Writing Your Tulsa Estate Planning Blog

A new study suggests that the total costs from elder abuse in the U.S. continue to rise at an alarming rate.

Elder abuse is a serious problem in the U.S. This has been known for a long time. As more people live longer while suffering from some form of cognitive impairment due to age or disease, fraudsters have more and more incentive to target the elderly.

What is not often known by the general public is how frequent financial abuse of the elderly is and how costly it can be.

Recently, the Wills, Trusts & Estates Prof Blog discussed the results of a recent survey that helps to answer those questions in “Elder Financial Abuse Is Costing Americans.”

The numbers are alarming: 37% of elderly caregivers report that the person under their care has been the victim of financial abuse. The average cost of the abuse to the elderly victim is $36,000. That is up 20% from two years ago when the average cost per victim was reported at $30,000.

Given the large number of elderly people in the U.S., these numbers show that a significant amount of wealth is being taken from the elderly in abuse incidents.

If you suspect that an elderly person you know is the victim of elder abuse, it is vital that you contact an elder law attorney and alert authorities. While it is often difficult to recover the lost funds, it can be done if the proper people are informed in time.

Reference: Wills, Trusts & Estates Prof Blog (Nov. 16, 2016) “Elder Financial Abuse Is Costing Americans.”

When you go to an estate planning attorney you expect that what you tell the attorney will be protected by attorney-client privilege. However, that might not always be the case.

Attorney-client privilege is one of the most important legal doctrines in the U.S. It allows people to be open and honest with their attorneys without fear that the attorney can later be forced to use any information obtained against the client. This doctrine even has an important place in estate planning.

To properly plan an estate a client needs to be able to tell the attorney what his assets are. The client would not be willing to do so if the attorney could later be forced to testify in a different legal dispute about those assets.

However, there are exceptions to attorney-client privilege as the Wills, Trusts & Estates Prof Blog reports in “Treasure-Hunter’s Documents Might Be in Deep Water.”

In the case discussed, a former treasure hunter hired an attorney to create an offshore trust. The client then got financing for an expedition in which he recovered gold from a sunken ship. However, he refused to pay the people who had financed his treasure hunt.

They are asking the judge to force the attorney to reveal the trust documents so that they will have an easier time recovering the money.

The judge in the case, while not making a decision, has acknowledged that the crime-fraud exception to attorney-client privilege might apply in this case. In other words, if the attorney’s services are knowingly used to commit a crime or a fraud, attorney-client privilege does not apply.

Reference: Wills, Trusts & Estates Prof Blog (Nov. 17, 2016) “Treasure-Hunter’s Documents Might Be in Deep Water.”

The Millennial generation might still have a long way to go before they reach retirement age, but they should be paying attention to elder law issues that will affect them in the future.

People of all generations tend to pay the most attention to the issues that affect them directly and immediately.

Most senior citizens do not think a lot about the cost of a college education and the availability of entry level jobs. Conversely, younger people do not think much about Social Security and Medicare. Each group has more pressing concerns that hold their attention.

However, the younger Millennial generation should pay attention to Social Security and Medicare.

Some people believe that stock markets will be bearish in the next few years. As a result, Millennials should save 25% of their current income to make sure that their retirement nest eggs grow at the appropriate rate, according to Wealth Management in “Should Millennials Double Retirement Savings Rates?”

Many Millennials will quickly point out that due to other economic factors beyond their control, they cannot afford to save 25% of their incomes, or even the traditional 10-15%.

As a result, people in that age group will be reliant to some extent on Social Security and Medicare when they retire. Since both of those programs face impending financial problems, Millennials need to pay attention to how these programs might change.

They should not consider it just an issue for older people. It will be their issue one day.

Reference: Wealth Management (Jan. 11, 2017) “Ken Thompson’s mother says she was cut out of will by late Brooklyn DA’s wife.”

President Trump’s choice for Treasury Secretary has created some controversy as ethics disclosures have revealed that he has placed assets into a dynasty trust.

President Obama has repeatedly asked Congress to address dynasty trusts. These are trusts designed to keep wealth in one family for many generations. Properly designed and administered, these trusts can help to legally avoid paying estate taxes for generation after generation, while continuing to generate wealth.

Some lawmakers view this as taking advantage of tax loopholes, while others believe that allowing dynastic wealth for generation after generation is bad in itself.

For his part, President Trump would make such trusts a thing of the past. He has said that he would eliminate the estate tax entirely, which makes dynasty trusts unnecessary.

