A recent article by Forbes highlighted what I believe to be a serious problem: half of Americans don’t have even the most basic estate planning documents.

According to a phone survey conducted among 1,022 adults in December 2009, only 35% have a will and only 29% have a living will, which states an individual’s views on end of life medical procedures.

The numbers are only a little more promising for the elderly. Fifty-one percent of adults over the age of 65 have a health care power of attorney in place, and 58% say they have a living will.

The poor economy seems to have taken its toll – 44% report they are more focused on immediate needs, such as groceries and paying bills rather than future protection. And, there seems to be a misconception amongst the survey respondents that they don’t need an estate plan if they are not independently wealthy.

In fact, it can be more costly in the long run for those who fail to prepare estate-planning documents.

If you die intestate (without a will) a lot of your assets may get chewed up in probate court rather than going to your loved ones. And, your family may have to pay heavy court costs out-of-pocket if they have to go through legal proceedings to get a judge to appoint someone to make medical decisions for you should you suffer an incapacitating accident or illness.

If you haven’t put together an estate plan, I encourage you to do so to protect your assets, your personal wishes, and your family in the event they have to make difficult decisions.

James D. Perry

An Alameda Superior Court judge decided this month not every felony conviction will disqualify you from helping the elderly or disabled.

Gov. Arnold Schwarzenegger originally wanted to ban everyone with a felony record from working in the In-Home Supportive Services program (IHSS). As the law stands, workers are barred from the program for 10 years if they have been convicted of child abuse, elder abuse, or defrauding MediCal or any patient.

Outside those restrictions, though, Judge David Hunter says in-home patients can employ anyone they want.

IHSS helps pay for in-home care to 430,000 low-income elderly and disabled Californians. It allows patients to remain in their homes under the care of individuals of their choosing, as approved by the state, to render help with daily tasks, such as bathing, house cleaning, meal preparation, laundry, grocery shopping, personal care services, accompaniment to medical appointments, and protective supervision for the mentally impaired.

The state argues that its interest is protecting Californians and preventing fraud.

One of the plaintiffs to the suit is a Sacramento woman who provides in-home care for her 90-year-old-mother. She was initially disqualified under the governor’s plan because of a 1976 conviction for felony grand theft.

The program costs about $5.5 billion annually, half of which is paid for by the federal government, 35% by the state, and 15% by individual counties.

“We are following the court order, but we do not believe convicted felons should be eligible to care for elderly and disabled Californians in their homes,” said Lizelda Lopez, spokeswoman for the Department of Social Services.

The state could appeal the ruling, and Ms. Lopez says the Department is already reviewing it.

This is tricky ground. The state has a legitimate interest in protecting its citizens and taxpayer dollars, but how long should it punish people for their crimes at the expense of the elderly and disabled?

James D. Perry

I recently came across a truly heart-warming story about a neighborhood initiative in the Washington, D.C. area.

Harry Rosenberg and his wife, Barbara Filner, along with nine of their neighbors started an aging-in-place “village” in their Bethesda, Maryland community to help their elderly neighbors with basic services such as transportation and home maintenance, helping them to stay in their homes longer as they aged.

Their first request for assistance came in November 2008: they helped an 81-year-old widow take out her trash and drover her to the doctor. The organization has a budget of $4,000 collected solely through donations. It charges no dues and has about 65 “friends” who volunteer, receive help, or are otherwise are associated.

And while it doesn’t receive many requests for assistance Harry and Barbara say it is still a viable presence in the community hosting neighborhood walks and restaurant outings. There are now six similar “villages” in the city itself, two in the Virginia suburbs, and eight others in the planning stages in the Maryland suburbs.

The first such aging-in-place community on record was called an “intentional community” in Boston’s Beacon Hill neighborhood to which members paid dues to provide collective services. The idea spread and “intentional communities” popped up in California, Illinois, Colorado, Florida, Hawaii, New York, and other states, and the first international intentional community was in Australia.

Retirement communities are expensive and aren’t always the best option. Not every older adult needs the care of trained staff but could use, perhaps, the helpful hand of neighbor every now and then. If you are interested in learning more about aging-in-place initiatives or starting one in your community you can learn more at http://www.aginginplaceinitiative.org/.

James D. Perry

America’s prison population is nearing 2.5 million – roughly 1 person in every 133 – so it’s not unusual that I’ve had clients who have friends or family who are incarcerated.

Leaving assets to a federal, state, or county inmate comes with some bureaucratic hurdles and must be done with careful assessment.

