Paul O. Dillon, Attorney at Law

Make Sure These Documents are Part of Your Estate Plan

Let’s be frank—no one likes to think about death and end-of-life arrangements. However, being prepared for the inevitable is not only a smart thing, it’s a kindness for loved ones. A recent article, “12 Documents to Prepare Now for Your Heirs,” from U.S. News & World Report, explains what you must do and how much harder it will be for loved ones if you don’t take these steps.

Failing to put your estate in order means family or friends will have to rely on probate court to determine the distribution of your property. Depending on your jurisdiction, this could create lengthy delays, additional court costs and unwanted outcomes. Heirs may also miss out on life insurance proceeds, or accounts may be overlooked if no one knows they exist.

Last Will and Testament. A will is used to name an executor to manage your estate, outline your wishes for property distribution and name a guardian for any minor children. You can use it to make arrangements for pets. However, a pet trust is enforceable and may be a better solution.

Trusts. A “funded” trust bypasses probate and gives more control over how assets are distributed. For instance, a trust can stipulate minor children do not receive access to their funds until a specific age or milestone is reached. Even with a trust, parents of minor children still need a will to name a guardian.

Letter of Explanation. Sometimes called a letter of intent, this document provides the rationale for instructions in the will. This can be especially important if assets are not being divided equally. Expressing your intentions may help avoid animosity between family members. Consider having a family meeting at your estate planning attorney’s office if this is awkward. With your attorney present, a neutral location may be easier and less confrontational than a discussion at home.

Asset Inventory. Create a complete list of all financial accounts and named beneficiaries. Each account may have a designated beneficiary or transfer on death provision. People often forget about these beneficiaries, so they should be checked to be sure they are correct.

Personal Items Inventory. If you want specific items to go to specific people, list them in your will. In some states, a personal property memorandum can be used for tangible property.

Power of Attorney. The POA is for use while you are living. If you become incapacitated because of an illness or accident, the POA lets a designated person make financial and legal decisions on your behalf. A Health Care POA allows a person to make medical decisions. Everyone should have these documents.

Life Insurance Policies. Heirs won’t know if you have policies unless you tell them. Keep records of your life insurance plans with important financial papers.

Real Estate Documents. Records like deeds, assessments, titles, mortgage statements and tax information should be included with documents prepared for heirs.

Recent Tax Returns. Tax returns contain a wealth of information for executors. Share the name of your CPA, so they can guide your family through filing final tax returns for your estate.

Online Accounts. Create a list of usernames and passwords and store it where heirs can access the information.

Digital Estate Plan. You’ll need a digital estate plan to provide directives of what you want to happen with your digital assets, including social media accounts, websites, digital photos, intellectual property and other files and documents. On certain platforms, you can designate a legacy contact who can access and manage your data after death.

Final Wishes and Arrangements. Your final wishes should be shared with your executor and family members. If you’ve made prearrangements for a funeral, memorial service, burial, or cremation, make sure that the information is shared. It’s a great relief for family members to know what you want rather than having to guess.

Reference: U.S. News & World Report (Oct. 27, 2023) “12 Documents to Prepare Now for Your Heirs”

Why You Need Two Kinds of Power of Attorney Documents

Wills and trusts are used to establish directions about what should happen to your property upon death and who you want to carry out those directions, explains an article from Coeur d’Alene/Post Falls Press, “Power of attorney documents come in two main varieties—do you have both?” However, the estate planning documents addressing what you want while you are still living but have become incapacitated are just as important. To some people, they are more important than wills and trusts.

A comprehensive estate plan should address both life and death, including incapacity. This is done through Power of Attorney documents. One is for health care, and the other is for financial and legal purposes.

A Power of Attorney document is used to name a decision maker, often called your “Agent” or “Attorney in Fact,” if you cannot make your own decisions while living. You can use the POA document to state the scope and limits the agent will have in making decisions for you. A custom-made POA allows you to get as specific as you wish—for instance, authorizing your agent to pay bills and maintain your home but not to sell it.

