Thursday, March 19, 2015

Why wills aren’t just for the wealthy

Chances are you’ve spent plenty of your free time thinking about the money you’ll have available at retirement. But what have you done to plan out your estate? The sad truth is that most of us — some 70% of adult Americans — have neglected to write a will. Some think their assets are just too puny to worry about, others worry that the costs of writing a “last will and testament” are too high.

But wills aren’t just vehicles for the wealthy or the morbid. If you’ve got a family and a home — not to mention a savings account — you should definitely have one. Cost is no excuse. While the average will drawn up by a lawyer typically runs from $500 to $1,000, you can get a simple will at a legal clinic for as little as $75 or create your own with an online vendor for even less.

For most people, the first time in your life that a will becomes imperative is when you have children. Forget about your assets for a minute. In the terrible event that you and your spouse die at the same time without a will, it falls to a probate court judge to name a guardian for your minor children — not a pleasant prospect. That is why it is a crucial first step to name a guardian for your minor kids. Our experts recommend naming an alternate guardian in the document, as well, in case something happens to your first choice.

Writing a will, of course, is also your chance to clarify who gets what in your estate. Before you can do that, however, you have to tally up your assets. That includes your house, your investment portfolio, the value of your retirement plan account(s), and the payout(s) from any life insurance coverage. After adding these things up, most folks discover that they are worth more than they initially suspected.

Once you’ve got your assets listed, you can decide what you want to leave to whom and who will be executor of your estate. One important caveat: Make sure that the beneficiaries listed in your will match the beneficiaries you name for your insurance policy and for your 401(k) and any other retirement accounts. If not, the beneficiaries named in these other documents will be the ones who actually get the money.

Now, if you want to do any more complex estate planning, chances are you’ll have to set up a trust, which isn’t cheap. They can cost as much as $2,000 to $3,000 or more. The primary reason people go to this kind of trouble is to protect their heirs from having to pay hefty estate taxes that can turn their carefully built nest egg into chicken feed. Or to protect their heirs from themselves if they are — to put it kindly — not very financially astute. Remember: for every dollar you leave behind over the unified federal gift and estate tax exemption amount ($5.43 million for 2014), the IRS will take 40 cents for the federal estate tax.

Once you have a will in place, don’t forget to update it regularly. You’ll need to amend it whenever there is a big change in your family’s circumstances — a birth, a death or marriage, or even if you move out of state. A will might seem like a hassle, but that is nothing compared with the hassles your heirs will experience if you die without one.


Tuesday, March 17, 2015

5 ways to avoid getting ‘sandwiched’ by parents and kids

One-in-seven middle-aged Americans is financially responsible for both a parent and a child.

The “sandwich generation” is a term coined for families squeezed between taking care of an aging parent and raising young children or supporting adult children.

This is becoming all too common with about one-in-seven middle-aged Americans taking on financial responsibility for both a parent and a child, according to the Pew Research Center.

If you find yourself “sandwiched,” you may discover that your own retirement is at risk. Here are five steps to getting back on track:

1. Family meeting

The family meeting is simple, but effective. Many families hold financial affairs close to their chests. As a result, when a loved one becomes incapacitated or dies, family members are forced to scramble to determine final wishes and wrap up financial matters. Transparency is essential. A family meeting is the perfect time to decide who will handle what decisions.

2. Updating legal documents

A good rule of thumb is to dust off legal documents and update every five or so years. If an aging parent has an incident, or is in failing health, it is a very good time to review these documents with your parents. Laws change and life has a funny way of changing situations. The basic legal documents you should have are an updated last will and testament, living will, health-care surrogate, power of attorney, and potentially a living trust.

3.Taking financial inventory

I’ve found that families commonly think their parents were paupers, only to find out they saved very well. Besides having the ability to help with their current circumstances, there might be a looming estate-tax problem in the future. On the other hand many families have believed for decades that their parents were well off financially, only to discover they were broke and that they had unknowingly become their parent’s financial plan.

