Many of our clients tell us that creating a last will and testament is the first thing that comes to mind when thinking about estate planning. While a will is a fundamental component of successful estate planning, including detailed health care documents in your estate plan is an effective way of ensuring any medical decisions made on your behalf are ones that you would approve of.
One of the main benefits of establishing advance directives is that you, as the creator, have the opportunity to create specific and detailed instructions with regards to the future medical care you wish to receive. Further, by creating advance directives, you have the ability to choose someone to act as your health care agent in the event you are unable to make medical decisions for yourself.
To help you make an informed decision about the types of planning documents you need, let us share three important health care documents that you should consider adding to your estate plan.
- Living Will
A living will is the first of these important health care documents. A living will is a legally-binding document that allows you to lay out your medical wishes in the event you are diagnosed with a terminal illness or experience a serious accident or injury. By creating this important planning document, you can provide as much detail as you like about your future medical treatment and end-of-life care wishes. This will lift some of the burden from your loved ones and will make it easier for them to make decisions about your care that align with your wishes.
- Health Care Power of Attorney
Through a health care power of attorney, you can designate an agent who has the authority to make medical decisions on your behalf in the event you are unable to do so yourself. It is almost impossible to plan for every conceivable circumstance, establishing a health care power of attorney can help accommodate for unexpected situations that arise. We want to share one cautionary note, however, about setting up a health care power of attorney. Be sure to choose someone you trust implicitly as your agent, as these types of decisions can be life and death.
- HIPAA Authorization
In order for your agent to gain access to your medical records as needed, he or she must have HIPAA authorization. HIPAA was created to protect your privacy when it comes to your health. Ensuring that your agent has the authority to access your records will make it easier for him or her to make medical decisions on your behalf if you become incapacitated and are unable to do so. Discuss with your estate planning attorney whether this authorization should be included as a part of your health care documents or as a stand alone document.
These are just a few of the health care documents you can add to your estate plan. Are you ready to discuss your legal planning needs and find out which documents fit best with your planning goals? Do not wait to get in touch with our office. As always, we are here to be a resource for you.
One of the most costly mistakes people can make, especially as they get older, is not having a comprehensive estate plan. For those who do have one, failing to regularly update it can be just as costly. Without a legally sound plan, there is no guarantee that your wishes will be honored and your property will go to the people you love or the organizations you support.
There is no better time to address this issue than at the start of a new year. Significant life changes or new tax laws, for example, may have occurred in the preceding calendar year or since your last update. Addressing your estate plan at the beginning of a new year offers the chance to get a jump start on the year to come.
One of the most common reasons to update an existing plan is marriage. Did you, your children or another family member named in your estate planning documents get married since your plan was created or last updated? An estate planning attorney could help you determine how that might affect your will, trust, beneficiary designations, insurance policies or other important estate documents.
Marriage changes family structure, and estate documents need to reflect those changes. For instance, if you were recently married, designating your spouse as a beneficiary to your property, or perhaps naming him or her as a personal representative to your will, would be something to handle right away. In the case of a living will, your new spouse should be made aware in writing of your health care wishes in the event you become terminally ill. A power of attorney document also could be crafted to give your spouse the ability to make decisions on your behalf relating to financial, legal and health care matters.
Estate planning is just the first part of the equation. You and your new spouse need to discuss your long-term care future. What you may not know is that when it comes to being able to afford the high cost of long-term care, you need to give your new spouse the ability to plan and work with an elder care attorney in the event of a crisis.
If the marriage is not your first, an additional set of considerations may apply. A review of previous estate documents would be required to understand how any prior arrangements would impact your plans moving forward. For instance, if you were contractually obligated through a previous divorce to keep your ex-spouse as beneficiary to a retirement account, you may not be able to update the beneficiary designation to your current spouse. Doing so could inadvertently cause a series of avoidable problems.
In any case, consulting with your estate planning attorney can provide the most efficient path to creating an overall estate plan that confidently meets your needs. We encourage you to ask us your questions. Do not wait to schedule a meeting to create the right estate plan for you now and in the new year.
When it comes to planning for an aging parent’s long-term care needs, few legal documents are as important as a durable power of attorney. Simply put, a power of attorney grants a designated person, known as the attorney-in-fact or agent, with the legal right to make decisions on the aging parent’s behalf. Through the durability of this document, should the time come when the parent is unable to make decisions, this authority can include assisting the aging parent with financial and legal matters.
