Posts Tagged ‘Life Insurance’

Alzheimer’s Disease and Estate Planning

dm.elderly_womanA lot of families in North Georgia have either personally been affected by Alzheimer’s disease, or know a family who has. As all of us get older, it is inevitable that some of our friends and family members will be diagnosed with Alzheimer’s disease or dementia. Dementia refers to the general decline in mental ability severe enough to interfere with daily life. Alzheimer’s disease accounts for 60 to 80 percent of cases. Vascular dementia, which occurs after a stroke, is the second most common dementia type. But there are many other conditions that can cause symptoms of dementia, including some that are reversible, such as thyroid problems and vitamin deficiencies.

Because there is no treatment or cure for Alzheimer’s disease, knowing how the disease will affect a family member, their estate or their ability to create an estate plan, is essential. It is particularly important to understand how Alzheimer’s disease can lead to estate litigation, and how you can take steps to avoid such problems.

It can be useful to think of Alzheimer’s disease as not a single medical condition, but rather a continuum of conditions. As most of us age, we naturally lose some of our physical and intellectual abilities. We learn to cope with the new realities in our lives each step of the way. For some people, these new realities are little different than what they knew when they were younger, while for others there are significant changes which impact their ability to manage their day-to-day affairs.

Like aging itself, Alzheimer’s disease has stages. In the early stages of Alzheimer’s disease, most people are entirely capable of making their own decisions. That includes decisions related to health care, daily nourishment, and even executing new estate planning documents to protect themselves and their estates. If you know someone in this state, it is important that they promptly contact experienced estate planning attorney to confirm their estate plan is updated.

On the other hand, there are many people who have progressed towards the advanced stages of Alzheimer’s disease and they no longer have the ability to make decisions regarding important issues in their life or sometimes even their day-to-day care. People with advanced Alzheimer’s disease do not typically have the ability to make knowledgeable and rational decisions and therefore cannot execute estate planning documents such as a Last Will and Testament, Power of Attorney, or Advanced Health Care Directive. If someone suffers from the advanced stages of Alzheimer’s disease did attempt to execute a new estate planning document, it would likely lead to litigation involving the enforceability of the new document.

Everyone creating any kind of estate planning document must have the requisite mental capacity. In Georgia, a person executing a Last Will and Testament must:

  1. Understand the nature of the act (i.e. that the execution of the will is intended to dispose of their property at the time of death)
  2. Understand the general nature of their property interest subject to disposition;
  3. Understand who the persons in their family and who would benefit from the will;
  4. Be capable of conceiving and expressing an intelligible distribution scheme.

Should a family member execute an estate planning document while suffering from Alzheimer’s disease, you must be careful. Whoever tries to enforce the document must be able to show that at the time the signor executed the estate planning document that they were mentally capable.

Depending on the stage of the disease and their individual circumstances, it may be important to take additional steps to protect the enforceability of the estate planning document. For example, the family member might need to see a physician shortly before the execution of the estate planning documents. As long as the physician diagnoses the individual as being mentally capable, the family member will be able to execute the estate planning documents, but you should keep certified copies of those medical records. It may also be a good idea to consider doing a video-taped will execution. If appropriate safeguards are not followed regarding the execution of estate planning documents while a family member is suffering from Alzheimer’s disease, others might be able to challenge the enforceability of the documents.

If you or a loved one needs to discuss the possibility of executing new estate planning documents in anticipation of issues related to Alzheimer’s disease, the estate planning lawyers at Durden & Mills, PC can assist you. Call us at (706) 543-4708 for a free consultation.

 

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Long term care insurance is not just for those persons getting close the retirement age.  Recently, a growing number of young adults in their 20’s and 30’s are obtaining long-term care insurance. The American Association for Long-Term Care Insurance released a study that found a 28 year old who had been receiving benefits from his long-term care insurance for four years.  He purchased the coverage at 21 and received his first benefit at 24.

