Category Archives: Wills

Estate Planning for Retirement Years

Retirement is a highly-anticipated reward for years of hard work and child rearing. The “golden years” are viewed as a special season to pursue hobbies and enjoy life. Interestingly, while many people seek advice from a financial advisor to make sure they have enough money to retire, often they do not obtain a professionally prepared estate plan. Instead of working with an attorney, they will do one of the following:

  • rely on outdated wills, trusts, and powers of attorney drafted many years earlier,
  • use estate plan forms downloaded from the Internet, or
  • not worry about estate planning at all.

All of these approaches are a disaster waiting to happen. There is simply no substitute for an estate plan prepared by an attorney because the legal issues facing older adults are far too complex.

The Advantages of an Elder Law Attorney

Since retirement typically happens later in life, aging and health concerns become more of a priority. A person who relies on the three approaches above will face several disadvantages:

  • Old estate plan documents typically focus on the children and not the retirement years.”
  • Canned” estate plan forms and those purchased from estate planning services are not tailored to the person’s unique circumstance and are not adequately state specific.
  • Long-term care planning strategies are not authorized or adequately addressed.

On the other hand, an elder law attorney will provide experience and specialized training required to plan for and cope with the unique legal issues that accompany aging. Elder law attorneys prepare documents that are:

  • tailored to a client’s personal circumstances,
  • current and state specific, and
  • designed to maximize eligibility for public benefits such as Medicare, Medicaid, Veterans benefits, and Social Security.

Estate Plans Focused on Retirement

At first glance, every estate plan seems to use the same few documents: wills, trusts, financial powers of attorney, and medical powers of attorney. It is important to realize that a document labeled as a “will” or “power of attorney” is not necessarily appropriate for the situation. A power of attorney prepared for a 75 year old should be very different from one prepared for a 40 year old. The financial and health needs of an older person are much different than those of a younger person, and their legal documents need to address those differences. Below are some examples of how estate plan documents for senior adults are tailored specifically for that season of life.

Financial Powers of Attorney. This document authorizes someone to make financial decisions on your behalf. For retirees, this is the single most important document for managing long-term care needs. Carefully crafted powers should be included to deal with retirement accounts, beneficiary changes, transfers of assets, creation of legal documents, and extraordinary powers for long-term care planning.

Medical Powers of Attorney/Patient Advocate Designation. This document authorizes someone to make medical decisions on your behalf. Each state has very specific rules about what decision the health care proxy is permitted to make. It should be drafted for the state of residence. Careful thought should be given to the powers to refuse or withdraw life support, deal with mental health treatment, and who should have the power to make those decisions.

Wills. A last Will and Testament is a well-known document goes into effect after death and disposes of assets passing through probate court. Many people mistakenly believe all of their assets will be controlled by their will. The truth is that a will does not touch some of a person’s largest assets, like IRA’s, annuities, and life insurance. Moreover, wills are not useful during periods of incapacity.

Trusts. Trusts are much more beneficial than wills when it comes to dealing with aging issues and long-term care needs. A trust has several advantages over a will as it:

  • is useful during periods of incapacity,
  • is adaptable to a variety of strategies for Medicaid and VA eligibility,
  • maximizes assets for a healthy spouse under special conditions,
  • benefits disabled children, and
  • avoids probate court process if properly structured.

Summary

The importance of up-to-date estate plan documents that are personalized to the present season of life cannot be overstated. These documents allow trusted family members and advisors to take over management of assets during a period of incapacity. They facilitate access to public assistance programs when needed to help pay for long-term care costs. They minimize the need to involve a probate court judge for the appointment of a Guardian when a person is incapable of making care decisions or the appointment of a Conservator if the individual is not able to manage their finances.

Every person of retirement age should have an elder law attorney on their team of advisors. Senior adults who consult with an elder law attorney will have assurance that their legal documents have been carefully tailored to their unique situation. They will have peace of mind that they have planned for the financial and legal challenges unique to the retirement years.

Gene Richards_8x10@300Norman E. Richards (Gene) is a partner in the Livonia office of Cummings, McClorey, Davis & Acho, P.L.C. where he focuses his practice on estate planning and elder law. He assists clients with the development of customized estate plans to address their specific needs, including family owned businesses, senior adults concerned about long term care needs, and special needs trusts for children with special needs. He may be reached at (734) 261-2400 or nrichards@cmda-law.com.

What can families do to avoid probate court?

It is important to acknowledge that a probate court serves an important role during life and after death.  During life, a probate court (i) protects the financial assets of an individual needing protection (through a conservator) and (ii) oversees the medical and personal care needs of an incapacitated individual (through a guardian).  After death, the probate court supervises the collection and application of assets that were titled in the deceased individual’s name alone (meaning assets with no surviving joint owner or no surviving beneficiary).   In both situations, the probate court may provide valuable oversight and accountability.  Sometimes the court is needed to resolve disagreements over wills, trusts and powers of attorney, as well as to decide family inheritance feuds.

