12/17/17

Keeping the Peace While Settling a Family Estate

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Yes, you can settle a family estate without fighting. Here’s how.

 

If a family member has passed away and his or her will or trust is in the midst of being settled, emotions and tensions within your clan may be high. Relatives are grieving, but at the same time, decisions regarding the fate of the estate must be made. 

Siblings may squabble over their “fair share” of the estate, a surviving spouse may face resistance from the deceased’s children from an earlier marriage, estranged family members may come out of the woodwork, and more. It may seem unlikely to maintain family harmony during such a challenging time.

Fortunately, a few key interpersonal tactics, as well as some practical solutions, can help keep arguments to a minimum, says Susan Lill, Senior Regional Fiduciary Manager with Wells Fargo Wealth Management. “Managing conflict generally boils down to good communication among family members, and perhaps some smart mediation-type skills,” she says. 

“A sense of transparency can help allay concerns for beneficiaries. Many misunderstandings arise when family members don’t understand the timeframes for settling an estate, or feel that they have not been kept in the loop,” she says. 

The following are a few of the most common estate-settlement conflicts and some potential solutions to bring harmony to all those involved.

1. Squabbling over personal items
“You’d be amazed at how often siblings are fine about splitting millions of dollars in stock shares, but practically get into fist fights about one family vase,” says Lill. Because dividing personal property is often the most difficult part of settling an estate, Wells Fargo Wealth Management has specialized tangible property experts. They can help families when the bank serves as executor, trustee, or agent for the executor.

Peacekeeping tactics: It may feel a bit extreme, but Lill suggests having the personal representative/trustee change the locks on family and vacation homes while the estate is being settled. “Tell family members you’re just trying to make sure no one removes favorite items before anyone else, in an effort to avoid major arguments,” she says.

Next, decide on a reasonable way for family members to split items not clearly delineated in the will or trust — from vehicles to pocketbooks, suggests Lill. One option: Have family members write down 10 items from the estate they would most like. If someone wants an item that no one else lists, it’s theirs. 

For overlapping items — and any other physical items left in the estate — consider taking a round-robin approach, allowing family members to take turns selecting items. Depending on the will/trust language, or the decision of the personal representative, McDermott says you could deduct the value of tangible items from each family members’ share of the estate. That way, no one feels they’ve gotten less than “their share.”

2. Impatient beneficiaries
Maybe you have a cousin who is tight on money and wants his inheritance well before the estate can be settled. Or perhaps two siblings inherit a vacation home; one wants to sell it immediately even if the market isn’t great, while the other wants to wait and sell later at a potentially higher price.

Peacekeeping tactics: A modest “advance on an inheritance” can help calm antsy relatives. “Keep in mind that the estate account will need to cover expected taxes, medical bills, and other fees, so leave enough in the account to cover that — and be sure to document the advance as part of paying out the estate,” says Lill.

3. Unequal distribution of assets
One beneficiary might be left a smaller share of the estate for a variety of reasons. For instance, maybe one adult child is financially successful and the parents didn’t think they needed as much help. 

Peacekeeping tactics: “In some situations, it’s helpful if benefactors talk to family members while they (benefactors) are still alive or leave a side letter with their will or trust that explains their reasons for treating beneficiaries unequally,” says McDermott. If that wasn’t done, consider bringing in a trust professional — either formally, as a co-fiduciary if the estate allows it, or informally, as a family advisor. This person may be able to objectively explain and help manage the disparity, rather than pitting family members against each other.

Overall, remember that settling a family estate can be emotionally challenging. A reasonable goal is to get through the process without unnecessarily damaging relationships — and without incurring a lot of expenses settling disagreements.

“Give family members a little extra grace and understanding during this process, since everyone grieves differently,” Lill suggests. Also, when an estate settlement proves particularly challenging for a family, Lill suggests bringing in professionals to take on settlement tasks and help resolve disputes. “That can be a great way to preserve family harmony.”

Complete Article HERE!

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11/21/17

Taking Over Your Aging Parents’ Finances

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When to step in — and how to guide their financial future

by

In the year 2011, the Baby Boomer generation started turning 65. Over the next 13 years, 10,000 Boomers will reach retirement age every day.

For the adult children of the Baby Boomers, these are not abstract statistics but real-life turning points that can provoke uncertainty and anxiety. But consider the advice of certified financial planner and author Lise Andreana:

“There is no time like the present to begin preparing for your aging parents’ financial future. Being proactive can help minimize a great deal of stress and uncertainty down the road — for your parents, yourself, and your entire family.”

The Simple Dollar is here to help you begin the journey of guiding your parents through this stage of their lives. We’ll cover how to approach the conversation, documents you’ll need, costs to consider, and more. Let’s get started.

Table of contents

Broaching the subject
Power of attorney
Document checklist
Long-term care costs
The sibling situation
Glossary
Additional resources

The Talk: How to handle a sensitive subject

Every family is different, and yours may have its own quirks or hangups about money. Although no size fits all, here are some suggestions on having The Talk with your parents:

When is the right time?

Many senior care experts recommend following the 40/70 Rule. As you approach 40 and your parents approach 70, it can be the most opportune time to discuss financial issues, as well as long-term care, estate planning and other relevant topics.

It’s better to address the situation proactively than to wait for a crisis to unfold, which could force your family into making decisions on the fly.

