When is a warm, secure place to live, not a warm, secure place to live?

We work, we live, we go about our business.Then one day we may find that we're too old, too infirm, or too alone to make due on our own any more. Many of us will choose to relocate to a nursing home under those circumstances. The attraction is obvious. They're clean, professionally staffed, well run facilities that are overseen by government entities that are intended to keep us safe, secure, and well cared for.

Not everything works out the way we hope it will, unfortunately. Not even those golden years spent in a nursing home are invulnerable to the pitfalls of economic trouble or legal entanglements.

A Maryland-based company that specializes in health care real estate is planning to appeal a decision made by a Hartford Superior count judge to close four nursing homes it has here in Connecticut.

The company in question took over the nursing homes in 2008, after the previous operator went bankrupt. Since then the economic realities of these facilities has not been rosy. In 2009 their losses ranged from $1 million, to $2 million, each. In fact the situation appeared bleak enough that all four facilities were placed in receivership this year.

The legal issues are significant, and they will no doubt take time to identify and resolve fully. As with all legal proceedings, there is no way to know for sure which way the ultimate ruling will go. In the meantime, four nursing homes have a cloud hanging over them, and 400 elderly residents have concerns they certainly didn't intend to be burdened with when they initially moved in to make these facilities their home.

Our futures may be bright and shiny, filled with affectionate puppies and close family. Or they may be dark and lonely, leaving us to fend for ourselves. The dividing line between one outcome and the other is often nothing more than careful planning, and taking the time to leave a clearly identifiable set of instructions regarding our care, and the management of our interests.

The simple things mean a lot. That's interesting, don't you think? And very true.

Hiring a caregiver is trickier than you think

Recently my estate planning colleague in Hawaii, Scott Makuakane, posted these helpful comments on engaging caregiver(s) for those needing such services.  As with so many things in today’s world, it is not as simple as it seems.  I share this information with you as a “heads up” for when such a need may arise within your family. 

If you are hiring a caregiver for yourself or another loved one, you may be tempted to try to make the process as simple as possible by treating the caregiver as a "private contractor."  You tell the person "I will pay you so much an hour, and you deal with the IRS and the State when it comes time to pay taxes."  After all, taking on the responsibilities of withholding taxes (and then paying the taxing authorities), buying Worker's Compensation insurance, paying Social Security and Medicare tax, and all the rest, may seem daunting if you have never done it before.  Be aware, however, that the IRS and the State when it comes time to pay taxes."  After all, taking on the responsibilities of withholding taxes (and then paying the taxing authorities), buying Worker's Compensation insurance, paying Social Security and Medicare tax, and all the rest, may seem daunting if you have never done it before.  Be aware, however, that the IRS and the State will probably take the position that the caregiver is an employee, that you are an employer, and that all of the legal obligations that attach to those labels are applicable to your situation.

IRS Publication 926 gives very helpful guidance to those hiring household employees, including caregivers.  You would do well to go through that publication and consider all of the questions it poses, several of which might never occur to you.  For example, can your prospective caregiver legally work in the U.S.?  How do you verify that, and what records must you keep to prove that you satisfied your obligation to verify the caregiver's status?  On that subject, you can find all of the information and forms you will need at the U.S. Citizenship and Immigration Services website.

Depending on your budget and the number of caregivers you will need, it may make sense to look into local employment or caregiver agencies.  This simplifies your job, because you can contract with the agency, and the agency will be the caregiver's employer and will deal with all of the details of being an employer.  You will pay a premium for this kind of service (in other words, you will have to pay significantly more per hour for the caregiver's services if you deal with an agency than if you dealt directly with the caregiver), but the agency's experience and employment expertise may make the extra cost seem like a bargain.

Another set of issues arises if you opt to be the employer of a caregiver, and then your employee is injured on the job.  If you have made sure to carry the right kinds of insurance, you will be fine.  However, the consequences of failing to do so can be financially disastrous.  An agency will probably carry Worker's Compensation insurance, but you should be sure to talk with your personal insurance professional to find out if there is anything else you should do to protect yourself through your homeowner's and umbrella policies.

