Handing Kids Keys to Your Home Is Never Good Estate Planning

April 29, 2020

Giving your home away to an adult child may seem like a simple approach for avoiding having the house go through probate, or even qualifying easily for Medicaid. But this seemingly simple solution comes with a lot of problems, including extra taxes, and possibly for years of delay for qualifying for Medicaid or VA benefits. That’s the advice from the article “Don’t Give Your Adult Kids Your House” from Nerd Wallet.

There are a lot of other ways to transfer a house to family members. AS the saying goes, “Do not attempt this at home!” Estate planning and elder law attorneys will be able to help you accomplish this, without creating extra problems for your family.

First, if you leave the house to your children in your will, which means they don’t get it until you die, they receive something called a “step-up in basis.” This means that all of the appreciation of the house that occurred during the time that you owned the house until your death is not taxed.

Here’s an example. A financial planner advises his client not to let his mother gift him the family home. She paid $16,000 for it back in 1976, and the current market value of the house was close to $200,000. None of that increase in value would be taxable if the son inherited the house. However, she signed a quitclaim to give her son the house while she was living and died shortly afterwards. The estimated tax bill was about $32,000.

Some families who realize the impact of this when it’s almost too late, scramble to give the house back to the parents. They do a last-minute deed change, before it’s too late. There isn’t always time for this.

When it comes to transferring the house, so a parent can qualify for Medicaid, there’s a five-year look back that prohibits any transfer of assets, especially of a house. That can lead to a penalty period, so the senior who needs long-term care will not be eligible for Medicaid.

Transferring a home to an adult child with financial or marital problems is asking for trouble. If the house becomes the child’s asset, then it can be attached by creditors. If a divorce occurs, the home could be an asset to be divided by the couple—or lost completely.

As for the family in the example above, the man was almost stuck paying taxes on a $184,000 gain. A tax research firm he engaged learned of a workaround, Section 2036 of the Internal Revenue Code. If the mother retained a life interest in the property, which includes the right to continue living there, then the home would remain in her estate, rather than be treated as a completed gift. The son, as executor of the estate, filed a gift tax return on her behalf to show that he was given a “remainder interest” or the right to inherit, when his mother’s life interest expired at her death.

There are less stressful and less costly ways to avoid the family home being part of the probated estate. Let an experienced estate planning attorney help your family before costly, time-consuming and stressful mistakes are made.

Reference: Nerd Wallet (April 3, 2020) “Don’t Give Your Adult Kids Your House”

What are the Alzheimer’s Signs?

April 28, 2020

Considerable’s recent article entitled “These are the 10 Alzheimer’s signs to watch out for, provides a list of symptoms but cautions that it’s important to note that every one of these 10 symptoms can be applied to other problems. The Alzheimer’s Association explains that there are 10 warning signs and symptoms of Alzheimer’s disease of which older adults should be aware. However, it’s also important to remember that for every one of these 10 symptoms of Alzheimer’s, there is also a typical age-related change that is not indicative of Alzheimer’s disease.

If you see any of these warning signs, don’t ignore them, especially if they’re impacting your life dramatically. See your doctor. (And, of course, an elder law attorney!)