Are my parents already having trouble?

Be on the lookout for warning signs that your parent may be struggling to manage his or her finances, which can include:

  • Unpaid bills
  • Bounced checks
  • Calls from creditors
  • Unusual or frivolous purchases

What’s the right approach?

To help prevent conflict with your parents when you talk about finances, consider the following.

  • Keep the circle small.
    Discussions involving a few key people can be less intimidating than a full-blown family meeting that could leave your parents feeling like you’re ganging up on them.
  • Focus on positives, not negatives.
    Don’t frame your concerns in terms of physical or mental decline. Keep the focus on a bright future for the entire family.
  • Treat them as peers and equals.
    Help your parents understand that you’re trying to look out for them, not look after them. Invite them to join an ongoing conversation.
  • Find an ally.
    Your parents might be more receptive if your family attorney or financial planner joins the discussion in the role of an objective third party.
  • Make a show of solidarity.
    This subject presents an opportunity to do a thorough check of your own finances to see that everything’s in order. This way, your parents might not feel that you’re singling them out or passing judgment.
  • Avoid fighting words.
    Certain words and phrases — including always, never and nothing — have a tendency to put people on the defensive and shut down communication. It can happen in any kind of personal relationship, including parent-child.

When in doubt, preserve your parents’ dignity. Be aware of the potential for wounded pride — speak respectfully and tread lightly.

Expert opinion

“Start the conversation early. Put in place a plan your family can follow when your parents can no longer make decisions on their own. … It’s important to ask questions and help your parent come to a decision on his or her own terms.”

Terri Rasp
Director of Sales, Analytics, and Training

StoneGate Senior Living, LLC

Power of attorney

A power of attorney, also called a POA, is a legal document that grants a person or organization (known as the agent or attorney-in-fact) the authority to act on behalf of someone (the principal) in specific financial, legal and health-related matters.

A POA with you as the agent and your parent or parents as principal could play an integral role in helping you protect their financial well-being. With a power of attorney in place, you will be able to act quickly if a parent suffers a medical emergency, for example, or experiences a steep decline in mental competence.

Should I use a lawyer for a POA?

The answer is, most likely, yes. You don’t necessarily have to go through an attorney, but it’s probably the wisest course of action. The power of attorney process can vary from state to state, and trying to go it on your own could result in a costly oversight.

Unless you’re an attorney or a financial adviser, you may not have the expertise to navigate these waters. Also important is the fact that a professional often brings some much-needed objectivity to a situation where emotions can cloud the issues.

Can I get a POA on my own?

Some legal advice websites let you download a printable version of your state’s POA form. However, bear in mind that you’re dealing with the complexities of legal documents and contracts. There’s no shame in seeking the advice of your family attorney, your financial adviser, or both to help you craft a POA that addresses your family’s specific needs.

What’s the best time to get a POA?

The key factor in a child-parent power of attorney is obtaining it proactively, before the parent loses the ability to manage their own affairs.

What kind of POA should I get?

A lot depends on the current status of the parents and when the family wants the POA to take effect. An attorney may recommend a durable power of attorney, which contains a durability provision to ensure it remains in effect if the principal’s condition changes. The change in status could be a sudden medical issue that leaves the parent debilitated or a deterioration in mental capacity.

A power of attorney covering financial affairs differs from a health care POA, which means you’ll need to address those issues separately.

What if my parent has dementia or Alzheimer’s?

Depending on the laws of your state, getting a POA for a parent who has dementia or Alzheimer’s disease may require a letter from a physician affirming that your parent understands what the POA means and can legally consent. If a parent is deemed unable to meet that standard, another option may be for the child to become an adult guardian or conservator instead — a process that would require a judge’s approval.

Is a power of attorney the same as a living will?

No, there’s a difference. A living will expresses the signer’s wishes regarding medical treatment in the event he or she loses the capacity to make decisions (for example, whether extraordinary measures should be taken to preserve their life or resuscitate them). This kind of document is sometimes called an advance health care directive.

As with a power of attorney, state-specific versions of living wills are available online. Still, it’s wise to consult an attorney about the specifics of your situation.

Obtaining power of attorney: 3 key steps

Expert opinion

“Prior to cognitive decline, I advise my clients to help their parents establish the proper paperwork. This includes the creation of a will, durable power of attorney, health care power of attorney, and advanced directives. The power of attorney forms are very powerful documents that should only be in the hands of somebody your parents trust. Whether that is a family member or a professional, it is up to them.”

Nate Byers
CPA/PFS, MBA

JBC Wealth Advisors, LLC

Financial document checklist

Here’s a list of important documents for reviewing a parent’s finances. These records will help you get a better idea of income and financial obligations. Double-check this list with your financial adviser to see if anything needs to be added.

_ Bank accounts
_ Credit card statements
_ Monthly bills (utilities, rent/mortgage, subscriptions, etc.)
_ List of loans and other debts
_ Social Security statements
_ Social Security benefit verification letter
_ Pension, 401k and annuity documents
_ Tax returns (for three to seven years)
_ Investment documents (savings bonds, stock certificates, brokerage accounts, etc.)
_ Insurance policies — life, health, and property
_ Vehicle titles
_ Property deeds
_ Dues-paying memberships (HOA, AARP, clubs, etc.)
_ Birth certificates and marriage licenses

Don’t forget …
_ List of their usernames and passwords for online customer portals
_ Combination/keys to their safety deposit boxes

Expert opinion

“The first thing that children should do is to start aggregating information on the parents’ financial information. Help your parents consolidate their holdings. Fewer bank accounts can save you tons of time.”

