Jul 20

Preventing a Will Contest

Emotions can run high at the death of a family member. If a family member is unhappy with the amount they received (or didn’t receive) under a will, he or she may contest the will. Will contests can drag out for years, keeping all the heirs from getting what they are entitled to. It may be impossible to prevent relatives from fighting over your will entirely, but there are steps you can take to try to minimize squabbles and ensure your intentions are carried out.

Your will can be contested if a family member believes you did not have the requisite mental capacity to execute the will, someone exerted undue influence over you, someone committed fraud, or the will was not executed properly.

The following are some steps that may make a will contest less likely to succeed:

  • Make sure your will is properly executed. The best way to do this is to have an experienced elder law or estate planning attorney assist you in drafting and executing the will. Wills need to be signed and witnessed, usually by two independent witnesses.
  • Explain your decision. If family members understand the reasoning behind the decisions in your will, they may be less likely to contest the will. It is a good idea to talk to family members at the time you draft the will and explain why someone is getting left out of the will or getting a reduced share. If you don’t discuss it in person, state the reason in the will. You may also want to include a letter with the will.
  • Use a no-contest clause. One of the most effective ways of preventing a challenge to your will is to include a no-contest clause (also called an “in terrorem clause”) in the will. This will only work if you are willing to leave something of value to the potentially disgruntled family member. A no-contest clause provides that if an heir challenges the will and loses, then he or she will get nothing. You must leave the heir enough so that a challenge is not worth the risk of losing the inheritance.
  • Prove competency. One common way of challenging a will is to argue that the deceased family member was not mentally competent at the time he or she signed the will. You can try to avoid this by making sure the attorney drafting the will tests you for competency. This could involve seeing a doctor or answering a series of questions.
  • Video record the will signing. A video recording of the will signing allows your family members and the court to see that you are freely signing the will and makes it more difficult to argue that you did not have the requisite mental capacity to agree to the will.
  • Remove the appearance of undue influence. Another common method of challenging a will is to argue that someone exerted undue influence over the deceased family member. For example, if you are planning on leaving everything to your daughter who is also your primary caregiver, your other children may argue that your daughter took advantage of her position to influence you. To avoid the appearance of undue influence, do not involve any family members who are inheriting under your will in drafting your will. Family members should not be present when you discuss the will with your attorney or when you sign it. To be totally safe, family members shouldn’t even drive you to the attorney.

Bear in mind that some of these strategies may not be advisable in certain states. To discuss your specific situation, please call us.

 

Jul 12

How Medicare and Employer Coverage Coordinate

Medicare benefits start at age 65, but many people continue working past that age, either by choice or need. It is important to understand how Medicare and employer coverage work together.

Depending on your circumstances, Medicare is either the primary or secondary insurer. The primary insurer pays any medical bills first up to the limits of its coverage. The secondary payer covers costs the primary insurer doesn’t cover (although it may not cover all costs). Knowing whether Medicare is primary or secondary to your current coverage is crucial because it determines whether you need to sign up for Medicare Part B when you first become eligible. If Medicare is the primary insurer and you fail to sign up for Part B, your eventual Medicare Part B premium could start going up 10 percent for each 12-month period that you could have had Medicare Part B, but did not take it.

Here are the rules governing whether Medicare coverage will be primary or secondary:

  • If your employer or your spouse’s employer has 20 or more employees, your employer’s insurance will be the primary insurer and Medicare is the secondary payer. If your employer or your spouse’s employer has fewer than 20 employees, Medicare will be the primary insurer and your employer’s insurance will be the secondary insurer.
  • If you are retired and still covered by your employer’s group health insurance plan, Medicare pays first and your former employer’s plan pays second.
  • If you receive both Social Security Disability Insurance and Medicare and your employer has 100 or more employees, your employer’s insurance pays first. Some employers are part of a multi-employer plan and if at least one employer in that plan has 20 employees or more, the employer’s insurance pays first. If your employer has fewer than 100 employees, Medicare will pay first.
  • If you have end stage renal disease (ESRD) and are in the first 30 months of Medicare coverage of ESRD, your employer’s plan pays first. After the first 30 months, Medicare becomes the primary insurer. It does not matter how many employees your employer has.
  • If you are self-employed and have a group health plan that covers yourself and at least one other person, Medicare pays first. Note that if you are self-employed, you may be able to deduct Medicare premiums from your income taxes by including the premiums in the self-employed health insurance deduction.

If your employer’s insurance is the primary insurer, the employer must offer you and your spouse the same coverage that it offers to younger employees. It also cannot deny you coverage, cancel your coverage once you become eligible for Medicare, or charge you more for premiums, deductibles, and copays.

