Four Steps You Can Take to Protect Your Digital Estate

While the internet makes our lives more convenient, it also adds new complications.  For example, what happens to all our online data and assets if we become disabled or die?

Whether or not we spend half our lives responding to devices, we all transact a lot of our daily business online — buying items on Amazon, paying our bills through online bank programs, accumulating and using airline miles, reallocating our investments, saving photos, listening to music, watching movies, or planning trips. And that’s not even mentioning dating sites or social media, such as Facebook, Instagram, or LinkedIn.

So, what happens to all these connections and information if you become disabled or die? Whom do you want to have access, and to which sites? For instance, although you may want your children to be able to access your financial accounts, do you want them scrutinizing your dating site?

The following are four actions you can take to make sure your digital estate is not lost or falls into the wrong hands:

  1. Share your passwords. Make sure that someone you trust, presumably the same person or people you appoint on your durable power of attorney and as personal representative of your estate, knows your passwords or how to find them. This can get complicated, since our passwords keep changing as sites require new passwords or have different requirements for password configurations. There are a few possible solutions to this challenge: (1) Keep a written list of your usernames, PIN numbers, and passwords and let your future agent know where it can be found. This has the benefit of being easy and impossible to hack, but it also means that anyone may be able to find the list. (2) Use a few secure passwords on all accounts that you can memorize and provide to your agent. (3) Use a service such as LastPass that stores all of your passwords. All you need to do is provide your agent with access to this one account. (Of course, use a different password for any sites you don’t want to share.)
  2. Add digital provisions to your estate planning documents. Make sure your durable power of attorney and will specifically authorize your agent and personal representative to access your digital accounts. This may or may not help since your access is governed by contracts with the online companies — those agreements we all check off without reading — which may or may not permit access to others. Strictly speaking, the sharing of passwords probably violates most of these agreements. However, there is an argument to be made that authorizing access in our estate planning documents gives our agents the legal authority to act for us and to use our usernames and passwords.
  3. Check if the online company has provisions for substitute access. Many online companies have their own systems for providing limited access to others in the event of our incapacity or death. See what they say and whether it’s possible to name someone to have access when and if necessary. Google, for instance, allows you to name an Inactive Account Manager.
  4. Save elsewhere. If you have anything saved online that’s really important to you, such as photographs, videos, or certain papers and documents, save it somewhere else as well. Print out important papers. Save everything to your computer (making sure you share your password) and to a USB drive. In fact, you should copy to more than one USB drive to share with whomever you deem appropriate.

If you take these steps, you and your family will be at much less risk of losing access to and control of your online life and property. Since things keep changing, it’s worth reviewing all of these steps on an annual basis.

To learn more, contact Amy Stratton or Kristen Prull Moonan.

When Should You Update Your Estate Plan?

Once you’ve created an estate plan, it is important to keep it up to date. You will need to revisit your plan after certain key life events, including marriage, the birth of children, divorce or the death of a spouse, and a significant increase or decrease in assets.  Here’s why.

Marriage

Whether it is your first or a later marriage, you will need to update your estate plan after you get married. A spouse does not automatically become your heir once you get married. Depending on state law, your spouse may get one-third to one-half of your estate, and the rest will go to other relatives. You need a will to spell out how much you wish your spouse to get.

Your estate plan will get more complicated if your marriage is not your first. You and your new spouse need to figure out where each of you wants your assets to go when you die. If you have children from a previous marriage, this can be a difficult discussion. There is no guarantee that if you leave your assets to your new spouse, he or she will provide for your children after you are gone. There are a number of options to ensure your children are provided for, including creating a trust for your children, making your children beneficiaries of life insurance policies, or giving your children joint ownership of property.

Even if you don’t have children, there may be family heirlooms or mementos that you want to keep in your family.

Children

Once you have children, it is important to name a guardian for your children in your will. If you don’t name someone to act as guardian, the court will choose the guardian. Because the court doesn’t know your kids like you do, the person they choose may not be ideal. In addition to naming a guardian, you may also want to set up a trust for your children so that your assets are set aside for your children when they get older.

Similarly, when your children reach adulthood, you will want to update your plan to reflect the changes. They will no longer need a guardian, and they may not need a trust. You may even want your children to act as executors or hold a power of attorney.

Divorce or Death of a Spouse

If you get divorced or your spouse dies, you will need to revisit your entire estate plan. It is likely that your spouse is named in some capacity in your estate plan — for example, as beneficiary, executor, or power of attorney. If you have a trust, you will need to make sure your spouse is no longer a trustee or beneficiary of the trust. You will also need to change the beneficiary on your retirement plans and insurance policies.