Scott W. Johnson
Owner, WholeVsTermLifeInsurance.com

Long-term care costs

When looking at long-term care solutions, be aware that private insurance and Medicare have some limitations. While Medicare and insurance do provide coverage for medical treatment and prescription drugs, custodial care such as long-term care facilities and home health care may be a different story. As a 2013 study points out, Medicare:

  • Pays only for “medically necessary care in a skilled nursing facility” — which is not the same as an assisted living center.
  • Pays for home health care “under very limited circumstances and for brief stretches of time.”

In some unfortunate cases, coverage gaps in Medicare and private insurance can lead to families exhausting financial resources (known as “spending down”) until their parents qualify for Medicaid. To help prevent this worst-case scenario, you may want to consult a financial planner about some proactive options such as:

Long-term care insurance (LTCI)

Expenses covered by long-term care insurance generally include assisted living, nursing home, adult day care, Alzheimer’s care facilities and hospice. The key is encouraging parents to buy coverage early, before they develop health problems.

Pros and cons include: LTCI can be pricey, although it could cover some expenses that Medicare or private insurance do not.

Long-term care benefit plan

This option involves converting a life insurance policy into funding specifically for long-term care. These insurance conversions are also called life care assurance, Medicaid life settlement, or life care funding. It’s commonly used as part of a spend-down strategy to receive Medicaid eligibility.

Pros and cons include: This strategy can provide an immediate source of funding. However, the family will lose the death benefit that an unconverted insurance policy would have provided.

Reverse mortgage

Some aging homeowners turn to reverse mortgages (also called home equity conversion mortgages) to turn their equity into cash while still retaining ownership.

Pros and cons include: Although it can provide a cash infusion, using a reverse mortgage to pay for senior care is a potentially risky, “last resort” type of move. Not everyone will qualify, and defaulting could lead to loss of ownership.

Medicaid

Unlike Medicare, Medicaid is jointly administered by the federal government and individual state governments. As a result, eligibility requirements and other rules vary from state to state.

In general, though, Medicaid recipients must have low incomes and assets with very low value. The program is intended to benefit the poorest Americans, so many middle-class families likely don’t qualify.

To get more information, check with the agency that manages Medicaid in your state. You can also contact an elder law attorney in your state or visit these websites:

Claiming your parents on your tax return

To claim a parent as a dependent, your financial support for them must be substantial — at least 50% of the total cost for housing, food, medical care and other items. Also, the parent can’t earn more than the personal exemption for that tax year (which was $4,050 in 2016).

So, unless your parent has a very low income and you pay more than half the cost of keeping them cared for, they probably wouldn’t qualify as a dependent. If the parent does qualify, you could receive tax benefits such as the Dependent Care Tax Credit and reduced taxable income.

To get definitive answers, ask your tax preparer. You can also call the IRS or make an appointment at a local Taxpayer Assistance Center.

Expert opinion

“When budgeting for an aging parent, Medicare costs need to be factored in. They pay a monthly premium for Medicare Parts B and D for life and then also a Medigap or Medicare Advantage plan to pay for the things like deductibles and coinsurances that Medicare doesn’t cover.”

Danielle Kunkle
Co-founder, Boomer Benefits

The sibling situation

Among adult siblings, the care of aging parents has the potential to spark conflict like few other subjects. Handling parents’ finances is no exception.

It’s not uncommon for someone who takes the lead as caregiver to feel overburdened and resentful toward a sibling taking a less active role. Fortunately, a personal care contract or caregiver agreement can help ensure that the sibling who makes the most sacrifices is at least financially compensated.

Under this type of agreement, parents or other family members agree to reimburse the family member acting as caregiver. Compensation options include:

  • Direct payments (the income will be taxable)
  • An estate plan, or additional consideration in the parent’s will
  • Transferring homeownership to the caregiver
  • A life insurance policy with the caregiver as beneficiary

An elder law attorney can help you draw up a caregiver agreement. As for the form that compensation takes, families should think carefully about options that could lead to future conflicts between siblings (specifically, an estate plan or home transfer).

About those conflicts…

Even if you have a financial arrangement in place, don’t forget that sibling caregivers often have emotional needs in addition to financial ones. Expert tips on how to defuse conflict and increase support include:

  • Stay in communication, even if it’s just a weekly call
  • Arrange for someone else to step in every now and then so the caregiver can have time off
  • Ask for outside help (family counselors, social workers, clergy, etc.) when conflict becomes unmanageable

Expert opinion

“Personal care agreements are valuable for two very different reasons. One is emotional, for the family caregiver to feel as though they have a ‘real’ job and have at least a written record of what they need to do. Many have to cut back on work or stop working during a period of caregiving. The agreements can also serve as a record of the work done for siblings.”

Michael Guerrero
Senior Benefits Adviser

Elder Care Resource Planning

Complete Article HERE!

