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Michael Davidov, Estate Planning and Elder Law Attorney

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Roth IRAs have wonderful benefits:  tax free growth and tax free distributions.  So, when you have the opportunity to convert assets from a traditional IRA to a Roth IRA, should you make the conversion?

Here are some considerations that will help you to decide:

  • Zero tax bracket:  If a full conversion or partial conversion can be offset by deductible losses (i.e. business losses, mortgage interest, student loan interest), the conversion makes sense because it is free.  No additional tax dollars will be assessed and you are converting assets that will be distributed with taxes due into assets that will be distributed without any taxes due.  Converting after tax traditional IRA assets would also be available at no cost.
  • Higher future taxes:  Paying taxes today may make sense if you think income tax rates or, at least your personal income tax rate, will rise in the future.  You are also eliminating taxes on all future growth.
  • No RMD:  If you won’t need the required minimum distributions from your traditional IRA, it may make sense to convert to a Roth IRA to take advantage of continuous tax free growth and tax free distributions for future generations.  Unlike the traditional IRA, the Roth IRA does not have required distributions.
  • Asset protection: IRA and Roth IRA assets are protected from bankruptcy proceedings and lawsuits (i.e. malpractice claims.)  Assets outside the IRA can be used to pay the taxes on the conversion, thereby reducing non-protected assets and maintaining asset protected assets.
  • Diversification:  Because the tax code is ever changing, it may be wise to divide your assets between non-retirement investments, traditional IRAs, and Roth IRAs.

If you have questions about retirement planning, traditional IRAs, Roth IRAs, and Roth conversion, be sure to consult with a qualified estate planning attorney.

Davidov law Group is a member of the American Academy of Estate Planning Attorneys.

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Roth IRAs have wonderful benefits: tax free growth and tax free distributions. So, when you have the opportunity to convert assets from a traditional IRA to a Roth IRA, should you make the conversion?

Here are some considerations that will help you to decide:

  • Zero tax bracket: If a full conversion or partial conversion can be offset by deductible losses (i.e. business losses, mortgage interest, student loan interest), the conversion makes sense because it is free. No additional tax dollars will be assessed and you are converting assets that will be distributed with taxes due into assets that will be distributed without any taxes due. Converting after tax traditional IRA assets would also be available at no cost.
  • Higher future taxes: Paying taxes today may make sense if you think income tax rates or, at least your personal income tax rate, will rise in the future. You are also eliminating taxes on all future growth.
  • No RMD: If you won’t need the required minimum distributions from your traditional IRA, it may make sense to convert to a Roth IRA to take advantage of continuous tax free growth and tax free distributions for future generations. Unlike the traditional IRA, the Roth IRA does not have required distributions.
  • Asset protection: IRA and Roth IRA assets are protected from bankruptcy proceedings and lawsuits (i.e. malpractice claims.) Assets outside the IRA can be used to pay the taxes on the conversion, thereby reducing non-protected assets and maintaining asset protected assets.
  • Diversification: Because the tax code is ever changing, it may be wise to divide your assets between non-retirement investments, traditional IRAs, and Roth IRAs.

If you have questions about retirement planning, traditional IRAs, Roth IRAs, and Roth conversion, be sure to consult with a qualified estate planning attorney.

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If you’re like most people you know that your trusted helpers need access to your estate planning documents. However, you may not realize that your helpers need access to other information as well so that they can carry out your wishes if you become disabled or die. Your estate planning helpers are the trustee of your trust, the executor of your Will, and your agents under your Power of Attorney Health Care Proxy.

While some people choose to give their trusted helpers a copy of their estate planning documentsand pertinent financial information, others choose to wait. Be sure your trusted helpers know where you keep your estate planning documents such as in your fire safe in your closet, in a box in the refrigerator, or on a shelf in your home office. It’s always a good idea to give this location information to your estate planning attorney too.

Make a binder or folder of your other important papers and keep it with your estate planning documents. Be sure to have a list of your advisory team and their contact information. This would include your estate planning attorney, CPA, financial advisor, and insurance professional.

It would also be prudent to have a list of people you want to be contacted if you become disabled or die, such as your minister, the funeral director, family members, and friends.

