April 2010 - Lonich Patton Ehrlich Policastri

Making Your Wishes Known at the End of Life

April 30, 2010/in Estate Planning /by Michael Lonich

April 16, 2010 is Health Care Decisions Day, a national campaign to encourage Americans to complete their advance directives, living wills, and basically document their preferences regarding medical treatment at the end of life.

Researchers at the University of Michigan in Ann Arbor have discovered that almost a third of patients over the age of 60 would eventually become so incapacitated that they would be unable to express their preferences regarding end of life treatment. Patients who specified all care possible in their living wills were far more likely to receive aggressive care as opposed to those who didn’t.

The number of individuals who possess living wills has increased over the years. Without these documents, they patient remains vulnerable despite whether or not they had end of life discussions with their doctors. With 40 million new patients in the healthcare system and the decreasing number of physicians , end of life discussions are becoming nearly impossible.

An attorney is not needed to obtain these documents. Patients can designate a healthcare proxy. A healthcare proxy is a trusted friend or relative who can make decisions for a patient. Proxies won’t have as much of an effect as a documented living will, but it’s a good backup.

For Full Article: http://www.nytimes.com/2010/04/16/health/15chen.html

Estate Planning Red Flag

April 9, 2010/in Estate Planning /by Michael Lonich

If you’ve recently divorced and haven’t yet revisited your estate plan, or don’t have one, you may be in for some surprises. It is important to review your estate plan to be sure that it does not confer any unintended benefits or rights on your former spouse. Here are some questions to consider:

1. Does your former spouse have access to any jointly owned assets, such as bank accounts, investments or real estate?
2. Is your former spouse still the designated beneficiary of any life insurance policies, IRAs or other retirement plans?
3. If an ERISA plan, was an appropriate ERISA waiver obtained at the time you negotiated your divorce settlement?
4. Did you give your former spouse any powers of attorney or designate him or her as your agent for health care decisions?
5. Did you name your former spouse as a beneficiary of any trusts? Are they irrevocable? If so, do they provide for your spouses’ interest to terminate automatically in the event of divorce? If not, do the trust documents and applicable state law allow you to change beneficiaries or modify the disposition of the trust assets?
6. Does your divorce settlement or judgment address any of these issues?

After a divorce, or any other major life change, such as marriage, birth of a child or death of a family member, you should meet with your estate planning advisor as soon as possible to review your plan. Failure to modify your plan to reflect these changes can lead to unexpected and, in many cases, undesirable results.

Is the Price Right?

April 7, 2010/in Estate Planning /by Michael Lonich

Buy/Sell Agreements and Estate Planning

Generally, for a buy/sell agreement to establish the value of a business interest for estate planning purposes it must:

1. Be a bona fide business arrangement;
2. Not be a device for transferring the business to family members at a discounted value;
3. Have terms comparable to similar, arms length agreements;
4. Fix a purchase price that is reasonable when the agreement is executed; and outline a pricing formula to consider evaluation changes in the intervening years;
5. Require an owner’s estate or beneficiaries to sell the shares at a specified price; and
6. Restrict owners’ disposition of their interests during life and at death.

If at least 50% of a company’s value is owned by non-family members subject to the same terms as family members, a buy/sell agreement is presumed to meet these requirements.

2010: The Year of No Estate Tax

April 5, 2010/in Estate Planning /by Michael Lonich

The Economic Growth and Tax Reconciliation Act of 2001 eliminated estate taxes for 2010, though they will return with a vengeance in 2011. (The maximum rate, previously 45% with an exemption of 3.5 million, rises to 55% next year with an exemption of just 1 million.) Although many expect Congress to retroactively apply estate taxes for this year, others are calling 2010 the “throw mama from the train” year. Adding an element of suspense is a push in Congress to make permanent the previous $3.5 million exemption. California’s estate lawyers are awaiting the outcome of HR4154. Even if Congress extends the 2009 exemption going forward there were many plans written with the current code in mind and once a permanent decision is made many plans will need rewriting.

Many observers doubt the HR4154 will pass unless it includes a provision to “reunify” gift and estate taxes which were split into different rates in 2001. That, in turn, could mean a two or three year boom in tax and estate law as gift givers scramble to take advantage of the shift.

With all of the changes happening recently as well as potential changes yet to be decided, many estate plans could have holes and will probably have some issues once the law is changed. If it ends up being no estate tax in 2010, it will make for an interesting year.

Study Shows Value of Living Will

April 2, 2010/in Estate Planning /by Gina Policastri

A new study suggests that more than one in four of the elderly population will need someone to make their end-of-life decisions for them. This finding places a significant emphasis on the importance of creating a living will and stating after-life wishes explicitly. A living will is a statement that is written by the patient that explains their choices for treatment if he/she becomes incapacitated. Researchers also stated that someone must be designated to make the treatment decisions for the patients. The results of a recent study concluded that those who explicitly stated their end-of-life wishes in a living will were more likely to get the treatment that they wanted. In 2009, the end-of-life care topic became a part of the health care reform debate. During the debate, the legislation proposed that if they were given a provision, Medicare would be allowed to pay doctors in order to counsel patients about end-of-life decisions. This idea got denied because critics thought end-of-life counseling was similar to a death panel.
The study also showed that due to dementia, a stroke, or a debilitating illness, the elderly are unable to make their own decisions near the end of life.

(This study included 3,746 people who were 60 and over. They passed away between the years of 2000 to 2006. )

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