Jul 20, 2014

Casey Kasem: America's Top 40 host's final countdown

Over his long career, radio personality Casey Kasem helped Americans count down the the solid gold hits. Unfortunately, Kasem's latter years were anything but golden. His end-of-life story offers a high profile, sad illustration of why your estate planning should focus on the twists and turns that may occur during your lifetime - not just on what happens after you're gone. Planning for life is of particular importance if you are in a second marriage and have children from a first marriage; that situation is often a fertile breeding ground for family disagreements over how to care for a loved one.

When Kasem died on June 15 at age 82, he was married to his second wife, Jean, 60. Kasem also had three children from his first marriage. After being diagnosed in 2007 with Lewy Body dementia, Kasem signed a health care power of attorney that gave his children from his first marriage, not his wife, the authority to make his health care decisions. He stated that he did “not desire any form of life-sustaining procedures, including nutrition and hydration,” if all it accomplished was “mere biological existence, devoid of cognitive function." 

Kasem quickly declined, lost the ability to communicate. and family turmoil ensued. His wife, and his children from his first marriage, became embroiled in a series of court battles regarding caregiving arrangements and who had the authority to make Kasem's decisions. At one point the children alleged that Jean was preventing them from visiting their father.

As the end drew near, the children wanted Kasem to live out his final days peacefully at home, as his instructions stated. Jean objected, saying, "My husband's a fighter! He's an American treasure. He would have never, ever wanted this." In June, Jean removed Kasem from his Santa Monica home and drove him to Washington State, without notify the children. When they discovered their father was missing, they took their search to the airwaves.

Kasem died in Washington on June 15, and his body was taken to a Tacoma funeral home. That's not where the story ends, though. Apparently Jean and the children also disagreed on what to do with Kasem's body. Jean said she wanted Kasem cremated; the children want their father buried in Los Angeles, and also want an autopsy conducted to determine whether he was physically abused. On June 16 Kasem's daughter Kerri obtained a restraining order from a Washington court preventing Jean from cremating the body or removing it from the funeral home. But when Kerri called the funeral home, she was told the body had already been taken off the premises.

Where is Kasem right now? The children believe that Jean took his body to Montreal, where they suspect she has a boyfriend. The Santa Monica police department is investigating.

If and when Kasem's body is found, don't think for a minute that is the end of the saga. Kasem's estate is estimated to be worth about $80 million. That's eighty million more reasons for the family to fight on. Daughter Kerri Kasem says she will not contest the estate -- unless Kasem signed a will or other document when incapacitated, or Jean somehow manipulated his will.

Bizarre situations like this happen in non-famous families, too; the stories just don't make it into the press. I encourage everyone to establish a well-crafted, crystal-clear estate plan that covers both death and life. A health care power of attorney is essential. While Kasem is to be commended for executing one, he might have spared his family grief with an additional step: A conversation with his family to fully explain his values and wishes, and answer their questions. It's a conversation no one really wants to have, but it can be a real gift to your family, especially when future friction seems likely. Most people know that it's important to talk about these sensitive issues before incapacity strikes...but most put it off until it's too late. For hints on how to begin to approach the subject with your family, check out the Conversation Project.

Jul 15, 2014

Alzheimer's: A poignant interview

Public radio recently broadcast a touching story about a family coping with Alzheimer's Disease. Kimberly Williams-Paisley, actress and wife of country singer Brad Paisley, discusses her family's journey after her mother was diagnosed with Alzheimer's at age 61. Williams-Paisley's father discusses how he learned to let go and acknowledge that his beloved wife was, in a sense, no longer the person he married. This interview will be helpful for any spouse, child or other family member working through these challenges. Listen here:

Jul 13, 2014

Qualified plan longevity annuity hedges risk of outliving retirement savings

Are you are concerned about running out of money before you run out of years? With longer lifespans, skyrocketing health costs, the demise of fixed pensions and the looming Social Security crisis, everyone except the wealthiest are feeling skittish these days.