The following is a short list of information you should store in a safe place:

    Incomes and survivor benefit options on these incomes if both parents are living
    Monthly operating expenses
    Long-term care policies
    Death and marriage certificates for previous spouses
    DD2-14 (discharge paperwork) to research potential benefits for seniors
    Financial information: Checking accounts, CDs, brokerages, qualified accounts, and annuities
    Real property including land, primary residences and other property

4. Take tours and research options

Do we move our parents into assisted living or hire caregivers? Remember there is no right or wrong answer. Facilities have come a long way since their initial creation and establishment. Home health care can be a great option as well, but families should understand that it can be a luxury to stay in one’s home. Home care may initially be cheaper but it can gradually become more expensive than a facility and taxing on family members acting as caregivers.

5. Build a long-term care plan

A long-term care plan is not a product. It’s not something someone can sell you. A long-term care plan is a strategy with an established timeline and predefined milestones. It is built upon one fundamental discovery question: “If today you became ill or injured in an accident and could no longer take care of yourself independently, how would you like to be taken care of?“

Once health-care milestones and timeliness are agreed upon, investigate care providers, confirm that your financial inventory supports this plan and meet with the family to agree on the new established plan.

These are the five steps every family should take to avoid or, at the very least, help alleviate the pain of becoming part of the sandwich generation. Preparing for illness and taking care of a sick loved one, is never an easy task. However, if you don’t plan or help your parents to plan, you could find yourself sandwiched between guilt and confusion.

Source: MarketWatch

Friday, March 13, 2015

Feds bust Miami-Dade ring in $130 million healthcare fraud case

The city of Miami, Miami-Dade County public schools and several companies lost millions of dollars in health insurance payments as a result of being scammed by crooked clinics that submitted bogus claims for pain injections, according to newly filed indictments.

Federal agents arrested 14 suspects Wednesday on charges of scheming to bilk more than $130 million from the public entities, private companies and major insurers, namely Blue Cross Blue Shield, United Healthcare and Cigna.

Four other suspects — including the accused ringleader, Reynaldo Castillo — were also charged but have not yet been apprehended. One of those, Danny Jacomino Bordon, who ran a Miami rehab clinic as well as a film production business called Ouija Studios, is expected to surrender to FBI agents on Thursday.

All together, the various entities and their insurers paid out about $15 million to the healthcare network, which operated about 35 clinics in Hialeah, Doral and Miami between 2012 and 2015, according to the indictments.

Among the bilked entities: Pepsi Co., Macy’s, RadioShack, BJ’s Wholesale Club, Lincoln Property Company, Nextera Energy and Southeast Frozen Foods Company.

Most of those, as well as the city of Miami and Miami-Dade school system, are self-insured with healthcare plans managed by the big insurers — so the fraudulent healthcare payments came directly out of their pockets.

Assistant U.S. Attorney Christopher Clark said that he will seek to detain almost all of the defendants because they are considered flight risks — possibly to Cuba. He is also seeking to recover millions of dollars paid out to the defendants and to seize at least five buildings that some purchased to house their clinics.

Their bond hearings and arraignments are scheduled for next Wednesday.

The case is unusual because typically the U.S. attorney’s office prosecutes healthcare fraud offenders who try to fleece the taxpayer-funded Medicare program.

But, according to the indictments, the clinics used familiar ploys to carry out the racket: stealing the names of employees to file false claims, paying kickbacks to patient recruiters, and misappropriating the licensing information of physicians. Most of the claims were for injections to treat purported knee and back pain.

Almost all of the clinics — including 1st Class Medical Centers, A Woman Health Center and Absolute Rehabilitation Center — were owned and operated by Reynaldo Castillo, Hendris Castillo Morales, Lisbet Castillo Batista and Maite Garcia, according to the indictments.

Another defendant, Alejandro Biart, is accused of being a patient recruiter who accepted kickbacks from the co-conspirators in return for referring Cigna beneficiaries to their clinics.