His choice for Treasury Secretary Steven Mnuchin, however, has brought the issue to the forefront, since it has been revealed that Mnuchin created a dynasty trust for his family.

This is reported by Financial Advisor in “Trump’s Treasury Pick May Have Used Tax Loophole Obama Attacked.”

It is actually true that dynasty trusts exist because of something of a loophole.

Congress never intended for them to be created. For centuries, the English common law inherited by the U.S. prohibited trusts that violated the rule against perpetuities. This rule is extremely complicated and limits the duration of trusts.

When Congress last worked out the basic structure of the federal estate tax, it assumed the rule would be in place. At the time, the rule was the law in every state.

Over the years, however, several estates have repealed the rule against perpetuities in an effort to entice trust business into their states.
That made dynasty trusts possible.

Reference: Financial Advisor (Jan. 12, 2017) “Trump’s Treasury Pick May Have Used Tax Loophole Obama Attacked.”

There are a few things that every single estate plan needs to have regardless of the exact legal instruments that you end up using as your primary estate planning tools.

Estate plans can take a variety of shapes. Some estate plans are small and simple. Other estate plans are large and contain many complex legal instruments. However, there are a few things every single estate plan needs to have.

Recently, the Catholic Register discussed what is necessary for all Canadian estate plans in “The must-haves of estate planning.” In the U.S. most of the same things are also necessary. They include:

•Someone needs to be appointed as the executor of your will. Even if the primary instrument to distribute your property is a trust, your plan should still include a pour-over will for which you need to appoint someone trustworthy as an executor.
•Your estate plan needs to include some basic tax planning, especially if you live in a state that has an estate tax of its own.
•If you have any dependents, then your estate plan needs to provide for their care. While you have some flexibility in your estate, you cannot simply disinherit a spouse or a minor child.
•Your estate plan should also include powers of attorney so you can appoint someone to look after your interests if you become incapacitated.

If you have an experienced estate planning attorney create your estate plan, then it will contain all of these things and much more that will make your estate plan as effective as it can possibly be.

Reference: Catholic Register (Nov. 6, 2016) “The must-haves of estate planning.”

One of the main estate planning goals of many people is to avoid having a family fight over their estates.

There are very few things that can be more destructive to a family than a fight over an estate. Once the fight begins it becomes nearly impossible to regain family harmony because of the deep and bitter emotions that battles over estates have. People who know this seek to create estate plans that make family fights less likely.

While it is not possible to avoid all fights, there are some steps that can help.

Recently, the Lodi News-Sentinel discussed some of those steps in “Avoid family fights over inheritance,” including:

•Plan ahead of time. You should have an estate plan in place long before you think you will need one. Sudden deaths happen and it could happen to you. If you have no estate plan, you practically invite your family to fight over your estate.
•Consider irrevocable trusts. At some point your family might start thinking about what will happen to your estate after you pass away and they might start angling for position in the estate. If you have planned ahead and have an irrevocable trust, then you will not be as easily influenced to change plans to accommodate everyone.
•Use a professional trustee. Instead of appointing a family member to be in charge of your trust after you pass away, use a professional who will remain independent and treat everyone in the family equally.
•Hold a family meeting. Bring everyone together and let them know what your plans are and why you made them. Family members who are surprised by your estate plans after you pass away are more likely to argue.

Reference: Lodi News-Sentinel (Nov. 7, 2016) “Avoid family fights over inheritance.”

Relatively recent changes to federal estate tax law have made bypass trusts less popular than they used to be. However, they are still good in many circumstances.

It used to be a complicated process for a married couple to get the most out of the estate tax exemption. When one spouse passed away his or her estate tax exemption could be useless if all of the assets went to the other spouse directly. When the second spouse passed away all of the couple’s assets would be considered part of his or her estate and the individual estate tax exemption would be applied.

To get around this couples had to get a “bypass” trust of which there were many types. Essentially, the surviving spouse was bypassed in the estate plan.
The relatively new federal law of spousal “portability” changed this and made bypass trusts less necessary. Now, if the paperwork is properly filled out, a surviving spouse can elect to carry over the deceased spouse’s estate tax exemption and use it along with his or her own later.

This move essentially doubles the estate tax exemption.

However, there are some situations where a bypass trust is still a good idea as discussed by the Poughkeepsie Journal in “Bypass trust works better for many families.”