Jul 12

Relief From Medicare’s Part B Late-Enrollment Penalty Offered to Some

Medicare is offering relief from penalties for certain Medicare beneficiaries who enrolled in Medicare Part A and had coverage through the individual marketplace. For a short time, these individuals will be able to enroll in Medicare Part B without paying a penalty for late enrollment.

Individuals who do not enroll in Medicare Part B when they first become eligible pay a stiff penalty. For each year that they put off enrolling, their monthly premium increases by 10 percent — permanently. Some people with marketplace plans – that is, plans purchased by individuals or families, not through employers — did not enroll in Medicare Part B when they were first eligible. Purchasing a marketplace plan with financial assistance from the Affordable Care Act (aka Obamacare) can be cheaper than enrolling in Medicare Part B. However, Medicare recipients are not eligible for marketplace financial assistance plans. And because marketplace plans are not considered equivalent coverage to Medicare Part B, signing up late for Part B will result in a late enrollment penalty.

Although the Centers for Medicare and Medicaid Services (CMS) sent notice to individuals who had both marketplace plans and Medicare, it may have been too late. Therefore, CMS is allowing individuals who enrolled in Medicare Part A and had coverage through a marketplace plan to enroll in Medicare Part B without a penalty. It is also allowing individuals who dropped marketplace coverage and are paying a late enrollment penalty for Medicare Part B to reduce their penalty. To be eligible for the relief, the individual must:

  • Have an initial Medicare enrollment period that began April 1, 2013 or later; or
  • Have been notified of a retroactive premium-free Medicare Part A award on October 1, 2013 or later.

This offer is available for only a short time. To be eligible for the relief, individuals must request it by September 30, 2017. Individuals who are eligible should contact Social Security at 1-800-772-1213 or visit their local Social Security office and request to take advantage of the “equitable relief.”

For more information, go here: https://www.cms.gov/Medicare/Eligibility-and-Enrollment/Medicare-and-the-Marketplace/Downloads/Limited-Equitable-Relief-Fact-Sheet.pdf.

Jul 12

Are Trusts Still Useful If the Estate Tax Is Repealed?

With Republicans in control of Congress and the presidency, there is talk of eliminating the federal estate tax.  In 2017 the tax affects only estates over $5.49 million, meaning that for more than 99 percent of Americans, it’s already been repealed.  With no estate tax, do you still need a trust? While trusts can be used to shelter assets from the estate tax, trusts have many other valuable estate planning uses.

A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to property for another person, called a “beneficiary.” The following are some of the benefits of trusts.

  • Avoiding Probate. One of the biggest benefits of a trust is avoiding the probate process. Probate is the process of administering and settling an estate after someone dies. It can be a costly and time-consuming process. Even with small estates, beneficiaries may not have access to estate funds until a will is filed and an executor appointed. A trust gives beneficiaries immediate access to trust funds. If you have property in multiple jurisdictions, a trust can be especially beneficial in avoiding more than one probate proceeding. Also, probate is a public process—anyone can access court records–while assets distributed in a trust are private.
  • Protection for Disability. Another benefit of a trust is to provide protection if you become disabled. If you become incapacitated, the trustee can manage your finances without the need to go to court and get a conservatorship or guardianship.
  • Control. A trust allows you to specifically detail how you want to distribute your assets. For example, you can choose to dole out benefits in small amounts if you don’t want your beneficiaries to receive all your assets at one time. You can also direct how funds in the trust can be spent on a beneficiary. If you have property, the trust can specify who has the right to use the property, whether it can be sold, and how proceeds should be distributed.
  • Protection from Creditors. Certain types of trusts can be set up to protect beneficiaries from creditors. A properly structured trust can ensure that creditors cannot reach trust funds. This can be helpful if, for example, your intended beneficiary divorces or is the target of a lawsuit.
  • Providing for a Child with Special Needs. If you have a child with special needs, a trust is particularly important. A special needs trust allows a beneficiary with special needs to receive inheritances, gifts, lawsuit settlements, or other funds without losing his or eligibility for government programs.

Trusts are just one possible part of an estate plan. To know if a trust is right for you, contact us to discuss your specific situation.

Dec 22

Lack of a Will Could Mean Chaos for Prince’s Estate

swns_prince_guitar_04The famed recording artist Prince died leaving an unknown fortune and possibly no will
or estate plan to dictate what to do with that fortune. Prince’s sister, Tyka Nelson, told
the probate court in the Minnesota county where Prince lived that her brother did not
have a will, which means his estate could be in court for years and exhaust millions of
dollars in court fees and unnecessary taxes. Ms. Nelson filed an emergency order for
the appointment of a special administrator to protect Prince’s assets, even as those
assets are swelling.

