March 14, 2018

Common Elder Scams

Some scams against the elderly are well-known. Nevertheless, they continue to work.

People who seek to scam the elderly out of money are not always very subtle about it. Not every scammer is patient enough to slowly get to know an elderly person and then con them out of their money. Some scams used against the elderly are demanding.

A common one is for an unknown person to call a grandparent and tell him or her that a grandchild is in trouble and needs cash wired immediately. The trouble normally consists of a problem with the police, where bail money is needed.

Another common scam the Minneapolis Star Tribune points out in "As senior population grows, so do scams targeting their money," is for a voice message to be left on an elderly person's phone claiming to be from the IRS. The elderly person is instructed to call a number right away for their last chance to settle a problem with the IRS by sending money.

Those schemes might seem like obvious scams to most people, but they continue to work on many of the elderly. The scammers seek to take advantage of the elderly person's diminished capacity and by demanding the money right away, the victim does not have the time to think through the request or ask anyone else about.

These and other scams against the elderly are unfortunately increasing. Elderly people should be aware of them and never agree to send money over the phone to someone, until they discuss the matter with someone else.

Reference: Minneapolis Star Tribune (Feb. 16, 2018) "As senior population grows, so do scams targeting their money."

March 13, 2018May 5, 2022

Revoking a Trust

People commonly wonder if they can revoke a trust that they no longer like and if they can have more than one trust. The answer is not a simple yes or no.

A reader recently asked a NWI Times column “Can an individual establish more than one trust?” It seems that the reader was curious whether he could have more than one trust and if creating a second trust would automatically revoke the first one.

These are common questions because most people are more familiar with the law of wills than of trusts. A person cannot have more than one will and creating a new will is an automatic revocation of any previous wills. Trusts do not work like that.

It is possible for a person to have more than one trust. It is not uncommon when people want to accomplish different things with different trusts. However, the assets put into the trusts cannot be the same and most people have no reason to have more than one trust. What most people seek to accomplish with a trust, can best be done with only one.

Whether and how a trust can be revoked, depends on what type of trust it is. Some trusts are created to be revocable at any time, but an attorney should create the trust.

Other trusts are created to be irrevocable. Sometimes they can be revoked but there are often tax penalties for doing so. It is usually advisable to amend an irrevocable trust where and how state law allows.

If you have questions about a trust you have created, it would be best to consider meeting with an estate planning attorney. Profit Law Firm has estate planning attorneys with meeting locations in Chevy Chase, Greenbelt, and the District of Columbia.

Reference: NWI Times (Feb. 18, 2018) “Can an individual establish more than one trust?”

March 12, 2018

Planning for Accident or Illness

It is impossible to know whether you will ever have an accident or have an illness that will leave you incapacitated. However, you can easily plan for dealing with it should it happen.

Most people generally understand that the older they get, the more likely they are to suffer from cognitive decline because of Alzheimer's or some other form of dementia. As people get older, they often begin to prepare for what will happen if their time comes and they become incapacitated.

What people do not think about is that elder dementia is not the only way people can become incapacitated. There are no age requirements for disabling accidents or illnesses. Everyone, no matter their age, should plan for what would happen if they are incapacitated. It is not difficult to do, as TC Palm discusses in "Be as prepared as you can by planning for incapacity."

To get started, schedule an appointment with an estate planning attorney. The attorney can prepare the necessary documents for incapacity.

You will need a general durable power of attorney, so someone else has the authority to handle your day-to-day finances. A health care power of attorney will allow someone else to make your health care decisions. A living will lets you decide ahead of time what medical means can be taken to prolong your life.

Consider taking another step at the attorney’s office and get an estate plan, just in case an accident or illness does more than incapacitate you. A thorough estate plan prepares you and your loved ones for illness and death.

Reference: TC Palm (Feb. 20, 2018) "Be as prepared as you can by planning for incapacity."

March 9, 2018May 10, 2024

Blended Families and Trust

Trust can be a key aspect of whether blended families will fight over an estate, after a loved one passes away.

Blended families are often the ultimate source of problems in estate litigation. When there are children from multiple marriages and stepparents who all have a potential stake in an estate, fights over the estate are more likely to occur. An estate planning attorney can help you find solutions for planning for blended families.

Those in blended families just have fewer bonds than more traditional families.

