Estate Planning Myths to Avoid

Many people talk themselves out of implementing a solid estate plan because they’ve heard of some of these common estate planning myths. Don’t let this happen to you!

Estate Planning Myths

Myth #1: Only the Rich Need Estate Planning

When we hear about estate planning on the news or read about it on the internet, it is usually in regards to a wealthy businessman or celebrity (such as Prince) who made some error, did no planning, or has family members who are angry about the planning that was actually done. The topic catches people’s attention: Rich people have so much that surely they need planning and can afford to have the planning done correctly. By comparison, when the average person thinks about their own property and planning needs, they assume that it is not necessary because they do not  have anything close to Bill Gates’ billions.

This is not true. Estate planning is about more than just the money. While proper planning allows you to determine who gets your money and property upon your death, the planning process also addresses what happens if you become incapacitated and someone has to make decisions on your behalf, which is a far more likely scenario.

If you haven’t done any planning, the court will have to appoint someone to make your medical and financial decisions for you. This can be very time consuming, expensive, and public. It can also wreak havoc on a family if they disagree about who should be appointed and how decisions should be made.

Even for those of modest means, who gets your hard-earned savings when you die is an important consideration. Without any planning, state law will decide who gets what—and many times, what the government’s best guess as to what you would want is contrary to what you actually want. But, because you did not take the opportunity to formalize your wishes in an estate plan, the state has to step in and do it for you.

Myth #2: I Don’t Have to Plan Because My Spouse Will Get Everything

For many married couples, it is common to own property or bank accounts jointly. If these assets are owned jointly or as tenants by the entirety, when one spouse dies, then the surviving spouse automatically becomes the sole owner. In most cases, this is the desired outcome for married individuals.

However, this approach can be dangerous. While it is convenient for assets to pass automatically to the surviving spouse, this outright distribution offers no protection. What happens if, after your spouse dies, you get into a car accident and are sued? If the assets you owned jointly automatically became yours alone, this money and property are available to satisfy any judgment that could be entered against you resulting from a lawsuit.

Additionally, what if, after you die, your spouse gets remarried? If the brokerage account you owned jointly becomes your spouse’s only, your spouse is now able to spend it all in any way he or she wants without any consideration for your wishes or the next generation. Your spouse’s new spouse could go out and buy a sports car with the money you intended to pass to your children. With blended families being common today, this is a real concern for many people.

Estate planning does not mean that you have to disinherit your spouse. Rather, it means the two of you can sit down and plan out what happens to your joint property and accounts upon either of your deaths, ensuring that the survivor is provided for and that any remaining money and property are gifted in a way that is agreeable to both of you.

Myth #3: A Will Avoids Probate

One of the most widely believed estate planning myths is that many people believe once they have created a will—whether drafted by an experienced attorney, or using a DIY solution or online form— they have avoided probate. Unfortunately, they are wrong.

While a will is a great way to designate a person to wind up your affairs once you have passed, determine who will get your hard earned savings and property, and, if necessary, appoint a guardian to care for your minor children, this document has to be submitted to the probate court to begin the process of distributing your money and property. The level of involvement by the probate court can vary depending on the circumstances, but this process is not private, as the will becomes a matter of public record.

Release from Administration: In Ohio, if the value of your estate (i.e., what you own at your death) is below a certain monetary threshold, then anyone who is entitled to inherit from the decedent can file a petition and have the property distributed outside of the traditional probate proceedings. The filing requires court filings and formal legal notice to anyone who might be interested before allowing your property to be distributed.

Probate: With this type of proceeding, the probate judge oversees every step of the administration process and has to approve of the Personal Representative’s actions. During a supervised probate, all pleadings and required documents have to be filed with the probate court and then served on interested persons or parties. This can be a very time consuming and expensive process. Each time the Personal Representative has to take an action, a legal pleading has to be filed and served on the interested party, which, in contentious situations, opens up the possibility for disagreements and attorneys’ fees.