The financial POA document gives the chosen agent the legal authority to make financial decisions on your behalf. In contrast, a Health Care Power of Attorney document gives your agent the legal authority to make healthcare decisions on your behalf.

By having both types of POA in place, a person you choose can make decisions on your behalf.

Suppose you become incapacitated and don’t have either Power of Attorney documents. In that case, someone (typically a spouse, adult child, or another family member) will need to apply through the court system to become a court-appointed “guardian” and “conservator” to obtain the authority the Power of Attorney documents would have given to them.

This can become a time-consuming, expensive and stressful process. The court might decide the person applying for these roles is not a good candidate, and instead of a family member, name a complete stranger to either of these roles.

The guardianship/conservator court process is far less private than simply having an experienced estate planning attorney prepare these documents. While the records of the legal proceedings and the actual courtroom hearings are often sealed in a guardianship/conservatorship court process, there is still a lot of personal information about your life, health and finances shared with multiple attorneys, the judge, a social worker and any other “interested parties” the court decides should be involved with the process.

For peace of mind, having an experienced estate planning attorney prepare these documents when creating or updating your estate plan is a far better way to plan for incapacity.

Reference: Coeur d’Alene/Post Falls Press (Oct. 11, 2023) “Power of attorney documents come in two main varieties—do you have both?”

Protect Assets from Medicaid Recovery

Medicaid is a government program used by Americans to pay for nursing home and long-term care. The Medicaid Estate Recovery Program (MERP) is used to recoup costs paid toward long term care, so that the program can be more affordable for the government, says the article “What is Medicaid Estate Recovery?” from kake.com. Beneficiaries of Medicaid recipients are often surprised to learn that this impacts them directly.

Medicare was created to help pay for healthcare costs of Americans once they reach age 65. It covers many different aspects of healthcare expenses, but not costs for long-term or nursing home care. That is the role of Medicaid.

Medicaid helps pay the costs of long-term care for aging seniors. It is used when a person has not purchased long-term health care insurance or does not have enough money to pay for long-term care out of their own funds.

Medicaid is also used by individuals who have taken steps to protect their assets using trusts or other estate planning tools.

The Medicaid Estate Recovery program allows Medicaid to be reimbursed for costs that include the costs of staying in a nursing home or other long-term care facility, home and community-based services, medical services received through a hospital when the person is a long-term care patient and prescription drug services for long-term care recipients.

When the recipient passes away, Medicaid is allowed to pursue assets from the estate. That often varies by state, but for the most part it means any assets that would be subject to the probate process after the recipient passes. That may include bank accounts, real estate, vehicles, or other real property.

In some states, recovery may be made from assets that are not subject to probate: jointly owned bank accounts between spouses, payable on death bank accounts, real estate owned in joint tenancy with right of survivorship, living trusts and any assets a Medicaid recipient has an interest in.

An estate planning attorney will know what assets Medicaid can use for recovery and how to protect the family from being financially devastated.

While it is true that Medicaid can’t take your home or assets before the recipient passes, it is legal for Medicaid to place a lien on the property. Let’s say your mother needs to move into a nursing home. Medicaid could place a lien on the property. If she dies and you inherit the home, you’ll have to satisfy the lien before you can sell the home.

Heirs need to anticipate inheriting a smaller estate. Medicaid eligibility assumes that recipients are low income or have few assets to pay for long term care. However, if parents are able to leave some amount of assets to their children, the recovery program will shrink those assets.

Strategic planning can be done in advance by the individual who may need Medicaid in the future. One way to do this is to purchase long-term care insurance, which is the strategy of personal responsibility. Another is removing assets from the probate process. Married couples can make that sure all assets are owned jointly with right of survivorship, or to purchase an annuity that transfers to the surviving spouse, when the other spouse passes away. An estate planning attorney can help create a Medicaid Asset Protection Trust, which may remove assets from being counted for eligibility.

