An estate plan often focuses on tangible property such as jewelry, artwork, money, and vehicles. However, in this age of technology, it is important to remember to include your digital assets. Digital assets consist of everything we own online. Because we spend more time on computers and smartphones than we ever did before, you may not realize how much digital stuff you own, from photos and videos to online accounts, cryptocurrency, and nonfungible tokens (NFTs). 

When you think about estate planning you may think about a set of documents that provides for the distribution of assets after you die. While it is true that an estate plan should efficiently distribute your assets after you die, a comprehensive estate plan should also examine the need to preserve assets for the enjoyment of the people you are responsible for, as well as ensure that you are supported and cared for during your lifetime, even in periods of diminished capacity or if you require long term care. Long-term care is the kind of care you need if you are not able to perform normal daily activities (such as eating, dressing, and bathing) without help, and it is expected that you will need this help for an extended period or the rest of your life. This kind of care is often needed due to aging, chronic illness, or injury, and most of us will need it for at least some time before we pass on. But it is not just for the elderly; a good number of younger, working-age adults are currently receiving long-term care due to accident, illness, or injury. Long-term care can be provided in your home, an assisted living facility, or a nursing home. All of these can be very expensive, with care provided in a private room at a nursing home typically being the most expensive. Home healthcare can easily run over $54,000 per year according to Genworth Financial’s Cost of Care Survey . Depending on the skill, medical certifications, and training required of the caregivers, the number of hours needed and where you live, home healthcare can cost more. Assisted living facilities can cost more than $50,000 per year; the more services you need, the higher the cost. Nursing home facilities, with round-the-clock care, are now $90,000 or more a year. Expect to see these costs go even higher, thanks to rising medical costs and longer life expectancies. The average stay in a nursing home is three years. Alzheimer's patients usually need care longer. Unfortunately, health insurance, disability income insurance, or Medicare do not cover long-term care. Health insurance plans cover nursing home expenses only for a short period while you are recovering from an illness or injury. Disability income insurance will replace part of your income if you are not able to work after a specified time, but it does not pay for long-term care. Medicare, which covers most people over the age of sixty-five, provides limited coverage for skilled care for up to one hundred days immediately following hospitalization. After that, you are on your own. So who will pay the cost if you need long-term care? There are only three sources: your (or your family's) assets, Medicaid, and long-term care insurance. Medicaid pays the bills for a large number of people in nursing homes today. But because the program is designed to provide services for those who cannot support themselves (children, disabled, incapacitated, and low-income individuals), you will have to "spend down" your assets and be practically penniless to qualify for benefits. Your spouse is also limited to the amount of assets he or she can have. Also, you will only be able to receive care from a facility that accepts Medicaid. But if you have minimal assets, it may be the best option for you. For many people, long-term care insurance is the best option, especially if you have assets and income you want to protect, you want to avoid being a financial burden on others, and you want to have some choice in the care you receive. With long-term care insurance, you will have the option of receiving care in your home or a private pay facility. The premiums are lower when you are younger and in good health. If you wait too long, the cost could be prohibitive and you might not qualify. When creating a comprehensive estate plan you must consider planning for long-term care. If you are considering trying to qualify for Medicaid, make sure you talk with us before you do anything. An innocent mistake could disqualify you from receiving benefits for many months.