In California, when an individual dies leaving an inheritance to a prisoner, both the Department of Corrections and Rehabilitation and the Victim Compensation and Government Claims Board must be notified. If a prisoner owes any money as restitution as part of his or her criminal sentence, the VCGCB with the help of the Franchise Tax Board is going to take its chunk first.

For example, I had an elderly client with very little family who willed part of his estate to a friend doing a few years’ time in state prison. His friend did not owe any restitution on his sentence, and all lawyers and state agencies involved were properly notified.

However, it was later discovered that he hadn’t paid child support to his wife in over 15 years. The arrearage was near $100,000, which was roughly equal to the value of the inheritance my client left him.

In some states, the department of corrections may even collect the cost of incarceration from an inmate’s inheritance by filing a lien in probate court. The State of Connecticut’s laws allow the probate court to extract the cost of incarceration or 50 percent of the inheritance, whichever is less.

If you’re thinking of leaving assets to a guest of the State, I urge caution. If you intend to provide a nest egg for a prisoner’s reentry into society, be aware of the debts they may have incurred as a result of their crimes, and recognize that they don’t have the autonomy to make decisions regarding that chunk of change until their release.

James D. Perry

My family said goodbye last month to my dad who celebrated his 94^th birthday last June and had lived a full life. He spent his final weeks at home with hospice care surrounded by the people he loved.

He manifested signs of dementia during his final years, but we were able make the decisions necessary for his medical care because he had an advance health care directive which set for his wishes for end of life care.

People hoping to avoid a prolonged dying process or to prevent family confusion and turmoil should execute an advance directive. Because a stroke or auto accident can lead to severe impairment, it’s never too early to have a plan in place.

The first step is to draw up an Advanced Directive for Health Care. This is known in some states as a living will. You can specify your preferences on a wide range of options – resuscitation, hydration, drugs, intubation, etc. – requesting that you want everything to be done or limiting medical interventions.

The second step is to appoint a health care agent, someone you know well and trust, to whom you designate to make medical decisions for you by way of your health care directive. That person will use your advance directive as guidance to make decisions that you yourself cannot make due to incapacity.

Your health care proxy should be someone who knows you well and someone who will be willing to carry out your wishes, even in the face of family conflict. Your agent in California will also be the person responsible for implementing your wishes for disposition of your body after your death.

Once your advance directive is in order, be sure to give a copy to your doctors, the proxy, your attorney, and your family. Be sure to communicate with your relatives and health care providers about your concerns and wishes.

All who knew my dad miss him and grieve his loss. Still as a family, we are comforted that he lived and died just as he wanted without unnecessary trips to the emergency hospital, or unwanted medical intervention, at a time when he just wanted peace.

James D. Perry

California residents started the new year with a bevy of changes to state law governing estate planning. One notable change is to California’s No Contest Clause Statute.

A no contest clause includes language in an estate planning instrument that warns heirs from challenging any provisions in the will at the risk of being disinherited in the process.

No contest clauses were originally seen as a way to avoid costly litigation and the public airing of dirty family laundry, and were fully enforced in California courts.

However, the California Law Revision Commission, while scrutinizing the statute in 2008, determined that the intent and the reality were far divorced from one another. Today, the Commission finds that no-contest clauses are too often being used by greedy and dishonest heirs as a tool to blackmail other family members into settling their disputes out of court. And heirs who had legitimate concerns that the instrument was executed fraudulently, under duress, or while the testator was mentally incapacitated were forced to seek judicial review under safe harbor hearings that would protect them from being disinherited.

As of January 1, 2010, California courts are giving no contest clauses included in wills and revocable trusts greater scrutiny. This means that no contest clauses included in wills or revocable trusts which became irrevocable on or after January 1, 2001 will remain enforceable, but heirs hoping to make a good faith challenge to the instrument will not be immediately disinherited upon challenge. Good faith probable cause challenges may be based on allegations including, but not limited to forgery, incapacity, duress, fraud, undue influence, or revocation.

If you have any questions about your estate planning documents or the effects of your no contest clause, contact your estate planning lawyer.

James D. Perry

There are a lot of things to look forward to in 2010, but those of us in estate planning and probate law were hoping for one last act of 2009 – Congressional action on the Death Tax.

The Death Tax officially died at midnight, December 31, 2009 meaning that any taxpayer dying in 2010 will not have to pay taxes on his or her estate. It will resurrect itself on January 1, 2011 at Clinton-era levels exempting only the first $1 million with a 55 percent tax rate.

Despite the appealing zero percent tax rate against estates, the hidden danger lies in recent changes to the capital gains tax laws. Heirs face heavy capital gains taxes on the sales of any inherited assets, which may potentially be more costly overall than the death tax.

