Covid 19 and Minor Children – Things to Consider Now

It's important to have a plan in place to take care of your minor children, if you are unable to do so yourself.
It’s important to have a plan in place to take care of your minor children, if you are unable to do so yourself.

Protecting your family is important, especially when you have minor children, and even more so now that we are living through a pandemic. With all of the unknowns of our current situation, you need some certainty. Having an up-to-date estate plan can be the first step toward providing that certainty in an uncertain world.

Many people view estate planning as limited to making arrangements for your death. However, it is equally important to plan for a time when you may still be alive but unable to care for yourself or your minor children.

Addressing the financial needs of you and your minor child

A revocable living trust can be a great solution for managing your and your minor child’s financial needs during incapacity. This planning tool enables you to name yourself as the trustee (the person or institution charged with managing, investing, and handing out the money and property) and allows you to continue exercising control over the money and property you transferred to the trust. The accounts and property are transferred to the trust when you change the legal ownership from you as an individual to you as the trustee of the trust. A trust also allows you to name a co-trustee or an alternate trustee to seamlessly step in, without court involvement, and manage the trust’s money and property for your benefit and the benefit of any other beneficiaries you have named in your trust if you become too ill to do it yourself.

In addition, when using a trust, you can specify when and how the funds should be used for your minor child’s benefit. You can provide instructions for certain expenses to be paid during a period of incapacity to ensure that your minor child is still being provided for in the same way you would provide for your child. Additionally, you can include a plan for how the money will be used upon your death for your child’s benefit. You can also state a time frame for when you think your child would be ready to manage his or her inheritance. Until the child reaches that age, the child’s inheritance will be managed by the trustee you choose. It’s important that you provide your child’s trustee with guidelines on what is important to you in terms of taking care of your child financially. If you leave your child’s inheritance to your child in a trust, the funds will be better protected from any future creditors or a divorcing spouse that your child may have.

An added benefit of utilizing a trust as part of your estate plan is avoiding the time-consuming and often expensive probate process that would otherwise be required. As long as you properly transfer your accounts and property to the trust, or make arrangements for the trust to be named beneficiary of your assets at your death, you will save your loved ones precious time and money during an emotional period.

Caring for your minor child

When planning for minor children, it is also important to consider who will physically care for them if you are unable to. If your minor child’s other legal parent is still alive and able to care for the child, the other parent will continue to provide care or will assume the day-to-day responsibilities of the caregiver. Nevertheless, it is a good idea to plan for what will happen if both of you are unable to care for the minor child, just in case. If you are the only living parent, or if the other legal parent is unfit to care for your child, however, it is crucial that you make the proper arrangements. While most people are familiar with the idea of naming a guardian for a minor child in a last will and testament, this document does not become effective until your death. Therefore, to properly plan for your minor child’s care during your incapacity, you need to consider naming a guardian in a separate writing.

Providing for your minor child’s care and financial security is an important undertaking with many important questions to consider. An estate planning attorney can guide you in making those crucial decisions and can put together a plan that will see that your wishes are carried out.

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How Grandparents Can Help Pay For College

Grandparents wanting to help pay for a grandchild's education may with to consider a 529 Plan.
Grandparents wanting to help pay for a grandchild’s education may with to consider a 529 Plan.

If you are a grandparent wondering how you can help pay for a grandchild’s future college education, you may wish to consider a Qualified Tuition Plan under IRC Section 529, otherwise known as a 529 plan.

Forbes’ recent article entitled “Estate Planning Primer: Qualified Tuition Plans” explains that there are two kinds of 529 programs that can help pay for college (and some other education expenses): prepaid plans and savings plans. The earnings on the assets in the 529 plan aren’t taxed, until the funds are distributed. The distributions are also tax-free up to the amount of the student’s “qualified higher education expenses.”

One kind of 529 plan is known as a prepaid plan. With this plan you buy tuition credits at the current tuition rates, even though your grandchild may not be starting college for several years. Because the cost of a college education rises every year, there is a substantial benefit to being able to lock in the cost at today’s rate.