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11/5/17

This might be the most egregious tax proposal of them all

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Business Insider explains one of the Republicans’ most egregious proposed changes in the tax code:

The Republican tax plan repeals an itemized deduction that applies to healthcare expenses. That’s key for families with high medical costs, like those dealing with chronic conditions that require medical devices and other expensive equipment. Right now, those expenses can be deducted from their taxes, but under the Republican tax plan, they wouldn’t be able to.

Under current law, individuals who spend over 10% of their income on medical expenses are allowed to deduct part of those costs from their taxes. The proposed new bill would remove that deduction. According to the Internal Revenue Service, for 2016 taxes, individuals were able to deduct in an itemized way “only the amount of your unreimbursed allowable medical and dental expenses that is more than 10 percent of your adjusted gross income [AGI].”

Who spends more than 10 percent of his or her AGI on medical expenses? Generally people at the end of life in nursing-care facilities, where many expenses are not covered by Medicaid or Medicare. CNBC reports:

“This would be a joke if the consequences weren’t so serious,” said Brad Woodhouse, campaign director of health-care advocacy group Protect Our Care, in a statement. “Republican leaders are determined to raise health-care costs for middle-class families who need it most — in this case people with high medical costs or those paying for long-term care.”

While it’s not a widely used tax deduction — about 5 percent of tax filers claim it — for the old and sick it can be significant.

It tends to be mostly … older people who do not have long-term care insurance, and end up in a nursing home,” said Richard Kaplan, a professor who specializes in tax policy and elder law at the University of Illinois College of Law.

The cost of living in a nursing home can easily run up to tens of thousands of dollars per year and wipe out the savings of elderly residents who are paying out of pocket. The deduction can be an important offset to taxes those Americans would owe on their retirement savings distributions.

“For people who are receiving long-term care and are paying for it themselves, this is going to be a huge deal,” said Kaplan.

Andy Slavitt, former head of the Centers for Medicare and Medicaid Services, tells me, “The medical deduction is one of the most popular and important tax credits, particularly for all of us as we age.” He adds, “It keeps many seniors and families out of bankruptcy when in need of end of life care. Ask anyone with chronically ill kids, parents, or spouses.” These are not only very sick, old people but very sick, old and non-rich people. (“AARP has calculated that about three-quarters of those who claim the medical expense deduction are 50 or older, and more than 70 percent have incomes $75,000 or below. Many of those expenses are for long-term care, which is typically not covered by health insurance. Long-term care can cost thousands or tens of thousands of dollars a year.”)

This move doesn’t recoup much revenue in the grand scheme of things. (“It will cost the government about $10 billion a year in lost tax revenues in 2018 and about $144 billion over the next 10 years.”) So why do it? Well, Republicans have given so many tax breaks to the rich and corporations that they are scrounging for ways to take benefits away from others.

Consider this: The giveaway to rich heirs by removing the estate tax and allowing heirs the “stepped-up basis” adjustment in assets comes to $300 billion. They are literally taking money from nursing home residents so that rich heirs won’t have to pay a dime of inheritance taxes on estates exceeding $11 million (for a couple).

Or think about elimination of the alternative minimum tax, something that costs President Trump and other very rich individuals millions or tens of millions. Repealing it would cost $695.5 billion. Literally, they are taking money from people in nursing homes so that Trump and people like him can pay less in taxes.

There’s only one word to describe this sort of trade-off: obscene.

Complete Article HERE!

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09/12/17

How to care for your pets after you die — and what you should never do

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According to the 2017-2018 National Pet Owners Survey, 68 percent of U.S. households, or about 85 million families, own a pet. For many, these animals are not just companions, but beloved family members. From providing comfort in times of trouble to greeting us at the front door, it’s hard to imagine life without their unconditional love.

Nevertheless, whether you’re the proud owner of a miniature box turtle or mammoth Irish Wolfhound, owners have an obligation to ensure that their four legged friends are cared for when they’re no longer around.

But Erach F. Screwvala, an estate-planning attorney with Screwvala LLC, says that he’s noticed a rising trend in asset base management: unusual pet provisions.

Recently, one NYC woman made headlines when she left $300,000 of her $3 million estate to her two cats. The Manhattan lawyer says that though it’s not uncommon to see vast sums allocated to furry friends, you don’t need to allot such sky high funds for adequate care.

“Amounts higher than this are more common in the celebrity world – for example, Oprah Winfrey supposedly has put aside $30 million for her dogs in her will,” Screwvala said. “If such large bequests are desired, it is critical to provide for distribution of any excess amounts after the death of the pets to avoid burdensome probate proceedings to distribute any remaining money.”

In outlining pet provisions for a well-crafted estate plan, Screwvala suggests taking one of three routes: listing a beneficiary, establishing a pet trust, or finding a trustworthy organization to look after your sweet Fluffy or Fido.

First, a beneficiary will inherit your pet when you pass away; preferably, you can leave them money to provide for the animal. Next, if you desire more control, a pet trust, ideally as part of a revocable living trust, is recommended. While this plan is more expensive to set up, it provides certainty that the pet will be cared for precisely how you want, Screwvala said. It is critical to provide sufficient funds for a pet trust, so that the trustee has ample funds to execute your wishes. This is particularly true with animals that have longer life expectancies, like horses, he adds.

Lastly, finding a specialized animal care organization is a viable option to leave your furry friend in good hands. Make sure that you make arrangements in advance, as many groups will have specific guidelines, Screwvala notes. In his years as an estate planning attorney, Screwvala has encountered many bizarre requests for pet provisions.

