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Expressions of Faith and Values in Your Estate Plan

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For many, passing religious beliefs and values to the next generation is just as important as passing along financial wealth and tangible assets; for others, passing faith and values is even more important.  Estate planning creates many opportunities to declare, share, convey, demonstrate, illustrate, or profess, your important thoughts and feelings.. Our clients often include their beliefs and values in their estate plans, encouraged by discussions regarding professions of faith. Following this article is a link to the Memorandum Regarding Profession of Faith we provide new clients.  What follows is a brief discussion of some of these opportunities.

End-of-Life Care

In a health care power of attorney or Living Will (Advance Directive in some states), you nominate someone to make medical decisions for you in the event you cannot make them yourself. You should select someone who shares your faith and values regarding end-of-life issues or someone who will honor your wishes even if they are do not share your values. In either case, it is important to provide written instructions regarding important decisions like organ donation, pain medication (if you want to remain conscious or be fully sedated at the end of life), hospice arrangements, dementia care, even avoiding care in a specific facility. You may want to be visited by a priest, rabbi or other member of clergy, and if so, should make your wishes in that regard clear. Pregnant women may want to include their preference on medical decisions that would impact the mother and her unborn child.

Funeral and Burial Arrangements

Your faith may inform your views on burial, cremation, autopsy, and preparation of your body for disposition, such as by embalming. Your faith may inform or influence the kind of service you want (or don’t want). Some people pre-plan their funerals and include a list of people to notify (which can be helpful for a grieving family). Some even pre-pay for the funeral and burial plots to prevent their loved ones from overspending out of grief and/or guilt.  Regardless, your estate plan should include a written Right of Sepulcher, or Appointment of an Agent for Disposition of your Bodily Remains, Funeral,  Cremation, and/or Burial Goods and Services. You should also direct your agent regarding preferred cemetery, cremation provider, or funeral/memorial service provider. 

Charitable Giving

Giving to others who are less fortunate is common among people of all faiths. With proper planning, even those with modest estates can make significant final distributions to their church or synagogue, university, hospital or other favorite cause. Not only do gifts or donations at death allow you to continue supporting your favorite charities after you are gone, it will let your family know that giving is important to you – and set an example for your children or other beneficiaries for their own charitable giving.  

Organ and tissue donation can also benefit your loved ones: the gift of life and health to others can ease the grief that follows loss, and provide comfort in giving a purpose to death.  Organ and tissue donation also can make available grief counselors for those in need.  Grief counselling is rarely provided by insurance, but is often provided for free to family members of organ and tissue donation. Lifebanc provides individual grief counseling with a licensed grief therapist for donor families free-of-charge, and can arrange for Lyft rides for those within a 20-mile radius. Individual counseling is also offered via Skype.

Distributions to children and grandchildren

Taking the time to plan how you leave assets to your family lets them know how much you care about them, and is another way to convey your faith values. For example, you can provide for the religious education of your children or grandchildren. If you have younger children, you should nominate a person who shares your religious views to manage their inheritance, or will respect and follow your values. You should consider a letter of instruction to their nominated guardian with your views on the care and upbringing of young children. 

Especially if you have minor children, you will want to consider carefully the person you nominate as guardian to rear your children, and consider whether the person you nominate is  likely to be be preferred by the legal system.  You may be best advised to incentive acceptance of your nomination by third parties and the the legal system with a conditional trust.  If you are concerned, seek legal counsel who can navigate these very troubling waters. 

If your children are older and you aren’t crazy about a son- or daughter-in-law, your attorney can help you provide for your son or daughter in a way that will prevent your money from falling into the wrong hands. However, be careful about making an inheritance conditional or disinheriting a child or grandchild who marries outside your faith or doesn’t adopt your faith.  These restrictions may not be enforceable, and may be ignored by either your decision-maker or the legal system.  Discuss with counsel these limitations with an appreciation that you can't force someone to believe as you.  Generally, it is better to avoid discord in the family. The emotional scars suffered by a family at emotional, psychological,legal, and economic war are probably not the  loved ones.

