Articles. Checklists & Practical Info

New Articles Coming in the Fall of 2010 for our Estate Planning, Business and Construction Clients!

MEDIGAP INSURANCE-DO YOU NEED IT?

Medigap is a secondary insurance used to supplement senior for Medicare and it is private insurance and the benefits and prices of each plan is variable, and differs state by state.

At a minimum, all Medigap policies pay must cover: (1) Deductibles for hospitalizations (this is the amount a patient must pay before Medicare pays for a hospitalization); (2) The first three pints of blood (which are not covered by Medicare); (3) The co-insurance amount (remaining 20 percent) for services covered by Medicare Part B (outpatient services, physical therapy, x-rays, etc). Some optional areas of coverage include: (1) Annual Medicare deductible; (2) Some prescriptions (these are not covered by Medicare); (3) Foreign travel emergency costs (these are not covered under Medicare): (4) Deductibles for nursing home costs (this is the amount a patient must pay before Medicare pays for a nursing home stay); and (5) Additional home care services (in certain situations).

Medigap never covers: (1) Unlimited prescription medications; (2) Vision and Dental care; (3) Long term/custodial care at home or in a nursing home; and (4) private duty nursing.

HOW MUCH? Medicap costs are typically based on the following factors: (1) Which Medigap plan is selected; (2) Resident state of the elder; (3) Age of elder when purchased; and (4) the insurance company.

HOW & WHEN TO APPLY? (1) Research and contact a private insurance company or use options of your employer or union; (2) Apply within the 6 month “open enrollment” period which begins when [a] you turn 65 and enroll in Medicare Part B or [b] when you retire and sign up for Medicare Part B. If you do not enroll in this time period, the company is not required to accept elders with health problems or pre-existing conditions, so do it within the two time periods where you have protection if possible.

CONCLUSION: Medigap covers medical costs, not long-term care. Also, if you cannot afford the Medigap insurance, you may want to ask about a Medigap select option which is similar to the concept of a managed care plan, but for medical costs.

SUCCESSION PLANNING FOR FAMILY BUSINESSES

So many people are involved in family businesses and it is important to the family to make sure that family members continue to own and operate the business under the best of circumstances. Unlike a regular business, if you own a family business, retirement isn't simply a matter of deciding not to go into the office anymore. There are other issues to address as well such as:

(1) What happens to the business when I can no longer be there to run it?.

(2) Who in the family is best suited to take over my role and who should be delegated

what responsibilities?

(3) How do we get commitment and buy in from all family members involved?

(4) What are the legal issues involved in family business matters?

(5) What risk shifting measures do we have in place?

(6) How does the overall strategy of the business fit in with family successor?

(7) How do my estate and tax planning documents tie in to this succession planning?

(8) Have we maximized all of our business and tax opportunities for effective planning?

(9) How involved do I want to be in the business when I am technically retired?

(10) What about a family limited partnership or some other vehicle?

(11) What about end of life and asset management issues, government assistance?

A family dynamic is a very complicated matter and there are emotions and relationships that must be considered in addition to the general business and tax planning that is often performed. Uncomfortable issues such as health, death, divorce, family disagreements, family history and family financial matters make it difficult to get everyone on the same page. Effective facilitation or mediation of these issues, before they are disagreements, are important as well. At Neumann & Hall, we believe that effective communication prevents or resolves 99% of family business problems, and therefore we are committed to doing more than just drafting documents for our clients. We are committed to helping our clients put into place a succession plan that not only deals with the legal and tax issues, but deals with the practical and unavoidable issues of the complicated family relationship.

Comfortable or not, succession planning should be a priority for any family business considering that more than seven out of ten family-owned businesses fail to survive the transition from founder to second generation, typically falling prey either to estate taxes or family discord - or both. Developing and implementing a well-designed succession plan is essential to the survival of a family business from one generation to the next. This is why our experience and professional certifications in mediation and related options for family communication is so important for our clients. Combine this with the extensive tax planning education and experience, as well as the practical business experience and graduate business education, we offer the comprehensive package for succession planning of your family business. If we are unable to help you for some reason, we can direct you to other sources for a particular piece of the planning.

It is often easy to find a professional or attorney who can help you with one piece of the planning process (i.e. formation of family business but lack of expertise in tax planning), but it is our goal to be able to help you throughout the process, even in professionally facilitated family discussions if required.

Before You Remarry-

Revisit Your Estate Plan and Other Considerations!

Remarriage is a cause for celebration, but it is important to be practical and be knowledgeable about all of the matters that may be changed. In NC, as in many states, persons gain automatic benefits (as to real estate, an elective share of an estate, retirement benefits, etc.). This can impact (positively or negatively) many other people involved, especially the children or beneficiaries of the wife or husband. This also complicates matters from an estate planning perspective, and in particular when there are elder care law and/or tax law issues involved. Blending two families is also a breeding ground for family disputes unless proactive measures (clear communications, family mediation, planning for contingencies) are used. You may be exposed to more debt or more assets. There are steps that you can take to make the new marriage not only successful from an emotional perspective, but from a practical perspective as well. Before you remarry, consider:

►Communicate with Family Members: There is nothing that causes more problems than the failure to communicate. Why not have a trained and experienced mediator help you identify and communicate with your family members? Why not have everyone on the same page from the beginning? 95+% of all disputes are arguably the result of poor communications, so why not eliminate the 95% risk? At N & H we help you consider these options and when appropriate, provide these services.

►Take an Inventory of Assets and Debts: This includes all assets/debts including real estate, personal property, investments, life insurance, retirement benefits, family business assets, credit cards, and all financial matters. Create a joint balance sheet, with a proposed income statement and do a cash flow analysis. Consider contingency planning, especially for those matters that are more important as you get older.

►Establish a Financial Agreement: Establish a joint mission, a vision for your future, and the joint values that you have financially. If you have disagreement, get it resolved before you remarry. Strategically plan out how you will deal with finances on a monthly and annual basis. How will you evaluate what you are doing? What will happen if something changes as you need either a process or a specific plan? This can be the result of the two of you working together or through a facilitated discussion such as mediation.

►Make Specific Decisions and Execute Proper Documents for When You Die: By remarrying you have now involved many more people in the impact that your death may have. What about a pre-nuptial or post-nuptial agreement? What about trusts (especially tax planning trusts such as the QTIP trust)? What about your new Will, your living wills, your financial and health care powers of attorney? Does your remarriage impact the availability of government assistance for long-term health care matters? What do you want to leave your heirs and how do you accomplish this? Do you need to change beneficiaries?

►Issues Regarding Family Businesses or Long-Term Family Property: Do you have a business or land that has been in your family or that you wish to keep in your family? What are the options to help you accomplish these goals?

►Chronic Care Issues: Does your family have a history of diseases such as type 2 diabetes, Parkinson’s, Alzheimer’s, etc.? Do you or your prospective spouse have chronic problems now? What about children or other family members with special needs?

Every situation and every family is different, and it is important to get professional help that not only understands what the elder care, tax, family business, financial and estate planning matters involve, but how to help the proposed spouses and their families communicate and be on the same page. So many people think that the practice of law includes just drafting documents, doing very specific planning in one topic, or litigation. In fact, an effective lawyer needs to be very experienced and knowledgeable about the subject matter of the issues involved in the remarriage, but also should be an effective facilitator of communications, dispute prevention, and planning.

Plowden Hall Law Firm, PLLC
287 North Broad Street (Location)

PO Box 1077 (Mailing)
Brevard, NC 28712
828.877.4645/Fax: 828.877.4676

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