Of all charitable donations made by Americans, only about four percent go to good causes outside of the United States. If you have a desire to make a difference abroad, there are a number of ways you can do so and still get a charitable deduction for income or estate tax purposes.
If your wish to make a general gift to alleviate hunger, support women, help after natural disasters, contribute to development, or support any other general category of need, consider donating to a US charity that provides aid internationally. Among these are Oxfam America (www.oxfamamerica.org), Global Fund for Women (www.globalfundforwomen.org), The Global Exchange (www.globalexchange.org), International Development Exchange (www.idex.org), Development Gap (www.developmentgap.org), Funding Exchange National Grants Program (fex.org), American Red Cross (www.redcross.org) and Grassroots International (grassrootsonline.org). These organizations’ websites provide extensive information on their programs around the world. All of these organizations are well known and trustworthy and, if you find an organization that is not on the list above, make sure it has the 501(c)(3) designation, so that your contribution is tax deductible.
If you wish to get a tax deduction at this time, but you are not ready to choose a charity, you may consider setting up a donor advised fund through a national charitable fund, such as Schwab Charitable (www.schwabcharitable.org) or the Calvert Foundation (www.calvertfoundation.org). You could set aside securities and cash at this time to achieve your tax planning goals and invest the funds until such time that you are ready to designate a charitable beneficiary. Most donor advised funds require a minimum contribution of $5,000.
When you are ready to distribute from your donor advised fund, there are two ways to identify charitable beneficiaries. One way is to find a US based charity that provides services abroad, such as Doctors Without Borders (www.doctorswithoutborders.org), which provides emergency medical services abroad, the American India Foundation (aif.org), which works on social and economic change in India, or the Grameen Foundation USA (www.grameenfoundation.org), which gives micro loans in many countries. Another way is to use an intermediary organization that provides tools to search for legitimate and effective charities in other countries for a small fee. Among such organizations are Give to Asia (www.give2asia.org), which supports a variety of causes throughout Asia, or Rockefeller Philanthropy Advisers (www.rockpa.org) that works in remote areas of the world. These organization’s websites are impressive planning tools and worth checking out.
Anyone who wishes to set up a new charitable organization that qualifies for 501(c)(3) status and operates abroad needs to consult with an attorney with experience in establishing nonprofit organizations. It is important to understand that US tax policy allows for a charitable deduction, since the government expects to offset the loss of tax revenues by reduced demands on government funds by social programs that benefit from those charitable donations. Gifts and donations to support foreign charitable organizations or international organizations don’t have that impact within the United States, and the income tax deduction is more difficult to get. The attorney will assist you to determining if a tax treaty exists with the country where you intend to use charitable donations. Such treaties determine when the participating countries recognize each other’s charitable organizations as such and when their citizens can deduct donations to charitable organization in the other county. Best known are the treaties with Mexico, Israel and Canada for the income tax deductibility and the tax treaties with Canada, Germany and the Netherlands for the reciprocal recognition of charitable organizations. The process of establishing a charity that operates abroad or is located abroad requires careful compliance with Treasury regulations.
In summary, there are ample choices for general gifts to international causes through established US charities, there is the option of making targeted grants with the help of planning tools offered by intermediary organizations, and there is the option of establishing a new charity with the advice of your attorney
As you are planning how to leave your IRA, 401(k), 403(b) or other qualified retirement accounts to your spouse, children, or other beneficiaries, consider setting up a separate Retirement Plan Trust.
Any trust that authorizes the trustee to handle withdrawal of assets from a retirement account and distribution to a beneficiary must contain carefully drafted provisions to comply with requirements of the IRS Tax Code to successfully achieve the desired results. Generally, there are two basic ways to structure retirement asset management by a trustee. The “conduit trust” requires that the trustee immediately distribute all withdrawn amounts to the beneficiary. The “accumulation trust” gives the trustee discretion with regard to the timing of the distribution of withdrawn amounts to the beneficiary, so that the withdrawn amounts could accumulate in the trust. For certain types of beneficiaries, such as young children, it is desirable to accumulate, and for disabled individuals receiving governmental benefits, it is necessary to accumulate in order not to disqualify the beneficiary from governmental benefits.
