This year our article is following a hypothetical family through their lives to see what role estate planning had on their family. To review prior blogs, go to SeamonLawOffices.com/Blog.

We have worked with the Smith family for years regarding estate planning for several family members and service-connected veterans’ benefits for a son. Most recently our elder law services enabled Joe and his wife Barb to obtain the Veteran’s Aid and Attendance pension.

Joe has been receiving the maximum Aid and Attendance pension for a married veteran (approximately $2,400 per month) for over two and one-half years now, which means he has received about $72,000. His pension reimburses him for unreimbursed medical expenses, so he has been paying his granddaughter for caregiver services in his home.

Unfortunately, Joe is declining rapidly. He is up at night, he is getting quite difficult for his wife and their granddaughter, who are his primary caregivers. Unfortunately, their breaking point was a few weeks ago when he left the house without anybody noticing. He was missing for a few hours, but the authorities helped locate him before anything bad happened to him. This incident made them realize that he was no longer safe at home and the time had come where he needed a skilled care facility (nursing home).

They were nervous because they had heard nursing homes were very expensive. The average cost of a nursing home in West Virginia is now over $11,000 per month which is over $130,000 per year. It does not take long for the average family to spend through their life savings.

Fortunately, they had planned for this time. Although they did not have the foresight to purchase long-term care insurance prior to Joe’s diagnosis, they did create a specific type of irrevocable trust and fund many of their assets into the trust. This trust helped Joe qualify for the Aid and Attendance pension so Joe could live at home longer, but now that same trust would be a valuable tool to enable Joe to qualify for long-term care Medicaid.

I reminded them that the trust’s assets had been in the trust for over five years, meaning those assets were protected now. In addition, Barb had accumulated quite a bit in her IRA so she was very relieved to learn those funds were exempt from Joe’s Medicaid spenddown.

Unfortunately, Barb had come into an unexpected sum of money when her uncle died a couple of years ago and she was so overwhelmed with Joe’s care that she forgot to address that change to their assets. We will have to do a Medicaid spenddown for this portion of their estate. While it is a bit disappointing, the plan will still work with some tweaking.

As it turns out, even though it is unfortunate that Joe needs this higher level of care, he planned well which enabled him to receive care in his home for as long as possible without going broke. His beloved family cared for him for as long as they could keep him safe. Now, due to safety concerns, it was time for the next step. Joe’s family is thankful to have had the past few years with Joe at home, and they are thankful that Joe was willing to have some difficult conversations to achieve these goals for the family. Remember, it is never too early to plan!

Nursing Home and Irrevocable Trusts

This year our article is following a hypothetical family through their lives to see what role estate planning had on their family. To review prior articles, go to SeamonLawOffices.com/Blog.

We have worked with the Smith family for years regarding long-term care Medicaid for an elderly parent, service-connected veterans’ benefits for a son, and estate planning for several family members. A few years ago, we helped Joe and Barb create a specific type of irrevocable trust to realign their assets to qualify for long-term care Medicaid and the Veterans’ pension referred to as Aid and Attendance in the future.

Although many people begin using asset protection trusts as they age to prepare for a diagnosis indicating they may have long-term care needs in the future, Joe and Barb did not create their asset protection trust until Joe was diagnosed with dementia. Joe had always known he would be fine with the local VA nursing home which he was entitled to as a veteran and Barb’s family typically was healthy until a ripe old age. But with this diagnosis, they realized Joe might be able to live at home for quite some time, especially if Barb could afford to pay for some help so they reevaluated their previous decision.

The asset protection trust used to help veterans such as Joe must be created and funded at least three years prior to an application for the VA Aid and Attendance pension. Fortunately, it had been a little over three years so Joe and Barb could apply for the improved pension now known as Aid and Attendance. This pension is meant to reimburse the applicant for money they are spending out of their income to pay for unreimbursed medical expenses. These expenses are typically paying for caregivers or care outside the home that is private pay such as a personal care home or assisted living.

Their granddaughter, Mary, has been helping Joe and Barb quite a bit. They pay her a small amount, but she feels guilty taking their money since she knows they are on a limited income. They were so excited to learn that is exactly what the Aid and Attendance is meant to help with! When a veteran is paying somebody for care, this pension can be used to reimburse the veteran. For example, Mary provides about three or four hours of care per day, they would like to pay her $20 per hour which would be about $2,000 per month, but their current income is about $2,500 per month before paying their health insurance premiums. Once they are approved for Aid and Attendance, they could be reimbursed up to the current maximum for a married couple which is a little over $2,400 per month.

That means that Mary can help them, and they can pay her without Mary feeling guilty that she is taking her grandparents’ money. Further, since the VA does not require the caregiver to have a specific certification as a caregiver, veterans can accept help from family and friends they are comfortable with or choose a professional caregiver. Eventually Joe, may need more assistance than Mary can provide, and they may find they need to use that money to pay a professional caregiver or towards the fees in a private pay facility.

Depending on how Joe’s illness progresses over time, he may need care in a skilled care facility, so we will discuss how that would work with the trust next month. This is a great example that it is never too early to plan.

Veterans Aid and Attendance Pension

This year this article is following a hypothetical family through their lives to see what role estate planning had on their family. To review prior articles, go to SeamonLawOffices.com/Blog.

We have worked with the Smith family for years regarding long-term Medicaid benefits and estate planning, so recently they contacted us for assistance in helping to see if we could help their son, Keith, who had served in the military and had been unsuccessful in obtaining Veterans’ Disability Compensation that they felt he deserved.

Keith had been in the military for several years when he injured his knee. He had surgery to repair the knee, but it never actually healed properly so he walked with a limp. He never applied for disability compensation for that injury, but years later he began having issues with his hip. His orthopedic doctor determined that Keith’s hip was deteriorating due to the initial injury to his hip that caused him to limp. The doctor believed this was a direct result of the knee injury.

Initially, Kevin was hesitant to pursue his claim. Although he was active duty, he never felt he was in harm’s way so in his mind he did not feel entitled to that help. He knew a lot of fellow soldiers who experienced far greater losses than he did. Of course, he did deserve compensation for his injuries even though they were not combat related or as life altering as the other veterans he knew.

Veterans do not need to have an attorney to apply for disability compensation, but often turn to attorneys when they receive a denial for their claim. Not just any attorney can assist a veteran, they must be accredited by the VA. A VA accredited attorney must pass a test and then maintain their knowledge through continuing education to maintain their accreditation. Non-attorneys may also become accredited as VA accredited agents.

During our meeting, Keith mentioned a family friend who was on service-connected VA disability compensation due to developing type II diabetes after having been exposed to Agent Orange while serving in Vietnam. Recently, the friend incurred a foot injury that would not heal properly and it became infected. The physicians were unable to control the infection primarily due to the diabetes, sadly he eventually had to have his foot amputated. I explained that even though this new issue is not service-connected, it is proximately due to a service-connected disability which means he may be able to increase his disability rating significantly. Keith was excited to let his friend know!

Keith is divorced and does not have children, so he was not concerned about his estate plan, he did not feel that it was important for him to have one. Keith presumed that if anything ever happened to him that his parents or siblings would just be able to take care of things because they were his next of kin and he trusted them. He had completed a VA Advance Directive (VA Form 10-0137) for his healthcare decisions.

I took time to explain to Keith that even when a person believes that their affairs are very simple that as an adult, they should at least have a general durable power of attorney and a last will and testament. The power of attorney would appoint a trusted agent to manage their non-medical affairs should they ever lose capacity (even temporarily). The last will and testament will make things clear and simple for their family upon their death while avoiding paying a bond. In the end, Keith agreed, and we were able to assist him with his VA issues and his estate plan.

Estate Planning for VA Disability Compensation

This year this blog is following a hypothetical family through their lives to see what role estate planning had on their family. To review prior articles, go to SeamonLawOffices.com/Blog.