With aging adults, a sudden illness, dementia or simply the aging process itself can lead to a situation where they become incapable of managing their own affairs. When a Florida durable power of attorney is in place, an adult child, or whomever the designated attorney-in-fact is, can step in and seamlessly continue paying their bills, handle their investments, and even make long-term care decisions.
Unfortunately, if this type of planning is not in place, any number of challenging situations can arise, including the need to file a court action to obtain a guardianship. This can be time consuming, expensive, and emotionally burdensome during a difficult period. Further, with a guardianship in place, the adult children may not be able to protect the aging parent’s money from the high costs of long-term care.
Planning ahead in this regard can make a huge, maybe even critical, difference. Despite the obvious benefits, many aging Floridians do not take the necessary steps to protect themselves, their assets, and their family from long-term care costs. Long-term care costs are a reality today. Research continues to show that the majority of seniors over age 70 will need some type of long-term care in the future.
Despite this continuing trend, many aging adults do not think about a future that could include long-term care. This could be for any number of reasons including a genuine fear over how to afford future care and that the senior will be in a position of vulnerability. When the aging adult’s planning is not completed in advance of a crisis, however, the durable power of attorney becomes the family and the senior’s best protection from this uncertainty.
Through the Florida durable power of attorney, the agent will be able to care for the elder in a way that makes sense for him or her. The agent will be able to find good care and determine the best way to pay for it. This could even include hiring an elder care attorney to help with the process.
If you’re aging parent is resistant, we encourage you to talk to them sooner rather than later. The durable power of attorney in Florida is your family’s best ally when it comes to crisis planning for the long-term care costs that may be needed in the future. We know this article may raise more questions than it answers and are here to help you as an elder care resource.
Month after month, you may read articles about the importance and value of estate planning. Congratulations! The message is sinking in, and you’re making a plan that will benefit your family for years, decades, perhaps generations, into the future.
So, at this juncture, the word “legacy” may be popping up for you. “Legacy Estate Planning,” as we call it in the financial services world, is about more than leaving resources behind to your family. It’s about strategically leaving resources for your family, so your estate can do the most good for the most years. It’s an honorable pursuit, and for most families, it’s an absolute necessity.
Legacy estate planning is not about money, it’s about intentionally planning for its use by those you love. It’s about setting up parameters and allowances; setting up rules and boundaries.
Your children love you, and your grandchildren love you, too. You want to leave them any and all inheritance you can when you pass from this world, but you have specific ideas on how it would benefit them most. In short, you realize they may need to get out of their own way to make the best choices with the resources you leave for them.
When you create a Legacy Estate Plan, you can include language and stopgaps that help your loved ones correctly manage the funds you have gifted them. In the documents you create with your advisor, you can set parameters for use of what by whom and when. If you’re worried about in-laws, include restricting language to that regard. If you’re concerned about someone being taken advantage of by another, put parameters in place to prevent it.
This is the beauty of the peace of mind you can experience with a Legacy Estate Plan. Help your loved ones help themselves, and create a space in the future where your estate can be its’ most effective in the lives of those you love most.
It’s time to plan. Do it in a way that’s worthy of your legacy. It’s this legacy, not the money, that will make the biggest difference in the lives of those you love. Don’t wait to contact our office with any questions you may have.
Depending on your relationship, it may be uncomfortable to approach your aging parents about their end-of-life choices, but do not put off his conversation. As our parents age it is critical we foster open communication on who they want to take care of them, how care should be provided, and the legacy they wish to leave.
Your parents will almost certainly have ideas and wishes to fulfill. You can help them ensure their goals are met but also can take the time to make sure they are prepared for an uncertain long-term care future.
When it comes to Florida estate planning, there’s a lot to consider. Offering support could be exactly what the situation needs. Whatever the case, starting the conversation is step one. This is only the start though. Your goal is to ultimately plan for how they will find good care should they need it and know how they will be able to afford it.
The earlier you can have this conversation the better. Let us share one way to break the ice:
“Mom, or Dad, would it be okay if we talked for a minute? I feel like it’d irresponsible of me if I didn’t ask you about your estate plan and future health decisions?”
Simply put, an estate plan includes anything the aging person owns and it puts into writing how they would like to distribute any available assets after they pass. It also can include a financial power of attorney and a healthcare power of attorney. Both are documents allowing a named individual to make financial and healthcare decisions on the person’s behalf should he or she become incapacitated.