We are here to help answer any questions you may have about estate planning, the estate planning process, or probate. Together, we can craft a one-of-a-kind plan to ensure that you and your family are properly protected.

Avoid the estate planning myths! Schedule an estate planning consultation with Golowin Legal at (614) 453-5208.

Estate Planning Awareness Week

Estate Planning Awareness Week

In 2008, Congress designated the third week of October as National Estate Planning Awareness Week to promote the need for the public to understand the importance and benefits of estate planning.

Unfortunately, a 2019 survey by Caring.com determined 57% of adults in the United States have not prepared any estate planning documents like a will or trust even though 76% of adults viewed them as important. Many of the respondents said this was due to procrastination, but many others mistakenly believed that it was not necessary because they did not have many assets.

Why should you have an estate plan?

An estate plan provides significant peace of mind by ensuring your assets are protected, plans are in place in the event you become ill, and your property is passed down according to your wishes.

What are some of the critical pieces of a good estate plan?

1. Last Will and Testament and/or a Revocable Living Trust

  • If you don’t have these important documents, state law will determine who will inherit your property, which means the wrong people may receive your assets.
  • To make things worse, because you didn’t leave instructions in your will or trust, the probate court will appoint the person that will be in charge of caring for any minor children or pets.
  • Spelling out your wishes in a will or trust will also prevent unnecessary confusion, anxiety, and expense for other family members when you are gone.

2. Financial Power of Attorney (a.k.a. General Durable Power of Attorney)

  • A financial power of attorney allows you to designate a person to make financial and property decisions for you if you become  unable to handle your own affairs.

3. Health Care Power of Attorney

  • A health care power of attorney enables you to designate a person you trust to make medical decisions for you when you are otherwise unable to speak for yourself.

4. Living Will

  • You may also want to sign a living will, which memorializes your wishes concerning your end of life care, such as whether you would like to receive life support if you are in a permanently unconscious state or terminal condition.
  • People that choose to sign a living will often want to ensure that the pressure of making a decision to remove life support does not fall upon the shoulders of a loved one, and would rather sign a living will with leaves a clear direction that they do want life support (and even fluid and nutrition) removed should they be permanently unconscious or in a terminal condition and unable to communicate.

5. HIPAA Medical Authorization

  • You should also ensure HIPAA medical authorization documents have been signed and provided to your medical professionals to ensure your family members are able to obtain needed information should you become incapacitated and unable to sign a release of information document when you arrive at the hospital.

6. Life Insurance

  • If you become incapacitated or die, it is important for your family or loved ones to have information about your insurance (such as life, health, disability, long-term care, etc.) so that claims can be filed.

7. List of Assets and Accounts

  • Make a list or spreadsheet of all of your accounts and other important information, including bank and investment accounts, titles to vehicles and homes, credit card accounts or loans, digital accounts (such as Facebook, LinkedIn, and Twitter) and passwords, Social Security cards, passports and birth certificates, which may be needed to manage your property when you are incapacitated or settle your estate once you are gone.
  • This information should be kept in a safe place and shared only with trusted family members or loved ones.

8. List of Legal, Financial, and Medical Professionals

  • Making a list of the people or companies that have performed services for you is also important. The list should include their contact information so your family can easily reach them in the event their help is needed if you become disabled or die.

How should you encourage your family members to create an estate plan?

Estate Planning Awareness Week is a great opportunity not only to take steps to make sure your own estate plan is in place, but also to talk to your family members, especially elderly parents, about creating an estate plan. Estate planning is often a difficult topic to broach, as it brings the unpleasant topics of aging and death to the forefront of our minds. Here are a few tips to help you start the conversation.