We have worked with the Smith family for years regarding long-term Medicaid benefits and estate planning, but recently Joe received some bad news from his doctor, he has been diagnosed with dementia. Joe and Barb are pretty shaken up, so they decided to bring their daughter, Sue, to their consultation for additional support. They are very distraught and the thought of having Sue along is comforting to them.

Joe is still doing well enough to pay the bills and most things that he has always taken care of, but he had a couple red flags recently that prompted him being tested. Joe’s mother had dementia, so he was knowledgeable and proactive. They are keeping his diagnosis private for now since they still need to deal with this reality before sharing it with extended family and friends.

Given Joe’s diagnosis of dementia, the couple thought they should review the decisions they made years ago, and they wanted to ensure that they had the most up-to-date documents possible. That was very forward-thinking on their part because a lot of clients are so consumed with their health issue, that they procrastinate on the legal issues. Both can be addressed at the same time.

The review was helpful because they realized they had included Joe’s brother as a potential fiduciary, but they had drifted apart quite a bit. They decided that they should replace him with their son-in-law. The decision they most regretted was that they had not purchased long-term care insurance when they were younger and healthier. They remembered we had discussed that specific trusts can help to legally protect assets, but at the time of that discussion, they were not that concerned.

We reviewed how an irrevocable trust can be utilized to legally protect specific assets from long-term care costs. A bonus to this type of trust for wartime veterans and their surviving spouses is that it can also be a valuable tool to help them qualify for Veterans pension benefits such as the Aid and Attendance pension. As a veteran, Joe was very interested in this option, but he had concerns about the tax implications of gifting to a trust. The farm his parents gifted him during their lifetime had a very low basis, so he was concerned about how that would affect him. The good news is that this type of trust can be used to secure assets during a person’s lifetime so they may qualify for long-term care Medicaid or the Veteran’s pension while having the desired tax outcome. Thus, the tax implications for the farm could be addressed and mitigated whether it was sold during Joe and Barb’s lifetimes or when inherited upon their deaths.

For this type of trust to be fully protective, it must be in place for five years for long-term care Medicaid protection and three years to qualify for the Veterans pension. Joe and Barb felt confident that they would not need care within that period, so they were very interested in setting up their irrevocable trust. Despite not having purchased the long-term care insurance prior to Joe’s illness, they were relieved to know there were still other options for their family!

Estate Planning for Asset Protection

This year this blog is following a hypothetical couple (“John” and “Sue”) through their lives to see what role estate planning had on their family. To review prior blogs, go to SeamonLawOffices.com/Blog.

Our story follows a couple I refer to as “John” and “Sue”. We initially worked together to establish their estate plan when they were young parents, and we updated their plan as their children grew up and they adopted their nephew who had autism. Now, they were back at the office with a new concern. As you might recall, their daughter Mary hit a rough patch in her twenties, but now she is in her thirties, in a good marriage, has a secure job, and is living well within her means. But given the past, they are still a little reluctant to fully trust Mary’s decision-making and they are worried there could be hard feelings between Mary and her younger brother, John Jr., when he realizes just how much his parents spent on Mary over the years.

Most parents realize that not every child is the same. Some children might need more financial support while others might need more emotional support, but this support of Mary was a little different. Mary’s prior behavior resulted in quite a bit of financial support to such a significant level that John and Sue felt they should even things up a bit. They considered gifting Junior money now, but they worry they could need that money for their retirement.

I explained that we could incorporate language in their estate plan addressing the prior financial help as an advancement that essentially would be taken out of Mary’s inheritance. They were uncertain as to what that meant, so we used the following as an example. If their estate was worth $450,000 when they passed away and they gave Mary $50,000 during their lifetime as an advance on her inheritance, then when the estate is divided up, Junior would inherit $250,000 while Mary would only inherit $200,000 due to her previous gift that would be treated as an advance on her inheritance.

They liked that idea, but now they were worried about whether Mary would be upset when she found out that she was not getting the same inheritance as her brother. That question is a little more difficult, but in my experience, it is best to be honest with Mary now, while they are living and can have that discussion rather than it be a surprise for Mary after they die. If Mary chooses to do so, she could always repay them the advance while they are living to make the inheritances even again. I reminded them that the money they gifted to Mary was part of their savings, so in addition to the $50,000, they also lost the potential interest on that money. They hadn’t thought about that, but then Sue recalled reading about the Rule of 72 where a 10% annual return would double your initial investment every seven years. They did not want to consider that in their advancement language, but it did give them more confidence in their decision and in a future conversation with Mary to explain the decision.

Fortunately, the couple was relatively young and healthy when they gifted to Mary, but for seniors, giving away assets or using assets to pay for another person’s bills, may have serious consequences when it comes to long-term care (ie. nursing home) and Medicaid qualification. Senior citizens should discuss gifting plans with their elder law attorney prior to making such gifts.

Estate Planning to Adjust for Lifetime Gifts to a Needy Heir

This year this article is following a hypothetical couple through their lives to see what role estate planning had on their family. To review prior articles, go to SeamonLawOffices.com/Blog.

Our story follows a couple I refer to as “John” and “Sue”. We initially worked together to establish their initial estate plan when they were young parents. They became the guardians of John’s 10-year-old nephew whose mother passed away. Unfortunately, Joey had some developmental deficits when he came to live with them, and they have recently been informed that Joey is on the autism spectrum. At our previous meeting, they knew this could be the outcome, but given Joey’s difficult childhood, they were still going through the process of determining how much his developmental delays were related to his upbringing and how much was due to a potential diagnosis.

Now that we know that Joey’s issues are likely serious enough to qualify him for means tested benefits such as certain Social Security and Medicaid benefits, updates need to be made to their estate plan. When a beneficiary of an estate or even a large gift is on means-tested benefits, it is very important to manage that inheritance or gift properly. John and Sue had researched supplemental needs trusts (“SNT”) and the West Virginia ABLE accounts but they were confused as to which option would be the best solution.

We began our discussion with the ABLE accounts, these are very useful for persons who the Social Security Administration qualify as disabled by the age of twenty-six years old. They are similar to a 529 Plan accounts. There are limitations to how much money can be deposited into an account on an annual basis but generally it is now $16,000 total per year from all combined sources. Most people are unaware that there is a Medicaid payback with these accounts when the owner passes away with funds in the account. But ABLE accounts are great tools to give Joey flexibility and autonomy in handling money himself.

By contrast a SNT is a tool that could receive the inheritance or gift without limitation and does not have a Medicaid payback. The disadvantage of the SNT is that you need an attorney to draft the trust and they can be a bit complicated to manage for a lay person so sometimes professional trustees are utilized.

John and Sue were very confused by all of this and were uncertain which tool would be best for Joey. The answer is both. The SNT can receive larger gifts or inheritances without adverse consequences to Joey’s benefits and if there are funds left in the trust upon Joey’s death, the remainder can be distributed to whoever John and Sue choose. The trust can also be used to add funds to his ABLE account from time to time providing Joey a flexible tool to use for spending money as he gets older.

They had concerns regarding who should manage Joey’s trust since public benefits can be very complicated, so we set up a meeting with the folks at the West Virginia PACE Trust Fund. PACE serves as a professional trustee for a pooled SNT and in the future, PACE will also serve as trustee of standalone SNTs. We decided it would be a good idea for them to meet with the folks at PACE while we worked on their estate plan, and while their financial planner set up the ABLE account. They were relieved that they could work on all three aspects simultaneously!

Estate Planning When a Loved One has a Disability

Our story follows a couple I refer to as “John” and “Sue”. They established their estate plan as young parents, then later they updated their plan to address concerns over their adult daughter’s poor decision-making. I was surprised to hear from them again so soon, but John had mentioned his sister recently passed due to a drug overdose, so I thought maybe he was trying to help the family tie up some loose ends. I was very surprised that they had been appointed guardians of his sister’s son.