The 2021 holiday season is upon us. That means that we are coming to the end of another year, but there is still time to get some major estate planning goals accomplished. Here are ten things to do before the end of the year. Put your estate plan in writing . Covid 19 brought new insights into how fleeting life really can be. You may have thought about putting your wishes on paper about how your want to distribute your assets if something happens to you. Set the end of the year as your deadline to finally get this done. Figure out why you have been procrastinating and conquer your fears. If it is because you are not sure who you want to be the guardian for your minor children, who you want to be your executor or trustee, or how to divide your estate, AMD Law can help you decide. (You can always change your mind later; do not let these decisions keep you from putting a plan in place now.) If you don’t commit your desires to writing Maryland’s (or your state’s) default will decide who gets your stuff. Make or update health care documents. At a minimum, everyone over the age of eighteen needs (1) a durable power of attorney for health care, which gives another person legal authority to make health care decisions (including life and death decisions) for you if you are unable to make them for yourself; and (2) Health Insurance Portability and Accountability Act (HIPAA) authorizations, which give written consent for doctors to discuss your medical situation with others, including family members. In addition, a revocable living trust is preferable over a will in the case of incapacity because it can prevent the court from controlling your assets. Review and update your existing estate plan . Personal and financial circumstances change throughout your lifetime, and your plan needs to change with them. Revisions should be made any time there are changes in your family (birth, death, marriage, divorce, remarriage), your finances, tax laws, or if a trustee or personal representative can no longer serve. Now is a perfect time to do this; if there are changes you want to share with family members, you can discuss it during the holidays. Review and update your guardian for minor children. The person you name as guardian for your children when they are young may not be the best choice as your children get older. Also, this person could change his or her mind, move away, or even become ill or die. Revisit your choice from time to time, and name more than one guardian in case your first choice cannot serve. Remember, if you have not named a guardian who is able and willing to serve and something happens to you, the court will decide who will raise your kids. Review and update beneficiary designations . This is especially important if your beneficiary has died or if you are divorced. If your beneficiary is incapacitated or is a minor, setting up a trust for this person and naming the trust as beneficiary will prevent the court from taking control of the proceeds. Review and update your insurance . Check the amount of your life insurance coverage and see if it meets your family’s current needs. Consider getting long-term care insurance to help pay for the costs of long-term care (and preserve your assets for your family) in the event you and your spouse should need it due to illness or injury. Get basic documents for unmarried kids who are over eighteen . It is a mild shock to learn we cannot see our college kids’ grades without their permission, even though we pay the tuition. It can be much worse if they become ill. Unmarried adults (age eighteen and over) must have a durable power of attorney for health care and HIPAA authorization naming you to act on their behalf in a medical emergency. And, while you are at it, have your attorney prepare a simple will and durable power of attorney. Hopefully these will not be needed, but if an event does occur, you will be glad you have them. Consider using your estate and gift tax exemption . As of 2021 every American can transfer up to $11.70 million free of federal gift, estate, and generation-skipping transfer tax. A married couple can transfer up to $23.4 million. If Congress does not change the current law, the federal estate tax exemption in 2026 will be $5 million (adjusted for inflation), $3.5 million, $1 million, or some other amount determined by Congress. If you are concerned that a reduction in the estate and gift tax will adversely affect you, consider using up your exemption by making gifts while the exemption remains high. You do not have to completely give away your assets; you can make the transfers in ways that will let you keep control and even keep the income your assets are generating. You also do not have to use the full $11.7 million exemption to benefit; even those safely below the $11.7 million amount should consider some planning to prevent future tax liability. Make tax-free gifts. Under current federal law, you can give up to $15,000 to as many people as you wish each year. This is a great way to reduce the size of your estate (and potentially save estate taxes) over time. For example, if you give $15,000 per year to your two children and three grandchildren, you would remove $75,000 from your estate in just one year and $350,000 in five years. (You can double these amounts if you are married.) Charitable gifts are unlimited. So are gifts for tuition and medical expenses, if you give directly to the institution. If your assets are safely below the $11.7 million exemption, you may not need to make these tax-free gifts to avoid paying estate tax when you pass away. You need to determine if making these tax-free gifts is appropriate for you by discussing them with your estate planning attorney. Talk to your children about your estate plan . You do not have to show them bank and financial statements, but you can talk in general terms about what you are planning and why. The more they understand it, the more likely they are to readily accept it—and that will help to avoid discord after you are gone. You can also talk to them about your values and the opportunities that money can provide. Even better, show your values by doing—the holidays are an excellent time for families to do charitable work together.

On December 20, 2019, President Trump signed the Setting Every Community Up for Retirement Enhancement Act (SECURE Act). The SECURE Act, which is effective January 1, 2020. The Act is the most impactful legislation affecting retirement accounts in decades. The SECURE Act has several positive changes: It increases the required beginning date (RBD) for required minimum distributions (RMDs) from your individual retirement accounts from 70 ½ to 72 years of age, and it eliminates the age restriction for contributions to qualified retirement accounts. However, perhaps the most significant change will affect the beneficiaries of your retirement accounts: The SECURE Act requires most designated beneficiaries to withdraw the entire balance of an inherited retirement account within ten years of the account owner’s death. The SECURE Act does provide a few exceptions to this new mandatory ten-year withdrawal rule: spouses, beneficiaries who are not more than ten years younger than the account owner, the account owner’s children who have not reached the “age of majority,” disabled individuals, and chronically ill individuals. However, proper analysis of your estate planning goals and planning for your intended beneficiaries’ circumstances are imperative to ensure your goals are accomplished and your beneficiaries are properly planned for. Under the old law, beneficiaries of inherited retirement accounts could take distributions over their individual life expectancy. Under the SECURE Act, the shorter ten-year time frame for taking distributions will result in the acceleration of income tax due, possibly causing your beneficiaries to be bumped into a higher income tax bracket, thus receiving less of the funds contained in the retirement account than you may have originally anticipated. Your estate planning goals likely include more than just tax considerations. You might be concerned with protecting a beneficiary’s inheritance from their creditors, future lawsuits, and a divorcing spouse. In order to protect your hard-earned retirement account and the ones you love, it is critical to act now. 

Why Do I Need Life Insurance?

Many Americans spend a lot of time and effort in managing their finances. While most are worried about how the coronavirus (COVID-19) will impact their income—whether that's because they are temporarily furloughed, find themselves suddenly without a job, or watching their investment and retirement accounts dwindle—there is another way COVID-19 can wreak havoc on American's finances: lack of incapacity planning. As the coronavirus continues to expand across the country, thousands of Americans are unable to carry out normal financial responsibilities because they are too ill, or they are stuck abroad and unable to travel home, or from a lack of resources due to being isolated at home. While feeling healthy, individuals should plan ahead now and ensure that someone will take care of their financial duties by setting up a Financial Power of Attorney. This important legal document will not only protect your finances should you fall ill from COVID-19 but also from any events that might leave you incapacitated, like an injury or accident. 

How Do I Make Sure My Grandchildren Are Taken Care of If Something Happens to Me in Prince George's County, Maryland?