In 2011, the long-term care insurance industry paid $6.6 billion in claim benefits to over 200,000 individuals.  Insurance companies noted that there a growing number of younger individuals are purchasing long-term care insurance. The director of AALTCI, Jesse Slome, explains “people often mistakenly associate long-term care solely with nursing home care required by the elderly. After purchasing insurance coverage younger individuals have accidents and are diagnosed with health conditions that result in the need for care for months and often years.” A male who purchased insurance at age 36 began receiving policy benefits at age 40. His claim has lasted over six and a half years and the insurer has already paid out over $700,000. Sounds like the long-term care insurance was a pretty good investment for him, right?

While many of us do not expect to need long-term care, we all know people who have suffered from serious car accidents, work accidents, or the onset of a medical condition which resulted in the need for prolonged medical care. If you were to ask those persons, they likely did not expect to be in their condition either. With the costs of long-term care exceeding $4,000 to $5,000 per month, you may want to consider long-term care insurance as a method of protecting your family from a financial catastrophe. A policy that provides for $164,000 in immediate benefits with the option to increase overage in future years costs roughly $635 yearly for a 25 year old according to the Association’s 2012 Price Index.

If you or loved one needs to discuss the possibility of purchasing long-term care insurance as part of your overall estate plan, the estate planning lawyers at Durden & Mills, PC can assist you. Call us at (706) 543-4708 for a free consultation.

Source: The Sacramento Bee, “Younger Long Term Care Insurance Claimants Examined,” American Association for Long-Term Care Insurances

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How Often Should You Update Your Estate Plan?

It’s important to remember that after you have established your estate plan and actually executed your estate planning documents (i.e. Last Will and Testament, Health Care Advance Directive, Financial Power of Attorney and possibly an Inter Vivos Trust Agreement), changes in your life circumstances may necessitate revisions to your estate plan. At Durden & Mills, PC, we suggest that you review your estate plan periodically to determine if any revisions should be made. As the years go on, certain things will happen that may affect your assets and preferences concerning the disposition of your estate.

Some of the major life events that often times result in the necessity to update your estate plan include the following:

  • Marriage or divorce;
  • Birth or adoption of a child (or grandchild);
  • Purchase or sale of real estate or a business;
  • Purchase of life insurance (or termination of exiting policy);
  • Buying property outside of your home state;
  • Inheriting assets from family or friends;
  • Change in estate tax laws;
  • Relocation to a different state;
  • Death of a beneficiary;
  • Significant change in your or your spouse’s health;
  • A beneficiary or named fiduciary develops a substance abuse problem;
  • A beneficiary or named fiduciary becomes financially irresponsible;
  • You make substantial gifts or loans to family members;
  • Incapacity of a family member/beneficiary; or
  • Change in charitable preferences.

If you have recently experienced any of these life changing circumstances, it might be time for you to consider updating your estate planning documents.  However, you also should use your common sense. We cannot think of all the possible conditions and circumstances that should prompt you to review and update your estate plan. While every slight change in your life does not require an update to your estate plan, it is often times better to consult with your Estate Planning attorney before it is too late and your family has to suffer the consequences of inaction.

Many problems can occur if your estate plan is not updated. A few examples include:

  • You may unintentionally disinherit a beneficiary of your estate if your will leaves them a piece of property or bank account that was liquidated prior to your death.
  • If you fail to update your life insurance or retirement beneficiaries after your divorce, you may end up giving your ex-spouse a little more than you intended to after your death.
  • Failing to properly designate beneficiaries of financial accounts may interfere with your overall estate plan if you have a blended family and your spouse is not the biological  parent of your children.
  • Young parents who fail to update their wills as their children grow and mature may leave aging grandparents as guardians of their children past a time when those grandparents are actually capable.   As friends and family come and go, your preferences for who should be the guardian of a minor child likely will evolve as the grandparents get older and less able to take on that additional responsibility.

Your estate plan is not something that should be done once and put then locked in a wooden box until after you pass away. Instead, make sure you review it at least every few years and anytime when your life substantially changes. In addition, you can always schedule a free consultation with one of the Estate Planning attorneys at Durden & Mills, PC to discuss any possible changes in your estate plan or other questions you may have. For the average client, an estate plan should be reviewed at least every three to five years (more often if substantial changes have occurred).  Since you have already invested the time and expense to develop your estate plan, why not devote a few additional minutes to review your plan so you can ensure that your planning documents continue to reflect and accomplish your wishes and goals.