The other kind of 529 plan is a savings plan. Even though the earnings in the plan are tax deferred and, to the extent used for qualified higher education expenses, tax-free, the amount available to pay the college costs depends on the investment performance of the plan. The more the funds in the plan grow, the more education costs can be covered. But if the value of the plan declines, fewer education costs will be covered.

Qualified higher education expenses include tuition, fees, books, supplies, and required equipment. Reasonable room and board may be considered a qualified expense, if the student is enrolled at least half-time. Distributions of income from the 529 plan in excess of qualified expenses are taxed to the student, and may result in 10% penalty.

You would designate you grandchild as beneficiary of the 529 plan at the time you create it. However, you are able to change the beneficiary or roll over the funds in the plan to another plan for the same or a different beneficiary.

A 529 plan may be used to fund a grandchild’s education at any college, university, vocational school, or other post-secondary school eligible to participate in a student aid program of the Department of Education.

Any funds you contribute to the 529 plan will be treated as gifts to your grandchild; however they qualify for the annual gift tax exclusion ($15,000 per person per year for 2020) adjusted annually for inflation. If you contribute more than the annual exclusion amount in a given year, you can elect to have the gift treated as being made over a five-year period starting with the year of the contribution.

While you may name yourself as custodian of the 529 plan, it is important to also designate a successor custodian, perhaps a parent of a grandchild, in the event you are not able to act as custodian.

Reference: Forbes (Aug. 5, 2020) “Estate Planning Primer: Qualified Tuition Plans”

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An Often Misdiagnosed Dementia

Lewey body dementia is an often misdiagnosed dementia.
Lewey body dementia is an often misdiagnosed dementia.

Many people had never heard of Lewy body dementia until it was reported in 2014 that this was the disease that afflicted Robin Williams. While Lewy body dementia and Alzheimer’s disease are the two most common types of dementia, those who have Lewy body dementia are often misdiagnosed as having Alzheimer’s disease or depression. As a result, they do not get the treatment and support they need.

Considerable’s recent article entitled “The second most common type of dementia often goes unrecognized” reports that in one study, nearly 70% of people diagnosed with Lewy body dementia visited three consultants before receiving the diagnosis. For 33% of people with the disease, the dementia was misdiagnosed and getting the correct diagnosis took over two years.

There are two different conditions associated with Lewy body dementia: dementia with Lewy bodies and Parkinson’s disease dementia. In dementia with Lewy bodies, problems with memory and thinking occur simultaneously with problems involving movement, like those associated with Parkinson’s disease. In Parkinson’s disease dementia, a person who has had movement problems resembling Parkinson’s disease for several years, then develops difficulties with memory and thinking.

In addition to memory, thinking, and movement problems, symptoms of Lewy body dementia include issues with alertness and concentration, hallucinations and paranoia, acting out dreams during sleep, low blood pressure when standing, daytime sleepiness and depression.

Because the symptoms of Lewy body dementia often resemble other conditions, research reveals that the first diagnosis is commonly incorrect. For example, in one study 26% of people who had Lewy body dementia were misdiagnosed as having Alzheimer’s disease, and 24% were determined to have a psychiatric diagnosis like depression.

We saw this first hand at our firm when a family member was suffering with this kind of dementia. It went undiagnosed until it was too late to treat it properly. We feel it’s important to get the word out to family members who might think their loved one is suffering from depression, Parkinson’s disease, or another kind of dementia.

Failure to properly diagnose a person with Lewy body dementia can result in delay in treatment specifically targeted for that condition. Also, with the correct diagnosis, patients and families can seek out resources, such as the Lewy Body Dementia Association, an organization dedicated to helping people living with this disease. This group provides education on Lewy body dementia, helps patients and families know what to expect, connects patients and families to support and resources and helps them find research opportunities.

For more information on dementia issues see https://galligan-law.com/some-common-drugs-may-increase-risk-of-dementia/

Reference: Considerable (Aug. 14, 2020) “The second most common type of dementia often goes unrecognized”

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