The death question

— How to talk to clients about their life expectancy

It may be a grim topic, but death is a key factor in retirement planning.

How long do you expect to live? It’s a touchy question, but research shows asking it can significantly help investors prepare for retirement.

Death is rarely a pleasant topic of conversation, but it’s a key factor in retirement planning since the longer you live, the more savings you’ll need to finance your life. But because it’s uncomfortable, many savers avoid realistically estimating their own lifespans — which can lead to poor planning.

“People tend to underestimate how long they will live in retirement, which means they tend to save too little, spend too much and run out of money in later life,” said Olivia Mitchell, executive director of the Pension Research Council at the University of Pennsylvania.

The good news is that, according to new research, even the most cursory conversation on the subject can make a big difference. Mitchell recently co-authored a study by the Leibniz Institute for Financial Research at Goethe University Frankfurt, which surveyed people’s estimates of their own life expectancies. In some cases, the test subjects also read a paragraph about a hypothetical retirement saver (“Mr. Smith”) and answered a multiple-choice question about what he should do.

But the study wasn’t interested in how well the respondents guided Mr. Smith. Instead, it focused on how accurately they estimated their own life expectancies after answering the questions. The researchers measured the gap between people’s subjective and actual life expectancies — in other words, how long they thought they would live versus how long they would probably live in reality, based on their gender, age and other demographics. In general, the average gap was 17.1%. But after reading the Mr. Smith paragraph, that gap shrank by 5.2 percentage points.

“In other words, simply prompting people to think about a financial decision related to longevity risk affected peoples’ estimates of their own anticipated lifespans,” the study said.

For financial advisors, what this means is that even just broaching the subject of a client’s lifespan can substantially help them think more clearly about the future. In some cases, that can mean better preparing for longevity risk — the danger that a person will outlive their retirement savings.

“When financial advisors are doing their jobs well, they will help people understand not only the too-simple concept of life expectancy, but also the notion that half the people live longer than this mean,” Mitchell said. “Therefore, plans are needed to cover the eventuality of living to 100 or beyond, which is what longevity risk refers to.”

Of course, this is easier said than done. How does one remind a client of their own mortality and then have a calm, unemotional conversation about finances? Advisors have a wide range of methods. When possible, some said, it helps to make it funny.

“I find it’s best to be compassionate, direct, and (for the right clients) inject a little humor,” said Louis Leyes, a financial planner and partner at Stages Planning Group in Pennsylvania. For some investors, he puts the question this way: “So, when would you like to take your leave of this mortal coil?”

Lora Hoff, a CFP at IPI Wealth Management in Illinois, said she likes to “keep it light.”

“I say something like, ‘My plan will need to include some assumptions about how long you will live,'” Hoff said. “‘I can use the actuarial default, or I typically use age 100, unless you have some specific preference of what you want to see — I don’t like to kill anybody off in my planning!’ Then I just laugh about it.”

Others use technology, including software like eMoney or MoneyGuidePro, to estimate the client’s lifespan. That way the question stays mathematical instead of emotional.

“We use MoneyGuidePro’s questions about whether they smoke, how healthy they are and the longevity in their family and let the program decide on their lifespan,” said Lisa Kirchenbauer, a CFP and founder of Omega Wealth Management in Virginia. “Then we discuss and change it to fit what the client is comfortable with, explaining the pros and cons of the choice.”

Some advisors say that by treating death as a purely practical matter, they can keep the conversation from getting uncomfortable.

“I actually don’t find it difficult to talk to clients about mortality,” said Anna Sergunina, a CFP and president of Main Street Financial Planning in California. “I explain to them that we need to have an ending point to their financial plan, to make sure we’ve estimated properly how long their money will last.”

Leibel Sternbach, a financial advisor and the chief technology officer of Fusion Capital Management in Texas, said most clients aren’t shocked by the death discussion.

“Our job is to ask the hard questions,” he said. “They know and expect it of us.”