A significant difference between conduit and accumulation trusts is the starting time for required minimum distributions from the retirement account. In the case of a conduit trust, withdrawals distributions don’t need to start until the year in which the plan participant, who set up the account and saved into it, would have turned 70 ½ years of age. That year, the beneficiary has to begin withdrawing funds at a rate based on the beneficiary’s life expectancy. The younger the beneficiary, the smaller the distributions. In the case of an accumulation trust, withdrawals from the retirement account to the trust need to begin the year following the plan participant’s death. The withdrawal rate will also be calculated based on the beneficiary’s life expectancy.
Conduit and accumulation trusts can be incorporated into a Will or revocable trust. However, to make use of the most sophisticated planning options, including special administrative powers for the trustee and a powerful role for a trust protector, to optimize the conveyance of the retirement accounts to beneficiaries, requires skilled drafting. Incorporation of such provisions into an estate planning document that is likely to be updated at some future time, possibly by another attorney who may not be familiar with the constantly evolving tax laws affecting retirement assets, could lead to failure of the intended plan.
By using a separate retirement plan trust, the risk of plan failure can be avoided. Furthermore, the strict drafting requirements for retirement assets may stifle the flexibility that could be included in the Will or revocable trust. A retirement trust could be drafted as a conduit trust, as an accumulation trust, or as a conduit trust that can be converted to an accumulation of trust following the plan participant’s death. Such a conversion could be desirable for certain beneficiary situations. For example, the accumulation trust structure would be desirable where a beneficiary’s distributions would be exposed to the beneficiary’s creditors. Since the trustee can accumulate the withdrawn amounts, those assets can be kept in the trust and protected. Another reason to consider a separate retirement plan trust would be the nature of the assets held in the retirement account. Thus, retirement accounts that hold business entities or real estate are best administered separately from the other assets of the estate. The use of a separate retirement plan trust would build a firewall between those accounts and the rest of your estate.
A nationwide movement has been underway since the late 1990s to improve end-of-life health care planning by individuals. While Advance Directives including Living Wills and Do-Not-Resuscitate Orders (DNRs) have been widely used to address future decisions regarding life support, pain relief and the administration of nutrition and fluids, they do not capture a patient’s preferred level of medical intervention for care either on a routine basis or on an urgent basis due to an acute medical condition. To give individuals the opportunity to express their medical treatment preferences, a process developed that begins with conversations between physicians and patients about available treatment options, and provides forms that record the patient’s preferences for all of the patient’s health care providers to see. Throughout the various States, these forms are known as physicians’ orders for life-sustaining treatment (POLST), medical orders for life-sustaining treatment (MOLST), physicians’ orders for scope of treatment (POST), and medical orders for scope of treatment (MOST). The National POLST Paradigm Task Force provides guidance for successful implementation of such forms.¹ In Maryland, we have the Maryland MOLST Training Task Force. The State provided regulations for the use of Maryland’s MOLST form in July 2013.²
Who Should Have a MOLST form?
Regulations require the MOLST forms to be completed at assisted living programs, home health agencies, hospices, kidney dialysis centers, and nursing homes for newly admitted patients and at hospitals for certain patients.
In addition, the rule of thumb is that any person for whom it would be true that a doctor would not be surprised if the person died within the year should have a MOLST form. Anyone of advanced age or frail health or both should have a MOLST, even those individuals who are not terminally ill, in a persistent vegetative state or suffering from an end-stage condition. Persons in these categories should have a conversation or a series of conversations regarding end-of-life care with a health care provider. Ideally, the conversations are a team effort by all involved in the person’s care and decision-making. End-of-life care is an evolving field. Understanding the nature and effects of treatments, procedures, medications, and methods, is important for every patient, and requires open and frank discussion.
1 The Center for Ethics in Health Care at Oregon Health & Science University first convened the task force. See OR. POLST TASK FORCE, GUIDANCE FOR OREGON’S HEALTH CARE PROFESSIONALS 6, 17 (2013), available at http://www.polst.org/wp-content/uploads/2013/ 12/2013.12.26-OR-Guidebook-2013.pdf 2 The Department of Health and Human Services regulations are found in COMAR 10.01.21
The Shortcomings of Advance Directives and DNRs
Most of us are familiar with a typical Advance Directive that includes a Living Will. Such a document allows an individual to specify whether or not to be administered life-sustaining treatment, as well as nutrition or fluids if the person has no expectation of recovery from a terminal condition, a persistent vegetative state, or an end-stage condition. The Advance Directive is executed with a hypothetical future health event and goes into effect in the future when the client is no longer capable of making health care decisions. At such time, the agent appointed in the directive has decision-making authority on the patient’s behalf.
