The Living Will

An often-misunderstood estate planning document is the living will. It’s often confused with a “living trust” which is a trust document providing the direction of how to invest and distribute your assets during your lifetime and upon your death.

The living will, in contrast, is what many refer to as the “right to die” document. In Florida, our living will statute can be found in Chapter 765, Part III. Florida law allows you to direct the withdrawal or withholding of life-prolonging procedures provided that you are in a terminal condition, have an end-stage condition, or are in a persistent vegetative state.

Typically, the living will states that when two physicians determine that there is no reasonable medical probability of your recovery from the condition, in such case the life-prolonging procedures be withheld and withdrawn when the procedures would serve only to prolong artificially the process of dying. When this occurs, you’re permitted to die naturally with only the administration of medication or the performance of a medical procedure deemed necessary to provide you with comfort, care and pain relief.

The most famous Florida case involving these issues was over Terri Schiavo, who, ironically never signed a living will. In 1990, at age 26, Schiavo suffered cardiac arrest at her home in St. Petersburg. While successfully resuscitated, she suffered massive brain damage and was left comatose. She was diagnosed 75 days later as being in a persistent vegetative state.

In 1998 her husband petitioned a Florida Court to remove her feeding tube, indicating this is what his wife would have wanted. Schiavo’s parents opposed the move. Litigation wound its way through the Florida and federal court system, ultimately resulting in the feeding tube being removed. Schiavo died in 2005, a full 15 years following her heart attack.

The Schiavo case involved 14 appeals and numerous motions, petitions, and hearings in the Florida courts; five suits in federal district court, extensive political intervention at the levels of the Florida state legislature, Governor Jeb Bush, the U.S. Congress, and President George W. Bush; and four denials of certiorari from the United States Supreme Court. The case also spurred highly visible activism from the pro-life movement, the right-to-die movement, and disability rights groups.

Despite your political beliefs, no one wants their personal medical situation to be the focus of litigation and political debate. It’s therefore surprising that so few people take the time to sign a living will.

One of the most heart-wrenching decisions my clients face when signing their living will involves the decision to remove the food and water tubes. “I don’t want to die of hunger or thirst,” is the usual response. Yet, at the same time, declaring your intent to not remove the tubes could result in a Terri Schiavo result, indefinitely lying comatose in a hospital bed.

Clients may find comfort in the fact that the living will directs for medical procedures to continue that would provide comfort, care or pain relief.

Some, however, struggle with the notion that the doctors could be wrong. That recovery may occur despite the long odds. In other cases, religious beliefs preclude the removal of food and water tubes. Both concepts occurred when Israel’s Prime Minister Ariel Sharon suffered a massive stroke in 2006.

Surgeons operated for seven hours to ease the pressure from the hemorrhage in Sharon’s brain. But few were prepared to write him off. He was known for bull-like strength, and many thought he would miraculously recover.

He underwent seven additional operations over the six months following his stroke, including the removal of a third of his large intestine. It was not until that April when ministers in the Israeli government voted unanimously to declare Sharon “permanently incapacitated,” promoting his successor Ehud Olmert to the Prime Minister’s office.

Because Orthodox Judaism considers the removal of food and water tubes euthanasia, which is prohibited under Jewish law, Sharon lay comatose in a nursing bed until his death in 2014, eight years after his stroke. He eventually died of cardiac failure.

The living will makes us confront our mortality. Medical science’s capabilities to revive and keep us alive are ahead of the philosophical, moral and religious considerations we face when making choices under a living will.

You might say that the living will is a counterbalance to science’s ability to put our bodies in a sort of stasis, yet not bring us all the way back to a functional state, including a certain quality of life. At that time, we have the option of saying “no more heroics.”

© 2019 Craig R. Hersch. Originally published in the Sanibel Island Sun

Congress is Coming for Your IRA


Congress is about to wallop the American people with a huge middle-class tax hike, which can change the way that you look at your IRA accounts.

And it’s quite sneaky the way they’re doing it.

To understand what I mean, you first need to understand the Required Minimum Distribution (RMD) rules. Most of us know that when we turn 70½ we have a fixed amount that we must withdraw from our traditional IRA accounts. These amounts increase as we age.

But what happens to the remaining balances of our IRAs when we die? If we name a spouse as our primary beneficiary, then she can roll over the IRA into her own account. If she is over age 70½, then she also must make RMDs based on her own schedule.

