Archive for the ‘Estate Planning’ Category

Extending Your Retirement Savings

Tuesday, October 29th, 2013

In 1935, when the Social Security system was created, average life expectancy was 62 years. In 2013, it has increased to about 80 years. A longer life expectancy means people have a chance to enjoy their retirement years, but it is also something to keep in mind during financial planning for retirement. What if you outlive your money?

Social Security retirement benefits provide a small income for retirees, but most people want to be able to maintain a lifestyle similar to what they had when they were working, and that takes planning.Of course, one of the most important factors in successful retirement planning is to start saving early, and young people who take advantage of 401(k)s and other retirement accounts are doing their future selves a great favor. If, on the other hand, you are nearing retirement and realizing that you need to increase your savings, there are things you can do.

It is important to take advantage of Roth accounts and other retirement accounts as much as possible. Roth accounts are particularly helpful for retirement because of the tax break on withdrawals. High-income earners would be well-advised to make the maximum contributions and convert traditional accounts to Roth accounts during high earning years, when the income tax will be less of a burden.

Another useful strategy to consider is investing in tax-deferred annuities or life insurance policies such as whole life, which have a cash value component that grows tax-deferred. These investments also have death benefits that can help provide an income to survivors.

 

 

 

Estate Planners Find More Clients Are Raising Grandchildren

Monday, October 7th, 2013

Financial advisors and estate planning experts are reporting that they are seeing an increase in the number of grandparents who are helping to raise their grandchildren. For many, that added financial responsibility means that plans for retirement must be put on hold.

More than 2.6 million grandparents were raising grandchildren below the age of 18 as of 2011, according to the U.S. Census. Many households are disrupted due to underemployment, divorce, mental health or substance abuse issues or chronic illness. When adult children are not able to fully parent their own children, other family members often step in, and many times, custody of the children falls to the grandparents. That addition to the household means that more funds are needed for food and clothing; add in school supplies, sports and leisure activities and even basic entertainment, and a comfortable budget for two retirees can quickly be stretched to the breaking point, not to mention the emotional toll.

Merrill Lynch ran a survey of retirees in early 2013. Thirty-five percent of responding grandparents stated that they expect they will have to provide financial support for their grandchildren: 43 percent of those respondents stated that they will be providing financial support; 38 percent believe they will be paying for housing; 30 percent will be paying for education; and 25 percent are planning to pay for health care.

Even when grandparents are not shouldering the entire burden, many grandparents report that they are helping to “bridge the financial gap,” paying for some items or providing ongoing monthly funds to help make ends meet. And when some families are more financially secure than others, issues of resentment can build. That and the tax implications of gifts and estate tax is why so many estate planning attorneys strongly suggest that families look into setting up trusts with specific guidelines.

In addition to looking at financial estate plan issues, any grandparents who are parenting or co-parenting grandchildren should speak with an attorney to make sure guardianship issues are formalized. A guardianship that must be declared through the courts during an emergency is unpleasant for everyone involved.

 

For more information about our legal services, visit www.littmankrooks.com.

Procrastination & Debt Have Serious Effects on Estate Planning

Thursday, September 19th, 2013

Proper retirement and estate planning is the key to having the resources to enjoy one’s golden years and leave a legacy to one’s heirs. Two of the biggest obstacles to avoid on the way to these goals are procrastinating about saving for retirement, and accumulating unmanageable debt.

It may be understandable that retirement is the last thing on young people’s minds, but it is also regrettable, because the earlier one begins to save for retirement, the easier it is to build a comfortable nest egg. Someone who saves $100 per month beginning at age 25 will have saved over $300,000 by age 67, assuming a rate of return on investment of 7 percent. Saving the same amount of money per month but not starting to save until age 40 would result in savings of less than $100,000.

The Social Security system is more stable than some critics would lead one to believe, but Social Security retirement benefits provide only a safety net, not enough to retire in comfort. Employer pensions are very nearly a thing of the past. Much of the responsibility of providing for one’s retirement is up to the individual. A 401(k) plan, especially with an employer contribution, can be a tremendous help, and can motivate even young workers to save. The key is to avoid procrastination in saving for retirement.

Debt is the other major issue that can adversely impact retirement planning and estate planning. With too much debt, many older Americans find they cannot afford to retire, much less leave a substantial estate to their heirs. To get control of debt, it is important to focus on paying down high-interest debt first, such as credit cards.

