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Philadelphia PA Estate Planning Blog
Tuesday, June 5, 2012
What is filial responsibility? It's an old (but existing) law in Pennsylvania that allows nursing homes to come after children of parents in nursing homes for unpaid bills. It's an unpopular law that made more sense hundreds of years ago.
Recently, a case was decided in the Superior Court of Pennsylvania that awarded $100,000 to a nursing home, collected from an adult child of a mother who was under care for less than a year. It was a strange case, and very few cases are on the books under this law. But this is a concern for elder law practitioners. My view is that this case will probably (hopefully) result in changes in the law.
An expert on filial responsibility discusses the developments in this 4 minute video. https://www.youtube.com/watch?v=cD-vLRK3vmc&feature=youtu.be
Tuesday, June 5, 2012
Looking for a great resource on estate and retirement planning? Jeremy Wechsler, your Estate & Elder Law Attorney, recently co-authored a new book with Peter R. Wechsler, his father and Your Retirement Quarterback. The book is an easy read but full of valuable information on estate and retirement planning.
Learn more about the book here: https://solvingtheretirementpuzzle.com
Thursday, May 31, 2012
Tempted to write your estate plan on your own? Before you do, check out this recent article about doing-it-yourself. Writing your Last Will & Testament or Power of Attorney on your own may seem like the easiest thing to do, but could cost you and your family later on.
Make sure you protect your estate, your affairs, yourself and your family by giving our firm a call to schedule your complementary estate planning consultation.
Article Link: https://bwlaw.blogs.com/estate_planning_bits/2012/05/the-recent-sophistication-of-software-has-contributed-to-an-increase-in-homegrown-estate-planning-these-mass-marketers-of-le.html
Monday, May 14, 2012
Everyone must plan their estate. Otherwise, you run the risk of your affairs being a mess at your death and things not happening the way you intended. Make sure you speak with a qualified estate planning attorney to build your customized estate plan. Just like every person and family is unique, so is your estate plan.
Here are five ideas for your plan:
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Testamentary Trusts Consider adding testamentary trusts to your will, either for your kids or grandkids. A customized testamentary trust has several benefits, including ensuring asset preservation, protection for minors, and more. A well-written testamentary trust is economical and can provide you peace of mind.
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The Year of the Gift: Consider a sophisticated gift strategy. 2012 might be considered the "Year of the Gift" because of the large exemption amount of $5 Million that may disappear at the end of the year. Smart gifting can provide many benefits to you and your heirs, but you must ensure gifting is done properly and in a way that makes sense for you. Be careful about doing-it-yourself.
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Write an ethical will: Most times, a Will or a Trust cannot capture the values, ideals, morals, judgments that you wish to pass on to the next generation. An ethical will can put those thoughts into words for you. Although it's not a legal document, an ethical will can be a great addition to any estate plan.
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Trust Strategy: Consider the use of trusts for certain needs. For beneficiaries on public benefits, a special needs trust should be established. If you wish to preserve assets against Medicaid spend down, a nursing home protection trust should be used. There are other trusts and strategies as well, and depending on your situation, they may make sense for your estate plan.
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Communicate: Talk to your family! Communication is key for any estate plan to work. You don't need to tell your kids how much you have in your estate, but you should communicate your general intentions as to who the Executor will be, whether there are even or uneven distributions and why, etc. Surprises are never good and unpleasant or unexpected surprises can lead to lasting conflict.
Please continue to update your plan regularly, and if you don't already have an estate plan, now is the time to put one into place!
Monday, May 14, 2012
Who gets access to your online accounts after you die?
You may have a plan for what to do with your physical belongings after you die, but what about your online accounts? In today's social media-dominated world, a person's digital presence lives on online even after he or she is gone. But who has the right to access those accounts? States have begun addressing this issue with new digital access laws.
Under current Facebook policy, if an account member dies, Facebook will remove the account at the request of family or put it into "memorial status," but it is very difficult for family members to get access to the account itself. Family members may want access to a deceased loved one's account to read messages left by friends or to have the ability to contact the deceased's friends.
Under Facebook's policy, the estate can have access to a download of account data as long as it has prior consent from the deceased or if it is mandated by law.
Such mandates are beginning to appear. In 2010, Oklahoma became the first state to pass a law giving estate executors the power to access, administer, or terminate the online social media accounts of the deceased. Two other states -- Nebraska and Oregon -- are now considering similar laws. Under Oklahoma's law, the executor automatically has the power to act on behalf of a deceased individual and access a Facebook, Twitter, or e-mail account. The executor does not have to go to court to get access to such accounts.