Increase or Decrease in Assets

One part of estate planning is estate tax planning. When your estate is small, you don’t usually have to worry about estate taxes because only estates over a certain amount, depending on current state and federal law, are subject to estate taxes. As your estate grows, you may want to create a plan that minimizes your estate taxes. If you have a plan that focuses on tax planning, but you experience a decrease in assets, you may want to change your plan to focus on other things.

Other

Other reasons to have your estate plan updated could include:

  • You move to another state
  • Federal or state estate tax laws have changed
  • A guardian, executor, or trustee is no longer able to serve
  • You wish to change your beneficiaries
  • It has been more than 5 years since the plan has been reviewed by an attorney

Contact your elder law attorney to update your plan. To learn more, contact Amy Stratton or Kristen Prull Moonan.

How Will the Coronavirus Pandemic Affect Social Security?

The coronavirus pandemic is having a profound effect on the current U.S. economy, and it may have a detrimental effect on Social Security’s long-term financial situation. High unemployment rates mean Social Security shortfalls could begin earlier than projected.

Social Security retirement benefits are financed primarily through dedicated payroll taxes paid by workers and their employers, with employees and employers splitting the tax equally. This money is put into a trust fund that is used to pay retiree benefits. The most recent report from the trustees of the Social Security trust fund is that the fund’s balance will reach zero in 2035. This is because more people are retiring than are working, so the program is paying out more in benefits than it is taking in. Additionally, seniors are living longer, so they receive benefits for a longer period of time. Once the fund runs out of money, it does not mean that benefits stop altogether. Instead, retirees’ benefits would be cut, unless Congress acts in the interim. According to the trustees’ projections, the fund’s income would be sufficient to pay retirees 77 percent of their total benefit.

With unemployment at record levels due to the pandemic, fewer employers and employees are paying payroll taxes into the trust fund. In addition, more workers may claim benefits early because they lost their jobs. President Trump issued an executive order deferring payroll taxes until the end of the year as a form of economic relief, which could negatively affect Social Security and Medicare funds.

Some experts believe that the pandemic could move up the depletion of the trust fund by two years, to 2033, if the COVID-19 economic collapse causes payroll taxes to drop by 20 percent for two years. Other experts argue that it could have a greater effect and deplete the fund by 2029. However, as the Social Security Administration Chief Actuary morbidly noted to Congress, this pandemic different from most recessions: the increased applications for benefits will be partially offset by increased deaths among seniors who were receiving benefits.

It remains to be seen exactly how much the pandemic affects the Social Security trust fund, but the experts agree that as soon as the pandemic ends, Congress should take steps to shore up the fund.   To learn more, contact Amy Stratton or Kristen Prull Moonan.

 

Which Nursing Home Rating System Should You Trust?

Choosing a nursing home for a loved one is a difficult decision and it can only be made more confusing by the various rating systems. A recent study found that using both Medicare’s Nursing Home Compare site and user reviews can help with the decision making.

The official Medicare website includes a nursing home rating system. Nursing Home Compare offers up to five-star ratings of nursing homes based on health inspections, staffing, and quality measures. However, Medicare’s rating system is far from perfect. The staff level and quality statistics ratings are based largely on self-reported data that the government does not verify. The ratings also do not take into account state fines and enforcement data or consumer complaints to state agencies.  Nursing homes have learned how to game the system to improve their ratings.

While Nursing Home Compare doesn’t include consumer feedback, Yelp and other online platforms like Facebook, Google, and Caring.com allow users to review individual nursing homes. These user reviews are highly subjective, and it can be difficult to judge their legitimacy. These reviews are not usually taken seriously–for example, consumer guides to finding a nursing home do not usually suggest that consumers consult online reviews.  (It should be noted, however, that Caring.com goes to great lengths to ensure the integrity of its reviews, including having senior care experts read every submission before publication.)

In order to better understand what consumers were saying about nursing homes online, researchers at the University of Southern California evaluated 264 Yelp reviews and grouped them into categories. The researchers found that consumers rate different aspects of nursing home care than does the official rating system. User reviews were more emotional and more likely to focus on staff attitudes and responsiveness rather than on the quality of health care.

The researchers concluded that user reviews can be used in conjunction with the Nursing Home Compare site to paint a fuller picture of life at the nursing home because they present complementary information. According to the study, online reviews shouldn’t be dismissed because they “directly capture the voices of residents and family members, precisely the kind of information [nursing homes] and their consumers need to hear and may want to act on, if resident-directed care is to be achieved.”

Yelp has gone a step further than other consumer review sites and has teamed up with the investigative news organization, ProPublica, to provide users with additional information. ProPublica’s Nursing Home Inspect site, allows users to compare nursing homes based on federal data. Yelp users viewing a nursing home review page see a ProPublica box that provides information on the nursing home’s deficiencies and fines.

To read an article about the study, click here.  To learn more, contact Amy Stratton or Kristen Prull Moonan.