Speak with an estate planning attorney to learn how to prepare for yourself or your parent’s future needs. The earlier the planning begins, the better chances of successfully protecting the family.

Reference: kake.com (Feb. 6, 2021) “What is Medicaid Estate Recovery?”

Reviewing Your Estate Plan Protects Goals, Family

Transferring the management of assets if and when you are unable to manage them yourself because of disability or death is the basic reason for an estate plan. This goes for people with $100 or $100 million. You already have an estate plan, because every state has laws addressing how assets are managed and who will inherit your assets, known as the Laws of Intestacy, if you do not have a will created. However, the estate plan created by your state’s laws might not be what you want, explains the article “Auditing Your Estate Plan” appearing in Forbes.

To take more control over your estate, you’ll want to have an estate planning attorney create an estate plan drafted to achieve your goals. To do so, you’ll need to start by defining your estate planning objectives. What are you trying to accomplish?

• Provide for a surviving spouse or family
• Save on income taxes now
• Save on estate and gift taxes later
• Provide for children later
• Bequeath assets to a charity
• Provide for retirement income, and/or
• Protect assets and beneficiaries from creditors.

A review of your estate plan, especially if you haven’t done so in more than three years, will show whether any of your goals have changed. You’ll need to review wills, trusts, powers of attorney, healthcare proxies, beneficiary designation forms, insurance policies and joint accounts.

Preparing for incapacity is just as important as distributing assets. Who should manage your medical, financial and legal affairs? Designating someone, or more than one person, to act on your behalf, and making your wishes clear and enforceable with estate planning documents, will give you and your loved ones security. You are ready, and they will be ready to help you, if something unexpected occurs.

There are a few more steps, if your estate plan needs to be revised:

• Make the plan, based on your goals,
• Engage the people, including an estate planning attorney, to execute the plan,
• Have a will updated and executed, along with other necessary documents,
• Re-title assets as needed and complete any changes to beneficiary designations, and
• Schedule a review of your estate plan every few years and more frequently if there are large changes to tax laws or your life circumstances.

Reference: Forbes (Sep. 23, 2020) “Auditing Your Estate Plan”

Don’t Overlook Key Parts of Estate Plan

The importance of having key estate planning documents cannot be overstated. That includes a will, an advance directive, powers of attorney for health care and financial matters and guardianships for minor children. Trusts may also be part of an estate plan, and they need to be created and funded in a timely manner. However,, according to the article “7 Things Your Client’s Estate Plan Might Be Missing: Morningstar” from Think Advisor, there are a number of frequently overlooked additional parts to an estate plan that make a difference.

Financial Overview. This gives a broad outline of your assets and can be a useful discussion starting point, when one spouse manages the money and the other needs to be brought up to speed. It includes information about larger assets, including the home, investments, cars and other valuables.

A Directory. Creating a complete master list of all accounts, including the account number, website addresses and the names of any individuals that you deal with on a regular basis, avoids sending loved ones on a scavenger hunt. Keep this document safe—either encrypt it or keep it in a locked, fireproof safe in your home.

Personal Property. Wills contain directions about property, but not everything gets included. Make a list of any tangible personal property that you want to go to specific people, like jewelry or artwork, and create a detailed memo. It won’t be part of the will, but most states consider such memos legally binding, as long as they are mentioned in the will. Your estate planning attorney will know what is best for your situation and in your state.

Plan for Pets. The best way to do this is with a pet trust, which is enforceable. You name a person to take care of your pets, and how much money they should use to care for the pet. The will can be used to specify who should be your pet’s caretaker. You can leave assets for the pet, but the designated person is not legally bound to use the money for the pet’s well-being.

Digital Estate Plan. Make a plan for your digital property, including tangible digital devices, like computers and phones and the data stored on devices in the cloud and online accounts, including social media, websites, emails, photos, videos, etc. Start by making an inventory of all digital accounts, which needs to be stored in the same way your directory is: under lock and key.