Complete Article ↪HERE↩!

March 21, 2023March 20, 2023

5 key things to know when you create a will and make other end-of-life plans

By Sarah O’Brien

Planning for who makes decisions and who gets what when you die is “a gift” for your family, says a financial advisor.
While many people think estate planning is only for the wealthy, experts say that’s not the case.
Here are some key things to think about when you give thought to your own end-of-life plans.

Contemplating your own death may not be on the list of things you’re eager to do.

Yet for your family or other loved ones who would find themselves trying to sort out your affairs while also dealing with the emotional fallout from losing you, your having a so-called estate plan is important, experts say. And this is the case whether you are wealthy or not.

“When you get your things in order, it’s a gift you’re giving your family,” said certified financial planner Lisa Kirchenbauer, founder and president of Omega Wealth Management in Arlington, Virginia.

In simple terms, your estate plan spells out who you want making decisions and who will inherit what you own. “Estate” simply refers to possessions and other assets.

Experts say most estate plans don’t need to be complicated. But to make sure your wishes are carried out, they do need to be done correctly — which may make it worth consulting with a local attorney who specializes in estate planning.

Here are five key things to know if you start thinking about how you’d craft an estate plan.

1. A will may not cover all your bases

A will is a basic part of an estate plan. It lets you identify who you want to receive certain property and allows you to name a guardian for dependent children. If you don’t have a will in place when you die, the courts may decide who gets what or who is appointed guardian.

However, some assets pass outside of the will, including retirement accounts such as 401(k) plans and individual retirement accounts, as well as life insurance policies and annuities. This means the beneficiaries listed on those accounts supersede any instructions in your will.

“If your ex-spouse is listed on the beneficiary designation, your ex-spouse will get the money regardless of what your will says,” said CFP Stephen Maggard, an advisor with Abacus Planning Group in Columbia, South Carolina.

Be aware that many 401(k) plans require your current spouse to be the beneficiary unless they legally agree otherwise.

Regular bank accounts, too, can have beneficiaries listed on a payable-on-death form, which your bank can supply. Same goes for brokerage accounts.

If no beneficiary is listed on these various accounts or the named person has already died (and there is no contingent beneficiary listed), the assets automatically go into probate.

That’s the process by which all of your debt is paid off and the remaining assets that are subject to probate — which includes those that pass through the will — are distributed to heirs. This can last several months to a year or more, depending on state laws and the complexity of your estate.

2. You’ll need to carefully pick your will’s executor, other key roles

When you create a will, you name an executor to carry out your wishes and handle your estate. It can be a big job.

Things such as liquidating or closing accounts, ensuring your assets go to the proper beneficiaries, paying any debts not discharged (i.e., taxes owed) and even selling your home could be among the duties overseen by the executor.

This means that you need to make sure whoever you name is up for the job — and that they are amenable to taking it on.

Additionally, an estate plan should include other end-of-life documents, including a living will. This outlines the health care you want and don’t want if you become unable to communicate those desires yourself.

You also can assign powers of attorney to trusted individuals so they can make decisions on your behalf if you become incapacitated at some point. Often, the person who is given this responsibility for decisions related to your health care is different from whom you would name to handle your financial affairs.

Just be sure to name alternatives.

“It’s super important to have backup people in all roles in the estate plan … in case someone cannot serve,” said CFP Jennifer Bush, a financial planner with MainStreet Financial Planning in San Jose, California.

3. Some assets get a ‘step-up in basis’

If you have assets such as stocks, bonds or real estate (i.e., a house) and are considering gifting them to children or other heirs while you’re alive, it might make more sense to wait.

When these assets are sold, any increase from the so-called cost basis (the value when the asset was acquired) and the sale price is subject to capital gains taxes.

However, upon your death, your heirs who inherit those assets get a “step-up in basis.” In other words, the market value of the asset at your death becomes the cost basis for the heir — which generally means any appreciation prior to that is untaxed. And when the heir sells the asset, any gains (or losses) are based on the new cost basis.