John and Sue’s youngest child was in college, so going from being practically empty nesters to the guardians of a ten-year-old was quite a change, but they were determined to help Joey. They explained that Joey had some behavioral and developmental deficits that his physician believed might be overcome with his new healthy and supportive home environment.

John and Sue decided that they accepted Joey as their son in their hearts and wanted to know what changes needed to be made to their last will and testament to include him. At that point, they were considering adoption, but that was not a decision that they were going to make immediately. I explained that their current wills distribute their estate to their descendants equally and that would not include Joey if he was not a biological or adopted child, but that we could specifically include him if that was their wish.

This loving couple decided that they wanted to include Joey and treat him as if he were their own. They already knew from our previous conversations that they could control his inheritance until he was an adult and then even longer if he was not fiscally responsible or mature enough to manage his inheritance. We reviewed a variety of ways to do so. They were concerned that if Joey’s learning deficits were not overcome that he would not be successful in college, and they recalled that their estate plan currently provided for college but they wanted to make sure the educational provisions would also pay for a trade school. I reassured them that the provision for education was not limited to college.

Due to Joey’s mother’s addiction, they were very relieved to learn that we could include a provision giving Joey’s trustee permission to require a drug test before an outright distribution to him as well as requiring Joey to be a productive member of society before benefiting from the trust as an adult. They didn’t want Joey to be what they referred to as a ‘trust baby’.

Before they left, I explained that their wills could have stand by language in case Joey ended up having some deficits that could lead to him needing to apply for means tested benefits such as Supplemental Security Income (SSI) or Medicaid. Prior to Joey, their family had relatively few health issues, so they were not familiar with these types of benefits. We discussed that process a bit, but they were confident that with their support Joey would mature into an independent adult. They decided that they would rely on those standby provisions for now, but they would keep our office updated on Joey’s progress. We agreed that our office would set a reminder for one year from their updates to check in on them.

Estate Planning for Special Family Situations

This year this blog is following a hypothetical couple through their lives to see what role estate planning had on their family. To review prior articles, go to SeamonLawOffices.com/Blog.

Our story follows a couple I refer to as “John” and “Sue”. They established their estate plan as young parents, then later they updated their plan to address concerns over their adult daughter’s poor decision-making. During that meeting we discussed that a nice advantage revocable living trusts have over last will and testaments is that assets in a trust do not need to be probated. They really liked that benefit of a trust, but at the time avoiding probate was not one of their major concerns.

After our meeting, Sue realized that since her parents had recently purchased a second home in Florida, her parents’ future estate administrations were likely to be more complicated. Sue recalled that each state has its own probate process and so her parents would have a probate for their West Virginia property and one for their Florida property. Sue encouraged her parents to consider whether a living trust would be a good option for them.

As a result of Sue’s prodding, Ben and Ida contacted our office to learn more about living trusts. Their goal was to make things easy for each other and then for Sue once they both passed away, but they were concerned about maintaining complete control over their assets. They were very happy to learn that with a living trust they could control all decisions regarding the trust and trust assets while they were living and had decision-making capacity, but that control could naturally transition to Sue as they either lost capacity or passed away. They decided a living trust was an efficient solution to avoid probate completely while maintaining complete control over the trust and the trust assets.

They chose Sue to serve as their successor trustee when neither of them was willing nor able to serve any longer, but they were curious about that process as well. They wanted to understand how Sue would know what to do and how to make sure she treated the other beneficiaries fairly. I explained that the trustee has a fiduciary duty to follow the terms of the trust and that the trustee can use the trust funds to pay professionals to assist her. I also explained that if they have concerns about Sue, they could choose a professional trustee instead of Sue. They decided they were confident Sue would do a great job, but just in case it was too much for her at the time, they would name their bank’s trust department as an alternate to Sue, meaning if Sue was unable or unwilling to serve upon their death, then the bank’s trust department would serve as trustee.

Ben and Ida were curious how the assets would be transferred (ie. funded) into the trust. They did not want to have to open new bank accounts or go to a lot of trouble. They were relieved that in most cases it is very easy to retitle existing accounts to the trust although they would need a new deed to transfer their real properties into their trust.

Fortunately, these discussions were a lot easier for Ben and Ida because they already had a great estate plan in place, so adding a living trust was a very easy transition for them.

Estate Planning to Avoid Probate

This year this blog is following a hypothetical couple through their lives to see what role estate planning had on their family. To review prior blogs on this story, go to SeamonLawOffices.com/Blog. This hypothetical story is based on having worked with over 1500 families over the past thirteen years, but it is not based on a specific client.

Last month we discussed a young couple I worked with named John and Sue as they established their initial estate plan as the parents of young children. Years later, the couple came back to the office with some concerns over their daughter, Mary. Mary had dropped out of college and was not making good decisions.

We spent some time catching up on what else was going on in their lives at the time. John, Sue and their children were all pretty healthy. John and Sue were hoping to pay off their home soon and had built up quite a bit of money in their qualified accounts (IRAs, 401ks, etc.). Her parents were now in their late 70s, but her grandmother had passed on.

As we discussed their current concerns, they were not interested in a living trust to avoid probate when they passed away, they were just really concerned that if something unexpected happened to them, that Mary would not manage her inheritance wisely and even more unsettling for them was that they were worried Mary might be taken advantage of; therefore, protecting Mary and her future inheritance was their primary goal.

I reminded them that they had some protection for Mary because she would inherit her share of their estate in trust with Sue’s brother serving as trustee. Their current estate plan would give Mary her inheritance through a trust and the trustee would have the ability to use the assets to help Mary, but she had the right to withdraw her inheritance one-third at a time at ages 25, 30 and 35.

Sadly, Mary was already 25 years old, and they did not think her decision-making would improve in the foreseeable future. I provided them a variety of options ranging from a strict trust that never would provide Mary a right to withdraw any sum, all distributions would be at the trustee’s discretion, or to just provide Mary the trust income, or to adjust the ages or length of time after they die before Mary would have that right to withdraw the assets. All of these options would provide Mary additional time to mature.

This was a difficult conversation for John and Sue, they admitted they had put our meeting off for quite some time. I explained that I was glad they were addressing the issue now while they were both able to participate on their solution, as difficult as it was to work through, it would be even more difficult for the survivor of the two of them to do so. They explained that they worked hard for what they have so it would be a shame for it to be wasted, and even worse if the inheritance ended up causing harm to Mary.

In the end, they felt better knowing they faced this decision together, they agreed that if Mary consistently maintained employment and managed her finances so that she was no longer asking for assistance that they would revisit their decisions. But for now, they felt at peace with their decision to restrict Mary’s access to her future inheritance.

They noted as they left that they were so relieved that they had planned as a younger couple so that these decisions to adjust their plan felt less stressful.

Estate Planning for a "Problem” Child

This year this blog will follow a hypothetical couple through their lives to see what role estate planning had on their family. This hypothetical story is based on having worked with over 1500 families over the past thirteen years, but it is not based on a specific client.

I met John and Sue after assisting her parents and grandmother with their estate plans. Sue’s parents were very active, but they were approaching retirement. We had helped Sue’s grandmother qualify for nursing home Medicaid while she recuperated from a bad fall. It was pretty clear to me that neither John nor Sue came willingly, Sue’s parents were adamant that the young couple needed an estate plan and the couple eventually gave in when Sue’s parents gave them a monetary Christmas gift which was earmarked for their estate plan.

