Purchasing Estate Planning Documents over the Internet Vs. Hiring an Attorney

Potential clients are being bombarded with marketing from Legal Zoom, Nolo Press, Quicken and the likes of Suzie Orman to obtain their estate planning documents from the internet or from do it yourself software as opposed to hiring a lawyer to create an estate plan.  The assumption made is that the lawyer is simply selling you forms that you can get yourself. 

So if you can cut out the lawyer you can save thousands of dollars.  Right?!?  Wrong!!!!!

The value of hiring an elder law and estate planning attorney rather than purchasing forms over the internet is that an experienced attorney does not simply sell you forms.  A good estate planning attorney will listen to your goals and desires, analyze your individual circumstances, provide you with various option to achieve your goals and incorporate them into your plan. There is absolutely no way answering questions on a website form can possibly do this. 

Unfortunately, companies that offer quick internet legal forms provide a false sense of security to those customers that use them. 

The customers believe they have dealt with their estate and long term care planning issues and that their affairs are in order. 

There is nothing further from truth!!!!!!!

Every week I consult with clients, who show me estate planning documents that do not achieve their objectives, although they certainly believed they did when they paid for them.  Trusts, powers of attorneys and advance health care directives which are not customized to a client's individual needs, almost never achieve the objectives sought.  Unfortunately, it is often times too late to redo these documents if a person no longer has the ability to handle their own affairs.   

In a nutshell the advantages of hiring an attorney over buying documents from a service or buying do it yourself estate planning software are as follows: 

1) Analyze: Attorneys analyze a client's situation and identify issues that need to be addressed in an estate and long term care plan by first listening to their client's desires and objectives;

2) Advise: Attorneys provide advice and guidance to their clients by recommending solutions and provide options to achieve the client's goals; 

3) Customize: Attorneys customize the documents for their clients to incorporate the solutions the clients have chosen to achieve their objectives;

4) Ensure: Attorneys ensure that the documents are signed in accordance with the strict formalities that are required by Law;

5) Advocate: Attorneys serve as advocates for their clients in dealing with financial institutions, governmental agencies and other business professionals; and

6) Care:  Most importantly, Attorneys care about a client and their families.

In essence there is no comparison between hiring an attorney and using a service to buy the most important and essential planning that one needs to do to protect themselves and their families.

Questions - give my office a call. Vinny Casiano, Elder Law Attorney  619-800-6820.

Review Your Estate Plan in View of Recent Estate Tax Changes

After much uncertainty and speculation regarding the future of federal estate taxes, on December 6, 2010 President Obama announced a tentative deal had been reached with Republicans to extend the Bush area tax cuts. Effective January 1, 2011, estate taxes are once again in effect, but at an exemption of $5 million for an individual, or collectively $10 million for a married couple. The applicable estate tax rate is 35%. This exemption and estate tax rate will be in effect for two years.

Tax historians note that the new estate and gift tax rates are the most generous since 1931, and provide a unique, yet temporary window for the wealthy to utilize various gifting strategies to pass assets to their children without incurring gift, estate, or generation-skipping transfer tax. This tax break impacts a number of American families. According to the Federal Reserve Survey of Consumer Finances, in 2007, 5.4 American households had a net worth in excess of $2 million.

However, even Americans with no intention of making significant gifts have reason to be concerned about this recent estate tax change, and should have their existing estate planning documents reviewed in light of this change. Many trusts contain what are known as “formula clause” provisions, which tie the amount of a bequest to the applicable estate tax exemption. These clauses were designed to maximize the amount a couple could pass on tax-free. Unfortunately, the current exemption of $5 million is significantly different from that of past years, such as the $1.5 million exemption which was in effect in 2005. Thus, if a spouse dies in 2011 with a $3 million estate and unchanged formula clauses, the surviving spouse may be entitled to nothing outright because all of the assets would pass into a trust.

Over the next few months we will examine the recent tax change in more detail, including how this change could affect your estate plan, and the planning opportunities presented by this change. For a personalized consultation regarding your estate plan, contact the Casiano Law Firm.

Medi-Cal Planning-An Overview

In past blog entries we have discussed how estate planning documents such as trusts, durable financial powers of attorney and advance health care directives provide a plan in the event of future incapacity. At the Casiano Law Firm, we also focus on planning involving Medicare, Medi-Cal, Social Security, and supplemental and long-term care insurance policy issues as part of our comprehensive elder law representation. This month’s blog will focus on an overview of Medi-Cal planning.

What is Medi-Cal?

Medi-Cal is California’s version of the federal Medicaid program that provides additional health insurance for qualified individuals who are at least 65 years of age, blind, or disabled. Medi-Cal is often used to assist residents in skilled nursing facilities who have exhausted their Medicare skilled nursing home coverage. Medicare covers the first 20 days of skilled nursing home coverage, then requires a co-payment of $137.50 per day for days 21 through 100, conditioned on the patient showing improvement in his or her condition. After 100 days, the patient is converted to “private pay” status where the patient must pay the monthly expense, which averages about $6,300 per month. In contrast, Medi-Cal will continue to pay for skilled nursing home expenses indefinitely, regardless of whether or not the patient shows improvement.