The bottom line is that you should not hire a caregiver without carefully considering your legal responsibilities and potential liabilities, and making sure they are addressed.  Ask your trusted advisors--your CPA, your lawyer, and your insurance professional--for guidance, and check out the resources cited above.  You will be glad you did.

I would hope you would give me a call prior to your engaging a caregiver.  A few precautions can be very beneficial for the longer run…..and likely protect your estate.  Please call me, or email me, or post a request to meet in the COMMENT portion of this blog. 

Going pro se, and Other Questionable Decisions

There is an expression in the legal profession that you have no doubt heard. It goes something like, “The individual who represents himself/herself in court, has a fool for a client.” It's been used almost as if it's a punchline in television shows, and in movies, and perhaps you've even heard it thrown around in casual conversation. It's such a well used phrase that virtually everyone is familiar with some variation on it.

Yet, people still have a tendency to want to act as their own attorney, even in matters that may have far reaching effects on their personal and professional lives.

The legal term for acting as your own attorney is, pro se. An act that will turn the self-represented into the, pro per.

The law is filled with odd phrases, terms, words, and concepts that the average man or woman on the street has little understanding of. That's true of most professions, of course. Few of us could speak intelligently to an orthodontist in their own language, or an air-traffic controller, or an electrician. Most professional positions develop their own jargon over time. A sort of, shorthand list of words and terms that allows those who are adept at the job to speak quickly, specifically, and effectively to each other.

Those of us who are not engaged in those professions often find ourselves standing close enough to overhear the words, but without the tools and background to understand the conversation. Hence the warning about going pro se, becoming a pro per, and possibly being on the losing side of the decision that comes down from the bench.

Of course not all legal work involves a jury trial, a rousing summation of the facts by an orator of profound talent, and a tense announcement of the verdict which will decide the future of someone's life. But then it would be a dull movie that focuses on a young couple huddled around their kitchen table trying to decipher a purchase contract, or the long-term ramifications of a durable power of attorney.

There are a wide selection of self-help sites on the Internet designed to help individuals act as their own attorney. You can buy books on the topic, read web pages, and even find videos that are designed to walk you through the process of acting as your own attorney to save money and simplify your life.

Of course you can find a wide range of resources that will assure you that you don't have to pay your federal income tax, too. That doesn't tend to work out too well either. But we're all free to make that choice, roll the dice, and see how it all works out for us in the long run. A surprising number of people do just that.

It's worth knowing that the vast majority of tax preparers, pay income tax themselves. This at least suggests that they know something about the penalty for non-payment that the rest of us should take notice of. It's also true that most attorneys who find themselves in need of legal representation, hire a lawyer rather than attempting to represent themselves.

There seems to be a lesson in there somewhere. A pretty good one, too – if I'm not mistaken.

A Taxing Situation

Thirty-six year old Donald Barrett of Plymouth was flirting with the American dream. But that dream is on hold, now. He was doing well espousing the various alleged health benefits of coral calcium and Supreme Greens on informercials. But then the tax man came calling – and apparently Barrett was slow to answer.

That usually doesn't work out well for the taxpayer, the under-taxpayer, or the non-taxpayer, as the case may be.

Last week Barrett pleaded guilty to tax fraud, and consumer fraud. Federal prosecutors report that Barrett's guilty plea was in response to charges that he failed to report more than half a million dollars in income from one of the products he sold on television. That covers the tax fraud angle. On the consumer fraud side of things, another of those products was being represented as a cancer and arthritis preventative – although the Food and Drug Administration had not approved the product for those purposes.

Sentencing is scheduled for July, when Barrett could face up to three years in prison. However, there is at least a suggestion that the Massachusetts man may only receive a year of incarceration, thanks to the terms of a plea deal.