On the other hand, if you were to gift such appreciated assets to heirs before your death, they’d assume your original cost basis — which could translate into an outsized tax bill when the assets are sold.

“We find ourselves often recommending that clients give adult children cash instead,” Maggard said.

4. You may want to consider setting up a trust

If you want your kids to receive money but don’t want to give a young adult — or one prone to poor money management or other concerning behaviors — unfettered access to a sudden windfall, you can consider creating a trust to be the beneficiary of a particular asset.

A trust holds assets on behalf of your beneficiary or beneficiaries, and is a legal entity dictated by the documents creating it.

If you go that route, the assets are left to the trust instead of directly to your heirs. They can only receive money according to how (or when) you’ve stipulated in the trust documents.

5. You’ll need to revisit your estate plan

Anytime you have a major life change — such as birth of a child or divorce — it’s important to review your estate plan.

You’ll want to confirm that your named executor (or trustee, if you set up a trust) is still an appropriate choice. Additionally, check all listed beneficiaries on your financial accounts to make sure no updates are needed.

Additionally, If you move to a new state, be sure to check whether you need to update any part of your plan so it follows that state’s laws.

Complete Article ↪HERE↩!

March 1, 2023

The average end-of-life expenses are more than $17,000

— But life insurance can cover that and much more

Whole life insurance has fixed premiums and death benefits, so they won’t fluctuate over the policy’s duration.

By Lina Roby

The average family will spend $17,199 on funeral and legal costs before estates are settled.
The higher your income, the longer it will take to settle your estate.
Even a small guaranteed-issue life insurance plan can counterbalance end-of-life costs.

According to a cost of dying report from, creators of the Empathy mobile app, which is designed to guide families through the grieving and post-death process, the average beneficiary in the US spends $17,199 on things like court costs, funerals, and more. The average estate is not settled for months or even years due to court filings, disputes, and other largely administrative aspects.

What does this mean for loved ones? In short, you’ll need to come out of pocket with $17,199 or more when the the median bank account balance of the average American is just $5,300 according to the Federal Reserve’s most recent Survey of Consumer Finances. This is where having an adequate life insurance policy can make all the difference.

Preparation means communication

Above all else, Empathy co-founder and CEO Ron Gura recommends communication, even over-communication, before death. He says regardless of age, health, or current income, “you need to put your last wishes in place, have sensible conversations with your loved ones, have a guardianship document, advanced directives, etc.”

Free online services allow anybody to create a will. Hospitals will file advanced directives for you. But it starts with communication. We have to talk about death in a way we’ve traditionally avoided in virtually every culture. For many, this also means talking about life insurance and buying a policy that makes sense for you.

How does life insurance protect your loved ones?

A common mantra of experienced life insurance agents and financial planners is also incredibly discouraging for the average consumer: “The most motivated client I have is the one for whom it’s already too late.”

It’s easy to be denied life insurance if you wait too long. Conditions like diabetes, cancer, and sleep apnea affect aging adults without warning, and you may not have as much time as you think. The increase in rates of type 2 diabetes starts at just 45, according to the CDC.

The average figure of $17,199 for costs that must be paid almost immediately after death puts pressure on families already struggling with grief. Even if you’re only interested in a cheap funeral life insurance policy, the price is inevitably lower when you buy early.

When I asked Gura about life insurance in the early days after death, he said, “Whole life and universal life insurance used in planning is very, very impactful. Policies have been around for hundreds of years, and people who have those have one layer less to worry about.”

When I consulted Patricia Stallworth, CFP and financial advisor at The Moneywise Woman, about small funeral policies, she said, “Small policies are a good option if there is nothing else, but they tend to be very costly. If funeral costs are the only concern, I recommend self-insuring if possible. Just setting the money aside in a separate fund – preferably one that is earning interest.”

