#TuesdayTips: Caring for Aging Parents

Currently, it is estimated that approximately one-third of the U.S. population provides care for a chronically ill, disabled, or aged family member and spends, on average, twenty hours per week providing that care.  Caring for your aging parents is not an easy task. 

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By Jessica L. Estes 

Currently, it is estimated that approximately one-third of the U.S. population provides care for a chronically ill, disabled, or aged family member and spends, on average, twenty hours per week providing that care.  Caring for your aging parents is not an easy task.  Not only can it be overwhelming, but it may cause stress in your life which can manifest itself in various ways, including illness, depression and/or anxiety, or strained family relationships. There are things you can do, though, to make the job less stressful.

First, it is important to know your parent’s personal wants and needs.  Satisfying those requirements will depend largely on the type of long-term care your parent is likely to require.  For most, living independently for as long as possible is ideal.  Usually, this requires that the parent stay healthy both physically and mentally, so the more physical and social activities your parent participates in, the more likely they are to maintain their health and independence.

Second, you and your parent should discuss where the caregiving is going to take place.  Will your parent be moving, or will you travel to your parent?  Any decision in this regard will have an impact on your immediate family (i.e. your spouse and/or children) so they should be included in that part of the discussion.  To determine the best housing option for your parent, you will need to compare the costs of any modifications to the home as well as the cost of assistive devices needed to continue to reside in their home, with the costs of an assisted living or nursing facility.  Also, be sure to check if there are any in-home or community services available to assist with transportation, shopping, housekeeping or yard-work and their respective costs.

Next, there should be a discussion about end-of-life care.  Make sure your parent has a health care power of attorney and an advance directive or living will.  Also, if your parent has any final disposition instructions for their body after their death, they should be included in these documents as well.

Finally, what is your parent’s financial situation?  Do they have sufficient funds to pay for their long-term care?  If not, what programs are available to pay for that type of care?  Generally, Medicaid is the only program available to pay for long-term care, but it is a needs-based program so your parent will have to meet the eligibility requirements.  You should make sure your parent has a durable financial power of attorney that names an agent to manage their finances if they become incapacitated or incompetent.  That agent also should be made aware of what income and assets your parent has and where the assets are located.

Organizing the caregiving duties into the above four manageable categories: personal, housing, medical and financial, will keep you calm and able to focus on specific tasks rather than feeling overwhelmed by everything all at once.  Call ERA Law Group, LLC today at (410) 919-1790 and ask how we can help!

#TuesdayTips: Long-Term Care Insurance Policies

A long-term care insurance policy can be an effective tool to pay for your long-term care, while at the same time, allowing you an opportunity to preserve your assets and qualify for government needs-based benefits.

By Jessica L. Estes

 Generally, most people do not have sufficient income or assets to fund their long-term care for extended periods of time.  And, most people are not what the government deems “needs-based,” so they would not qualify immediately for any needs-based benefits.  Rather, most individuals are somewhere in the middle.

For anyone in this “middle” category, a long-term care insurance policy can be an effective tool to pay for their long-term care, while at the same time, allowing them an opportunity to preserve their assets and qualify for government needs-based benefits.  For example, if you have a policy that will supplement your income to cover your monthly long-term care costs, you could gift money to an asset protection trust and use the policy and your income to pay through any look-back period.  When the policy is exhausted, you would be eligible for benefits, as the gift would be outside the look-back period.

Moreover, having an insurance policy that will pay benefits not only for nursing home care, but for home care, adult day care, assisted living and respite care is best, as it covers all the bases.  The policy does not need to have a lifetime benefit; usually, a 3 to 5-year term, with an inflation rider of 3% to 5%, compounded if one can afford it, is ideal.  The shorter the elimination period – the time you must wait before benefits are paid, the costlier the policy.  However, a 90 to 120-day elimination period is typical.

Additionally, you may want to consider a policy that qualifies as a partnership policy under the Maryland Long-Term Care Insurance Partnership Program.  Certain policies that qualify as a partnership policy will allow individuals to preserve assets in an amount equal to the benefits that were paid out on the policy if they ever need to apply for Medicaid.  In other words, if one has a partnership policy that paid out $300,000.00 toward his/her long-term care and then he/she applies for Medicaid, he/she will be allowed to keep $302,500.00 in assets instead of the normal $2,500.00.

Even though these policies may seem costly, the annual premium likely is less than a month’s cost in a nursing home; yet, most people do not want to spend the money if there is a chance they will never use the policy.  For these individuals, companies have created policies that can act as an annuity and provide a return of premiums if they never use it or can act as life insurance and provide a death benefit.  Also, for a married couple, and if both spouses can qualify for a policy, some policies will allow a transfer of benefits to one spouse if the other spouse does not use them.