1. Be sensitive to your family members’ feelings

  • Put yourself in their shoes, and keep in mind that few people are eager to dwell on the subject of their own death.
  • One way to begin the conversation is to talk first about the need to plan for an illness and to provide instructions in the event they become too ill to communicate with doctors or handle financial matters for themselves. The conversation can then naturally progress to the importance of having an estate plan that will enable their assets to be transferred in the way that they wish, provide for the care of any dependents or pets, and minimize any taxes, court costs, and legal fees
  • Communicate that you are not trying to control their decisions, but only want to ensure that their own wishes regarding their medical care and their property are known—and that all their instructions are in writing to guarantee they are carried out.

2. Involve other family members in the conversation

  • If you are planning to speak to your parents about the need for an estate plan, it is important to try to include any siblings in the discussion to avoid giving the impression that you are trying to influence or control your parents’ choices. You and your siblings should emphasize to your parents that none of you are asking about what you will inherit, but just want to make sure that their wishes are carried out if they become ill or pass away.

3. Consult an estate planning attorney

An experienced estate planning attorney can help you and your family members create an estate plan tailored to meet each of your unique needs and carry out your wishes—or help you update a pre-existing estate plan.

  • We can provide each family member with guidance and information about the options available to them.
  • We can help each of you put a plan in place that will prevent unnecessary stress, legal expenses and taxes, uneven inheritances, disputes between family members, and delays in passing life savings on to loved ones.
  • In addition, it will provide you and your family members with the peace of mind that comes with knowing there are plans in place for your care if any of you become ill and that your wishes will be honored once you pass away.

Celebrate Estate Planning Awareness Week! Contact Golowin Legal to set up an estate planning consultation at (614) 453-5208.

2019 VA Aid and Attendance Pension Rates

What are the 2019 VA Aid and Attendance Pension rates?

For 2019, the Maximum Allowable Pension Rates (MAPR) for the VA Basic Pension, Housebound, and Aid and Attendance ratings have increased from 2018.

As indicated below, the maximum monthly pension payable to a married veteran in need of Aid and Attendance is now $2,231 per month. The maximum monthly payment to a surviving spouse is now $1,209.

These monthly payments are tax-free money to be used by the veteran or surviving spouse as they see fit, though it is most often used to help pay for in-home, assisted living, or nursing home costs.

Qualifying for this VA Pension can make a dramatic difference in the veteran or surviving spouse’s ability to pay for the daily support they need to stay safe and out of the nursing home.

Department of Veterans Affairs Aid and Attendance

If you know a wartime veteran or a surviving spouse of a wartime veteran, make sure they know about this program by sending them a link to the Golowin Legal VA Aid and Attendance page.

 Maximum Allowable Pension Rate (MAPR)Approx. Monthly Benefit
Veteran
(Basic Pension with no dependent)
$13,535$1,128
Veteran
(Basic Pension with one dependent)
$17,724$1,477
Veteran
(Housebound with no dependent)
$16,540$1,378
Veteran
(Housebound with one dependent)
$20,731$1,728
Veteran
(Aid and Attendance with no dependent)
$22,577$1,881
Veteran
(Aid and Attendance with one dependent)
$26,766$2,231
Each additional child$2,313$193
   
Surviving Spouse
(Basic Pension with no dependent)
$9,078$757
Surviving Spouse
(Housebound with no dependent)
$11,095$925
Surviving Spouse
(Aid and Attendance with no dependent)
$14,509$1,209
Surviving child$2,313$193
   
Veteran Married to Veteran
(Both Aid and Attendance)
$35,813$2,984

Click here if you need to order military discharge papers because the original has been lost.

If you need assistance filing a claim for VA Aid and Attendance Pension, please contact VA Accredited Attorney Russell Golowin at 614.453.5208 today.

2018 VA Aid and Attendance Rule Change

Are you aware of the important VA Aid and Attendance rule change? In October 2018, the Veterans Administration (VA) changed their non-service connected pension benefit (sometimes called “Aid and Attendance”) eligibility rules, which has had a dramatic effect the eligibility criteria.