In short, if you find yourself without savings at a later age, a funeral policy can help your loved ones. However, an interest-bearing fund opened early is best if funeral costs are your only concern. For larger goals like building generational wealth, starting early would be your best option regardless.

Protect loved ones from predatory loans with life insurance

While the average short-term costs after death come in at nearly $20,000, the average American may have just $5,300. Unfortunately, a funeral home has to collect payment at the time of the service to keep its doors open, leaving grieving families stuck in the middle.

It’s unsurprising that, as Gura has found, “25% of people are taking out a loan. Some of the loans are not exactly taken from JPMorgan. They’re taken from predatory lenders at a very vulnerable moment in time.”

Beneficiaries could spend years, even the rest of their lives, buried under the debt of these loan sharks or other predatory loans. The original $17,199 paid will quadruple with interest charges.

Even a $25,000 life insurance policy can pay short-term costs without interest or loan repayment. Ironically, the more money you have, the more beneficiaries pay. As such, life insurance should be proportional to your current income.

Going beyond end-of-life costs

The lack of financial preparation and communication can financially and otherwise devastate families, especially those already struggling financially. A small funeral policy covering short-term costs can help stabilize loved ones after a loss, but a more extensive policy can build generational wealth.

For example, let’s look at a modest $300,000 whole life insurance policy. Premiums are likely very affordable for young buyers. By the time everything is settled, families might spend around $20,000 to $30,000 to settle a single estate if things go smoothly, leaving loved ones $270,000-$280,000 in tax-free life insurance benefits.

Even if you’re not ready to have the discussion about end-of-life arrangements, life insurance is also made for the living. Many large policies have other withdrawal options built in. More specifically, policyholders can take early withdrawals and life insurance loans.

If you want to see what this means for you, first schedule an appointment with an experienced financial advisor with knowledge of life insurance options. Based on her experience as a seasoned CFP, Stallworth says, “In preparing to help loved ones – depending on the situation, a financial advisor can either work with the estate attorney or go through a checklist of things that need to be reviewed such as wills, the titling of various assets, beneficiaries on various accounts and whether a trust might be appropriate.”

Complete Article ↪HERE↩!

February 15, 2023February 15, 2023

Estate Planning

— An At-a-Glance Overview

Estate planning, or legacy planning, entails preparing your affairs for the future, including death and other life events. While older adults might give more thought to estate planning, it is an essential tool at any age.

Why It’s Important

With estate planning, individuals and families can protect their interests after death or incapacity.

You can provide for their spouses, children, and dependent family members when you pass away.
You can arrange your care and financial affairs should you suffer a severe accident or illness that renders you incapacitated.
If you are a parent, you can nominate a guardian to care for and manage the inheritance of your minor children.
If you own a business, you can prepare to transfer it to family members, colleagues, or other trusted individuals.
You can make arrangements for your long-term care when you can no longer live on your own.
You can also make funeral preparations, determine what happens to your body when you pass, and prepay for your funeral, all of which can help lessen the burden on your family members.

What Is an Estate?

Legacy planning entails passing on your estate. Your estate is everything you own, including:

Savings and checking accounts
Retirement accounts
Investments
Life insurance
Annuities
House and other real estate
Car
Personal possessions, such as jewelry, furniture, and sentimental items

When you die, your estate encompasses all your property upon death. If you sold or gave away property before death, it is no longer part of your estate, and you cannot transfer it upon death.

Items you own with another person are also part of your estate. Depending on the type of asset, it might automatically pass to the other owner. For instance, if you own a home with your spouse as tenants by the entirety, it will pass to your spouse upon your death.

What Is an Estate Plan?

An estate plan consists of legal documents and arrangements that determine the distribution of your assets when you die or outline your care if you become incapacitated.

While a will can be a central component of an estate plan, a solid plan encompasses more than a will. It can also include legal tools that allow assets to pass outside of a will and probate, the process by which a court oversees the distribution of assets in a will.