Most of us are also familiar with Do-Not-Resuscitate (DNR) orders, which prevent resuscitation in the event of cardiopulmonary arrest. Such orders are issued by physicians for certain patients after a conversation with the patient or the patient’s decision-makers.
Neither the Advance Directive nor the DNR provides a client the opportunity to specify the kind and level of medical intervention, during or at the end of life, that reflect the client’s preferences, values, and goals. The choices are either for no intervention at all or full intervention. A MOLST allows the patient to clearly and accurately identify the desired level of care from among the available treatment options as they are explained to the patient or the patient’s health care decision-makers by a physician, physician’s assistant or nurse practitioner. The care related decisions can be addressed separately from the choice regarding DNR orders. Thus, a person may not want to be resuscitated, but, in all other situations, the person may want more or less aggressive care. Since the patient may lose the capacity to participate in the conversations, it is still important to have an Advance Directive that appoints a health care agent, who can talk with the patient’s health care providers on behalf of the patient.
What Treatment Categories does the MOLST Cover?
The Maryland MOLST allows the patient to make informed choices regarding the administration of antibiotics, nutrition, fluids, ventilation, blood transfusion, hospital transfer, medical workup, and dialysis, in addition to cardiopulmonary resuscitation (CPR). As part of the conversation with medical staff regarding the treatment categories, the staff will summarize key facts and opinions about the patient’s medical situation and prognosis, and the relevance of various treatment options.³ The medical staff is expected to ensure that the patient’s choices are informed as a result of the consultation with the physician, physician’s assistant or nurse practitioner, who signs the order. Since a patient’s medical needs are likely to change over time, it is important to continue to have these conversations. The MOLST can be updated when the patient reverses an earlier decision based on changes in his or her medical condition.
What is the Purpose of the MOLST Worksheet?
An individual who is not currently facing an acute medical condition and has the capacity to discuss health care treatment options with a health care provider has the option of completing the MOLST Worksheet. The worksheet is part of the MOLST and allows a person to document treatment preferences for future situations. If and when the time comes that the person needs a MOLST, the worksheet provides valuable input for the completion of the MOLST form. The topics covered by the worksheet are the same as those addressed on the MOLST form. An individual may choose which of these topics to address. There is no requirement that all categories be worked on.
Minors with Terminal Illnesses and Individuals with Disabilities
Some states allow minors with terminal illnesses to have POLSTs, and some provide a section for special concerns of individuals with disabilities. The Maryland MOLST does not provide a section for individuals with disabilities.
MOLST Need to be Kept Where They Can Be Found – the Registry
Emergency Medical Technicians (EMTs) or first responders will respect and implement a patient’s wishes. They can only do so, if they see the MOLST. A physician can provide guidance on where to keep the form; on the bedside table or room door, for the bed-ridden patient, on the refrigerator, in the purse, or any other place where it can be discovered before procedures are started that may go against the patient’s wishes.
Some states maintain a registry for their residents’ POLST or MOLST forms. The advantage of a registry is that EMTs and other providers have access to the forms. Maryland has such a registry.
³See Health Care Decision Guide for Health Care Professionals by the Maryland MOLST Training Task Force, May 2012.
A competent individual’s use of a MOLST, properly executed in accordance with local law, is protected by constitutional and common law. The Due Process Clause protects our deeply personal liberty to reject medical treatment. Since the form is completed after conversations with the physician, a patient’s informed consent, as well as the individual’s liberty and privacy concerns are satisfied. A health care provider’s refusal to honor a MOLST would implicate common law and constitutional violations at the least.
The US Supreme Court has been united in its view that a competent individual, absent a specific compelling public interest has a right to refuse medical treatment.
“On balance, the right to self-determination ordinarily outweighs any countervailing state interests, and competent persons generally are permitted to refuse medical treatment, even at the risk of death. Most of the cases that have held otherwise, unless they involved the interest in protecting innocent third parties, have concerned the patient’s competency to make a rational and considered choice.”4 This language is decisive for the constitutional validity and enforceability of a MOLST. It announces that each person has a fundamental liberty interest to control his or her medical care.
