ESTATE PLANNING UPDATE

May 2005

Several fairly recent changes in the laws impacting one's estate plan have been enacted or are under consideration.  Recent court battles over the right to die have made headline news.  While not all of the legislative changes have been finalized (and may never be finalized), enough changes have occurred that we feel compelled to advise you of a few of these which may impact you or your family in the future.

Living Wills

We have all recently witnessed the tragic experience encountered by the family of Terri Schiavo.  It is reminiscent of the same unfortunate dispute which arose several years ago regarding Karen Quinlan.  Fortunately, the legislatures in all 50 states have provided a means by which such disputes might be minimized.  Executing a Living Will, while not an absolute guidance and direction to your guarantee that conflict will not arise, enable you, while you are alive and competent, to give guidance and direction to your family and your doctors and hospitals, as to your personal choices and wishes as far as your treatment at life's end.  A Living Will, coupled with a health care power of attorney and a general power of attorney, can avoid many of the stresses and difficult decisions which families encounter when one is incapacitated and unable to participate in making their own decisions regarding health care and their own financial affairs.  We at Dietze and Davis feel so strongly in the value of each individual having these simple, basic tools that we are encouraging all of our clients to have these documents prepared and executed if you have not already done so.

Health Care Power of Attorney

For many years, we have encouraged clients to execute a health care power of attorney by which you designate someone as your agent to make health care decisions for you if you are incapacitated.  Congress recently enacted the Health Insurance Portability and Accountability Act ("HIPAA").  This Act was aimed at insuring the privacy and security of one's health care information.  In essence, it provides that no health care provider (i.e. doctors or hospital personnel) can disclose or discuss your medical condition with anyone but you, unless you authorize them, in writing, to make that disclosure.  If you are suddenly incapacitated, you may not be able to give the necessary written consent.  In that case, the doctors and hospitals may not be able to disclose information regarding your medical condition to your health care agent.  Newer forms of a Health Care Power of Attorney contain a waiver of the privacy restriction contained in HIPAA, thus allowing doctors and hospital personnel to disclose and discuss your medical condition with your designated agent.  If your Health Care Power of Attorney was executed prior to 2003, we suggest you contact us to have it updated.  Your agent should be given an original of the power of attorney, and he or she and other family members should all have an understanding of who has been designated as your agent and where originals of this important document can be found.

Estate Tax Planning

Congress is presently considering changes to the Estate Tax laws, or even the eventual repeal of the Estate Tax.  Until the dust settles and we find out what Congress ultimately does, it makes it difficult to do much in terms of long range estate tax planning.  However, over the last several year, Congress has gradually increased the amount or value of assets which can be bequeathed to the next general free of Federal Estate Tax.  Last year and this year, that amount is $1,500,000.  In 2006 and for the following two years, the amount will be $2,000,000.  If your present Will or Trust provides for a tax-saving split of assets when the first spouse dies, with the exempt amount going into a family trust, and if the combined net worth of both of the spouses is less than the exempt amount, it may be possible to simplify your Will or Trust by eliminating the complex provisions dealing with a family trust, and to avoid the need and expense of administering a trust throughout the lifetime of the surviving spouse.  The same will be true if Congress repeals the Estate Tax or establishes and even higher exemption amount.

If we can assist you with any of the foregoing, please contact either Joel Davis, David Thrower, or their legal assistant, Lisa Taylor.