End of Life Plan. Advance directives are used to direct your wishes towards life-extending care, but they don’t always go into detail. Providing additional information to loved ones who might need to make health care decisions could alleviate a lifetime of guilt. Having conversations is a starting point but putting your wishes into a document is better.

Ethical Will. An ethical will in which the person hands down their belief system to loved ones is a gift and part of your legacy. What would you want the next generation to know about your beliefs? What life lessons do you want to share?

Reference: Think Advisor (July 22, 2020) “7 Things Your Client’s Estate Plan Might Be Missing: Morningstar”

Why You Need an Advance Directive Right Now

The number of Americans who have died in the last few months because of COVID-19 is staggering, reports Inside Indiana Business in an article that advises readers to “Get Your Advance Directives in Place Now.” Just talking with family members about your wishes is not enough. You’ll need to put the proper legal documents in place. It’s not that hard, and it is necessary.

Only one in three Americans has completed any kind of advance directive. Many younger adults don’t feel the need to complete these documents, but there have been many examples that prove this is the wrong approach. Both Terri Schiavo and Karen Ann Quinlan were only in their twenties when they were not able to make their wishes known. Family members fought in and out of court for years.

The clinical realities of COVID-19 make it hard for healthcare workers to determine their patient’s wishes. Visitors are not permitted, and staff members are overwhelmed with patients. COVID-19 respiratory symptoms come on rapidly in many cases, making it impossible to convey end-of-life wishes.

Advance directives are the written instructions regarding health care decisions, if you are not able to communicate your wishes. They must be in compliance with your state’s laws. The most common types of advance care directives are the durable power of attorney for health care and the living will.

A durable power of attorney for health care names a person, usually a spouse or family member, to be a health care agent. You may also name alternative agents. This person will be able to make decisions about your health care on your behalf, so be sure they know what your wishes are.

A living will is the document that states your wishes about the type of care you do or don’t want to receive. Living wills typically concern treatments like CPR (cardiopulmonary resuscitation), breathing machines (ventilators), dialysis, feeding tubes and certain treatments, like the use of an IV (intravenous, meaning medicine delivered directly into the bloodstream).

Studies show that people who have properly executed advance directives are more likely to get care that reflects their stated preferences.

Traditional documents will cover most health situations. However, the specific symptoms of COVID-19 may require you to reconsider opinions on certain treatments. Many COVID-19 patients need ventilators to breathe and do subsequently recover. If in the past you wanted to refuse being put on a ventilator, this may cause you to reconsider.

Almost all states require notarization and/or witnesses for advance directives and other estate planning documents to be valid. Many states, including Indiana and New York, now allow for remote notarization.

Talk with your estate planning attorney about putting all of your estate planning documents in order.

Reference: Inside Indiana Business (June 8, 2020) “Get Your Advance Directives in Place Now”

What Is an Advance Directive, and Why You Need This Document?

The coronavirus pandemic has had an impact on the entire world. No wonder—it’s a frightening disease that experts are just beginning to understand. Many of us are asking ourselves: Am I ready for a worst-case scenario? Anyone who does not have the health care portion of their estate plan in order, needs to address it now, says the timely article “COVID-19 crisis highlights the importance of completing advance directives” from Cincinnati.com.

The topic of an advance directive used to be introduced with a question about what would happen if a person were in a car accident, rushed to the hospital and unable to convey their wishes for care.  The question has now become, what if a sudden onset of COVID-19 occurred, and you were unable to speak on your own behalf? Would your loved ones know what you would want, or would they have to guess?

All adults—that is, anyone over the age of 18—should have an advance directive. The process of creating this and other health care-related estate planning documents will provide the answers to your loved ones, while helping you work through your wishes. Here’s how to start:

What matters to you? Give this considerable thought. What is important to you, who best knows and understands you and who would you trust to make critical decisions on your behalf, in the event of a medical emergency? What medical treatment would you want—or not want—and who can you count on to carry out your wishes?

