Keep Health Care Instructions on Your Phone

The estate planning document which addresses your health care wishes when you become incapacitated is referred to in Connecticut as your “Health Care Instructions”. This document is also known as a “Health Care Proxy”, “Advance Medical Directives” or “Health Care Power of Attorney” in other states. The document typically states who you have chosen as your representative when it comes to making medical decisions on your behalf. These decisions often include electing a certain type of surgery, medicine changes, therapy or discharge planning. It grants your agent access to your medical information, which is normally barred to third parties under the Health Insurance Portability and Accountability Act (HIPPA). In most cases, it also contains “Living Will” language, which lets your medical team know that you do not want to be kept alive in a genuinely hopeless situation.

In the world of your typical estate planning documents, this is the one potential “emergency” document, meaning that it may be necessary for family or friends to access this document immediately, without any warning. No other estate planning document really falls into this category. Therefore, making sure that the important people in your life have easy access to this document can be vitally important.

Many doctors and hospitals prefer to see original, hard copies of this particular document. Since medical providers can be very liability averse, they tend to get nervous when handed a photocopy of this particular legal document. Therefore, ideally, you should have several original copies of your health care instructions and they should be spread out amongst your health care agents, your doctor, your estate planning attorney and your own records.

I have some clients who keep an original health care document in the glove compartment of the car since their car tends to be wherever they are. However, there is one item that usually follows us everywhere these days, and that is (obviously) our phones. Therefore, it’s a good idea to keep a photo of each page of your health care document on your phone. Again, an original paper copy would be better, but in a pinch, a .jpg file is 100% better than nothing at all.

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship. If you need legal advice, consult with a lawyer instead of a blog.

Estate Tax: One Less Thing to Worry About

When I started practicing in 1997, the estate tax exemption was $600,000 and the top estate tax rate was a whopping 55%. This meant that there was a considerable estate tax to pay if you died with an estate larger than $600,000. That sounds like a lot, but remember that the value of your estate includes real estate and life insurance proceeds. So it was relatively common for estates to trigger the tax back then, which prompted some fancy footwork with my clients’ estate planning prior to death in order to mitigate the tax bite.

Well, times have changed.

The federal estate tax exemption is now a jaw-dropping $11.4 million and the top tax rate is down to 40%! And even if you are in the tiny percentage of the U.S. population that actually exceeds that figure, they only tax the dollars above that $11.4 million threshold.

Additionally, if you are a married couple you can take advantage of an estate tax concept called “portability”, which allows your surviving spouse to use any unused portion of your exemption. For example, if a husband dies with a $3 million estate, then he did not use $8.4 million of his exemption. That unused exemption can be shifted over to his spouse, and now she can pass away with an estate as large as $19.8 million with no estate tax liability. Put another way, a married couple essentially enjoys a $22.8 million estate tax exemption!

Now, of course, Connecticut has its own state estate tax. The Connecticut exemption isn’t quite as generous as the federal exemption, but it still ain’t bad. The exemption is $3.6 million this year, $5.1 million in 2020, $7.1 million in 2021, $9.1 million in 2022, and then it catches up with the federal exemption in 2023.

All of this means that virtually none of my clients are doing estate tax planning anymore. Instead, they’re focused mostly on minimizing probate exposure and generally making sure things go smoothly for their loved ones if they pass away.

There are plenty of things to fret over these days, but having your estate decimated by a huge estate tax is, thankfully, no longer one of them.

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.