San Diego Elder Law

While it is important to have an updated estate plan, there is a lot of information that your heirs should know that doesn't necessarily fit into a will, trust or other components of an estate plan. The solution is a letter of instruction, which can provide your heirs with guidance if you die or become incapacitated.

A letter of instruction is a legally non-binding document that gives your heirs information crucial to helping them tie up your affairs. Without such a letter, it can be easy for heirs to miss important items or become overwhelmed trying to sort through all the documents you left behind. The following are some items that can be included in a letter:

• A list of people to contact when you die and a list of beneficiaries of your estate plan
• The location of important documents, such as your will, insurance policies, financial statements, deeds, and birth certificate
• A list of assets, such as bank accounts, investment accounts, insurance policies, real estate holdings, and military benefits
• Passwords and PIN numbers for online accounts
• The location of any safe deposit boxes
• A list of contact information for lawyers, financial planners, brokers, tax preparers, and insurance agents
• A list of credit card accounts and other debts
• A list of organizations that you belong to that should be notified in the event of your death (for example, professional organizations or boards)
• Instructions for a funeral or memorial service
• Instructions for distribution of sentimental personal items
• A personal message to family members

Once the letter is written, be sure to store it in an easily accessible place and to tell your family about it. You should check it once a year to make sure it stays up-to-date.

In October, Medicare beneficiary David P. (not his real name), was shocked to see a charge of more than $1,000 on his credit card statement.  The charge was for the complete cost of renting a machine he needed to help him recover from knee replacement surgery.  The equipment is covered by Medicare, so Mr. P. thought he would be responsible only for his 20 percent co-payment.

But it turns out that the equipment supplier who rented him the machine never informed him that it is not a registered Medicare provider and that therefore Mr. P. may be responsible for the full cost of the rental.

"It is a problem that beneficiaries often do not know that they are using a non-participating supplier," says Alfred J. Chiplin, Senior Policy Attorney at the Center for Medicare Advocacy and co-author of The Medicare Handbook (Wolters Kluwer).

The good news is that Chiplin says a new Medicare program that has been launched in a few areas of the country will keep people like Mr. P. from unwittingly being liable for the full cost of such "durable medical equipment (DME)," which includes oxygen equipment, wheelchairs, walkers, and similar devices.

In the few areas of the country with the new program, which is called the “Medicare DMEPOS Competitive Bidding Program,” Medicare beneficiaries who expect any reimbursement may rent or buy certain durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) only from suppliers who contract with Medicare.  In addition, non-contracting suppliers are required to tell Medicare beneficiaries that they don't work with Medicare and the beneficiaries must sign a waiver form stating they are aware of this.  If the supplier fails to do this, the beneficiary is not liable for the charge.

Chiplin told ElderLawAnswers that equipment suppliers in the DMEPOS program areas are getting better at providing Medicare beneficiaries with the required notice that they are not contracting providers, and he says Medicare is stepping up its fraud and sanctions activity. (For more on the DMEPOS program, click here.  To see if your zip code is in a coverage area, click here.)

Seek Medicare Reimbursement Anyway

But in the vast majority of the country not currently covered by the DMEPOS program, it is unclear whether suppliers who don't work with Medicare are under any obligation to alert Medicare beneficiaries of this fact.  The best defense, then, is for beneficiaries to always make certain the supplier has a relationship with Medicare – something Mr. P. had no idea he should do.

If you are caught in the situation Mr. P. found himself in, you can submit your bill from the supplier and seek as much reimbursement as you can get, Chiplin says.  (Mr. P. is still awaiting word from Medicare.)

"Once the DMEPOS program is fully implemented, beneficiaries should experience a greater reduction in DME out-of-pocket expenses as they will be required to use certified and registered DMEPOS providers in order to obtain Medicare-covered items," Chiplin says.

"It’s always best for beneficiaries to use certified suppliers and those who are Medicare participating suppliers," Chiplin counsels.

Once you've created an estate plan, it is important to keep it up to date. You will need to revisit your plan after certain key life events.

Marriage

Whether it is your first or a later marriage, you will need to update your estate plan after you get married. A spouse does not automatically become your heir once you get married. Depending on state law, your spouse may get one-third to one-half of your estate, and the rest will go to other relatives. You need a will to spell out how much you wish your spouse to get.

Your estate plan will get more complicated if your marriage is not your first. You and your new spouse need to figure out where each of you wants your assets to go when you die. If you have children from a previous marriage, this can be a difficult discussion. There is no guarantee that if you leave your assets to your new spouse, he or she will provide for your children after you are gone. There are a number of options to ensure your children are provided for, including creating a trust for your children, making your children beneficiaries of life insurance policies, or giving your children joint ownership of property.

Even if you don't have children, there may be family heirlooms or mementos that you want to keep in your family. For more information on estate planning before remarrying, click here.

Children

Once you have children, it is important to name a guardian for your children in your will. If you don't name someone to act as guardian, the court will choose the guardian. Because the court doesn't know your kids like you do, the person they choose may not be ideal. In addition to naming a guardian, you may also want to set up a trust for your children so that your assets are set aside for your children when they get older.

Similarly, when your children reach adulthood, you will want to update your plan to reflect the changes. They will no longer need a guardian, and they may not need a trust. You may even want your children to act as executors or hold a power of attorney.

Divorce or Death of a Spouse

If you get divorced or your spouse dies, you will need to revisit your entire estate plan. It is likely that your spouse is named in some capacity in your estate plan -- for example, as beneficiary, executor, or power of attorney. If you have a trust, you will need to make sure your spouse is no longer a trustee or beneficiary of the trust. You will also need to change the beneficiary on your retirement plans and insurance policies.

Increase or Decrease in Assets

One part of estate planning is estate tax planning. When your estate is small, you don't usually have to worry about estate taxes because only estates over a certain amount, depending on current state and federal law, are subject to estate taxes. As your estate grows, you may want to create a plan that minimizes your estate taxes. If you have a plan that focuses on tax planning, but you experience a decrease in assets, you may want to change your plan to focus on other things. For more information about estate taxes, click here.

Other

Other reasons to have your estate plan updated could include:

• You move to another state
• Federal or state estate tax laws have changed
• A guardian, executor, or trustee is no longer able to serve
• You wish to change your beneficiaries
• It has been more than 5 years since the plan has been reviewed by an attorney

Contact your elder law attorney to update your plan.