So what's the moral of the story? Pay your taxes. No matter what Steve Martin's comedy albums might imply, “I forgot,” is simply not among the accepted reasons for being in arrears to the government when it comes to tax payments. And you might want to hold off on claiming that grandma's chicken soup has magical healing powers, unless the FDA happens to issue a document that says they agree with you.

FINAL INSTRUCTIONS

Recently one of my estate planning colleagues, addressed the importance of "Final Instructions".  This type of information is similar to an instruction manual that steps us through arrangements that we should address in advance of the inevitability of our passing.  We rarely get an instruction manual at birth, but we surely can leave one before our departure from life.  My thanks for this post goes to Ellen Gay Moser who practices estate planning in the state of Illinois.

Your “instruction manual” for your children or survivors should begin with the basics.  First, do you have a Trust and Will?  If so, have you written instructions for your kids (survivors) to follow at your death or disability? 

In regards to your estate, are you concerned about probate and taxes? If so, you have done a good job to provide for your heirs and save unnecessary costs, fees, and taxes. If not, you  may be leaving your kids  with no clues as to what to do and no instructions  for them to follow.  It's a well known habit that when all else fails, we read the instructions. But if we are left with no clues or instructions, what do we do? We waste a lot of time and money that tends to diminish your estate.

If you have a Trust,  then you  likely already have an instruction manual  stating your goals as to who gets what and when they get it. The duties of your Successor Trustee are set forth in your  Trust document and it is his/her fiduciary responsibility to abide by the law and the Trust. The Trustee must collect and manage assets, pay your debts and taxes and seek advice of counsel. Your goals to protect your loved ones can be carried out, if you state your goals loud and clear in your Trust.

Your “Final Instructions” may include specific distributions of special stuff /memorabilia/heirlooms/investments/etc  to go to certain people. Instructions will  often  include tax planning for married couples, disability planning when you become unable to manage your financial affairs prior to death, and who you want to be in charge of your property when you die or are disabled. Provisions may be made in your trust for protecting your children from predators and special instructions will protect your disabled children.

Do you have a plan to protect your children in the event your surviving spouse remarries? Do you care if a child is disinherited? Do you want to protect a spendthrift? If you plan your Will and Trust with lots of “baby sitter” instructions, your children may be protected for life, and your grandchildren too.    At the minimum,  Final Instructions are important to avoid the consequences of doing nothing.  I encourage you to take the time now to meet with an estate planning attorney such as myself to create or review your Final instructions. 

Give me a call, send me an email, or leave a comment on this posting, so I can respond in a helpful manner with information or to set a meeting discuss your  manual for “Final Instructions.”

Oops, I Didn't Know That

When you're dealing with large sums of money, long-term contracts, or significant business dealings, these are the five words you never want to utter under any circumstances. “Oops, I didn't know that.”

This simple phrase suggests two things. One, you didn't do your homework leading up to the deal. Number two – and this rises rapidly to number one if you say it after signing the document, you may have made a big, irreparable mistake that could cost you a lot of money, time, and heartache.

Consider this scenario. You're watching television with your significant other one night, and you settle in to view, The Shawshank Redemption. It's a terrific movie with a great cast, and it's based on a very good story by Stephen King. The ending is good, too.

So the two of you start talking and decide that retirement on the beach in Mexico sounds pretty good to you. Maybe you start poking around on the Internet, you come across a broker, and you start getting pictures of beachfront property in Mexico. It's pretty inexpensive, too. At least it's inexpensive for beachfront property.

You take your time because this is serious business. Maybe you even visit the area on vacation to make sure you like it. But you don't like it. You love it! The place is so beautiful that you decide to accelerate your retirement so you can spend more time in this heaven on earth. You make the arrangements, you buy the house, and you making plans to relocate.

This would be a really, really inconvenient time to find out that American's aren't allowed to own land in Mexico that is within 31 miles of the beach, unless you happen to hold title in a Mexican Corporation.

Oops, I didn't know that!

See, those five words take on a whole new weight when the balance of your retirement hangs in the balance. It's something to think about, anyway.