A new kind of deferred income annuity, commonly called "longevity insurance," may provide an answer. In the past, these annuities were unusable in IRAs and other qualified plans because the required minimum distributions (RMD's) from a qualified plan had to take into consideration the value of the longevity insurance annuity. Now, the RMD issue has been resolved as a result of new IRS regulations. The new regulations apply to these annuities if purchased after July 1, 2014.

You may now put a portion of your 401K or IRA into a deferred income annuity. The income stream kicks in when you attain a certain age and continues until you pass away. Effectively, you are buying protection against the possibility that you will outlive your money. Briefly, here are the new rules and features of the longevity annuity as it applies to qualified plans:
  • Up to 25% of the balance in your qualified plan, or a maximum of $125,000, may be put into the deferred income annuity. The dollar limit is indexed to inflation and will increase in the future in $10,000 increments.
  • You must begin receiving the income no later than age 85.
  • You are still required to take Required Minimum Distributions from your qualified plan at age 70 1/2, but the amount of the annuity is excluded when calculating RMD's.
  • Benefits to heirs: There is a return of premium feature. If the purchaser dies before or after the annuity begins, premiums paid but not yet received may be returned to the account, which means the initial investment can be passed to heirs. If the contract includes a life annuity to the surviving spouse, the premiums may be returned after the second death.

As with all annuities, the qualified plan deferred annuity is not right for everyone. If you and your spouse have ample savings and/or other sources of retirement income, you probably don't need one. But keep in mind that when one spouse dies, the survivor often has significantly less retirement income because of the loss of one Social Security check, and possibly the loss of some or all of the decedent's pension. A longevity insurance annuity may provide a safety net to replace that lost income. 

Contact Steve Levine, president of Karp Financial Services, for additional information, at 561-626-1130.  Also keep in mind that a deferred income annuity must be evaluated within the broader context of your estate plan, so be sure to consult with your estate planning attorney.

Jul 8, 2014

Florida Medicaid rules for long-term care benefits change - again

Florida's eligibility rules for long-term care Medicaid benefits are extraordinarily complicated. The rules change frequently, adding more confusion to the legal labyrinth. Florida has just issued its latest set of changes, effective July 1, 2014. Here is a brief explanation of the new guidelines:

Spouse's Minimum Monthly Maintenance Needs Allowance:
Florida permits a portion of the Medicaid applicant's income to be diverted to the community (i.e., well) spouse if the community spouse's income falls below the Minimum Monthly Maintenance Needs Allowance. Effective July 1, 2014, the Minimum Monthly Maintenance Needs Allowance is $1,966.00 (it was $1,938.75). There are certain circumstances when the diversion may bring the spouse's income even higher. 

Income the applicant may retain:
An applicant who does not qualify for Medicaid because his/her income exceeds $2,163.00 (the current lawful maximum) may establish a Qualified Income Trust, also known as a Miller Trust. The applicant's excess income is placed in the trust. Effective July 1, 2014, an applicant may retain $105 of the income from the trust, up from $35.

For a comprehensive explanation of Medicaid eligibility requirements, see the Medicaid eligibility guidelines at my website.

If you wish to preserve your family's assets and obtain long-term care Medicaid benefits, talk to our Florida Bar Certified Elder Law Attorneys. Do not go it alone. We have in-depth knowledge of the maze of Medicaid rules, and years of experience. We can help you and your family avoid costly missteps.

Jul 6, 2014

Veterans and active duty service members may qualify for special Florida property tax exemptions

Florida offers certain property tax exemptions to veterans and active service members. Are you taking advantage of them? From the Florida Department of Revenue, here are the different types of exemptions that may be available to you:

Disabled Ex-Service member: An ex-service member disabled at least 10% in war or by service-connected events may be entitled to a $5,000 exemption on any property he or she owns.

Service-Connected, Total and Permanent Disability or Confined to a Wheelchair: An honorably discharged veteran who is totally and permanently disabled or requires a wheelchair for mobility resulting from their military service may qualify for total exemption of their homestead. Under some circumstances, the benefit of this exemption can carry over to the surviving spouse.

Discount for Veterans 65 and Older with a Combat-Related Disability: A veteran who is disabled, 65 or older, and owns homestead property may qualify for a property tax discount based on their percentage of disability. To be eligible, you must have been honorably discharged from military service and be partially disabled with a permanent service-connected disability, at least part of which is combat-related.  

