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Estate Planning and the Holidays

Estate Planning and the Holidays

  • December 18, 2018

Attorneys Sarah J. Kons and Peter B. Harbach appeared on WHBY's Freshtake with Josh Dukelow to discuss Estate Planning considerations during the holidays, specifically Charitable Giving and tips for recognizing changes elder family members may be experiencing in their health and behavior during the holidays. Catch the segment here.

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Charitable Planning Discussion

Recognizing Changes to Your Loved One's Health

Josh: Peter, Sarah, welcome back. [...] So glad to have you guys here. And this is just a fun time of year. We're going to get into spending time with family and how we might be able to leverage those get-togethers to learn a little bit about informing estate planning. But before we do, I want to just turn our attention to end-of-year-giving for just a second.

Peter, end of the year, there's a lot of talk about charitable giving. Would this, maybe, be a good time to review the estate plan? Maybe charitable designations that might be in there or anything else?

Peter: Yeah, absolutely. One thing that people should know is how you give money can have an impact on your taxable income. One of probably the best tools that people have that they're [...] taking required minimum distributions, meaning they're over 70 1/2 and they have IRAs, one of the best ways they can do their giving is by qualified charitable distribution, which is essentially the money coming right from the IRA and straight to the charity. It doesn't hit the owner's bank account at all. So that's a non-taxable distribution.

Josh: Because you give directly from the IRA to the charity, nobody pays taxes on that.

Peter: Exactly. Exactly. And so if you're scurrying at the end of the year, thinking, "Hey, I haven't even taken my minimum required distribution yet," and you have charitable intent, it might be a good idea to talk to your financial advisor about, "Hey. Maybe we don't want this to hit my bank account," meaning it doesn't hit my tax returns.

Josh: Exactly. I was working in the charitable giving world when this law change was put into place. And so if you're more than 70 1/2 years old or older, you are eligible to make these using your minimum required distributions. The law requires you take a certain amount out of your retirement assets every year. But you can use those to make your charitable gifts. And for some, that actually allows them to make much bigger gifts than they might have otherwise been able to make.

Peter: Yeah. Absolutely. Because you don't have the same taxable income. I should note that it's capped at $100,000.

Josh: So there is a limit here.

Peter: There's a limit, but probably a limit that most people don't worry about hitting.

Josh: Exactly. Yeah, that's right. So I know, Sarah, we've been working together on my estate plan, and one of the big pieces that there is charitable designations, charitable beneficiaries of my estate. Is that something that might change over time that people might want to just, if they haven't thought of for a while, maybe take a time to think about and maybe update?

Sarah: Absolutely. And there are different ways to plan for charities within your estate plan that can also give you some tax advantages. So depending on what it is that you are intending to do [...] if you're not charitably minded, this might not be a good fit. But if you have that charitable intent, why not try to take advantage of some of the opportunities you have to do some tax planning?

Josh: So similarly to how you give during your life can impact the taxes you pay, the same thing's true from your estate.

Sarah: Oh, absolutely. One of the things that I tend to encourage when it comes to clients that are planning around charitable intent is there are a lot of good opportunities out there with different organizations and things like community foundations where you can give during life and kind of experience that. When you give just after death, you don't actually get to see the impact that you have and see how organizations are using the money. And if you're able to plan for it while you're still around, sometimes that can help narrow your focus or help you determine what causes or what organizations you really think are going to be a good fit for you.

Josh: Yeah. For so many people, these end-of-life gifts are the biggest gift they're ever going to give. If you make arrangements for that while you're still around, you can ensure that gift's going to do the thing you really want it to do, where if the charity doesn't know about the gift until you're already gone, you miss that opportunity for that conversation and to be able to influence the use of that money.

Sarah: Oh absolutely.

Josh: Yeah. Very interesting. Well these end-of-year tax and giving considerations are something you should be talking to your advisors about. I hope your advisors are at Hooper Law Office, at least for your estate planning. I'm working with Sarah on my plan, and we're coming up on signing. And I understand signing is not the end of the process, right?