Memory loss that upsets daily life. If you’re experiencing significant memory loss that’s interrupting your daily life, it could indicate Alzheimer’s disease. However, the typical age-related change is that sometimes you forget names or appointments, but you remember them later on.
Trouble planning or solving problems. You have changes in your ability to develop and follow a plan or work with numbers, but it’s not a sign if you make a few errors when managing finances or household bills.
Difficulty finishing regular tasks. Those with Alzheimer’s can begin having issues completing familiar tasks like driving to church, recalling the rules of a favorite game, or organizing a grocery list. However, it’s a typical age-related change to occasionally require assistance using a microwave or figuring out how to record a TV show.
Confusion with time or location. If you’re always losing track of dates, seasons, and the passage of time, you should see your physician and have an Alzheimer’s test. You can, however, get confused about the day of the week and later recall.
Trouble understanding visual images and spatial relationships. Some people will have visual issues that indicate Alzheimer’s, which is different than the typical age-related change of your sight related to cataracts.
Recent issues with words in speaking or writing. If you stop in the middle of a conversation and have no clue how to continue, it can be a sign of Alzheimer’s. The same is true if you have trouble remembering the name of a common object and frequently repeat yourself. However, it’s a typical age-related change to occasionally have difficulty finding the right word.
Misplacing things and losing the ability to retrace steps. If you put things in unusual places and can’t retrace your steps to find them, or if you accuse people of stealing from you, this may indicate Alzheimer’s disease. It is, however, a typical age-related change to misplace things from time to time and retrace your steps to find them.
A lack of sound judgment. If you’re often experiencing difficulty with decision making and using poor judgment, see your doctor to be tested for Alzheimer’s. However, making an occasional bad decision or mistake is normal.
No interest in work or social activities. Those with Alzheimer’s might feel unable to hold or follow a conversation and as a result withdraw from work or social activities. It is, however, a typical age-related change to occasionally feel uninterested in family or social obligations.
Change in mood and personality. If you think your mood and personality are shifting, it may be a sign of Alzheimer’s. This could include confusion, suspicion, depression, fear/anxiety and becoming easily upset. However, it is a typical age-related change to develop specific ways of doing things and to get upset, when your routine is disrupted.

Reference: Considerable (March 4, 2020) “These are the 10 Alzheimer’s signs to watch out for”

How Can I Be a Good Caregiver?

April 26, 2020

As an elder law attorney, I get a lot of questions about being a caregiver. And I have several close friends who have stepped up to be the most wonderful caregivers for aging family members. (You know who you are!) If you find yourself suddenly in a caregiving role, you may not know where to begin, CaringBridge’s recent article entitled “5 Tips to Be a Good Caregiver” provides some great advice. I salute you, and hope this helps.

Communicate. They say that this is the most important factor, when trying to be a good caregiver. Caregivers should strive to communicate with patience, understanding and empathy. A person being taken care of can sometimes feel like they’re a burden or a nuisance. Good communication and reassurance can help prevent that. You should also have communication between you and your other family and friends. Asking for help isn’t always easy, but those who care about you will want to support you.

Take Care of Yourself. When you’re constantly on call caring for a person who is ill, it’s not hard to forget about your own needs. Caregivers can be so overwhelmed, that they’re unable to take time for their other family or interests. They can feel guilty being away from the person in need. However, you can’t be a good caregiver, if you aren’t also in good shape. Prioritize your own health, physical and mental—it’s vital for both you and your loved one. First, take care of yourself because you can’t take care of a loved one, if you are not taking care of yourself.

Have a Lot of Patience. This is important because it’s helpful to be patient with yourself. You’ll make mistakes, but remember that you’re trying your best, and no one’s perfect. You should also be aware that communication can sometimes be difficult, when you’re caregiving. Your loved one might say or do something that hurts your feelings. However, do your best to be patient and empathetic. Don’t take it personally. Try to look at the situation with understanding and acceptance to battle discouragement.

Create Boundaries. When spending so much time with one person, and sharing their most intimate moments, it’s still important to have some boundaries. These can include you knowing your own limitations and what you’re comfortable doing for that person. Boundaries also apply to the person receiving the care and things, such as the way in which that want to be cared for and their likes and dislikes. Boundaries allow both people to be happier.

Remind Yourself of Your Mission. Sometimes, you can become a caregiver out of necessity or a sudden crisis. Nonetheless, at the center of the situation is love and empathy. Caregivers love and want the best for the person they’re helping. You should try to harness that compassion to keep you motivated through hard times.

Remember that a good caregiver is one who cares. You’re not expected to be perfect, so make certain that you give yourself just as much love and patience as you offer your patient.

