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Mark Cornwall: Prospects Are Rosy for 2010
There are these few days between Christmas and New Year’s Day when it’s OK — in fact, necessary — to reflect on the year gone past and plan for the future.
It’s so easy to be pessimistic or remorseful over the events of 2009, whether personal or public. Anyone can do that. But the purpose for reflection is to learn from your misadventures or omissions, find the wisdom from your mistakes and use it to plan a prosperous new year.
Prosperity starts with your moral virtue, not the strength of the dollar — although the latter makes the virtue come much easier. I write an article every week for Noozhawk about the virtues of estate planning, and every day I run into someone who doesn’t understand them.
For example, I had a very good friend tell me about how a friend of his retired a couple of years ago, and two months later his wife got cancer. She was eligible for Medicare, but knowing the medical cost of long-term care, she divorced her husband (they remained together) because she didn’t want him stuck with the medical bills upon her death, and that saved him $170,000 after she died. He thought that was very clever.
I asked him the same question I would like to ask many other friends: “Do you ever read any of the articles I send you in Noozhawk?” I have written several articles that relieve this same fear for every couple, which is that Medicare does not collect the medical cost for long-term care for the first spouse or the second spouse until after the second spouse dies. Medicare is actually a loan on the couple’s estate, so it’s the children of the estate who get hit with the repayment of what’s left in their parents’ estate.
Good estate planning to eliminate the $170,000 payback under the new law must start at least five years before the time it’s needed, because that’s how far they “look back” to see how money and assets of the estate have been dispersed to become eligible for the program in the first place. Under no circumstances, however, is the remaining spouse going to be stuck with the bill. Now, is that worth getting a divorce? Before you answer, remember the wife owned 50 percent of the community property, so who knows how the scenario above worked out?
Should the children get the $170,000, or is it more virtuous to pay back the amount to Medicare? That’s the type of question only you can answer.
There are a lot of questions you should be asking yourself regarding what may or may not happen in 2010. Many of them are under your control. Unfortunately, for the topic of estate planning, the two biggest issues for 2010 are still up in the air mainly because of the hot air blown into them: 1) the new repeal of the repeal of the estate tax and 2) the new health-care act.
How can you plan without knowing the outcome? It’s actually quite easy, because the language used in your estate plan is broad enough and inclusive enough to get you the best deal — regardless of the new law.
As for the new health-care plan, we know this much: With no option plan, there will be no competition pressuring the insurance companies. This is good for insurance companies and doctors, the same as not extending the age for Medicare eligibility to 55. It’s also interesting to note that the American Medical Association only backed this plan because it was threatened with Medicare payments to doctors being lowered 20 percent.
It sure makes me wonder why Democrats and Republicans can’t just get along. That is about the rosiest thing I can think of for the new year that is out of my control. After that, nothing was ever achieved without enthusiasm. I read that on a plaque on Hank’s Hill, overlooking the ocean.
— No opinion herein is a “marketed opinion” and no information provided herein can be used to avoid tax penalties for which the taxpayer would otherwise be responsible. Mark S. Cornwall has lived in Santa Barbara for more than 30 years and practiced law here for 25 years. He is accepting new clients. His book, Estate Planning: The Heroes Way for Baby Boomers, can be purchased via his Web site, www.MarkCornwall.com; Amazon.com; or locally at Chaucer’s and Borders bookstores. To schedule an appointment, contact him at .(JavaScript must be enabled to view this email address) or 805.845.7558.
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» on 12.30.09 @ 12:35 PM
Great articles Mr. Cornwall. I’ve enjoyed reading them throughout 2009 and I look forward to your wisdom in 2010.
» on 12.30.09 @ 11:05 PM
Mark, kudos to you for stressing morality!
The great scientist Albert Einstein said:
“The most important human endeavor is the striving for morality in our actions. Our inner balance and even our very existence depend on it. Only morality in our actions can give beauty and dignity to life.”
To be absolutely moral—by which I mean not only teaching/stressing morality, but actually being moral—is a tough, tough task! Even if we fail in our attempts to be moral, at least we can be satisfied that we tried!
Sadly, there is a “bent of mind” that breeds the immorality and cheating that is eating away at the American financial system that you’ve been rightly pointing out about in your articles.
May I suggest that you and your readers view Ben Stein’s documentary movie (released last year), “Expelled, no intelligence allowed”, which explores how a section of academia, by propagating an unproved theory, subtly influence the thinking of the students and intellectuals of the world, and thus build a basis for immorality, the kind that scientists like Einstein would have never approved!
» on 12.31.09 @ 09:55 PM
You have Medicare and Medicaid confused. Medicare pays medical expenses regardless of financial situation. Medicaid pays long-term care expenses only if indigent and then can collect from assets left at death.
» on 01.06.10 @ 11:27 PM
Rosy?—Vote the liberals out they have bankrupt Calif..
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