I always find it interesting to see how other cultures and countries approach elder care. Several news stories came out recently about China’s plan to support its aging population.

Family ties are a tremendous part of Chinese culture, and for centuries, Chinese families have come together to care for relatives young and old. But just last year, on Seniors Day, one social scientist noted that the responsibility of elder care was shifting towards the government.

China currently has 167 million people over the age of 60, 19 million of whom are over the age of 80. Half of them live alone, though the number is closer to 70 percent in the cities.

While it was often considered a moral obligation to care for your aging parents, the country’s economic boom bringing time-consuming jobs and changing migration patterns have weakened familial ties in both rural and urban areas.

But this new social problem is clashing with an old social problem.

China’s one-child policy, in place since 1978 as a means of controlling the population growth, has created a generation without siblings.

Today, this means that there are fewer workers, and thus fewer incomes, to support aging relatives. A typical household then may be supporting 3 nuclear family members (2 parents and 1 child), as well as 4 grandparents (husband’s two parents and wife’s two parents). And, longevity is even imposing a greater burden – called the 4-2-1- Problem – on young people. A single adult child could be responsible for supporting his or her two parents over the age of 60 as well as any living grandparents.

In response to calls for greater government aid to the aged, China is looking to codify a practice that used to be a mere cultural tradition. The proposed law would give the elderly a right to sue their children in court to enforce their right to be physically and emotionally cared for.

While it’s a praise-worthy law, Chinese lawyers are already saying it lacks teeth and may be unenforceable because it violates personal liberty.

James D. Perry

The story of William Roberts Lindsay is a sad, lonely, and slightly bizarre one.

Lindsay amassed a fortune as a successful investor in Los Angeles and retired to Las Vegas in his mid-50s for the desert climate and low tax regime. He was a bit of a recluse – he never married and named his barber, Elton Marvin, and his pet pug, Midget as his closest friends.

When he died, he left only Midget and some dog treats to Marvin and the remainder of his estate he left to Scotland.

Yes, Scotland. The land of William Wallace, bagpipes, castles, and kilts.

For at least the last 10 years, Lindsay had been supporting Scottish interests. He funded the William R. Lindsay chair in public health at Glasgow University, and two years ago he made a $4 million donation to the National Trust for Scotland, a charitable organization dedicated to preserving Scottish heritage and history. Interestingly enough, he had previously been turned down for another Scottish academic chair because he was believed to be a “crank.”

Yet, Lindsay had never been to Scotland. His entire vision of the country was shaped by the movie Brigadooon, based on the Broadway hit musical of the same name, and staring Gene Kelly as one of two Americans hoping to discover a hidden Scottish village that emerges from the mist just one day every 100 years.

But Lindsay’s ancestors hailed from Scotland and that connection was the last important thing to him, imaginary though the impression was.

He bequeathed his estate – minus the dog – to the NTS before shooting himself in his home in November at the age of 79.

Bi aig fois, a’ Uilleam. (Rest in peace, William.)

James D. Perry

Young, single people are the least likely demographic to have an estate plan.

Estate planning is primarily thought of as a means to distribute personal and real property upon death. Often, young people haven’t yet acquired a great deal of property, and they figure anything they do have will go to their living parents or siblings. Or, they may be holding off on planning their estate because of the eventual hope of getting married and expanding their family.

But estate planning deals with a lot more than just distribution of assets, and the most responsible thing to do is to prepare for the unexpected circumstances that can occur while working towards the life you want.

A strong estate plan also includes a durable power of attorney and an advance directive for health care. These documents are important because they dictate who will make decisions for you in the event you are incapacitated.

If you end up in the hospital because of a sudden illness or traumatic accident, bills will still come due, taxes must be filed, and financial decisions must be made. A durable power of attorney gives decision-making power to a trusted friend or family member during your incapacitation.

And, while you’re in the hospital, an advance directive for health care gives your designated agent the power to carry out your personal wishes for medical and life-saving treatment and end-of-life care.

In that same vein, singles should consider purchasing a disability insurance plan because they don’t have the second income of a spouse to fall back on in the event of an accident or disability.