While states grapple with this issue, it may be a good idea to provide some instruction in your will on how to deal with your online accounts once you die. Contact your attorney to determine if this is something you should add to your will. In addition, online services have also popped up that help people pass on the digital keys to their online lives.
Monday, May 14, 2012
Reverse mortgage borrowers are getting younger, and that may not be a good thing.
The age of reverse mortgage borrowers is dropping, according to a new study by MetLife. Unfortunately, reverse mortgages come with risks, so younger borrowers need to be careful.
Reverse mortgages allow homeowners who are at least 62 years of age to borrow money on their house. The homeowner receives a sum of money from the lender, based largely on the value of the house, age of the borrower, and current interest rates. The loan does not need to be paid back until the last surviving homeowner dies, sells the house, or permanently moves out.
The MetLife study found that younger borrowers are taking out reverse mortgages. Today baby boomers aged 62 to 64 make up 21 percent of reverse mortgage applicants. In 1999, only 6 percent of applicants were in this age bracket. Of homeowners who are considering a reverse mortgage, 46 percent are under age 70.
This new trend toward younger borrowers could spell trouble. While reverse mortgages seem like a great idea, there are major downsides. The closing costs for the loans are much higher than for conventional mortgages, and younger borrowers receive less money because their life expectancy is longer. In addition, the borrower is still responsible for property taxes, homeowner's insurance, and maintenance. If the borrower runs out of money and can't pay the property taxes or homeowner's insurance, the loan will default, and the borrower could lose his or her house.
MetLife's study also found that most reverse mortgage applicants (67 percent) wanted to use the reverse mortgage to lower household debt compared to 27 percent who wanted to enhance their lifestyle and 23 percent who wanted to plan for the future. Instead of using a reverse mortgage to pay for health care that would allow borrowers to remain in their homes during their final years, borrowers are using reverse mortgages to cover short-term financial shortfalls. The MetLife study finds that strong reverse mortgage counseling is needed, and it cautions that homeowners need to consider whether to use their home equity to shore up their retirement financing or preserve this asset for major unexpected expenses in the future, such as health-related expenses that inevitably increase as people age. (Funds for reverse mortage counseling were eliminated in last year's budget deal between Democrats and Republicans but have since been restored.)
To read the MetLife study, click here.
For more information on reverse mortgages, click here.
Monday, May 14, 2012
A case of estate planning for pets is decided in a Chicago court.
A Chicago judge has reversed a death sentence that has been hanging over Boots the cat for months. The feline's owner, Georgia Lee Dvorak, died last Christmas Eve at age 76. Dvorak left no survivors, and her will, written in 1988, included a provision directing that any cat or cats she owned at the time of her death be euthanized "in a painless, peaceful manner."
But trust officers at Fifth Third Bank, which was appointed to manage Dvorak's $1.4 million estate, were reluctant to follow through on the will's terms when it came to Boots, age 11.
The bank asked a Cook County (Chicago) probate court to set aside that provision of Dvorak's will. In its arguments to the judge, the bank noted that Dvorak had left the the bulk of her estate to twelve animal-related charitable organizations. They also cited legal precedents in which courts had spared other animals in similar legal predicaments, including two Irish setters in Pennsylvania who had been ordered destroyed in their owner's will, and horses in Vermont and Canada that had been similarly condemned.
The judge allowed the bank to search for a suitable home for Boots to live out the remainder of her life, and one was found. Cats-are-Purrsons-Too agreed to care for Boots provided it could receive a $2,000 endowment. On April 3, 2012, the judge ruled that $1,000 of Dvorak's estate could go toward the endowment, and the bank agreed to forego fees of $1,000, according to an article in the Chicago Tribune.
In its fact sheet "Providing for Your Pet's Future Without You," the Humane Society of the United States warns that when a pet owner puts a request in a will that an animal be put to death, "that provision is often ruled invalid by the legal system when the animal is young or in good health and when other humane alternatives are available."
Monday, May 14, 2012
Under our "system" of paying for long-term care, you may be able to qualify for Medicaid to pay for nursing home care, but in most states there's little public assistance for home care. Most people want to stay at home as long as possible, but few can afford the high cost of home care for very long. One solution is to tap into the equity built up in your home.
If you own a home and are at least 62 years old, you may be able to quickly get money to pay for long-term care (or anything else) by taking out a reverse mortgage. Reverse mortgages, financial arrangements designed specifically for older homeowners, are a way of borrowing that transforms the equity in a home into liquid cash without having to either move or make regular loan repayments. They permit house-rich but cash-poor elders to use their housing equity to, for example, pay for home care while they remain in the home, or for nursing home care later on. The loans do not have to be repaid until the last surviving borrower dies, sells the home or permanently moves out.