 

Caregiver Contracts: How to Pay a Family Member for Care

Although people are willing to voluntarily care for a parent or loved one without any promise of compensation, entering into a caregiver contract (also called personal service or personal care agreement) with a family member can have many benefits. It rewards the family member doing the work. It can help alleviate tension between family members by making sure the work is fairly compensated. In addition, it can be a be a key part of Medicaid planning, helping to spend down savings so that the elder might more easily be able to qualify for Medicaid long-term care coverage, if necessary.

The following are some things to keep in mind when drafting a caregiver contract:

  • Meet with your attorney. It is important to get your attorney’s help in drafting the contract, especially if qualifying for Medicaid is a goal.
  • Caregiver’s duties. The contract should set out the caregiver’s duties, which can be anything from driving to doctor’s appointments and attending doctor’s meetings to grocery shopping to help with paying bills. The length of the term of the contract is usually for the elder’s lifetime, so it is important to cover all possibilities, even if they are not currently needed. The contract can continue even if the elder enters a nursing home, with the caregiver acting as the elder’s advocate to ensure the best possible care.
  • Payment. Payment to the caregiver can either be made with a lump-sum payment or in weekly or monthly installments. For Medicaid purposes, it is very important that the pay not be excessive. Excessive pay could be viewed as a gift for Medicaid eligibility purposes. The pay should be similar to what other caregivers in the area are making, or less. To calculate a lump-sum payment, take the monthly rate and multiply it by the elder’s life expectancy. (Note that some states, Georgia for example, do not recognize the ability to create a lump sum contract based upon life expectancy.)
  • Taxes. Keep in mind that there are tax consequences. The caregiver will have to pay taxes on the income he or she receives.
  • Other sources of payment. If the elder does not have enough money to pay his or her caregiver, there may be other sources of payment. A long-term care insurance policy may cover family caregivers, for example. Also, there may be state or federal government programs that compensate family caregivers. Check with your local Agency on Aging to get more information.

To learn more, contact Amy Stratton or Kristen Prull Moonan.

Will Medicare Cover a Coronavirus Vaccine?

With the coronavirus pandemic responsible for more than a hundred thousand deaths and disrupting life across the United States, the only way for the country to return to normal is an effective vaccine. When a vaccine is available, Medicare will cover the cost.

Medicare covers vaccines in a variety of ways, depending on the vaccine.  It may be through Medicare Part B, Medicare Part D, or a Medicare Advantage plan if you are enrolled in one. Part B covers vaccines only for certain illnesses: flu, pneumonia, and Hepatitis B (if you are at medium or high risk). Medicare covers 100 percent of the cost of these vaccines if you go to an approved provider, and you do not have to pay a deductible or coinsurance. Medicare Advantage is also required to provide these vaccines at no additional costs.

Part B also covers vaccines if you are exposed to a dangerous virus or disease, such as rabies or tetanus. In those cases, you will have to pay a deductible and a 20 percent coinsurance.

Part D covers all other doctor-recommended vaccines, such as the shingles vaccine and the Tdap (tetanus, diphtheria, pertussis) vaccine. How much the vaccine costs will depend on whether you go to a provider who is in-network for your Part D plan. If you get the vaccine in-network, you will have to pay the co-pay amount. If you get the vaccine out-of-network, you may have to pay for the entire vaccine and bill Medicare. Medicare will only pay for the approved cost, which may be less than what you paid. If you have a Medicare Advantage plan that covers prescription drugs, it may cover these vaccines. The cost to you will vary, depending on the plan.

With regard to COVID-19, the CARES Act provides that if a vaccine becomes available, Medicare is required to cover this vaccine under Part B with no cost sharing. Medicare Advantage plans are required to include the basic coverage offered by Medicare Parts A and B, so this coverage also applies to beneficiaries in Medicare Advantage plans.

To learn more, contact Amy Stratton or Kristen Prull Moonan.

When Planning Your Estate, Don’t Let the Perfect Be the Enemy of the Good

There are many unknowns when planning an estate, but you can’t let the uncertainties get in the way of creating any kind of plan. Having an imperfect plan is usually better than having no plan at all.

When planning an estate you want to be able to consider all the angles, but there are inevitably a number of “known unknowns” that can make planning difficult. These include:

  • How long you will live
  • How much money you will have left over, which can depend on longevity and potential need for care
  • Your children’s health
  • Your children’s financial stability, now and perhaps many decades into the future

There are also value judgments to make. Should you treat all children equally, or should their financial situations be taken into account? In any family, some siblings can be wildly successful financially, while others struggle. Some children may have supported you in your old age and others totally ignored you. (A word to the wise: Unless you have had a discussion with your children, treat them equally in your estate plan. You can provide differential support during your life, but unequal distributions at death can create great difficulties if they come as a surprise.) Should you create trusts that protect assets for your children and grandchildren, or simply provide that the funds be distributed outright at your death for them to use as they choose? Whom should you appoint in various roles—as agent under powers of attorney, as health care proxies, as trustees, as personal representatives?

