Free Elder Law Advice: What’s The Motivation?

Posted on March 2, 2011 by Victor Medina

There’s an old acting joke whereby actors look to directors to learn, “What’s my motivation for this scene?” I often help clients understand, as they are bombarded with advice from people on the issue of VA benefits and Medicaid, what the motivation of the people giving advice is.

There are two types of institutions who can help you file a benefits claim. The first type are individuals with substantive qualifications, such as:

1. A state or county official of the Department of Veterans Affairs.

2. A veterans service organization (VSOs) such as VFW, American Legion or Amvets.

3. An attorney licensed to practice law in your state, and accredited by the Dept. of Veterans Affairs.

Many people don’t know that it’s illegal for an attorney to charge legal fees to help veterans file a claim for benefits. As such, there aren’t many lawyers with sufficient knowledge and expertise in this particular area of law. In addition, VSOs don’t have the resources to keep up with the demand of requests for assistance.

The second kind of institution that comes into play are salespeople from annuity companies looking sell their products in exchange for the “free” help they provide.  The process usually involves offering to help file your claim for free and a free review of your overall situation. Almost always, there are recommendations that include purchasing their annuities as part of your overall “plan.” Now, to be fair, there are times when an annuity is a good idea. However, these individuals are being compensated by the annuity company – so you’re paying for their “free” services when you buy the annuity.

We recommend you seek independent advice (either from our firm or from another qualified elder law attorney) before you decide to purchase a one-size-fits-all annuity or transfer assets away. (We’ll talk about some of the pitfalls of transferring assets away in the next section.) You need an unbiased counselor who is being fairly compensated by you to represent your interests – not motivated by external forces to sell you one particular solution over another.

A quick word about attorneys who claim to practice in this area of law. One of the benefits of having a law degree is that you are licensed to practice in just about every area of law. That’s a benefit to the attorney, not the client. The truth is that many attorneys hold themselves out to be “elder law” attorneys, when their experience is only in wills and trusts. Estate planning documents are important for seniors, but it’s not enough. You need to make sure that whichever attorney you hire is well-versed in the complicated and ever-changing maze of laws that surround these specific elder law benefits. You need a lawyer who has not only traveled this path before, but who travels it on an ongoing basis.

Posted by Victor Medina, Medina Law Group, LLC

 

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The VA Benefits Medicaid Ticking Time Bomb

Posted on February 28, 2011 by Victor Medina

The VA Aid and Attendance program – where veterans and their surviving spouses can receive a special pension to cover medical expenses – has certain financial eligibility requirements, which include an income and asset test. In short, qualifying applicants cannot own more than a certain level of assets (based in part on their life expectancy).

What if your asset level is too high to qualify? Well, you might think that simply gifting your assets away is the right way to solve the problem. However, while the VA does not apply any penalty period for prior gifts, giving away your assets can have catastrophic effect on your ability to qualify for Medicaid in the future. That’s what I call, “The Medicaid Ticking Time Bomb”!

Now, I can hear some of you already. You’re saying, “The ‘giving away assets problem’ is only for people looking to qualify for Medicaid. That’s not me (or my spouse or Dad). He’s doing fine at home.” You may be right. For now.

Most veterans who are housebound or in assisted living do not realize that their health care needs and expenses are NOT going to stay the same very long. Unfortunately, the aged and frail veteran has begun an end-of-life journey that is reasonably foreseeable. A housebound or assisted living facility resident has a 90% probability of needing to go on to skilled nursing home care within 2 to 3 years.  The cost of skilled nursing home care can easily run up to $10,000 per month. In addition, the veteran will be in the nursing home an average of 2.5 years before passing away. It is highly likely that the veteran’s family will need to apply for Medicaid benefits to pay the nursing home costs.

Medicaid imposes a significant penalty period of ineligibility if a senior has given away any assets within five years of applying for Medicaid assistance. This means that if you were to ignore our advice and transfer assets to qualify for Aid & Attendance, you could become ineligible for Medicaid, which, as you can now see, 90% of VA claimants will need in under five years.