In this binder, also keep important certificates such as marriage, birth, and death certificates, divorce decrees, stock certificates, the most recent investment account statements, car titles, deeds, and insurance policies.

In fact, keep a current list of your assets. Include the title of the assets, how much each asset is worth, the account numbers, and contact information for the bank or investment company. Update this list every six months. Things change every day and out of date information will not be helpful.

Importantly, (super importantly) keep a list of account passwords and usernames. Yes, it’s okay to write them down and keep them with your other important papers. What’s the combination to your fire safe, what information does your trusted helper need to get into your online bank account, investment accounts, utilities, as well as email, Twitter, and FaceBook accounts.

This folder or binder that you keep with your estate planning documents will reduce your trusted helpers’ stress and burden tenfold. If you have any questions about getting your affairs organized and updated, consult with a qualified estate planning attorney.

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If you’re like a lot of people you know you should have a Will and feel guilty that you don’t have one. There’s another large group of people who don’t know if they need a Will or they think that they don’t need a Will. Which group are you in?

Okay, first of all, EVERYONE, age 18 or older, needs a Will. Yes, everyone. Even you need a Will; no matter what. For those of you with trust planning, you likely have a Will but may not know why. You have a Pour-Over-Will. The Will only has one beneficiary, your trust. It acts like a legal “pooper scooper,” picking up an assets not in the trust and pouring them into the trust. Additionally, the Will names guardians to care for your minor children and the executor to administer your estate.

Now, for those of you with only a few assets, yes, you still need a Will. Your Will names guardians to care for your minor children and the executor to administer your estate and distributes the few assets you do have. There is business to attend to such as paying last bills, filing tax returns (income tax and any applicable inheritance tax), canceling utilities and subscriptions, and paying for the funeral and burial.

A Will is an essential part of any estate plan. These legal estate planning documents work with your Will to ensure that your wishes are carried out: Durable Power of Attorney, Health Care Proxy, Living Will, HIPAA Release, Organ Donation Release and perhaps a Revocable Living Trust.

If you are unsure whether you need any of these particular estate planning tools, contact your estate planning attorney who will be happy to answer your questions and guide you through making a Will and your estate planning.

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It is common for families not to talk about such things as what they will inherit when mom and dad is gone. This type of conversation can be uncomfortable for parents, and make children feel as if they are doing something wrong for even thinking about such things. As a result the subject is often swept under the rug until the time comes that there is no choice but to talk about it. This can lead to some major family disputes because children may be surprised at what they parents wishes really were.

To make this conversation easier for everyone involved, it is a good idea to think about estate planning as a way to show your family that you love them. If you have an estate plan in place, when you die your family will have much less stress to deal with.

The best thing to do with your estate plan is to not let it be a surprise to those that it will affect. If you let your loved ones know what you have in mind as far as their inheritance, there will be fewer problems later. Even if they don’t necessarily like what you plan to do, they will better be able to accept it if they hear from you that it is what you want.

Broach the subject with your family when everyone is together, even if you need to call a family meeting for that specific purpose. A big mistake is to talk about your estate plan during holiday gatherings, as it may ruin the holiday for some, and cause hard feelings. If your family is aware that they are coming together for the purpose of discussing this touchy subject, they will be better prepared to deal with it.

Once you have given your family an outline of what you will have in your will or trust, you can then ask for everyone’s input so that their opinions can be considered. Of course you will still create your plan in a way that you feel is best, but at least if your children and grandchildren are able to give you their input, they will not feel as if they simply never had the opportunity to talk with you about it.

It is true that discussing your estate and eventual death with your family is a very uncomfortable thing to do, but it is definitely a step you need to take to keep peace within your family.

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The month of February and Valentines Day brings a celebration of love and stirs couples to rekindle feelings of romance and devotion. Not so different from young couples are aging seniors, celebrating memories of sweethearts and romance in days gone by. Sit a while with a senior couple and they will soon be telling you their romance story or listen to a widow or widower as they sing their favorite love song from their youth.

Dementia and Alzheimer’s can rob senior minds of many of these treasured memories, changing their personality and life style. Because of these and other illnesses, many seniors end up in nursing homes or care facilities where only their basic physical needs are cared for by the facility staff. To these seniors, Valentines Day becomes no different from every other day. They often find it difficult to relive memories of the past. In one care facility a sign placed lovingly over a patient’s bed reads, “I Am Somebody’s Sweetheart,” as if to say I once dreamed, lived and loved, please treat me kindly.