Nothing incapacitates a person like a car accident or sudden illness – and no age group is immune to either – but responsible estate planning can prepare your life for your worst-case scenarios.

James D. Perry

Finding a quality long-term care facility can be a daunting task. The options are many, so how do you know if one is better than any other?

Starting in the New Year, you may be getting some help.

In 2011, California nursing homes will be required to publicly post their federal ratings and information explaining the ratings. They will also have to tell patients and family members how to obtain information about the nursing home’s state licensing record from the California Department of Public Health’s website.

The federal Centers for Medicare and Medicaid Services oversee the rating system. Facilities are inspected annually and judged on a number of licensing factors, including the quality of medical care, staffing levels, sanitation, and bedsore mitigation.

The star system went into effect in 2008, but California is the first state in the nation to mandate posted rankings about the quality of care in nursing homes. Currently, California has 1,235 federally rated facilities, of which 195 got the lowest rating – one star – and 187 got the highest rating of five stars.

The ratings are not perfect, though. Patient advocates and nursing home officials have found fault with the system and are appealing to the federal government for reform.

California Advocates for Nursing Home Reform initially supported the state legislation that mandated the public disclosure of the star ratings, but the group is concerned that the system encourages nursing home administrators to cover up their facilities’ flaws to boost their ratings. And officials with the California Association of Health Facilities say that ratings tend to skew against facilities with larger populations of chronically ill residents.

Imperfect though they may be, the star system at least provides a starting point for patients and families wading through their long-term care choices.

James D. Perry

The president and Congress have finally agreed on a tax law…for now. President Obama signed a tax plan that includes new guidelines for the estate tax, but only for the next two years. Congress will have to revisit the tax plan before 2013.

The law includes a historically high exemption of $5 million per individual, and anything over that threshold will be taxed at a historically low rate of 35 percent. Furthermore, the law once against marries the gift tax to the estate tax, so the exemption and tax rate for gifts made after Dec. 31, 2010 will be equal to the applicable estate taxation.

Additionally, the estates of post-Dec. 31, 2010 decedents have the option to transfer any remainder of $5 million exemption to their surviving spouse.

But what matters for the estates of those who died this year is the decision between taking advantage of the zero-percent tax rate of 2010, or electing to file the final tax returns under the new 2011 law.

While a zero-percent tax rate is awfully attractive, under the 2010 law, heirs are required to pay capital gains on inherited assets over $1.3 million, or surviving spouses inheriting over $3 million. Under the 2011 law, these inheritances would be covered under the $5 million exemption.

Any change in rules can be confusing, but if you have questions about handling a 2010 estate or planning your estate for the next two years under the new tax law, I urge you to get in touch with your estate planning attorney.

James D. Perry

2010 has been a financially rough year for much of America. But many non-profit organizations still say they’ve seen a small increase in charitable giving this year over 2009 numbers.

If you’re in the financial position to give this year, you have a lot of opportunities to do so. Solicitations are everywhere, including direct mail, in churches and community centers, and outside shopping malls and stores. The question then becomes how to divvy up your charitable resources.

The New York Times’ Ron Lieber suggests you first examine “Why” you want to give before tackling the “Where” and “When.”

Why do you give? Do you have a personal connection to a particular charitable cause or feel a responsibility for supporting an organization’s mission? We can all agree that breast cancer research is important, but if it hasn’t touched your life, perhaps you’d rather support animal welfare or after-school education programs.

Once you’ve decided what causes you want to support, you’ll need to determine exactly to what organizations you’re going to give.

Do your research on charitable organizations to see who will use your money most efficiently. Websites such as Guide Star and Charity Navigator provide givers with tools to make informed decisions and tips for charitable giving.

Finally, if you want to give, don’t make a hasty decision just because the deadline for 2010 charitable tax deductions is looming. If you feel you can’t make an informed decision this month, you might want to just roll over your charitable budget into 2011 where you can spread the wealth throughout the year.

‘Tis the season for giving.  But, give with purpose and put your money to good use.