“One that really sticks out in my mind was when I was asked to include a diamond dog collar and walking leash. Although, this was a rather peculiar request, it was definitely a wise move, as you can imagine a genuine diamond collar is incredibly valuable!” he said. “However, if the dog collar was encrusted with laboratory grown diamonds I would advise against because synthetic diamonds are of no inherent value.”

Additional requests have included a wardrobe of designer animal outfits and provisions for a custom-made wooden casket for a cat, Screwvala said. While such specific requests certainly gave the owners of those animals peace of mind, establishing your estate plan with straightforward pet provisions is beneficial to all.

“The most important thing people should leave is enough money to ensure that their pet is properly cared for after they pass away,” Screwvala said. He suggests avoiding overtly ridiculous food provisions (filet mignon steak only!) or anything else that might be difficult for the caretaker to fulfill.

Ultimately, one of the smartest moves you can make is connecting with an experienced estate planning attorney who understands your local laws, Screwvala says. This expertise is critical: in some states, provisions for pet care in wills are honorary, meaning that they can be ignored by your heirs.

“They don’t need $300,000, but a loving caretaker, regular veterinarian care, and a couple square meals a day will do wonders!” he said.

Complete Article HERE!

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08/5/17

A good death

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It would be foolish to think that we can control when our time is up. But neither should we face that moment unprepared. Not only for our sake, but for the people we leave behind.
 

By Vivien Shiao

THE only certainty in life is death. But this is not something we like to think about – not when we are at our prime, our careers powering ahead, and the future bright. In fact, as you flip through the papers, about to tuck into a nice brunch with loved ones, you may even question why we want to mention it at all, potentially casting a pall on a perfectly good weekend. The reality is, there are just as many ways to die as there are ways to live. It can come like a thief in the night, sudden and without warning. For others, death comes as an impending train – relentless and closing in. Or sometimes, long after the body and mind have withered, death still does not come. As the ultimate human experience we all cannot run away from, it matters how we approach death. How we live the rest of our days depends on it.

What a good death means

A good death is hard to define. In many instances, the process of dying is described as a battle to be won, a fight between life and death. Rage, rage against the dying of the light, wrote poet Dylan Thomas.

But doctors intimate with death tell The Business Times that this struggle to extend life without thought to its quality is not necessarily what people want.

Dr Ng Wai Chong, chief of clinical affairs, Tsao Foundation, is a physician who is well acquainted with death. To him, a good death is the ultimate challenge. “It is one with a good mind, one that is peaceful, one that has closure. All the big questions in life have been answered… To prepare for a good death, you need to live a life that is responsible and with a clear conscience.”

Those who are prepared are typically contented, accepting and also grateful, says Dr Ng. For Dr Neo Han Yee, a palliative care consultant at Tan Tock Seng Hospital, a good death means a life of little regret or guilt, and being at peace knowing that loved ones will be taken care of. “It is difficult to achieve zero suffering, but on a spiritual aspect, these people feel that their lives have been worthwhile and they are ready to move on.”

A good death also has a social dimension, he explains: People with the “foresight” to invest their time and effort in relationships, in turn, receive support in their last days from family and loved ones. They are the ones with the wisdom to prepare early and help family members cope with their impending passing, he says.

Planning for the end

A good death doesn’t come by accident. It takes planning and preparation in many aspects – financial, legal, psychological, social, medical, and even spiritual – to make it happen. This is not just to ease one’s passage, but also to ease the burden on loved ones.

If the end-of-life process is a long drawn out one, the stakes are even higher. For example, if you become mentally incapacitated due to your illness and your children have no idea what your last wishes are, they could end up spending tens of thousands trying to treat you, in the hopes of extending life.

Not only could this increase your distress in your last days (though with no ill intention), the lack of clarity is likely to result in conflict among family members, and financial issues. Such a scenario may seem like the stuff of TV dramas, but it is a lot more common than you think, according to experts that BT spoke to. So, rather than wait for a crisis to strike, it may be prudent to plan ahead when things are hunky dory and you still have sound presence of mind. This could prevent unnecessary expenditure, heartache and headache for others further down the road.

Alfred Chia, CEO of financial advisory firm SingCapital, says that procrastination is one of the biggest mistakes that people tend to make regarding their finances. He is also the co-author of Last Wishes: Financial Planning, Will Planning and Funeral Planning in Singapore. “Planning for death should not be viewed as taboo or negative. In fact, it is a celebration of our life in this world,” Mr Chia says. He advises people to plan for retirement early to avoid “huge financial stress” later. Work out the amount needed each month for the ideal lifestyle post-retirement and the number of years you expect to provide for, he says. The right insurance policy can also help achieve your goals in a more cost-effective way, he adds.

Other mistakes he has observed others make is to fall prey to financial scams, and to invest in instruments that don’t suit their risk profile. He says: “There is a saying that when I pass on, I have not spent all my money. While that is a regret, it will be even more regretful if I have spent all my money, and yet am still alive with no capacity to earn an income.”

On the flipside of the coin, those who are extremely wealthy have even more compelling reasons to plan. To manage their wealth, they often turn to family offices – private wealth management advisory firms.

Mr Chia says that planning ahead for the wealthy can help keep family unity and prevent squabbles over inheritance. Family offices can also spread the distribution of wealth over an extended period so that the children won’t be “spoilt” with the sudden wealth, he adds.

