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Legal Gangsters: Netflix’s I Care a Lot Uncovers the Dark Side of Legal Guardianship – Part 2

The Netflix movie I Care a Lot provides a dark, violent, and somewhat comedic take on the real-life and not-at-all funny dangers of the legal (and sometimes corrupt) guardianship system. While the film’s twisting plot may seem far-fetched, it sheds light on a tragic phenomenon—the abuse of seniors at the hands of crooked “professional” guardians.

Last week in part one of this series, we offered a brief synopsis of the movie, which revolves around Marla Grayson, a crooked professional guardian who makes her living by preying on vulnerable seniors, and we then outlined the true events that inspired the fictional account. The film’s writer and director, J. Blakeson, came up with the idea after reading news stories of a similar scam involving a corrupt professional guardianship agency in Las Vegas.

In that case, a real-life Marla Grayson named April Parks, who owned a company called A Private Professional Guardian, was sentenced to up to 40 years in prison in 2018 after being indicted on more than 200 felonies for using her guardianship status to swindle more than 150 seniors out of their life savings. While I Care a Lot is fictional, the Parks case also inspired the 2018 documentary, The Guardians, directed by award-winning filmmaker Billie Mintz, and his film details the terrifying true events that ravaged the Nevada guardianship industry.

In a Facebook post, Mintz praises I Care a Lot as “a perfect introduction to guardianship,” but worries that because of the movie’s heavy focus on violence and Russian mobsters, “people won’t believe it’s real.” However, as Mintz points out, “I assure you that everything you see about guardianship is true.”

Indeed, while the Parks case is the most famous, similar cases of senior abuse by professional guardians are on the rise across the country. A 2010 report by the Government Accountability Office found hundreds of cases where guardians were involved in the abuse, exploitation, and neglect of seniors placed under their supervision. And given the country’s exploding elderly population and our overloaded court system, such abuse will almost certainly become more common.

Additionally, although most of the cases that have made the news have involved the elderly, the fact is, any adult could face court-ordered guardianship if they become incapacitated by illness or injury and haven’t put the proper legal protections in place.

To this end, here in part two, we’re going to explain how you can protect yourself and your loved ones from such abuse using proactive estate planning. 

 

How It Happens

Should you become incapacitated without any planning in place (due to illness or injury), your family (or a friend) would have to petition the court in order to be granted guardianship. In most cases, the court would appoint a family member as guardian, but this isn’t always the case. If you have no living family members, or those you do have are unwilling or unable to serve or deemed unsuitable by the court, a professional guardian would be appointed. 

Beyond the potential for abuse by professional guardians, if you become incapacitated and your family is forced into court seeking guardianship, they are likely to endure a costly, drawn-out, and emotionally taxing process. Not only can the legal fees and court costs drain your estate, but if your loved ones disagree over who is best suited to serve as your guardian, it could cause a bitter conflict that could tear your family apart and make it less likely that you get the kind of care you want.

In another scenario, should your loved ones disagree about who should be your guardian, the court could decide that naming a relative as your guardian would be too disruptive to your family dynamics and appoint a professional guardian instead. However, if you have the proper planning vehicles in place, it is highly unlikely for a guardian to be appointed against your wishes.

 

A Comprehensive Plan For Incapacity
Should you become incapacitated, a comprehensive incapacity plan would give the individual, or individuals, of your choice the immediate authority to make your medical, financial, and legal decisions, without the need for court intervention. Moreover, such planning allows you to provide clear guidance about your wishes, so there is no mistake about how these decisions should be made.

There are several planning vehicles that can go into a comprehensive plan for incapacity, but a will is not among them. A will only goes into effect upon your death, and then, it merely governs how your assets should be divided, so it would do nothing to protect you in the event of incapacity.

When it comes to creating your incapacity plan, your best bet is to put in place a number of different planning tools rather than a single document. To this end, your plan should include some or all of the following:

 

  • Durable financial power of attorney: This document grants an individual of your choice the immediate authority to make decisions related to the management of your financial and legal affairs.
  • Revocable living trust: A living trust immediately transfers control of all assets held by the trust to a person of your choice to be used for your benefit in the event of your incapacity. The trust can include legally binding instructions for how your care should be managed, and the document can even spell out specific conditions that must be met for you to be deemed incapacitated.
  • Medical power of attorney: A medical power of attorney grants an individual of your choice the immediate legal authority to make decisions about your medical treatment in the event of your incapacity.
  • Living will: A living will ((sometimes called an advance directive) provides specific guidance about how your medical decisions should be made during your incapacity, particularly at the end of life. In some instances, a medical power of attorney and a living will are combined in a single document.

But here is the thing about all of these documents—they are just documents and not guidance for the people you love. If you really want to keep your family and friends out of court and out of conflict, you cannot just rely on documents to do it. Rather, these documents should be created by a lawyer who will get to know you, your wishes, and be there for you throughout the many stages of life, plus be there for your family and friends if and when you can’t be.

 

Communication is Key

In addition to the above planning tools, it is equally—if not more—important for your loved ones to be aware of your plan and understand their role in it. As part of our planning process, we hold a family meeting with all of the individuals impacted by your plan where we walk them through your plan and explain the reasoning behind your decisions and what they need to do if something happens to you.

By combining your comprehensive incapacity plan with a team of people who care for you, can watch out for you, and know exactly what to do in the event tragedy strikes, we can make it virtually impossible for you to be abused by a professional guardian.

Don’t Put It Off
Although incapacity from dementia is most common in the elderly, debilitating injury and illness can strike at any point in life. Given this, all adults 18 and older should have an incapacity plan. Furthermore, planning for incapacity must take place well before any cognitive decline appears since you must be able to clearly express your wishes and consent for the documents to be valid.