But then what happens when our surviving spouse dies and leaves the IRA to a child, grandchild or other loved one? When we leave an IRA account to a non-spouse beneficiary, then it becomes an “Inherited IRA.”

Under current rules, a non-spouse beneficiary can “stretch” the RMDs of an Inherited IRA over their lifetime. This allows the IRA to continue to grow tax deferred. If the beneficiary is wise with the investments and doesn’t take more than his RMDs, then the IRA balance can grow for his or her retirement.

But that may all change. The “Setting Every Community Up for Retirement Act” (known as the “Secure Act”) gives non-spouse beneficiaries only 10 years to pull out all the money from an IRA account.

The effect would be to make more of an Inherited IRA subject to higher taxes sooner, as distributions would be made in larger amounts. As much as one-third more of an Inherited IRA would be consumed by taxes than what the current law provides.

If Trump signs the Secure Act into law, it will set the stage for much higher taxes in the coming decade, especially when the Trump Tax Act signed in 2017 expires in 2025. Assume, for example, a $1 million IRA left to a middle age daughter. She’d have to withdraw roughly $100,000 annually, pushing her up into a higher tax bracket. If she lives in a state with a state income tax, more than half of the IRA distribution could be lost to taxes.

If she has college-age children, the additional income would likely affect their aid applications adversely. If instead the IRA were left to the grandchildren, this would also adversely affect their college aid applications, and because of the “kiddie tax” would results in the same tax consequence as if the account were left to the parents.

In exchange for this windfall under the Secure Act, Congress will push back the age at which retirees must take their first RMD from 70½ to 72.

The Secure Act would be an estate-planning catastrophe for people holding significant IRAs. It would take the sensible planning performed up to now and require an entire re-think of the plan.

Typically trusts are used for Inherited IRAs to young recipients. The “identifiable beneficiary rules” require that the trusts satisfy certain requirements for the young beneficiaries to “stretch out” the IRA RMDs. Under the Secure Act, significant trust income would be trapped inside, resulting in the highest marginal federal income tax bracket. And don’t forget state taxes.

The Senate also seems poised to pass the Secure Act, which would land it on the President’s desk. Personally, I’m finding it tiresome how Congress names legislation (Setting Every Community Up for Retirement Act) exactly opposite of that legislation’s effect on our citizens.

This is a tax not only on the wealthy, but hurts the middle class, who’s retirement savings are largely vested in IRA and 401(k) accounts. It’s an estate tax on everyone. Should you so desire, it’s not too late to write your Senators to speak up against this legislation.

© 2019 Craig R. Hersch. Originally published in the Sanibel Island Sun

Serving as Trustee vs Being a Beneficiary

When you deal with your estate plan once every decade or so, it’s easy to get lost in the vocabulary.  This occurred to me the other day during a conversation with my client, Babs, who was upset that one of her daughters, Jeanette, was not listed in her documents as a successor trustee if Babs became incapacitated or died.

I was befuddled since Babs once told me how irresponsible Jeanette was. In fact, Babs said that she didn’t want Jeanette to have any control over her bank or brokerage accounts. So I first confirmed with Babs that we were talking about the same person.

“Well, yes” client answered, “I don’t want Jeanette to control any of my money, at least while I’m alive.”

“So why are you upset that she is not going to serve as your trustee?” I asked.

“Because I still want to treat all my children equally!”

This is where I explain that being a trustee is not an honor, nor does it bestow any more of a beneficial interest on the person acting as trustee. Instead, acting as a trustee is a job. It is laden with a lot of responsibility.

Whomever serves as your successor trustee must have the ability to interact with your financial advisor to determine what your asset mix should consist of. In fact, your trustee is held to the “prudent investor” standard under Florida law.  Violating that standard could lead to a lawsuit where the other beneficiaries of the trust recover damages against the trustee.

If stocks or bonds need to be sold in order to have cash to pay for in-home nursing care or other convalescent care expenses, your trustee is the one who makes decisions which assets should be sold to do that. If you need to move out of your home for care, then the family member that you have named as your trustee will have to decide whether to continue to have your finances continue to carry the expenses associated with owning the home or whether it would be prudent to sell it.

These are not easy decisions.