Most of the rest of the defendants, in exchange for a fee, allowed their names to be used to incorporate the clinics, open bank accounts and cash checks received from Cigna, Blue Cross Blue Shield and United Healthcare, the indictments said.

Source: MiamiHerald

Read more here:

Tuesday, March 10, 2015

Estate Planning for Blended Families

You have arrived at your second marriage a little bit older and (hopefully) a little bit wiser. Second marriages and blended families present their own issues when it comes to estate planning. You would like to take care of your spouse and your children, but letting them work it out after you are gone is a recipe for disaster. Once you have been through a divorce, you understand that "happily ever after" isn't always. Fortunately, estate planning that takes into account your unique family situation can alleviate most of your concerns, allowing you to freely pursue your second chance at happily ever after.

Good communication is key. The first step is to have an honest conversation with your new spouse about your existing finances, goals for the future and how you expect your assets to be distributed. These conversations can be difficult and emotionally-charged, but they will reap innumerable rewards in the long run. If your children are adults, you may also want to include them in these discussions so that everyone knows what to expect.

If possible, I suggest consulting with an estate planning attorney prior to remarriage to assess your options. But, if you have said "I do" again, it is not too late! The most important thing is to do something. Don't let the state determine how your assets will be distributed.

The biggest concern in second marriages is ensuring that each spouse's share of the estate ultimately ends up with his or her desired beneficiary. That is, if each spouse has children from other relationships, those children's inheritance is protected even if their parent is the first spouse to die. Traditional estate planning distributes an estate to the spouse and then the children. But, after the first spouse dies, the surviving spouse can easily amend the documents to disinherit whomever he or she chooses--including the deceased spouse's children!


If one of you brings significant assets to the marriage, it may make sense to prepare a separate property trust, before you get married to ensure that those assets ultimately end up with your chosen beneficiaries. You may make your current spouse the beneficiary of the trust until their death and then your children. Or you may have your separate property distributed directly to your children.

Whether or not you have a separate property trust, you should also establish a joint trust with your spouse that has protections for the children. For example, upon the first of you to die, half of the couple's assets are placed into an irrevocable trust for the benefit of the surviving spouse. The surviving spouse is able to live off of the income generated by that trust, but the principal is preserved for the children of the deceased spouse. This kind of trust does require some administrative time and costs, but they are well-worth the peace of mind provided.


A durable power of attorney gives you the opportunity to name a trusted individual to manage your financial affairs and legal decisions during your life if you are not able. Make sure that any previous powers of attorney (perhaps naming your previous spouse) are revoked. Execute an updated power of attorney naming your spouse, your children or another trusted individual as your agent.


Similar to a power of attorney, a health care directive allows you to name someone you trust to make decisions about your health care when you are not capable yourself. An updated health care directive is always helpful for medical professionals in the event of an emergency. This also gives you a chance to discuss your feelings about your end-of-life care, organ donation and burial arrangements with your new spouse.


You may have a significant amount of wealth in life insurance policies and your retirement accounts. The beneficiary designations on those assets will control who they are distributed to, not your will or trust. Many people forget to change beneficiaries when they get divorced. 

Think holistically about these accounts and your other estate planning. For example, you may want to provide a death benefit through a life insurance plan for your spouse, while allowing the rest of your estate to pass to your children. It is extremely important that you do not name minors on your beneficiary designations. Minors are not legally able to control assets and a guardian may have to be appointed by the court to manage the asset until the minor turns 18. Speak to your estate planning attorney about strategies to allow your children to benefit from your life insurance and 401K plan without court intervention.


You and your new spouse may be still learning about each other, and that includes details about financial assets. Often people have smaller life insurance policies that have been owned forever, a little-used account at a credit union or an old 401(k) plan from a job left long ago. Now is the time to share that information and make changes or transfer those accounts. It will be so helpful for your grieving spouse and family to not have to play detective after your death.