Get documents in order, so your wishes are carried out. Your estate planning attorney can help you draft and execute the documents you need, so you can be confident that they will be treated as legitimate by health care providers. The estate planning lawyer will know how to execute the documents, so they are in compliance with your state’s laws. Here’s what you’ll want:

• A living will, which records your wishes for medical treatment, if you cannot speak on your own behalf.
• Medical power of attorney, to designate a person to make health care decisions, when you are not able to do so. The person is referred to as an agent, surrogate or proxy.
• A HIPAA release form, so the person you designate may speak with your medical care providers.

Note that none of these documents concerns distribution of your personal property and assets. For that, you’ll want a will or revocable living trust, which your estate planning attorney can prepare for you.

Talk to loved ones now. Consider this conversation a gift to them. This alleviates them from a lifetime of wondering if they did the right thing for you. Have a forthright conversation with them, let them know about the documents you have had prepared and what your wishes are.

Reference: Cincinnati.com (April 27, 2020) “COVID-19 crisis highlights the importance of completing advance directives”

Estate Plan Updates in the Age of Coronavirus

With the ever-increasing number of deaths in Europe and the U.S., many people are now doing what estate planning attorneys have advised them to do for years—get their estate plans in order. Many are having phone meetings or videoconferences with estate planning attorneys, says Barron’s in the article “The Coronavirus Has Americans Scrambling to Set Their Estate Plans. Here Are Some Key Things to Know.” People are worried, and they are in a hurry too.

However, estate planning can be complex, even when there is plenty of time to prepare. Here are a few tips:

Everyone should have three basic documents: a last will and testament, a durable power of attorney and an advance health care directive. These documents will allow assets to be distributed, give another person the ability to make financial decisions, if you are too sick to do so and also allow another person to talk to medical professionals on your behalf on treatment and care. These same documents are also a good idea for any young adults in the family, anyone older than 18 in most states.

With the proper documents prepared in accordance with the laws of your state, you may be able to avoid having a court appoint a guardian for minor children or having a probate court determine asset distribution.

However, there’s more. In addition to these basic documents, everyone needs to review their beneficiary designations on assets that include bank accounts, IRAs, annuities, insurance policies and any other assets. If family situations have changed, these may be out of date.

It’s also a good idea to have an attorney create a medical power of attorney for a minor child, in case another family member needs to take a child to the doctor, discuss their care and make decisions.

While young adults may be more worried about the financial impact of the pandemic, seniors and the elderly are concerned about having documents in order. Wealthy people are concerned about the impact that the pandemic may have on estate planning law, and some are engaged in planning to make substantial gifts, in case the current estate and give tax exemptions are lowered.

Other issues to be discussed with an estate planning attorney:

• Irrevocable living trusts, which provide an opportunity to direct how assets in a trust will be held, invested and distributed before and after death.
• Durable powers of attorney, which appoint an agent to make financial decisions.
• Health-care surrogates, which let people designate a surrogate to make health decisions on their behalf and receive health care information from physicians.
• Living wills, which allow people to designate whether to provide life-prolonging treatment, if in a terminal state.

Reference: Barron’s (March 22, 2020) “The Coronavirus Has Americans Scrambling to Set Their Estate Plans. Here Are Some Key Things to Know”

Are You Prepared for a Sudden Death in Your Family?

The sudden deaths of fashion designer Kate Spade and chef and storyteller Anthony Bourdain are sparking discussions about mental health. They’re also a stark reminder that a sudden death can affect any family.

CNBC’s article, “Sudden deaths like those of Kate Spade and Anthony Bourdain can devastate family finances,” explains that a number of the leading causes of death in the US are events that happen without warning. These are things like heart disease, accidents, stroke, and suicide, which are among the leading causes of death across the country, according to data from the Centers for Disease Control and Prevention.

An unexpected death has a tremendous impact on a family—mentally, emotionally and physically. In addition, it can also affect family finances, depending on the amount of planning the deceased had in place. Think about these items in the event that an unexpected death occurs.

