Massachusetts Elder Law Attorney Blog | Middlesex Co

Don’t Give Away Money Until You Know You Won’t Need It

Many in their 50s and older are thinking about gifting money to their adult children. Many are unsure if they can afford to do so. That’s because the real question they are asking is whether they have saved enough for themselves in retirement.

(Photo credit: Wikipedia)

An article I read on marketwatch.com really zones in on this thorny question and suggests that many people won’t really know the answer to well into older age.

About 17 percent of wealth transfers occur while the giver is still alive, the story says. People enjoy seeing how their gifts are used to improve their loved ones’ lives. They also realize that if they wait too long to give, their heirs will already be old and into retirement before they get a chance to see any money.

But the story says that givers must consider the costs of long-term care when they are doling out gifts. Seven in 10 people are going to need help one day. And Medicare isn’t going to cover long-term care costs in most cases.

If you have long-term care insurance, you are probably going to be more comfortable giving money away while you are still alive. If you don’t have it, you probably will want to be more conservative in your gifting.

Nursing home costs run at least $10,000 a month in most places and most people who need one are going to be there for a few years. Home health aides, if you plan to stay at home, can run $20 an hour.

Medicaid pays for many people’s nursing home stays but you can’t just give away your money to meet the rigorous low income requirements to be covered by that program. There is a five-year look back period.

As a result, the article recommends you having enough money in the bank to cover at least five years of nursing home care before starting to gift to others. That’s about $600,000.

And don’t give away money thinking your children will give it back in the event you need it, the story warns. There may be many reasons why they can’t or won’t give it back.

Some people get around this issue by giving away possessions, like a beloved family piano, for example, rather than cash.

But the bottom line, the story says, is that you don’t owe them anything once you’ve raised them and educated them.

Estate Planning Nightmares To Avoid

When it comes to estate planning, there are some big mistakes that you should take pains to avoid.

(Photo credit: Wikipedia)

Problems can begin when parents and their offspring haven’t talked about the subject. And even when they do, they often don’t get into the proper level of detail.

There can be hurt feelings and misunderstandings as children often view the amount of money each one gets as how much each one was loved.

An article I saw recently on dailyfinance.com lists some of the biggest mistakes that can be made when it comes to estate planning. I thought it would be good to summarize them for you here, and if you want to read the entire story you can click on the link.

Mistakes to avoid:

1) Failing to plan. The article tells the story of a grandfather whose grandson had put his life on hold to care for the grandfather, yet the grandfather made no estate plans, so when she died, the grandson got no inheritance.

2) Simple administrative details can get in the way. This is illustrated by the story of a woman whose entire estate went to her new husband, with nothing going to her kids, because she forgot to update her beneficiary designation.

3) Sibling squabbles. Two children ended up fighting over possessions because their mother’s will did not leave specific items to specific children.

Getting the plan that is right for you takes some time and thought – I call this stage the “Design Meeting.” In some cases, the Design Meeting may actually be two or three separate meetings. But the important thing is that the final documents actually reflect your wishes.

Consider a MOLST form

Many of us have signed a health care proxy form — a legal document in which we appoint someone to make medical decisions for us if we become incapacitated.

But in Massachusetts, and in many other states, there is another form we may want to sign. It is called a MOLST (Medical Order for Life-Sustaining Treatment).

Similar to a prescription, it contains instructions from a doctor to other health care professionals such as emergency responders and nurses about what life-sustaining treatments to try — or not try — on a patient, based on that patient’s wishes.

These treatments might include such things as CPR. Health professionals are required to try such treatments unless there is a MOLST order in place.

If the person is mentally incapacitated, the MOLST order can be signed by the person’s health care agent, named in the proxy.

Even if the person has a DNR or “do not resuscitate” order in place, a MOLST order may be signed. It can cover resuscitation and other forms of life-sustaining treatments.

If you have signed a MOLST and want to change your mind, you can still ask for treatment and/or have the order voided.

The order should be kept in a place where it can easily be found such as on the refrigerator and may want to carry a copy when leaving the house.

More information on MOLST can be found here:

http://molst-ma.org/consumers/faq

When Your Parents Lose Their Independence

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Moving is always a stressful experience. But for an elderly person who may be forced to give up his or her home — and possibly independence — it can be downright traumatic.

However, an article I read last week in the Wall Street Journal on line offered some tips on how the transition can be eased.

The most important, the article said, is to offer the older folks the opportunity to make their own choices, if possible. The earlier planning is started, the better.

Starting the discussion early allows for all options to be considered.

