Ask Liza: Everyday Estate Planning

Liza: I live in California. Can I get my Will pre-validated? No, you can't. Though I can see why you might want to. Pre-validating a will lets you make sure that your Will won't be challenged in court after you die. Instead, you can get a probate court to declare it valid while you're alive, which is handy, since you're actually around to tell the court that it's exactly the way you want it to be if anyone makes a fuss after being notified of what you intend to do. But so far, only a few states allow pre-validation: Alaska, North Dakota, Ohio, and Delaware. Cynically speaking, it's such a good idea that my guess is lawyer lobbies are trying to block it elsewhere, since it would potentially cut down on probate fights after death (and that's what's called a meal-ticket for attorneys.) If you want to read more, here's a good article from FA (Financial Advisor) magazine.

Liza: My Dad has a POD account at our local bank and he says that I can have it and even wrote me a note saying that it is mine. I suggested he contact the bank to make sure that it will go to me but my Dad says that his signed statement is good enough. I don't want to get into a big fight over this. What should I do? If your Dad really wants that account to go to you when he dies, a note to you isn't going to do the trick. What the bank wants is a signed form, on file with the bank, making you the payable on death beneficiary. When he dies, you'll own the account. It's that simple. But if you go down there with a note, they'll just look at you with googly eyes and tell you to go away.Tell your Dad that the bank needs him to go down there and fill out their POD form. Nothing else will do. Life is way too short to argue with banks about much of anything.

Forbes.com recently published a really helpful article that summarizes the ways that those who inherit an IRA, or who are thinking about leaving one to their heirs, can make the best strategic use of that money.

Here's the top three in my opinion:

1) If you inherit an IRA, take out only the required minimum distribution, which is calculated based on your life expectancy. (If you're a surviving spouse, you don't have to start withdrawals until you're 701/2, but everyone else has to start taking money out the year after the owner has died, in most cases).

 

2) If you have an IRA, DO NOT name your 'estate' as the beneficiary. This will trigger the five-year rule, which means your heirs will have to take out all of the money within 5 years, and pay income tax on those withdrawals (if the account is an IRA, Roth IRA's are different).

 

3) Beneficiaries of inherited ROTH IRA's still have to take required minimum distributions, just like those from regular IRA's, starting a year after the death of the owner, but they don't have to pay income tax on those withdrawals. Because the owner of a ROTH IRA does not have to take any money out of those accounts during their lifetime, this can be a way of leaving more money to your heirs than a traditional IRA.

For more information on IRA's and other retirement accounts, you might want to check out The Mom's Guide to WIlls and Estate Planning (Nolo).

Hmm. Maybe next year's estate tax exclusion won't go down to a million dollars per person. Bloomberg BusinessWeek reports this week that the Senate Budget Panel has approved a spending plan that includes an assumption that last year's estate tax exclusion of $3.5 million dollars, and last year's top estate tax rate of 45%, will be reinstated. That's really good news for  most of us, who don't have that much money to begin with. It means that most people will be able to pass their estates to their heirs without having to worry about the estate tax.

This may come about via the same reconciliation procedure that the Senate and House used to get health care legislation passed, so, it's not a done deal.

The story reports that "Senate Finance Committee Chairman Max Baucus, a Montana Democrat who is the chamber's chief tax writer, declined to say yesterday which tax provisions could be approved through reconciliation, which would allow Democrats to pass them in the Senate with a simple majority. Democrats control the chamber with 59 votes. "I have some ideas," said Baucus, adding "we don't even have a budget yet" and "we're getting way ahead of ourselves."

A recent study in the New England Journal of Medicine found that one in four elder adults need someone else to make decisions for them at the end of their lives.

"The results illustrate the value of people making their wishes known in a living will and designating someone to make treatment decisions for them, the researchers said," The Associated Press reports. "In the study, those who spelled out their preferences in living wills usually got the treatment they wanted. Only a few wanted heroic measures to prolong their lives.

As summarized in the LA Times: Those who requested limited care at the end of their lives received it most of the time. The study used data from the long-running Health and Retirement Study, which surveys adults ages 51 and older nationwide. In analyzing data from people ages 60 and older who died between 2000 and 2006, researchers found that of the 398 incapacitated people who had used a living will to request limited care at the end of life, almost 83% received it.

For a guide to making informed decisions regarding elder care, see Long-Term Care, by Joseph Matthews (Nolo).

This week President Obama issued a memorandum to Kathleen Sebelius, the Secretary of Health and Human Services, that asks the Secretary to use her rulemaking authority to require all hospitals that accept Medicare and Medicaid patients to respect the wishes of patients with respect to who should be allowed to visit them.

It directs that hospital rules should make it "clear that designated visitors, including individuals designated by legally valid advance directives (such as durable powers of attorney and health care proxies), should enjoy visitation privileges that are no more restrictive than those that immediate family members enjoy. You should also provide that participating hospitals may not deny visitation privileges on the basis of race, color, national origin, religion, sex, sexual orientation, gender identity, or disability."

