Creating a will lets your mother name an executor, who will file her last tax returns, notify social security and the state department of health after her death, cancel her cable subscription, and deal with her overdue fines at the library. It's just good house keeping and will (no pun  intended) make it easier for you to tidy up her affairs after she's gone. More than that, you may not know everything about your mom--some of those odds and ends may surprise you. 

Having a will in place will make it possible for you to deal with whatever she leaves behind. My very own Dad, for example, left my sister and I an oil and gas lease in Oklahoma (we call it 'the gusher') that we had NO IDEA he owned. Wills aren't complicated, she can do one herself using Nolo's online Will or Nolo's Quick and Legal Will book. And here's something else she needs: a Durable Power of Attorney and an Advanced Health Care Directive. These documents will help you to take care of her when she gets sick. The Power of Attorney allows you to take care of her financial matters: the Advance Health Care Directive gives you the authority to make medical decisions for her if she can't communicate directly with her doctors. You can make both of these using Nolo's WillMaker, and local senior centers can often help you get free forms to fill out as well.

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).

The idea is to let people pay a lower tax rate (reportedly 35%) if they prepay the estate tax they think will be due upon their deaths. This would get more tax money into the government sooner, and in return it would be a terrific deal for those wealthy enough to have to worry about the tax--which is due to return to 55% next year.

Stay tuned to see what becomes of this idea.

Here's a few good tips for those of you with precious digital archives,  The Wills, Trusts and Estates Prof. Blog:

For more information on organizing your records to make it easier for your family to track down your important accounts and paperwork, see Get It Together, by Melanie Cullen and Shae Irving (Nolo).

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."

"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).

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? .

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).

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).

As I said in my earlier blog post, being someone's health care agent is a BIG DEAL (to quote, sort of, our Vice President). You need to really know what the principal (the person who appointed you) wants, and doesn't want, if they become critically ill.

As an estate planner with young, healthy clients, I really didn't dwell on what making an end-of-life choice in your Advance Directive means. But I will now. Before my Dad died, I guess I imagined that end of life choices would be stark: there'd be the car crash or the stroke. There'd be no brain activity and it would be obvious that maintaining life support wasn't what the person wanted. Guess what? That's the easy scenario. Real life is way weirder than that.

My father got the one-doctor-says-you're-cured; one-doctor-says-goodbye; one-doctor-says-you're-stable; but NO ONE SAYS you're terminally ill treatment in the hospital. He was told he had a rare neurological disease. He was told that he could take a drug that cost $5,000 a dose for five day straight, every three weeks, for 2 years (!), and maybe he'd see some improvement. My father was almost 83 at that point, had lost more than 30 lbs in the last year, and was completely weakened by the disease.

He couldn't swallow safely. Food got into his lungs. That turned into pnuemonia. He ended up with a feeding tube. He could have lived for awhile that way, but at what cost? In a nursing home? Never getting out of bed?

Every scenario is, of course, different. But if you're acting as an agent for someone you love, talk to them. Right away. Make sure you know what's important to them and what they're willing to put up with and what they don't really want. Don't assume you'll get the easy choice; assume you'll get the hard one.

To learn more about advance directives and health care agents, see Plan Your Estate, by Denis Clifford (Nolo).

Here's the first big lesson: PLEASE MAKE REALLY SURE THAT YOU KNOW WHAT THE PRINCIPAL WANTS BEFORE ANYONE ASKS YOU TO DECIDE SOMETHING.

When the doctors call you up in the middle of the night and ask whether or not they should put your parent on a ventilator (which means they stick a tube down into the lungs and a machine does the breathing), you really ought to have had that discussion before the call. Saying "NO" may well mean that your parent won't make it through the night. Saying "YES" may well mean that your parent gets stuck in the ICU, unconscious, with a machine doing the breathing....for a very long time, or maybe forever. 

Here's the second big lesson: YOU MAY NEED TO REALLY FIGHT WITH THE DOCTORS TO GET WHAT YOUR PRINCIPAL WANTS.

The doctors may call you and ask what to do. But if you're not there, they may very well do what they think should be done, regardless of what you've told them. More on this tomorrow. 

To learn more about health care directives and agents, read Nolo's article The Durable Power of Attorney: Health Care and Finances.

The cost basis is the dollar amount the asset was worth when you purchased an item (with certain adjustments), and it's that value that the IRS uses to determine if there's been a gain or a loss on the sale. You pay capital gains taxes on the difference between the cost basis and the sales price. A higher basis means less of a gain when you sell, if the value of the asset has gone up.

The stepped-up basis was a big tax break for heirs. What it meant is that if your mother left you a house worth $1 million dollars that she purchased for $100,000 and then you turned around a sold it for $1 million dollars, you'd owe ZERO capital gains tax on that sale. And it was an unlimited tax-break, you got that step-up on all of the assets inherited at death.

But not this year. Now, each taxpayer is limited to $1.3 million dollars worth of a stepped-up basis. It will be their executor's job to allocate that to particular assets, like a house, and therefore to specific heirs. There's also a $3 million step-up available to spouses for appreciated assets. But all other assets are to be valued at their original value.

So, if your father purchased stock in IBM for a pittance in 1963, you're going to have to find out what that was and pay capital gains on the difference between that value and what you're selling it for today. That's called a carry-over basis, and it is going to make accountants and heirs nuts as they try and figure out what the original values are for long-ago purchased assets. Not to mention how much fun it will be to pay all those captial gains taxes.

To read more about this, read Kathleen Pender's good summary from the SF Chronicle.

In 2011, unless Congress acts, the estate tax is scheduled to come back at levels not seen since 2001 (the tax would fall on any estate worth more than 1 million dollars and at rates ranging from 37% to 55%). The current law, passed in 2001, expires in 2011, so the tax comes back at 2001 levels, with an adjustment for inflation.

If that's not odd enough, most congressional watchers predict that Congress will actually pass a law re-instating the tax that will be retroactive to January 1, 2010 (so, as a matter of reality, there will be no actual repeal whatsoever!)

Which is to say that no one really knows what will happen over the next few months. But certainly, something will. I'll keep you posted.

For more, see this article in the Wall Street Journal, which offers a nice summary of the current state of affairs.