Of course, many older folks will not want to have that discussion, but it is important to remind them that if the time comes when they cannot make their own decisions, they will have to be made for them. This way, they get to choose.

If assisted living is in the picture, the adult children should do the research and present the options to their parents. They should be given the chance to visit the various facilities and, once a decision is made, should be given the opportunity to decide what personal possessions they want to bring with them. Many facilities will have floor plans available so the furniture layout can be finalized weeks in advance.

Make sure to get the new residence set up, and the personal items unpacked before your parents spend their first night there. Check with the on-site case managers to see if the adult children should spend a lot of time there in the first few weeks. Some facilities have advised that the children not spend too much time with their parents because it gives the parent a chance to get adjusted on their own.

At the same time, you cannot neglect your own families and duties.

Moving parents can be a challenge, but, done right, it can be done well.

Williams Took Care Of His Kids

It seems nobody can resist reading the juicy details of the life and death of a beloved celebrity and I am no different.

But some of the stories are simply salacious, while others are instructive. This one I found on Yahoo Finance fits into the latter category.

According to the story, the actor and comedian Robin Williams apparently didn’t leave a note prior to taking his own life last week, but details that have come out showed his estate was left in good shape, even if he might have been having financial problems, which some stories say was the case while others deny it.

What we do know from documents unearthed is that Williams in 2009 set up a trust for his three children who ranged in age from 22 to 35.

According to the story, the trust documents say that when each child turned 21 he or she would get one-third of the cash set aside for them. When they turned 30, they each would get their full share. The payout was not dependent on Williams’ death. That means he felt it was better for them to have the money while he was still alive. As it turned out, that was only partly true. But the idea is that by making lifetime distributions he could guide them and watch them build their lives responsibly.

The story did not say how much was in the trusts but said he had a significant amount of money outside of the trust and that his wife, Susan Schneider, would certainly get a healthy amount.

His net worth was once estimated at $130 million, the story said, but in 2013 he said he was nearly bankrupt. He reportedly paid his first two wives $30 million combined. Another report said he was worth about $50 million at the time of his death. He had put his $35 million ranch in Napa up for sale because he couldn’t afford it any more, the story said.

In 2013, he took a part on a TV sitcom because he needed the money. The show, “The Crazy Ones,” was cancelled after one season.

Estate Planning With A Second Family In Mind

More and more people are getting married a second time and find themselves with two families. Estate planning for one family is hard enough, but it can be quite complex if you have a second one to provide for.

That’s why I thought it would be helpful for me to post this article I found on Yahoo Finance last week. It deals with the issues that families with a mix of biological children, stepchildren, first spouses and second spouses must face.

(Photo credit: Wikipedia)

If you find yourself in this position, you don’t want to leave your heirs from the two families to fight it out over who gets what. The article lists the six most important things to remember when estate planning for a blended family.

Here are the six things to keep in mind, at least as outlined in the article:

It depends on how long your family has been together. If you and your second spouse married when your children were still young, or you had children together, you are really one big family. You should proceed with your will as if all your children were your biological children and your second spouse is your first spouse. But if your children were teenagers or adults when you remarried, things are different. You may want to make separate provisions for your biological children and your stepchildren.
Make provisions for your second spouse, but first make plans to provide for your children immediately. They should not have to wait until your second spouse dies before getting an inheritance.
Make a plan for your home. If your children grew up in your home, they may have more of a claim to it than does your second spouse. If they never grew up there, it belongs to your second spouse.
Taxes are less important than family harmony. Equal distribution may trump taxes, If you leave everything to your spouse to save on taxes, your children won’t be happy.
Communicate with everyone, either one at a time or as a group. It may be uncomfortable, but it will work out better, especially if you tell them your ideas and ask for their input.
Make sure you have the right experts. The right estate planning lawyer and financial planner are critical. You may even need a family therapist.

Planning for blended families can be challenging. But each family’s circumstances are different. I would be happy to review the options that best suit your family’s particular situation.

Get Your Estate Plan Right

A column I came across in the Wall Street Journal the other day got right to the point when it comes to estate planning.

Last Will And Testament (Photo credit: Ken_Mayer)

Start out by making a will.

The column quotes a financial advisor from Illinois who says he has clients in their 40s and 50s who have never done a will.

But it says there is now a “growing urgency” among Baby Boomers to get their estate plans in order. And this is especially important for those who have children with disabilities.

The will, the column says, is the foundation of any estate plan. It says who gets what and appoints guardians for children or adult children with disabilities.

Without a will, the state will decide these things for you.

Estate plans may also include trusts in the will to take care of children and name trustees to oversee those trusts. Without a trust, the children would get their inheritance right away once they are of age.