President Barack Obama and members of Congress have indicated that they want to freeze the levy at 2009 levels ($3.5 million exemption, 45 percent tax) instead of letting it expire.

The House voted in December to put this plan into law. The Senate, though, declined to act until a more permanent solution was found.

It’s expected now that the Senate will take action (when, we’re not sure) and apply any new tax law retroactively. That move may face legal challenges and it still doesn’t help those looking to put into place a responsible estate plan.

Without government action, it is difficult for estate planning lawyers to properly advise clients.

Until this is resolved, all eyes are on The Hill.

James D. Perry

Stories in the news this month have really highlighted the need we have in this country to truly care for our elderly family members and friends, protecting them from exploitation.

Brooke Astor’s son, Anthony Marshall was sentenced this month to as many as three years in prison for swindling millions of dollars from his mother, who suffered from Alzheimer’s disease. And, a Long Island woman was convicted just recently of stealing the home of a 93-year-old retired barber.

MetLife’s Mature Market Institute estimates that financial scams cost the elderly about $2.6 billion a year. Only one in 25 cases of financial abuse is ever reported.

Many people are quick to point to reverse mortgage lenders as the greedy, moustache-twirling villains of financial abuse. Reverse mortgages are loans against the equity in your home that you do not have to pay back until you voluntarily move or sell your home or until you die.

They are ripe for abuse because aggressive ad pitches often involve coercion and deception promising “free money” and failing to disclose fees and terms of the loan, similar to problems raised during the flood of subprime mortgage rate loans into the market that created the housing boom and subsequent collapse.

However, financial abuse can often come from closer to home. Lisa Nerenberg, an elder abuse consultant recently told the Los Angeles Times that the chief perpetrators of financial elder abuse are family members. MetLife puts the percentage of substantiated cases of financial abuse involving an adult child around 60 percent.

As a senior citizen, you can help protect your assets by assigning them into trusts and by choosing a trust-worthy individual to have power of attorney or to serve as a fiduciary. Others can help prevent financial elder abuse by simply opening up a dialogue with their loved ones about finances and keeping an eye out for scams.

James D. Perry

Many grandparents come to me saying they would love to give their grandkids a substantial gift for their college funds and future nest eggs, but they don’t know quite how to do it, and they have fears that their grandchildren will be saddled with the taxes.

The first step is to determine how much you can comfortably give away.

Make an honest assessment of your financial health and your long-term goals. You don’t want to compromise your needs or your retirement by spreading your finances too thin.

Next, know the facts about giving.

In January of this year, the law changed to allow individuals to give up to $13,000, per year, per beneficiary tax-free. This $13,000 is excluded from the giver’s lifetime monetary giving allowance. And, the sooner you put that money to work, the better.

Nearly 85 percent of monetary gifts from grandparents to grandchildren will go towards their college education. Prepaid tuition savings vehicles – like 529s – can help in those efforts. The downside, though, is that capital gains from these accounts not used to pay for education will be subject to taxes and penalties.

Grandparents also have the option of opening a Uniform Gifts to Minors Act account. The first $850 contributed to this account is tax-free. The account is automatically put in the hands of their grandchild upon the state’s age of majority.

However, any money removed from a UGMA account will be taxed as capital gains, and the funds may count against him or her when it comes time to calculate financial aid eligibility for college.

To figure out what kind of plan would work best for you, speak to your financial planner or estate-planning lawyer.

Tis the season for gift giving, so don’t be afraid to share the wealth!

James D. Perry

Dear clients and friends,

There is a saying that feeling appreciation and not expressing it is like wrapping a gift and not giving it.

So this year, at the first anniversary of my law office’s move from Los Alamitos to Orange, I want to thank my clients, old and new, and the many other friends, neighbors, and professionals who have asked for my services or recommended me to someone else.

I am also grateful for the three celebrations that took place in 2009: my Dad’s 94^th birthday; Patricia’s and my 3^rd wedding anniversary; and the 5^th anniversary of my secretary/paralegal Monica Sharifzedah’s good work in my law office.

It has been a tough economic year. Still, there is a multitude of things to be grateful for. So, if like me, you are tempted to complain or fuss about something that didn’t turn out so well, I suggest that you smile and sing this little song:

Got no checkbooks, got no banks,
Still I’d like to express my thanks –
I got the sun in the mornin’ and the moon at night.

Got no heirlooms for my kin.
Made no will, but when I cash in
I leave the sun in the mornin’ and the moon at night.
Irving Berlin

Happy Thanksgiving!

James D. Perry