If you or loved one needs to update your estate planning documents or just discuss an estate plan, the estate planning lawyers at Durden & Mills, PC can assist you. Call us at (706) 543-4708 for a free consultation.

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Who should be the beneficiary of my life insurance policy?

Often times, our clients are not sure who should be listed as their life insurance beneficiary. While it may seem like an easy question, it often times requires some careful consideration.

Spouse.  In some cases, your spouse is a great choice to be the beneficiary of your life insurance policy. Other times, it is not such a good idea. Concerns arise when your spouse is not the parent of all your children or if your spouse has financial management issues. If either of those apply, you may want to consider other options.

Children.  Children under 18 years of age can not personally receive life insurance proceeds. Instead, the local probate court will have to appoint a conservator to accept the life insurance proceeds on their behalf. Thereafter, the conservator will hold the money for the benefit of your children and dispense it for their support in accordance with the court’s rules. Often times this creates unnecessary expense and burden which reduces the ultimate benefit to your children.

Estate.  Many times new clients come to their first estate planning appointment and report that they have listed their estate as the beneficiary of their life insurance policy. Assuming they do not have a lot of debt and their estate plan is appropriate, that might be ok. However, most times clients do not realize that they are jeopardizing the ability of their spouse and/or children to get the entire life insurance proceeds since they listed their estate as the beneficiary. Listing your estate as the life insurance beneficiary can also delay your family members from having quick access to the life insurance proceeds at a time when it is usually needed most. Typically, we can suggest better options to protect what is the most valuable asset for many young families.

Trust for Children.  In many of our estate plans where the clients have young children, we establish a testamentary trust which goes into effect after the death of the client, assuming the other spouse does not survive. That trust has detailed instructions concerning how the will beneficiaries, typically children, are to receive financial support from the estate proceeds. Often times, we recommend that clients list that testamentary trust as the beneficiary of their life insurance policies so that the money will go to the trust for the benefit of the children instead of being tied up in the probate process or being subject to creditor attack.

Charity or Nonprofit Organizations.   You can name a favorite non-profit or charity organization as your beneficiary. You may do this to create certain tax or financial planning advantages, but this should always be discussed with your accountant or financial planner.

Things to Consider:
In determining who should be the beneficiary of your life insurance policy, you may want to consider the following:

  • Will anyone be incurring expenses at your death for funeral, bills, etc.
  • Who depends on you for financial support (spouse, adult children, minor children, etc.)? Can they manage the money themselves?
  • Do you have personal or financial reasons for the proceeds to pass directly to the ultimate beneficiary or do you want them held in trust?
  • Do any of your family members not get along or do you expect a will contest?

If you or a loved one needs to discuss life insurance beneficiaries and/or update your will and other estate planning documents, the Northern Georgia probate lawyers at Durden & Mills, PC can assist you. Call us at (706) 543-4708 for a free consultation.

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Divorce & Life Insurance, Wills, Retirement…

In the event you have a major life event, such as divorce or remarriage, you should consider changing beneficiary designations on your life insurance polices, retirement accounts. You should also update your will.  What happens if you forget to change your beneficiary after a divorce and your first spouse is still listed when you die? Will your ex-spouse receive the life insurance and retirement proceeds? In short, the answer is typically YES. After divorce, the designation naming your ex-spouse is still effective in Georgia, except in limited circumstances where the plan specifically provides otherwise.

It is also important that you consider changing your Power of Attorney and Health Care Directive if you get divorced or get remarried. Sometimes, it is even smart to change all of these beneficiary designations and estate planning documents prior to filing for divorce. Depending on what county your divorce is filed, you may be prohibiting from changing your estate plan or beneficiaries during your divorce.

If you or a loved one has experienced a major life event such as divorce or remarriage in North Georgia, and you need assistance in updating your estate plan, the North Georgia probate lawyers at Durden & Mills, PC can assist you. Call us at (706) 543-4708.

 

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