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Akron Estate Planning Law Blog

Powers of attorney can prevent unwanted guardianships and conservatorships

Guardianship, as some readers know, is the legal process by which an individual is appointed by a court to make personal decisions on behalf of a protected person who cannot legally make those decisions for himself or herself. Guardianship is not an ideal process to go through, and is often remedial in nature, meaning that it is used when better alternatives are not available.

A Medina woman whose husband was placed in a guardianship understands this well. Her 78-year-old husband, who suffers with Alzheimer’s disease, was placed was placed in a guardianship in 2011 when it was determined that he was incompetent to make his own financial and medical decisions. The attorney who was initially appointed as guardian withdrew from the guardianship in 2012, at which point a new attorney took on the role. With the new attorney, the woman says, she began to have concerns about the process. 

Carefully consider funding options for long-term care

Readers know that the purpose of this blog is to dip into various topics related to estate planning. Among the topics we regularly speak about here is long-term care planning, which is closely allied to estate planning. The reason for this is simple: because of the high costs of long-term care, the rest of one’s estate planning efforts at risk if one fails to take steps to fund long-term care.

One of the major challenges of long-term care planning is finding the right approach. While long-term care insurance has been around for awhile, it use is on the decline, in part because of the expensive premiums and medical exclusions. If one chooses to make use of long-term care insurance, it is best to obtain a policy before any major medical issues are known. This can help keep premiums more affordable. 

Digital assets in estate planning

In estate planning, there are a variety of important areas of one’s financial and personal life that need to be addressed and planned out. This includes things like health care directives, appointing guardians for minor children, reducing tax liability, and of course disposing of assets. The latter, being a rather important category in estate planning, is unfortunately not always adequately addressed in the estate planning process. One particular category of assets that is sometimes glossed over is digital assets.

Digital assets include any assets tied to an electronic account, even things like digital music, kindle books, email accounts, social media accounts, blogs and web pages. All of these assets have some value, and sometimes the value is significant, particular when an account is tied up with an online business. Incorporating these assets into the estate planning process is something folks sometimes forget to do. 

Surviving spouses: be mindful of portability in estate planning

Readers who have heard a bit about estate planning and probate issues may have run across the issue of estate tax portability. Portability is a feature of federal tax law under which a surviving spouse is able to make use of any unused estate tax exemption amount. At present, the total federal estate tax exemption amount is $5.34 million, so the potential benefit can be great.

As a recent Forbes article points out, portability is able to achieve tax savings for a surviving spouse in a way similar to how credit shelter trusts are used to provide tax savings for couples. Credit shelter trusts are structured in such a way that the couple is able to avoid estate taxes while passing their assets to their heirs. Estate taxation in some states is such that credit shelter trusts may still be necessary to achieve maximum savings at the state level, so credit shelter trusts still have their use.

Long-term care planning should be included in estate plan

Because of the high costs of long-term care, long-term care planning is an important aspect of preparing for retirement and protecting one’s wealth. In the estate planning process, long-term care planning can mean the difference between having an intact plan and an estate dried up due to paying unexpected long-term care costs.

Long-term care insurance, of course, has played an important part in funding long-term care for many people, but the popularity of such policies has been on the decrease. Part of this is because of the increasing cost of premiums. One alternative to the traditional long-term care insurance policy is a hybrid insurance policy. These typically combine long-term care coverage with a universal life insurance policy or a fixed annuity. 

Women and estate planning

In many areas of life, women and men approach things a bit differently and estate planning is no exception. Although the law governing the estate planning process is no different for men and women, women generally have slightly different needs, goals and blind spots than men when it comes to getting their affairs in order and passing on wealth. This, at least, is what the experts have noticed.

Though estate planning for women is not fundamentally different from estate planning for men, there are certain things that can be said in the way of generalities. What it often amounts to is that women tend to look after the needs of others while neglecting their own needs, and have to be reminded to care for themselves.

Aspects of a basic estate plan

We've all heard about the importance of estate planning, and some of the things good estate planning can protect us from. Many of our readers already have some sort of estate plan in place. No doubt, not all estate plans look the same. For some people, estate planning is quite elaborate, while for others the task it to get some basic documents in place. Many people who are somewhat leery of estate planning costs go into the process only wanting a "simple will."

Setting up a basic will is a good start, but even basic estate planning should include a bit more than that. A will should include basic provisions disposing of property, establishing a personal representative, naming guardians for any children, and can include provisions for money to be placed in trust for minor children. The recommendation from attorneys is almost always going to be: don't do your will on your own, but work with an attorney who can help identify any potential issues.

Alternatives to long-term care insurance

Those who have been around the block with estate planning know that long–term care planning is an important aspect of the process. With the costs of long-term care continually increasing, those who really want to ensure the integrity of their estate plan must minimize their exposure to these costs.

There are several ways to do this. One way is to put away enough money to help pay for these costs, which isn’t the best option for many people. Another is to purchase a long-term care insurance policy. Yet another is to maximize one’s ability to qualify for state and federal programs that pay for long-term care, particularly Medicaid. Unfortunately, most people do not engage in sufficient long-term care planning and end up at risk. 

More states rolling back estate taxes

As many of our readers know, the federal estate tax exemption is currently $5.34 million, the highest it has ever been. This provides taxpayers with an excellent opportunity to pass on wealth with little fear of taxation except for the most wealthy. As a result, estate planners—who normally spend a significant amount of time helping folks devise strategies to avoid estate tax—are finding their focus shift to other aspects of the estate planning process. Theoretically, estate tax is still a potential issue at the state level and this should be kept in mind, but many states are taking steps to ease off on estate and inheritance taxes as well.

Maryland is reportedly the latest state to make significant efforts to reduce the estate tax burden on its residents. Measures in both the Maryland House and Senate aim to put the state estate tax exemption on a level comparable to the currently large federal estate tax exemption. Although the measure does not get rid of an inheritance tax assessed on some individuals, it does provide significant relief. 

Estate planning and the DIY approach—be cautious

Do-it-yourself, or DIY, projects can be challenging, fun, and a learning experience for people to engage in. But those who have done even a bit of DIY know that it is important to know one’s limits. Without honoring the limits of your knowledge and skill in a DIY project, you could end up with a substandard product, or worse, a product that is hazardous to yourself, your family and others.

There is an analogy here with estate planning. Surely there are some aspects of estate planning that can be done without expert help, provided one researches the issue a bit. There are other aspects of estate planning, however, that one should really have some sort of expert guidance with. This is particularly the case with more complicated estates, though do-it-yourselfers can overlook things on even simple estate plans. 

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