The MOLST Should Be Signed By the Patient
The Task Force recommends that the MOLST be signed by the patient to ensure that there was at least some communication about the form with the patient or the patient’s health care agent. Such a requirement would increase the confidence that the form reflects the patient’s informed decisions.
Patients who do not wish to have very expensive treatments, benefit from having a MOLST that is properly implemented.
MOLST has to be part of estate planning and elder law consultations
The Medical Orders for Life-Sustaining Treatment (MOLST) form and associated worksheet are part of a comprehensive estate planning consultation. Estate planning and elder law attorneys need to draw clients’ attention to the existence and function of this form.
4 1 Cruzan, 497 U.S. at 273 (quoting In re Conroy, 486 A.2d at 1225).
Lewicky, O’Connor, Hunt & Meiser, LLC | 8115 Maple Lawn Boulevard, Suite 175, Fulton, MD 20759 | 410-489-1996
Verena Meiser was admitted to the State Bar of California. With her new credential, Ms. Meiser will be able to support her estate planning clients with family and property ties to California.
Planning for a Special Needs Child
Planning for special needs individual is complex. Each case is specific to that person’s needs and abilities. The families I work with know that what we try to resolve together goes beyond legal matters. We take a team approach to our comprehensive planning and focus on everything from financial security, safe housing, quality caregiving, and strong advocates, to building and providing a support structure for their loved one that allow him or her to live with the greatest possible degree of independence.
Continuing eligibility for available services is key to any special needs plan. Our planning addresses social security, medical assistance (Medicaid), home and community-based waivers, and services with the DDA—the Developmental Disability Administration.
We develop special needs trusts that provide the overarching plan for the entire life cycle of the special needs individual. There are several types of special needs trust and we help families choose the right ones.
Modern special needs trusts often include provisions for a Caregiver and an optional Advisory Committee. A Caregiver will be intimately familiar with the special needs individual’s behavior, social contacts and health. Caregivers can be a valuable source of information for health care professionals, as well as the trustee of a special needs trust. An Advisory Committee consisting of professionals familiar with the trust beneficiary, can advise the trustee on the beneficiary’s status and needs that require financial support from the trust. Caregivers and Advisory Committees are of particular value in situations where the trustee does not live near the beneficiary.
Special needs planning is for the long haul. We will work closely with you, be strategic and give you peace of mind.
Clients have asked me how they could make charitable donations to good causes abroad. Some have discovered schools or clinics or other great organizations while traveling and would like to make tax deductible donations. There are a number of ways to give and make a meaningful difference.
To relieve hunger, support women, help after natural disasters, contribute to development, or support any other general category of need, consider donating to a US charity that provides aid internationally. Such organizations are recognized as 501(c)(3) organizations and donations are tax deductible. Among these are Oxfam America (www.oxfamamerica.org), Global Fund for Women (www.globalfundforwomen.org), The Global Exchange (www.globalexchange.org), International Development Exchange (www.idex.org), Development Gap (www.developmentgap.org), Funding Exchange National Grants Program (fex.org), American Red Cross (www.redcross.org) and Grassroots International (grassrootsonline.org).
For charitable deduction planning at this time without having a particular charity in mind, domestically or internationally, a donor advised fund may be the solution. Assets can be set aside in a donor advised fund for a charitable deduction. A donor advised fund through a national charitable fund, such as Schwab Charitable (www.schwabcharitable.org) or the Calvert Foundation (www.calvertfoundation.org) permits selection of a charity, domestic or international, at a future time. Most donor advised funds require a minimum contribution of $5,000.
Charitable beneficiaries for funds held in the donor advised fund can be identified in two ways. Either find a US based charity that provides services abroad, such as Doctors Without Borders (www.doctorswithoutborders.org), which provides emergency medical services abroad, the American India Foundation (aif.org), which works on social and economic change in India, or the Grameen Foundation USA (www.grameenfoundation.org), which gives micro loans in many countries. Or, use an intermediary organization that provides tools to search for legitimate and effective charities in other countries for a small fee. Among such organizations are Give to Asia (www.give2asia.org), which supports a variety of causes throughout Asia, or Rockefeller Philanthropy Advisers (www.rockpa.org) that works in remote areas of the world. These organization’s websites are impressive planning tools and worth checking out.