John and Sue were busy parents of two young children at the time. They seemed a bit distracted when we first started talking, but once we began discussing what could happen to the kids if neither of them could care for them for a period of time, they suddenly became very focused on our conversation. They had not realized that guardians for minor children should be named in two different documents because the document that controls how our decisions will be made during an incapacity (a durable power of attorney) is different than the document that controls these decisions after death (a last will and testament).

The couple explained that they would want Sue’s parents to take care of their children. John did not have a good childhood, so it was very important to them that John’s family never obtained custody of their children. They thought Sue’s brother would be the best person to manage the children’s inheritance because he was very good with money.

We then discussed how they would want their children’s inheritance to be managed and distributed for their benefit. They wanted the children to have what they needed, including a good education, but they were concerned about them being a financial burden to her parents who needed to save for retirement.

After we discussed a variety of scenarios, they felt most comfortable with the decision that should they both die, their estate would be divided evenly into a trust for each of their two children. Sue’s brother would manage the trusts for each child’s health, education, maintenance, and support.

Further, they wanted the children to eventually have access to their trusts, but with some oversight by Sue’s brother (the trustee) while they were young adults. They decided each child would have the right to withdraw one-third of their trust at each of the ages of 25, 30, and 35 years old. The children could even choose to just let the money stay in the trusts if they did not need the distribution as they reached each of those ages.

Although they initially thought estate planning would be depressing and a waste of time given their good health, John and Sue realized that some of these concerns had been in the back of their minds for quite some time, so they were very relieved. As they left the office, they joked their children would be adults before we knew it and then John and Sue would return to our office to remove the guardian provisions and to reevaluate how to distribute the inheritance.

This story is a similar theme we see at our office - it is never too early to plan!

Estate Planning to Protect Your Family

This is the time of year we frantically shop for gifts for our loved ones – another toy, clothing, or jewelry. Holiday shopping can be overwhelming, but maybe this year, you should consider a gift that can grow into something more meaningful.

Each year, we are permitted to give a certain amount free of any federal gift taxes to any person. This is known as the annual gift tax exclusion which is $15,000 this year. If you would like to make a financial gift to a loved one, you should discuss your options with your various trusted professionals such as your estate planning attorney, accountant, and financial advisor.

Gifts such as cash and savings bonds are relatively simple to gift, but the donor retains no control over the asset and the opportunity for growth is relatively low. Cash is usually quickly spent or put in a piggy bank or savings account at little to no interest rate. Bonds also have a low rate of return. The 2021 annual fixed rate for savings bonds is just one-tenth of a percent.

Custodial accounts such as UTMA accounts can be a simple way to gift. The transferor makes an irrevocable gift to a beneficiary and appoints a custodian to control the gift until the minor reaches a specified age (which may not extend past 21 years old in West Virginia). The advantage of these accounts is that the custodian can direct the money for any purpose for the benefit of the beneficiary, but the account is the beneficiary’s for asset and income purposes so it is subject to Kiddie Tax rules and may affect student aid. To avoid the negative impact on financial aid, the account may be liquidated, and the proceeds transferred to a custodial 529 Plan account.

529 Plans provide potential tax-free growth for certain educational expenses. The donor remains the owner, retains investment control over the account, and may change the beneficiary to a relative of the beneficiary. The advantage of these accounts is that they do not impact the beneficiary’s federal financial aid, government grants, or scholarships. But there may be a penalty if the funds are used for non-educational expenses, and they are an asset of the donor, meaning the account is not exempt if the donor needs to apply for long-term Medicaid.

Finally, trusts can be a great option. The 2503(c) Minor’s Trust enables the grantor to shift estate tax liability and income to the younger family members while still controlling the assets. There are special considerations as to whether the grantor should serve as the trustee or if another person or entity should serve as the trustee. The trustee has a broad discretion to manage the principal and income for the benefit of the minor beneficiary to the age of 21 years, but the trust also provides the opportunity for the funds to remain in the trust beyond that age. The disadvantage of the trust is that the grantor will incur attorney fees to have the trust created and if a professional trustee is used there could be trustee fees. Many people choose family members to serve as trustee to avoid the fees.

This holiday season, consider what gifts may be meaningful for your loved ones today and into the future and work with your trusted professionals to achieve your goals. It is never too early to plan!

Long-lasting Gifts

Did you know that in 2019, Americans gave almost $450 billion to charities? The average high net worth donors gave close to $30,000 while the general population households gave about $2,500. For more details on these statistics, see NPtrust.org.

National Philanthropy Day is a day set aside each year to recognize the great contributions philanthropy makes to our society and to recognize those persons, businesses and organizations that are active in the philanthropic community. This year we celebrated National Philanthropy Day on November 15th.Although, the word philanthropy has connotations of wealth, even those of more modest means can make a difference by donating assets either as a gift during their lifetime or as a bequest upon their death.

The reasons we give vary from our interests in a specific cause to a desire for tax relief. How and when to gift is an issue to discuss with your estate planner and your accountant. Generally, we speak of a gift as something we give while we are living as opposed to a bequest which is a gift from your estate after you have passed away. Specifically, a charitable bequest is a written instruction in your will or trust that directs a gift to be made upon your death to a charity.

You have a variety of options of how to accomplish your bequest depending on your personal goals. Sometimes gifting a specific property or account works well, but other times a percentage of your estate or a specific amount are more appropriate. For example, I recently worked with a man who wanted to give $10,000 to each of his nieces and nephews regardless of the value of his estate, and in that case stating the specific amount was more effective than a percentage of the estate. 

On the other hand, I once worked with a woman who firmly believed in tithing 10% of her entire estate to her church. At the time she had a home and about $100,000 so she wanted her will to give her church $10,000 with the remainder to her children. But her home was worth $150,000, so her estate was valued at $250,000 meaning her tithe would be $25,000 not $10,000. If her will specifically bequeathed $25,000 to her church based on these current values, but her estate later changed in value due to investments or medical expenses, that amount may have been incorrect as well. Imagine if she spent most of her savings on health care, her church would have potentially inherited much more than her children, if $25,000 waws much greater than 10% of the value of the remaining estate! In her case, we decided to direct that 10% of her estate would be bequeathed to her church to provide the flexibility she desired.

In some cases, a specific bequest to a specific beneficiary is the best solution. I once worked with a woman who had a beautiful collection of West Virginia artifacts, she did not care what the value of her collection was, she wanted her entire collection to go to a specific museum. She feared that her family may not appreciate the collection, or they might sell it off piecemeal.

Regardless of your charitable goals, there is a reasonable estate planning solution to accomplish those goals. Work with your estate planning attorney to determine the best way to achieve your goals. Remember, it is never too early to plan!

Giving Back

Recently I met with a family who was grieving their father they had lost after a long illness. Their father wanted to keep things simple and private, so he chose to write his own last will and testament without the aid of an attorney. His decision resulted in a mess for his family to deal with after his death because although his will was valid and was entered into probate, it did not properly specify some of his decisions.

Sadly, this family now had additional and unexpected emotions of frustration and guilt to deal with in addition to their expected grief. They were frustrated that their father left such a mess for them especially knowing that it could potentially heighten the risk of disagreement among the children. And they felt guilty for being frustrated with their father. Unfortunately, I did not have a satisfactory answer for the family as I attempted to help them. This scenario plays out quite often.

When a last will and testament is lacking, the testator (the deceased person the will belonged to) usually did not know they were leaving a mess behind, rather the issues surface after their death when their executor is trying to enter the will into probate and settle the estate. When there is an issue with the will, the state’s default statutes may be required to resolve issues, or the will may be held completely invalid, or result in litigation. Each of these outcomes are likely to cause a family rift, be much more expensive to resolve, and probably will not be the outcome the decedent intended.