When asked how she relates to those she cares for, nurse assistant Karen W. replies that most of the time it’s those patients who are causing a disturbance or may be in danger of harming themselves who are the ones that get her attention. Even then she can only take care of the immediate problem. Very seldom has she time to personally get to know well all the elderly people she cares for.

Although this is true with many facilities, the need for more personalized care is, in some cases, being recognized. Assisted living facilities with specialized memory care programs — some using art, music and dance or physical activities — are finding great success with increasing the quality of life for those suffering from dementia and Alzheimer’s. Many care facilities across the nation are adding these programs to better serve their residents.

If you cannot find a facility in your area that provides this special attention, home care may be a better option.

Consider this real experience. When Nora would visit her father in the nursing home she would find him sitting, slumped over and disinterested in his surroundings. By the time she and her young children finished their visit, he was alert and talking to them. Feeling he would do better in her home environment, Nora enlisted the services of a Geriatric Care Manager to evaluate her father and determine what would be needed for his care at home so that he could get the social stimulation that he needed.

A Geriatric Care Manager can be a valuable asset to family members when it becomes necessary to look at alternatives for their loved one’s long term care. They work with all members of the family in educating about resources and making decisions. Some services provided are.

  • Make an assessment about the type of care need
  • Develop a care plan for care both current and future care
  • Work with physicians in getting medical support
  • Find home care services that work with the families needs
  • Provide assistance with legal and financial issues

Appropriate home care services are also often necessary when a change in environment is called for. Home care services vary, depending on what is needed, and may change as caregiving requirements change in regards to the physical or mental health of the elderly person.

Types of Home Care are:

  • Home health care companies: provide nurses, physical therapists, social workers and aides that assist with basic health care such as changing bandages, taking vital signs and helping with medication as well as a host of other skilled needs.
  • Non-medical home providers: help with bathing, dressing, meals, ambulating, chores, errands, housekeeping and much, much more.

Home care personnel are skilled in working with the spouse and extended family members of their ailing loved one to provide needed services and support in the home. They add consistency in the care and are available in time of crisis or need to add additional services.

With help from her Geriatric Care Manager, Nora brought her father to her home for his care. The care manager worked with her father’s doctor, prescribing a physical therapist and nurse’s aid to come to the home. A non-medical home care company was employed to help with daily bathing and dressing.

Another resource available to families, which is not used as often as it should be, is hospice. Hospice care is provided in the home or in a hospice facility, hospital or nursing home. When illness is terminal, hospice service is provided by a team which includes doctors, nurses, grief counselors, aides and social workers as needed. These services can be provided at no out-of-pocket cost by Medicare.

In her internet article Naomi Naierman, President and CEO of the American Hospice Foundation states:

“As a Medicare beneficiary, you are entitled to the Medicare Hospice Benefit without additional premiums. If you are enrolled in a managed care organization (MCO) you have access to this benefit, even if the MCO does not cover hospice services.

The Medicare Hospice Benefit covers the following hospice services in full:

  • Skilled nursing services
  • Volunteer Services
  • Physician visits
  • Skilled therapy
  • Home health aide visits
  • Medical social services
  • Spiritual counseling
  • Nutrition counseling
  • Bereavement support for the family”

There is a growing market for care providers throughout the nation to fill the need of senior care services. Assisted living, home care and hospice care, geriatric care managers and geriatric clinics are all just part of these services. The National Care Planning Council supports family caregivers with information and resources of all types of long term care services on its website:www.longtermcarelink.net.

“Somebody’s Sweetheart” may be in need of your loving care someday and help is available to reduce your burden and ease the journey.

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The power of attorney is a powerful document; likely the most powerful legal document that you’ll ever sign. However, it is not an all powerful magic wand. The power of attorney has limits.

Not a Magic Wand

The power of attorney is not a magic wand because it’s not always honored, especially if it’s older or the signature looks scribbled. It is common place for a power of attorney to be refused because of its age as institutions are afraid of honoring a revoked, forged, or fraudulent document. Thus, it is extremely important to keep your estate plan up to date.

