Tag Archives: elder law

Do Frequent Flier Miles Expire When You Do?

Posted on by

Accumulated frequent flier miles can be valuable assets, but what happens to those miles after someone dies? Can a spouse or other heirs inherit them, or do the miles simply evaporate like a contrail?

Whether they can be inherited depends on the airline, and in most cases, airlines will point out in their terms and conditions that frequent flier miles are not, in fact, your property. Regardless, even if the airline’s official policy is “no,” with a little perseverance, there is always the chance that the answer could be “yes.”

Here’s a look at several major airlines’ current mileage transfer rules:

Alaska Airlines’ Memorial Miles

Alaska Airlines, according to travel website and blog The Points Guy, may require only a copy of a death certificate to transfer your deceased loved one’s miles to you – without a fee. Call 1-800-654-5669 to reach Alaska Airlines customer service.

Transferring Miles With American Airlines

While current AAdvantage members do have the ability to move their miles to another member’s account (with the payment of fees and certain limitations), American Airlines will not generally allow for accrued mileage credit to be “transferable by the member upon death.” That said, the airline’s regulations do seem to offer such transfers in certain cases: “American Airlines, in its sole discretion, may credit accrued mileage to persons specifically identified in … wills upon receipt of documentation satisfactory to American Airlines and upon payment of any applicable fees.”

If your deceased loved one was an AAdvantage member, it may be worth a visit to American Airlines’ Buy, Gift, and Transfer Miles webpage to learn more.

JetBlue’s Points Pooling

In 2018, JetBlue launched the Points Pooling program to its TrueBlue loyalty members. Two to seven TrueBlue members, regardless of whether they are family, can join a “pool” and each contribute their points to it. Any member of your pool can leave their unused points for the remaining members of their pool to redeem. In theory, this would allow you to inherit the points of a loved one who passes away.

United Airlines: MileagePlus

For United Airlines customers who are part of the MileagePlus Program, it may be possible to transfer accumulated United Airlines miles upon the death of an individual.

Similar to American, the following is outlined on the airline’s website: “In the event of the death … of a Member, United may, in its sole discretion, credit all or a portion of such Member’s accrued mileage to authorized persons upon receipt of documentation satisfactory to United and payment of applicable fees.”

Call United’s customer service line at 1-800-421-4655 for guidance on the airline’s Transfer Miles Program.

Delta SkyMiles

Looking to transfer miles from a deceased Delta SkyMiles member into your name?

If you have the login details for their account, you may be able to make the transfer online via Delta’s website. Consider opening your own SkyMiles account first to simplify the process. Note that Delta charges 1¢ for each mile transferred, plus a $30 processing fee. Taxes may also apply. Miles can be transferred in 1,000-mile increments, and the maximum that can be transferred from one SkyMiles account to another is 150,000 miles per year.

Even if you have only the name of the individual and their SkyMiles number, you may still consider calling Delta’s SkyMiles customer service number at 800-323-2323 to ask for help.

Southwest Airlines

The account of a Southwest Airlines’ Rapid Rewards member who dies will become inactive and the points will be unavailable, according to the airline. In fact, its site explicitly states: “Points may not be transferred to a Member’s estate or as part of a settlement, inheritance, or will.”

Plan Ahead for Your Own Loved Ones

If you are part of an airline loyalty program and have accumulated a substantial number of miles, you may want to give your loved ones the details they need to access your frequent flier accounts so that they can log in directly in the event of your death.

Or, ask your estate planning attorney about how to go about adding into your will your wishes for passing those miles along to someone, should your preferred airline allow it.

How You Can Help Your Loved Ones by Planning Your Funeral Arrangements

Posted on by

When an individual passes away without a funeral plan, responsibility for arranging the funeral often falls on the deceased’s close family members, such as surviving spouses and children. Planning your own funeral arrangements can assist your loved ones in an emotionally challenging time, while also protecting them from incurring extraneous costs.

According to the National Funeral Directors Association, in 2021, the average cost of a full-service burial was $7,848, and the average cost of full-service cremation was $6,971. When an individual dies without having outlined a funeral plan, surviving family members may be unsure of their loved one’s wishes. As a result, they may choose more expensive funeral options or feel pressure to overspend to demonstrate their love. Yet you can shield your family from these costs by prearranging the funeral and, in some cases, prepaying for funeral arrangements. (Always do your research before prepaying.)