I once had a family contact me whose mother wrote her own last will and testament which clearly indicated her life insurance and retirement accounts would be split evenly among her four children, but the actual beneficiary designation on those assets only named her youngest daughter. That daughter was the child who helped her mother with caregiving, errands, home maintenance, etc. so she felt entitled to that money. More importantly, that money was hers by operation of law because a beneficiary designation basically overrides the will. In retrospect, we do not know what the mother wanted, she may have assumed her daughter would share the proceeds with the other children or she may have wanted to reward her daughter for her service and dedication.

Writing a good last will and testament is not dependent on your intelligence or your proficiency with internet searches for estate planning advice. Attorneys are trained to assist their clients to achieve their goals and to spot issues that need special consideration. In today’s world where things are more complicated than ever, estate planning attorneys have furthered their training and knowledge for the benefit of their clients on those specific estate issues. If that mother had worked with an estate planning attorney, the attorney would likely have brought that conflict to her attention to be resolved prior to her death.

To make sure you do not leave a mess behind when it comes to your estate, take an actionable step toward your peace of mind by contacting an attorney. If it is difficult to find the time to call, many offices will let you submit a request to schedule through their website or to schedule a call to get the process started. Remember, it is never too early to plan!

When Your Last Will and Testament Does Not Control Your Estate

Alzheimer’s dementia is a dreaded diagnosis. As an estate planning attorney, I hear from those afflicted with Alzheimer’s or their loved ones almost daily as they desperately search for answers at various stages of the illness.

As an effort to raise awareness about this disease and to challenge the stigma that surrounds dementia, World Alzheimer’s Day is observed on September 21st, and locally, we have the 

’s on Sunday, October 17th at the Mountaineer Mall – all are welcome!

The statistics regarding Alzheimer’s dementia are overwhelming. On a national level we have 6.2 million Americans over the age of 65 years who have Alzheimer’s dementia, which is 1 in 9 persons in that age group. It is estimated that we have 39,000 West Virginians with Alzheimer’s dementia. In addition to the impact on those who have the disease, the impact on the caregivers and our economy is staggering. In West Virginia, it is estimated that in 2020 85,000 caregivers provided a total of 145,000,000 hours of unpaid care which is valued at $1,971,000, with two-thirds of the unpaid caregivers being women.

Dementia is a brain condition that affects the parts of the brain that control memory and language, but it is not a specific disease, it is an overall term describing a group of symptoms. Alzheimer’s disease is the most common form of dementia, it destroys brain cells and nerves, disrupting the transmitters that carry messages in the brain, particularly those responsible for storing memories.

Most people who develop Alzheimer’s dementia are over the age of 65 years. However, the risk of developing Alzheimer’s dementia should not be considered a normal part of aging. Although the risk of developing the disease increases with age, younger people can develop this degenerative disease as well.

The potential of a dementia diagnosis along with the other uncertainties of our senior years can be unsettling. Therefore, we should take control by preparing for our future. All adults should have an estate plan and it should be updated during life’s transitions such as changes in family status, certain medical diagnosis, or aging issues. If you are of the age where you are contemplating when you should retire, or draw on your social security income, or are applying for Medicare, your estate plan should also include elder law provisions.

Elder law provisions are included in estate plans to address issues such as long-term care planning, public benefits, end-of-life issues, veterans’ benefits, and the legal rights of the elderly. If you already have estate planning documents, you should not presume they have the appropriate provisions in them. Usually, these issues would be addressed specifically with your elder law attorney in discussions regarding the design of your documents and the provisions should have been explained to you prior to you executing those documents.

The cost of procrastination can be quite expensive because even if you are currently healthy or consider yourself too young to have these serious health issues, you do not have to be elderly to experience a serious injury from an accident, a stroke, or a new diagnosis of a long-term illness. When you have made your important decisions in advance, it is easier for you, as well as your trusted helpers. While these conversations may be uncomfortable, they are well worth the peace of mind in the event of a crisis. Remember, it is never too early to plan!

World Alzheimer’s Month

Each year, August 11 is celebrated as National Son and Daughter Day. It is the perfect day to celebrate our love for our children. The earliest record of this unofficial holiday goes back to 1936 when J. Henry Dusenberry first had the idea when a boy asked him why there was a day to celebrate mothers and fathers but not children. The focus of this holiday is to think about how much you love and appreciate your children of all ages. At one point at least 22 states celebrated this day. In 1972, a Florida Congressman lobbied to make it an official national holiday, but it still remains an unofficial holiday.

Most parents of younger children feel that nearly every day is focused on their children, but as we get older the tables begin to turn. As an estate and elder law attorney, I see amazing children who sacrifice quite a bit to help their parents as they age. I am often touched at how much love and care so many adult children provide to their parents sometimes at the sacrifice of their own children or grandchildren. People often express that we do not take care of our elderly anymore and while there are many examples of that, I’ve been blessed to meet some pretty amazing ‘kids’ over the years.

I have many stories, but a few come to mind. For example, I once worked with an elderly man who was a little difficult when I met him, but he had four children who all came into the office with him. The children were so patient with him, making sure that his wishes were fulfilled, they were trying to figure out how to keep him safe at home for as long as possible. I worked with them for quite some time before I learned that Dad was actually not a great Dad to those kids, but they still worked as a team and did everything they could for him. I was amazed that even though their father wasn’t there for them, they were there for their father.

Another family had a few adult children that lived in the area, there was so much love in this family because they had wonderful parents. Unfortunately, both parents were in and out of the nursing home. This roller coaster of decisions has huge health and financial consequences often causes friction among the children, but not these kids. They visited their parents almost every day, regardless of whether they were at home or in the nursing home. They did everything they could to make sure their parents knew they were loved and respected, they also kept their sense of humor which kept their parents’ spirits up.

While those children were amazing because they all worked together, often it is only one child trying to take care of everything on their own. Although its nice that they don’t have anybody to fight with, they also do not have anybody helping them. One ‘kid’ comes to mind who was actually a senior citizen himself, but he not only worked closely with us with one parent, but then a second parent as they went through various health issues. Never once did he complain or get frustrated with the situation.

If you are lucky enough to have awesome parents or awesome children, make sure you take a moment to let them know how much you love and appreciate them. Don’t assume they just know how you feel, it’s pretty nice to hear it too!

Celebrating Our Sons and Daughters

The internet is a wonderful tool to learn about a myriad of topics, we can even watch YouTube videos that demonstrate exactly how to accomplish a variety of things. We ask Google, Alexa and Siri for television schedules, the weather report, and trivia questions. It used to be the younger generation who reached for their smartphone to look up the answers to questions that came up during conversation, but nowadays, it is folks of all ages.

In particular, I have noticed that a common question on Facebook groups is for an estate planning attorney in the area and while some attorneys are named, there is usually at least one suggestion to use an online option. The internet is a great place to get educated on estate and elder law issues, but I do not recommend relying on that technology for our estate planning needs.

A good estate planning attorney asks about their client’s goals as well as the client’s family, concerns, assets and income. Usually, the attorney begins to gather this information as part of the intake process prior to the first consultation. As the attorney reviews this information, they usually see issues, perhaps red flags that they should follow up on. This valuable information helps to facilitate the meeting so that they can accomplish as much as possible in their time with the client. I often see that people answer the questions without understanding the legal significance of their answers. For example, the average person usually does not understand the importance of whether any of their heirs might end up on an asset tested benefit or if they do what their options are to provide for that person without disqualifying them from their benefits. Further, most people do not understand how a blended family can impact the estate, how step children and step grandchildren will be addressed, or the pros and cons of gifting property.

During a consultation, the above issues and so many others are discussed in detail. Most of the time, the client expresses how the information provided by the attorney helped them to not only make a better decision but also prevented them from making a serious mistake with their estate plan. Of course, those who do not take advantage of that legal information usually do not realize it because the complications occur when the documents are needed, meaning the person is either incapacitated or deceased, it is their family who must deal with the consequences.