Your trustee will file your tax returns. He or she will interact with your CPA as well as your attorney when deciding legal matters associated with your estate. When you die, your trustee will have a fiduciary duty to your creditors, taxing authorities and the other beneficiaries. If your trustee violates these fiduciary duties then he or she can be held liable, and have to pay an attorney out of their own pocket to defend the claims or to satisfy any judgments if they are deemed to have acted negligently.

Just because someone is a trustee does not mean that the amount that they are entitled to as a beneficiary will change. If Suzy is a 25% beneficiary of the estate, she does not receive any additional beneficial interest when acting as the trustee.

She may get reimbursed for her out of pocket expenses associated with fulfilling her trustee duties, such as air fare, car rental, hotel expenses, overnight express charges and the like. She will also be entitled to take a trustee’s fee for her time. The fee that she takes is usually well earned, and is taxed as ordinary income much like a CPA’s or attorney’s fees would be taxed to them as ordinary income.

Many family members graciously perform their duties without taking a fee. More often than not, his or her siblings will not appreciate it and expect the child you have selected to act as trustee to do it all for free even though the duties can be enormously burdensome.

It is therefore vitally important when naming a trustee that you select someone who will devote the requisite time and attention to these important matters, and will be comfortable interacting with your professionals. Someone who is confident, diligent and detail oriented makes for a fine trustee. They don’t necessarily have to have any background in law, accounting or taxes. So long as they know how to interact with your team of professionals, it usually works out fine.

As you can see, it really isn’t a matter of being “fair” to one child or another. I would go so far as to say that not only have you not bestowed an “honor” upon the family member that you select as your trustee, rather you have handed them a job. A big job, at that.

So don’t worry about being equal. Select the family member who is the most likely to do the job right.

For more information on the duties of a successor trustee, visit for a free guide!

© 2019 Craig R. Hersch. Originally published in the Sanibel Island Sun.

The Top 5 Reasons Baby Boomers MUST Update Their Estate Plans

The baby boomer generation, said to span between 1946 and 1964 has been quite the generation.  I know as I was born at the tail end in 1964. And boy have we been a royal pain-in-the-rear. By first swelling the ranks of classrooms, causing the construction of new schools, and then making college admissions hyper-competitive, afterwards increasing the demand for first home purchases and so on.

We’re even responsible for our own baby-boomlet of progeny in the 1980s and 1990s.

The oldest baby boomers are retiring – while quite a few remain in the primes of our working careers. We’re expected to put a strain on the Social Security and Medicare programs, and many of us haven’t saved enough for retirement. There are a number of reasons for that, from overconsumption to stock market and housing crashes to believing the mirage of never-ending youth.

A lot of us are very guilty of that last one.

The mirage of never-ending youth. It’s what traps those who haven’t looked at their estate plan in quite some time. When baby boomers arrive at my office, they generally pull out existing wills that call for guardianships for their children (who are now grown adults themselves) and name long-deceased parents as executors and trustees.

Which brings me to today’s topic – the top five reasons that baby boomers MUST update their estate plans:

  1. Relationships Change

Just as I mentioned above, your old wills, trusts and power of attorney documents might name people to serve in posts such as personal representative, trustee and health care surrogate who you may have lost touch with or who are no longer close to us. While attorneys in northern jurisdictions often name themselves as trustee of their clients’ trusts, you may now be a Florida resident or that attorney may have long since retired. It’s time to take a fresh look at who you have named to conduct your affairs for you in the event of your disability or death. Also, we may now be in a different relationship or marriage than we found ourselves in when we first prepared our estate plan. Blended families typical of second marriages require a thoughtful, detailed plan to prevent problems between a surviving spouse and step-relations;

  1. Children Grow Up

Your will drawn twenty years or more ago may have contemplated making distributions for your young children that are now fully grown with kids of their own. Your adult children may also be some of the best candidates to serve as your personal representative under your will or as your trustee under your trust. You may also want to protect the inheritance you leave your grown children from adult issues such as divorce or lawsuits;

  1. Your Health

While none of us like to admit it, age usually presents more health issues to deal with. You want to make sure that your health care surrogate documents are up to date, as well as your living will that designates what you want to have happen should you end up on life support with no hope of recovery. None of us wants to be the next Terri Schiavo, so it is important that your health care documents are up to date with today’s law and with your intent;