Deployed Military Exemption: A member or former member of any branch of the United States military or military reserves, the United States Coast Guard or its reserves, or the Florida National Guard may receive an exemption on this year’s tax bill if he or she: 
  • receives a homestead exemption
  • was deployed during the last calendar year outside the continental United States, Alaska, and Hawaii in support of a designated operation (each year the Florida legislature designates operations for this exemption), and
  • submits an application, Form DR-501M, to the property appraiser.
The percent of the taxable value that is exempt for the current year is determined by the percent of time during the last year when the service member was deployed on a designated operation.

Surviving Spouse of Military Veteran Who Died in the Line of Duty: A surviving spouse of a veteran who died from service-connected causes while on active duty may be granted a total exemption on their home. 
Filing and Keeping Your Homestead Exemption: When a person serving in the Armed Forces owns a property and uses it as a homestead, the service member may rent the homestead without abandoning the claim to the homestead exemption. Service members who can't file a homestead exemption claim in person because of a service obligation may file the claim through next of kin or through any other person who has been authorized in writing to file on behalf of the service member. 

For additional information on property exemptions, contact your county Property Appraiseror click here. 

Jul 2, 2014

Autism lifetime costs in the millions

A study published in the Journal of the American Medical Association -Pediatrics estimates that the cost of lifetime support for a person with autism is in the millions of dollars. If autism does not involve an intellectual disability, the cost is $1.4 million; with intellectual involvement, the cost balloons to $2.4 million. In childhood, the main cost is special education and therapies, and lost parental income. When the disabled child enters adulthood, non-employment and residential care are significant factors.The study's researchers conclude that there is a need for early and more effective interventions. Also, solutions must be found that would allow parents of autistic children to more easily remain in the workforce. Read a summary of the study. 

Our attorneys understand the legal and financial challenges faced by parents of children with special needs. Our law firm can assist you. Read about estate planning for a child with special needs.

Jun 21, 2014

Parents, worried about your adult kids' economic prospects? You have plenty of company.

An excellent article in the The New York Times Magazine (June 22, 2014) addresses the perplexing realities of today's "boomerang generation." Author Adam Davidson echoes the concerns I hear from many of my estate planning clients as they consider how they want their assets distributed and how to best protect their loved ones.

It's Official: The Boomerang Kids Won't Leave explains that today, one in five adult children in their 20s and 30s live at home with parents. Among all young adults, 60% receive some degree of financial support from parents. Add to this generation's employment challenges the fact that many are in debt. Nearly 45% of 25-year-old college graduates have outstanding debt, with an average balance of $20,000, says Davidson.

The article goes on to say that this could well be a permanent state of affairs, not just a temporary blip as a result of the great recession. The author points to the great systemic, structural changes in the American economy over the decades: the decrease in available jobs due to technology, and competition with foreign workers in a global economy. Those that make it to the top 10% will do just fine, he says, but the rest are likely to stay... well, stuck. Davidson writes:

"This uncomfortable fact, which many economists have recently accepted, suggests that we are living not simply in an unequal society but rather in two separate, side-by-side economies... For those at work in the much larger pool, there will be falling wages and far greater uncertainty... Today, about a third of young adults will earn a four-year-degree, and many of them - more than a third, by many estimates - are unlikely to find lifelong secure employment sufficient to pay down their debt and place them on track to earn more than their parents."

In other words, the old adage that America's next generation always does better than the prior one may no longer apply. And that is bound to influence how today's parents and grandparents go about planning their estates. Almost all my clients say they want to preserve assets and leave something for their kids. In a world where job prospects and financial security are in diminishing supply for so many,  that desire takes on increased urgency.

Read the original article here.  
Read about estate planning in Florida here.

Jun 15, 2014

Inherited IRAs not protected in bankruptcy: U.S Supreme Court

An inherited IRA does not have the same bankruptcy protection as a non-inherited IRA, the U.S. Supreme Court has decided. The unanimous June 12, 2014 decision in Clark v. Rameker has far-reaching estate planning implications. An IRA is often one of, if not the largest, asset in an estate. If you intend to leave your IRA to your children, you should take steps without delay to protect the funds from your child's creditors in the event your child goes through a bankruptcy in the future. 