In light of this, you should get your own planning handled first, and then discuss the need for planning with your aging parents as soon as possible, and from there, schedule a Family Wealth Planning Session with us to get a plan started. And if you or your senior loved ones already have an incapacity plan, we can review it to make sure it has been properly set up, maintained, and updated. Unfortunately, a plan put in place years ago is unlikely to work now, so updating is critical, and unfortunately often not overlooked.

Indeed, once you have a plan in place, make sure to regularly review and update it to keep pace with life changes, changes in your assets, or changes in your family structure. And if any of the individuals you have named become unable or unwilling to serve for whatever reason, you will need to revise your plan—and we can help with that too.

 

Retain Control of Your Life and Assets

To avoid the loss of autonomy, family conflict, and potential for abuse that comes with court-ordered guardianship, we invite you to meet with us as your Personal Family Lawyer®. While there is no way to prevent dementia and other forms of cognitive decline or an unexpected illness or injury, we can put planning tools in place to ensure that you at least have some control over how your life and assets will be managed if it ever does occur. Contact us today to schedule your appointment.

 

This article is a service of Stephanie Hon, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

Legal Gangsters: Netflix’s I Care a Lot Uncovers the Dark Side of Legal Guardianship – Part 1

The Netflix movie I Care a Lot provides a dark, violent, and somewhat comedic take on the real-life and not-at-all funny dangers of the legal (and sometimes corrupt) guardianship system. While the film’s twisting plot may seem far-fetched, it sheds light on a tragic phenomenon—the abuse of seniors at the hands of crooked “professional” guardians.

In this two-part series, we’ll discuss how the movie depicts such abuse, how this can occur in real life, and what you can do to prevent something similar from happening to you or your loved ones using proactive estate planning and our Family Wealth Planning process. For support in putting airtight, protective planning vehicles in place, meet with us as your Personal Family Lawyer®.

Note: This article contains spoilers for the movie I Care a Lot.

At the beginning of the movie, we meet Marla Grayson, a crooked professional guardian who makes her living by preying on vulnerable seniors. A professional guardian is a person appointed by the court to make legal and financial decisions for senior “wards” of the court, who are deemed unable to make such decisions for themselves.

Working with a corrupt doctor, Marla targets wealthy victims and gets a judge to order these individuals unfit to care for themselves and then appoint her as their guardian. From there, she and her business partner/ girlfriend, Fran, move the seniors into a nursing home, seize their homes, and sell all of their assets for their own financial gain.

Marla’s scheme takes a turn for the worse when her latest senior victim, Jennifer Peterson, turns out to be the mother of a Russian mob boss named Roman Lunyov. After Marla has Jennifer placed in a long-term care facility, Roman tries unsuccessfully to get his mother out of the facility, first by bribing Marla, then through the court, and finally by trying to break her out. 

While this may seem ludicrous, this kind of abuse actually happens outside of the movies to seniors with significant assets, even those with caring adult children like Roman. 

At this point, the movie descends into a violent back-and-forth between Roman and Marla, as they each try and fail to kill one another until they both decide that rather than murdering each other, they could make more money by going into business together. 

Fast forward to several years later, we learn that Marla and Roman have become millionaires after starting a global chain of senior care services, called Grayson Guardianships, which employs thousands of crooked guardians overseeing hundreds of thousands of “clients” all over the world.

 

Based On True Events

With its over-the-top violence, kidnappings, and Russian mobsters, some might dismiss I Care a Lot as nothing but Hollywood hype and find it hard to believe that an operation as sinister as Marla’s could ever actually exist. But the fact is, the movie’s writer and director, J. Blakeson, came up with the idea after reading news stories about very similar (less the mob and murder) situations. And knowing such things actually happen makes the movie even more terrifying.

“The idea first came when I heard news stories about these predatory legal guardians who were exploiting this legal loophole and exploiting the vulnerability in the system to take advantage of older people, basically stripping them of their lives and assets to fill their own pockets,” Blakeson told Esquire Magazine. “They run through their money as fast as possible, store them in the worst care home, and just forget about them. Just park them and then move on to the next one, and that felt almost like a gangster’s operation.”

And while the real-life scams never reached a level on par with Grayson’s Guardians, one crooked professional guardianship business in Las Vegas did manage to bilk hundreds of unsuspecting seniors out of their life savings. As we detailed in our previous article, Use Estate Planning to Avoid Adult Guardianship—and Elder Abuse, a real-life Marla Grayson named April Parks, who owned a Las Vegas-based company called A Private Professional Guardian, was sentenced to up to 40 years in prison in 2018 after being indicted on more than 200 felonies for using her guardianship status to swindle more than 150 seniors. 

In her case, prosecutors described how Parks, in a similar fashion as Marla, used a shady network of social workers and medical professionals who helped her track down her elderly victims. On the lookout for wealthy seniors with a history of health issues and few living relatives, Parks was often able to obtain court-sanctioned guardianship during court hearings that lasted less than two minutes.

From there, the guardians would force the elderly out of their homes and into assisted-living facilities and nursing homes. They would then sell off their homes and other assets, keeping the proceeds for themselves. Even worse, the guardians were often able to prevent the seniors from seeing or speaking with their family members, leaving them isolated and even more vulnerable to exploitation.

 

The Most Punitive Civil Penalty

What makes these cases particularly tragic is the fact that for the most part, everything these unscrupulous guardians did is perfectly legal. As Blakeson put it, “They had the law on their side, and there was nothing you could do.” Although guardianships are designed to protect the elderly from their own poor decisions, guardianship can turn out to be more of a punishment than a benefit. 

In a 2018 New York Times article detailing the state of the guardianship system in New York, Florida congressman Claude Pepper described guardianship as “the most punitive civil penalty that can be levied against an American citizen, with the exception, of course, of the death penalty.” 