Any time a veteran gives away assets to qualify for VA benefits, he or she is setting a Medicaid penalty ticking time bomb. A VA-accredited elder law attorney who has substantial experience with the Medicaid eligibility rules for your state can tell you if you’re setting yourself in harm’s way.

A VA-accredited elder law attorney is a trustworthy guide for the client and the client’s family for all of the significant problems that may arise as the senior travels this pathway. You never want to run out of money and out of options before you run out of breath.

Posted by Victor Medina, Medina Law Group, LLC

 

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Has Estate Planning Become Obsolete With The New Estate Tax Law?

Posted on January 19, 2011 by Victor Medina

Last month, Congress passed a broad tax law that included estate tax provisions increasing exemption amounts to $5 million per person. The new law, now known by an acronym that, if I write it here, will have you fleeing to another site — it’s that boring — also includes a provision that allows an individual to carry over any unused exemption to a surviving spouse. It’s called “portability” and it’s a concept that has been batted about in the estate tax legislation club (think Brentwood Country Club from Caddyshack, but stuffier) for some time.

The result of this is that married couples can exempt from federal estate tax almost $10 million between them with little-to-no formal estate planning before one of them dies.

So, the question is: Has estate planning become obsolete with the new estate tax law?

I know a lot of my colleagues, locally and nationally, seem to think so. Like Chicken Little, they swear the sky is falling and have been stockpiling canned goods for the day when their estate planning practices go belly-up.

I’m not so sure I’m following them into the bunker.

For me and my clients, estate planning isn’t just about money. Oh sure, saving taxes always one of the goals — and for folks who live in states with decoupled estate tax exemptions, like New Jersey, there are tax issues for estates as modest as $675,000 — but it’s never the only, or even most important, goal.

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To understand this a little deeper, we have to agree on a definition of estate planning (from the client’s perspective):

“I want to control my property while I am alive and well.

Protect and care for me and my loved ones if I become disabled.

When I die, I want to give what I want…to whom I want…when I want them to have it…and in the way I want them to have it – all at the lowest overall cost to me and those I love.”

That’s pretty broad and it usually takes a good hour-long seminar with me for clients to fully understand and agree with that statement, but note that “tax planning” isn’t mentioned in there and the issue of money isn’t discussed until the very end.

In my experience, estate planning is as much (if not more) about family relationships as it is about money.

There are as many reasons for people to have a comprehensive estate plan as I have clients. Each walks in with a unique situation for which a tailored estate plan — one that is continuously updated and maintained — is just what the doctor ordered.

To those of you considering estate planning, if tax planning was your only goal (and you own less than $675,000) go ahead and skip it. However, if the definition I used above hits home, you should find an estate planning attorney who can help you accomplish your goals.

Posted by Victor J. Medina, Medina Law Group, LLC

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The Estate Planning Prescription Pad

Posted on November 12, 2010 by Victor Medina

I work with a fair number of financial advisors, insurance professionals and CPA/accountants. One of the services I provide for those valued planning partners is to review their client’s existing estate plans (where I was not the attorney or scrivener) and give my opinion on the documents they have. The review is my way of helping out people I consider to be friends. I won’t do this for folks coming off the street. The result of my review is a detailed opinion letter (usually between 10 and 20 pages) that the planning partner can use in discussions with their clients. Sometimes it results in work for me as the new planner, but more often it’s just something that I do without the expectation that I get any work out of it.

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This kind of review is usually pretty easy for me to do because most estate plans are 1 of 3 kinds of forms that I have seen time and time again. Occasionally, I get tripped up when the font is different that I’m used to (those tricky form-fillers!), but once I get reading the text I can recognize it as “Form1″ or “Form2″ – you get the idea.