The Financial Times recently discussed this in an advice column titled “Should I trust my wife to divide my assets fairly?” A man who was on his second marriage wanted to make sure both of his children received an equal share of his estate. The children were each from a different marriage, so the man was concerned that his second wife might not leave the same amount of money to the child from his first marriage, if he left everything to her first.

The question almost begs the answer: well, if you must ask, then you have your answer.

That is not to say that stepparents can never be trusted to divide everything equally. However, the real trust factor to be concerned about, is not the trust between the husband and wife. The real concern should be the trust between the stepparent and the stepchild. The better they get along and trust each other, the more likely they will work together without fighting over an estate.

It is normally best not to leave things up to trust. Estate planning attorneys can give you many different options for making sure everyone in your family is appropriately taken care of, regardless whether they trust each other.

Reference: Financial Times (Feb. 6, 2018) “Should I trust my wife to divide my assets fairly?”

March 8, 2018October 25, 2023

Do Your Estate Plan Now

If you are wondering when you should do your estate planning, the best answer that you can get is that you should do it as soon as you possibly can.

One of the many things people wonder about when it comes to estate planning, is when they should plan for their own estates. People often think the best time for estate planning, is after some particular life event happens.

They wonder if that means they should do it after they get their first job, after they get married, after they have their first child, after they make a certain amount of money, after they retire or after something else. The truth is that estate planning should be done after any of those events. It is best not to wait for any particular event to get started.

You will always be better off with a plan, than without one, as grbj.com points out in “Estate Planning: better done sooner rather than later.”

You never know when you will need to have an estate plan. You cannot guarantee you will only pass away after you have lived long enough to experience any specific big life-changing event. We all know that life and death does not work that way. Waiting for something specific to happen in your life before getting an estate plan, does not make sense.

It always makes good sense to have an estate plan. Having one will leave your heirs better off after you pass away, no matter how many assets you have or at what stage of life.

Do not wait for something to happen to get an estate plan. Visit an estate planning attorney and get one now.

Reference: grbj.com (Feb. 9, 2018) “Estate Planning: better done sooner rather than later.”

March 7, 2018September 10, 2025

Gifts for Educational Purposes

Giving money to children and grandchildren for educational purposes is a common goal in estate planning. There are several different ways that it can be done efficiently.

Most people would prefer that their children and grandchildren do not have to go into debt to get an education. If they can find some way to pay for the education, besides having college students take out student loans, it is what most parents and grandparents would prefer.

It is common for people to take this into consideration when they visit an estate planning attorney, because they would like their estate plans to account for future educational expenses. There are a few good ways that the educational expenses of children and grandchildren can be covered, as The Legal Intelligencer recently explained in “How to Make Tax-Efficient Gifts to Children, Grandchildren for Their Education,” including:

529 plans are investment vehicles that allow people to put money in tax free. The money can then be used for the educational expenses of a beneficiary later. Withdrawals for education are also tax free.
Irrevocable trusts are another option. They do not have the same tax benefits. However, they can be grantor retained trusts allowing the settlor to have control over the assets, so they can be invested appropriately.
Another option is to pay the child’s or grandchild’s tuition directly. Educational gifts made in this way are not subject to gift taxes.
IRAs can also be used for this purpose, when gifts to children or grandchildren are used to fund their own IRAs. However, you should consult with an accountant first, because there may be unintended tax consequences, if not done properly.

Reference: The Legal Intelligencer (Feb. 12, 2018) “How to Make Tax-Efficient Gifts to Children, Grandchildren for Their Education.”

March 6, 2018

Report Finds Problems with Assisted Living Oversight

One way that Medicaid can save money is by paying for assisted living care for seniors who are eligible for it, instead of paying for nursing home care. A new report found that because of a lack of oversight, that is not happening.

Medicaid was not originally designed to pay for seniors' stays in assisted living facilities. However, as more and more money was being spent on nursing home facilities and the costs at those facilities continued to rise, the federal government granted states waivers to use Medicaid funds for the generally less expensive assisted living facilities.

This should have saved the federal government quite a bit of money.

A group of Senators asked the Government Accountability Office to study how the government's money was being used. The results were not good as The New York Times reported in "U.S. Pays Billions for 'Assisted Living,' but What Does It Get?"

Every year the government spends approximately $10 billion on assisted living facilities. The discouraging news? It is almost impossible to determine how much of the money is well-spent and how much of it is not. The GAO found that a lack of regulations and proper oversight made it impossible to get even basic information about patient outcomes and critical events in many states.