Indeed, once you’ve been placed under court-ordered guardianship, you essentially lose all of your civil rights. Whether it’s a family member or a professional, the person named as your guardian has the complete legal authority to control every facet of your life. While guardianship is governed by state law and varies from state to state, some of the most common powers guardians are granted include the following:

  • Determining where you live, including moving you into a nursing home
  • Complete control over your finances, real estate, and other assets
  • Making all of your healthcare decisions and providing consent for medical treatments
  • Placing restrictions on your communications and interactions with others, including family members
  • Making decisions about your daily life such as recreational activities, clothing, and food choices
  • Making end-of-life and other palliative-care decisions 

Additionally, though it’s possible for guardianship to be terminated by the court if it can be proven that the need for guardianship no longer exists, a study by the American Bar Association (ABA) found that such attempts typically failAnd those family members who do try to fight against court-appointed guardians frequently end up paying hefty sums of money in attorney’s fees and court costs, with some even going bankrupt in the process.


Protection Through Planning

Given the potential for neglect, abuse, and exploitation that guardianship affords, it’s crucial that seniors and their families take the proper steps to prevent any and all possibility of falling prey to such scams. Moreover, because any adult could face court-ordered guardianship if they become incapacitated by illness or injury, it’s vital that every person over age 18—not just seniors—take proactive measures to prepare for potential incapacity.

Fortunately, there are multiple estate planning tools that can prevent such abuse from occurring. With us, as your Personal Family Lawyer®, we can put planning vehicles in place and offer ongoing advisory and support that would make it practically impossible for a legal guardian to ever be appointed—or need to be appointed—against your wishes.

Next week, we’ll continue with part two in this series on the dark side of adult guardianship and offer tips for how you can avoid the potential for abuse using estate planning.

 

This article is a service of Stephanie Hon, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

7 Ways To Save Big Money On Your 2020 Taxes—Part 1

2020 was a nightmarish year for many families. But thanks to recent legislation, you could see a silver lining in the form of major tax breaks when filing your income taxes this spring. First up, although it’s technically not a tax break, the IRS announced this week that the deadline for filing your 2020 federal income taxes has been pushed back from April 15 to May 17, 2021, which gives you an extra month to get your tax return handled. 

The postponement applies to individual taxpayers, including those who pay self-employment taxes. But the extension does not apply to the first-quarter 2021 estimated tax payments that many small business owners file. So if you file quarterly taxes, contact your tax advisor now if you haven’t already done so.

Additionally, the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020 provides individual taxpayers with several hefty tax-saving opportunities, many of which are only available this year. What’s more, President Biden’s new relief package, known as the American Rescue Plan (ARP), which went into effect in March 2021, not only offers additional stimulus payments to most Americans, but it also includes significant tax relief for those taxpayers who lost their job and had to rely on unemployment benefits in 2020.

While there are dozens of potential tax breaks available for 2020, here are 7 of the leading ways you can save big money on your 2020 tax return. 

  1. Stimulus Payments

As part of the CARES Act, millions of Americans received stimulus checks in 2020, and those payments were an advance refundable tax credit on your 2020 taxes. This means that no matter how much you owe (or get back) on your 2020 taxes, you get to keep all of the stimulus money and won’t have to pay any taxes on it.

Because the IRS didn’t have everyone’s 2020 tax returns when they issued the stimulus checks, they based the stimulus payments on your 2018 or 2019 returns, whichever one you had most recently filed. Using data from those years, the stimulus payments from 2020 phased out at an adjusted gross income (AGI) of $75,000 to $99,000 for singles and at $150,000 to $198,000 for married couples filing jointly.

Given that the stimulus payments were based on your AGI for 2018 or 2019 but technically apply to your 2020 AGI, you may find that your payment was either too much or too little. But there’s good news—even if your financial situation has improved since 2018 or 2019 and you received too much stimulus money based on your 2020 income, you get to keep the overage.

By the same token, if you received too little or only partial payment on your 2020 stimulus, you can claim what you missed in the form of a recovery rebate credit when you file your 2020 taxes. Not sure how this would work? Here are three scenarios where you may be entitled to additional stimulus money.

  • If your AGI for 2018/19 is higher than your AGI in 2020, you can claim the additional amount owed when you file your 2020 taxes this April.
  • If you had a child in 2020 but didn’t get the $500 credit for dependent children in your stimulus payment, you can claim the child when you file in 2021.
  • If someone else claimed the child based on 2018/19 returns, but you can legitimately claim that child on your 2020 return, you can get the $500 tax credit when you file in 2021, and the person who got it based on 2018/19 returns will not have to pay it back.
  1. Unemployment Benefits

When the pandemic stalled out the economy, many Americans lost their jobs and were forced to rely on unemployment insurance to pay the bills. That said, unemployment benefits are generally taxable, so if you took them, without having taxes automatically deducted, you were looking at having to pay income taxes on that money when you file your 2020 return.

However, taxpayers who received unemployment benefits in 2020 were provided with significant relief with the passage of President Biden’s American Rescue Plan (ARP). Under the ARP, the first $10,200 of your 2020 unemployment benefits are tax-free if your annual household income is less than $150,000. The ARP doesn’t provide a different threshold for single and joint filers, so both spouses are entitled to the $10,200 tax break, for a potential total of $20,400, if both spouses received the benefits.

Note that if your unemployment benefits exceed $10,200 in 2020, you’ll need to report the excess as taxable income and pay taxes on the amount over the limit. And if your household income is over $150,000, you’ll need to pay taxes on all of your unemployment benefits just like you would before the passage of the ARP.

If you already filed your 2020 return and paid taxes on your unemployment benefits before the passage of the ARP made those benefits tax-free, the IRS plans to automatically process your refund. This means you won’t have to tax any extra steps, such as filing an amended return, to secure the refund. The IRS will release further details on this issue in the coming weeks.