James D. Perry

There has been much news in recent days about the need for Long Term Care (LTC) Insurance and the recent reports of large increases in premiums and big insurance companies announcing that they will not sell any new policies.

The subject deserves more time and space than one blog article, so today I will touch on the need. I will follow this blog next week with interviews with Long Term Care Insurance Brokers and Financial Planners discussing the problems the LTC insurance industry is going through.

People are living longer these days, but the human body still continues to break down.  As such, more and more seniors – an estimated 9 million in 2008 – need long-term care.  But do you need long-term care insurance?  It’s a smart way to defray the enormous costs of care, but really, it depends.

Premiums this year cost individuals an annual average of $2,180, but the average rate this year for a private nursing home room is $229 per night, or $83,585 a year, and the average rate for a home healthcare aide is $21 per hour.  The New York Times had an article last week (“Ignore Long-Term Care Planning at Your Peril”) reporting that some major long-term care insurance companies are looking to raise premiums by as much as 40 percent.  And, the longer you wait the more likely rates will rise, and the older you get, more likely you’ll develop a so-called pre-existing condition that affects plan availability and premiums.

There is a misconception that Medicare will cover long-term care costs.  While Medicare may pay for short-term nursing home stays in certain circumstances (for example, while you are convalescing after surgery or undergoing rehabilitation after a qualified hospital stay), it will not pay for long-term care.  And, Medicaid will cover nursing home costs, but only after you’ve expended most of your own finances, and then your access and options in care providers becomes severely limited.

The new Class Act, passed under the health care bill, provides long-term care insurance through the government, but enrollment doesn’t start until 2012 and benefits aren’t likely to exceed $100 a day and then only after you’ve paid premiums for 5 years prior.  However, it may be easier to qualify under the Class Act, as some private plans won’t cover care for certain pre-existing conditions.

One up-side is that there are tax breaks available for qualified long-term care insurance premiums where benefits received under such policies are tax-free.

So, how likely are you to need care to make purchasing an insurance plan worth it?  It largely depends on your family’s health history and your financial situation.  If you’re at risk for a serious illness that requires regular care, and you want to leave something to your children or grandchildren upon your death, it’s probably smart to at least investigate the specifics of a LTC policy.

Next time, update on the Long Term Care Policies and Insurance Companies.

James D. Perry

You may have seen the commercials. Medicare fraud costs the taxpayers billions of dollars every year, and the government is working to crack down on fraud.

A recent New York Times article gave highlights from some of the more outrageous and costly Medicare scams: a crime syndicate engaged in identity theft billed the government for more than $100 million in services supposedly rendered by over 100 bogus health clinics; and a chain of mental health clinics claiming $200 million in group therapy sessions that authorities say were either unnecessary or never provided.

But, frauds like these are perpetrated by ambitious criminals.

A senior citizen is more likely to fall victim to some unscrupulous individual collecting Medicare numbers by offering free medical screenings or trying to sell them unnecessary or not-covered medical supplies that they will never receive. Instead, the scammer bills the government under the patient’s Medicare number and pockets the reimbursement.

Preventing Medicare fraud is a lot like preventing identity theft.

Just as you protect your bank account and credit card numbers, you need to protect your Medicare card – or “Guard Your Card” as the fraud-prevention campaign goes. This means carefully reviewing your credit report and your Medicare statements for suspicious activity.

Your statements are available at MyMedicare.gov. You only need to set up a log-in ID and password for the secure website. Seniors who are not web savvy may need help in this area, and only they can authorize their children or caretakers to assist them with this.

Also, beware of freebies. Anyone offering free services does not need your Medicare card number, nor do they need your Social Security Number. If you mysteriously receive free medical supplies or services, report it to Medicare immediately.

Scammers are likely out in force around this time of year because, beginning Nov. 15, Medicare recipients can enroll in Medicare or change their plans. There will be a lot of fake plans out there, so be sure to check the plan finder under Medicare.gov.

If you suspect Medicare fraud, report it immediately by calling 1-800-HHS-TIPS (1-800-447-8477) or email HHSTips@hhs.gov.

James D. Perry

Over my years of practice, I’ve seen an increase in the number of women looking to create an estate plan.