What I find surprising is how many times I see the same bad or misused clauses in plan after plan after plan. Look, I won’t try to convince that every estate plan should be created from whole cloth every time. There is incredible value in using clauses that are tested, and in fact, many of my estate plans look very similar. However, the art of the documents is in my counseling and assessment of the situation.

The best analogy I can think of is that of a doctor and her prescription pad. When you visit the doctor, I hope you will agree that it’s not for access to the prescription pad carried in the front pocket of his white gown. Most of the time, the pills you need might even be found over-the-counter. The real value is in the doctor’s diagnostic skill in evaluating your condition and needs. Maybe the headache is from lack of sleep, maybe you have a tumor – but you won’t be able to know the difference if the doctor does nothing but leave her prescription pad out for you to fill out on your own.

Competent estate planners have invested time, energy and money into learning our art very well. The value is not in the ability to be word processing wizards with a stack of forms, but in the diagnostic skill we can bring to bear on your family’s situation and figure out what documents, counseling and monitoring is required to achieve your particular goals.

You wouldn’t fill out your own prescription, nor would you trust a doctor who did nothing but use the same therapeutic approach no matter the client – your estate plan warrants the same care and attention. Insist on an estate planner that will treat your situation as thorough as the top doctor in your area.

Posted by Victor Medina, Medina Law Group, LLC

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Where There Is A Will There Is a War!

Posted on September 6, 2010 by Victor Medina

I can’t quite put my finger on why, but folks have an awfully hard time discussing their estate planning, their finances, and their wishes with their family.  Whether it stems from a denial of mortality or simple modesty, most people do not have frank conversations with their loved ones about their Wills or Trusts – which often leads heirs into a mess as they put the pieces together after the fact.

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A recent ABC News story story encourages people to be more transparent in their planning with beneficiaries, and shines light on the need to regularly review estate plans to make sure that what you wanted 5 years ago is still what you want today.

Even as an experienced estate planning attorney, I found several points in the article worthy of notice.  First, the author asserts that estate planning is one of the “least understood, and most neglected areas of personal finance.”  Boy, ain’t that the truth!

Because estate planning is an area of law that intersects with personal finance (and mass-marketed solutions), people apparently feel comfortable attempting it by themselves or with the assistance of the Internet. As a result, there isn’t a meeting that goes by where I don’t correct someone’s misperception of the law or the result of certain decisions. Part of my job is certainly to be an educator.

The real danger with estate planning being one of the least understood areas of personal finance is not what people don’t know. It’s what they think they do know – often with disastrous results. Unlike other financial mistakes, there’s no second chance to make the correct decision. You’re stuck with the plan you have when you die.  Make it a good one.

Do-it-yourself estate planning solutions like Legal Zoom have a legitimate function. Although it drives specialists like me crazy, I’d rather you have a will from Legal Zoom than no will at all. But as a friend of mine says, having a prescription pad does not make you a doctor. Internet wills and trust often result in unintended consequences, disappointed or angry beneficiaries, and a real mess.

Take this lesson from this post – the cost or penalty for having a poor plan in place is more than financial or pecuniary. Often the emotional costs – like those described in the ABC story above – are much greater. If you believe that caring for your loved ones after you’re gone is an important activity in your life, meet with a professional and commit to reviewing your plan on a regular basis.

 

Posted by Victor Medina,

Medina Law Group, LLC

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New Video Post – Life Insurance & Estate Planning Primer

Posted on August 17, 2010 by Victor Medina

Are you confused about life insurance and how it plays into your estate plan? Many people have misconceptions about life insurance and whether it passes estate tax free or not. Watch this short video to learn the basics.

 

 

 

 

Posted by Victor Medina, Medina Law Group, LLC

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Pay No Attention To The Estate Planner Behind The Curtain!

Posted on August 11, 2010 by Victor Medina

The Internet is such an interesting place. One of the most powerful things about it is that it’s lowered the bar for people to self-publish. It used to be that you could trust something that was published, due in large part to the high barrier to entry to publishing and a tacit agreement among publishers to have a certain journalistic integrity.