3. Waived RMDs

You are typically required to take an annual required minimum distribution (RMD) from your IRA, 401(k), or other tax-deferred retirement account starting in the year when you turn 72, but the CARES Act temporarily waived the RMD requirement for 2020. The waiver also applies if you reached age 70½ in 2019, but waited to take your first RMD until 2020, as allowed under the SECURE Act.

RMDs generally count as taxable income, so taking this waiver means that you may have lower taxable income in 2020 and therefore owe fewer income taxes for 2020.

However, there are a number of factors to consider, including the state of the market and your living expenses, when deciding whether or not to waive your RMDs. Given this, consult with us, as your Personal Family Lawyer®, or your tax professional before making your final decision.

Next week, in part two of this, we’ll cover the remaining four ways you can save big money on your 2020 tax bill. 

This article is a service of Stephanie D. Hon, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

Why Estate Planning is a Women’s Issue

A group of wealth strategists at CIBC Private Wealth Management noticed that the women in attendance at educational seminars for client couples were often mum. So, as part of the firm’s Women’s CIRCLE initiative, they started women-only seminars, including one called Finding Your Way. The idea is that if you take an inventory of your financial life, and know a little bit about how the estate administration process works, you’ll be more confident and better prepared to deal with a death in the family.

The surprise: It wasn’t just older women in their 60s and 70s who have been signing up, but Millennial women, wanting to know what they should be doing to manage their own wealth and make sure their parents (especially moms who will generally outlive dads) are in good shape in the event of a death or divorce.

“These concepts are really daunting and quite scary,” says Becky Milliman, a managing director with CIBC Private Wealth Management in Chicago, noting that it takes courage for the less financially sophisticated family member to speak up, and that tends to be the woman.

Here are some top lessons.

Keep a list of trusted advisors. Many of the adult children couldn’t name their parents’ attorney or accountant. You shouldn’t just know their names, you should meet them or at least make a quick introductory phone call. Ditto for financial advisors, bankers, and/or insurance brokers. Keep an updated list with your will. More wealth management firms are rolling out “emergency contact forms” as a backstop for elder abuse. Fill them out.

Use a thumb drive. There were real concerns over digital assets, says Amanda Marsted, a managing director of CIBC Private Wealth Management in New York. Would you know the login information to access your spouse or parents’ accounts? Consider using a password manager, or store password information (and documents) on a thumb drive.

Have the conversation. What if mom or dad (or your spouse) says: “When you need to know, you’ll get the information.” Tell them: You don’t have to share balances, but at a minimum, you should share advisors, bank account numbers, and such. That will prevent much bigger problems down the line.

Keep important documents secure. Are your original wills and trusts at the lawyer’s office? Your real estate deed in your bank safe deposit box? Your insurance policies in one filing cabinet and income tax returns in another? The list goes on: retirement plan statements, birth/marriage certificates, Social Security cards. Make a list of these documents, including where you keep them. “You need to be prepared,” Milliman says.

Plan ahead if you have a family business. If you have a family business, do you have a succession plan in place? In one case, a widow was left with a business her late husband founded that she had no interest in carrying on. Luckily, it turned out to be an opportunistic time to sell, and Milliman helped the widow create a family foundation to minimize taxes from the sale and help her make a difference.

 Source: https://www.forbes.com/sites/ashleaebeling/2018/07/10/why-estate-planning-is-a-womens-issue/#35fdba54536e

New Developments Transform the Role Life Insurance Plays in Your Estate and Financial Planning

Within the past year, a combination of new legislation and the recent change of leadership in the White House and Congress stands to dramatically increase the income taxes your loved ones will have to pay on inherited retirement accounts as well as increasing the income taxes you owe on your taxable investments. However, purchasing life insurance may offer you the opportunity to minimize the effect of these developments.

To this end, if you hold assets in a retirement account, you need to review your financial plan and estate plan as soon as possible to determine if investing in life insurance or some other strategy may offer tax-saving benefits for you and your family. To help you with this process, here we’ll discuss how these new developments might affect the taxes owed by you and your heirs, and how investing in life insurance may help offset the tax impact of these new changes.

The SECURE Act

At the start of 2020, the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) went into effect, and the new law effectively put an end to the so-called “stretch IRA.” Under prior law, beneficiaries of your retirement account could choose to stretch out distributions of an inherited retirement account over their own life expectancy to minimize the income taxes owed on those distributions. 

For example, an 18-year-old beneficiary expected to live an additional 65 years could inherit an IRA and stretch out the distributions for 65 years, paying income tax on just the portion withdrawn each year. In that case, the income tax law would encourage the child not to withdraw and spend the inherited assets all at once.

Under the new law, however, most designated beneficiaries of inherited IRAs and similar tax-deferred qualified retirement accounts are now required to withdraw all of the assets from the inherited account—and pay income taxes on those withdrawals—within 10 years of the account owner’s death. Those who fail to withdraw funds within the 10-year window face a 50% tax penalty on the assets remaining in the account.

But this is just the first development that stands to affect the amount of taxes your heirs might face in the near future on inherited investments.

Democrats Take Control

As we highlighted in a previous article, the recent election of Joe Biden as President and subsequent Democratic takeover of the Senate will likely result in the passage of new tax legislation that could have a significant impact on your family’s financial and estate planning considerations. 

Specifically, it’s likely that within the next two years Democrats will pass legislation aimed at eliminating many of the tax cuts enacted through the 2017 Tax Cuts and Jobs Act. As part of this legislation, we’re expected to see significantly lower federal estate tax exemptions, the elimination of the step-up in cost basis on inherited assets, as well as an increase in the top personal income and capital gains tax rates. 

One way you may be able to minimize the new taxes on both your tax-deferred retirement accounts and taxable investments is by investing in cash-value life insurance. Let’s break down exactly what this strategy might look like.