The Maryland Consumer Guide to Long Term Care provides information on the companies authorized to sell policies in Maryland, as well as detailed information regarding Maryland’s Partnership Program.  Also, there is a one-time tax credit up to $500 that you can take on your Maryland return for purchasing a long-term care insurance policy.

To schedule an appointment with Jessica L. Estes, Esq., call ERA Law Group, LLC today at (410) 919-1790!

#FamilyFriday – What Changes in Maryland Family Law Can We Expect to See in 2018?

The 2018 Legislative Session began on January 10, 2018 and brings with it some possible changes to Maryland Family Law.

On this week’s #FamilyFriday article, the attorneys of ERA Law Group, LLC want to bring to your attention some possible changes in Maryland Family Law!  The 2018 Legislative Session began on January 10, 2018 and brings with it some possible changes to Maryland Family Law.

Divorce – Mutual Consent

As we’ve discussed in previous blogs, divorce by mutual consent allows spouses to divorce within one (1) year of their separation and is available only to those married couples that have settled all marital issues and do not have any children in common.  Now, for the third time, there is an attempt to allow spouses with minor children in common to obtain a divorce by mutual consent.

Child Support – Driver’s License Suspension

Parents who fail to pay child support could potentially suffer serious consequences such as having their license suspended.  In this session there is an attempt to exempt individuals from having their license suspended if their income is at or below 200% of the federal poverty level.

Child Support – Income

When determining child support, it is only the actual gross income of the parents that are considered.  Even if one of the parent’s is re-married their spouse’s income is not factored into the child support equation.  In this session there is an attempt to allow a Court to consider a parent’s spouse’s income when determining that parent’s child support obligation.  Additionally, under the same considerations, the Court may order payment of attorney fees in proportion of each parties’ adjusted actual incomes.

Visitation and Child Custody – Terms

Currently the term used for describing the time awarded to the non-custodial parent is “visitation.”  Additionally, the term used to describe decision making authority is “child custody.”  In this session there is an attempt to replace the word “visitation” with “parenting time” and the term “child custody” with “legal decision making.”

If you have a family law related issue or question, call the attorneys of ERA Law Group, LLC today at (410) 919-1790!

#TuesdayTips: Asset Preservation in 3 Easy Steps

Asset preservation is simple; all it takes are three easy steps.  First, know the rules.  Second, know your predators.  Third, know your options. 

By Jessica L. Estes

Asset preservation is simple; all it takes are three easy steps.  First, know the rules.  Second, know your predators.  Third, know your options.

There are two sets of rules: rules that apply during your lifetime and rules that apply after your death.  During your lifetime, your named financial and health care powers of attorney will be able to act for you with respect to your finances and medical/end- of-life decisions, respectively.  These are your rules.  If you do not have these powers of attorney, you should get them; otherwise, your loved ones will have to apply for legal guardianship of you.  Not only does this require certificates of incompetency from two doctors, but it also requires a hearing and/or trial, which can be costly.  And, the court will be involved in your finances and health care decisions until you die.  Guardianship is the government’s rules.

After your death, your Last Will and Testament will take effect and your personal representative, or executor, will distribute your assets to your beneficiaries.  The Will represents your rules, but the Will must be probated, which is a legal process involving court oversight (or, the government’s rules).  Again, this can be costly, ranging from 5% to 20% of the total value of your estate according to AARP, and the personal representative cannot distribute assets to the beneficiaries for a minimum of six months.  Also, probate estates are available for public inspection.  Rather than a Will, you may want to consider a trust, which would bypass the probate process and the government’s involvement.

Now that you know the rules, you need to be aware of your predators.  They include the government (i.e., guardianship, probate, and taxes), long-term care costs (i.e. in-home care, assisted living and nursing homes), family (e.g. a spouse that requires long-term care or a child that is a spendthrift), and lawsuits, either yours or your beneficiaries.

Finally, your options – use the government’s rules or make your own.  By drafting your documents in a way that assures: 1) you are in control, 2) you decide who benefits from your estate plan and 3) you direct when and under what circumstances (e.g. while you are alive and well, incapacitated, and deceased) such benefits are distributed, you have created a proper estate plan that protects not only you, but your family as well, during your lifetime and after.   And remember, most people have documents, but not a plan.  To create your plan today call ERA Law Group at (410) 919-1790!

#FamilyFriday – My Kids Don’t Want to Follow the Visitation Schedule

Children are not involved in the process of establishing custody, visitation, and support.  So, what happens when they don’t like the outcome?  On this week’s #FamilyFriday article the attorneys of ERA Law Group discuss what a parent’s role is when their children refuse to go to visitation.