1. Get organized. You should secure all of the deceased’s financial and legal documents, along with his or her keys, wallet, and phone. Next, find the will, if there is one. If an executor is named, make sure he or she takes on their responsibility to lead going forward.
2. Look to your own mental and financial health. It’s critical to get the support and help that you need, as you grieve.
3. Delay major financial decisions for at least a year. Some folks want to make big life changes right away, but experts say to wait. You're grieving and may not be thinking clearly. You may make a decision that you will regret later. If you do need to make a significant financial decision, talk with an attorney first.

Everyone should do estate planning, so that they don’t leave behind a big mess. Work with an attorney to draft the basic estate planning documents, like a will, power of attorney, and healthcare proxy.

When you work with an experienced estate planning attorney to draw up these documents, be sure that to communicate both the name of your attorney who drafted the documents and your wishes to your loved ones.

You should also make sure that your plans are up to date. Review your estate planning documents periodically, especially when there are life-changing events, such as marriage, separation, divorce, or the birth or adoption of a child. You should also talk to your attorney about any changes in the law.

Reference: CNBC (June 8, 2018) “Sudden deaths like those of Kate Spade and Anthony Bourdain can devastate family finances”

Selecting the Right Medicare Plan

Most people fill Medicare’s coverage gaps by buying a Medicare supplement (Medigap) plan and a Part D prescription-drug plan, or they get both medical and drug coverage from a private insurer with a Medicare Advantage plan.

Kiplinger’s recent article, “8 Steps to Picking the Right Medicare Plans During Open Enrollment” explains that you have from October 15 until December 7 each year to choose a Medicare Part D prescription-drug plan or a Medicare Advantage plan for the coming year. You can move from one Part D plan to another, or from one Medicare Advantage plan to another. You can also switch into a Medicare Advantage plan.  However, if you have Medicare Advantage and want to switch to a Medigap plan plus a Part D plan, you may have limited Medigap options depending on your health.  You can go with any Part D plan during open enrollment.

Things change, including the drugs you take or the doctors you see, along with the coverage under your plan for next year. A form should arrive at the end of September that indicates any changes for 2018 to the cost and coverage of your current plan. Look at changes to drug formularies, drug tiers, and co-pays that impact the drugs you take.

Remember that the Part D plan with the lowest premiums may not be the least expensive overall, if you have high co-pays for your drugs. The average Part D premium for 2018 will be $33.50 per month—that’s actually $1.20 less than 2017’s average. This is primarily because several large insurers are offering low-premium plans (sometimes less than $20 per month) with preferred pharmacies. Co-pays can differ, based on your drugs and the pharmacy you use.

If you’re looking for a Medicare Advantage plan, analyze the plans’ coverage and co-payments for the types of medical care you usually use. The average Medicare Advantage plan has a $30 premium per month in 2018, but some plans have $0 premiums because they may have some of the smallest provider networks and generally require higher co-payments for doctor’s visits, hospital stays, and other types of care.

Be sure that your healthcare professionals are included in the Medicare Advantage networks you’re evaluating and find out what happens if you use an out-of-network doctor. Some Medicare Advantage plans are PPOs. They just charge a higher co-payment and have a higher out-of-pocket maximum for out-of-network care. Most have provider networks in a state or region, but some allow you to use networks in other states.

Medicare Advantage may also offer coverage that traditional Medicare doesn’t, like vision and dental care or hearing aids.

Note that it’s becoming more common for Part D and Medicare Advantage plans to require prior authorization for high-cost medications. Many plans also require step therapy, where you try a less-expensive drug first, if possible.

If you end up deciding to keep your current plan, you don't need to do anything. You are automatically re-enrolled if the plan continues to be offered next year. Even so, review the Annual Notice of Changes.

Reference: Kiplinger (October 20, 2017) “8 Steps to Picking the Right Medicare Plans During Open Enrollment”