Debt – even a healthy, manageable amount – can affect estate planning in less obvious ways as well. For instance, if you are planning to provide for some heirs through a trust and others through a will, you should be aware that debts must be paid from your estate and consider how that will affect your bequests.

 

For more information about our legal services, visit www.elderlawnewyork.com.

 

 

Study Finds High Disability Rates for Elderly

Tuesday, August 27th, 2013

Researchers at the University of California, San Francisco, have released a study recently published in JAMA Internal Medicine, after looking at more than 15 years of data. They examined the national Health and Retirement Study in order to discern how many elderly people are disabled in their last few years of life. The study looked at more than 8,000 adults over the age of 50 who died between the years 1995 and 2010, and how mobile they were, as well as any disabilities they had in their last years of life.

Gerontologists and other elder care professionals have been working on the “compression of morbidity:” keeping seniors healthy and active as long as possible so that there is little-to-no loss in quality of life until just before death. But despite their best efforts, the researchers believe that instead, people are living longer while also disabled. Though later-life disability can be slowed down, it cannot, it seems, be prevented entirely. According to the lead author, Dr. Alex Smith, most people who live to an older age, especially women, do so with a mobility issue or other disability for the last few years of life.

The study found that for the last two years before death, 28 percent of individuals were disabled in an area of “activities of daily living,” meaning they could not bathe, dress or toilet themselves without assistance. Twelve percent of that group was severely disabled; they needed assistance with all three of the activities of daily living, and other assistance, as well. The rate of disability rose sharply with the age ranges; of the group which died by age 69, only 15 percent were disabled in the two years prior to their deaths. Of the group which died after age 90, at least 50 percent were disabled within two years prior to their deaths.

Mobility issues occurred in most people in the study; 69 percent of the older group had reported that they could not walk more than several blocks, while 50 percent reported that they had trouble using stairs. Women overwhelming were more disabled in their later years compared to men the same age, possibly due to depression, osteoporosis and arthritis, all of which occur more commonly in elderly women than in elderly men. The study did not include the incidences of cognitive decline.

The study indicates that the U.S. needs better elder care facilities, comprehensive medical elder care and extensive support structures in place as the nation’s elderly population continues to grow.

How Nursing Facilities Can Be Welcoming to LGBT Residents

Monday, August 19th, 2013

Nursing homes have always had lesbian, gay, bisexual or transgender residents, but they have not always felt comfortable identifying as such, for fear of how staff or other residents might react. It is important for nursing facilities to be open and welcoming to LGBT residents, and to this end the Alzheimer’s Association has published a guide for long-term care facilities welcoming LGBT residents. The guide is also useful for LGBT elders and their families considering a nursing facility, to determine how welcoming it will be.

According to the Alzheimer’s Association, a facility should first of all assume that there are LGBT residents, and not assume that staff can identify them. LGBT residents cannot necessarily be identified by external characteristics and they may have past life experiences such as being in a heterosexual marriage or having children that do not fit common assumptions about LGBT people.

The association also recommends that nursing home staff ask residents about their sexual orientation in a safe and confidential way, in the same way that any other factual though potentially sensitive question would be asked. However, if the resident appears uncomfortable, the matter should not be pushed, and staff should remember that sexual orientation is just one aspect of a person’s identity.

The association recommends – and LGBT elders should look for – signs of welcoming in a long-term care facility. A facility can show that LGBT elders are welcome by prominently posting its non-discrimination policy, including same-sex couples in marketing materials, and including LGBT-inclusive images or messages in the lobby and other public areas. Forms should include relationship options such as “significant other” and “partner.” Staff should be trained on how to recognize and address the needs of LGBT residents.

When nursing facilities take these steps, it will be apparent to LGBT elders and their families that the facility is welcoming to them.

 

For more information about our elder law services, visit www.elderlawnewyork.com.

Mobile Lifestyle Can Have A Legal Impact

Monday, June 17th, 2013

By Bernard A. Krooks, Esq.

Many New Yorkers have embraced a decidedly mobile lifestyle. They think nothing of seasonal migrations in search of temperate weather. Their families may be far-flung, prompting frequent out-of-state visits or they may be trying out a potential retirement spot. We account for the highest percentage of Florida’s temporary residents, often opting to call it home.

But while it’s simple to buy a plane ticket and have the mail forwarded, legal documents don’t always cross state lines so easily. Differences in state law can have big implications for estate planning and long-term care. In some cases, one jurisdiction may not even recognize documents drafted elsewhere due to differences in execution requirements. And you could face unexpected tax bills as governments struggle to fill their depleted coffers.