Regardless of the important role and value of probate court, some individuals prefer to stay away from the probate process if at all possible.  There are several legal tools that may be used to side-step probate court:

Powers of attorney – Powers of attorney, both medical and financial, are the two most important documents required in order to stay out of probate court during life.  A general, durable power of attorney for finances (GDPOA) nominates a trusted individual (known as the “agent” or “attorney-in-fact”) to manage legal and financial affairs for the person signing the document (the “principal”).  Medical decisions can be delegated to a patient advocate.  This is done with a durable power of attorney for health care, known in Michigan as a patient advocate designation (PAD).  It is important to note that the principal does not give up any rights or freedom by signing a power of attorney document.  The agent and patient advocate are fiduciaries who must act in the principal’s best interest and at the principal’s direction.

With a GDPOA that includes the proper language, the agent will have authority to handle real estate, financial accounts, retirement accounts, business interests, mail, motor vehicles, debts and other legal matters.  If a GDPOA is in place and provides the authority needed, it will not be necessary to ask the probate court to appoint a conservator to manage financial and legal affairs in the event of the principal’s physical or mental incapacity.

With a PAD, the named patient advocate may be authorized to make medical decisions on behalf of an individual who cannot make those decisions himself or herself.  This document also serves as a durable power of attorney for health care and for care, custody and medical treatment decisions.  This document and the powers in it are sometimes called a “living will” or an “advance directive for health care.”  The patient advocate has the authority to make a broad range of medical decisions, including decisions regarding life support, as provided in this document and in accordance with the individual’s wishes.

Trusts – Trusts are usually thought of as a type of will.  Unlike a will, however, a revocable trust operates both during life and after death.  Also unlike a will, a trust does not require probate.  The trust maker (“settlor”) sets up a document that designates an individual (“trustee”) to manage assets titled in the trust for the settlor during the settlor’s lifetime (if incapacitated).  Upon the settlor’s death, the trustee follows the trust’s instructions on distributing the trust’s assets to named beneficiaries.  As the trustee has legal authority over trust assets, the probate court is not needed to manage and distribute the assets of the trust.  This makes a trust a key tool to avoid probate during life and after death.

Beneficiary designations – Beneficiary designations may be used to transfer bank, investment and retirement accounts to specific individuals and charities upon death.  In some instances, a special kind of deed may work to transfer real estate on death.  The benefit of beneficiary forms is avoidance of probate upon the death of the account holder or real estate owner.  On the other hand, there are several disadvantages with these forms as they frequently (i) are not updated after divorces or deaths of family members, (ii) are not reviewed regularly, (iii) are filled out incorrectly, and (iv) do not coordinate with other estate plan documents.

Joint ownership – Accounts and real estate with multiple joint owners will transfer probate-free to the surviving joint owners.  Joint ownership is usually appropriate for married couples, unless it is a second, or more, marriage.  Joint ownership is not usually advisable between parents and children or other persons as this may cause tax, legal and inheritance problems.

Some things to remember:

  • Powers of attorney (medical and financial), trusts, wills and beneficiary documents should be reviewed frequently and updated as needed;
  • Each tool described above has a limited purpose and should be coordinated with other tools; and
  • It is risky to utilize these tools without consulting an attorney, CPA or financial advisor.

Gene Richards_8x10@300Norman E. Richards (Gene) is an attorney at the law firm of Cummings, McClorey, Davis & Acho, P.L.C. where he focuses his practice on estate planning and elder law.  He assists clients with the development of customized estate plans to address their specific needs, including family owned businesses, senior adults concerned about long term care needs, and special needs trusts for children with special needs.  He may be reached at (734) 261-2400 or nrichards@cmda-law.com.

Gene Richards Featured on “The Lawyers” Radio Program

Radio Show PhotoCurt Benson, an attorney in our Grand Rapids office, hosts a popular syndicated radio program, The Lawyers, which airs on Newsradio WOOD 1300 and 106.9 FM.  On the program, Mr. Benson interviews professors, judges, lawyers and lawmakers on legal issues in the news. He recently sat down with Gene Richards, a partner in our Livonia office, to discuss a variety of estate planning and elder law issues, legal updates, and cost-effective solutions.  Please click here to listen to the informative radio program.

Mr. Richards helps clients safely navigate life’s transitions through the skillful, practical, and compassionate application of comprehensive elder law and estate planning services.  He guides senior clients in planning for their future care needs, including maximizing financial resources to pay for the cost of long-term care. He takes the time to understand his clients’ needs and goals and designs practical, customized solutions for them.

Gene Richards may be reached at (734) 261-2400 or nrichards@cmda-law.com.

Virtual Currency Shouldn’t be Overlooked when Putting Together Estate Planning Documents

Gene Richards_8x10@300Virtual currency may not show up in portfolios of many senior adults, but it shouldn’t be overlooked when putting together wills, trusts and powers of attorney. Not surprisingly, a national survey on consumer use of virtual currencies found that among those 65 or older, 75 percent said they were “very unlikely” to purchase Bitcoins. However, some seniors are trendy and tech savvy and might have a virtual currency “wallet.” Here’s a well written blog article on the importance of addressing bitcoin and other virtual currencies in the estate planning process. I’ll add that it is also critical to identify all assets and resources when trying to qualify for Medicaid and VA assistance to pay for long-term care.  Without adequate planning a legal representative, whether agent under power of attorney, personal representative (a/k/a executor) of a will, or trustee of a trust will have difficulty dealing with unique property, such as virtual currency, if the owner is incapacitated or has died.