The parents have filed suit, went to mediation, attended trial, or settled their issues as they relate to child custody, visitation, and support.  As a result, the parents have a visitation and holiday schedule, established modes of communication, and settled on child support.  The parents are satisfied or as best as they can be in the situation.  Anything missing?  The children.  Children are not involved in the process of establishing custody, visitation, and support.  So, what happens when they don’t like the outcome?  On this week’s #FamilyFriday article the attorneys of ERA Law Group discuss what a parent’s role is when their children refuse to go to visitation.

When determining custody, the Court’s are provided with many factors to consider when making their decision.  One of those factors is – what do the children want?  However, Judges are hesitant to permit a child to come to Court.  On the rare occasion and generally when the child is mature enough to handle the situation, Judges will speak with the child in chambers without the presence of his or her parents.  Even in those situations where the child does have an opportunity to express their desires, Judges may ultimately make a determination as to visitation that does not coincide with the child’s preferences.  Or, in less litigious circumstances, parents will settle their disagreements and make a visitation schedule that is best for themselves and what they believe is in the best interest of their children.  Again, the children may not agree.

When I get the call from a parent stating that their children don’t want to go attend visitation, it often goes like this:

Parent:  “My child refuses to see their parent during the scheduled time, what do I do?”

Answer: “Until your child is 18, it is not up to your children.  You, as their parent, must make sure that they adhere to the visitation schedule.”

Parent: “But, s/he is 17 and literally refuses.  How am I physically supposed to make them?”

And, that is the problem.  No, it is not expected that you physically force your children out the door but it is expected that you encourage them to attend, not create a barrier for them to attend, and, most importantly, not applaud your child’s refusal to attend.  Be sure to discuss the issue with the other parent and discuss possible resolutions.  Be sure to keep the lines of communication open between your child and the other parent so that the child communicates his/her desires to both of you equally.

If you find yourself and children in this situation, call the attorneys at ERA Law Group, LLC and ask what options you may have available.  Perhaps it is time to modify the current arrangement or explore other options.  Call us today for a FREE 30 MINUTE CONSULTATION at (410) 919-1790.

#TuesdayTips: Charitable Remainder Trusts

It’s that time of year again… the hustle and bustle of the holidays are upon us!  If you are like me, you may still be searching for that perfect gift for everyone on your list.  Perhaps this year, as you make your list and check it twice, you may want to consider a charitable remainder trust.

It’s that time of year again… the hustle and bustle of the holidays are upon us!  If you are like me, you may still be searching for that perfect gift for everyone on your list.  Perhaps this year, as you make your list and check it twice, you may want to consider a charitable remainder trust.

A charitable remainder trust is an irrevocable trust that allows the donor, or anyone else you name, to receive each year either a fixed dollar amount from the trust or a percentage (at least 5%) of the value of the trust.  The right to receive this distribution is either for the individual’s lifetime or for a period of years not to exceed 20 years.  At the end of the term, the amount remaining in the trust is distributed to a qualified charity.  Generally, a qualified charity is one that has been deemed tax-exempt by the Internal Revenue Service.

Moreover, the charity will serve as trustee of the trust and will be responsible for investing and managing the asset(s) to produce income for you.  Because the charity is also the remainder beneficiary, it has an incentive to increase the value of the trust, which in turn, benefits not only the charity, but you as the income beneficiary of the trust.

In addition to the income benefit, there are three primary tax benefits.  First, after you have transferred the asset(s) to the trust, you may take an income tax deduction, spread over five years.  You are not, however, allowed to deduct dollar for dollar the amount that you gave.  Rather, you are only allowed to deduct the amount of the “gift,” which is the amount donated less the amount of income you are expected to receive.  Second, whatever the charity receives at the end of the trust term, is not subject to estate tax.  Similarly, the donation will not be subject to gift tax based on the amount the “gift,” unless the income beneficiary of the trust is someone other than the donor or their spouse, in which case, there may be a gift tax imposed on the amount of income that is paid to the income beneficiary.  Lastly, because the charity is tax-exempt, there is no capital gains tax on the sale of the asset(s) in the trust.  So, you can turn non-income-producing property that has increased significantly in value from the time at which you acquired it, into cash without having to pay capital gains tax on the profit.  This enables you to invest the full proceeds of the sale into an income-producing asset.