Generally speaking, spending 183 or more days per year in a location will make you subject to local residency requirements. If you maintain your legal residence in one state for purposes of voting and taxation, but spend significant time elsewhere, it pays to do some contingency planning.

At a minimum, you should discuss your residency situation when you meet with your attorney to review your will, trusts and other important estate planning instruments. It may be wise to consult an attorney in each state to ensure that you’re in compliance with all regulations and that you take full advantage of any favorable differences. I’ve had an increasing number of clients ask about the benefits of having attorneys collaborate across jurisdictions. Parents had begun spending more time in Florida, or due to frailty, were moving back to New York to be closer to family, and they didn’t want to suddenly discover that careful estate planning had been rendered invalid.

While a well-drafted trust can stipulate that it be administered according to the laws of the originating state, it may not be advisable to have one state interpret the statutes of another. Other documents may prove even more challenging. An advance directive can become entangled by something as seemingly trivial as the number of witnesses to your signature. As a result, doctors and hospitals may fail to respect living wills or health care proxies. Banks may not recognize financial powers of attorney. The result could be chaos when you’re least prepared to cope.

Probate, the procedure through which property is transferred to heirs, poses more questions. This process typically takes place where the decedent was domiciled, but if real estate is owned in more than one state, probate must be initiated in each location, possibly involving different deadlines. Even if the decedent was legally resident elsewhere, states have been known to claim estate taxes when local ties were extensive enough.

Over 70 percent of New York nursing home expenses end up being covered by Medicaid, but eligibility and covered services vary by state. So it pays to understand how to navigate the system where ever you or your parents plan to spend your senior years. In addition, there’s growing interest in “filial responsibility” loans, under which adult offspring could be held accountable for the older generation’s expenses. So if Mom or Dad suddenly requires nursing home care that isn’t covered by Medicaid-even for a few months- a son or a daughter could suddenly become liable for huge bills. While New York does not currently hold adult children liable for their parents’ nursing home costs, in a recent case in Pennsylvania, a court held an adult son responsible for his mom’s nursing home expenses.

Since Florida has no state income tax, it could be tempting to declare yourself a resident if you pass the 183-day test, but New York is particularly aggressive about claiming taxes from individuals with connections here. You need to take steps to relinquish your New York residency, including the divestiture of real estate holdings. New York residency audits are on the increase, and you’ll bear the burden of proof, including documentation of how long you’ve spent where. Failure to present a compelling case could leave you responsible for state taxes.

Don’t let legal snarls complicate your chosen lifestyle. A second home and carefree travel are often the fruit of a lifetime’s effort. With a little research and planning, you can avoid untimely complications.

 

For more information, visit www.elderlawnewyork.com.

Planinng for Life’s Unexpected Twists and Turns

Tuesday, June 4th, 2013

By Susan Yubas, Director of Business Development at The Bristal Assisted Living, Certified Senior Advisor, Founder of FYI Senior Living Solutions, Inc.

Most of us do not get around to having that all important conversation with loved ones, and if we do, it is at the worst possible time and under the most stressful conditions.

An acquaintance of mine in her early forties was recently hospitalized following an automobile accident in which there was no other car involved.  An otherwise healthy, active woman who was not texting or talking on her cell phone while driving, her husband and I waited to hear what could have been the cause.  Did she have a stroke, a seizure, a heart attack?

As we sat together, he asked “What if she doesn’t pull through?  Or has physical or cognitive issues?  What if she can’t go back to work? Can we afford to live on one income, especially if she needs help? We never talked about this.  We never talked about the “what if’s.” I don’t know what she would want me to do or what would be best!”

In my practice, I primarily work with older adults and their families as they prepare for and deal with the life transitions that happen with aging.  But, the reality is that planning is not age related.  Denial is just so convenient.   We have all the time in the world to “get to it” and we’re young and healthy.  We may get old, but will never be “elderly.”  If we are, there will always be someone around who knows what our wishes are. They will have our best interests in mind.   That person will also be able and willing to implement and execute whatever needs to be done and, of course, there will be enough money to pay for it all.

Or, we made a plan a long time ago and haven’t updated it due to “benign neglect.“ Since then, we’ve moved to another state with different regulations.  We’re no longer friendly with the person we named as Executor in our Will.  Documents may not be titled properly so that our wishes can be granted.  Then, a crisis happens, and you receive that call about a parent who has had a fall, a stroke, or an accident, and life will not be the same.