Estate planning is important for women because they have a greater likelihood of ending up alone later in life. Women have a longer life expectancy than men and tend to marry older men often making them the final word on disposition of family assets.

In my own case, I had the good fortune to convince my wife Patricia to marry me, despite the fact that I am six years older. As a bonus for me, she loves to cook and bought me my first order of “Grecian Formula” which “restores lost color to graying hair naturally.”

Deborah Jacobs, writing for Forbes Magazine, suggests that women ask themselves a few important questions to help them craft their best estate plan, inclusive of powers of attorney, guardianship, life insurance, wills, and trusts.

1. Whom can you trust? You should have a durable power of attorney giving a trusted family member or close friend the legal authority to make decisions for you should you become incapacitated due to mental illness, medical emergency, or accident.

2. Who would raise your children? It’s often the hardest question to ask because the thought of orphaning your children is so painful.  But not asking the hard questions can leave your children at the mercy of the court.  If you haven’t named a guardian, the court will need to name one.  This can lead to a custody battle between relatives wanting to take the children, or, the reverse, no one may want to take them.

3. Do you have life insurance? Life insurance can help replace lost income when a spouse dies, or it may cover state or federal estate taxes.  If you have life insurance through your employer or a pension plan, be sure to keep your beneficiary forms updated.  You may want to designate a family member as the owner of the policy to avoid the proceeds being taxed as part of your estate.

4.  Do you have assets of your own? The estate tax applies to each person individually.  California is a community property state, so property that is used jointly in the marriage (e.g., the marital home or a joint bank account) is presumed to be community property.  If you are trying to balance the tax burden, you may need to transfer title to one spouse individually.  Otherwise, you may be rebutting the community property presumption in court.

5. Is there money in the bank? If your spouse dies, you will not have access right away to his individual bank accounts.  You want to be sure that there is enough money in joint accounts or separate accounts to which you have access to cover immediate expenses until the spouse’s estate is settled.

6. Should you shed assets to save taxes? Before you start giving away the farm, you need to make sure you have enough money for yourself to live and pay emergency or final expenses.  You can give away as much as $13,000 individually per year tax free, $1 million over your lifetime.  This year is an anomaly in estate taxation (0% on estates, 35% on gifts), but starting Jan. 1, 2011, unless Congress acts, you will be paying the death tax and the gift tax at a rate of 55%.

There are a great number of estate planning and financial planning vehicles you can employ to transfer assets prior to and after death and to lower your tax bill.  Take stock of your goals and your financial reality, and then talk to your estate planning attorney.

James D. Perry

We never read about a perfect celebrity estate plan. An estate plan that can smoothly transfer assets is not newsworthy, and happy relatives rarely sue.

From what I have read, esteemed film actor Dennis Hopper made every attempt to create a solid estate plan. Unfortunately, his name and estate plan have been in the papers because of a singular unforeseen problem: one angry widow.

Early this year, Hopper filed for divorce from his wife of 18 years, Victoria Duffy. She responded by filing a complaint in court claiming Hopper had cut her out of his will at the behest of other family members. She claimed he lacked the mental capacity to change his will, a charge his doctors emphatically denied despite his declining health due to inoperable and terminal prostate cancer.

Because Duffy and Hopper were still married at his death, she stands to inherit a quarter of his sizeable estate and a $250,000 life insurance property, but a clause in their prenuptial agreement may strip her of all inheritance. According to the document, the couple must have been “married and living together” on the date of Hopper’s death.

The prenuptial agreement categorized any property purchased or acquired by Hopper during the marriage as separate property. Just prior to his death in May, Hopper signed an affidavit under oath accusing Duffy of stealing more than $1.5 million in valuable artwork from him – artwork that was considered his separate property.

Hopper had created a revocable living trust and funded it with assets including works from his art collection. Now his trust is suing Duffy, asking a court to compel her to return the property so it can be properly distributed to his named beneficiaries.

Hopper took the responsible steps executing a will, creating a trust and funding his trust. But, all the planning in the world won’t deter a person with enough money for a lawyer and a nasty grudge.

James D. Perry