The New Role of Life Insurance In Your Estate and Financial Planning

Given the new distribution requirements for inherited IRAs, you should consider whether it makes sense to withdraw funds from your retirement account now, pay the tax, and invest the remainder in cash-value life insurance. From there, you can access the accumulated cash-surrender value of the life insurance policy income-tax-free during your lifetime via tax-free withdrawals and/or loans. And upon your death, the death benefit of your life insurance policy would be income-tax-free for your heirs.

By annually investing what you would otherwise put into tax-deferred retirement accounts into a cash-value life insurance contract, or by taking taxable withdrawals from your tax-deferred retirement accounts over time and reinvesting them in cash-value life insurance, you can effectively move these funds into a tax-free, rather than tax-deferred, investment vehicle.

This strategy could not only minimize the income taxes you pay over your lifetime, but it could also significantly reduce the tax bill imposed on your designated beneficiaries after your death since life insurance proceeds are income-tax-free.

Additionally, by investing a portion of your investable assets in cash-value life insurance, you can offset the effects of the proposed loss of income tax basis step-up upon your death, which we’re likely to see enacted through Democrat-backed legislation. What’s more, this strategy would also minimize your current income taxes on what otherwise would have been taxable income from your investments, as growth on investments inside a life insurance policy is not subject to income tax, including any capital gains.

Finally, if you stand to be affected by the proposed decrease of the federal estate tax exemption, which is currently set at $11.7 million, by placing the life insurance policy inside an irrevocable life insurance trust, you can remove the death benefit paid out to your beneficiaries from your taxable estate. In doing so, you would still be able to access the cash value of the insurance policy during your lifetime, either via a so-called “spousal access trust,” if you are married, or via a traditional irrevocable life insurance trust, if you are not married. 

Rethink Your Planning

Although the SECURE Act and the proposed new legislation stand to have an adverse effect on the tax consequences for your retirement and estate planning, investing in life insurance may offer you a valuable tax-saving opportunity. That said, you can only take advantage of this opportunity if you plan for it.

If you fail to revise your plan to address the SECURE Act’s new requirements and/or the proposed legislation that’s likely to be passed by the Democratic administration, you and your family could face a significantly higher tax bill. To prevent this from happening, schedule a Family Wealth Planning Session™ or an existing estate-plan review today.

With us as your Personal Family Lawyer®, we’ll work with you and your financial advisor to analyze all of the ways your retirement accounts might be impacted by the SECURE Act and the new proposed legislation and come up with the most effective planning strategies for passing your assets to your loved ones in the most tax-advantaged manner possible, while ensuring your current tax liabilities are similarly minimized. To learn more, contact us right away.

This article is a service of Stephanie D. Hon, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

 

What You Should Know About Long-Term Care Insurance

With people living longer than ever before, more and more seniors require long-term healthcare services in nursing homes and assisted living facilities. However, such care is extremely expensive, especially when it’s needed for extended periods of time.

Traditional healthcare insurance doesn’t cover such services, and though Medicare does pay for some long-term care, it’s quite limited, difficult to qualify for, and requires you to deplete nearly all of our assets before being eligible (or do proactive planning to shield your assets, which we can support you with). To address this gap in coverage, long-term care insurance was created.

Intensive Care

First introduced as “nursing home insurance” in the 1980s, long-term care insurance is designed to cover expenses associated with long-term skilled nursing services delivered in a nursing home, assisted living facility, or other senior care setting, though some of today’s policies cover care delivered in your own home as well.

Such intensive care is required when you are no longer able to care for yourself, often at the end of your life. These policies cover the cost of skilled nursing services that support you with basic self-care tasks, such as bathing, feeding, and using the bathroom.

These are known as activities of daily living (ADLs) and generally include:

  • Ambulating (walking or getting around)
  • Feeding
  • Bathing
  • Dressing and grooming
  • Using the toilet
  • Continence management
  • Getting in and out of bed or a chair

Before your coverage kicks in, most policies require that you demonstrate you have lost the ability to engage in at least two or three ADLs. Most policies also have a deductible, or elimination period, which is a set number of days that must elapse between the time you become disabled (eligible for benefits) and the time your coverage kicks in.

Many policies offer a 90-day elimination period, but others can be longer, shorter, or even have no elimination period at all. Of course, the shorter the elimination period, the more expensive the premium.

Additionally, long-term care policies typically come with a predetermined benefit period, which is the number of years of care it will pay for. A benefit period of three to five years, for example, is a quite common duration for such policies. Most policies also come with a cap on the dollar amount of coverage that will be paid for care on a daily basis, known as a daily benefit amount.

Getting Covered

Obviously, the younger and healthier you are when you buy the policy, the cheaper the premiums will be, so the sooner you invest in coverage, the better. In fact, most policies exclude certain pre-existing conditions, so if you wait until you become ill, it can be impossible to find coverage.

For example, if you have any of the following conditions, it generally disqualifies you from obtaining coverage:

  • You already need help with ADLs
  • You have AIDS or AIDS-Related Complex (ARC)
  • You have Alzheimer’s Disease or any form of dementia or cognitive dysfunction
  • You have a neurological disease, such as multiple sclerosis or Parkinson’s Disease
  • You had a stroke within the past year to two years or have a history of strokes
  • You have metastatic cancer
  • You have kidney failure

Increasing Premiums, Decreasing Benefits

With the elderly population booming, there has been a surge in demand for long-term care services, which has led to a marked increase in the cost of such policies. At the same time, many insurers have been cutting back on the benefits their policies offer.

Given this, other types of hybrid policies are springing up. One increasingly popular type of hybrid policy combines long-term care insurance with life insurance. With this type of policy, if you don’t use the long-term care benefits, the policy pays a death benefit to your family when you pass away.

If you are looking to purchase long-term care insurance, you should speak with multiple insurance providers and compare their benefits, care options, and premiums. Different companies may offer the same coverage and benefits, but they can vary dramatically in price. Always ask about the insurance company’s history of rate increases, including the amount of the most recent increase.

