ELDER LAW & ESTATE PLANNING

Transcription

1 ALI ABA Advanced Estate Planning June 17, 2003 Madison, Wisconsin ELDER LAW & ESTATE PLANNING By: Cynthia L. Barrett Attorney at Law 760 Crown Plaza 1500 SW First Avenue Portland, Oregon (503) Fax (503) Cynthia L. Barrett - All Rights Reserved - licensed use to ALI ABA TABLE OF CONTENTS Part 1: Why and How to Change Your Estate Planning Practice _The Hazy Future of Estate Planning _Elder Law Practice Model _Structuring the Practice to Meet New Client Needs _New Product Development in Three Areas _Some Commonly Used Elder Law Products or Services... 5 Part 2: Elder Law Approaches to Common Life Planning Problems Care Costs and Long Term Care Insurance Protecting the Client s Quality of Life with Drafting Second & Third Marriage Planning for Health Cost Asset Protection Each Spouse Pays; Long Term Care Insurance; Waiver of Elective Share; Waiver of Support After Dissolution

2 Part 3: Your Relative s Health Care Crisis An interactive discussion Part 4: Interstate Guardian Disputes... Part 5: Special Needs Trust Situations Development of The Special Needs Trust Inter vivos Transfer for a Disabled Person -Third Party SNT Charitable Split Interest Gift Receptacle SNT Life Insurance Receptacle SNT Transfers at Death for Disabled Person Self-Settled Payback Special Needs Trust for Unprotected Resources Personal Injury Settlement; Unprotected Inheritance; Disqualifying Testamentary Trust; Disqualifying Inter Vivos Gifts Part 1. Why and How to Change Your Estate Planning Practice 1.1 The Hazy Future of Estate Planning Do you sometimes feel that estate planning has a hazy future? You know that each person could benefit from an incapacity plan, and each person wants his stuff left at death to benefit relatives and causes (religious, social service, political etc.). In the future, what role will attorneys play

3 (1) in the potential client s planning process, and (2) in the eventual execution of the potential client s plan? So long as the lawyer sits at the gate of the court, to shepherd the client s plan through the fallback incapacity forum, the conservatorship court, and through the probate court at death, the lawyer will have a role in execution of the plan. As I describe in more detail below, the elder law attorney focuses much of his or her practice on execution of the client s plan through the courts. Many different advisors are developing products that completely avoid the court supervised conservator and probate court - the inter vivos trust, and beneficiary designation accounts permitting management during life of the owner without court appointed fiduciaries, and transmission at death without the blessing of a court or court-supervised payment of creditors. Indeed, potential clients are urged to avoid courts, saving lawyer and court charges, by probate avoidance product vendors. So long as beneficiary designation products avoid court supervision, lawyers will not be necessary to transmit that wealth to the next generation. The traditional estate planning lawyer in the years has used death tax savings as an incentive to persuade clients to think of a lawyer when planning for wealth transmission. The lawyer knew the ways to reduce overall wealth transmission taxes, and would organize the client s incapacity plan in a summary fashion, as an incidental part of the primary task: lowering transfer costs for wealth. If, as planned by the current administration, death tax savings are no longer motivating the client to seek legal services in planning the transmission of wealth, and courts do not supervise the process of wealth transmission, what role will lawyers play? Indeed, the future of estate planning by lawyers is hazy. 1.2 Elder Law Practice Model The elder law practice model is quite flexible, accommodating many practice types. The practice can be quite focused on long term client relationships, or transactional. The elder law practice can be quickly built, by focusing outreach and marketing on a medical/social service referral network. Each elder law practitioner is idiosyncratic, choosing a work setting congruent with his or her goals or lifestyle. Some of us are building behemoth practices, with a 1-7 lawyers and a large supportive non-lawyer staff, doing primarily transactional asset preservation work for a block of clients (what is called medicaid planning at crisis ); some of us are solo practitioners with one-four staff members, doing some transactional work or focusing on the court-driven situations. Some elder law attorneys do primarily court-referral guardian/conservator work for those declining elders or disabled youngsters who have no family members to assist them. The courts are more and more directly sending cases with public benefit issues to elder law attorneys who do a guardian/conservator practice. Some elder law attorneys focus their practice on the plan execution - serving as fiduciary or

4 advising fiduciaries. These fiduciary-focused elder law attorneys see the growing need for financial and medical management assistance to declining elders, and position their practices to meet that need. One-time transactional work for the ill elder, or for the anxious spouse or caregiving child during an elder s health crisis, builds an emotional bond with desirable long term clients. The spouse and children of the ill elder return to the elder law attorney for their own estate planning and plan execution work. Indeed, one form of elder law practice is the life care plan model, where the spouse of an ill person and the ill person sign up (for a substantial fee) for lifetime services: social and medical management, health care cost planning for both, estate planning documents, financial management during incapacity, and eventually transmission of assets at death to the desired beneficiaries. New lawyers who look at the elder law model see that they can quickly grow a practice by focusing on the health-driven crisis for a family. The elder law attorney can efficiently create a health care-focused professional referral base. These medical and social service providers, who deal with patients and social service agency clients in a health care crisis, know the elder law attorney can advise about: 1. Paying for care - private insurance, spend down of income and assets, public programs 2. Determining, and then advising, medical and financial back up individuals or institutions 3. Crisis-driven estate planning and immediate execution of the plan, integrating the ill person s desired caretaking of others (i.e support for spouse & children, or asset transfers to favored individuals or organizations) with payment for health care and protection from abuse by care providers and care managers 1.3 Structuring the Practice to Meet the New Client s Needs What does the elder law attorney do differently than the estate planner? Enlarging the Referral Base from Financial to Social and Medical Service Sources Home Visits Hiring or building team relationships with non-lawyer professional collaborators or in-house service providers provide emergency care, placement assistance, in-home care Develop Custom-Drafted Medical Decision Documents and Focused Medical Consultations Superior Data Base Management Focused outreach of interest to the referral network: Newsletter, , Postings on Website Attending All Available Public Benefit Program CLE Designing a constant feedback loop between the estate planning and implementation practice groups Pricing - Flat Fee Projects Identified, Defined for Client Based on Value to Client New Technology Integration to Improve Profitability of Flat Fee Projects by Lowering Project Costs, Permit Internal Assessment of Most Profitable Engagements & Pricing, Improve Consistency of Products, Enhance the Client Experience 1.4 New Product Development in Three Areas

5 In what areas are the elder law attorneys developing new products or service? Health Crisis Assistance Estate Plan and Health Care Crisis Plan Implementation Advisory Services Better Planning Document Development (a feedback loop) Based on Massive Experience with Crisis Situations 1.5 Some Commonly Used Elder Law Practice Products or Services: How might you describe some of the current elder law practice services or products? Medical Directives Permitting Refusal of Treatment After Cognitive Losses Financial Power of Attorney and Revocable Trust Drafting to Permit Spousal Protection from Health Care Costs Medicaid Applications Medicaid Strategies for Spouses Medicaid Transfer Strategies Income Cap Trusts Special Needs Trusts Long Term Care Insurance Review Retiree Insurance Option Review Second Marriages: Health Care Cost Fear-Driven Prenuptial Planning Independent Court Appointed Fiduciary Role Definition & Fee Structure Problem-solving for Probate Avoidance Assets Using the Courts HIPAA Sensitive Drafting of Incapacity Documents HIPAA Sensitive Advice for Fiduciaries The elder law attorney also, of course, offers the traditional estate planning documents (wills, trusts, etc.) and, in some offices, taxable estate planning services.