Several months ago, I met with a couple in their early 70’s at the request of their son who lived out of town.  He couldn’t get his parents to talk to him about their wishes and plans for the future, which they insisted, were all taken care of.  In the course of our conversation, I learned that they had, in fact, made plans for retirement long ago.  Since then, their circumstances had changed significantly,   but they had made no changes in their initial plan.  They were in good health and enjoyed an active, independent life.

Shortly after our initial meeting, the husband started to have problems with his eyesight.   The wife slipped on the stairs, fractured her hip and only wanted to recover at home.  Neither of them could continue to run the business they had built.  Previously capable parents were suddenly not able to think clearly due to the stress of the situation.  The children were angry at their parents for not thinking about how they would take care of each other or for what would happen to their business if they could no longer work.  They argued over what would be the best for their parents and who would be the child responsible for coordinating their care and transition to what would become their “new normal.”

Life does not always go as smoothly as we would hope.  However, when we take the time to plan in an organized and thoughtful manner, we can make difficult situations a little less difficult and hopefully avoid a crisis situation from occurring.

 

For more information, visit www.elderlawnewyork.com.

 

When Medicare Covers Nursing Home Care

Tuesday, May 28th, 2013

Many Americans of various income levels expect to make use of Medicare for health care costs after age 65. However, it is important to note that Medicare does not pay for care at a nursing facility except in certain circumstances.

First, let’s review what Medicare does cover. Medicare Part A covers care in a hospital and Part B covers outpatient services. For these benefits, there is a choice between traditional Medicare or a network plan, Medicare Part C or Medicare Advantage, in which the government pays for private coverage. Finally, Medicare Part D covers outpatient prescription medications.

So where does nursing home care fit in? Nursing home care is only covered for a limited time if it is necessary after a hospital stay. If a patient is hospitalized for three consecutive days or more and is then admitted to a nursing home within 30 days and a doctor certifies that the patient needs care that can only be provided on an inpatient basis at a nursing facility, then Medicare will cover a stay of up to 100 days. Only facilities approved by the Centers for Medicare and Medicaid Services (CMS) can be covered. If the stay lasts longer than 100 days, then patients are expected to pay for the care out-of-pocket until the point that they become eligible for Medicaid.

The rules above are confusing enough, but their interpretation can get even more complicated. Some families have been denied Medicare coverage for a nursing home stay because the hospital deemed their stay an “observation” rather than an “admission.” In other cases, because a hospital day is usually measured as midnight-to-midnight, patients may believe they have been in the hospital for three days, but find that the hospital measures their stay as less than three days.

To monitor Medicare charges, CMS employs private contractors who receive contingency fees based on the overcharges that they discover, so they are motivated to deny coverage whenever they can.

For a doctor to certify that treatment in a skilled nursing facility is required, the patient must need rehabilitation services for at least five days a week, or skilled services for seven days a week. Services such as, for instance, tube feedings would qualify for nursing home admission. Other services, such as rehabilitation services that could be given 3 or 4 times a week on an outpatient basis, would not be covered.

Even if Medicare covers a nursing home stay, there is only full coverage for the first 20 days. After that, a co-payment is required. These co-payments, and the cost of a nursing home after 100 days, may be covered by Medicare supplemental insurance, if the patient has such insurance and submits a claim.

Many middle-class families, facing the prospect of seeing an older loved one’s life savings consumed by nursing home costs, are turning to trust planning to protect their assets while still allowing them to be eligible for Medicaid. An elder law or estate planning attorney can create a trust for an older person to transfer assets, thus reducing the person’s wealth level enough to become eligible for Medicaid. Another strategy for dealing with nursing home and other long-term health care costs is long-term care insurance. With proper planning, families can manage the costs of a stay in a nursing home.

 

Planning for Boomers

Tuesday, May 21st, 2013

By Susan Yubas, Director of Business Development at The Bristal Assisted Living, Certified Senior Advisor, Founder of FYI Senior Living Solutions, Inc.

The other day I realized I am exactly two thirds of my mother’s age.  That hit me hard, as I began to think of life as being divided in thirds…and realized that if the first two thirds of my life went by in a blink, then I want this last third to go by very slowly.