This is disturbing since Medicaid is expected to need even more money in the future to pay for the nursing home care and assisted living care of an aging population. If the oversight problem is not fixed, it will be seniors who are most harmed by the problems.

Reference: New York Times (Feb. 3, 2018) "U.S. Pays Billions for 'Assisted Living,' but What Does It Get?"

March 5, 2018

The Failure of James Brown’s Estate Plan

James Brown intended for his estate to give millions to poor children. However, he passed away 11 years ago, and the children have still not received anything.

It is not clear how much the estate of legendary soul singer James Brown is worth. The estate claims it is worth about $5 million. However, some experts estimate that it could be worth as much as $100 million.

It is clear is what Brown intended to do with his wealth. He had a carefully crafted estate plan that was intended to give millions to poor children throughout Georgia and South Carolina.

Brown passed away in 2006 but his estate has not given any of the money to the children. Instead the estate is still bogged down in numerous lawsuits and remains unsettled, as The New York Times reported in "Why Is James Brown's Estate Still Unsettled? Ask the Lawyers."

The main source of the dispute appears to be a family feud with Brown's children and grandchildren on one side and his widow, who is the estate administrator, on the other side. Numerous lawsuits have been filed.

In perhaps the biggest lawsuit, the children and grandchildren allege that the widow has cut inappropriate side deals for the copyrights to Brown's music. These copyrights are where the bulk of the estate's value likely is found. They also allege in another lawsuit that the widow was not even married to Brown, because she was allegedly also married to another man.

It is safe to say that this dispute is unlikely to end soon. The biggest losers here are the children who would otherwise be receiving assistance.

Reference: New York Times (Feb. 4, 2018) "Why Is James Brown's Estate Still Unsettled? Ask the Lawyers."

March 2, 2018

When a Relative Passes Away Without a Will

If a close loved one has recently passed away without having a will, you need to know what to do so that the estate can be properly distributed.

Every day people in the U.S. pass away without any form of estate plan. Surveys show that approximately half of Americans do not even have a will when they pass away.

When one of those decedents is a close relative of yours, you might be the person the family thinks should be in charge of handling everything and making sure the decedent’s assets are distributed to other family members.

However, that is not a simple process, as the Napa Valley Register discussed in "Mom died with no will. Now what?"

You cannot just start handing property out to other people. This is especially true if the property in question is something like real estate or a car. You need the necessary legal authority to transfer those assets.

For that authority you will need to go to probate court and ask a judge to appoint you as the personal representative of the estate. Once you secure that designation, you have the legal authority to determine what assets comprise the decedent’s estate and then distribute them.

However, you cannot distribute assets anyway you wish. Your state's laws of intestate succession will determine to whom the assets should be distributed.

That sounds complicated and it is. The first step you should take if you find yourself in this position, is to hire an estate attorney who can assist you.

Reference: Napa Valley Register (Feb. 1, 2018) "Mom died with no will. Now what?"

March 1, 2018October 25, 2023

Trusts May Be The Answer: When Minors are Your Heirs

If you think it is likely your heirs will be minors would when you pass away, it is best to do so differently than you would leave assets for adults.

If you have minor children, grandchildren or other relatives you want to include in your estate plan you should do so, because if you leave assets only to their parents, they might spend everything before the minors can inherit it.

You could also simply write provisions in your will, so the minors receive certain assets or a portion of your estate. However, that does not work in the same way leaving assets in a will to adults does. The probate court will have to hold hearings and determine who the best adult is to be in charge of handling those assets on behalf of the minors, until they come of age.

This can be inefficient and, unless you have left special instructions in the will, the person appointed by the court might not be the same person you would have appointed. There is a better way to leave assets to minors as the Times Herald-Record discussed in “Proper legal planning for minor beneficiaries.”

The better option is to create a trust and to fund the trust with the assets you would like to leave for the minors. You can appoint a trustee of your own choosing to administer the assets for the benefit of the minors. You also can leave instructions about how and when the assets are to be distributed for the children. That does not have to be the moment they reach the age of majority.

If you would like to leave part of your estate to minors, then talk to an estate planning attorney about creating a trust to do so.

Reference: Times Herald-Record (Feb. 1, 2018) “Proper legal planning for minor beneficiaries.”

Building Legacies that Last Estate Planning and Elder Law

Author: Profit Law Firm