Is it good to think about any legal issues for the New Year?

Without specifics about yourself I’ll make this answer generic in a personal and in a business sense. I presume you looked at your financial estate planning (401k, mutual funds, stocks and bonds, life insurance, etc) and as you do you also think about your legal estate planning. After all you are a year older; you may have gotten married, had a new child, had a child reach the age of majority (19 years), gotten divorced or suffered the death of a spouse or even a child. You may have a child graduate, enter the workforce and be off your payroll. Your financial estate planning goes hand in hand with your legal estate planning and you should discuss that with your lawyer, not that he or she will try to advise you on whether your investment advisor is steering you correctly but rather the impact of your financial worth on your legal estate.

Gift Tax Exclusion

For 2019 the gift tax exclusion remains as changed in 2018 to $15,000.00 a person, as a gift (child, grandchild, etc.) not requiring the filing of a Gift Tax return or up to $30,000 to a person if both you and your spouse gift to the same person once per year. There is a lifetime generation skipping tax (GST) limit of $11.2 million in 2019. There may be a tax advantage for the wealthy in that and if this seems to be something that might be helpful to your financial planning you should seek the advice of an accountant or other tax/ financial professional (may include a tax attorney). For 2018, there was a $11.18 million total estate tax exemption per individual; 2019 will provide a $11.2 million tax exemption. The total GST and total estate tax exemption are inclusive in total in that they cannot exceed $11.2 million The portable portion mentioned above may be available to a surviving spouse who may be able to combine their unused estate credit amounts up to a total of $22.4 million. Remember that life insurance is considered for estate tax purposes if you have control over the policy (i.e. ability to change the beneficiaries, cancel the policy, etc). Some individuals have large insurance policies and in the past not inconceivable for high middle class people to have an estate over prior limits but the possibility could even exist with some wealthier individuals. If you die in 2019 with an estate of greater than $11.2 million then that amount over $11.2 million will be taxed at 40%.

Last Will and Testament

With that said you need to pull out your Last Will and Testament and review it. If you have had any life changes (marriage, divorce, death, large inheritance, new child, etc.) a new Will may be in order. If you don’t have a Last Will and Testament you need to have a lawyer prepare one as soon as possible. Why do you need one? Because if you don’t then the State of Alabama has one for you. Some of the spousal examples under the rules of intestacy (dying without a Will); (1) first $100,000 to spouse and then 1/2 of the remaining estate to the living parent(s) when there are no children, (2) if children then the spouse gets $50,000 and 1/2 of the rest, (3) if one or more of the children are not yours then the surviving spouse only gets half of everything, period. This is probably not the estate plan you have in mind. There are internet sites and software programs that can also assist with a Last Will and Testament but there is no guarantee that it will pass muster regarding state rules on probate nor a guarantee that it will do what you want upon your death. The best chance of meeting estate goals is through a lawyer and if you are of moderate means, you may be surprised that it is less expensive than you think. In the long run a Will may save money since an intestate estate when probated requires the bonding of the Personal Representative and an inventory of the decedent’s estate. I run into too many old or non-attorney prepared defective Wills when it really counts and there is an attempt to probate the estate. Obviously such probate is not without issue.

Power of Attorney

Aside from the Last Will and Testament you may want to have a Power of Attorney prepared. Most prepared these days are durable which require wording that the power of attorney is effective even in your disability or incapacity. Powers of Attorney became a statutory form as of 1 January 2012. Most attorneys have concerns about the filling in the blank and initialing choices format and most now insert tried and true language used in their practices for their many years. A Power of Attorney is now by default a Durable power; however I insert the needed language anyway to make sure that there are no questions about it’s durability. A Power of Attorney (POA) can be very powerful and placed in the wrong hands can be damaging such as a daughter that is named AGENT and decides to sell your lake house and push you towards moving to an assisted living facility. On the other hand, naming a trusted AGENT and retaining the POA for future needs can be extremely beneficial. The POA can be used so that someone can write your bills for you during incapacity, file your taxes and with health/ Health Insurance Portability and Privacy Act (HIPAA) provisions monitor your care with the doctors and hospital as well as handle medical insurance billing. The POA may also be used to nominate whom you would want as a conservator or guardian should one need to be named for you through a Court proceeding.

Advanced Directive for Health Care

The final personal document would be an Advance Directive for Health Care, which is composed of a Living Will and Health Care Proxy nomination. It will allow you to make certain decisions about end of life issues should you later become unable to speak for yourself and two doctors have determined that you will likely die in the near future. This is the document that Terri Schiavo DID NOT have and for that reason the court found the testimony of the “husband” who was then living with another woman to be credible as to Terri’s final wishes. Hmmmmm. Naming a Health Care Proxy is the same as naming a health care power-of-attorney such as under a POA. The proxy is given limited rights under which situations that they can make decisions. And by the way, the ex-spouse automatically loses that job as proxy upon divorce. That’s dodging a bullet!

Social Security - 2019 Medicare Part B

If retirement is nearing and you will also receive Social Security consider that the 2019 Medicare Part B will move from the 2018, $134.00 to $135.50 per month dependent on whether the senior is subject to the statutory “hold harmless” provision. Those with higher incomes will pay higher Part B premiums. There is a $185.00 (move from $183.00 in 2018) Part B deductible for the year. If you need nursing home (skilled nursing) care under Part A, days 1-20 are fully covered provided you continue to meet Medicare’s requirements for those days; the co-payment for days 21-100 (if you qualify) will be $170.50 per day ($167.50 per day in 2018). After day 100 you are 100% on your own unless you have some other means of long term care payment. If you have not already checked on long term health care insurance you should do so now. It not only will cover nursing home care but can also cover assisted living or in home care. If you consider this insurance also look carefully at the options since they may be equally as important as the policy itself. This includes inflation increases which are very important or even the option of continued coverage for a certain amount of time when one with “forgetfulness” forgets to pay the premium.