The way we look at aging has changed drastically over the years.  People are doing great things in this stage of life, some with assistance, and rather than looking at help as taking away independence, they view accepting assistance as a means to reaching potential – to being everything they can be.  I recently listened to a talk given by the actress Jane Fonda on reaching what she calls life’s “third act.”  She realized that she could control a good part of this time of her life and decided that she was not going to live the old paradigm of aging (think of a bell curve where the start of the curve is birth, the peak is middle age and then it declines sharply to old age,) but rather to view aging as a staircase that you climb to make added years happier, more successful and more liberating.  Think of it – when you are an adolescent, you plan for college, then you plan for your work and your family years.  Why not view the “boomer years” as a time to plan for this next stage of your life and to use those years to make a difference.

Six years ago, a gerontologist at Cornell University started asking older people for their advice towards solving life’s major challenges. Called the Cornell Legacy Project, it asked seniors for their advice as to how to age fearlessly and well.

The researchers were surprised to find that those in the study held a generally positive view about old age. One response came from an 81-year old man: “Embrace it. You still enjoy life, and there’s still purpose in your life. A 94-year old woman suggested: “My advice about growing old? I’d tell them to find the magic.” Old age is very different from what seniors anticipated – and it exceeds their expectations. People felt freer to pursue interests and clearer about their life goals and how they wanted to spend their time. Many described their life after 70 as a quest or an adventure.

There was overall agreement on the importance of maintaining social connections finding meaningful ways to participate in activities in order to assure a positive and enjoyable old age. These relationships and productive roles can be difficult as life transitions such as retirement, widowhood, and health problems occur.  The seniors interviewed for this study suggested that starting around age 60, everyone needs to become aware of the possibility of becoming isolated and take steps to stay involved.

Many seniors also said that the lesson they had learned was to plan carefully for where you will live in old age. Based on their own experience and those of parents and friends, they agreed that younger people should begin to think about living arrangements when they are still active and healthy – both to increase their options for where they can live and also to reduce responsibility and anxiety on the part of their children.  The seniors noted that some people unnecessarily suffer with insecurity, isolation, and inconvenience because they stay in their homes rather than move to a more stimulating environment.

Travel.  Take a class.  Volunteer.  Mentor.  Aging can mean an extended active and productive life.  Most aging Americans do not think that when they retire they will no longer be productive.   Many of us believe old age begins after age 80.  We exercise regularly and eat a healthier diet so we feel years younger than we are.  We envision years and years of health and activity and being able to afford what we want.   We believe 60 is the new 40, and the older we get, the younger those older than us become.  In many cases, we will continue to learn, grow, and find new ways to be productive, creative and relevant.

We still need to think ahead.  Not all of us are really thinking about the time when we may become frail and many of us are very unprepared for that time in our lives.  We have begun to lose our parents and some friends.  Some of us have lost spouses. But we still do not put much thought into about what happens when we are no longer able to be as independent and active as we currently are, even if it is at age 90 plus.

Aging is more of an attitude than a number. This is a time to re-assess what you want from life and what makes you really happy. Know your capabilities and what makes life exciting for you.

Live for today, but remember to plan for tomorrow.

 

For more information, visit www.elderlawnewyork.com.

How Chained CPI Could Affect Social Security

Tuesday, May 14th, 2013

As part of negotiations aimed at reducing the deficit, Congress and the President have considered changes to the way the Consumer Price Index (CPI) is calculated. “Chained CPI,” as the proposed method of calculation is known, could have adverse affects on Social Security benefits, as cost of living adjustments are based on CPI.

Proponents of chained CPI say that the current method of calculating CPI overestimates the real effect of inflation. When prices go up on some items, consumers may choose to purchase something else instead, thus mitigating the effects of inflation. This “substitution bias” is addressed by chained CPI. This technical change would result in lower payments for Social Security beneficiaries.

The proposed change is popular among politicians seeking to reduce the deficit, as it is estimated that there could be a reduction of about $390 billion from the deficit over the first decade, with about one third of the savings resulting from lower Social Security benefits payments.

Of course, Social Security beneficiaries do not want lower payments, and advocates for seniors have pointed out that chained CPI is not appropriate for estimating the cost of living for older people, as many of their expenses, such as medication and health care, are fixed, and therefore not prone to substitution bias. Further, Social Security is financed separately from the rest of the budget, and does not contribute to deficits in other parts of the budget. The bottom line is that seniors who depend on a fixed income are least able to afford cutbacks.

For more information about our elder law services, visit www.elderlawnewyork.com.