Facing finality: it’s important to plan for your final days

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A recent survey reveals that seniors and their adult children often do not take the necessary steps to plan for their final years of life.

By Cory Fisher

Despite the fact that most seniors have very specific ideas regarding how things should be handled when it comes to their care at the end of life, a surprising number have not shared this information with their offspring.

Too often seniors and adult children are eager to avoid the topic and therefore do not take the steps necessary to plan for the final years of life — including getting financial affairs in order and creating plans for care when a senior’s health inevitably begins to decline.

A new survey by Home Instead, Inc. found that while 73 percent of seniors have a written will, only 13 percent have actually made arrangements for long-term care. Additionally, 79 percent of seniors are more comfortable planning for their funerals than planning for when they need full-time care or hospice.

New research reveals it’s the children who feel the most awkward about broaching the subject of a parent’s final wishes. Even as parents approach their final years, adult children still find it hard to accept their parents’ mortality and believe the topic might be upsetting to parents or grandparents.

Yet once the subject has been broached, a 2017 survey of 505 seniors age 75 and over, and 510 adults between the ages of 45 and 69 revealed something quite different. A whopping 88 percent of seniors said discussing plans for their final years made them feel closer to their adult children, and 97 percent of adults who helped with their parents’ planning said it “gave them peace of mind that things would go okay.”

Those end-of-life fears that lead to avoidance only delay the inevitable. In most cases, adult children will be monitoring their parents’ care and the more information they have, the better.

Research, as well as Home Instead Senior Care experts say there are ways to combat those fears. Talk it out, don’t wait for a crisis, put a plan in place, consult experts on end-of-life issues and follow the “40-70 Rule,” which means that if you are at least 40, or your parents are at least 70, it’s time to start about certain senior topics.

Some of the most common fears experienced by seniors, according to research compiled by Home Instead, Inc., include:

  • Fear No. 1: “I hate the thought of having feeding tubes and ventilators keeping me alive.”

What you can do about it: Consider establishing a living will. Living wills detail an individual’s treatment preferences in the event he or she is unable to make those decisions. Many lawyers will prepare a living will as part of an estate planning package.

  • Fear No. 2: “I’m afraid I will end up in a nursing home, and I don’t want to die in a hospital or institution.”

What you can do about it: There are many options for end of life care outside of nursing homes and hospitals. Adult children can help their parents research home care options so the entire family is prepared when the time comes.

  • Fear No. 3: “What if I get dementia and can no longer make my own decisions?”

What you can do about it: It’s wise to have seniors designate a trusted person with power of attorney who will act on their behalf in the event that they are no longer able to advocate for themselves. This will give them peace of mind that their care wishes will be met regardless of their mental acuity.

For adult children, experts suggest the best way to address the end-of-life fears is to communicate clearly with parents about their wishes way in advance. Record specific discussions by taking notes, which could be helpful when making decisions in the future.

For those who feel a great deal of anxiety surrounding this topic, Home Instead offers free resources to encourage seniors and their adult children to talk together about important life plans, which can include end-of-life care, finances, insurance and funeral planning.

A novel component of the free resources offered includes a music generated feature entitled, “Compose Your Life Song.” The light-hearted online exercise, which can be found at http://www.caregiverstress.com/end-of-life-planning/compose-life-song/my-song/, can help families broach difficult subjects more easily.

After completing the activity, seniors are presented with their own customized “song” and accompanying resources that will help them reflect on their personal preparedness during their final years.

The song is a great way to gracefully transition into more serious topics, said Buck Shaw, owner of the Home Instead Senior Care office serving Sacramento, Nevada, Placer and El Dorado counties.

“It’s fun — I’ve done it myself,” he said. “It’s a very basic questionnaire that is a nice blend of topics. It’s so important to talk about these things — I can’t tell you how often I’ve seen families have disagreements when plans aren’t in place. One part of the family thinks grandpa wants one thing, while the other side thinks the opposite.

“It creates an awkward division of the family. I’ve even seen very educated people — doctors and teachers — arguing with relatives who are trying to keep grandpa alive when he was good to go. This can cause rifts in the family that are hard to repair.”

Participants who go online to create their own song respond “yes” or “no” to thought-provoking statements, such as, “I have checked off an item on my bucket list in the past year,” “I frequently visit with people whose company I enjoy,” “I have talked to my family about my end-of-life wishes” and “I have established a will and advanced directives.” This can open the door to deeper, more constructive conversations, said Shaw.