The elder law and estate planning attorneys at Cummings, McClorey, Davis & Acho, P.L.C. (CMDA) regularly assist clients in planning with unique assets, such as virtual currency.  Even if it is too late to plan, the CMDA attorneys can still help by petitioning for the appointment a conservator in the local probate courts.  Gene Richards may be reached at (734) 261-2400 or nrichards@cmda-law.com. 

The Five Most Common Mistakes an Elder Law Attorney Sees

Jim Schuster is a Certified Elder Law Attorney and a colleague of the CMDA Elder Law team.  He is a welcome guest contributor to our elder law blog.

Everybody knows of the problems of aging adults, however few give it the serious attention it needs.  The failure to address these issues appropriately can result in serious financial distress and/or a loss of independence.  I have outlined five common mistakes made by aging adults and tips on how to avoid making them.

First Mistake: Doing nothing
If you do nothing to deal with aging you have a good chance of lifetime probate. That means the probate court must appoint a guardian or conservator to handle your affairs.  One study found that the number one cause of probate guardianship was the need for emergency medical treatment when the patient cannot give consent.

The cost of probate over your lifetime can be enormous and you lose control over your life.   It’s like being a child again.

Second Mistake: Only planning for death
Many people think they are “all set” if they have a will. A will is only effective at death.  We are talking about lifetime issues, not what happens after we die. For example, in a hospital or a nursing home an empowered advocate can mean the difference between life and death.

Third Mistake: Joint property with children
Many seniors think they are all set if they have a daughter or son on their bank accounts with them.  The thinking goes “that way they can pay the bills if I cannot.”  There are many problems with joint accounts.

The first is that it solves only one problem of aging: paying bills. Joint accounts give the child no ability to help the parent in any other way.  If the child calls the insurance company they will ask “Are you the insured?” The child will say “No. But, I’m joint on the bank account.” That goes nowhere.

The more serious problem is the risk of loss of life savings to a child who has financial bad luck.  The same can go for the house.  If a child is a joint owner, then if the child is sued, divorced or goes in bankruptcy so does your property.

And finally, joint accounts can be the source of probate battles after the death. What if a parent makes an account joint with one child? After the parent dies, will the child share it with the other children?  What if the parent’s will says to share equally?  Unfortunately there are no absolute legal rules and questions like these are often answered after a bitter battle in probate court.

Fourth Mistake: Paying employees under the table
People who perform personal services in the home are “employees.”  The recipient of the services is the employer, who is responsible for collecting and paying income, social security, Medicare, and unemployment taxes.

Let’s make it personal. Suppose the lady falls down the stairs carrying laundry.  She can file for workers’ compensation and have her medical bills and her wage loss paid by the employer – you.  If you “let her go” because daughter can now do it, the lady could file for unemployment.  And then you start hearing about back taxes, interest, and penalties

Fifth Mistake:  Not getting legal advice for “means tested” government benefits
Veterans “Aid and Attendance” and Medicaid nursing home benefits are very valuable to elders. But, they are “means tested.”   They have asset and income limits.  Few people know that these programs allow some common sense solutions to losing all your life savings before you get your earned benefits. Like the income tax you need to know what “deductions, credits and exemptions” the programs allow. When it comes to these government benefits get legal advice.

Conclusion: It is really easy to do it right
For the average person a “life care” plan is no more difficult than preparing for “death and taxes.”  All you have to do is identify your trusted assistants and give them legal authority to do what they will need to do – everything. And then make sure they know when to get professional advice.  Do that and you are 99% there to having aging go as smoothly as it can be.

Jim Schuster, a Certified Elder Law attorney, is an Of Counsel attorney at the law firm of Cummings, McClorey, Davis & Acho, P.L.C. He has been licensed to practice law since 1978 and practices entirely in the area of Elder Law. Mr. Schuster helps elders stay independent and in control and helps children of aging parents with the advice and legal documents they need to carry out their parents’ wishes and take care of their needs. Additionally, he assists clients with the complex Nursing Home Medicaid application process.

Attorneys in the Estate Planning and Elder Law practice group at Cummings, McClorey, Davis & Acho, P.L.C. are available to answer any questions about the five common mistakes outlined above.  We offer compassionate, common sense solutions for seniors worried about the future.  Contact us at (734) 261-2400 or www.cmda-law.com

Estate Planning for Older Adults

Estate Planning iPad ImageAdvocacy is an important need of older adults as they strive to preserve their independence and protect their interests.  For example, strong advocacy is needed to: protect life savings, deal with incapacity, find quality long-term care (whether at home, in assisted living or a nursing home), and qualify for government benefits to pay for long-term care (such as Medicaid and VA benefits). Elder Law attorneys use specialized legal tools and strategies to augment the “advocacy power” of older adults facing these situations. Read more

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