Estate Planning Tools

In addition to your will, your estate plan could include the following:

Purchasing jointly owned property or adding a joint owner to your property
Designating a beneficiary on a pay-on-death bank account, retirement account, or annuity
Buying life insurance to benefit your family should you pass away
Creating a trust for a child
Obtaining long-term care insurance to cover future nursing home or assisted living fees
Executing power of attorney documents, naming health care and financial agents
Making a living will, providing instructions for care should you become incapacitated
Preparing a transfer on death instrument to pass ownership of your property to a beneficiary upon death

What Is an Estate Planner?

As professionals helping people make future arrangements, estate planners are attorneys who focus on end-of-life preparations. Estate planning attorneys assist people with drafting legal documents and understanding laws and taxes that could affect them and the loved ones they will leave behind.

When creating estate plans, individuals may need to consult attorneys as well as other experts, including financial planners, accountants, life insurance advisors, bankers, and real estate brokers.

What Does the Final Distribution of Assets Involve?

The final distribution of assets is a conclusory step in the probate process before the court closes probate. When an estate goes through probate, the personal representative must satisfy all debts, and the court must resolve all disputes before allowing the beneficiaries to receive the assets. The court transfers ownership of the assets to the beneficiaries during the final distribution of assets.

Do I Need a Lawyer for Estate Planning?

Although the law does not require that individuals secure legal representation to make estate plans, many find the support and guidance of estate planning attorneys invaluable. An estate planning attorney can help you identify the legal tools and strategies that suit your needs, as well as draft the necessary documents, such as wills, trusts, and powers of attorney. A legacy planning lawyer can help you preserve your estate’s wealth and may work with tax professionals.

In addition to addressing tax concerns and drafting documents, these attorneys can help you avoid probate. Probate, the process by which the court oversees the distribution of assets in a will, can be expensive and time-consuming for surviving family members. It also opens the door for disgruntled people to challenge the validity of the testamentary document, further complicating asset distribution. An estate planning attorney could help you organize your assets to transfer outside of probate to make the transfers simpler, easier, and less vulnerable to challenges.

Consult with an estate planning attorney in your area for assistance in creating a legacy plan.

Complete Article ↪HERE↩!

January 29, 2023January 29, 2023

Financial planning tips for every family caregiver

By Rebecca Holcomb

Taking care of family in the best of times can be difficult. Some estimates claim 18.2% of the US adult population, or more than 43 million Americans provide unpaid in-home care for an adult relative. The numbers go higher as the cared for get older or when Alzheimer’s and other forms of dementia are taken into account.

Caring for an ailing family member or one at the end of life can be daunting. Exhaustion, an endless routine, and a constant need to be ready can drain even the healthiest caregiver. There have not been a lot of studies on what many are calling ‘caregiver syndrome.’ However, a recent survey found that 70% of all caregivers in retirement age, die before the person they are caring for.

The mental, physical and spiritual strain on the body can be so critical that a caregiver’s life can drain away while trying their best to care for their loved one.

With this in mind, here are some tips to help family caregivers do the near impossible.

Routine Conversation

When a loved one gets sick and needs long-term care, dealing with the ramifications usually falls on the next of kin. If the person is married, it’s their spouse. Or, in the case of elderly parents, it might be a child. A sibling might step in with a brother or sister who gets sick.

End-of-life choices and financial decisions can significantly impact your health and the health of those you care for.

Some of the topics that need to be discussed repeatedly as circumstances change are:

What part do you want the caregiver to play in tending to your financial assets

? If you don’t want them to play a role in your finances, who will facilitate those decisions?
Where do you keep your estate documents? Have they been updated to reflect your current last wishes?
If you are sick and need long-term care, how can the caregiver make you most comfortable? What resources are available to help ensure you’re well taken care of?
How do you want to be remembered?

If an illness runs long, the person being cared for may change their minds repeatedly on the above questions, especially if cognitive decline is a factor.