Choose Wisely

For the best chances of success when shopping for a policy, get help from a fee-only planner, who is not compensated based on your choice of coverage. Or, if you are working with a commissioned agent, meet with a lawyer like us with experience in elder law, who can review the policy terms to ensure it’s a good fit for you before you sign on the dotted line.

When meeting with an insurance provider, you must get answers to following three questions about your policy:

  1. How long is the elimination period before the policy begins paying benefits?
  2. What capacities, or ADLs, must you lose before coverage kicks in?
  3. How many years of care are covered?

Buying long-term care insurance should be a family affair, because you are going to need your family members to advocate for you and file a claim for the policy when you need to use it. Given this, make sure your family knows what kind of policy you have, who your agent is, and how to make a claim.

What’s more, you should pre-authorize the right person to speak to the insurance company on your behalf, and not just rely on a power of attorney. That said, you should definitely have a well-drafted, updated, and regularly reviewed power of attorney on file as well.

Keep Your Policy Updated

Once you are in your 40s, your long-term care policy should be reviewed annually to evaluate new insurance products on the market and update your policy based on your changing needs. Whatever you do, once you have a policy in place, make sure you don’t miss a premium payment, because if you stop paying, even for a short period of time, you’ll lose all of the money you invested and will have no access to the benefits when you need them.

Reach out to us, as your Personal Family Lawyer®, for support in finding the right long-term care policy for your particular situation. Long-term care insurance, along with life insurance, are key components in your estate plan. When combined with the right estate planning vehicles, you can rest assured your family will be protected and provided for no matter what happens to you. Contact us todayto learn more.

5 Steps For Adding Digital Assets To Your Estate Plan

Although digital technology has made many aspects of our lives much easier and more convenient, it has also created some unique challenges when it comes to estate planning.

If you haven’t planned properly, for example, just locating and accessing all of your digital assets can be a major headache—or even impossible—for your loved ones following your death or incapacity.And even if your loved ones can access your digital assets, in some cases, doing so may violate privacy laws and/or the terms of service governing your accounts. You may also have some online assets that you don’t want your loved ones to inherit, so you’ll need to take measures to restrict and/or limit access to such assets.

​Given the unique nature of your online property, there are a number of special considerations you should be aware of when including online property in your plan. Here are a few of the steps you should take to help ensure your digital assets are properly accounted for, managed, and passed on.

1. Make an inventory:

Create a list of all your digital assets, along with their login and password information. Some of the most common digital assets include cryptocurrency, online financial accounts, online payment accounts like PayPal, websites, blogs, digital photos, email, and social media.

Store the list in a secure location, and provide your fiduciary (executor, trustee, or power of attorney agent) with detailed instructions about how to locate and access your accounts. To make them easier to manage, back up any cloud-based assets to a computer, flash drive, or other physical storage device. Review this list regularly to account for any new digital property you acquire.

2. Include digital assets in your estate plan:

Just like any other property you want to pass on, detail in your plan who you want to inherit each digital asset, along with your wishes for how the asset should be used or managed. If you have any assets you don’t want passed on, include instructions for how these accounts should be closed and/or deleted.

Do NOT include passwords or security keys in your planning documents, where they can be read by others. This is especially true for your will, which becomes public record upon your death. Instead, keep this information in a separate, secure location, and provide your fiduciary with instructions about how to access it. Consider using digital account-management services, such as Directive Communication Systems, to help streamline this process.

If you have particularly complex or highly encrypted digital assets like cryptocurrency, consider including provisions in your plan allowing your fiduciary to hire an IT consultant to deal with any technical challenges that might come up.

3. Restrict access:

Include terms in your plan detailing the level of access you want your fiduciary to have to your digital accounts. For example, do you want your fiduciary to be allowed to view your emails, photos, and social media posts before passing them on or deleting them? If there are any assets you want to limit access to, we can help you include the necessary provisions in your plan to ensure your privacy is respected.

4. Include relevant hardware: 

Don’t forget to include the physical devices—smartphones, computers, tablets—upon which your digital assets are stored in your plan. Having quick access to these devices will make it much easier for your fiduciary to manage your digital assets. And since the data can be transferred or deleted, you can even leave these devices to someone other than the individual who inherits the digital property stored on them.

5. Review service providers’ access-authorization functions:

Some service providers like Google, Facebook, and Instagram allow you to give specific individuals access to your accounts upon your death. Review the terms of service for your accounts, and if these functions are available, use them to document who you want to access your accounts.

Double check that the people you named to inherit your digital assets using these access-authorization tools match those you’ve named in your estate plan. If not, the provider will likely give priority to the person named with its tool, not your plan.

Keep pace with technology

As technology evolves, you’ll need to adapt your estate plan to keep pace with the ever-changing nature of your assets. As your Personal Family Lawyer®, we know just how valuable your online property can be, and our planning strategies are specifically designed to ensure these assets are preserved and passed on seamlessly in the event of your death or incapacity. Contact us today to schedule a Family Wealth Planning Session.

4 Tips For Talking About Estate Planning With Your Family Over the Holidays

With COVID-19 still raging, your 2020 holiday season may not feature the big family get-togethers of years past, but you’ll still likely be visiting with loved ones in some fashion, whether via video chat or in smaller groups. And though the holidays are always a good time to bring up estate planning, given the ongoing pandemic, talking about these issues is particularly urgent this time around.

That said, asking your dad about his end-of-life wishes while he’s watching football isn’t the best way to broach the subject. In order to make the talk as productive as possible, consider the following four tips.


1. Set aside a time and place to talk

Discussing planning while opening Christmas gifts most likely won’t be very productive. Your best bet is to schedule a time, when you can all gather to talk without distractions or interruptions.