Sarah: That is absolutely not the end of the process. Not to overwhelm people or anything like that, but there are still steps that you have to take, and it depends on the planning that you're doing. But one of the [...] honestly, the most overlooked pieces of planning is making sure that what you have is aligned with your plan. And so beneficiary designations, ownership, if you're using a trust, make sure your assets are titled in the name of the trust. All of these things have to be coordinated and you can't do it until after you sign things, because it doesn't exist until then. So then you can't designate it.

Josh: OK.

Sarah: So you can't put the cart before the horse in this. So it becomes an important step after all the signatures are done. And then obviously, ongoing I tell everybody that meets with me, in order to become a client of mine, you have to agree to come back to see me at least every three to five years.

Josh: A long-term relationship as it were.

Sarah: Exactly. There's commitment.

Josh: That's right. And this is something you want to be thinking about, updating, making sure it presently reflects what may have changed in your life. And even later in life, things can change pretty significantly that may be needing updating in your plan.

Sarah: Oh absolutely. And we coordinate with advisors quite a bit for exactly that reason. I see you every three to five years, but your financial advisor meets you multiple times a year. So the better he or she understands what your plan is, the better they can kind of keep an eye on if you change bank accounts or banks entirely, or if designations have fallen off somehow, they can catch that.

Josh: Right. I know your professional advisor might know that this account was specified in your plan. Well, for some reason, we now liquidated that account. You've got to update the plan.

Sarah: Exactly.

Josh: Interesting. OK. Well this is why you work with experts, folks. They know these things. But they know a lot more than just the technical details. They also have insights for us about how we can take advantage of opportunities like the ones we have around the holidays where we're spending time with family to get some insights about how our family members are doing.

Now Sarah, when this topic first came up, I was not quite sure where we were going exactly with this. So give me just a sense of what we're talking about here. When we're spending time with family, what are we looking for? Big picture and why. We'll get into the details in a minute. But sort of big picture, what are we looking for here?

Sarah: Really, what you're looking for is two different things. One is changes and then kind of looking further at what those changes might mean. And the second is have you had good conversations about what the plan is? So you want to make sure that you're aware of what's going on in the lives of your loved ones, especially for health purposes when you start noticing things that may indicate a larger health issue. Then that automatically kind of couples what do they have in place in terms of documents? How easy is it for you as a family member to step in and help them when you're needed? So it's really about observation and review.

Josh: OK. So observation. We're looking for changes, anything that we're going to be looking for. Now Peter, I know some people, when they get together with family during the holidays, they're just hoping an argument doesn't break out, right? Is there advice you guys have about maybe sort of how people might begin to do this. If someone has an aging parent for example, what are some of the things you could suggest they might be looking or how someone might approach this?

Peter: Sure. Obviously, the holidays, when people get together, a lot of people aren't seeing each other on a day-to-day basis and so if you start to see abnormalities or health concerns that you have for your loved one, I guess tip number one is don't treat them like a child.

Josh: Yeah, that's important.

Peter: You don't highlight their limitations or take this as an opportunity to say things like, "OK, we're taking away the keys. You're not driving anymore." Because that sort of dynamic is going to just [...] you're going to hit a brick wall if you approach it that way. I would suggest that people start to explore strategic solutions to, "OK, how do we maintain Mom's lifestyle," or Dad's lifestyle or whoever it is that we're talking about, arranging for rides and things like that. Not highlighting, "You will not drive anymore. It is not safe." Because this sort of role reversal of you're acting as the parent now, most people who are aging are not going to be receptive to that kind of a dynamic.

Josh: Yeah. And that was exactly [...] when I first heard about this topic, I was thinking, "Oh just what Mom wants to hear at Christmas is, 'You can't drive anymore.'" Right? That's a great way that you described that Peter of being solutions-oriented, not highlighting limitations or restrictions, but making offers and offering and arranging for things that are just going to make life easier without having, necessarily, to point out and highlight the limitation or the restriction.