Important Factors to Consider in Medi-Cal Planning

Medi-Cal planning requires a careful and thorough review of your assets, income, and estate planning documents to develop a plan tailored to your unique situation. A comprehensive Medi-Cal plan should consider three important factors:

• Eligibility planning for Medi-Cal benefits;
• Income planning to reduce or eliminate the monthly “share of cost” to be paid by the Medi-Cal beneficiary; and
• Estate recovery planning to reduce or eliminate the recovery of the amount of benefits paid out from the beneficiary’s estate.

Don’t Transfer or Give Away Assets

We are frequently asked by clients if they should simply give away their assets. Do not give away any assets or transfer title to your real property without first consulting with an experienced elder law attorney. Medi-Cal considers certain assets to be exempt for the purpose of determining eligibility, and a special petition or administrative hearing may be used to increase the standard eligibility limit, reduce or eliminate the co-payment, or eliminate Medi-Cal’s ability to recover for benefits paid out under some circumstances. Certain property transfers can have significant tax consequences, and improper transfers can result in the disqualification of a Medi-Cal beneficiary and a significant period of ineligibility for Medi-Cal benefits.

Consult an Experienced San Diego Elder Law Attorney

Medi-Cal regulations are frequently changing and this area of planning requires the assistance of experienced counsel familiar with both elder law and estate planning matters. If you have questions regarding Medi-Cal planning, contact the Casiano Law Firm for a free telephone consultation with an experienced San Diego elder law and estate planning attorney.

Financial Powers of Attorney

A financial power of attorney is a document that authorizes someone (referred to as your “agent”) to act on your behalf. A financial power of attorney may be limited to a specific term or give your agent the authority to take only a certain specified action on your behalf (such as the power to complete a real estate transaction while you are away on vacation), or it may convey broad authority to your agent to act on your behalf. A financial power of attorney may be “durable” in nature, meaning it is not affected by your subsequent incapacity. It may also be “springing”, meaning it does not take affect until the occurrence of a specified event, such as a determination that you are no longer capable of managing your own financial affairs, or it may be immediately effective upon the signing of the document.

Do you need a financial power of attorney?

Many clients ask why they need a financial power of attorney. They assume that their spouse automatically has the authority to act on their behalf in the event they become incapacitated. However, this simply isn’t the case-your spouse will need to have the authority conveyed under a power of attorney, or be appointed as your conservator, in order to take certain actions on your behalf if you are incapacitated. Other clients assume that if they have a trust, they don’t need a financial power of attorney, since if they become incapacitated, their successor trustee will manage the assets held in the trust. While this is true, there are many actions that the successor trustee is not authorized to take on your behalf if you are incapacitated, such as signing your tax return, dealing with Social Security, Medicare, insurance, etc., and handling assets which are not held in the trust. For this reason, a financial power of attorney is advisable even if you hold all of your assets in your trust.

Who should you name as agent?

Careful consideration should be given to your choice of agent. Financial powers of attorney are important legal documents that can convey important powers to the named agent. You will want to name someone who is capable of managing money, who will make sound financial decisions, and who you trust will have your best interests in mind. Typically, if you have a trust, you will name the successor trustee of your trust as your agent on your financial power of attorney. Consult your estate planning attorney for further guidance on selecting an agent for your financial power of attorney.

Thanks for reading our blog. If you have questions, or need assistance with estate planning, contact the Casiano Law Firm for a complimentary telephone consultation with an experienced San Diego estate planning attorney.

Estate Planning for the Possibility of Future IncapacityEstate Planning for the Possibility of Future Incapacity

In the last two blog entries we discussed the importance of planning for the possibility of future incapacity. While some people may think this is a topic that impacts only the elderly, incapacity can strike anyone at any time, due to an accident, injury, or illness. In this month’s blog entry we will discuss how the use of a living trust and a durable financial power of attorney provide protection and a plan in the event of incapacity.

Revocable Living Trusts
A living trust is a document which you create during your lifetime which allows you to specify who will manage the assets of the trust (the “successor trustee”) and who will receive the assets of the trust (the “beneficiaries”) after your death. During your lifetime, you are typically both the trustee and the beneficiary of the trust, ensuring that you still have complete use and control over your assets. As the name implies, you can revoke the trust or make changes to the provisions of the trust during your lifetime. In the event you become incapacitated, your successor trustee will manage the trust assets on your behalf, often avoiding the necessity for a conservatorship proceeding, which we discussed in our July blog entry.

Durable Powers of Attorney for Financial Matters
A durable power of attorney for financial matters is a document in which you specify who will make financial decisions on your behalf in the event you become incapacitated (your “agent”). This document may be immediately effective upon execution, or it may be springing, meaning it becomes effective only upon your incapacity. The document is “durable” in nature in that it is not affected by your subsequent incapacity-the powers given to your agent will continue despite your loss of capacity. Even if all of your assets are held in your living trust, and are therefore under the management of your successor trustee if you become incapacitated, you will need a durable power of attorney for financial matters to give your agent the authority to sign your tax returns, deal with your insurance company, and handle other financial matters on your behalf.

Estate Planning Issues Require Experienced Legal Representation
Comprehensive estate planning includes careful consideration of various contingencies, such as the possibility of future incapacity. If you need assistance with estate planning, contact the Casiano Law Firm for a complimentary telephone consultation with an experienced San Diego elder law and estate planning attorney.