Be upfront with your family about the meeting’s purpose, so no one is taken by surprise and people come prepared for the talk. Choose a setting that’s comfortable, quiet, and private. The more relaxed everyone is, the more likely they’ll be comfortable opening up.

2. Create an agenda, and set a start and stop time

Create a list of the most important points you want to cover, and do your best to stick to them. You should encourage open conversation, but having a list of items you want to cover can help ensure you don’t forget anything.

Also, set a start and stop time for the conversation. This will help keep the discussion on track and prevent people from veering too far off topic. If anything important comes up that’s not on the list, you can always continue the discussion later. Remember, the goal is to simply get the conversation started, not work out all of the details or dollar amounts.

3. Explain why planning is important

Assure everyone that the conversation isn’t about prying into anyone’s finances, health, or relationships—it’s about providing for the family’s future security and wellbeing no matter what happens. It’s about ensuring everyone’s wishes are clearly understood and honored, not about finding out how much money someone stands to inherit.

Talking about these issues is also a good way to avoid future conflict and expense. When family members don’t clearly understand the reasoning behind one another’s planning choices, it’s likely to breed conflict, resentment, and even costly legal battles.

4. Discuss your planning experience

If you’ve already created your plan, start the talk by explaining the planning documents you have in place and why you chose them. If you’ve worked with us, as your Personal Family Lawyer®, describe how the process unfolded and how we supported you to create a plan designed for your unique wishes and needs.

Mention any questions or concerns you initially had about planning and how we worked with you to address them. If you have loved ones who’ve yet to do any planning and have doubts about its usefulness, discuss their concerns in a sympathetic and supportive manner, sharing how you dealt with similar issues whenever possible.

If you have not yet worked with us on your estate plan, consider watching this brief training that discusses what you need to do, what you can do yourself, and what you need a lawyer to help you with. You may even want to watch it with your family, and outline the actions steps together. And if one of your action steps is to enlist the support of a lawyer to get your planning done, call us for a Family Wealth Planning Session™.

For the love of your family

With us as your Personal Family Lawyer®, we can guide and support you in having these intimate discussions with your loved ones. When done right, planning can put your life and relationships into a much clearer focus and offer peace of mind knowing that the people you love most will be protected and provided for no matter what. Contact us today to learn more.

5 Questions To Ask Before Hiring An Estate Planning Lawyer—Part 2

Since you’ll be discussing topics like death, incapacity, and other frightening life events, hiring an estate planning lawyer may feel intimidating or morbid. But it definitely doesn’t have to be that way.

Instead, it can be the most empowering decision you ever make for yourself and your loved ones. The key to transforming the experience of hiring a lawyer from one that you dread into one that empowers you is to educate yourself first. This is the person who is going to be there for your family when you can’t be, so you want to really understand who the lawyer is as a human, not just an attorney. Of course, you’ll also want to find out the kind of services the lawyer offers and how they run their business.

To gather this information and get a better feel for who the individual is at the human level, we suggest you ask the prospective lawyer five key questions. Last week in part one, we listed the first two of these questions, and here, we cover the final three.


​ 3. How will you proactively communicate with me on an ongoing basis?

The sad truth is most lawyers do a terrible job of staying in regular communication with their clients. Unfortunately, most lawyers don’t have their business systems set up for ongoing, proactive communication, and they don’t have the time to really get to know you or your family.

If you work with a lawyer who doesn’t have systems in place to keep your plan updated, ensure your assets are owned in the right way (throughout your life), and communicate with you regularly, your estate plan will be worth little more than one you could create for yourself online—and it’s likely to fail when your family needs it most.

Think of it this way: Yes, your estate plan is a set of documents. But more importantly, it’s who and what your family will turn to when something happens to you. You want to work with a lawyer who has systems in place to keep your documents up to date and to ensure your assets are owned in the right way throughout your lifetime. Ideally, the lawyer should get to know you and your family over time, so when something happens, your lawyer can be there for the people you love, and there will already be an underlying relationship and trust.

Your lawyer should proactively communicate with you and keep you and your family educated on an ongoing basis. We think sending out a weekly (at least) email is best. I prefer to hear from the professionals with whom I work on a monthly basis by regular mail and on a weekly basis by email, but depending on the relationship, it could be even more frequent than that.

If you are considering hiring a lawyer who doesn’t take the time to proactively communicate with his or her clients, this should be a red flag. That’s a sign that the lawyer may be stuck in an old, outdated mindset that won’t address your ongoing needs in the way you deserve.

4. Can I call about any legal problem I have, or just about matters within your specialty?

Given the complexity of today’s legal world, lawyers must have specialized training in one or more specific practice areas, such as divorce, bankruptcy, wills and trusts, personal injury, business, criminal matters, or employment law. You definitely do NOT want to work with a lawyer who professes to be an expert in whatever random legal issue walks through the door.

That said, you do want your personal lawyer to have broad enough expertise that you can consult with him or her about all sorts of different legal and financial issues that may come up in your life—and trust he or she will be able to offer you sound guidance. Moreover, while your lawyer may not be able to advise you on all legal matters, he or she should at least be able to refer to you to another trusted professional who can help you.

Trust me, you wouldn’t want the lawyer who designed your estate plan to also handle your personal injury claim, settle a dispute with your landlord, and advise you on your divorce. But you do want him or her to be there to hear your story, refer you to a highly qualified lawyer who specializes in that area, and overall, serve as your go-to legal consultant.

In this capacity, you can call your personal lawyer before you sign any legal documents, any time you have a legal or financial issue arise, or whenever anything that might adversely affect your family or business comes up, and know that you’ll get excellent guidance.

With this in mind, look for a lawyer who has an ongoing service program or membership program, in which you can pay a low monthly fee and be able to call with all of your legal and financial questions, without being charged hourly for the consultation. And be sure that when you call, you get to schedule time to talk with your own lawyer, who you know and trust. We love the idea of legal insurance plans, but we don’t love that you don’t get your own personal lawyer with them. You need to know your lawyer, and know that your lawyer has your back.