Without a plan in place, grieving family members often face time constraints in making decisions. For instance, they may not have time to visit multiple funeral homes and compare their values after their loved one’s death. Often, they choose the first funeral home they see rather than exploring various options to find the best fit and value.

When individuals prearrange their funerals, they have time to research funeral homes and carefully decide the details of their end-of-life arrangements, ensuring that the services will follow their wishes.

Beyond choosing the funeral home, planning such arrangements ahead of time can include:

  • Deciding what happens to the remains, including burial or cremation
  • Determining the burial location, such as next to a loved one
  • Letting loved ones know where to spread or keep ashes
  • Deciding whether to donate organs or remains to scientific research
  • Selecting the type of funeral or memorial service (For instance, a traditional funeral ceremony may be held in a religious institution and include viewing and burial, whereas direct burials happen soon after death and do not include a viewing)

How to plan your funeral arrangements

Often, planning funeral arrangements entails writing down your wishes in detail. You may wish to give your family members copies of your written wishes. Additionally, people with a reasonable idea of where they will pass away can prepay a funeral home for services, ensuring family members do not need to take on the cost.

Advance directives can document your desires regarding end-of-life care and what happens to your remains after death. You can choose a person to act as your healthcare agent and help you with healthcare decisions. Although your agent’s authority often terminates upon your death, you may provide your agent with your funeral wishes, along with the power to oversee the arrangements.

Wills may contain sections describing desired funeral arrangements. However, wills are not the best place for funeral arrangements, as family members often read wills after the funeral. Instead, a separate document, such as a prepaid funeral or burial contract, can describe funeral arrangements and end-of-life wishes.

Deciding funeral arrangements in advance and providing instructions to your loved ones makes your wishes clear, avoiding arguments within your family and giving them more peace of mind after you pass away.

Four Provisions People Often Forget to Include in Their Estate Plan

Posted on by

Even if you’ve created an estate plan, are you sure you included everything you need to? There are certain provisions that people often forget to put in a will or estate plan that can have a big impact on a family.

1. Alternate Beneficiaries

One of the most important things your estate plan should include is at least one alternative beneficiary in case the named beneficiary does not outlive you or is unable to claim under the will. If a will names a beneficiary who isn’t able to take possession of the property, your assets may pass as though you didn’t have a will at all. This means state law will determine who gets your property, not you. By providing an alternative beneficiary, you can make sure that the property goes where you want it to go.

2. Personal Possessions and Family Heirlooms

Not all heirlooms are worth a lot of money, but they may contain sentimental value. It is a good idea to be clear about which family members should get which items. You can write a list directly into your will, but this makes it difficult if you want to add items or delete items. A personal property memorandum is a separate document that details which friends and family members get what personal property. In some states, if the document is referenced in the will, it is legally binding. Even if the document is not legally binding, it is helpful to leave instructions for your heirs to avoid confusion and bickering.

3. Digital Assets

More and more, we are conducting business online. What happens to these online assets and accounts after you die? There are some steps you can take to help your family deal with your digital property. You should make a list of all of your online accounts, including e-mail, financial accounts, social media accounts, and anywhere else you conduct business online. Include your username and password for each account. Also, include access information for your digital devices, including smartphones and computers. And then you need to make sure the agent under your durable power of attorney and the personal representative named in your will have authority to deal with your online accounts.

4. Pets

Pets are beloved members of the family, but they can’t take care of themselves after you are gone. While you can’t leave property directly to a pet, you can name a caretaker in your will and leave that person money to care for the pet. Don’t forget to name an alternative beneficiary as well. If you want more security, in some states, you can set up a pet trust. With a pet trust, the trustee makes payments on a regular basis to your pet’s caregiver and pays for your pet’s needs as they come up.

Contact your attorney to make sure your will and estate plan takes care of all your needs.

How Long Should I Hold on to Important Documents?

Posted on by

It is hard to know what documents to trash and when. Before you know it, your spare room, office, basement, or garage is overflowing with boxes of papers that all seem important. Trying to weed through the mess and figure out what to toss? Keep reading.

Which Documents Should I Keep?