Clark v. Rameker concerned a $300,000 IRA that Heidi Clark-Heffron inherited from her mother when her mother died. When Clark-Heffron's business subsequently failed, she filed for bankruptcy under Chapter 7. She argued that the IRA she had inherited was a retirement account and thus protected from creditors under federal bankruptcy law. The Supreme Court ruled against her, concluding that an IRA inherited by a non-spouse is not, effectively, a "retirement account." Unlike an IRA a person sets up, contributes to and withdraws from at retirement age, or one passed to a spouse and rolled over by the spouse, the funds in an inherited IRA may be withdrawn without penalty at any time before retirement age. Thus, an inherited IRA has effectively lost its status as a retirement account and is simply a "pot of money" that does not merit any special protections, the court determined.

The Supreme Court decision says that the IRA you leave your non-spouse beneficiary will be available to his/her creditors should the beneficiary file for bankruptcy. However, a grey area exists that must still be clarified with regard to beneficiaries who reside in Florida. Fortunately, notwithstanding this grey area, proper estate planning can protect an inherited IRA regardless of where the beneficiary resides, as I will explain later.

Here is the grey area: Florida statutes exempt inherited IRAs from creditor claims. Of course, this protection applies only to beneficiaries who reside in Florida. (I do not know what other states, if any, provide similar protection.) On the other hand, bankruptcy laws are federal rules that govern whether debts will be discharged in bankruptcy. The unanswered question is: If a Florida resident who owns an inherited IRA files for bankruptcy, will the federal bankruptcy court allow the discharge of debts, if the beneficiary retains the IRA?

Although this may sound confusing, the problem is that there are two different and distinct issues at play. One, can a creditor attach a Florida resident's inherited IRA? Clearly, no. Two, can a debtor who resides in Florida be discharged in bankruptcy while retaining an inherited IRA? The latter has yet to be answered by our courts. I have spoken to several experts in bankruptcy law who say they are uncertain as to how the courts will hold.

Regardless of what the courts ultimately decide, or where your child resides (in a state that provides IRA beneficiary protection or not), there are steps you can take to protect the IRA funds you pass to your beneficiary. The key: Do not make your child the beneficiary of your IRA. Instead, leave it in a spendthrift trust for your child. A properly drafted IRA Trust or IRA Stretchout Trust can accomplish this goal. Do not rely on a traditional revocable living trust to accomplish that goal! 

For assistance, contact the Florida estate planning attorneys of the Karp Law Firm.

Jun 9, 2014

Happy to announce I am a 2014 Super Lawyer!

I am privileged to announce I have again been named a "SuperLawyer"  by Super Lawyers, a division of Thomson Reuters. The organization evaluates attorneys nationwide based on outstanding professional achievement and peer recognition. Each year, no more than 5% of the attorneys in each state are recognized. The Super Lawyers list is intended to provide consumers and legal professionals with a credible resource when searching for outstanding legal counsel.

Jun 5, 2014

Veterans' crisis prompts Congress to introduce bipartisan bills

In the wake of recent revelations about long wait times and secret lists at V.A. health facilities, two senators last week introduced legislation to address the crisis. Sen. Bernie Sanders (D-VT) and Sen. John McCain (R-AZ) are sponsoring a bipartisan bill that among other goals would: Add 26 new VA facilities in 18 states; allow veterans who live more than 40 miles from a V.A. facility or who have experienced unreasonable delays while waiting for services, to receive help at non-VA medical facilities; appropriate $500M to hire more doctors and nurses; and give the V.A. Secretary greater authority to hire staff for non-performance. 

This past Tuesday, the House passed a bill, sponsored by Rep. Jeff Miller (R-FL) that is very similar to the Senate version.The speed with which these bills have been formulated is a real departure from the normal congressional foot-dragging. It is no less than what veterans deserve, and a reflection of the depth of the chronic problems at the V.A.

One of the V.A. benefits available to elderly and disabled veterans is Aid and Attendance. To find out more about this benefit and eligibility requirements, click here.
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