Working with the law

When life ends, a host of issues crop up for loved ones, that can only be properly resolved within the confines of the law.

Most people know the significance of wills, but there are other considerations such as trusts and Lasting Power of Attorney, or the LPA.

A will is for the distribution of assets after one’s death, while an LPA is for the appointment of a person or persons (known as the donee) to make decisions for you on “health and wealth” before your death.

Doris Chia, litigation partner of David Lim & Partners, saysthat most people with elderly parents would want to do an LPA, so that they are able to access their parents’ bank accounts or assets to pay for their parents’ medical bills when their parents are unable to do so.

One thing to bear in mind is that the LPA only kicks in in the event of loss of mental capacity. So although you may do an LPA now, it may only be valid decades later, says Ms Chia. Or, it may never come into effect at all if the person who appointed the LPA remains mentally healthy.

Ms Chia also warns that the LPA comes under the Mental Capacity Act, which means it can only be made by a person of sound mind. Once there is an onset of a mental issue such as Alzheimer’s or senile dementia, it will be too late to make one.

The consequences can be serious. She cites an example where the mother of one client became mentally incapacitated and then fell ill, and the client was unable to sell a private property that she owned jointly with her mother.

Without an LPA, she had to apply to the court for deputyship to sell the property, to fund her mother’s medical needs. This process cost “tens of thousands of dollars”, according to Ms Chia.

“A person applying to be a deputy has to file several affidavits in court. This also costs money. You can save all this heartache now by doing an LPA. What’s the harm?”

According to the Office of the Public Guardian, the fee for LPA certificate issuers ranges from S$25 for a general practitioner to S$500 for a psychiatrist – still much more affordable than applying for deputyship.

Another group of people that Ms Chia urged to apply for LPAs are singles, and people who identify as LGBT (lesbian, gay, bisexual, transgender).

“For LGBT people, it is essential to do an LPA as it allows the partner – and not family members, if that is your choice – to make decisions on your personal welfare and property and affairs. Otherwise, legally, your partner has no say over such matters in such circumstances.”

Where there’s a will

Aside from the LPA, the will is another matter to be considered seriously. For non-Muslims who die without making a will, distribution of assets will be according to the Intestate Succession Act. For example, the surviving spouse will get 50 per cent of assets, with the rest divided among their children. For singles, the assets will go to their living parents. Otherwise, it will go to their siblings.

Muslims follow the Muslim intestacy law, the faraid. Only one-third of their assets can be willed away, with the rest distributed according to the faraid.

For those who don’t want to follow the standard distribution rules, making a will is vital. Some people, Ms Chia has observed, don’t trust their spouses too much and prefer to give everything to their children.

The existence of a will gives much quicker access to assets. For people who die with a will in place, a Grant of Probate allows the process to move much faster compared to the Letter of Administration for those who die without a will, says Ms Chia.

Even so, the existence of a will is no guarantee that it will be carried out. It may be hidden, or lost, or challenged. It’s important that the executors of the will – those who will administer and distribute your estate upon death – know where the will is, together with proper instructions on bank accounts, assets and insurance policies.

Details make all the difference. “I always say to my clients, do a will that can last many years,” says Ms Chia. “Don’t say Property A goes to one son, and Property B goes to another son. If you sell Property B and you forget to amend your will, one son will end up with nothing.”

Instead, she recommends that the executor be instructed to sell all assets and for the proceeds to be distributed according to percentages.

State of mind and health also matter. It’s better to make a will when you are healthy and of sound mind so that there will be no dispute later, Ms Chia advises. She observes that most people do not think about end-of-life decisions until they are forced upon them. But wills are sometimes contested if the person had made it when they were very old or very sick.

Giving the assets in a trust, as opposed to in a will, prevents challenges by family members, says Ms Chia. Often used for succession planning, a trust protects family assets for the good of beneficiaries who are either too young, financially immature or vulnerable until they either come of age or reach a certain maturity.

The assets put into a trust are a gift made in a person’s lifetime, and not upon his death. Once the assets vest in the trust, they no longer belong to him. The assets will not form part of his assets at the point of his death and hence, a trust cannot be contested, explains Ms Chia.

Having a trust could also mitigate the heavy taxes applicable to estate duty in certain overseas jurisdictions, or safeguard assets from the possibility of lawsuits by creditors.

One particular group that can benefit are family members with special needs, she adds. Setting up a trust with that particular person as the beneficiary is a way to plan for a day when one can no longer care for him or her in person, says Ms Chia.

A conversation about care

Perhaps, due to cultural mores, or perhaps the need to “protect” their parents, some children refuse to even talk about death with their elderly parents, even as it is looming.

Sometimes, the severity of their condition – or even the amount of time they have left – is deliberately kept from them by well-meaning family members, thinking that mentioning it will result in emotional instability.

TTSH’s Dr Neo observes: “Quite often, when a person is so sick, family members are pushed into a corner. They don’t know how to broach the topic.”

But doctors and healthcare professionals are actively trying to change this mindset with the introduction of the Advanced Care Plan (ACP). It is a voluntary discussion on future care preferences between an individual, his or her family and healthcare providers.