Sarah: Rather than it being about what can't you do anymore, it's going to be about, "How can we make sure that we're ensuring that you have as much independence and control over your life as you possibly can?"

You also want to educate yourself as to what you need to be looking for. Especially when it comes from a change-in-your-healthcare side of things. Dementia or Alzheimer's is kind of particularly insidious in that way. It's hard to always see the things that are indications of it without just imagining that there's something else. Some things like if a person can't follow a recipe anymore, they can't follow a map anymore, if you notice that they spilled something on themselves and they didn't seem to notice the entire night, things like, "Mom always kept the kitchen clean," and it was a disaster the whole time you were there. Not that those are criticisms, but they can be indications. Those types of personality shifts, the spilling something yourself. Tunnel vision is a real big indication of dementia, Alzheimer's, those things getting triggered. So it's important to understand what those symptoms are, if you have concerns about them, so that you know what to look for.

Josh: Yeah. The important thing that I think I'm taking away just so far is when you're in that situation, you see something like a messy kitchen, don't just assume Mom's being a slob today. Think for a second, "OK wait. Mom always kept the kitchen clean. If the kitchen's messy right now, this might be a larger indicator of something." Don't jump all over Mom about a messy kitchen. Ask some questions. Think a little bit more. Maybe ask if siblings who might visit more often have seen or noticed other things. Is this kind of where we want to go?

Sarah: Absolutely. The family meeting aspect of it can be incredibly helpful. And really, having conversations with the kids that aren't there all the time can be particularly helpful. It's difficult sometimes to recognize things when you're seeing the person on a more regular basis. So if you have family members from out of town, they may see things that you may have missed just because it was such a slow change over time. So it can be really helpful that way.

It's also kind of why we go back to talking about agents and healthcare power of attorney documents and them being local. Because it allows them to do a better job in that capacity.

Josh: Sure. Keeping tabs, monitoring, and like you said, observing, being aware of changes that might be happening.

Sarah: Exactly. But making sure that you are always treating your parents with respect and allowing them to maintain their pride and dignity. You want to make sure that independence and maintaining their control over things as much as they possibly can is a priority in the conversation and what you're doing.

Josh: So many people are now finding themselves in the position of caregiver. And it's not just people whose aging parents are now elderly. Even younger people are finding they're in a position of having to take care of loved ones they may not have expected. And that comes with a lot of different responsibilities including thinking about the long-term care needs of this loved one. So we're going to talk a little bit more with Peter and Sarah about what we can notice when we're gathering with family around the holidays and how that might inform plans for the future. If you've got questions, our Settlers Bank's phone lines are open. 281-1150 is the phone number. 281-1150. If you've got questions for Peter Harbach or Sarah Kons from Hooper Law Office, we're talking about making sure you're noticing what might be changing when you're gathering with family here around the holidays. More to come when Fresh Take continues after this on WHBY.

[commercial 00:12:08 to 00:12:32]

Josh: Welcome back to the Miron Construction Studio of WHBY. We have Peter Harbach and Sarah Kons with us from Hooper Law Office, getting some insights about how we might observe the loved ones we're spending time with around the holidays and then use some of that information to make sure that they are being properly cared for throughout the extent of their life.

Peter, I want to start with you. We talked about some of the things we're looking for, changes in behavior, things that have always been the case and now they're different. Sarah, I loved your example of potential tunnel vision as evidence by someone getting a drop of something on their shirt and they didn't seem to notice, these little behaviors that are changing. Once we've noticed these things, what do we do about it?

Peter: Sure. Observe first. I don't want somebody to overreact to, "Oh it's a messy kitchen. There must be dementia," or something like that.

Josh: Right. That's important. That's right. Yes.