Prince owned several properties at his death as well as the rights to hundreds of songs;
estimates put his estate’s value at between $100 million and $300 million. It is possible
a will may still be found, but under state law, if there is no estate plan in place, Prince’s
six siblings – one sister and five half-siblings — will share his estate. In Minnesota, halfsiblings
and full siblings are treated equally when it comes to inheritance.
Ironically for someone who was known for his privacy, dying intestate — without a will —
also means that Prince’s estate will be open to public scrutiny. In addition, if everything
passes through probate, his estate will likely face a large estate tax bill that might have
been at least partially avoided.

Moreover, Prince’s estate may not be distributed as he may have wished. For example,
Prince was a devout Jehovah’s Witness. If he wanted to leave anything to the church or
to another charity, those distributions will not be made without a written estate plan. In
the absence of clear instructions, there are likely to be lawsuits over the distribution
and administration of his estate. Prince also left a number of unreleased songs that he
may not have wanted made public, but without other guidance, those songs along with
his entire music catalog will now be under the control of the estate administrator.
You don’t have to be worth millions to learn a lesson from Prince’s apparent mistake.
The only way to ensure that your assets get distributed the way you want is to create an
estate plan. Not having an estate plan can similarly cost your heirs time and money in
unwanted court battles and fees. Contact your attorney to make sure your estate plan
is in place and up to date.

“Prince was a major star and a cultural influence, but he was a human being,” Kenneth
J. Abdo, an entertainment lawyer in Minneapolis, told the New York Times. “It comes
down to taking care of business. If you don’t take care of it, you’re leaving a mess to the
family or the courts.”

Dec 05

May Someone With Dementia Sign a Will?

Millions of people are affected by dementia, and unfortunately many of them do not have all their estate planning affairs in order before the symptoms start. If you or a loved one has dementia, it may not be too late to sign a will or other documents, but certain criteria must be met to ensure that the signer is mentally competent.Young nurse and female senior in nursing home, measurements are

In order for a will to be valid, the person signing must have “testamentary capacity,” which means he or she must understand the implications of what is being signed. Simply because you have a form of mental illness or disease does not mean that you automatically lack the required mental capacity. As long as you have periods of lucidity, you may still be competent to sign a will.

Generally, you are considered mentally competent to sign a will if the following criteria are met:

  • You understand the nature and extent of your property, which means you know what you own and how much of it.
  • You remember and understand who your relatives and descendants are and are able to articulate who should inherit your property.
  • You understand what a will is and how it disposes of property.
  • You understand how all these things relate to each other and come together to form a plan.

Family members may contest the will if they are unhappy with the distributions and believe you lacked mental capacity to sign it. If a will is found to be invalid, a prior will may be reinstated or the estate may pass through the state’s intestacy laws (as if no will existed). To prevent a will contest, your attorney should help make it as clear as possible that the person signing the will is competent. The attorney may have a series of questions to ask you to assess your competency. In addition, the attorney can have the will signing videotaped or arrange for witnesses to speak to your competency.

Mar 21

Medicaid for Millionaires?

protecting-assets-avs-lawMedicaid for Millionaires?

Can a millionaire qualify for nursing home Medicaid? Part of the practice of Medicaid planning is to position a client in such a way that the client will financially qualify for Medicaid. At first blush, a client with a large net worth would not meet the financial criteria for Medicaid. But can the client make changes in their financial position in order to qualify for Medicaid? Read the rest of this entry »

Sep 10

Advanced Age Marriage- Prenups are not just for divorce

 

sprancmanis-elder-law-marriage
Paul L Dineen / Foter / CC BY

Marriage Later in Life

Anytime two people get remarried and there are children from a previous marriage there needs to be consideration of how your estate plan will function with your children and your new spouse.  Your estate and assets were built over time with a previous spouse, or on your own with the intention of your estate going to your own children, and that is probably likewise true with the new spouse and what they have built on their side. Read the rest of this entry »

Sep 03

What will happen to my special needs child when I can no longer care for them?

Special Needs Trust

sprancmanis-special-needs-trust
mikel450 / Foter / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

A special needs trust is a discretionary trust with the purpose of caring for and enhancing the lifestyle of a special needs person when you pass away or are no longer able to care for them. Read the rest of this entry »

May 21

Record keeping and Medicaid Applications in NY

elderly-nursing-home-application

Billy Wilson via Compfight

Joann was a good daughter.  She did what any good daughter would do:  when mom became ill, she sacrificed her own life and well being to take care of mom.  She left full time employment and took a part time job, so she could be with mom to help her take care of her medical and daily needs, something that became a full time job.  Between the two of them, they Read the rest of this entry »