For example, I often see clients who purposefully do not mention estranged children since they do not want to include them as heirs, but that opens the door for that child to contest their parent’s will. Or I see parents give their homes or some portion of ownership rights to their child to avoid probate, but they do not realize there are other options to accomplish that goal that are better for maintaining control and avoiding taxes. Or the parent who thinks they are doing their child a favor to add their name to all of their assets, but then has a car accident that exposes their child (as the co-owner) to the parent’s liability.

Sometimes there are very simple solutions to what feels like a monumental issue. The best way to make sure you resolve your concerns without unknowingly causing larger issues is to work with an estate planning attorney who has considered these issues hundreds, if not thousands of times.

 Why You Need an Attorney	

Traditionally, June has been the most popular month of the year to marry and there are many reasons why. The Roman goddess of marriage, Juno, is said to be a protector of women, in particular in marriage and childbearing so for those who marry in June it was said they would be blessed with prosperity and happiness. That sounds pretty inspiring as opposed to another reason that came about during medieval times. At that time people only bathed about once a year and that was usually in the spring, so it was common to marry while the bride still smelled relatively fresh, but just to be safe, she carried a bouquet of fresh flowers to mask any unpleasant odors.

Today, June is still a popular month for weddings, but as we know while the wedding is a momentous occasion, the wedding is just a celebration of the main event which is the actual marriage. In estate planning, getting married changes things quite a bit in the eyes of the law so we should update our estate planning documents to reflect that change in status.

Most states, including West Virginia, have laws that help cover the gaps for those who do not update their estate planning documents when they marry. The general presumption is that we would want to include our spouse as an heir of our estate. But, the law also considers how we would wish to provide for our children. If all of the children are joint biological or adopted children of the spouses, West Virginia law presumes, the surviving spouse will take care of the children and she will be the sole beneficiary of the estate.

It gets a little more complicated if either spouse has children outside of the marriage, even a well-written law cannot anticipate our personal family dynamics. Accordingly, for achievement of their goals, many people formally document their intentions in their estate planning documents. Generally, if there are children outside of the marriage, the law will just reduce the amount that goes to the surviving spouse to make sure that the decedent’s children are provided for.

In some cases, a decedent may have purposefully or inadvertently disinherited his spouse. If there was a prenuptial agreement that stipulated this outcome, then that is usually honored. But otherwise, the law protects that survivor by providing a process for them to “elect against” the deceased spouse’s estate. The amount that they are entitled to varies based on how long they have been married but the maximum is one-half of the estate.

While a person may be fine with those potential outcomes, it does not take into consideration whether the spouse or child should inherit outright or have their inheritance controlled by a trust. Sometimes heirs are not healthy, are spendthrifts or may not have reached adulthood when they inherit. All of these situations cause complications. Unfortunately, if the children are minors, they are entitled to their entire share once they attain the age of eighteen years. My clients generally prefer the children to not have full access at such a young age.

Ideally, every adult should have a valid will that clearly lays out their decisions as to who their heirs are and when they will inherit their share of the estate. Most of us have worked very hard for whatever we have so it seems foolish to leave inheritances disbursed per default state laws or based on a will that was not professionally drafted

How Your Marital Status Affects Your Estate Plan

Honoring the men and women who died while serving in the U.S. military dates back to shortly after the Civil War. During this time, various towns and cities paid spring tributes to fallen soldiers. In 1968, General John A. Logan called for Decoration Day which would be a nationwide day of remembrance for those who had fallen during the Civil War. Decoration Day evolved to include honoring those who had served during all of our wars. In 1971, it became an official federal holiday and was renamed Memorial Day. Our Memorial Day traditions vary from visiting the resting place of our heroes, parades, picnics and a National Moment of Remembrance at 3:00pm local time.

Many of our veterans now struggle from either service-connected disabilities or nonservice connected disabilities. Although most of them are aware that they could be entitled to compensation for service-connected disabilities, many are not aware of the nonservice connected pension they (or their dependents and surviving spouses) may qualify for. This basic pension is called the Improved Pension, with additional benefits for those who are homebound or who qualify for aid and attendance benefits.

The Improved Pension rates vary depending on a variety of factors, but generally a veteran without any dependents may qualify for over $18,000 per year. If that same veteran also qualified for the aid and attendance benefit, they may qualify for over $23,000 per year. While the amounts for an un-remarried surviving spouse are less, they are still significant. For the basic pension an un-remarried surviving spouse may qualify for over $9,000 per year and with the Aid and Attendance Benefit, they may qualify for over $14,000 per year.

Sometimes veterans and their spouses are hesitant to apply for this pension because they “are not in the VA system” or they have previously been denied other benefits, but many veterans who have never qualified for other VA benefits qualify for this benefit. Although the qualifications for this pension can be confusing, generally a veteran should qualify if they served active duty during wartime, did not have a dishonorable discharge, is either permanently and totally disabled or is at least 65 years old, and meets certain financial requirements. For a surviving spouse to qualify, that spouse must have been married to the wartime veteran at the time of the veteran’s death and not have remarried.

For those applicants who plan ahead, the financial requirements may be an easy obstacle to surmount. This type of planning is typically done with the assistance of your estate or elder law attorney. Fortunately, this type of planning dovetails with the typical planning a person should consider as they age to protect assets from the high costs of long-term care. For example, all adults, especially those having health issues, should have updated estate planning documents including a financial power of attorney. Powers of attorney are valuable tools when a person has mental or physical issues and needs assistance with paying bills and managing assets. For some, a trust may be used to move assets out of the applicant’s estate in preparation for a future VA or Medicaid application.

An eligible beneficiary may apply by calling the VA, completing VA Form 21-526 (which may be found on the VA website), through their local veterans’ organization, or by working with an accredited VA attorney.

This Memorial Day, thank the veterans in your life and make sure they are aware of this valuable benefit, it may provide the additional income to allow that veteran to pay for additional care in their home or applied towards the cost of a facility.

We Remember

We can always find something to worry about, but a recent survey by Bay Alarm Medical indicates that eight in ten Americans are very concerned that they may run out of money as they age. In fact, more Americans are worried that they will face financial instability than they are of their spouse’s death or even their own death. Fortunately, the fear of financial instability is a fear we can mitigate with knowledge and action.

Financial literacy has been an issue for quite some time, which is why the Senate passed a 2004 resolution making the month of April National Financial Literacy Month. The Senate’s goal was to help raise public awareness regarding financial education and the consequences of not understanding personal finances.

Although awareness of the need for financial literacy is helpful, the knowledge part is still challenging. If you are uncertain of your financial literacy, you are not alone. Many Americans do not yet have the ability to understand and effectively use various financial skills such as personal financial management, budgeting, paying bills, setting financial goals and investing. To test financial literacy the National Financial Educators Council (NFEC) created a 30-question test called the National Financial Capability Test. NFEC reports that of the 40,000 people who have taken this test, the average score was less than 68%, with 42% actually failing the test.

You may wonder what financial literacy has to do with estate planning, my answer would be ‘everything’. My clients typically want to know how to achieve two goals. First, how to protect their assets from the high cost of long-term care. Second, how to pass their estate to their heirs without incurring unnecessary expenses or hassles. My advice depends on what assets they have, as well as their income sources such as social security, pensions, and investments.

Most people would have trouble answering questions regarding their assets and income at the spur of the moment, but I have found many of my clients often have difficulty answering these questions even when they can prepare in advance. If you have assets that you do not understand, there are various steps you can take such as reading books or internet articles, or meeting with your banker, insurance agent and financial advisor to ask your questions.

While you are talking to your trusted advisors, take the time to learn how your assets are titled, what type of investment earnings are being produced, whether you have designated a beneficiary, or if there may be penalties for removing funds from the investment. Do not forget to ask some ‘what if’ questions such as “what if I get sick and I need to withdraw either a portion of or the entire account all at once?” Or “what if I pass away, how do my beneficiaries get this account?”