This is great news for couples in non-traditional relationships, as well as widows and widowers, and really anyone who needs the love and support of non-family members while ill. And it makes it especially important (although it has always been especially important) for those who want to designate loved ones as their health care agents to complete valid Advance Directives or Health Care Proxies so that these designations have the force of law.

Read more about advance directives in Nolo's article Living Will, Power of Attorney, or Advance Directive? .

One of the many weird experiences I had during my father's final illness was the tragic disconnect between my father's actual condition and the attitude of the doctors who cared for him. My father was emaciated, with a collapsed left lung, advanced coronary heart disease, and a chronic neurological condition that was causing his nerves to stop working. Bad, right?

But despite our repeated attempts to get SOMEONE in the ICU to listen to our requests for a discusssion about when it was appropriate to discuss palliative care (treating a patient's discomfort, but giving up on aggresive treatment of the underlying condition), we got nowhere. I mean it was like we were speaking a completely different language.

The one remotely sympathetic doctor promised us that if, "he felt he was just moving the pieces around he'd let us know." That was excellent, except 2 days later that doctor was out of the ICU rotation and we never saw him again.

And guess what? After almost a month in the hospital, "moving the pieces around" was pretty much all that happened. In the end, they discharged my father to a nursing home in worse condition that when he entered the hospital -- still with a collapsed lung and now unable to swallow. Pretty depressing. And still, the main doctor insisted my father was "cured."

What do they teach in medical school? Denial?

If you are caring for someone who is very ill, and getting nowhere with the doctors, find your local hospice and get their help. Don't expect the doctors to tell you when it's time. Find out if there's a palliative care program at the hospital and get in touch with them, aggresively if possible. (Sometimes the doctors don't want them involved, Argh. It's like the Twilight Zone.)

For a detailed discussion of hospice care, see Long-Term Care, by Joseph Matthews (Nolo).

As my father became increasingly ill, he began to send me an occasional list of where his important things were. This began in 1999. I would throw the emails into a file and just sort of avoid the whole issue. It's difficult to take death seriously, even for an estate planner. (Although, in my defense, I wasn't an estate planner back then.) The larger point is that many of us don't really want to imagine the finality of our parent's death.

But here's the thing, as he lay dying this year, I just, somewhat foolishly in retrospect, figured the list was accurate. I didn't actually double check while I still had time to ask him where things were. It would have been easy. One of the first things that my sister and I did was go to his apartment and take the valuable things (and important papers) back to my house, to keep them safe.

What we didn't do was look in the box of important papers and verify their existence.  I REALLY wish I'd asked him where that stock certificate was for the 850,000 (!) shares of that start up was. Because it's not under "B" like he said it would be (repeatedly, and often), But it's not there. Or anywhere else.

And now I can't ask him. So, here's the take away: If you have time to discuss these things with your parent or loved one, do.

Next blog: how you replace a stock certificate and the mysteries of the transfer agent.

For a complete guide to organizing your records in order to make it easy for your family to track down your important paperwork, see Get It Together: Organize Your Records So Your Family Won't Have To, by Melanie Cullen and Shae Irving (Nolo).

Steve Jobs' recent return to the public eye after a liver transplant highlights the amazing benefits that can come from organ donation. In his own words, "I now have the liver of a mid-20s person who died in a car crash and was generous enough to donate their organs. I wouldn't be here without such generosity,"

But organ donation is not a simple issue, and many have to wait for months or years for a suitable organ. A recent article in the Ohio Dayton Daily News reports that 54% percent of those eligible people are registered to donate organs (which means that close to half of those that could register to donate, don't). That puts Ohio ahead of most of the nation, though.

Nationally, according to the non-profit group Donate Life, only 38% of drivers have registered to be organ donors, more than 100,000 people are awaiting a donated organ, and 18 people die each day waiting for available organs.

The article listed the following reasons why people choose not to register:

• Concerns about bodily integrity.
• Worries that signing a donor card may 'jinx' them.
• Mistrust of doctors and fear that they won't get proper care if they are registered organ donors.
• Religion.

To learn how to register to donate organs in your state, go to www.donatelife.net or www.facebook.com/donatelife.

 

For more information on being an organ donor, see Nolo's article The Organ Donor: A Guide.

Senator Kennedy's death this week from malignant brain cancer highlights the limits of medical treatment. He received the best medical care possible, and still died in little over a year from his cancer -- the most common form of brain cancer, one with no effective treatment.

At the same time, by all accounts, his last year was mostly a good one, filled with family, attention to the things that mattered most to him, and the opportunity to die where he wished to be.

It's a last year that many would hope for. But not all are able to enjoy. Sometimes it takes an advocate within the medical establishment to help families find peace and comfort at the end of life. Not all doctors are trained to deliver bad news at all, let alone to do so tactfully and with full recognition of what it means.

The New York Times recently ran a long article about a branch of medicine dedicated to helping more people end their lives with dignity and comfort. If you or your family find yourself dealing with end of life care, find out if there's a palliative care physician available in your health plan, and take advantage of their training. Their focus is on comfort at end of life, not aggresive medical intervention that will ultimately only prolong, not prevent, death.

To learn more about palliative care, see Long-Term Care, by Joseph Matthews (Nolo).