In This Issue
Dividing Family Possessions Before Death A Good Idea 
Who should have grandma's dining room table or diamond ring? How should family photos be distributed? Dividing up heirlooms can be a touchy subject. If you leave the decision until after you die, your children may end up fighting over possessions. If your will divides up belongings without an explanation as to why one child gets one thing and another child gets something else, your children could end up with hurt feelings. To avoid these scenarios, plan ahead and
talk it over with your children (or other heirs). By bringing them in to the conversation, you can make things easier for them later.
Every family handles the division of assets differently and you need to figure out what will work best for your family. Some families want heirlooms to be divided equally. Others feel that one child may need a little extra. The important thing is to discuss it with your children so they understand the decision-making process. These discussions are also a good opportunity to share memories and stories about the heirlooms. You get the opportunity to explain why something may be important to you, and you can find out what items are important to your children. You may think your oldest daughter wants your tea set, only to discover that the tea set has no meaning to her and she really wants grandma's quilt. There are several ways to divide family possessions. One option is for you to pick who gets what. If you do this, take into account your children's interests. Another option is to ask your children what they want. If there are items that more than one person wants, you can all sit down to discuss a solution. Alternatively, you can do a round robin, where each child gets a turn picking something. It might help to separate sen timental items from valuable items. You can ask your children to choose items off of each list. The University of Minnesota Extension Service has developed a number of educa tional resources to help families make more informed decisions about passing along personal belongings. For example, the following website is very helpful: http://yellowpieplate.umn.edu/indexB.html
An executor has many responsibilities
Being the executor of an estate is not a task to be undertaken lightly. This person has the responsibility of managing the administration of a deceased individual's estate. The time and effort involved will vary with the size of the estate. But even an executor of a small estate will have important duties that must be performed correctly, at the risk of being liable to the estate or the beneficiaries. The executor is either named in the will, or is appointed by the court in the absence of a will. You do not have to accept the position of executor even if you are named in the will. The average estate administration takes one year, though you won't need to work full time on it. All this can be a lot of work, but remem ber that the executor is entitled to compensation, subject to approval by the court. Keep in mind that the compensation is counted as income, so you will need to declare it on your income taxes. Below are some of the duties you may have to perform as executor: Locate documents. If there is a will, but you don't already know where the will is or the will hasn't already been brought to court, you may need to find it among the deceased's belong ings. If all you have is a copy of the will, you may need to get the original from the lawyer who drafted it. You will also need to get a copy of the death certificate. Hire an attorney. You are not required to hire an attorney, but mistakes can cost you money. You may be personally liable if something goes wrong with the estate or the payment of taxes. An attorney can help you make sure all the proper steps are taken and deadlines met. Apply for probate. If there is a will, the court will grant you letters testamentary. If there is no will, you will receive letters of administration. This will officially begin your work as the executor. Notify interested parties. Notify the beneficiaries of the will, as well as any potential heirs (such as children, siblings, or parents who may or may not be named in a will). In addition, you will have to place an advertisement in a newspaper near where the deceased lived giving notice to potential creditors. Manage the deceased's property. You will need to prepare a list of the deceased's assets and liabilities, and you may need to collect any property in the hands of other people. One of the executor's jobs is to protect the property from loss, so you will need to assure the proper ty is kept safe. You will also need to hire an appraiser to find out how much any property is worth. In addition, if the estate includes a business, you may have to make sure the business continues to run. Pay valid claims by creditors. Once the creditors are determined, you will need to pay the deceased's debts from the estate's funds. The executor is not personally liable for deceased's debts. The estate usually pays any reasonable funeral expenses first. Other debts include probate and administration fees and taxes, as well as any valid claims filed by creditors. File tax returns. You need to make sure the tax forms are filed within the time frame set under the law. Taxes will include estate taxes and income taxes. Distribute the assets to the beneficiaries. Once the creditors' claims are clear, the executor is responsible for making sure the beneficiaries get what they are entitled to under the will or under the law, if there is no will. You may be required to sell property in order to fulfill legacies in a will. In addition, you may have to set up any trusts required by the will. Keep accurate records. It is very important to keep accurate records of everything you do. You will need to create a final accounting, which the beneficiaries must review before the distribution of the estate can be finalized. The accounting should include any distributions and expenses as well as any income earned by the estate since the deceased died. File the final accounting with the court. Once the final accounting is approved by the beneficiaries and the court, the court will close the estate. You will need to file a final report with the court and close the estate.