Consider continuing the conversation with this:
“Your estate plan is important to me, but it is more than that. I am worried that you may one day need long-term care. I think we need to start talking now about how we will find good care and be able to afford it.”
This conversation may catch your parents by surprise. Reassure them. Let them know that you are not trying to pressure them into making an immediate decision but you do want to open the conversation. Discuss with them how this type of care, which could become necessary in the future, can be expensive, and involve considerable inconveniences during an emotionally difficult period.
Share with them that if they do not have Florida estate planning documents that contemplate future elder care needs, much of the planning they need may not be possible. In fact, they may be at risk of not being able to save any of their assets from being depleted on the cost of a nursing home. Encourage them though that together you can create a plan with their elder care attorney to ensure that they are provided for under any potential future circumstance.
It may not be easy to talk to your aging parents about their estate planning and elder care needs, but with love and support it can alleviate worry and bring about peace of mind. Consider it an opportunity to be of service to your loved ones who once took care of you. Do not hesitate to ask us your questions.
The Tax Cut and Jobs Act (TCJA) is now officially law. Both the House and Senate passed the new tax reform bill in December with straight party-line votes and no support from Democrats. President Trump signed it into law right before Christmas. It is the first overhaul of the tax code in more than 30 years. In our continuing commitment to making sure you and your family are protected we want to share with you the tax reform impact on seniors and persons with disabilities.
Retirees, most of whom are on relatively fixed incomes, are probably the most concerned about what the new tax law will mean for them. But, generally, they will be less affected than others because the changes do not affect how Social Security and investment income are taxed. In fact, many will benefit from the doubling of the standard deduction and, with the new individual tax brackets and rates, will be paying less in taxes when they file their tax returns in April, 2019. (Most of the changes will apply to 2018 income, not 2017 income.)
Let us share the thirteen key individual provisions for retirees and persons with disabilities to know and plan for in advance. These individual provisions are set to expire at the end of 2025 so Congress will need to act before then if they are to continue.
1. (Mostly) Lower Individual Income Tax Rates and Brackets. There are still seven individual tax brackets and rates, but most are lower. Current rates are 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. Here are the new rates and how much income will apply to each:
Rate Individuals Married, filing jointly
10% Up to $9,525 Up to $19,050
12% $9,526 to $38,700 $19,051 to $77,400
22% $38,701 to $82,500 $77,401 to $165,000
24% $82,501 to $157,500 $165,001 to $315,000
32% $157,501 to $200,000 $315,001 to $400,000
35% $200,001 to $500,000 $400,001 to $600,000
37% $500,001 and over $600,001 and over
2. Standard Deduction is Almost Doubled. For single filers, the standard deduction is increased from $6,350 to $12,000. For married couples filing jointly, it increases from $12,700 to $24,000. Under the new law, fewer filers would choose to itemize, as the only reason to continue to itemize is if deductions exceed the standard deduction.
3. Personal and Elderly Exemptions. Currently, you can claim a $4,050 personal exemption for yourself, your spouse and each dependent, which lowers your taxable income and resulting taxes. The new law eliminates these personal exemptions, replacing them with the increased standard deduction. The blind and elderly deduction has been retained in the new law. People age 65 and over (or blind) can claim an additional $1,550 deduction if they file as single or head-of-household. Married couples filing jointly can claim $1,250 if one meets the requirement and $2,500 if both do.
4. Medical Expenses Deduction. Currently, people with high medical expenses can deduct the portion of those expenses that exceeds 10% of their income. For example, a couple with $50,000 in income and $10,000 in medical expenses can deduct $5,000 of those medical expenses. The new law increases this to medical expenses that exceed 7.5% of income. In the example above, the couple would be able to deduct $6,250 of their expenses. (Note that this part of the new law applies to medical expenses for 2017 and 2018.)
5. State and Local Tax (SALT) Deduction. The amount you pay in state and local property taxes, income and sales taxes can be deducted from your Federal income taxes—and the amount you can currently deduct is unlimited. The new law limits the deduction for these local and state taxes to $10,000. Residents in the vast majority of counties in the U.S. claim an average SALT deduction below $10,000. Most low- and middle-income families who currently itemize because of their SALT deduction will likely take the much higher standard deduction unless their total itemized deductions (including SALT) are more than $12,000 if single and $24,000 if married filing jointly. Originally lawmakers in the House and Senate wanted to repeal SALT entirely, to help pay for the tax cuts, but lawmakers in high-tax states (specifically CA, IL, NY and NJ) fought to keep it in. Those in higher income households in high-tax states will benefit from the SALT deduction.