Dementia and Other Cognitive Issues

One area that can be prevalent in long-term care is the incidence of cognitive decline. This is the gradual deterioration of mental faculties due to neurological or physiological disturbances.

Dealing with these situations can be arduous as they often take years to take full effect. Getting important issues taken care of beforehand is essential to ensuring your loved ones get the care they need.

Some factors to consider if a loved one is showing signs of cognitive decline are:

1. Financial Power of Attorney (POA): Ensuring that someone can make medical and financial decisions for your loved one is crucial to their end-of-life care. In cases of cognitive decline that doesn’t respond to medication, a loved one’s ability to choose wisely for themselves may suddenly disappear. If this happens and a POA isn’t already in place, you’ll have to file a conservatorship instead.

2. Medicaid/Medicare : Medicaid is a government medical and dental insurance program for low-income families. Medicare is a government insurance program for individuals aged 65 and older. If your loved one qualifies for one or both of these programs, they can significantly impact the financial toll that long-term care can take on your loved one’s assets. Apply for them as soon as you think your loved one might qualify.

3. Alternatives to state-led programs: If your loved one doesn’t qualify for Medicaid, paying for long-term care can be expensive. Look for ways to cut those costs down.

Hire a part-time caregiver
Hire a family member
Ask your loved one’s doctor to prescribe a nurse
Take advantage of technology and community resources

Scheduled Breaks

One area that caregivers often overlook is their own mental and physical health needs. Even if your loved one has everything in order, managing it can take a toll. Scheduling routine breaks for yourself is essential to ensure you stay healthy and happy despite caring for an ill family member.

Some ways you can make sure you and your loved one are cared for are as follows:

Schedule a CNA or Nurse: Two to three times a week, allow for a medical professional to take over the job you usually tend to. A nurse or CNA ensures your loved one is cared for (if they are at home) and allows you to attend to other errands or take a break.

Involve a trusted family member: Enlisting help from a sibling or other family member can give you a much-needed reprieve. This once-a-week break (or more) is crucial to keeping your mental health intact.
Transition to Assisted Living: Despite most people not wanting to put their loved one into a facility, sometimes a transition to assisted living can help ease the pressure of constant, 24/7 care.

No matter how you handle it, scheduling time to rejuvenate can help ensure you are around during your loved one’s last years.

Dealing With Death

No matter how long your loved one is cared for, death is the great equalizer. Planning a funeral when a loved one has passed away can be overwhelming, especially considering most people only plan one or two funerals during their lifetime.

Taking time to grieve is critical to ensuring wise decisions are made concerning the funeral and aftercare for your loved one’s estate. Before making any choices about the funeral, read over your loved one’s legal documents, including their last will and testament. Doing so will give you time to understand and ensure your loved one’s final wishes are considered.

Once you have those in place and the funeral is over, the next step is dealing with their estate. This situation can be overwhelming, especially if their legal documentation isn’t complete or they have a large estate to distribute.

When partitioning your loved one’s estate, have their legal documentation handy to ensure you’re giving the right part of the estate to the right person. 35% of Americans say they’ve experienced family conflict over an estate that was mishandled or didn’t have an estate plan set up ahead of time.

Considering these situations can help family caregivers ensure they have a much easier time dealing with end-of-life care for loved ones and to deal wisely with estate planning issues that may arise after a loved one dies.

Complete Article ↪HERE↩!

January 8, 2023January 8, 2023

Can Nursing Homes Take Your Life Insurance From Your Beneficiary?

By Rebecca Lake

A lengthy nursing home stay can be expensive, and if you don’t qualify for Medicaid, you may need to draw down your assets to pay for it. You may choose to leave a life insurance policy behind to help your loved ones cover final expenses and replace some of the assets that were used to fund nursing care. But can nursing homes take your life insurance from your beneficiary? The short answer is no, a nursing home cannot lay claim to your life insurance policy if you’ve taken the necessary precautions. We explain more below but you may also want to work with a financial advisor to help set you your estate up with the right insurance for your retirement and long-term care needs.