Reference: CaringBridge (Feb. 13, 2020) “5 Tips to Be a Good Caregiver”

C19 UPDATE: Did You Get a Paycheck Protection Program Loan? Take These Steps Now to Qualify for Forgiveness

April 25, 2020

The Small Business Administration is expected to start taking loan applications again next week through the Paycheck Protection Program for small businesses impacted by coronavirus. You may recall that the PPP was part of the $2.2 trillion CARES Act stimulus package. One of the most valuable aspects of this program is that these small business loans can be converted to grants and be fully forgiven if used to keep employees on the payroll. While there is still confusion around exactly what steps business owners must take to qualify for loan forgiveness, Forbes recently suggested loan recipients take the following three steps now.

1: Use all of the funds you receive to pay your employees. Be aware that is mathematically impossible to get the full 100% forgiveness simply by paying the same wages that your PPP application was based on. This is because the loans were calculated at 2-1/2 times your monthly payroll, and you will have only eight weeks (from the day you received funding) to disburse the loan funds.

What to do? You can use the rest of the funds on permissible expenses (business rents, mortgage interest, and utilities, with some restrictions). But it appears the safest thing to do (“safe” meaning likelihood of achieving full loan forgiveness) will be to increase your payroll, either the amount per employee or the number of employees you have on payroll, or by paying bonuses, etc.

2: But beware – any amount paid to a single employee (including yourself) over an annualized $100,000/year will not count towards forgiveness.

3: Start these payments from the very date you receive the money, or as close to that as possible, and make sure all your pay periods fall within the 8-week window. This is a tricky little point; forgiveness appears to be calculated on a cash basis, in which case, accrued payroll with a pay date after the 8-week period won’t count.

Finally, remember that managing your business through these difficult times is a balancing act. In other words, don’t put your business in danger just to be sure your loan is fully forgiven. The last thing you want to do right now is sabotage the long-term health of your business. Even if your loan is not 100 percent forgiven, the remainder will convert to a one percent loan.

The best advice? Invest your time now on business strategy, forecast different scenarios, and have a plan to grow out of these challenging times.

Resources: Forbes, For Up To 100% PPP Loan Forgiveness, Take These 3 Steps The Very Moment You Get Your Loan, April 23, 2020; US Chamber of Commerce, CORONAVIRUS EMERGENCY LOANS Small Business Guide and Checklist, updated April 23, 2020

Long Term Care Varies, State by State

April 23, 2020

What if your parents live in Oklahoma, you live in Virginia and your brothers and sisters live in New York and California? Having the important conversation with your aging parents about what the future might hold if one of them should need long-term care is going to be a challenge, to say the least.

It’s not just about whether they want to leave their home, reports the article “What is the best state for long term care” from Pennsylvania’s The Mercury newspaper. There are many more complications. Every state has different availability, levels of care and taxes, and deciding where to get long-term care is a challenge. If the family is considering a continuing care retirement community, or if the parents already live in one, what are the terms of the contract?

It is important to remember that Medicaid is a joint Federal-State program. Some things are the same across the country. But there are differences between states, and even within a state, so there can be dramatic differences, depending upon whether the facility being considered is in a metropolitan, suburban or rural area. (And perhaps not surprisingly, Virginia is one of the “stingiest” states when it comes to Medicaid.) There’s also the question of whether the facility will accept Medicaid patients, if the parents have long-term care insurance or any other resources.

Here’s what often happens: you open up a glossy brochure of a senior community in a warm climate, like Florida or Arizona. There are golf courses, swimming pools and a great looking main house where clubs and other activities take place. However, what happens when the active phase of your life ends, slowly or suddenly? The questions to ask concern levels of care and quality of care. Where is the nearest hospital, and is it a good one? What kind of care can you receive in your own apartment? Are you locked into to your purchase, regardless of your wishes to sell and move to be closer to or live with your adult children?

And what happens if you or a “well” spouse runs out of money? That’s the question no one wants to think about, but it does have to be considered.

For people who move to Florida, which has a very generous homestead exemption for property taxes and no state tax, the incentives are strong. However, what if you become sick and need to return north?

For seniors who live in Pennsylvania and receive long-term care and other services, the well spouse’s retirement funds are exempt for Medicaid regardless of the amount. However, if you move over the state’s border to New Jersey, and those accounts will need to be spent down to qualify for Medicaid. Virginia — just down I-81 from Pennsylvania — counts the resources of both spouses, but disregards the income of the healthy spouse. The difference to the well spouse could be life changing.