“About 77 percent of adult children think their parents have plans in place, while only 50 percent do,” he said. “In the long run, if we become advocates for seniors, we all win in the end. It’s all about raising awareness and doing the right thing.”

Complete Article HERE!

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Dying Young and the Psychology of Leaving a Legacy

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Often the biggest existential distress that we carry is the idea that no-one will remember us when we are gone—initially we know that our friends and family will hold who we are, but after a generation, these people are likely gone too. At the end of life, the pressure to leave an unquestionably relevant legacy can be crippling for people, particularly for young people. When coupled with the limited energy that people have when they are unwell, the very nature of what people expect to achieve in the world shrinks, and the really important pieces come into focus.

When time is seen to be limited, every moment can take on a weight that has never before been experienced. Some of these expectations come from within and some externally, but regardless of their origin they can be paralyzing for the young person facing their mortality, particularly when unwell. Culturally, there are multiple references as to what ‘dying young’ is meant to mean and most refer to extraordinary and often unobtainable expectations. For instance, members of the ‘27 club’ (celebrities who die on or before their 27th birthday) and notable cancer-related concepts around ‘bucket lists’ and works of fiction (e.g., The Fault in Our Stars). Most young people, particularly those who are dying, do not have the capacity or the options to engage in an extraordinary feat, they can become overwhelmed and paralyzed by what they are ‘meant to be doing’.

Often, as is the case with many things in life, simple and small are the gestures and moments which are the most meaningful, with huge projects and adventures feeling too overwhelming and out of the grasp of someone with limited energy and resources. As such, the fantasy of what something may have looked and felt like, had they have been well, is a much more satisfying space for them to sit with. Similarly, relationships become much more meaningful, as do the simple things that are taken away through the treatment process, like being able to sit in the sun or go to the pub with a friend.

Young patients can be bombarded with well-intentioned suggestions about what they ‘need’ to do, including making future legacy-based activities, such as leaving cards for each of their younger sibling’s birthdays, video journals of their death, or chronicling how they feel about all the people in their world. Although these are good ideas, they are emotionally and physically difficult to manage with limited resources. Patients need to be feeling very resilient and well before attempting any of these things with most being abandoned due to the confronting nature of conceptualizing the world without them present in it. It is a difficult ask for anyone to be able to take the relatively abstract idea of the world continuing following your own death; this does not change for young people and, in some ways, it is even more challenging due to their pervasive sense of self, even in the face of very real threats to their mortality.

The way that young people respond to being presented with a very limited life expectancy can vary tremendously. Some may stick their head firmly in the sand and refuse to discuss or conceptualize anything about what may happen in the lead-up to their death, or following. Others will organize everything about the end of their lives, including where they want to die, how alert they want to be, as well as what will happen following their death—such as where their belongings go and how they want to be remembered. For most people in this situation, in an existential sense, almost everything is out of control, the disease will do what it does, the pain is what it is, and they are an observer to the things happening in their bodies. The things that people can control is what they talk about, how much they talk about it, and who they talk about it too.

Just because death, dying, and legacy are not being talked about, does not mean that it is not in the consciousness and thoughts of the person pondering their own end. Instead, it may be that they have done as much thinking and talking about it as they need to do; it is often these patients that have very well-considered plans about what they want to happen as they deteriorate and the decisions that must be made about their care.

Complete Article HERE!

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How to Prepare, Just in Case You Die Young

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Nobody wants to imagine it. But you can disaster-proof your affairs with this checklist.

Insurance, wills, the POA (power of attorney)—they all matter in making things more manageable for survivors.

By Chana R. Schoenberger

Few estate plans consider the possibility of an early death. That is a potentially disastrous mistake, experts say.

By the time you’re in your 40s, you likely know someone, or know of someone, who has died young. That is why it is important for people to draw up plans as soon as possible, including accounting for what will happen should death occur in middle age, with children still at home.

We spoke with estate-planning lawyers to ask what end-of-life documents and estate plans a 30- or 40-something would need to assemble (aside from tax-planning help, for which an accountant or tax lawyer should be enlisted). All recommended getting started right away with this checklist:

INSURANCE

Life insurance can be expensive, but it ensures that if a spouse should die young, his or her partner can stop working or downshift careers to take care of the children. People often buy life insurance for themselves when their children are born, so the surviving spouse won’t have to worry about having money for tuition or the costs of raising children as a single parent.