There are some documents that you will want to hang on to forever and some that you should keep for a few years. Consider the following examples:

Documents You Should Always Have

These following documents should always be available, and you should properly store them to ensure you can grab them when you need them:

  • Birth certificates
  • Death certificates
  • Marriage license
  • Social Security card (Lost yours? Now you can request a replacement online.)
  • Your current insurance policies (life, health, etc.)
  • The newest version of your estate planning documents

Documents You Should Only Keep Temporarily

Some documents lose importance as time goes by. However, it would help if you hung on to the following documents for a few years (typically, between five and seven years):

  • Papers related to charitable donations
  • Tax returns
  • Credit card statements
  • Cancelled checks
  • Bank statements

Why Is It Important to Keep Some Documents?

Should you pass away, it is crucial to have kept certain documents because the probate court may request them after your death. Maintaining important documents will help your family close your estate.

Other reasons to hold on to paperwork depend on your situation. For example, some people find themselves a party to a lawsuit. If that happens to you, you may need to produce documents, and it will be much easier if you can readily access the important ones.

Digital Storage

Digitally storing your documents can significantly cut down on the clutter. Before you start digitizing your essential documents, you want to have a plan. Sit down, look at all your documents, and determine whether they are necessary. Use a critical eye as you decide what to keep. The next step is scanning each document into your computer, on to an external hard drive, or on a flash drive.

Some important considerations when digitizing your files include keeping up to date with current technology and password-protecting your sensitive information. As technology advances, make sure that you advance with it. The last thing you want is to be unable to open your files. Always encrypt or password-protect your information. It is the best way to protect yourself against hackers and identity thieves.

How Community Property Affects Estate and Tax Planning

Posted on by

In most states, spouses can purchase and own property separately from one another. However, in certain states – called community property states – if one spouse purchases property, it is considered the property of both spouses. How marital property is owned has implications for both estate and tax planning.

There are currently nine community property states. They are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. A few other states (for example, Alaska) allow couples to opt into community property arrangements.

Community property is property acquired by a husband and wife during marriage. In community property states, property held in only one spouse’s name can still be community property. For example, the paycheck that a spouse brings home every week is community property even though only one spouse’s name is on the check. If that check is used to buy an asset, then that asset is community property, regardless of whose name is on the account or the asset.

Property that is not community property is property that one spouse brings to the marriage, inherits, or is gifted. A spouse can turn separate property into community property by putting an asset owned by one spouse into both spouses’ names.

Depending on the state, partners may be able to change whether property is separate or community via pre-nuptial agreement, post-nuptial agreement, or exceptions in the law. Changing community property into separate property may be appropriate in second marriages or when one spouse is bringing significant separate property into the marriage. For example, if, at the time of the marriage, one spouse receives significant income from owning a business, the spouses may decide that it is appropriate that the business remain that spouse’s separate property and the income from that property will remain that spouse’s separate property.

One advantage of community property is with regard to capital gains taxes. If one spouse dies, the cost basis of the community property gets “stepped up.” The current value of the property becomes the cost basis. This means that if, for example, the couples’ house was purchased years ago for $150,000 and it is now worth $600,000. The surviving spouse will receive a step up from the original cost basis from $150,000 to $600,000. If the spouse sells the property right away, he or she will not owe any capital gains taxes. In non-community property states, if one spouse dies, only the deceased spouse’s interest (usually 50 percent of the value) is stepped up.

When estate planning in a community property state, it is important to fully review assets to determine which assets are community property and which are separate property. A surviving spouse in a community property state is entitled by law to half of the community property, regardless of what the spouses may have wanted to do with the property (such as pass it on to children). Community property can be a factor even in non-community property states if the couple owns property in a community property state.

If spouses move from one type of state to another, it is especially important that they have their estate plan reviewed by an attorney in the new state to make sure the plan still does what they want.

Using an Intentionally Defective Grantor Trust to Transfer Assets

Posted on by

An intentionally defective grantor trust (IDGT) is a common estate planning tool that is used by wealthy families to transfer assets from one generation to the next while achieving significant tax savings. IDGTs are especially useful if you have assets that will appreciate significantly over time.

An IDGT is “intentionally defective” because it purposely gives the grantor – the person creating the trust – a right or power that allows the grantor to pay taxes on the income generated by the trust even though the trust assets are not a part of the grantor’s estate. The trust is irrevocable, which means the trust assets will not be counted for estate tax purposes. Transferring assets to an IDGT takes the assets out of an estate while the trust’s income is taxed at the grantor’s personal rate, not the trust’s much higher rate.