While not legally binding, it describes the type of care the person would prefer, if he or she is to become very sick and unable to make healthcare decisions in the future. Compared to the Advanced Medical Directive (AMD) which has a very narrow scope of criteria, the beauty of the ACP is in the conversation, says Dr Ng from the Tsao Foundation.

“The goal is to respect a person’s rights to self-determination. It encourages people to think about existential issues and helps the people conducting it to get into the value system of the person. Scenarios might change, but the general drift is there, so it will bring some clarity.”

Otherwise, caregivers who don’t know what patients want will end up going on the “path of least resistance”, which often means over-investigation of treatment, says Dr Ng.

An AMD allows you to register in advance your wishes not to have any extraordinary life-sustaining treatment to prolong life in the event that you become terminally ill and unconscious and where death is imminent. However, the definition of a “terminal illness” is extremely specific.

Among the wealthier and more educated patients or caregivers, Dr Ng has also observed a sub-group of people who approach medical conditions with a consumer attitude. Instead, he advocates having a doctor as a lohealth partner that you can trust, with a relationship built over a long time.

“I see people over-treat, over-investigate, but a primary care doctor is a better way of managing health. The person can help you clarify your purpose, your goals and the best strategy to proceed. Along the way, he can even do your ACP with you and be a facilitator when it comes to complex family dynamics.”

Beginning with the end

It is not just the medical aspect of health that people should take into account in their last days. There’s also the need to think about the social, emotional and psychological state of the person.

TTSH’s Dr Neo explains that the intensity of pain is often heavily coloured by one’s emotions. To cope with the end of life, people must build up psychological preparedness and fortitude, he says.

To him, thinking about death is constructive for thinking of life.

He observes: “Life is impermanent. You treasure people around you a lot more, you don’t waste time on things not worth it. You invest your time and effort in things worthwhile. You know how to value relationships much more, so when the time comes, you will be wiser as you have thought about it for a longer period of time.”

To build psychological maturity, he advises people to find a higher meaning in life, or a certain “calling”. Singaporeans tend to forget this, he notes, as we trudge along in our work and family life. Happiness is always projected in the future, instead of finding meaning in one’s current existence.

At the crux of it, people are too busy trying to beat each other or accrue financial gain to think about their own vulnerability, says Dr Neo.

“We live in a very illusory world. Only when a crisis hits then will the person be shaken and realise that life is fragile. If we don’t make mental, emotional and financial preparations before, you will find it hard to cope with the situation. We often underestimate how much we can prepare for death.”

No one can predict how much time we have left on this Earth. But if we put in as much thought about how we want to die as much as we think about how we want to live, surely our days here – limited though they may be – will be all the more precious and meaningful.


What you need to know

Will

  • Make sure your executors can find it. Ms Chia from David Lim & Partners cites an incident when a client made a will and was so secretive about it that his family couldn’t find it after his death. Be aware also that:
  • The will is sometimes contested if it was made at a time when the person was very old or ill.
  • CPF nominations and insurance policies with a named beneficiary are not part of the will.
  • Property – private or HDB – held in joint tenancy will automatically go to the survivor and hence cannot be part of the will for distribution.

Lasting Power of Attorney

  • Can only be used when the person who makes it (the donor) loses mental capacity and is only valid when the donor signs it when he is of sound mind.
  • One fear that people have about LPAs is that their children or donees can “help themselves” to the donor’s money when he or she is mentally incapacitated. Ms Chia debunks this: The money can only be used for the person’s welfare and medical expenses, and they will need to submit accounts to the Office of the Public Guardian, which serves to safeguard the interests of individuals who lack mental capacity and are vulnerable. In addition, more than one donee can be appointed to guard against dishonesty.

Trust

  • Anyone can set up a trust, says Ms Chia, but the costs are higher compared to arranging a will, or even setting up a private interest foundation, an entity which has the characteristics of both a company and a trust. “If the trust requires professional trust managers to make investment decisions or payments over several generations, this will cost money to administer. One needs to weigh the asset value against the cost of administering the trust,” she says.

Advance Medical Directive

  • Legally binding, but very narrow definition of “terminal illness”.
  • The AMD registry is only accessible during office hours. A doctor facing an emergency situation in the night will be unable to retrieve and verify an AMD. In fact, the AMD Act Section 15 has also been frequently interpreted as an offence for a doctor to query his patient about his AMD, according to Dr Neo of TTSH.

Advance Care Plan

  • Puts everyone on the same page, as it describes the type of care you would prefer, if you become unable to make healthcare decisions in the future. U For people with an ACP, the palliative care is much smoother for everyone involved as they don’t feel burdened with tough decisions, says Dr Ng of Tsao Foundation.
  • Not legally binding, and can be changed and reviewed, preferably with your primary care doctor or the main doctor tending to your advanced illness.

Complete Article HERE!

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07/27/17

Why it’s so hard to die in peace

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For those of us who had hoped that American attitudes toward death were shifting in ways that would promote a wider reconstruction of the health-care system, there’s discouraging news from Health Affairs, the preeminent journal of health policy. It devotes its latest issue to “end-of-life” care and finds that — at least so far — the power to make health care more compassionate and cost-effective is limited.

That was the vision. Americans would become more realistic about death. Through “living wills,” they’d reject heroic — often futile — treatment to keep them alive. Health spending would be lower (by one estimate, a quarter of Medicare spending occurs in the last year of life). People would die with dignity. They’d be spared needless suffering.