“It’s best if you can buy guaranteed renewable term insurance when you’re still insurable and have no underwriting risks, while you’re still relatively young and before you have any diagnoses,” says Joe McDonald, an estate-planning lawyer at McDonald & Kanyuk in Concord, N.H.

It’s also advisable to buy long-term-care insurance, though it is becoming more expensive as policyholders live longer. Many employers also offer disability insurance to replace a certain percentage of salary if the employee becomes incapacitated, says Joshua Kaplan, an estate-planning lawyer at the law firm Dechert in New York.

WILL

Everyone needs a will. Without one, depending on the state of residence, it could take weeks or months for an estate to make its way through probate court until a judge appoints an executor to wind down the deceased’s financial affairs. During that time, heirs may not be able to access the money left to them or even write checks to pay their bills.

Often state rules say that every person named in a will as the recipient of property needs to receive written notice that the will is in probate.

“It’s often simpler to leave everything to one person or a class of person, like your children, and then have them distribute,” says Mr. Kaplan. His grandmother did this, leaving everything equally to his aunt and father, with a letter explaining which relatives should also get certain items.

Once the will has been made and signed properly, where should it be kept? Somewhere safe, where the family can find it, such as with a lawyer. But be sure to tell someone in the family where it is.

“Don’t leave it in your safe-deposit box unless someone is the second signer, or you won’t be able to get to it,” says Sharon Bilar, an estate lawyer who has a practice in New York.

BENEFICIARIES

When you set up a bank account or any financial account, you’re typically asked to name a beneficiary to inherit it if you die. Such an account will pass directly to that person without going through probate, so make sure your beneficiary designations are up-to-date. You may have designated your siblings when you started working and set up your 401(k), for instance, but now you’re married and want to designate your spouse.

You also need a secondary beneficiary, in case something happens to your first choice (suppose, for example, that you and your spouse are in a car crash together). A trust can be a beneficiary as well. If there isn’t a space on account-opening forms for a secondary beneficiary, call the financial institution and request to add this person.

Generally, your children will be your secondary beneficiaries, after your spouse. Be careful of designating as secondary beneficiary an adult whom you would like to take care of your children, Ms. Bilar says.

“If you make anyone the beneficiary who’s not your child, that money legally belongs to the beneficiary, and you cannot force that person to spend the money on your child,” she says.

POWERS OF ATTORNEY and PROXIES

“If you’re worried about passing suddenly or becoming suddenly incapacitated, the legal documents you should have are some sort of health-care advance directive and a living will,” Mr. Kaplan says. A health-care proxy appoints one person, older than age 18, to act on your behalf when making medical decisions. If you don’t have this document signed and something happens to you, your spouse will have the right to make these decisions for you, followed by your adult children and your parents. Make sure to designate a first- and second-choice person to be your proxy, Mr. Kaplan says.

You’ll also want to sign a living will, which lays out your intentions for end-of-life care, such as when to withhold treatment if doctors determine you’re not going to recover, and whether you wish to be an organ donor. This is important if you are in an accident or otherwise become incapacitated. Because wishes often are driven by religious and other personal moral concerns, it is important for couples to discuss their own preferences, Mr. Kaplan says.

GUARDIANSHIP

When there are children under 18, the most important step in estate planning is to decide who should raise them if both spouses are gone. This preference goes into your will, where a judge will almost always honor it when deciding whom to appoint as guardian. If you don’t have this designation in writing, you’re leaving it up to the court to decide who will take care of your children. “It’s best if spouses both name the same people in the same order” when they choose a guardian for minor children, Mr. Kaplan says.

The guardian you select for your child doesn’t have to be the trustee of any trust you set up for your child—although it is easier if they agree on how to spend the money to benefit the child.

“Some people want the trustee to put the brakes on the guardian spending money for the child, to act as a check and balance,” says Mindy Stern, an estate lawyer at Schwartz Sladkus Reich Greenberg Atlas in New York.

Every additional piece of information survivors have about the deceased’s affairs can make the hours and days after a person dies easier. Survivors should have access to a file that contains insurance information; a list of all your bank and financial-institution accounts, “529” college-savings accounts and retirement accounts, with beneficiary information; a list of all your credit cards, as well as any household expenses that are set on auto-pay; and details on where to find the deed to the house and the cemetery plot, plus the key to the safe-deposit box.

Also keep a list of online accounts and their passwords, as well as information on airline frequent-flier miles, and the credentials to any cryptocurrency wallets you hold, Ms. Bilar says.

Complete Article HERE!

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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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Taking Over Your Aging Parents’ Finances

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

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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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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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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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