The benefit of an IDGT is that it allows the trust to grow without having to use trust assets to pay income taxes. This amounts to a tax-free gift to the trust. In addition, by paying the income taxes, you are also continuing to lower your taxable estate. IDGTs work best for assets that are likely to appreciate significantly in value, such as stock or real estate. For example, suppose you fund an IDGT with $10 million in assets and it earns 5 percent annually over a 30-year period. If the trust does not have to pay income tax, it might grow to more than $43 million. If the trust needs to pay income taxes from its own assets, its growth would likely be significantly less.

Bear in mind that when you transfer the assets to the trust, the transfer may be subject to gift taxes. Currently, the annual gift tax exclusion is $16,000 (for 2022). This means that any person who gives away $16,000 or less to any one individual (anyone other than their spouse) does not have to report the gift or gifts to the IRS. In addition, the IRS allows you to give away a total of $12.06 million (in 2022) during your lifetime before a gift tax is owed. Even if you gift assets to an IDGT and reduce your future gift and estate tax exemption, any future growth will occur outside of your estate.

If you want to avoid gift taxes, you may be able to sell assets to the trust. This is usually done in installments through an interest-bearing promissory note. When an asset is sold to an IDGT, there are no capital gains taxes because you are selling something to yourself. If the assets in the trust gain more in value than the interest rate, then the sale will still benefit the trust overall. This strategy works best when interest rates are low.

To find out if an IDGT is right for you, contact your attorney.

The Tax Consequences of Selling a House After the Death of a Spouse

Posted on by

If your spouse dies, you may have to decide whether or when to sell your house. There are some tax considerations that go into that decision.

The biggest concern when selling property is capital gains taxes.  A capital gain is the difference between the “basis” in property and its selling price. The basis is usually the purchase price of property. So, if you purchased a house for $250,000 and sold it for $450,000 you would have $200,000 of gain ($450,000 – $250,000 = $200,000).

Couples who are married and file taxes jointly can sell their main residence and exclude up to $500,000 of the gain from the sale from their gross income. Single individuals can exclude only $250,000. Surviving spouses get the full $500,000 exclusion if they sell their house within two years of the date of the spouse’s death, and if other ownership and use requirements have been met. The result is that widows or widowers who sell within two years may not have to pay any capital gains tax on the sale of the home.

If it has been more than two years after the spouse’s death, the surviving spouse can exclude only $250,000 of capital gains. However, the surviving spouse does not automatically owe taxes on the rest of any gain.

When a property owner dies, the cost basis of the property is “stepped up.” This means the current value of the property becomes the basis. When a joint owner dies, half of the value of the property is stepped up. For example, suppose a husband and wife buy property for $200,000, and then the husband dies when the property has a fair market value of $300,000. The new cost basis of the property for the wife will be $250,000 ($100,000 for the wife’s original 50 percent interest and $150,000 for the other half passed to her at the husband’s death). In community property states, where property acquired during marriage is the community property of both spouses, the property’s entire basis is stepped up when one spouse dies.

To understand the tax consequences of selling property after the death of a spouse, contact your attorney.

What to Do If You Want to Leave Your Children Unequal Inheritances

Posted on by

Parents usually want to leave their children equal shares of their estate, but equal isn’t always fair. If you plan to provide more (or less) for one child in your estate plan, preparation is important.

It is natural for parents to want to treat their children equally in their estate plan, but there are some circumstances in which a parent might want to leave children unequal shares. If one child is providing all the caregiving, the parent might want to reward that child. If one child is substantially better off than another child, then the parent might want to provide more for the child who has a greater need for the funds.

Other factors that can influence how much to give each child is if one child has special needs or if there is a family business that only one child wants to run. It’s also possible that the parents have already provided more for one child during their lifetime, maybe by paying for graduate school or helping them buy a house.

Whatever the reason for leaving your children unequal shares, the important thing is to discuss your reasoning with the children. Sit down with them and explain your decision-making process. If you feel like the conversation could be difficult and contentious, you could hire a mediator to help facilitate the discussion.