Anyone who wishes to set up a new charitable organization that qualifies for 501(c)(3) status and operates abroad needs to consult with an attorney with experience in establishing nonprofit organizations. The US tax policy that underlies the IRS recognition of domestic charities is based on the idea that lost tax revenues are balanced by reduced demands on government funds by social programs that benefit from those charitable donations. Gifts and donations to support foreign charitable organizations or international organizations, on the other hand, don’t have that impact within the United States, and the income tax deduction is more difficult to get. Non-profit law can be confusing and the attorney can navigate you through tax treaties and Treasury regulations.
In summary, there are ample choices for general gifts to international causes through established US charities, there is the option of making targeted grants with the help of planning tools offered by intermediary organizations, and there is the option of establishing a new charity with the advice of an attorney.
How to prepare to meet with an estate planning attorney
So you’ve made that call and have scheduled your first appointment with an estate planning attorney to discuss creating your will or trust. Congratulations! The hard part is done, but there still is a bit more work that you need to do before that first meeting. While it may be tempting to go in unprepared and let the attorney take charge of the discussion, it’s actually far more productive if you come prepared and armed with important information. The more organized you are before your meeting, the more your attorney can successfully help you make the right choices.
Questions to think about before your first meeting
Before you meet with an attorney, you should think about what your goals are for your end-of-life plan and your property after your death. Who, for example, do you want to be the person who will be financially responsible of your estate (your executor, personal representative or trustee, who makes sure that your money and assets are distributed in accordance with your wishes)? And, if that person is not available or cannot perform those duties for some reason, who would be your second choice? If you have minor children, who will take care of them if you die? Additionally, you’ll want to have a general idea of who is going to get your money and property, including whether or not you want to give part of your estate to a specific charity or to a person who is currently a minor.
Although it’s challenging, you’ll also want to consider what you’ll need in the event that you become unable to make decisions for yourself. What will you want your care to look like, and who will you want to be in charge of your care. Making an endof-life plan is a difficult but necessary way to plan for a more secure future. You’ll want to think about what your medical directive will look like. Do you know if you’d want to be on life-support or in hospice care? Who do you trust to make those decisions for you? By knowing, even in a general sense, what you want in your later life, you’ll be able to craft a plan with your attorney that is in line with your needs and desires.
What to bring to your first meeting with your estate planning attorney, and what your attorney needs to see and know
You should come to your first meeting armed with some key information and documents, which will allow your attorney to move forward with your plans quickly and effectively. This information includes:
List of family, including their names, ages, and contact information. Remember to include your spouse, children, living immediate relatives, as well as former spouses. Also, if there are others who will be involved in crucial decisions (i.e., executors, guardians, beneficiaries, etc.), make sure to include those names and contact information on your list.
Information for both retirement and non-retirement assets, such as your bank statement, stocks, bonds, and other investments, 401 (k) statements, IRAs, pension statements, and the like. Your attorney is not looking for the hard and fast numbers here. Rather, he or she is getting a sense of your combined financial assets and future projections of assets. Your attorney will also want to explain how each type of asset should be planned for given your particular family situation.
Record of real estate and lists of personal property, including your home and mortgage, rental properties, vacation properties, or investment properties. You’ll also want to include a list of personal property that is either financially or emotionally valuable. If you own your grandmother’s engagement ring and want it passed down to a specific person, your attorney will need to know about those special requests.
Remember, you don’t have to stress over every detail, or wonder if you are forgetting something crucial. Your estate planning attorney should be a skilled questioner that can hone in on unusual or difficult details in your assets. However, by bringing in the standard documents and having a broad sense about your end-oflife wishes, your attorney can effectively lead you on the path to a well-planned future.
If you think your are ready to meet with an estate planning attorney at Lewicky, O’Connor, Hunt & Meiser, LLC, make an appointment today.
Verena Meiser has 16 years of experience as a trust and estates attorney. She has been practicing law in Columbia, Maryland for the past 12 years. She specializes in estate planning and asset protection, special needs planning, elder law, VA planning, estate administration, trust administration and trustee support