Once you collect this information about your assets, make a list including the information. Keep the list with your estate planning documents and review it periodically to make sure it is up-to-date. Someday, this information will be very helpful to your executor of your estate.

If you find this to be an overwhelming task, set a goal to address a different asset each week or enlist the help of a trusted family member or friend. Then contact your estate planning attorney to incorporate this information into your estate and elder plan!

Understanding Your Finances 

Apparently, the majority of Americans’ rely on good luck for their estate plans because according to the American Bar Association, 55% of Americans die without a will. When a person dies without a legal will, it is referred to as an intestate estate. With an intestate estate, instead of following your wishes, your estate is administered pursuant to the default laws in your state. Of course, in estate planning, as with most things, proper preparation has more to do with your outcome than luck does.

When a person dies their estate usually goes through probate which is the legal process to ensure their outstanding debts and taxes are paid before their assets are distributed to their beneficiaries. If the decedent did not have a valid will or their will inadequately addresses the issues at hand, then the state’s laws of intestacy fill in the blanks for the probate process.

There are many reasons a person may not have a will, but procrastination or lack of knowledge is usually at the heart of these reasons. According to AARP, 47% of Americans polled who did not have an estate plan in the place cited just not “getting around to it” as their reason for not establishing one. But others simply choose not to execute a will because they trust their family to know and follow through on their wishes after they are deceased. This is a costly mistake because an intestate estate is controlled by state laws, not the goodwill of the potential beneficiaries.

The first issue with intestacy is determining who the administrator of the estate will be. In West Virginia who serves as administrator of the estate is determined by who applies first as well as an order of priority established by state law. Unfortunately, whoever ends up being your administrator will need to pay a non-refundable bond based off the value of your entire estate. The next surprise to the decedent’s family is that verbal promises of bequeathing specific assets to specific individuals is not easily fulfilled. The intestate laws look at degrees of relationship and treat those beneficiaries of an equal relationship equally regardless of the personal relationship or verbal promises. For example, all of the decedent’s children are treated the same even if a child has been estranged for decades. For a beneficiary who is a minor or under a disability, there may also be additional costs and time involved because the court will likely need to oversee the management of that beneficiary’s inheritance.

While 46% of families are interested in learning more about establishing an estate plan, only one in ten have sought advice from a knowledgeable estate planning professional according to a 2016 Wealth Advisor report. Achieving your estate planning goals has nothing to do with luck. Consulting with an estate planning attorney is an ideal way to gain peace of mind regarding planning. In our experience, our clients and their families are much more confident and at ease, once they have completed their estate plan knowing they have a solid plan in place that meets their needs and goals.

Change your ‘luck’ by making your last will and testament a priority, then enjoy life and focus on more pleasurable interests. Don’t delay, get in touch with a trusted estate planning professional today!

When the "Luck of the Irish" Just Isn't Good Enough

This time last year, we were celebrating the beginning of 2020 and likely pondering our resolutions for the New Year. There was some talk of a new virus developing throughout the world, but overall life continued as normal. By the time March rolled around, our world looked very different than just a few months before. A new year full of hope and goals were quickly replaced with anxiety and uncertainty. As we reflect on this past year full of difficulties, we are reminded of what we did learn this year, and how we can lay the foundation for a fresh start in 2021.

It is easy to take for granted simple tasks like going to the store or the office, or even traveling to visit loved ones. While we have been able to adapt to working from home, online ordering, and video calls to keep in touch, it is difficult to truly replace face-to-face time with the ones we love. Given the nature of our work, many of our clients or their loved ones reside in nursing facilities. The toll the pandemic has taken on the elderly population is especially heartbreaking to us. We know that we will not take for granted the ability to hug our aging parents when this is all over.

As estate planners, we are grateful to provide financial peace of mind for their loved ones’ care through asset protection and crisis planning when everything else has turned upside down. While pre-planning is ideal, crisis planning allows us to still preserve 40-60% of assets for a single person and most to all of a married person’s assets in the event of an unexpected admittance to a long-term care facility. It is always a difficult decision when someone you love needs cares in a facility but even more so during this time.

If you are healthy now, it is a good idea to discuss planning tools like an irrevocable Medicaid asset protection trust with your estate planning attorney. Having this trust in place and funded 5 years in advance lays the foundation for when you do need care and will streamline the process for your family in what will inevitably be a stressful time. If 2020 has taught us nothing else, it certainly taught us to be prepared for everything from empty shelves at the store to an unexpected health crisis.

The motto in our office is “it’s never too early to plan.” Those who are younger and healthy may now feel more motivated to create an estate plan than ever before. It is important to have both medical and financial powers of attorney in place to state who can manage your decisions for you if you become unable. The process to obtain guardianship and conservatorship through the courts without these documents can be a lengthy process, especially with COVID-related delays that have affected many aspects of life in recent months.

As we look to 2021, I think we all know there are still challenges ahead. Despite knowing did not end at the stroke of midnight on January 1st, so many of us crave the fresh start that a new year brings. Our resolutions may look different than last year as we reflect on the lessons of the past year, but whatever your goals are for this year we encourage you to add estate planning to your list. Whether it’s time to review an existing plan that may be outdated or you just haven’t gotten around to it, the final lesson I know we have all learned from 2020 is that our time is limited and we want to make the most of it. What better way to do that than providing peace of mind for you and your loved ones? To all those who have had a tough year either financially or because of illness, our hearts go out to you from Seamon Law and we wish you a resilient and happy 2021.

A Fresh Start

This year it seems that most people would just like to have some normalcy with a side dish of peace of mind for the holidays. While normalcy appears to be around the corner, it still is not something we can directly control, but achieving peace of mind just might be something we have some control over! The holidays are just around the corner and it seems as though most people just want the year to be over. 2020, the year of new social norms, new worries, loneliness, and the unknown.

A relatively easy way to achieve peace of mind is to create or update your estate plan, yet there is a disconnect between most Americans' concerns and their actions. According to a recent WealthCounsel study, 71% of Americans say having a well-thought-out estate plan would help them feel like a good spouse or parent. Yet, just as many admit they do not have one despite the fact that almost the same amount (67%) is actually concerned about their families’ long-term financial well-being. An added bonus of having an estate plan in place for yourself is that it helps you to think through and resolve these concerns while also reducing the likelihood of drawn-out processes and cumbersome expenses associated with family tensions.


So, what holds us back? The same WealthCounsel study indicates that 25% say they haven’t discussed creating an estate plan because they don’t like to think or talk about their own deaths. Of course, it is unpleasant to talk about your own death, and unfortunately, in light of the circumstances over the past year, it has become even more real for some people to reckon with those fears. The fact is, we will all pass away at some point whether or not we have prepared our estate plan. It is better to get the uncomfortable discussion out of the way now so that we can have our affairs in order to take one thing off our loved ones’ plates in stressful times during illness or after death. These decisions and issues do not get any easier when we are in the midst of a crisis.

Although the holidays are looking a little different this year amidst the global pandemic, it is still a time to come together even if it may be virtual or at the very least, modified. We’re not strangers to difficult conversations with all the events of 2020, so our estate plan is a topic of conversation we should consider having with our loved ones as we safely gather in person or virtually.

Let’s start 2021 with a new attitude, as we move forward towards both some normalcy and some peace of mind as your gift for you and your loved ones! Although an estate plan might be an unexpected gift to give this holiday season, it might be the most important one. We encourage you to talk to your family about your concerns and goals this holiday season. It’s never too early to plan!

What Do You Want for Christmas?