Conclusion

Transferring your faith and values to your family is best accomplished over time, by letting your family see your faith at work in your life. Your involvement in religious services, charitable work, and simple treatment of others speak volumes. It’s never too late, and it's never a bad idea to speak to those with whom you may not have the opportunity during your life, such as your unborn heirs. Letting future generations know the bedrock upon which they are based is humbling, connecting, and encouraging. Regardless, speak to your family while you can. Explain what your faith means to you and how it has helped you through the difficult moments of your life. You can also write personal letters or make a video that they can keep and review long after you are gone.  Bottom line: the intangibles may be far more valuable than the stuff about which we so often focus in constructing an estate plan;

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More:

You can review the Memorandum Regarding Profession of Faith we provide new clients here. 

Note: this article was inspired by, and incorporates text and elements from this article.  

No "Claw-back" of Large Gifts Made Prior to 2025

For transfer tax purposes, the IRS has released guidance confirming that taxpayers can make large gifts from 2018-2025 (when the expanded $11.4 million-per person transfer tax exemption is in place) without fear of any kind of “clawback” if the client dies in a later year, when the exemption is lower.   This means that taxpayers can use the entire $22.8 million per-married-couple transfer tax exemption between 2019 and 2025 without any fear that they will be subject to transfer tax liability for those gifts in later years.

The 2017 tax act doubled the basic exclusion amount (essentially, the amount that can be transferred free of estate, gift, or generation-skipping transfer taxes) from $5 million to $10 million for transfers made after 2017 and before 2026.  The exclusion amounts are adjusted for inflation and assets exceeding the exclusion amount are subject to up to a 40% estate and gift tax rate. For 2018, the inflation adjusted exclusion amount is $11.18 million and in 2019, it is $11.4 million.The exclusion amount is, however, set to revert to $5 million after 2025. 

Priya Prakash Royal, author of the Bloomberg Estate Tax Blog, correctly observed:

Of course, Congress can change the law at any time and the 2017 tax act is a political hotbed. Many taxpayers will probably wait until late in 2025 to make any drastic decisions on gifting their entire exclusion amount. However, advisers should keep their clients aware of the possible changes that could be made if the House and the Senate are both controlled by the Democrats – especially if the Democrats take over the Presidency in 2020 or 2024. This may hasten the need for clients to take advantage of the increased basic exclusion amount.

IRS Changes EIN Application Policy - Requires an Individual “Responsible Party”

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The IRS announced on March 27, 2019 that the “responsible party” on applications for an employer identification number (EIN) must now be a natural person.  Individuals named as responsible party must have either a Social Security number (SSN) or an individual taxpayer identification number (ITIN).  The new requirement is intended to enhance security and improve transparency. 

An EIN is the tax identification number assigned to entities such as trusts, estates, retirement plans, LLCs, partnerships, and corporations.  An entity obtains such a number by completing the IRS Form SS-4 or an online application.  One question in the application process asks the applicant to identify the “responsible party,” which the IRS defines as “the person who ultimately owns or controls the entity or who exercises ultimate effective control over the entity.”  In cases where more than one person meets that definition, the entity may decide which individual should be the responsible party. In the past, a non-natural person, such as a trust, estate, or business entity (LLC, Corporation, or partnership) could be a "responsible party."  According to the IRS,"[t]he change will prohibit entities from using their own EINs to obtain additional EINs." 

In deciding who to list as the responsible party, the IRS encourages applicants to consider whether the party has “a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the person, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets.”  The Form SS-4 Instructions provide a detailed explanation of who should be the responsible party for various types of entities. Only governmental entities and the military are exempt from this requirement, and may continue to list non-individual entities as the responsible party.

 If there are changes to the responsible party, the entity can change the responsible official designation by completing Form 8822-B, Change of Address or Responsible Party. A Form 8822-B must be filed within 60 days of a change.

This policy will go into effect for all EIN applications submitted on and after May 13, 2019.

More:

To read an article explaining why you should consider retaining a professional to apply for and obtain a an EIN, go here.