Delaware and New Jersey have Medicaid available for assisted living/personal care. Virginia and Pennsylvania do not. The Keystone State has strict income limitations regarding “at home” services through Medicaid, whereas California is very open in how it interprets rules about Medicaid gifting.

The answer of where to live when long-term care is in play depends on many different factors. Your best bet is to meet with an estate planning and elder care attorney who understands the pros and cons of your state, your family’s situation and what will work best for you and your spouse, or you as an individual.

Reference: The Mercury (March 4, 2020) “What is the best state for long term care”

C19 UPDATE: Coronavirus Got You Thinking About a Will? That Might Not Be Enough.

April 21, 2020

As the coronavirus pandemic continues to spread across the country today, it seems more people are thinking they should probably get a will done, just in case. While this renewed attention to estate planning is great, experts at Bankrate.com warn that a will may not be enough.

In fact, many estate planning attorneys recommend will substitutes like living trusts, and paying very careful attention to the impact of joint ownership arrangements and beneficiary designations on your hopes and plans for your loved ones.

What is a Will?

A will is a legal document that directs who should receive your property at your death – specifically any property that is in your name only and without a beneficiary designation. Without a will, your property may be distributed by the courts according to your state’s laws of intestacy … regardless of what your wishes might have been.

Some Shortcomings of a Will

Contrary to popular belief, a will does not avoid probate – a court process that can be expensive and can take years to resolve. With courts backed up now due to coronavirus, the process of settling a will could take much longer.
A will can face challenges in court during probate, leading to long, messy and expensive litigation.
A will does not control the distribution of any assets held jointly with others, or that will pass according to beneficiary designations.
Your will goes into effect only after you die. It cannot help with medical or financial decisions that must be made in the event of your incapacity or serious illness.

What’s Right for You?

When it comes to estate planning, there is no one-size-fits-all solution. In some situations, a will – even with all its shortcomings – may still be a good option. Meeting with an estate planning attorney is the best way to get the planning that’s right for you. In many instances today, you won’t have to leave your home and can meet by phone or online in a video chat.

Resource: ABC News, Coronavirus leads to surge in wills: ‘Everyone is thinking about their mortality’, April 2, 2020; Bankrate.com, Revocable trust vs will: A guide to estate planning in the age of coronavirus, April 17, 2020

If Not Now, When? It is the Time for Estate Planning

April 21, 2020

What else could go wrong? You might not want to ask that question, given recent events. A global pandemic, markets in what feels like free fall, schools closed for an extended period of time—these are just a few of the challenges facing our communities, our nation and our world. The time is now, in other words, to be sure that everyone has their estate planning completed, advises Kiplinger in the article “Coronavirus Legal Advice: Get Your Business and Estate in Order Now.”

Business owners from large and small sized companies are contacting estate planning attorney’s offices to get their plans completed. People who have delayed having their estate plans done or never finalized their plans are now getting their affairs in order. What would happen if multiple family members got sick, and a family business was left unprotected?

Because the virus is recognized as being especially dangerous for people who are over age 60 or have underlying medical issues, which includes many business owners and CEOs, the question of “What if I get it?” needs to be addressed. Not having a succession plan or an estate plan, could lead to havoc for the company and the family.

Establishing a Power of Attorney is a key part of the estate plan, in case key decision makers are incapacitated, or if the head of the household can’t take care of paying bills, taxes or taking care of family or business matters. For that, you need a Durable Power of Attorney.

Another document needed now, more than ever: is an Advance Health Care Directive. This explains how you want medical decisions to be made, if you are too sick to make these decisions on your own behalf. It tells your health care team and family members what kind of care you want, what kind of care you don’t want and who should make these decisions for you.

This is especially important for people who are living together without the legal protection that being married provides. While some states may recognize registered domestic partners, in other states, medical personnel will not permit someone who is not legally married to another person to be involved in their health care decisions.

