King & Wood, P.A.

Should I Get a Divorce to Protect My Spouse from Medical Debt When I’m Dead?

“If you have a medical issue that will certainly lead to death and significant costs, is it wise to legally divorce ahead of your death, so that the person dying owns very little beyond their health care coverage to protect assets from the likes of the medical insurance community?”

It really depends based upon the facts of the specific situation.

nj.com’s article asks “Will getting a divorce protect my spouse from my medical debt when I’m dead?” According to the article, the factors to consider include details on the couple’s assets, income and debts, the existence of a will and/or other estate planning documents and the amount and nature of the medical expenses.

There are a few medical expenses of a deceased spouse, for which the other spouse may be liable. The nature of the medical debt is relevant, in addition to the amount, in the Garden State.

In addition, whether the would-be deceased spouse has a will and the extent of his or her estate is also an important factor. If the estate assets are insufficient to pay all debts of the estate in full, it is possible that medical debt may not be paid at all. For example, New Jersey’s applicable statute—N.J.S. 3B:22-2—states the debts in order of priority to be repaid when the estate assets are not enough to pay all claims in full:

• Reasonable funeral expenses;
• Costs and expenses of administration;
• Debts for the reasonable value of services rendered to the decedent by the Office of the Public Guardian for Elderly Adults;
• Debts and taxes with preference under federal law or the laws of New Jersey;
• Reasonable medical and hospital expenses of the last illness of the decedent, including compensation of persons attending him;
• Judgments entered against the decedent according to the priorities of their entries respectively; and then,
• All other claims.

There are also some concerns as to whether this type of Medicaid planning, or Medicaid divorce, may raise potential implications of fraud. Before acting, speak with a knowledgeable estate planning attorney who practices in this area.

Reference: nj.com (May 16, 2019) “Will getting a divorce protect my spouse from my medical debt when I’m dead?”

How Do I Create a Medical Power of Attorney?

“Having a solid end-of-life plan in place, can be a big help to you and your family when the time comes. In addition to getting your financial affairs in order through the estate planning process, it’s also a good idea to set up medical power of attorney.”

A medical power of attorney is a legal document (also called a healthcare power of attorney or durable power of attorney for healthcare) that names an agent to make medical decisions on your behalf, explains Yahoo Finance’s recent article, “How to Set Up Medical Power of Attorney.” A medical power of attorney gives a family member or a trusted friend the legal authority to make health decisions for you.

This isn’t the same as a living will, which is a document that details what you’d like your healthcare team to do, if you become incapacitated. You may have a living will and a medical power of attorney. If decisions must be made about resuscitation and life support, recording those wishes in a living will, removes those difficult decisions from your agent.

When you’re thinking about a person to be your healthcare agent, find someone with whom you’re comfortable discussing health-related issues. Select a person you trust with your life and who will assume this responsibility if and when the time comes. Your agent must be your advocate, execute your wishes and make wise decisions, even when friends and family are telling them otherwise.

Here are some general guidelines for agents that you should avoid. Don’t choose:

• Your healthcare provider or the person who owns a health or residential facility in which you’re residing;
• A person whose job it is to medically evaluate you, such as a physician;
• A person who works for a government agency that is financially responsible for your care unless she’s a blood relative;
• The same person as your court-approved guardian or conservator; or
• A person who’s already a healthcare agent for more than 10 people.

It’s important to also name a backup agent, in the event that your medical power of attorney can’t make decisions on your behalf.

The medical power of attorney is one of several documents that should be part of your estate plan. Meet with an estate planning attorney to make sure that you have the correctly prepared documents you need to protect yourself and your family.

Reference: Yahoo Finance (May 8, 2019) “How to Set Up Medical Power of Attorney”

Please Welcome Megan Hance!

We are pleased to announce that Megan Hance has joined our firm as a closing specialist. Megan comes to us with an extensive banking background. She worked in commercial lending for a year and a half and residential lending for two years. In her free time, she likes spending time with her family. She also enjoyed reading, cooking, and as a native Ohioan, cheering on the Ohio State Buckeyes during college football season.

Welcome Caroline Palmer!