If you are confused about what a TIN, ITIN, and/or EIN  is, go here.

Aging in Place Planning - New Geriatrics Research Offers Roadmap for Person-Centered Care

Person-centered care (PCC) is an approach to health care that puts personal values and preferences of the patient at the forefront of decision-making. Improving healthcare safety, quality, and coordination, as well as quality of life, are important aims of caring for older adults with multiple chronic conditions and/or functional limitations. Person‐centered care is an approach to meeting these aims in a way that assures the primacy of individuals’ health and life goals in their care planning and in their actual care.

Person‐centered care means that individuals' values and preferences are elicited and, once expressed, guide all aspects of their health care, supporting their realistic health and life goals. Person‐centered care is achieved through a dynamic relationship among individuals, in and out of the health care system, and others who are important to them, and all relevant providers. The required  collaboration informs decision‐making to the extent that the individual desires. See, "Implementing “Patient‐Centered Care”: A Revolutionary Change in Health Care Delivery." Person-centered care is consistent with, and one could argue, the objective of "supported decision-making," upon which Aging in Place Planning is based.  

According to an article published in the American Geriatrics Society Newsletter, two new research articles and a corresponding commentary from leaders in the the American Geriatrics Society (AGS) describe ways to make person-centered care more actionable for seniors. The study authors explain that the time is ripe for reform of senior care toward PCC: 

"The U.S. healthcare system is finally at a much anticipated and long‐needed tipping point. For more than half a century, the predominant paradigm for organizing and financing health care in the United States has been based on [two] 2 major factors: care focused on organ systems and reimbursement based on volume rather than quality of service. This system has too rigidly driven what can be done and reimbursed and does not foster care that addresses disorders of multiple organ systems (multimorbidity) and the effect of multimorbidity on overall functional ability, considerations that are critically important in the care of older people. Given recent developments in our healthcare system, the time is ripe for geriatricians to leverage their unique expertise to advocate for a person‐centered approach to healthcare design and delivery that encourages healthcare professionals to organize care around patient priorities, rather than an outdated taxonomy and payment system."

"Making person-centered care a reality for older adults with complex care needs will take time and effort, including significant research to move promising approaches from the lab bench to the clinic,” wrote William B. Applegate, MD, MPH, AGSF, Editor-in-Chief of JAGS and lead author of the editorial addressing the two new studies (DOI: 10.1111/ jgs.15536). “This work is helping test innovative strategies, which will move us toward a broader and more balanced approach to care.”

Though critically important, eliciting and documenting personal values remains uncommon in routine older adult care, particularly for people with multiple health concerns that complicate pinpointing broader health priorities. In “Development of a Clinically Feasible Process for Identifying Patient Health Priorities” a research team describes Patient Priorities Care (PPC), a novel process to identify health goals and care preferences for older people with multiple health conditions. Expertly trained facilitators help older adults and caregivers work through health priorities sensitively, in a process that could be completed across just two sessions totaling 45 minutes or less. According to the research team:

 “Results of this study demonstrate that healthcare professionals can be trained to perform the patient priorities identification process as part of their clinical encounters…[through a process that is] rewarding and enjoyable but requires training and formal feedback.”

A separate team put the PPC processes into practice, reporting their findings in “Feasibility of Implementing Patient Priorities Care for Patients with Multiple Chronic Conditions” Their study involved using Patient Priorities Care among more than 100 patients working with nine primary care providers and five cardiologists in Connecticut. While researchers still hope for improvements in the time needed to complete the process and in avenues for embedding it within practice workflows, they noted that the vast majority of patients returned to their physician with clear goals and care preferences. Follow-up discussions between patients and providers suggest that moving from disease-based to priorities-aligned decisions is “challenging but feasible.”

The foregoing work represents only the latest steps forward for high-quality, person-centered care for older people, and also builds on an even lengthier legacy at  AGS.  Implementation of these strategies for all seniors, even those receiving care outside of institutions, while aging in place, will be a welcome development.