Who Pays for Nursing Home Care?

If you or a spouse require nursing home care, there are multiple ways to pay for it, depending on how long of a stay is required. Generally, the options for paying for nursing home care include:

Personal savings or investments
Medicaid
VA benefits (if you’re an eligible veteran or the spouse of a veteran)
Long-term care insurance
Life insurance with a critical illness or long-term care rider
Annuities
Loans, including home equity loans

Each option has pros and cons. Using personal savings or investments to pay for nursing care, for example, can mean leaving a smaller financial legacy for your loved ones. Long-term care insurance can cover your nursing care expenses but buying a policy can be expensive.

A life insurance policy with a long-term care rider may be more appealing since you can get both a death benefit and funds to pay for long-term care if needed. Annuities can provide you with a steady income to pay for long-term care, though again, the cost is a consideration. Taking out a loan is another option, though it does mean taking on debt with interest.

Most nursing homes accept Medicaid for patients who are unable to fund their nursing costs out-of-pocket or through private insurance. Medicaid is a government program that’s administered at the state level. Eligibility is based on your income and financial resources.

Medicare can also pay for nursing care, but only if you need short-term rehabilitative care. If you require long-term nursing care, Medicare won’t cover any of those costs.

Can Nursing Homes Take Your Life Insurance From Your Beneficiary?

Your beneficiary would be able to decide how the money from the policy should be used. That might include paying final expenses, paying off a mortgage debt or covering day-to-day living expenses.

However, you could hit a snag if you have a life insurance policy, but your estate is the beneficiary. In that case, a nursing home might be able to make a claim against your estate for any money owed toward your cost of care.

Can You Use Life Insurance to Pay for Nursing Home Care?

It’s possible to use your life insurance policy to pay for nursing home care if you don’t qualify for Medicaid or you don’t want to use other assets to pay. There are four ways that you could use life insurance to pay for long-term care and they are:

1. Life Settlement

A life settlement simply means selling your life insurance policy for cash. This option might be available to you if you have a permanent policy that accumulates cash value and meet the insurance company’s minimum age requirements.

Choosing a life settlement could provide you with cash to cover long-term care costs. However, you might pay taxes on the proceeds of the sale. You’re also eliminating the death benefit for your beneficiaries.

2. Viatical Settlement

A viatical settlement is similar to a life settlement, in that you’re selling the policy. However, your ability to qualify for a viatical settlement hinges on being diagnosed with a terminal illness or within the final two years of your life expectancy.

Again, there’d be no death benefit left behind for your loved ones. The amount of money you’d be able to receive through a viatical settlement will depend on the cash value that’s accumulated in the policy.

3. Accelerated Death Benefit Rider

An accelerated death benefit rider is an add-on to a life insurance policy that allows you to tap into your death benefit during your lifetime. You could use the money to pay for nursing home care or other end-of-life expenses.

Depending on how much money you withdraw, you may still be able to leave some death benefits for your beneficiaries.

4. Hybrid Policy

A hybrid life insurance policy combines a death benefit with long-term care insurance. If you require long-term care, your policy could pay out benefits toward those costs.

Once you pass away, your beneficiaries would be able to collect a death benefit. While this type of life insurance may come with higher premiums, you could get the best of both worlds if you’re concerned about nursing home care creating a financial burden for your loved ones.

Does Life Insurance Affect Medicaid Eligibility for Long-Term Care?

As mentioned, Medicaid can help to pay for long-term care expenses should a nursing home stay be necessary. If you have a life insurance policy, that may affect your ability to qualify for care.

Specifically, Medicaid is interested in permanent life insurance policies that accumulate cash value. If your policy has built up cash value, it can count as an asset toward your eligibility. The amount of cash value you can have without becoming ineligible will depend on the Medicaid rules in your state, but it’s typically around $1,500.

