Q: My wife and I signed living trusts in 1999 that contained what are called “A-B” trusts to avoid estate taxes. Since that time, our assets have decreased due to the stock market decline. We are in our mid-70s and have tried to keep up, but have been told by some planners that our trusts are fine, while others have told us we should consider getting rid of the trusts. Our total assets now are less than $1 million. Please help.

A: In 1999, estates in excess of $650,000 were subject to estate taxes. Today, based on a 2001 law, the amount exempt from estate taxes has risen to $1.5 million, and, in January 2006, the figure will be $2 million. Therefore, based on your current assets, you don’t have estate tax implications when the second of you dies.

That said, it’s a good idea to have a lawyer review an older trust, which generally requires that an amount up to the full “unified credit” (a federal tax credit that offsets estate tax liability) at the first’s death be placed into a “bypass” trust to attempt to decrease or avoid estate taxes at the second’s death.

Because of the increased amount you can keep before estate taxes kick in, the language of your trust may take away from the surviving spouse full control of a substantial part of the family assets. Depending on the language:

¢ The surviving spouse may only receive income from the trust, unless there is a showing of special needs or circumstances that justify distribution of trust corpus (assets).

¢ If title to the home is allocated to more than one trust, part of the capital gains exclusion at sale may be lost.

¢ The surviving spouse could lose the ability to refinance the residence or take out a reverse mortgage if he or she needs cash.

¢ The survivor of your wife and you could well be prevented from gifting the residence.

For these and many other reasons, we recommend that wills and trusts signed before 2001 be reviewed by competent professionals to avoid unforeseen surprises, especially if the trust was a product of a “trust mill” or other “form factory.”

Requiring a DNR?

Q: My father was set to enter an assisted-living home in pretty good shape, as all he really needed were three squares a day and assistance with his medications. I was surprised when, as part of the admission procedure, he and I were asked to sign a “do not resuscitate” order. I thought these were reserved only for people who were considered to be “short-timers,” which my dad is not. We refused to sign, and the administrator told me to take dad home because they could not admit him unless we signed it. I have not been able to find anyone around here who can tell me what to do.

A: We find it very unusual for an assisted-living facility – or any facility, for that matter – to require a “DNR” from a relatively healthy individual as a condition of admission. Generally, a DNR is a direction not to start CPR (cardiopulmonary resuscitation) if your dad’s heart stopped or he stopped breathing.

While very ill individuals – metastasized cancer, kidney failure, congestive heart failure and severe infection – may not want resuscitation, a person as healthy as your father seems to be an unlikely signer. We suggest that you report your problem to your state facility licensing board because something is wrong here.

Summer care for seniors

With summer upon us, too many seniors fail to take precautions to deal with heat and sun that can cause serious health conditions – even death because, as our bodies age, we are less able to adapt to high temperatures. Without taking proper safety measures, we may become dehydrated or suffer from other weather-related conditions, such as heat fatigue, heat exhaustion and heat stroke.

According to elderly care experts at HomeInstead (www.homeinstead.com), family members should check in on elderly parents and relatives, not just by phone, but by stopping by their home to observe their physical appearance and well-being. HomeInstead suggests that when you go by, you should check on food and beverage supplies, medications and the temperature in the home that should keep the seniors comfortable.

HomeInstead has announced a new Web site to help family caregivers gauge their stress levels through a new, online stress-assessment tool. To try out this innovative tool without charge, go to www.caregiverstress.com.

– Jan Warner is a member of the National Academy of Elder Law Attorneys and has been practicing law for more than 30 years. Jan Collins is editor of the Business and Economic Review published by the University of South Carolina and a special correspondent for The Economist.