QUESTION. We are considering removing my mother from an Alzheimer's unit in an assisted living facility, and having her rent an apartment that she will live in along with my sister and my sister's family. My mother's funds would pay the rent and probably the utilities. I can see down the road other expenses, like maintenance on my sister's car so that my mother could get to appointments. Are these expenditures acceptable to Medicaid as a way to properly spend down my mother's assets in case she eventually does need nursing home care?
ANSWER. Payments of living expenses are fine as long as they are well documented. Your mother can also pay your sister for the services she provides. That should be according to a contract between them, and your sister must report the payments as taxable income. Under new programs in some states, it may also be possible for Medicaid to pay your sister to care for your mother. You need to consult with an elder law attorney in your state to take advantage of all of the benefits available. Finally, bear in mind that Alzheimer's is a progressive disease, and your mother may ultimately require round the clock care.
Make sure your plan beneficiary choices are up to date While many people periodically update their wills or other estate plans, they don't remember to update the designation of who will receive distributions from their retirement plans, such as an IRA or 401 (k) fund. Every year you should review your entire estate plan, and the review should include retirement plan"beneficiary designations"to make sure they aren't outdated. The following are some tips for naming a retirement plan beneficiary. Name a beneficiary Do not assume that your retirement plan will be distributed according to your will. If you don't name a beneficiary, the distribution of benefits may be controlled by state or federal law, or according to your particular retirement plan. Some plans automatically distribute money to a spouse or children. While others may leave it to the retirement plan holder's estate, this could have negative tax consequences. The only way to control where the money goes is to name a beneficiary. You may want to designate a trust as your beneficiary If your estate is more than the current estate tax exclusion ($2 million for 2007 and 2008) and a large portion of it consists of retirement plans, it may make sense to direct that the plans be payable to a trust rather than to the surviving spouse. The trust must be properly drafted to avoid tax consequences, so consult with your attorney before doing this. If you want your money to go into a trust for your children, be sure to designate the trust as the beneficiary. If you name your children, the money will go directly to them. Major life changes If you get married or have children, you may want to change your beneficiary. Also, if your spouse was your beneficiary and you get divorced, your former spouse will still be the beneficiary. Divorce does not automatically remove an ex-spouse as beneficiary. If you wish to remove a former spouse from the plan, you will have to fill out a new beneficiary designation form. Review your beneficiary designation periodically Your beneficiary may not be who you remembered it to be or it may be outdated. For example, if you named a charity as beneficiary, you will want to make sure the charity still exists. A change of beneficiary form can often be downloaded from the website of the firm holding the plan assets
The Centers for Medicare and Medicaid Services (CMS) has announced the new Medicare premi ums, deductibles, and co-insurances. The standard Medicare Part B premium is increasing by 3.1 percent to $96.40 a month, the smallest increase since 2001. Here are all the new Medicare figures: • Part B premium: $96.40/month (was $93.50); • Part B deductible: $135 (was $131); • Part A deductible: $1,024 (was $992); • Co-payment for hospital stay days 61-90: $256/day (was $248); • Co-payment for hospital stay days 91 and beyond: $512/day (was $496); • Skilled nursing facility co-payment, days 21-100: $128/day (was $124). As directed by the 2003 Medicare law, for the first time higher income benefi ciaries will pay higher Part B premiums. Below are the higher premium rates: • Individuals with annual incomes between $82,000 and $102,000 and married couples with annual incomes between $164,000 and $204,000 in 2008 will pay a monthly premium of $122.20. • Individuals with annual incomes between $102,000 and $153,000 and married couples with annual incomes between $204,000 and $306,000 in 2008 will pay a monthly premium of $160.90. • Individuals with annual incomes between $153,000 and $205,000 and married couples with annual incomes between $306,000 and $410,000 in 2008 will pay a monthly premium of $199.70. • Individuals with annual incomes of $205,000 or more and married couples with annual incomes of $410,000 or more in 2008 will pay a monthly premium of $238.40.
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