5. What happens if you die or retire?

This is a critically important—and often overlooked—question to ask not only your lawyer, but any service professional before beginning a relationship. Sure, it may be uncomfortable to ask, but a truly excellent, client-centered professional will have a plan in place to ensure their clients are taken care of no matter what happens to the individual lawyer managing your plan.

Look for a lawyer who has their own detailed plan in place that will ensure that someone warm and caring will take over your planning without any interruption of service. If your lawyer prepared a will, trust, and other estate planning documents for you, or if you are in the middle of a divorce or lawsuit, you want to make certain your lawyer has such a contingency plan in place, so you won’t be forced to start over from scratch should your lawyer die, retire, or become otherwise unavailable.

Finally, if your lawyer offers a membership program, you’ll want to make sure he or she has a relationship with another lawyer or a network of lawyers who can continue to service you under that program.

A Lasting Relationship

Although hiring the right estate planning lawyer may not seem like a super important decision, it’s actually one of the most critical choices you can make for both yourself and your family. After all, this is the individual you are trusting to serve on your behalf to protect and provide for your loved ones in the event of life’s most traumatic experiences.

Should you choose the wrong person for the job, your family could potentially face all manner of unnecessary conflicts, expenses, and legal entanglements during a time when they are at their most vulnerable. In the end, estate planning is about far more than having a lawyer create a set of documents for you, and then never seeing you again, or only seeing you when something goes wrong.

With us as your Personal Family Lawyer®, we develop a relationship with you and with your family that lasts not only for your lifetime, but for the lifetime of your children and their children, if that’s your wish. Our unique, family-centered legal services are specifically tailored to provide our clients with the kind of love, attention, and trust we’d want for our own loved ones.

To learn Schedule Online more about our one-of-a-kind systems and services, schedule a Family Wealth Planning Session today.

5 Questions To Ask Before Hiring An Estate Planning Lawyer—Part 1

Since you’ll be discussing topics like death, incapacity, and other frightening life events, hiring an estate planning lawyer may feel intimidating or morbid. But it definitely doesn’t have to be that way.

Instead, it can be the most empowering decision you ever make for yourself and your loved ones. The key to transforming the experience of hiring a lawyer from one that you dread into one that empowers you is to educate yourself first. This is the person who is going to be there for your family when you can’t be, so you want to really understand who the lawyer is as a human, not just an attorney. Of course, you’ll also want to find out the kind of services your potential lawyer offers and how they run their business.

To this end, here are five questions to ask to ensure you don’t end up paying for legal services that you don’t need, expect, or want. Once you know exactly what you should be looking for when choosing a planning professional, you’ll be much better positioned to hire an attorney who will provide the kind of love, attention, care, and trust your family deserves.


1. How do you bill for your services?

There’s no reason you should be afraid to ask a lawyer how he or she bills for the work they do on your behalf. In fact, questions about billing and payment should be among the very first subjects you bring up when you first contact them. No one wants surprises, especially when it comes to the bill.

If you call a lawyer’s office and they are reluctant or refuse to give you clear answers to questions about how they charge for their services, determine your fees, or what they expect certain services will cost, this is a big red flag. When someone is hesitant to discuss their billing or business practices, you could be in for some major surprises about what things cost down the road.

Find an estate planning lawyer who bills for all of their services on a flat-fee, no surprises, basis—and never on an hourly basis—unless it’s required by the court for limited purposes. And ideally, you want a lawyer who will guide you through a process of discovery in which they learn about your family dynamics, your assets, and they educate you about what would happen for your family and to your assets if and when something happens to you, and then support you in choosing the right plan for you that meets your budget and your desired outcomes.

Our process for your planning begins with a Family Wealth Planning Session™, in which we educate you about the law and you educate us about your family dynamics and assets, and then you choose the right plan, at the right cost, for the people you love.

2. How will you respond to my needs on an ongoing basis?

One of the biggest complaints people have about working with lawyers is that they are notoriously unresponsive. Indeed, I’ve heard of cases in which clients went weeks without getting a call back from their lawyer. This is all too common, but totally unacceptable, especially when you’re paying them big bucks.

That said, in most cases, these lawyers aren’t blowing you off—they simply don’t have enough support or the systems in place to be able to be responsive. Far too many lawyers believe they can take care of everything themselves. From paperwork and client meetings to scheduling and returning phone calls to connecting their clients with other advisors, there are just too many responsibilities for one person to manage all on their own.

The truth is, if a lawyer is a complete solo practitioner without support or works for a firm that doesn’t provide adequate support, sooner or later, they are almost certain to become overwhelmed and unresponsive. Given this, it’s vital that you ask your lawyer about how they will respond to your needs if you decide to become their client.

Ask them how quickly calls are typically returned in their office, ask them if there will be someone on-hand to answer quick questions, and ask them how they will support you to keep your plan up to date on an ongoing basis and be there for your loved one’s when you can’t be.

A great way to test this is to call your prospective lawyer’s office and ask for him or her. If you get put through right away—or even worse, your call gets sent to a full voicemail—think twice about hiring this lawyer. This means they don’t have effective systems in place for managing and responding to calls or answering quick questions.

Instead, what you want is for the person who answers the phone—or another team member—to offer to help you. And if that individual cannot help you, then he or she should schedule a call for you to talk with your lawyer at a future date and time.

Your lawyer simply can’t be effective or efficient if he or she is taking every call that comes through. Ideally, all calls to your lawyer should be pre-scheduled with a clear agenda, so you both can be ready to focus on your specific needs.

Later in part two, we’ll talk more about the ways in which your attorney should communicate with you and list the remaining three questions to ask before hiring your estate planning lawyer.

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