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From the November 29, 2002 print edition

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Estate Matters
 

It's never too early to begin planning your estate

Craig Bernab  

A general perception exists that long-term care issues and estate planning issues only affect the "elderly."

Actually, long-term care can describe services that assist people who are ill, injured or have diminished mental capacity. The services can help the individuals with daily activities.

The individual requiring care could be a wife, husband, parent, or even a child.

Activities of daily living are daily functions that we perform, such as bathing, dressing and eating. Anyone, at any age, can become seriously ill or suffer an injury that diminishes their capacity to perform these functions, and therefore necessitate the need for long-term care.

Additionally, we never know when an untimely death may occur and a properly designed estate plan will ensure that our estate is passed to our heirs in the manner that we choose.

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The details

Seriously consider the qualifications of the individual you engage to plan for these events.

An attorney who specializes in long-term care planning and estate planning is a valuable resource.

The attorney has the knowledge to assist with all aspects of the planning process including becoming aware of long-term care services and resources in the community, evaluating the many different long-term care providers and choosing the proper provider for your situation.

Good legal advice is also beneficial when reviewing contracts with nursing homes, assisted living facilities, retirement communities and other institutions, and when drafting a will and/or trust to ensure that your estate is passed to your heirs in an efficient manner, while minimizing estate tax expense.

Paying for long-term care expenses can be problematic. The average cost of long-term care in Maryland can range from $4,000 to $5,000 per month or $48,000 to $60,000 per year. These costs are increasing dramatically.

Long-term care expenses are typically not covered by general health insurance policies, and very limited coverage exists under Medicare.

An attorney can evaluate your ability to privately pay for such expenses or investigate the purchase of a long-term care insurance policy.

Sometimes, long-term care planning begins too late, when you (or an aging parent, relative or friend) have suffered an injury or illness and are exhausting assets to cover long-term care expenses.

An attorney can advise you about federal programs such as Medicaid or various Maryland housing programs that assist with the payment and administration of long-term care.

If you are considering applying for Medicaid, an attorney should definitely be consulted as the eligibility rules are strict and confusing, and the application process is difficult.

Regardless of the size of your estate, an attorney can help you choose a distribution plan for your assets to ensure that your heirs are adequately provided for in the event of your death.

Taxing situation

If you have a larger estate that may be subject to federal estate taxes, it is extremely important to consult an attorney due to the recent sweeping changes made to the federal estate tax law by the Economic Growth and Tax Relief Reconciliation Act of 2001.

For example, the tax act includes a gradual repeal of the estate tax law in 2010, a gradual decrease in the estate tax rates occurring each year through 2010, and a gradual increase in the estate tax exemption amount through 2010.

But due to a sunset provision, the tax act will expire in 2011, unless Congress re-enacts the legislation.

Your attorney will explain the impact of this major tax act on your estate and recommend effective legal strategies designed to minimize the expected estate tax burden.

Emphasizing that long-term care planning and estate planning will be required by an increasing number of people is the fact that the fastest growing sector of the American population are those over the age of 65.

Considering that the "baby boomers," those born between 1946 and 1964, will cause the numbers of those over 65 to swell over the next 30 years, it is not surprising that the legal issues usually affecting this age group and their families have become increasingly important.

Therefore, attorneys will be called upon to counsel clients with the serious legal issues affecting this age group.

An experienced attorney who can properly plan for these legal issues could make a significant difference for your loved one, your family and you.

And, the plan is tightly bound and protected in the eyes of the law.

Craig Berman, an attorney and CPA in Timonium, can be reached at (410) 308-0300.



2002 American City Business Journals Inc.






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