Personal information that lives only online is also at risk. Most bills today don’t arrive in the mail, but in your email inbox. What happens if the person who pays the bill is in a hospital, on a ventilator? Just as you make sure that your spouse or children know where your estate plan documents are, they also need to know who your estate planning attorney is, where your insurance policies, financial records and legal documents are and your contact list of key friends and family members.

Right now, estate planning attorneys are talking with clients about a “Plan C”—a plan for what would happen if heirs, beneficiaries and contingent beneficiaries are wiped out. They are adding language that states which beneficiaries or charities should receive their assets, if all of the people named in the estate plan have died. This is to maintain control over the distribution of assets, even in a worst-case scenario, rather than having assets pass via the rules of intestate succession. Without a Plan C, an entire estate could go to a distant relative, regardless of whether you wanted that to happen.

Reference: Kiplinger (March 16, 2020) “Coronavirus Legal Advice: Get Your Business and Estate in Order Now.”

Finalizing Estate Planning Documents while Social Distancing

April 20, 2020

After the initial shock of the COVID-19 pandemic, people now realize not just that they need to update their wills, but to change the people who have been named in important roles. In a recent article from The New York Times, “What to Know About Making a Will in the Age of Coronavirus,” one person said, “I think I still have my jerk brother as the trustee. I need to change that.” However, with social distancing now being the new norm, some necessary processes for executing estate plans are calling for extra creativity.

While lawyers can draft any necessary documents from their home offices, the documents need to be signed by clients and, depending upon the document and the state, by witnesses and notaries. These parties usually need to be in the same room for the documents to be considered legally valid.

New York’s governor issued an executive order last month that declared a disaster emergency in the state and temporarily gave notaries the authority to authenticate documents by videoconference. Other governors have also issued executive orders to allow video notarizations, including Connecticut, Iowa, New Hampshire and Washington. It’s safe to say that more states will probably permit this as time goes on.

Virginia was among the first states to allow electronic notarization, and I and other lawyers are lobbying Governor Northam to issue to issue emergency orders to address the need for relaxed rules for will and estate document execution. It is worth noting that living trusts are, in effect, will substitutes, and require fewer formalities to sign in Virginia, but other states have differing rules on that, as well. It is a challenge in every state to adopt new ways of practing law in the age of the pandemic.

However, besides needing notarizations, wills in New York State and other documents require two unrelated witnesses in the room when the document is signed. That also goes for the health care proxy, which gives a person the ability to name someone to make medical decisions on their behalf, if they become incapacitated.

One New York attorney used a video conference to watch two clients and their witnesses, located more than 100 miles away from his home office, sign new financial powers of attorney and health care proxies. He used his laptop to record a video of the proceedings, while clients used their phones. The client couple sat on the enclosed porch of a friend’s house in a distant county and signed the documents, while their friends stood six feet away. When the couple finished signing, they stepped away and their friends moved in to sign the documents, all in view of the attorney and all, of course, wearing vinyl gloves.

The documents were then scanned and sent to the attorney by email and he notarized them. They will also be mailed to him at his home, and then he will authenticate the documents.

In New Jersey, for example, notaries need to be physically present at the signing of documents. One lawyer took extra steps for two ER nurses, both single mothers and on the front lines of the coronavirus outbreak. He met them in the front yard of one of their houses, where a table had been set up and rocks were used to hold down the documents from blowing away in the wind. Everyone wore gloves and brought their own pens. One nurse served as witness for each other, and another friend was a witness for both. After each person signed, they stepped away, while another stepped up to the table.

Not every state is making changes to permit these documents to be witnessed and notarized, so there may be many new ways of executing estate plans in the weeks and months to come, including more outdoor, parking lot or front porch signings. Speak with your estate planning attorney, who will know the laws that apply to your state.

Reference: The New York Times (March 26, 2020) “What to Know About Making a Will in the Age of Coronavirus”

Scammers Beef Up Efforts in a Crisis

April 19, 2020

As if the elderly didn’t have enough to endure, now comes word that scammers who typically prey on seniors are upping their game. Stating that Social Security offices around the country are closed, which is true, scammers are targeting seniors with letters threatening the suspension of their Social Security payments due to pandemic-related office closures due to COVID-19.

