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Estate Planning and Parkinson’s 101 + New Tax Laws

Establishing your estate plan can be likened to committing to healthy eating. You know that it will benefit your health and quality of life as soon as you commit to it, but revving up to that first day and turning it into a lifestyle can feel like an impossible job.

Proactive financial planning provides long-lasting benefits to you, your family and even non-profits you name in your plans. Living with Parkinson’s disease (PD) comes with a long list of challenges, but everyone has to face the challenge of financial planning. Living with Parkinson’s means you have a few extra steps you should start thinking about when it comes to financial planning. We’ve listed them out.  

About Estate Planning 

Estate planning is not only about a will. It helps you plan for your life and it’s never too early to begin planning. Setting a plan in place now means less anxiety and stress down the line for you and your family. Estate planning addresses wills, revocable trusts, powers of attorney, health proxies and related estate planning as well as tax and other planning that might be important to you.

When you shift the focus to planning for life, a durable power of attorney (POA) Legal authorization for someone to act on your behalf (as your “agent”) in financial and business matters should you become physically or mentally unable to represent yourself. You may also name an alternate if your primary agent is unable or unwilling to serve. Once completed and notarized, the document should be registered in your county of residence. It is simple to revoke or change a POA if necessary., health proxy and living trustA legal document that explains what you want to do with your assets. Like a will, but it allows heirs to avoid certain estate taxes and potentially lengthy and expensive probate procedures. Living trusts can be useful if you have complex financial circumstances or property in multiple states. Otherwise, many certified financial planners advise clients to avoid them. are equally as important as a will. For many people, how to manage assets can be addressed in documents other than their will.

Key Documents You Should Already Have

These financial guides assist you in financially planning for the future:

  • Durable power of attorney: names a person (can be an attorney, but does not need to be) to handle financial affairs during incapacity as well as tax and legal matters. This is one of the most important documents a person with Parkinson's should have. 
  • Trust: legally appoints a trustee to distribute goods and properties to other beneficiaries; if a large amount of property or assets are owned, monies and goods can be distributed while a person is still alive.
  • Will: like a trust, however monies and goods are only distributed after death.

Health planning documents should be shared with your medical team. Forms to complete these documents can be obtained through your health care team or lawyer. Make sure copies are placed in your medical chart.

  • Durable Power of Attorney for Health Care: Names a person to make decisions regarding your health in event of serious illness or medical emergency.
  • Advanced Directive: provides written directions regarding personal preferences for future medical treatments; can also name a health care agent(s) to make decisions. 

Bonus option: A revocable living trust is a type of trust that controls finances from the time it is funded through incapacity and death. If attainable, this is the most powerful tool for managing assets as PD progresses. The primary benefit of a revocable trust is that you can be the initial trustee and name successor trustees to manage your assets if Parkinson’s progresses to a degree where you cannot do so. Tip: Most revocable trusts are sold to people based on fears of the probate process. Be careful about what you read about revocable trusts as much of the material you will find will not address its real value to a person with PD, as stated above.

7 Steps to Ensure a Productive Meeting With Your Estate Attorney

  1. To ensure that your personalized plan works for you, be upfront about your existing and potential PD challenges from day one.
  2. Schedule meetings for the times of day you will likely be best able to fully participate (for example, choose a time in the afternoon if your morning medications take time to take effect).
  3. Begin planning immediately; it is never too early to start.
  4. Review your overall plan at least annually. That way, you create a history of your wishes. Avoid the struggle too many face when forced to make significant decisions after their disease has progressed.
  5. Your attorney might need to take additional precautions to document your competency to execute legal documents as your disease progresses, including a letter from your neurologist about the impact of PD-related cognitive changes, your medications, etc.
  6. Request or prepare an agenda in advance of every meeting. Have someone accompany you to take notes.
  7. Prepare an action list of specific steps after each meeting.

What Should I Know About the New Tax Rules?

The new tax law currently in effect has changed charitable giving rules. The good news is that you can still give to your favorite non-profits. The charitable impact is broken down below:

  • A handful of expenses are eligible to be deducted from your overall taxable income on your tax return. These include real estate taxes, mortgage interest and charitable contributions. Still, two-thirds of taxpayers choose the standard deduction instead of itemizing out the deductions stated above.
  • If your itemized deductions did not total $12,000 (for a married couple), you would choose the standard deduction ($12,000). With the new tax law, the standard deduction is doubled to $24,000.
  • Tax experts predict only five to ten percent of taxpayers will now choose to itemize their deductions. Everyone else will be happy with the larger standard deduction.

There are some creative ways people can still benefit from donating to charity. Donating $100,000 to a donor advised fund (DAF) would qualify as a deduction from that year’s taxes. A DAF can trickle out slowly and may be used to contribute to a charity or a cause over the course of a decade. This December 2017 New York Times article describes how to write off donations under the new tax law, using a term called bunching, where a taxpayer can bunch their donations together. Visit Parkinson.org for more information about planned giving.

Category: 
Tips for Daily Living
Date: 
Mon, 02/05/2018
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