In a reverse mortgage, the homeowner receives a sum of money from the lender, usually a bank, based largely on the value of the house, the age of the borrower, and current interest rates. For example, a 70-year-old borrower with a $200,000 house in Westchester County, New York, would be able to receive a maximum loan of $110,723 (based on 2009 figures). The lower the interest rate and the older the borrower, the more that can be borrowed. To find out how much you can get for your house, use the AARP's reverse mortgage loan calculator.
Homeowners can get the money in one of three ways (or in any combination of the three): in a lump sum, as a line of credit that can be drawn on at the borrower's option, or in a series of regular payments, called a "reverse annuity mortgage." The most popular choice is the line of credit because it allows a borrower to decide when he or she needs the money and how much. Moreover, no interest is charged on the untapped balance of the loan.
Although it is often assumed that an elderly person would want to use the funds from a reverse mortgage loan for health care, there are no restrictions--the funds can be used in any way. For instance, the loan could be used to pay back taxes, for house repairs, or to retrofit a home to make it handicapped-accessible.
Borrowers who take out a reverse mortgage still own their home. What is owed to the lender -- and usually paid by the borrower's estate -- is the money ultimately received over the course of the loan, plus interest. In addition, the repayment amount cannot exceed the value of the borrower's home at the time the loan is repaid. All borrowers must be at least 62 years of age to qualify for most reverse mortgages. In addition, a reverse mortgage cannot be taken out if there is prior debt against the home. Thus, either the old mortgage must be paid off before taking out a reverse mortgage or some of the proceeds from the reverse mortgage used to retire the old debt.
Reverse mortgages are somewhat underutilized now, but financial institutions, sensing an opportunity as the population ages and people live longer lives, are expanding their reverse mortgage programs.
The most widely available reverse mortgage product -- and the source of the largest cash advances -- is the Home Equity Conversion Mortgage (HECM), the only reverse mortgage program insured by the Federal Housing Administration (FHA). However, the FHA sets a ceiling on the amount that can be borrowed against a single-family house, which is determined on a county-by-county basis. High-end borrowers must look to the proprietary reverse mortgage market, which imposes no loan limits. On October 1, 2008, a new housing law took effect that increases the borrowing level on reverse mortgages. The national limit on the amount a homeowner can borrow is now $417,000. The limit can be increased to $625,000 in areas with high housing costs.
Is a Reverse Mortgage Right for You?
While reverse mortgages look like no-lose propositions on the surface, they also have some significant downsides. First, the closing costs for these loans are about double those for conventional mortgages. Closing costs on a reverse mortgage for the $200,000 home described above would be more than $10,000. These costs can be financed by the loan itself, but that reduces the money available to you.
Reverse mortgage payments also may affect your eligibility for government benefits, including Medicaid. Generally, these payments will not be counted as income as long as they are spent within the same month that they are received. If the funds are not spent, however, they could accumulate and push your resources over the allowable limits for Medicaid or SSI eligibility. In addition, payments from reverse annuity mortgages may be counted as income for purposes of Medicaid and SSI whether or not they are spent within the month they are received. This shouldn't be treated as income, since it simply involves withdrawing equity from one's home, but the state may view it differently since the funds come in a regular monthly check. In any case, you should consult with an elder lawyer in your state if you have any concern about how a reverse mortgage will affect your eligibility for federal benefits.
Also, bear in mind that if your major objective is to safeguard an inheritance for your children, a reverse mortgage may not be a good idea. As soon as the elderly person (or the survivor of an elderly couple) dies, it will be necessary to sell the home and much -- if not all -- of the sales proceeds will have to be paid to the lender. But if you have a pressing need for additional income and have no close heirs, or if you do not intend to benefit your children or your children don't particularly want to inherit the house, a reverse mortgage can be a way to supplement income, perhaps without jeopardizing Medicaid eligibility.
Reverse mortgages are complex products and borrowers are advised to acquaint themselves with the different options available and then carefully compare competing loan offerings. Following are two outstanding Web sites to get you started in that process:
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You can learn the basics about reverse mortgages from the AARP's excellent reverse mortgage Web site. The site includes a calculator for estimating the loan for which a borrower would be eligible. Go to: www.aarp.org/revmort
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For more details, background information, and supplementary materials, visit the National Center for Home Equity Conversion site at www.reverse.org
In addition, the names of FHA-insured lenders are available from the Federal National Mortgage Association (Fannie Mae), (800) 7-FANNIE.