Moreover, your new spouse may not know all of your family and old friends. Providing names, telephone numbers and email addresses for these people so that they can be notified if something happens to you will help connect your spouse with your past.

Every blended family is different and each presents its own set of challenges, both legal and personal, but a trusted attorney can help guide you through the process and achieve your goals.

Source: HuffPost

Friday, March 6, 2015

Shocking NYC murder highlights need for estate planning contingencies

Case serves as a reminder that advisers need to plan for events in which a beneficiary becomes unable to inherit.

A recent murder case is bringing so-called “slayer statutes” into the limelight and making the case for planning for contingencies in the event a named beneficiary can't inherit.

Readers may have been following the lurid story involving the late Thomas Gilbert Sr., founder of Wainscott Capital Partners Fund, who was fatally shot in his Manhattan apartment on Jan. 4.

Mr. Gilbert's son, Thomas Gilbert Jr., was arrested and charged with the murder soon after.

Now, reports are flying that the younger Mr. Gilbert may still get his cut of his dad's $1.6 million nest egg, as the will splits the money between the elder Mr. Gilbert's wife, daughter and son. This is due to the ambiguity around Mr. Gilbert's death and whether it was intentional.

Enter the use of slayer statutes: state-based rules that determine what happens in an estate distribution following the slaying of a grantor by a beneficiary.


“This is intended to deter those who kill to get the money,” said Andrew M. Katzenstein, a partner in the personal planning department at Proskauer Rose. “These statutes are set up for the nefarious cases.”

In general, slayer statutes prevent beneficiaries from profiting from their own wrongdoing. When it comes to the distribution of the estate, the beneficiary who participated in the murder is disinherited and treated as if he or she died before the grantor.

Slayer statutes apply across the span of transfers: Beneficiaries who kill their grantors are unable to collect from an intestate inheritance — a scenario where one dies without a will — and they are barred from being named beneficiaries, according to Joanna L. Grossman, a law professor at Hofstra Law School. Non-probate transfers, such as life insurance and real estate transfers, also are blocked from going to that individual.

With insurance policies, carriers may take the case to court in an interpleader action to determine who receives the proceeds of any death benefits. In a situation where one spouse slays the other, the children may be in line to receive death benefits, said Charles Douglas, editor of the Journal of Estate and Tax Planning.

But there is a fine line between what's considered murder in the context of the slayer statute.


Ms. Grossman notes that whether the statute kicks in depends on whether there is a criminal proceeding and a conviction of the alleged perpetrator. The probate court will base its decision on the findings of the criminal court: In the event of murder, the person is treated as a slayer under the statute.

Manslaughter is murkier, however: Voluntary manslaughter — where one person kills another in the heat of the moment and didn't plan to do so — may bar the perpetrator from inheriting. Involuntary manslaughter — the unintentional killing of another — can also be iffy as to whether that results in disinheritance.

States will vary on their definition for the type of killing that would result in a disinheritance, as well as how broadly the statutes apply to asset transfers and whether the law applies to the descendants of the beneficiary who participated in the death, Ms. Grossman noted.

Probate court is the path of recourse for surviving beneficiaries. There, family members can push back against criminal court findings that would permit the killer to inherit. “The only time the beneficiary does anything is if the district attorney isn't moving forward with the murder investigation, Mr. Katzenstein said. “Then the beneficiaries have to prove it in probate court.”

In such a scenario, the trustee of a trust or the executor of the will needs to be aware of how a case shapes up before the time comes for distribution.


Nobody drafts a will with the expectation that a loved one could ultimately harm them, but it helps for planners to think about events in which a beneficiary becomes unable to inherit.

There are more mundane reasons why a child may not be able to receive the money left behind by a parent. Perhaps the beneficiary passes away before the grantor, or maybe the beneficiary commits fraud or causes undue influence and can't inherit as a result, according to Ms. Grossman.

“This is really just the normal lesson of planning for contingencies,” she said. “Assume the beneficiary won't be able to take [the inheritance]. Think about where things should go.”