6. Lower Cap on Mortgage Interest Deduction. Currently, if you take out a new mortgage on a first or second home, you can deduct the interest on up to $1 million of debt. The new law puts the cap at $750,000 of debt. (If you already have a mortgage, you would not be affected.) The new law also eliminates the deduction for interest on home equity loans, which is currently allowed on loans up to $100,000.
7. Temporary Credit for Non-Child Dependents. Under the new law, parents will be able to take a $500 credit for each non-child dependent they are supporting. This would include a child age 17 or older, an ailing elderly parent or an adult child with a disability. It is temporary because it is set to expire at the end of 2025 along with the other individual provisions.
8. Higher Exemptions for Alternative Minimum Tax (AMT). The AMT was created almost 50 years ago to prevent the very rich from taking so many deductions that they paid no income taxes. It requires high-income earners to run their numbers twice (under regular tax rules and under the stricter AMT rules) and pay the higher amount in taxes. But because the AMT wasn’t tied to inflation, it has gradually been affecting a growing number of middle-class earners. The new tax law reduces the number of filers who would be affected by the AMT by increasing the current income exemption levels for individuals from $54,300 to $70,300 and for married couples from $84,500 to $109,400.
9. Federal Estate Tax Exemptions Doubled. The new law does not repeal the Federal estate tax, but it eliminates it for almost everyone by doubling the estate tax exemption to $11.2 million for individuals and $22.4 million for married couples. Amounts over these exemptions will be taxed at 40%. The new rates are effective starting January 1, 2018 through December 31, 2025.
10. Eliminates Individual Mandate to Buy Health Insurance. With the elimination of the individual mandate to purchase health insurance, there will no longer be a penalty for not buying insurance. This is expected to help offset the cost of the tax bill and save money by reducing the amount the federal government spends on insurance subsidies and Medicaid. The Congressional Budget Office expects that fewer consumers who qualify for subsidies are expected to enroll on Obama Care exchanges and fewer people who are eligible for Medicaid will seek coverage and learn they can sign up for the program. (Estimates of those who are expected to have no health insurance by 2027 are all over the place, ranging from 3-5 million to 13 million.) Critics, including AARP, claim that eliminating the individual mandate will drive up health care premiums, result in more uninsured Americans and add $1.46 trillion to the deficit over the next ten years, which could trigger automatic spending cuts to Medicare, Medicaid, and other entitlement programs unless Congress votes to stop them. Some claim the individual mandate helps to encourage younger and healthier Americans to sign up for coverage. Without it, the individual market might lean more toward sicker and older consumers, which might lead some insurers to drop out of the market. 29% of current enrollees on the federal exchange already have only one option in 2018. Others maintain that the mandate is not a key driver for obtaining insurance. About 4 million taxpayers paid the penalty in 2016.
11. Inflation Adjustments Slowed. The new tax law uses “chained CPI” to measure inflation, which is a slower measure than that currently used. This means that deductions, credits and exemptions will be worth less over time because the inflation-adjusted dollars that determine eligibility and maximum value would grow more slowly. It would also subject more of your income to higher rates in the future.
12. 529 Plans Expanded. 529 plans have been a tax-advantaged way to save for college costs. The new tax law expands the use of tax-free distributions from these plans, including paying for elementary and secondary school expenses for private, public and religious school, as well as some home schooling expenses. Educational therapies for children with disabilities are also included. There is a $10,000 annual limit per student.
13. ABLE Accounts Adjusted. ABLE accounts, established under Section 529A of the Internal Revenue Code, allow some individuals with disabilities to retain higher amounts of savings without losing their Social Security and Medicaid benefits. The new tax law allows money in a 529 education plan to be rolled over to a 529A ABLE account, but rollovers may count toward the annual contribution limit for ABLE accounts ($15,000 in 2018). The new law also changes the rules on contributions to ABLE accounts by designated beneficiaries who have earned income from employment.
As we move further into this year, expect some clarifications and strategies as the experts weigh in on the tax reform impact on seniors. There will also undoubtedly be some adjustments as the new tax bill goes into effect. Please don’t hesitate to contact our legal team if you have questions about these new provisions and how they may impact you or those you work with or if you are ready to start planning in light of these changes.