As we enter the final stretch of 2020, the word “prepared” comes to mind. I think that many of us were not prepared for what this year has brought so far! We saw it in empty shelves and stocking pantries and unexpected twists and turns in the news throughout the year. As estate planners, preparedness is not a new concept to us. In fact, it is at the heart of what we do!

Think back to times you have prepared for something. You likely prepared for a test by studying. You have probably prepared for the company by cleaning the house and creating a welcoming atmosphere. You may have prepared for flu season with a vaccine to protect against illness. Ideally, you are able to prepare for retirement by saving and investing. Estate planning is just another form of preparing.

Not having an estate plan is like not studying for a test you know is inevitable. You will feel 

 more confident going into that test if you know you have planned and prepared! Preparing is not going to cause terrible things to happen to you – just remember the old adage “prepare for the worst, hope for the best”. Preparing 

 give you peace of mind in a crisis if it does happen.

Although we wish we could, we can’t prevent an unexpected illness. But the good news is, we can mitigate the effects it has through preparing your estate plan. Being prepared means having powers of attorney in place so that your loved ones do not have to seek the court’s approval to make medical and financial decisions for you in a crisis. This can be a long and emotional process when what you will need most is time with your loved ones.

Preparing with an estate plan can also include protections for your home and hard-earned assets should you or your spouse need nursing home care in the future. This is an especially important aspect of preparing because to achieve the best results, we should plan at least five years in advance of a long-term illness. Without this preparation, you are unlikely to be able to protect as many assets and could potentially need to spend your assets down to just a couple thousand dollars, nominal life insurance, a vehicle, and your home. And even though your home is safe while you and your spouse are alive, the state may place a lien on your home after you have both passed away in order to recoup funds spend on your care while in a nursing home!

Not preparing in this instance could mean running out of money which could prevent you from returning home if you ever recovered enough to leave a nursing facility, but still needed some care in the home. Remember, when you run out of money, you run out of options. Preparing is what gives you these options.

As we prepare for the last months of 2020 and are hopeful for what 2021 will bring, we hope you reflect on what you are grateful for throughout this difficult year, but also areas where you can be more prepared. If one of those areas is estate planning, we encourage you to reach out to an estate planning professional. It is never too early to plan – or prepare!

Are You Prepared?

Did you know that in 2018, Medicaid spent $445 million for the care of people with Alzheimer’s? In fact, this year’s total projected cost for caring for these individuals is an alarming $305 billion. As we honor World Alzheimer’s Month this September, we want to take a moment to reflect on the importance of fighting Alzheimer’s here in West Virginia and around the world, and also the impact an Alzheimer’s diagnosis has on estate planning.

While the cost of care to Medicaid is alarming, the total projected cost this year indicates the financial burden to our society as a whole, especially for those families who pay out-of-pocket for care. Planning in advance is critical in preventing some of the financial burdens on our families. As adults, we should have an estate plan now, but the diagnosis of Alzheimer’s or dementia adds even more of a sense of urgency to planning. Having your foundational documents in place while you have good mental capacity enables you to maintain control by naming someone you trust to manage your assets.

The controlling document for non-medical decisions during a period of incapacity is a durable financial power of attorney. This document must be signed while you have the mental capacity to make decisions for yourself. In your durable power of attorney, you appoint an agent to manage your financial affairs on your behalf and you determine how much flexibility you will permit them to have.

Once a person loses capacity, they can no longer sign documents such as a durable power of attorney. At this point, if they have an inadequate document or none at all, the family is tasked with the added burden of petitioning the court for a conservatorship. In addition, if you do not have a medical power of attorney, the court may also need to establish a guardian for your medical decisions.

Unfortunately, even when it is not adversarial, the conservatorship process can be very stressful for your loved ones and somewhat expensive. Families often express that they don’t understand why their loved one would have left such a mess for them. The process to obtain guardianship and conservatorship takes more time and costs more money than obtaining a durable power of attorney while you have the capacity to sign documents for yourself. Plus, the delays in going through the court process mean that planning opportunities to save assets are also delayed.

Ideally, you will also be planning your estate at least five years in advance of a major health crisis. In this pre-planning scenario, we have more options to protect your assets from some of the medical expenses. The five years is important due to Medicaid rules that prevent the transfer of assets for less than fair market value within a five-year window of applying for benefits.

If you have not planned ahead, there may still be some options to help protect assets. This scenario is usually referred to as crisis planning, but the effectiveness usually relies on the durable power of attorney or obtaining a conservatorship as quickly as possible.

We encourage you to reach out to an estate planning professional for an estate planning checkup and to learn more about resources in your area by contacting your local Alzheimer’s Association chapter. And finally, we encourage you to donate or participate in this years’ virtual Walk to End Alzheimer’s events to raise awareness and funds to end Alzheimer’s for the more than 5 million Americans living with this disease.

It's World Alzheimer's Month

Last month we discussed what happens if a loved one goes into a long-term care facility (ie. a nursing home). As you may recall, their stay in the facility will cost about $10,000 per month and may result in them spending their life savings before eventually being able to qualify for long-term care Medicaid.

This month we will discuss advanced planning options to avoid that outcome. Planning in advance is our best opportunity to maintain control of our care options as well as how we pay for our care. Most people prefer to spend the rest of their days in their own homes or at least a place where they can remain independent, and they do not want to go broke in a nursing home. But for various reasons, the majority of people do not plan appropriately for this stage of life. Remember, doing nothing is actually making a conscious decision to leave these issues to chance.

For your best chance to protect your assets, you should consider various options such as long-term care insurance products and gifting options. Insurance options may be evaluated with your trusted insurance professional while gifting options should be evaluated with legal advice from your elder law attorney and possibly your tax professional.

Gifting directly to a loved one is usually the cheapest solution, but it also has the most potential for adverse consequences. Once an asset is gifted, you have no legal right to it. The gift now belongs to the recipient meaning it is exposed to that person’s potential divorce, financial issues, and irresponsibility. In addition, it usually results in unfavorable tax outcomes where the asset has increased in value due to capital gains tax issues.

Rather than a direct gift, a trust designed for this type of asset protection usually provides the best outcome for all involved because it provides the most flexibility and protection. A gift to a trust can be a completed gift for Medicaid purposes while the trust protects the assets regardless of anything bad that can happen to the eventual recipient of the gift, meaning trust assets are protected from their potential divorce, creditors, etc. It also provides the person making the gift the opportunity to redirect who the eventual recipient will be. Since that person retains the right to change who the eventual recipient will be, it also provides a good outcome regarding capital gains taxes. It can also consolidate decision-making so that one or two trusted persons, such as children, may make decisions regarding the trust assets rather than several owners which often happens with direct gifts.

Let us consider how this could help a senior maintain flexibility while protecting assets. A person creates an irrevocable trust and transfers her home and $100,000 to her trust. She also appoints somebody she trusts to manage that trust, maybe her trusted daughter. A few years later, the parent decides to sell her home and move to Florida. Her daughter signs the paperwork and uses the proceeds to purchase Mom’s new home in Florida which is still in the trust. Eventually, the parent has a fall that requires skilled care, her new home and $100,000 are completely protected by the trust as long as they were in the trust for at least five years.

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Nursing Home and Irrevocable Trusts

Veterans Aid and Attendance Pension

Estate Planning for VA Disability Compensation

Estate Planning for Asset Protection

Estate Planning to Adjust for Lifetime Gifts to a Needy Heir

Estate Planning When a Loved One has a Disability

Estate Planning for Special Family Situations

Estate Planning to Avoid Probate

Estate Planning for a "Problem” Child

Estate Planning to Protect Your Family

Long-lasting Gifts

Giving Back

When Your Last Will and Testament Does Not Control Your Estate

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Why You Need an Attorney

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The Future of Retirement Trusts

Supplemental Needs Trust

Protecting Assets with Irrevocable Trusts

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