If your policy’s cash value is above the allowed threshold, you’ll need to draw some of your assets down in order to become Medicaid-eligible. You could do that by:

Cashing out the policy
Surrendering the policy
Transferring the policy to a family member or trust

There is a catch if you plan to gift your policy to someone else. There’s a five-year Medicaid look-back period in which your financial situation is subject to scrutiny. During this period, you’re barred from giving away assets in order to qualify for Medicaid. If you think you’ll have to spend down your cash value life insurance to become eligible for assistance, you’ll need to pay close attention to the timing.

It’s also important to note that if you leave your life insurance policy in place, Medicaid could make a claim against it if your estate is the beneficiary. Medicaid estate recovery programs allow Medicaid to recoup costs paid toward your care from your estate assets, including life insurance policies.

The Bottom Line

Insurance Planning Tips

Consider talking to your financial advisor about long-term care planning and where life insurance or long-term care insurance might fit into the picture. If you don’t have a financial advisor yet, finding one doesn’t have to be difficult. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Medicare planning and Medicaid eligibility are both important parts of estate planning, as you don’t want to inadvertently do anything that could hinder you from becoming eligible for benefits. You should consider which you might need to help care for your retirement needs.

Complete Article ↪HERE↩!

January 7, 2023January 6, 2023

6 joyful steps for end-of-life planning

— It isn’t just about wills and funerals — it is a reflection of your values, your goals for healthy aging, and the hopes and dreams you have for those you love

By Tara Parker-Pope

The new year is a time of fresh starts and beginnings. But it’s also a good time to plan for the end.

Planning for a health crisis and the end of life doesn’t have to be dreary. There is a lot of joy in organizing your final days, knowing that by being prepared, your final act will be one of guidance and support for your family members and other loved ones. End-of-life planning isn’t just about wills and funerals — it’s also a reflection of your values, your goals for healthy aging, and the hopes and dreams you have for those you love.

From experience, I can tell you that death is complicated for those left behind. Advanced health directives are essential — and should be created when you are healthy, not from a hospital bed. Funeral arrangements are costly, and the details — from the type of service to your final resting place (coffin or urn? Burial plot or cremation?) — are dizzying. Your credit cards, bank accounts, utility bills, cellphone accounts and internet passwords can become a huge burden for those who survive you, if you haven’t planned ahead.

Here’s a simple checklist to help you get started.

Create a crisis notebook: For me, choosing a binder where I could gather all my planning documents is what finally got me started. You will need to create additional hard and digital copies once you’ve made some progress. This AARP worksheet will get you started on compiling all the documents — medical, legal, financial and end-of-life — you need. It will take some time, but the worksheet is a great way to keep track of what you have left to do.
Start by writing your advance directive: Go to the AARP website to find the right forms for your state. This step is the one that most benefits you directly and will help your family make medical decisions on your behalf. The website Five Wishes is also a popular resource, with easy-to-follow instructions for creating an advanced directive.
Write a will: Gallup reports that less than half of Americans have a will. Without a will, the laws of the state will decide how your assets are distributed. Services such as Nolo, LegalZoom or Quicken Willmaker can help for a fee.
Make a digital estate plan: This guide from AARP will help you manage utility accounts, credit cards and social media passwords.
Plan your goodbye party: Having attended several funerals, I don’t want my survivors to incur the expense or burden of planning one. And I actually enjoyed researching the options and making goodbye plans for myself with a focus on a greener ending to my life than a traditional funeral and burial. I’ve picked a lovely black birch tree in the Berkshires through Better Place Forests to mark my final resting place.
Add a last letter: VJ Periyakoil, a physician who specializes in geriatrics and palliative care at the Stanford University Medical Center, started the Stanford Letter Project, to give people the tools they need to write to their doctor, friends or family. You’ll find the template and sample letters at med.stanford.edu/letter.

Complete Article ↪HERE↩!