We are pleased to announce that Caroline Palmer has joined our firm as Front Desk Coordinator.  Caroline will administer our client intake and scheduling processes. 

Caroline is a 2019 graduate of Florida State University, where she completed a B.A. in History with a minor in English.  A native of Live Oak, Florida, Caroline enjoys taking her dog, Jack, to the park, spending time with family and friends, and travelling when she can.  Caroline plans to continue her education by pursuing a master’s degree in Library and Information Sciences.

 

Welcome to the firm, Caroline!

What’s the Latest on Lee Radziwill’s Estate?

“The recent passing of Lee Radziwill was the end of an era. From her iconic fashion sense to her family pedigree, Radziwill lived a unique American life. Through all the ups and downs, she always reflected poise and style.”

Lee Radziwill had a unique place in history, as the sister to Jacqueline Kennedy Onassis. Her will was probated in New York, and her estate planning was complex and thorough, says Forbes’ recent article, “How Lee Radziwill's Estate Plan Reflected the Refined Elegance Of Her Life.”

Her estate plan uses a standard structure of a Will and a Revocable Trust. This trust is commonly used as a way to create privacy and ease of administration. Although her assets passed into trust, she also had a will. The will was necessary to handle certain elements of estate administration that could not be put in the revocable trust document. The will that was probated was put in place in September of last year, just a few months prior to her death.

If Radziwill knew that her health was not good, it might have caused her to review her decisions and make some final changes, based on her current life circumstances.

Her estate planning reflects family history, as wealthy families often use trusts as a way of dynasty planning, to manage assets in a family line.

The goals of these types of trusts are control and tax savings. One way to pass property to your children and make sure it stays in the family, is to use a trust. Trusts can last for generations. This multi-generational approach is very obvious in Radziwill’s will. She references three different trusts among three generations. Estate planning allows for the assets to move between generations. In this case, Radziwill exercises a special power of appointment over the principal of the trust to pass it to a trust for her daughter Tina that is created under Radziwill’s Revocable Trust, adding to the principal in that trust.

When someone makes a lifetime gift to someone in trust, they may also give that person the power to dispose of the property in trust at death and sometimes during life, which is known as a power of appointment. If it’s an unlimited power, it is a general power. If the power is limited in any way, it’s a special power of appointment. Radziwill’s power of appointment was limited, so she was probably only able to appoint these assets to her heirs or charity. By restricting those who can inherit from the trust, she’s able to maintain her family’s intent.

In executing a well-designed estate plan, Radziwill properly protected and passed her family assets to the next generation.

Reference: Forbes (March 31, 2019) “How Lee Radziwill's Estate Plan Reflected the Refined Elegance Of Her Life”

When Should I Start My Estate Planning?

“Since we don’t know when we will die, it’s never too early to start coming up with a plan.”

Only 42% of Americans have a will or other estate planning documents, according to a 2017 Caring.com study. Among parents of children under 18, only 36% have created a will.

USA Today’s recent article, “Estate planning: 6 steps to ensure your family is financially ready for when you die,” explains that if you die without a will, state laws will decide what happens to your property or who should be legally responsible for minor children. That might be OK in some circumstances, but in others, a grandchild with special needs might not receive the resources you want him to have, or an estranged family member might get your house.

For some reason, people believe that if they don't do anything, things will “work out.” They often do not. Here is what you should consider:

Create a will. This document states who should get your money and possessions, as well as who would become a guardian to your minor children, if both parents die.

A living will. This legal document states what medical procedures you want or don’t want, if you’re incapacitated and can’t speak for yourself, such as whether to continue life-sustaining treatment. Powers of attorney let you appoint someone you trust to make legal, financial and health care decisions for you, if you are unable.

Trust. This is a legal entity that holds any property you want to leave to your beneficiaries. With a trust, your family won’t have to go through probate. Trusts also let you to set up instructions for how and when property is distributed. A trustee will manage the trust. Make sure you let people know, when you’ve designated them as a trustee. Name a secondary trustee, in case the primary trustee cannot or will not serve.

Beneficiaries. If you have investment accounts and retirement plans like a 401(k), make certain that the individual you’ve listed as the beneficiary is the person you want to receive those funds.  Remember to appoint a contingency or secondary beneficiary, just in case.

