Aging Options Blog : Washington Estate Planning Lawyer & Attorney : Rajiv Nagaich : Aging Options Law Firm : WA Elder Law, Wills & Trusts

 As you may already know we are in uncertain tax planning times. In 2010 there is no estate tax unless Congress takes steps to finalize some solution. Next year the estate tax exemption is slated to be $1,000,000, the same amount it was in year 2000 with a tax rate that can go up to 55%.

Currently, the Senate is about to introduce a bill seeking a $5,000,000 per person exemption with a maximum estate tax rate of 35%; while thehouse had passed a bill in 2009 with a $3,500,000 exemption amount with a 45% highest tax bracket. In a politically active year it is expected that Congress will do something, but that should not be taken for granted.

For that reason, in my view it would be prudent to plan your estate around the $1M exemption amount. This is done by implicating the use of trusts whereby each of you (married Couples) agree to leave your share of the estate to a credit shelter trust instead to each other. This allows the surviving spouse's share of the estate to be no more than his or her half of the total community estate, and hopefully less than $1M. This was the planning many of you had undertaken before and that should be continued, but with a twist.

The twist being that the trust should also make provisions to make the assets in the trust invisible to the long term care financing system or Medicaid. This way, if the surviving spouse needs long term care AFTER the death of a spouse, the assets in the trust cannot be required to be spent down to $2,000, thus assuring the surviving spouse that he/she will not be left penniless and some of the assets will end up as an inheritance with your children. The chances are remote that you will need Medicaid, but the provisions are prudent in these uncertain times.

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Typical concerns about Powers of Attorney 

I'm afraid that the person I appoint won't manage my affairs properly

giving someone the potential power to manager affairs can be frightening. This is why it is important for you to appoint someone you trust to be your attorney. She must use your finances as you would for your benefit. Giving someone a power of attorney does not limit your own rights in any way. It simply gives the other person the power to act when or where you cannot act.

Does a power of attorney take away my rights?

Absolutely not. Only a court can take away your right to manage her own affairs, through a conservatorship or guardianship proceeding. In attorney simply has the power to act along with you, and as long as you are competent, you can revoke the power of attorney.

I don't have anyone I trust enough to give them power over my affairs

if you do not have someone you trust to a point, it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship. In that case, you may use a limited durable power of attorney to simply nominate the person you want to serve as your guardian. Most dates require the court to respect your nomination "except for good cause for disqualification."

What if I change my mind?

You may revoke your power of attorney at any time. You need to send a letter to your attorney telling her that her appointment has been revoked. From the moment the attorney received a letter, she can no longer act under the power of attorney. If you have recorded the power of attorney with the land records of your County or at the probate court, you must record the rev

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Excuse #1: My estate is too small.

For many individuals, especially those with smaller estates, the most important documents are a durable power of attorney and medical directives. While a will protects your estate after you're gone, a durable power of attorney and medical directives protect you while you're still here.

Excuse #2: Joint ownership of accounts with my children is an adequate plan.

No it isn't. Unless there is only one child. It is impossible to keep separate accounts for more than one child equal. This is especially true if the parent becomes incapacitated and no linger has control over the accounts. Trying to save a few dollars by managing an estate in this fashion runs the serious risk of causing discord in a family for generations to come. Why take the chance?

Excuse #3: I don't want to pay a lawyer to draw up the plan.

Software is available that produces most of the estate planning documents an attorney will prepare. The chances are good, however, that such "one size fits all" approaches will prove inadequate in any specific case. In fact, few clients just need a simple will. If there's anything about your situation that's not plain vanilla, you need to see a lawyer (and only a qualified lawyer can tell you if your situation is indeed plain vanilla). The problems you may create by not getting competent legal advice probably won't be yours, but may well be your children's. Don't risk leaving such a legacy.

Excuse #4: I just haven't gotten around to it.

Reading this blog is the first step towards getting around to it. 

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What is the similarity between the characters in the musical “Fiddler on the Roof” and attorneys? Tradition! 

All of my clients deal with estate planning issues: The majority of my clients

who have planned their estates have done so under the traditional notions of estate planning which, unfortunately, leaves them largely exposed to the threat of uncovered long-term care costs.

Traditional estate planning involves preparation of wills or trusts, powers of attorney, living wills and advance directives. These documents are generally

based on one of two notions. The first is that one day you will go to sleep and never wake up, and the biggest issue the estate plan needs to address is to make it easier for your loved ones to administer your estate. Alternatively, the plan will ensure that your appointed agents will be able to manage your

financial and health care affairs without missing a beat should you face

incapacity. But these solutions do not address the more urgent threat or the real issue of uncovered medical costs and depletion of the estate assets to support quality-of-life goals.

As discussed above, estate taxes no longer touch most estates. The real threat to an estate today, therefore, is not estate tax but rather the threat of

uncovered long-term care costs. Understanding that the role of the estate planning process is to evaluate potential threats that could erode your estate and afford appropriate protective measures to avoid such erosion, the process generally falls short unless it includes guidance and assistance

to your chosen fiduciaries on how they can approach the issue in a more reasoned and educated manner. The guidance and assistance is designed to aid in asset preservation through the employment of legal solutions and management of quality of life of you and involved family members.

Elder law attorney practising Life Care Planning addresses both these issues. They do so by understanding that most families dealing with disability or death of a family member seek not simply to protect assets, rather they seek to make sure that the protected wealth is used to address the care needs of the incapacitated and all those affected by the incapacity; or to bring peaceful closure to a chapter in their lives stemming from the demise of a loved one.

Through Life Care Planning much can be done to assure that should incapacity strike, quality of life of the incapacitated individual and that of others will be maximized and the affected family members will not be stressed to a breaking point dealing with the complications stemming from the incapacity.

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