VA Aid and Attendance Rule Change

The Aid and Attendance Rule Change:

Net Worth Limit

The new net worth limit will be the maximum Community Spouse Resource Allowance (CSRA) that is used by the Medicaid program. Currently, this is $123,600.

The old rule considered life expectancy, negative monthly cash flow, and other similar factors. Often an $80,000 limit was referred to even though this was never supported by the rules.

Now that there is a set net worth limit, there will be less confusion concerning who is eligible. Hopefully this will help make the application process quicker. All claimaints will need to have $123,600 or less in order to qualify. If they have more than this limit, they will need to decrease their net worth to be eligible for pension.

Look-back and Penalty Periods

This Aid and Attendance rule change means there will now be a period of ineligibility imposed if a claimant makes an uncompensated transfer during the 3-year lookback period. An uncompensated transfer might be moving money into an irrevocable trust or an immediate annuity.

If a claimant made an uncompensated transfer during the 36-month lookback period, the penalty period will begin the month after the last transfer occurred. The maximum penalty period will be 5 years (60 months).

The penalty period will be determined by taking the total of the uncompensated transfers during the lookback period and dividing it by the Maximum Allowable Pension Rate (MAPR) in effect on the date of the pension claim at the aid and attendance level for a veteran with one dependent. This MAPR is currently $2,169.

For example, if a claimant had gifted his son $32,550* two years before filing the “Aid and Attendance” claim, he would be ineligible for pension for the next 15 months ($32,550/$2,169=15 months).

*Only transfers above the net worth limit will be penalized.

Purchasing an Annuity

A quick way to gain eligibility for VA pension used to be purchasing an immediate annuity. However, now assets moved into an annuity to spend down net worth will be penalized if the annuity cannot be liquidated. Also, the monthly income from the annuity will be considered income.

Therefore, purchasing an immediate annuity is no longer an attractive option.

Irrevocable Trusts

Irrevocable trusts have been used to reduce net worth as well, but now those transfers will be penalized if made within 36 months of filing a claim.

While the new VA Aid and Attendance rule change makes irrevocable trusts less immediately effective, they will still be an effective planning tool. A claimant can create a trust, transfer assets to it, and then wait 36 months to file a claim. As long as their assets are below the limit at the time of the claim, they should be approved.

Spending Down Net Worth

If a claimant has more than $123,600, but does not have enough excess assets to justify creating an irrevocable trust, they should focus on spending their assets down.

Unfortunately, “in the absence of clear and convincing evidence showing otherwise, an asset transfer made during the look-back period was for the purpose of decreasing net worth to establish pension entitlement.” This means that any transfer not made for fair market value will be penalized, if the amount is over the CSRA limit.

The good news is that purchases for fair market value for the veteran or surviving spouse are allowed. This means that purchases of home repairs, vehicles, medical equipment, clothing, electronics, vacations, etc. are all permissible as long as they are used for the claimant (you can’t buy a cruise ticket for your son).

Summary

  • Net worth limit is $123,600 (2018).Claimants that transferred assets within the last three years (36 months) will now be subject to a period of ineligibility (“penalty period”)
  • Immediate annuities will be penalized if purchased within the three-year lookback period
  • Transfers to irrevocable trusts will be penalized if within the three-year lookback period
  • Allowable ways to spend down assets are to spend them on items or services that are purchased at fair market value for the veteran or surviving spouse

This is a very significant change in the VA rules that will affect many veterans and surviving spouses that are in need of in-home, assisted living, or nursing home care.
Now more than ever, it is important to consider long-term care insurance and work with an elder law attorney to design an appropriate plan before the need for long-term care arises.

If you need assistance, please contact Golowin Legal to schedule a one-hour meeting to discuss your goals.

These rules were published in the Federal Register as “Net Worth, Asset Transfers, and Income Exclusions for Needs-Based Benefits” on on September 18, 2018.

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