A special needs trust is a must if you have a child with a disability who is unlikely to be able to support himself or herself, the column points out. If your assets were to go right to the child, he or she might be disqualified from government benefits. The trust gets around that.

One reason many parents delay setting up trusts is that they don’t know whom to name as the trustee. The column’s advice for these people: name someone and you can revisit it later if you want.

If the child is one with disabilities, you may want to consider naming more than one person to handle different duties for the child.

There are many things to think about. The message of the column — and of this blog post — is that you need to get on this if you haven’t already.

You never know what is going to happen in life. Better to be prepared.

Actor Hoffman Made Mistakes With His Will

I came across an interesting article recently about the actor Phillip Seymour Hoffman and how he made numerous mistakes in his estate planning that are going to impact his partner and kids.

I thought his story could serve as a cautionary tale.

Hoffman, who died of a drug overdose earlier this year, supposedly did not want to make “trust fund kids” out of his three children. That may be admirable, but the way he went about it will actually do harm to his long-time partner and kids.

According to the story on marketwatch.com, probate court documents reveal that Hoffman’s wishes were that his kids get no part of his $35 million estate and that all of it go to his long-time partner Mimi O’Donnell, the mother of his kids but to whom he was not married.

When a wealthy person dies, he or she can do one of three things: leave the money to their family; leave it to charity; or leave it to the IRS in the form of estate taxes.

Hoffman’s lack of planning maximized the IRS’s take with no benefit to his family or to charities.

While I understand the desire not to create “trust fund kids,” there are ways to do it so they do not become spoiled layabouts.

Now, about 40 percent of Hoffman’s estate over the first $5.4 million will go to the IRS because he and O’Donnell were not married. That’s $12 million.

Much of that could have gone to charities he cared about.

And the matter of no trusts for his kids? What about their education? He could have set up trusts to fund just that. Or trusts to fund medical costs if ever necessary. Or he could have set up trusts that kick in only if the kids accomplish certain goals or earn a certain amount of money on their own. Apparently, he did include his first child in his will, but not the second and third since they had not yet been born when he made out the will.

Another reason why updating wills periodically is important.

Caring For Spouse Tougher Than Caring For Parent

This blog post is one that many of us in a certain age group will find hits close to home.

(Photo credit: Ed Yourdon)

I found this article on dailyfinance.com and it talks about the difficulties we encounter when caring for an ill parent or an ill spouse.

Many of us are finding that we have responsibilities for caring for one or the other or both.

One of the key messages of the story: caring for an ill spouse is more stressful than caring for an ill parent.

Basically, life changes. It is not ever going to be the same if you are caring for an ill spouse. People who find themselves in such a caregiving position experience stress, frustration and anger.

A poll conducted by AARP and reported on in the story showed 62 percent who cared for a spouse said it caused stress in the family, compared to about half who cared for a parent.

About 20 percent said caring for a spouse has weakened their marriage.

Caregiving includes driving your spouse to doctors’ appointments, and may progress on to bathing and other hands-on care.

Most in the poll said they favor more programs to help people care for ill spouses or parents, including tax breaks to encourage people to save for long-term care or to buy long-term care insurance.

It is an issue that we will continue debating for years, I’m afraid.

There is support for caregivers. Most councils on aging have support groups that meet weekly or monthly where caregivers can speak freely about the problems they face. Below are several councils:

Arlington Council on Aging: http://www.arlingtonma.gov/departments/health-human-services/council-on-aging

Winchester Council on Aging: http://www.jenkscenter.org/aging.htm

Massachusetts Alzheimer’s Association Support Groups: https://www.alzmassnh.org/support-groups/find-a-support-group/

There are also many online support resources and forums where people can share information and seek guidance. AARP has a very informative and active website dedicated to caregivers: “Caregiving Resource Center”

Boomers Should Be Saving

I recently came across an article on AARP.com that I thought would be important for baby boomers to read.

Retirement (Photo credit: Tax Credits)

The message: keep saving for retirement.

The article noted that many people who could be saving are not doing so.

One study cited in the article showed only one-third of people aged 50 and older have not saved for retirement. But it is never too late.

An important method for saving for retirement is taking advantage of employer savings plans such as 401(k) plans, according to the story.

The article also suggested taking advantage of financial seminars such as those run by the AARP Foundation. The study showed those who took the courses were able to cut spending and pay down debt better than those who had not taken such courses.

Another study cited in the article showed more disturbing news: American teens are less financially literate than youths from other nations.

Maybe our children are following in our footsteps. That may not be such a good thing.

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