It’s true that the offices across the country are closed, but Social Security employees are continuing to work, says the My Prime Time News article “Inspector General Warns Public About New Social Security Benefit Suspension Scam.”

What’s more, the Inspector General notes that the Social Security Administration (SSA) will not suspend or discontinue benefits because their offices are closed. The Inspector General has received reports that beneficiaries are receiving letters that advise them to call a phone number referenced in the letter.

Scammers then talk the callers into providing them with personal information or make arrangements for the seniors to send them retail gift cards, wire transfers, internet currency or even sending cash by mail. Otherwise, they tell the seniors that their benefits will be cut off until the office reopens.

Any communication that is received with that message, by mail, phone or email, is fraudulent and should be dismissed. Social Security will never:

Threaten with benefit suspension, arrest or legal action, if a fine or fee is not paid,
Promise a benefit increase or other help in return for direct payment,
Request or even accept payment by retail gift card, wire transfer, internet currency or prepaid debt card,
Demand secrecy about payments, or
Send letters or reports with personally identifiable information through the U.S. Mail.

Anyone who receives a letter, text, call or email that concerns an alleged problem with a Social Security number should not respond. The challenge is that the communications sometimes include a person’s Social Security number, or contains names, addresses or other information that is accurate. This is because scammers have purchased information illegally, not because the information is legitimate. Anyone receiving any communication from Social Security that demands immediate attention or threatens the end of benefits, should not respond directly to that communication.

Instead, report the scam to the Social Security Administration through its website. If you have any doubt about the validity of the letter or email, speak with a trusted friend, family member, or estate planning attorney. Don’t fall for it—especially during these tense times.

Reference: My Prime Time News (March 28, 2020) “Inspector General Warns Public About New Social Security Benefit Suspension Scam”

C19 UPDATE: Should You Bring Mom Home from the Nursing Home Now?

April 18, 2020

If you have a loved one currently living in a nursing home, you’re probably worried about them right now. You may not be able to visit them or check in on their care. You may be afraid that the next COVID19 outbreak will strike their facility. And … you may be struggling with the decision about whether it’s best for them to stay in the facility, or if you should bring them home.

These are all reasonable concerns. There have been more than 5,670 coronavirus deaths in long-term care facilities nationwide, according to state health data reported by NBC News on April 15.

But would Mom or Dad fare better, even with all due social distancing, in the family home?

Some issues to carefully consider if you are struggling with this question now:

Are you prepared to shoulder the entire burden of care for your loved one now? If not, are there other family or community resources that could help – and can you access them in the current situation?
What does your loved one want? Do the benefits of moving them out outweigh the stress of disruption and displacement?
Can you really keep your elderly loved one safer at home … especially if they have chronic conditions such as heart, lung, or kidney disease?
How long will you be able to keep up with your loved one’s care at home … and
Will your loved one be able to return to the facility if you cannot keep up … or after the danger has passed?
Will your loved one lose their Medicare or Medicaid benefits if they leave the nursing home?

These questions, and more, should be addressed before making the decision to remove your loved one from a nursing facility. Check with an elder law attorney who is familiar with your situation, state and federal laws, and nursing home policies who can explain your options and guide you to an informed decision.

Resources: NBC News, Coronavirus deaths in U.S. nursing homes soar to more than 5,500, April 15, 2020; March 18, 2020;

Richmond Virginia Estate Planning, Elder Law, And Asset Protection

Handing Kids Keys to Your Home Is Never Good Estate Planning

What are the Alzheimer’s Signs?

How Can I Be a Good Caregiver?

C19 UPDATE: Did You Get a Paycheck Protection Program Loan? Take These Steps Now to Qualify for Forgiveness

Long Term Care Varies, State by State

C19 UPDATE: Coronavirus Got You Thinking About a Will? That Might Not Be Enough.

If Not Now, When? It is the Time for Estate Planning

Finalizing Estate Planning Documents while Social Distancing

C19 UPDATE: Should You Bring Mom Home from the Nursing Home Now?

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