Not having definitive answers to these questions can make it difficult to finalize a plan. However, before you get overwhelmed and give up on estate planning altogether, you need to consider the following:

  • Any plan is much better than no plan
  • We can’t totally predict the future, but just have to do the best we can based on what we know today
  • No plan is irrevocable; you can make changes as circumstances change or if you rethink what you want to do
  • After age 60 or so, it’s important to review your plan every five years in any case, since circumstances and laws change

The best way to approach estate planning is to think through all the questions and then create the best plan based on current circumstances. Your attorney can help you talk through all the options. To learn more, contact Amy Stratton or Kristen Prull Moonan.

Five Topics to Discuss With Your Spouse Before You Retire

You may have a vision for your retirement, but does your spouse share that vision? Spouses often disagree about many key retirement details. It is important to work together to come up with a plan you both can accept.

Many husbands and wives are not in accord about retirement. For example, a study by Fidelity Investments found that one-third of couples disagreed or didn’t know where they were going to live in retirement, and 62 percent didn’t agree on their expected retirement ages.

Here are some important things to discuss with your spouse as you get ready to retire:

  1. Timing of retirement. Many factors can go into a decision about when to retire, including job enjoyment and financial requirements. But couples also need to think about how best to maximize their Social Security benefits. Because Social Security doesn’t just pay benefits to a worker but also pays benefits to the worker’s spouse, couples need to work together to figure out how to get the most out of their Social Security benefits. For example, a husband can wait until his full retirement age to take benefits on his wife’s record. When he does, he can get half of her full benefit. The husband can then wait until age 70 to file on his own work record. At that point, the wife can file a spousal benefit on his record. Each circumstance is different and couples should talk to a financial planner about the best strategy for them.
  2. Finances.The first hurdle is that both spouses need to understand their financial situation. The Fidelity survey found that wives were much less involved in retirement finances than their husbands. Both spouses need a clear understanding of their finances and whether they are working in sync.
  3. Type of lifestyle. What do you expect to get out of retirement? Do you want to travel? Do you want to volunteer? Or do you want to relax on a beach somewhere? It is important to have a conversation about your hopes and dreams for retirement. You can start the process by creating individual wish lists and then comparing them.
  4. Health care. Make sure you and your spouse have adequate health care coverage either from Medicare or an employer-based plan. You also need to understand the rules regarding Medicare coverage.
  5. Long-term care. Unfortunately, most couples are going to need some type of long-term care for either one or both spouses at some point. There are things you can do to make it easier on yourselves if this need arises. Talk to your attorney about putting a plan together. Doing it early will save lots of headaches and expense later.

For a retirement planning checklist from Fidelity Investments, click here. To learn more, contact Amy Stratton or Kristen Prull Moonan.

 

5 Ways Your Will Can Become Useless, Or Close to It

Is having an out-of-date will better than having no will at all? While wills do not have expiration dates, certain changes can render them useless. When this happens, having an out-of-date will can be the same as having no will at all. It is important to review your will periodically to ensure it still does what you want. The following are five ways your will can become out-of-date:

  1. Your beneficiaries have died. What happens if your will leaves your estate to your two siblings, but both siblings die before you? If your beneficiaries predecease you, your will is still technically valid, but it will have no effect on who will inherit from your estate. Instead, your estate will be distributed according to the law in your state, just as if you had died with no will at all.
  2. You have potential new beneficiaries. A will that was written before you got married or had children will be of little assistance in distributing your estate. States have provisions that protect spouses and children that come after a will is written. In most states, spouses are entitled to a certain percentage of an estate. In addition, many states have laws that protect children born after a will was written, allowing them to inherit from the estate. It’s possible that under the laws of your state, a spouse and children not named in your will may not receive as much as you would have wanted them to. In both of these circumstances, state law is dictating where your estate is going, not you.
  3. Your executor is dead or unable to serve. The executor (also called a personal representative) is the person named in your will who oversees the distribution of your property. If the person you named as executor is unable to serve, the court will have to appoint someone else. Beneficiaries may have a say in who is chosen, but it may not be someone you would have wanted in the position.
  4. You no longer own property named in the will. Suppose your will attempts to divide up your estate equally by giving cash to your daughter and property of equal value to your son. If the property is sold before you die, your son will receive nothing. In this case, your will is no longer ensuring your estate is divided equally.
  5. The law changes. If your estate plan was designed specifically to avoid estate taxes and the estate tax law changes, your will may no longer serve its purpose.

Contact your attorney to ensure your will is still up to date. Reach out here to Amy Stratton or Kristen Prull Moonan.