Further, you can elect to have either fixed annuity payments or a percentage of the current value of the trust.  If you choose the fixed annuity, you will receive a fixed dollar amount each year.  This is beneficial if the trust has a lower than expected income return because you will still receive your fixed payment.  Sounds great, but be careful.  The higher your annuity is, the lower your income tax deduction.  Also, if the trust does not generate enough income to cover your annuity payment, then the trust’s principal will be used.  The more principal that is used, the less likely it is that the charity would receive anything at the end of the trust term and consequently, the less likely it is that the charity would accept your donation in the first place.

Conversely, if you elect a percentage of the value of the trust, your payments will reflect any gains or losses in value of the investments each year.  And, it is important to note, that once a decision is made, you cannot change it later.  If you are considering a charitable remainder trust, call ERA Law Group, LLC at (410) 919-1790 before making a final decision.  Happy gift giving!

#TuesdayTips: The “Simple” Will

All too often will-seeking clients call the firm asking if we do “simple” wills, say they need a will, but don’t want one of those “long wills”, or claim to not have anything, so they just need a “basic” will.  On this week’s #TuesdayTips article, ERA Law Group, LLC discusses how having a properly drafted will can mitigate many of these foreseen and unforeseen problems.

All too often will-seeking clients call the firm asking if we do “simple” wills, say they need a will, but don’t want one of those “long wills”, or claim to not have anything, so they just need a “basic” will.   Most law firms will respond to the client, “Yes! We can do that!”  But there are pitfalls that can arise, some foreseen and some unforeseen, when a person only has a “simple” will, and the client does not even know these potential pitfalls exist.  On this week’s #TuesdayTips article, ERA Law Group, LLC discusses how having a properly drafted will can mitigate many of these foreseen and unforeseen problems.

Two common scenarios arise when people have a “simple” will that case issues: (1) Age issues, and (2) Disability issues.  The first scenario, age, has two parts: (a) what happens if someone who is under eighteen (18) years old is set to inherit money or property from the decedent; and (2) what if someone who is over eighteen (18) years old is set to inherit money or property, but is irresponsible to handle a substantial inheritance?

In Maryland, a person under eighteen cannot inherit money or property and hold legal title to that property in their own name.  Someone else over eighteen must hold title to that property, for the minor’s benefit, until the minor attains eighteen years old.  Often times, though, the Testator or Testatrix (man/woman who creates the will) might not think that a person at eighteen is mature enough to handle inheriting money or property; therefore, in a properly drafted under-stated age trust (a.k.a. a minor’s trust) set up in a will, he/she can set the minimum age to inherit to an age he/she feels is more appropriate.  Often, a Testator or Testatrix will choose somewhere between age 23 and 25 because the person inheriting has completed college, grad school, a trade school and/or has been working for a reasonable amount of time and a can hopefully manage an inheritance of money, property or both.  Therefore, it is advantageous for your will to contain an under-stated age subtrust that directs how a minor’s or individual’s inheritance who is under a stated age will be held and managed.  Last, this subtrust can avoid the requirement of court intervention if a minor is set to receive an inheritance and no provisions are made outlining how to handle a minor receiving an inheritance.

The next scenario is: what happens if a person who is incompetent or disabled is set to receive an inheritance?  It is possible that when a person dies, he or she has designated an individual who is incompetent or disabled to receive all or a portion of their estate.  If that happens, it can have dire consequences for the beneficiary.  For example, what happens if the child of a decedent has a severe cognitive disability (i.e., severe autism or severe Downs Syndrome) and is receiving SSI and Medicaid because he is unable to work. If the parent does not do proper planning, that disabled child may inherit a substantial sum of money causing that child to lose his SSI and Medicaid benefits.

Or this other scenario: a husband is in a nursing home on Medicaid because of severe dementia, but the wife still living in the community suffers a massive heart attack and dies.  Now the husband in the nursing home may be designated in the wife’s will to receive all of her estate.  Now the husband in the nursing facility might lose his Medicaid benefits because he now inherited a house that needs to be sold.  Remember, the husband has severe dementia, cannot sell the house himself, and does not have a power of attorney.  Now a guardianship issue has presented itself in addition to him losing his Medicaid benefits because he now has excess assets.

All of the problems caused in scenario two can be avoided if the decedent’s will has a properly drafted Incompetent or Disabled Beneficiary Trust.

At ERA Law Group, LLC, we advise our clients of these potential pitfalls, even when the client wants to do “basic” planning.  Unfortunately, if not properly counseled, “basic” planning can cause very complex issues later after someone dies.  At that point, it may be too late to cure the issues.  That is why ERA’s “basic” or “simple” will includes both of these subtrusts…we don’t want our clients to be left stranded if these difficult and “unforeseen” scenarios come up later.  Call us today at (410) 919-1790!