Peter: Pay attention to what's going on. Educate yourself about what conditions actually look like. There's a lot of good resources out there. Teepa Snow, for instance, has a wonderful website talking about gems, which sort of describes the different levels of cognitive impairment through dementia and Alzheimer's. So that would be [...] a first step is kind of observe and educate yourself and then communicate with family members, and start to look at solutions.

It's totally going to be based on the particular situation and what our challenges are. If it's driving, it's communicating with the family, "OK. How are we going to make transportation safe and keep Mom or Dad independent?" If it's things that are more serious where you start to become concerned that the home is maybe not a safe environment or they need assistance in maintaining it being a safe environment, you need to look at, "OK. Should we be looking at remodeling or adding things into the home to make it a better environment? Should we start to explore the possibility of having care come into the home?"

And if it's a more significant issue, you should start exploring options in facilities. But again, it's not, "Hey, we're going to force you into a facility." It's, "OK, let's explore how is this going to help your quality of life?" And people should also know that there are many facilities and it's hard to not know what you don't know when it comes to picking one.

Josh: So true.

Peter: And there are entire professionals of senior advisors and geriatric care managers that will come and do an assessment of the individual. And their whole job is to know the different placement options and how they're going to fit with what your particular goals might be or what somebody likes to do, the activities they like and match somebody up with a good facility because there are so many of them. How do you do that kind of shopping on your own?

Josh: Yeah. It's so hard when it's [...] and actually we might only take once in our life to choose that kind of facility for a loved one, working with experts on something like that makes a big difference.

Peter: Absolutely.

Josh: Yeah.

Sarah: I really encourage making sure that you're having your parent participate in that conversation and that exploration. If you, yourself, are having health issues and you may need care at home or care in a facility, prior to losing capacity or not being able to engage in a helpful way in that conversation, go look at places. Just because you're not moving now doesn't mean that you shouldn't have some guidance that you're giving to the people that may be locating a good transition for you in the future.

So go yourself. Look at these places. See what's out there. See what's available. So then you can communicate what it is you want and what you prioritize to your family members so they know later on what it is that you want. Not just based off of what they think is going to be best.

Josh: Right. They need to have these conversations as conversations. I'm imagining this idea of, "Hey Mom. I'm noticing it's a little messy around here. Should we have someone come in to help you keep the house clean?" My mom would not take that comment very well. You've got to think about how to approach these subjects sensitively and including the people who are going to be impacted by these decisions in the decision making is essential to having everyone be onboard. We've even gotten into the idea when people have differing opinions on what's happening or what should be happening.

I know we've talked a little bit about sibling conflict that can happen with these estate planning questions. This is a big one.

Sarah: Oh absolutely. And there are really good resources out there for people. One of the ones that we tend to recommend is a book called How to Say it to Seniors by an author named David Solie. That book really outlines some of the best ways to have those difficult conversations. And I really encourage people to take a look at some of those resources out there. Talk to people at the Alzheimer's Association. Talk to people at the ADRC, the Aging and Disability Resource Center.

These people out there, geriatric care managers and senior advisors, they have a wealth of knowledge that can be so helpful. Don't just sit at a computer and Google.

Josh: Yeah. That's a great point. And it all starts with observation, back to where we started the conversation. You've got to take the time, take your opportunity when you are with family to notice what's going on. If you're not visiting Mom and Dad as much as you used to and you're headed there for the holidays, take the time to [...] and maybe even ask them, "Hey show me around the house. What's new here and what's different?" You'll notice things that they choose to point out. If they don't, maybe a remodel is in order. Let's do a main floor laundry if they don't want to use the stairs anymore.

Those are the things that you can only talk about once you notice these changes that are happening. And I never would have thought of this. And so I appreciate you Peter and Sarah from Hooper Law Office giving us these insights, things to think about, to watch for and to talk about when we're with our loved ones here around the holidays. Always appreciate your insights on these important topics. Thanks so much for the time today.

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