Your children may be understanding of your decision, but if you are worried about one child challenging your will after you die, you may want to take additional steps:

  • Draft your will and estate plan with the assistance of an attorney and make sure it is properly executed. To avoid accusations of undue influence, do not involve any of your children in the process.
  • Explain in detail your reasoning in your estate planning document and make it clear that it is your decision and not the influence of the child who is receiving more.
  • Include a no-contest clause (also called an “in terrorem clause”) in your will. A no-contest clause provides that if an heir challenges the will and loses, then he or she will get nothing. You must leave the heir enough so that a challenge is not worth the risk of losing the inheritance.

Can Life Insurance Affect Your Medicaid Eligibility?

Posted on by

When applying for Medicaid many people often forget about life insurance. But depending on the type of life insurance and the value of the policy, it can count as an asset.

In order to qualify for Medicaid, you can’t have more than $2,000 in assets (in most states). Life insurance policies are usually either “term” life insurance or “whole” life insurance. If a Medicaid applicant has term life insurance, it doesn’t count as an asset and won’t affect Medicaid eligibility because this form of life insurance does not have an accumulated cash value. On the other hand, whole life insurance accumulates a cash value that the owner can access, so it can be counted as an asset.

That said, Medicaid law exempts small whole life insurance policies from the calculation of assets. If the policy’s face value is less than $1,500, then it won’t count as an asset for Medicaid eligibility purposes. However, if the policy’s face value is more than $1,500, the cash surrender value becomes an available asset.

For example, suppose a Medicaid applicant has a whole life insurance policy with a $1,500 death benefit and a $700 cash surrender value (the amount you would get if you cash in the policy before death). The policy is exempt and won’t be used to determine the applicant’s eligibility for Medicaid. However, if the death benefit is $1,750 and the cash value is $700, the cash surrender value will be counted toward the $2,000 asset limit.

If you have a life insurance policy that may disqualify you from Medicaid, you have a few options:

  • Surrender the policy and spend down the cash value.
  • Transfer ownership of the policy to your spouse or to a special needs trust. If you transfer the policy to your spouse, the cash value would then be part of the spouse’s community resource allowance.
  • Transfer ownership of the policy to a funeral home. The policy can be used to pay for your funeral expenses, which is an exempt asset.
  • Take out a loan on the cash value. This reduces the cash value and the death benefit, but keeps the policy in place.

Before taking any actions with a life insurance policy, you should talk to your attorney to find out what is the best strategy for you.

The Durable Power of Attorney: Your Most Important Estate Planning Document

Posted on by

For most people, the durable power of attorney is the most important estate planning instrument available — even more useful than a will. A power of attorney allows a person you appoint — your “attorney-in-fact” or “agent” — to act in place of you – the “principal” — for financial purposes when and if you ever become incapacitated.

In that case, the person you choose will be able to step in and take care of your financial affairs. Without a durable power of attorney, no one can represent you unless a court appoints a conservator or guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, your representative may have to seek court permission to take planning steps that she could implement immediately under a simple durable power of attorney.

A power of attorney may be limited or general. A limited power of attorney may give someone the right to sign a deed to property on a day when you are out of town. Or it may allow someone to sign checks for you. A general power is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself.

A power of attorney may also be either current or “springing.” Most powers of attorney take effect immediately upon their execution, even if the understanding is that they will not be used until and unless the grantor becomes incapacitated. However, the document can also be written so that it does not become effective until such incapacity occurs. In such cases, it is very important that the standard for determining incapacity and triggering the power of attorney be clearly laid out in the document itself.

However, attorneys report that their clients are experiencing increasing difficulty in getting banks or other financial institutions to recognize the authority of an agent under a durable power of attorney. A certain amount of caution on the part of financial institutions is understandable: When someone steps forward claiming to represent the account holder, the financial institution wants to verify that the attorney-in-fact indeed has the authority to act for the principal. Still, some institutions go overboard, for example requiring that the attorney-in-fact indemnify them against any loss. Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you may want to execute such forms offered by the institutions with which you have accounts. In addition, many attorneys counsel their clients to create living trusts in part to avoid this sort of problem with powers of attorney.

While you should seriously consider executing a durable power of attorney, if you do not have someone you trust to appoint it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship. In that case, you may execute a limited durable power of attorney simply nominating the person you want to serve as your conservator or guardian. Most states require the court to respect your nomination “except for good cause or disqualification.”