It is also common for a financial institution to refuse to honor a power of attorney because it’s not their form. Such institutions don’t want to analyze the legality and validity of each power of attorney for each client. They want you to use their forms.

Belt and Suspenders

Disability provisions in a revocable living trust and a power of attorney work well together. Trusts and trustees are never refused. However, a trustee may only manage assets that are titled into the name of the trust. If an asset is not funded, the agent under the power of attorney must manage that asset.

It is prudent to have a “funding power of attorney” so that your agent has the authority to transfer your assets into your trust on your behalf. However, there are some assets such as retirement accounts and cars (in some states), that cannot be transferred into the trust, so the power of attorney agent must act.

Successors

It is common for the trustee of your trust and your agent under your power of attorney to be the same person. Be sure to name successor trustees and agents in the event that your named trusted helper is unable or unwilling to serve.

If you have questions about powers of attorney or disability planning with a revocable living trust, consult with a qualified estate planning attorney.

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Choosing a nursing home for a loved one is a highly stressful experience. Both emotions and finances are involved. Having counseled numerous families during these difficult times, I understand your feelings and am providing these suggested questions to guide you in choosing a nursing home.

Do I like the location?

Is the nursing home facility near loved ones, friends, church, and favorite places such as parks, libraries, and museums?

Is the staff highly trained, certified, and available?

What is the staff to resident ratio? What training does the staff receive? What certification does the staff have? Is the nursing home administrator certified? Is the nursing home facility itself state certified? Are there doctors available when needed? Are there clergy, personal attendants, and an activities director available on a regular basis?

Will my loved one receive all of the personal care she needs?

In the event that your loved one’s medical condition worsens, can she stay at this particular nursing home? Is there a trained same gender staff member to help with all private matters such as dressing, toileting, and bathing? Is there a daily schedule?

How’s the food?

What’s the quality and quantity of the food? Are there food choices at each meal? Are snacks available for the resident 24/7? Is the resident able to offer snacks to guests? Do residents eat in their rooms or in a central dining room? Are the kitchen, dining room, and patient’s room clean before, during, and after meals?

Is the nursing home facility comfortable?

Does the facility look, smell, and feel clean? Is the facility attractive and comfortable? Is the facility safe? Are there courtyard or porch sitting areas? Is the facility properly lit and furnished? Are there rooms for private gatherings? Are there common rooms for group concerts, crafts, and Wii games? How often are patient rooms cleaned?

Cost and contract?

What are the total costs and fees? Does the nursing home facility accept Medicare and Medicaid? What if your loved one runs out of money? What other terms are in the contract?

If you have questions about choosing a nursing home for your loved one, consult with a qualified estate planning and elder care attorney.

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The FBI warns that senior citizens are the targets of scam artists because seniors often have financial assets and can be manipulated into signing documents like contracts for unneeded goods or services. Even worse yet, fragile seniors can be convinced that the right thing to do is to sign over their assets to a predator who is taking advantage of their situation.

Financial Abuse In the Nursing Home

Scam artists easily target seniors by phone or in person at the door. Unfortunately another type of scam occurs when seniors are lonely, ill and vulnerable in the nursing home. Unscrupulous nursing home staff members or their cohorts have access to residents for eight to twelve hours a day several days a week, becoming a new “best friend.”

Beware of long-lost family members who suddenly befriend Grandmother in her hour of need in the nursing home when their real intention is to manipulate her checking or savings account.

Signs of Financial Abuse

Typically families rely on a trusted attorney to handle a senior’s legal affairs. Beware of a sudden change to a new attorney or accountant; the change is probably due to persuasion or coercion in order to obtain control over finances. This might result in a new will or change in trusts in favor of a staff member.

Watch for unauthorized use of a credit card or ATM account. While a senior in a nursing home will probably no longer have cards, someone residing in an assisted living center might still be using credit cards for occasional purchases.

Worse yet, major withdrawals can occur from checking, savings or other kinds of accounts or property can be transferred in unexpected ways.

Prevention

It is a difficult and delicate matter to protect financial control of an elder family member’s estate, especially when family members live some distance away. Consult with an attorney who is well-versed in elder law for legal and ethical ways to handle a senior’s finances, especially those who are in nursing homes.