Unfortunately, that’s all changed with the advent of the Internet. Anyone with a blog, or a video camera, can become an instant journalist and newsmaker. Sometimes, it works out well as we saw with the coverage of the Iranian elections, but more often there are opportunistic people, with low morals, who end up snookering people looking for a little information and news to fill their day, or more importantly – who take to the Internet to do important legal work. Take this lady here….

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She recently made a splash as Jenny – The Dry-Erase Girl. She quit her job in an unusual fashion – by posting photos of her using a dry-erase board to give her reasons, including outing her boss as having bad-breath and spending his days playing Farmville on Facebook. Funny, right?  Except, all untrue. “Jenny” is Elyse Porterfield, an actress who was hired to perpetrate this hoax.

Look, no one got hurt by this – it was a fairly harmless hoax. But, lots of people accepted it as true, simply because it was posted on the Internet. The news of her “quitting” circulated the web with many people latching onto it as a real news story and sharing the information (as true) with their friends and loved ones. On the other hand, you might have heard about the JetBlue flight attendant who quit his job in his own spectacular fashion…that one was true. How do you tell the difference?

The same is going on with less sensational issues, like estate planning and legal services. There are plenty of people who are holding themselves out as the providers of legal services and legal solutions. Except – they are who they say they are only by virtue of what they write about themselves on the Internet. It’s a formula that can create a real mess – especially in the realm of estate planning where the effectiveness of the plan is known only in moments of crisis or after you die – situations where there is no time to cure the problems.

If you insist on doing your estate planning on the Internet with a company like LegalZoom or RocketLawyer (or even Suze Orman’s WillMaker), at arm’s length and without the investment in creating a real relationship with an actual person (where you can judge competence and reliability for yourself), please understand you are taking a risk that the company isn’t what they say they are (unless they finally start saying they are a for-profit enterprise hell bent on making money), the documents may not do what you think they’ll do. There will be no one around to complain to when these companies and fly-by-night solutions disappear and your loved ones are left holding the bag with an estate plan that does something you’d never want.

On a less ominous note – enjoy this clip – it illustrates my point very well.




Posted by Victor Medina, Medina Law Group, LLC

Posted in Do-It-Yourself Legal Planning, How We Do It, YourLawyers4Life | Leave a comment

The “Torpedo” Hits New Jersey

Posted on August 1, 2010 by Victor Medina

I can’t remember a hotter summer in New Jersey than this Summer 2010. With temperatures regularly above 90 degrees, the Medina Clan has been working hard to find ways to stay cool.

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Thanks to my wife’s tireless research, we’ve been able to fill the boys’ days with fun, low-cost activities – like Vacation Bible School (affectionately known as “VBS”), a golf academy, tennis camp, and swim lessons. The swim lessons have been the best “investment” since we’ve been spending countless days at Camp Margary (also known as “the in-laws”) because they have a pool, and cold drinks, and a steady supply of grill-able items like hamburgers, hot dogs and sausage.

Back to the swim lessons for a moment, my wife found _THE_ Mercer County swim instructing guru. Blessed with almost mythical powers, legend says that she can teach any child to swim in less than one summer and there are whispers of the Phelps-dust that she sprinkles at the end of the summer to give your child a shot at Olympic stardom.

For my older son, that has translated into a decent freestyle stroke, the “torpedo,” and the confidence to jump into the deep end of the pool. For the younger son, the results haven’t been quite as striking, but he’s learned not to attempt to breathe underwater – which means a lot less gagging on pool water and a lot less freaking out by his parents or other pool attendants – and when the goggles are properly positioned, he can tell you how many fingers you are holding underwater.

I’m also happy to report that there are two new additions to the Medina family.