Work with an experienced attorney. Estate planning can be complicated, so get some professional legal help.

End-of-life planning isn’t really fun, but it’s necessary, if you want to have full control over your life and your assets.

Reference: USA Today (April 1, 2019) “Estate planning: 6 steps to ensure your family is financially ready for when you die”

Did Rapper Nipsey Hussle Have an Estate Plan?

“Rapper Nipsey Hussle was gunned down outside his L.A. store on Sunday, March 31. He is survived by his two minor children and longtime girlfriend Lauren London. Assuming that Hussle died without an estate plan, all his assets would pass to his children in equal shares, since he was not married at the time of his death.”

This raises significant issues, because minors can’t own more than a certain amount of assets, explains Rolling Out in the recent article, “RIP Nipsey Hussle: 5 reasons you need an estate plan.”

This means that a guardian or trustee must be appointed to manage the funds for them, until they reach the age of majority. If the deceased doesn’t have a will that instructs who that guardian shall be, they will be chosen by the court. In this case, Nipsey’s longtime girlfriend Lauren London would get nothing from Hussle’s estate (even though that may not have been his intention), because it looks like she wasn’t his spouse or an heir. Consider these important reasons for an estate plan:

Property transfer wishes. This is the primary objective of estate planning. Your estate consists of all your property (real, personal, and intellectual) minus your debts. Your estate plan will determine who gets what and when. Create clear goals, as to who should inherit your property and alternative beneficiaries, in case someone predeceases you.

Transfer costs and taxes. Another goal of estate planning is maximizing any available tax benefits. You can limit estate taxes by creating trusts, making charitable donations and by establishing a family limited partnership for a business.

More net assets to heirs. An estate plan will help avoid the expense and delays of probate.

Liquidity at death. Funds need to be available to satisfy the immediate needs of the family. This can be accomplished with life insurance policies, IRAs, stocks and bonds. If all of your property is being transferred by will or intestate succession, no one gets anything, until the estate is probated.

Personal wishes surrounding death. Write down all of your preferences concerning burial, cremation, and organ donation to help your family.

Hopefully Hussle created an estate plan, so his family doesn’t have to grieve his death, while figuring out his personal, business and family matters.

Reference: Rolling Out (April 1, 2019) “RIP Nipsey Hussle: 5 reasons you need an estate plan”

What If My Beneficiary Isn’t Ready to Handle an Inheritance?

 

“If you have any reservations about who you have in mind when writing your will, whether you're thinking about a young child or even an older person who could be vulnerable to scams, a trust could make a lot of sense.”

A recent Kiplinger article asks: “Is Your Beneficiary Ready to Receive Money?” In fact, not everyone will be mentally or emotionally prepared for the money you wish to leave them. Here are some things to consider:

The Beneficiary’s Age. Children under 18 years old cannot sign legal contracts. Without some planning, the court will take custody of the funds on the child’s behalf. This could occur via custody accounts, protective orders or conservatorships. If this happens, there’s little control over how the money will be used. The conservatorship will usually end and the funds be paid to the child, when they become an adult. Giving significant financial resources to a young adult who’s not ready for the responsibility, often ends in disaster. Work with an estate planning attorney to find a solution to avoid this result.

The Beneficiary’s Lifestyle. There are many other circumstances for which you need to consider and plan. These include the following:

• A beneficiary with a substance abuse or gambling problem;
• A beneficiary and her inheritance winds up in an abusive relationship;
• A beneficiary is sued;
• A beneficiary is going through a divorce;
• A beneficiary has a disability; and
• A beneficiary who’s unable to manage assets.

All of these issues can be addressed, with the aid of an estate planning attorney. A testamentary trust can be created to make certain that minors (and adults who just may not be ready) don’t get money too soon, while also making sure they have funds available to help with school, health care and life expenses.

Who Will Manage the Trust? Every trust must have a trustee. Find a person who is willing to do the work. You can also engage a professional trust company for larger trusts. The trustee will distribute funds, only in the ways you’ve instructed. Conditions can include getting an education, or using the money for a home or for substance abuse rehab.

Estate Plan Review. Review your estate plan after major life events or every few years. Talk to a qualified estate planning attorney to make the process easier and to be certain that your money goes to the right people at the right time.