  1. Your Stuff

It’s probably time to review your assets and how your estate plan provides for you, in the event of your disability, and your loved ones after your death. In our youth our main assets probably consisted of a home, term life insurance and maybe a few investments. As we enter middle-age we may no longer have term life insurance (instead we may have whole or universal life policies that contain cash value), and we may have larger investment accounts as well as IRA and 401(k) accounts. As the types and amounts of assets that we own changes, it is important that our estate plan change with them. An estate plan built around a young family with term life insurance should look drastically different than an estate plan for someone in the prime of their working career or who is nearing retirement;

  1. Your Legacy

Finally, many of us like to consider what kind of legacy we leave behind. It might include a charitable legacy with institutions or causes near and dear to our hearts, or it might mean how we want our progeny to carry on with the wealth that we’ve accumulated.  Perhaps we’re concerned that we’ll take away the incentive to lead a productive life, or we may want our wealth to be used for certain activities we find beneficial – such as education or health care.

There’s a lot to consider. Make it a priority to dust off the will or trust that you’ve neglected for so long and use these five points to write down what concerns you the most about your own planning. Then take that to your attorney to provide a framework for your discussions and plans.

© 2019 Craig R. Hersch. Originally published in the Sanibel Island Sun.

Another Look At Euthanasia

Euthanasia or physician-assisted suicide remains a topic of conversation, particularly among families of those who suffer from dreaded, life-ending diseases, especially those that take a long time to conclude such as Alzheimer’s, ALS, MD and terminal, inoperable cancer.

Some of my clients have voiced frustration that the law allows one to put down a pet in grave distress, but a human must suffer until the end. If you’ve ever witnessed a loved one die a slow, painful, death then you probably understand the desire to more freely allow euthanasia.

To that end, Switzerland, Holland and Belgium, as well as a growing number of U.S. states, including California, Colorado and most recently Maine, whose governor recently signed the Death With Dignity Act, have legalized euthanasia.

New medical guidance in Canada, where the practice has been legal for three years for terminally ill patients, hints at the troublesome ways that assisted suicide might be expanded in the coming years. I say “troublesome” because of the influence of the need for organ donations taken from individuals who choose to meet their end in this manner.

About 30 euthanasia patients in Canada have donated their organs after death since 2016. The Canadian Medical Association issued guidelines for how the process should work, clarifying that organ removal should not begin until the patient is medically deceased and the heart stops beating.

But some experts quarrel with this restriction.

In a 2018 New England Journal of Medicine article, two Canadian medical researchers and a Harvard bioethicist argued waiting until death occurs reduces the quality of donated organs. The authors suggest killing the patient by removing his organs. After all, the best organs come from live people, like those who donate a kidney.

Even a gap of a few minutes that it takes following death to remove the organ makes a difference in its quality. The New England Journal of Medicine authors admit to the ghoulishness of their proposal but note “many may want the option of donating as many organs as possible in the best condition possible.”

By linking assisted suicide and organ harvesting, those in the medical community ratify the premise that euthanasia can help create a more efficient organ supply chain. An obvious criticism of Canada’s guidance that organs may be harvested only from deceased individuals is that it focuses on the supply of organs while ignoring the demand.

One need only look to China to see where this might lead. There, organs are harvested from executed political prisoners. Executions are timed to maximize the organ-harvesting potential. After the sentence is handed down, doctors examine the condemned man to evaluate him as a possible organ donor. If he looks like a good candidate, the date of his execution is put on hold until, say, someone needs a heart transplant.

While you might say that China is the exception, it’s not too hard to imagine the temptation for other countries to link the time of death with the demand for organs. You may recall these conversations over the implementation of Obamacare, where critics suggested that “death squads” might take the need for organ donation into consideration when determining resources allocated to a terminally ill patient.

One lesson from Holland’s experience with euthanasia is that doctors and nurses may powerfully influence a person’s decision to end his life. The most vulnerable patients are those who are depressed and dependent upon another’s care. Some patients were reportedly influenced by their caregiver’s cues of being physically, mentally and financially worn out.

In many circumstances, slippery-slope scenarios and arguments often seem foolish or unlikely. Here, however, the moral problems warrant serious philosophical discussion. There are two very real sides to the euthanasia coin, and hopefully we arrive at conclusions considering the consequences of each.

© 2019 Craig R. Hersch. Originally published in the Sanibel Island Sun.