Superficially, the vision seems to be triumphing, according to the 17 studies in Health Affairs. By one study, a third of American adults — and nearly half those 65 and older — have some sort of living will. From 1999 to 2015, the share of Americans who died in hospitals dropped from more than half to 37 percent. Over the same period, the number dying at home or in a hospice rose from less than a quarter to 38 percent. Moreover, at 8.5 percent of health costs, spending in the last year of life is lower in the United States than in some other countries.

But on inspection, the gains seem less impressive. The share of people with living wills has remained stuck for six years. According to another study in Health Affairs, the increase in hospice care is not substituting for expensive hospital care but adding to it. Said the study by Melissa Aldridge of Mount Sinai hospital in New York and Elizabeth Bradley of Vassar College:

“What has emerged [is] a relatively new pattern of hospice use. . . . Hospice enrollment [has become] an ‘add-on’ in health care after the extensive use of other health care services and within days of death.”

Patients receive expensive care until nearly the end, when they’re switched to hospice care. This obviously limits the potential for reducing costs and for relieving patients’ suffering. In addition, spending for the last year of life, though significant, is still a small share of total spending, refuting the argument that the high cost of dying explains why U.S. health care is so costly.

“We found that U.S. health spending [during the last year of life] was less than one-tenth of total U.S. health care spending [8.5 percent] and thus cannot be the primary cause of why U.S. health care is so much more expensive than care in other countries,” concluded another study in Health Affairs headed by Eric French of University College London.

(The fact that the effect on Medicare is much larger reflects simple arithmetic: Because Medicare represents only about a fifth of total U.S. health spending, the spending in the last year is being compared with a smaller base.)

None of this means that end-of-life care can be ignored. Indeed, the problems will almost certainly worsen, because much care-giving is by families and friends. Already, 29 percent of the adult population — two-thirds of them women — consider themselves caregivers.

As the population ages, the burdens will grow. In 2010, the ratio of potential caregivers (people 45 to 64) to those aged 80 and older was 7-to-1; by 2030, it’s projected to be 4-to-1. Alzheimer’s cases are increasing. Spending pressures on Medicare and Medicaid will intensify.

Just whether the persistence of high-cost care reflects good medicine, a deep human craving to cling to life, or both is unclear. But the rhetoric about “end-of-life” care has changed more than the reality. To the question — Can we die in peace and with dignity? — the answer is “not yet.”

Complete Article HERE!

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05/4/17

End-of-life discussions head off hardship in times of grief

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By Terry Savage

With Mother’s Day coming up, and Father’s Day soon after, maybe it’s time to have a family discussion about what will happen when the unspeakable happens. Death isn’t pleasant to talk about, but if you’re willing to have that conversation, you’ll make things much easier at a tough time in the future.

No one likes to think about mortality. Young adults consider themselves immortal. Middle agers are fighting the concept of growing older. And the baby boomer generation figures it can bend the rules of aging as it has changed so much of our society in the past 60 years. But sooner or later, our time will come.

Will we leave a giant puzzle for our loved ones and heirs to figure out? Or will we smooth the way to making this transition a bit less painful, leaving them able — and legally empowered — to handle the assets we leave behind?

By the way, this is not a discussion just for aging parents. Families with young children need to organize their finances as well. Who will know the passwords to access everything from bank accounts and 401(k) plans to your valuable cache of airline miles?

Years ago, I created a Personal Financial Organizer form — which is still available free at my website, TerrySavage.com when you sign up for my free newsletter. It comes to you by a link in a return email, and you can print out as many copies as you want, giving them to friends and family to create their own roadmaps to their finances.

This four-page form is used both as a discussion starter and an organizational tool. Once filled out, it serves as a guide to locating your investment accounts, bank and brokerage accounts, will and estate planning documents, cemetery deed, safe deposit box and keys, passwords and credit card account numbers, and myriad other documents that would be hard to find in a crisis or after you’re gone.

But Harris Rosen, a retired executive, has taken it a step further in “My Family Record Book” ($15.95 on Amazon.com). The octogenarian has explained not only what you should organize, but why — and he explains the pitfalls and consequences of not knowing this important information.

Rosen speaks directly to seniors, giving resources and references on everything from how to order a tombstone to services that will take care of your pet after you are gone! There is an entire section on downsizing after the loss of a spouse and advice on how to dispose of furniture and clothing to charitable organizations that will make good use of these items. But mostly he focuses on organizing your financial papers to make life easier for your survivors.

Two other books of a similar genre are the best-selling “Getting it Together” by Melanie Cullen, published by Nolo Press ($14.31 on Amazon), which includes downloadable forms, and the spiral-bound “Peace of Mind Planner” by Peter Pauper Press ($12.04 on Amazon). Both make your planning organized and accessible to family members.

By now you get the idea. Any of these tools will make the perfect gift for the upcoming holidays and provide a starting point for important discussions of end-of-life matters, from locating health care directives and powers of attorney to planning a funeral or finding the policies and assets that will allow the survivors to deal with financial issues.

Yes, it’s a tough subject to tackle on Mother’s Day or Father’s day. But it’s not nearly as tough as it will be to try to figure it out in a crisis when your loved ones are not able or around to help you. And that’s The Savage Truth.

Complete Article HERE!

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