On June 24th and June 25th after 9 hours of “labor” and weighing in at 4.8 oz., my wife and I welcomed 2 new iPhone 4s into the fold. Lovingly selected, we’re proud to report that they’ve acclimated well into our lives, requiring just 2-3 hours per day of swiping and tapping to keep them happy. We’re also looking forward to the arrival of the free cases Apple has decided to give out in late-August/early-September. I can post pictures of the iPhones if anyone is interested. For pictures of my kids, you’ll have to talk to my wife.

 

Posted by Victor Medina, Medina Law Group, LLC

 

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Why Does Probate Take So Much Time?

Posted on July 20, 2010 by Victor Medina

Imagine that you’ve recently lost a loved one and you’ve been named “executor” of the estate. You might be surprised to learn that you can’t finish the process in a month, or even two for that matter.

First, in New Jersey, you can’t submit a Will to the court or begin probating estate until 10 days after the date of death. So, even if you have a simple estate and are ready to move forward, you can’t take the first step until the waiting period has expired. This can be an extremely frustrating holding pattern to be in. For many people, the act of distributing their loved one’s possessions is helpful to the grieving process. Unfortunately, you’re stuck in limbo for over a week.

After the first waiting period is finished, the WIll can be submitted to the court and Letters Testamentary or Letters of Administration can be issued. These are the papers you need to be able to step into your loved one’s shoes and begin administering the estate. That process typically takes 15 minutes of in-and-out at the Surrogate’s Office.

Then, you have to start sending out certain notices to the beneficiaries and dealing with outstanding debts and creditors of the estate. Most folks find themselves stuck again as they wait for certain claim and notice periods to expire. Before you know it, it’s been 4 months since you lost your loved one and you’re just getting around to listing the house up for sale.

Our clients are surprised to learn that all of these waiting periods exist and that they won’t be done as quickly as they imagined. Making sure that they comply with all of the notice and time requirements is one of the main reasons that our clients engage us to help them with probate. Sometimes it’s easier to turn everything over to professionals with experience in the field.

 

Posted by Victor Medina, Medina Law Group, LLC

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Estate Planning is a Matter of Timing – And Counseling

Posted on June 29, 2010 by Victor Medina

In March, Dan Duncan became the first billionaire to die in this year of an federal estate tax repeal – that is to say, no federal estate tax at all.  Assuming no retroactive changes, Duncan may be the first billionaire to pass his wealth onto his children and grand-children free of estate tax.

This article by the New York Times focuses most of its analysis on the impact of the estate tax repeal and the timing of this death.  In my educational seminars, I spend a few minutes telling folks tongue-in-cheek that Choosing The Wrong Year To Die is a “common estate planning mistake.”  My point, besides making a joke, is that the law is ever-changing.  The estate plan that is right on target today may be obsolete or rendered ineffective by changes in the law in the future.  That’s why it is so essential to engage a lawyer who has a consistent and deliberate formal updating process as an integral part of their practice.  Some estate planning attorney call these “client maintenance” or “client care” programs – whatever the name, make sure your attorney has one.  

However, timing is just one element of an effective estate plan.  The other part is finding a professional who understands the law and the rules who can work them to your benefit.  There’s a saying that there are two tax systems in this country.  No, not one for the rich and one for the poor – rather, it’s one for the informed, and another for the uninformed.  Without the proper planning, couples with an estate of $2MM could pay $550,000 in federal estate tax if they both passed away next year (2011).  With proper planning, the total federal estate tax due by that same couple drops to zero ($0).

As with income taxes, there are some people who (legally) pay much less than folks who make the same amount per year.  The difference is that the couple who paid less income tax engaged the services of a profession who understood the rules and how the system works, identifying opportunities and benefits that are not self-evident – and which would never occur to the lay person.

The value of a professional is not in the documents he creates. It’s in the knowledge and experience that enable him to tell you what you should do.

No matter what you year you may die.

 

Posted by Victor Medina, Medina Law Group, LLC

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