Reference: Kiplinger (April 1, 2019) “Is Your Beneficiary Ready to Receive Money?”

Should I Try Using a DIY Will Online?

“For some people with complicated personal and financial lives, today’s complexities may not be fully addressed with a do-it-yourself service for wills and trusts.”

Although using a DIY site to draft a will can save money and time, sometimes doing it this way could lead to expensive and unpleasant estate planning mistakes.

Next Avenue’s article, “The Problems With Do-It-Yourself Online Wills” reported that one DIY estate planning service had typos on its site, and its estate-planning “packages” had the same document labeled with three different names. Even worse, some of these packages were missing a key estate planning document about which very few users would know to ask.

Many DIY estate planning sites have attorneys on staff, but access to specific help for your personal documents is rarely available. If personal advice is offered, it may cost much more to get it.

It is true that many of us would prefer to fill in the blanks in silence, then have to talk to anyone about our doubts or concerns. However, sometimes it helps—a great deal—to get professional advice.

If you prepare your taxes yourself and they end up incorrect, you and the IRS may end up working things out. However, if you decide to do your estate planning by yourself, you will never know the results of your DIY handiwork. Your loved ones will. And it may not be pleasant.

You need to have customized estate planning documents to avoid court involvement, to decrease administrative issues and to know that the job is done. The four basic estate planning documents are a will, a trust, power of attorney for financial matters and an advance health care directive. If you use any of these on a DIY site, you’ll be offered a fill-in-the-blank approach. However, each state has its own probate code, and the software package you use may have different names for these documents.

Some DIY websites have all of these documents for you, but only if you purchase their higher-end packages. Some offer limited attorney consultation, but it can be just a set of drop-down of questions with pre-written responses, rather than an actual conversation with an attorney.

The benefit of using a DIY service is that you’ll have a plan, quickly and cheaply as possible—which may be better than having no plan at all. Many programs presume that you already know what you want. The reality is that many people have no clue what they want or need. When you get into the complexities of family dynamics, with legal terms specific to your state and situation, DIY estate planning can cause more challenges than working with a qualified estate planning attorney.

Reference: Next Avenue (March 29, 2019) “The Problems With Do-It-Yourself Online Wills”

Why Are Wills So Important?

“Estate planning can be tricky, which is why many people turn to attorneys to get the job done right.”

Drafting a last will and testament is an important part of estate planning. However, even with the critical importance of having a will, a recent AARP survey found that 20% of Americans over the age of 45 don’t have one.

Detailing your wishes helps to eliminate unnecessary work and potential stress and anxiety, when a loved one dies. Wills let your heirs act with the decedent’s wishes in mind, and a will can make certain that assets and possessions wind up in the right hands.

The Oakdale Leader’s recent article, “Things People Should Know About Creating Wills” says that when you meet with an experienced estate planning attorney, he or she will discuss the following topics with you:

Assets: Create a list of known assets and determine which assets are covered by your will and which are to be passed through joint tenancy, beneficiary designation, or a living trust. For instance, life insurance policies or retirement plan proceeds will be distributed directly to the named beneficiaries. A will also can cover other assets, such as photographs, personal items, autos and jewelry.

Guardianship: Parents’ wills should include a clause that states who they want to become guardians of their minor children.

Pets: Some people use their will to state the guardianship for their pets and to leave money or property to help care for them. However, it is important to remember that pets don’t have the legal capacity to own property, so don’t give money directly to pets in your will. In some states, you can establish a pet trust.

Funeral directions: Probate won’t occur until after the funeral, so funeral wishes in a will often go unnoticed. You can let your executor know your wishes in a separate document.

Executor: An executor is a trusted person who will carry out the terms of your will. He or she should be willing to serve and be capable of executing the will.

People who die without a valid will become intestate, which means the estate will be settled based on the laws of where that person lived. The court will appoint an administrator to transfer property. However, the administrator is bound by law and may make decisions that go against the decedent’s wishes. To avoid this, make sure you have a valid will and other estate planning documents.

Reference: Oakdale (CA) Leader (March 27, 2019) “Things People Should Know About Creating Wills”