Monday, March 5, 2012
Check out this web site we came across, www.benefitscheckup.org. It's a wonderful site that allows adults ages 55 and over to check and see if there are any federal, state or local benefits that they may be qualified for but not receiving.
According to the web site, "Many adults over 55 need help paying for prescription drugs, health care, utilities, and other basic needs. There are over 2,000 federal, state and private benefits programs available to help. But many people don’t know these programs exist or how they can apply." Take 15-20 minutes on this web site and let it find unused benefits for you.
We hope this helps!
Tuesday, February 21, 2012
The Only Good Estate Plan is an Updated Estate Plan.
Lately, many of my newest clients have come to me with very old wills and powers of attorney. The plan is nicely done, folded and tucked in a nice envelope. The older the will, the harder it is for me to unfold. Once I dust it off, the will done on the typewriter is readable.
In any case, it's a relief to me when these clients visit with me and actually become clients. My thought is, at least I can help this family update their plan, because most of the time, the plan no longer reflects their wishes, values, or the realities of their family situation.
Many times, the kids were young when you first sat down to make your will. The needs were different. The choice of executor or power of attorney may be a sibling that you no longer feel comfortable with having serve in these roles. The estate size and value have changed, as well as the types of accounts and assets you own. Maybe there has been a second, or third marriage. You get the point!
That's why the only good estate plan is an updated one. An old estate plan may have provisions in it that go against your current wishes today.
If you have an old estate plan, I applaud you for doing some planning in the first place. Too many people fail to plan. But now, take the next step and make sure to keep that plan updated. I recommend checking your plan every 3 years, and updating it every 5-10 years. Those are rough guidelines. If there are any major changes in your family or circumstances, update the plan immediately.
Friday, February 10, 2012
Is Long-Term Care Insurance a Good Bet?
Economists argue that even if Medicaid spend-down rules were tightened significantly, Long-Term Care insurance would still be unfavored by consumers.
It is sometimes claimed that reducing the amount of assets an individual can keep while qualifying for Medicaid would increase the purchase of long-term care insurance.
Now, two professors of economics have estimated that tightening Medicaid spend-down rules would do little to encourage the purchase of LTC insurance.
While Medicaid recipients may keep only about $2,000 in assets in most states, their spouses may retain over $100,000 in Pennsylvania. In the Fall 2011 issue of the Journal of Economic Perspectives, the authors estimate that a $10,000 decrease in the level of assets an individual and their spouse can keep while qualifying for Medicaid would increase private LTC insurance coverage by 1.1 percentage points.
"To put this in perspective," they write, "if every statein the country moved from their current Medicaid asset eligibility requirements to the most stringent Medicaid eligibility requirements allowed by federal law, this would decrease average household assets protected from Medicaid by about $25,000. This, in turn, would increase the demand for private LTC insurance by only 2.7 percentage points. While this represents a large increase in insurance coverage relative to the baseline ownership rate, the vast majority of households would still find it unattractive to purchase private insurance."
Overall, the authors are pessimistic about the prospects for encouraging more Americans to buy LTC insurance unless Medicaid is completely restructured or done away with altogether. They note that LTC insurance is a poor deal, particularly for men, who get back only about 33 cents on the premium dollar they spend, and that for a 65-year-old man of average wealth, 60 percent of the private insurance benefits would have been paid by Medicaid. However, life insurance policies with long-term care riders may be a better bet, and our office can provide more information on these products if you are interested.
The authors say that even if the implicit Medicaid "tax" on LTC insurance were eliminated, "other factors could still prevent the market for LTC insurance from developing." These factors include the availability of informal insurance provided by family members, the liquid assets in the home serving as a "buffer stock of assets," and the difficulty many individuals have in "making decisions about long-term, probabilistic outcomes."
The Law Offices of Jeremy A. Wechsler assist clients with Estate Planning matters in Willow Grove, PA as well as Abington, Hatboro, Dresher, Horsham, Bryn Athyn, Huntingdon Valley, Fort Washington, Jenkintown, Glenside, Oreland, Warminister, Wyncote, Ambler, Elkins Park, Flourtown, Philadelphia, Warrington, Cheltenham, Gwynedd Valley, Jamison, Feasterville Trevose, Richboro, North Wales, Blue Bell, Lafayette Hill, King of Prussia, Collegeville, Oaks, Phoenixville, Oxford Valley, Langhorne, Penndel, Bristol, Fairless Hills, Bensalem, Plymouth Meeting, Furlong, Philadelphia County, Bucks County and Montgomery County.
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