Many states have estate taxes of their own and they do not all allow spousal portability. Thus, in some states a bypass trust is still necessary to take full advantage of estate tax exemptions. A bypass trust can also be used to protect against a surviving spouse getting remarried and having all of the couple’s property eventually ending up in the new spouse’s family. They can also be used as a great way to include other family members in the estate plan, especially grandchildren.
If all this sounds a bit confusing, do not worry. That is why there are estate planning attorneys.

Tell the attorney what you want done with your possessions after you pass away and let the attorney worry about the best way to accomplish that while minimizing the estate tax burden on your estate.

Reference: Poughkeepsie Journal (Nov. 4, 2016) “Bypass trust works better for many families.”

One of the first things that people have to decide when they start thinking about estate plans is whether they want to use a will or a trust. Both have their advantages.

If you start asking your friends and family or look on the Internet for estate planning advice, then you are likely to receive a lot of conflicting advice. Should you get a will or a trust? Nearly everyone seems to have an opinion one way or another.

Normally, the opinion of non-attorneys is rooted in which of the two options was best for the person giving the advice. It may or may not be the best advice for you.

To help decide the better option to use as the primary legal instrument in your estate plan it is helpful to know the basic differences between the two.
This was the subject of a Motley Fool article titled “Wills vs. Trusts: Which Are Better?”

A will determines who gets your possessions after you pass away. It has no legal effect until then. It is a roadmap for what you want to happen later. The rules for wills vary from state to state, but they need to go through probate court and the details are made public. For people with small estates they can be cost-effective.

Trusts, on the other hand, have legal effect as soon as they are executed. Property is placed in the trust while you are still alive. While trusts can be more costly to obtain and maintain, they do not ordinarily have to go through probate after you pass away and the details are not made available to the public. Trusts are normally preferred to wills for larger estates.

If you are uncertain whether a will or trust is a better option for you, that is okay. You probably should not decide between the two before talking to an estate planning attorney who can help you make the decision. To learn more about trusts versus wills, sign up for one of our upcoming workshops.

Reference: Motley Fool (Nov. 8, 2016) “Wills vs. Trusts: Which Are Better?”

Estate planning can sometimes seem like it requires a long, complicated list of different documents. It can be helpful to break those documents down into two basic categories.

Once you start planning for your estate you can quickly get bogged down trying to figure out what all of the different estate planning documents are. There are all sorts of different legal documents that are not familiar to most non-attorneys. This often confuses people enough that they give up and delay getting an estate plan.

However, it does not have to be that complicated.

A good way to think about the different documents is to put them into two basic categories, as the Motley Fool discusses in “The Estate-Planning Documents Everyone Needs.”

The first type of estate planning document determines what happens to your belongings after you pass away. This category includes wills, most trusts and even things like a retirement account that has a beneficiary designation.

The second type of estate planning document determines who takes care of your affairs if you are not able to do so. This category includes powers of attorney and advanced health care directives.

Who do you want to have your possessions after you pass away and who would you like to take care of your affairs if you cannot? Answer these questions, and then go to an experienced estate planning attorney. Tell the attorney your answers, and let the attorney figure out the documents you need to give your answers legal effect.

Reference: Motley Fool (Nov. 7, 2016) “The Estate-Planning Documents Everyone Needs.”

President-elect Donald Trump’s nominee to be Secretary of Health and Human Services has many worried that Medicare could undergo severe changes and cuts. However, there might be some opportunity for positive changes as well.

It is no secret that U.S. Rep. Tom Price is not a fan of Medicare or any form of federal government health coverage. Since he has been in Congress, the legislator has sought to make drastic changes to Medicare and to reduce its funding. This has many seniors and elder law advocates rightfully worried.

If he is confirmed as the next Secretary of Health and Human Services, the future of Medicare is in doubt, as Price would be in charge of overseeing the program.

However, as NJ.com recently argued in “Make lemonade out of possible Medicare lemon,” there might be an opportunity for positive changes to the program.

One thing Price might do as secretary is to end Medicare at the federal level and instead give each state a block grant to administer its own replacement program. That could leave open the possibility that individual states could seek to negotiate prescription drug prices with manufacturers, which the federal government is currently prohibited from doing.

While negotiating at the state level would not be as effective at lowering prices as it would be at the federal level, it would still be helpful and Medicare patients could see their drug prices reduced.

Reference: NJ.com (Dec. 26, 2016) “Make lemonade out of possible Medicare lemon.”