Need Something Else to Worry About? Try Long-Term Care

A recent article from Think Advisor paints a dismal picture of Americans who are just not preparing themselves for the inevitable facts of aging.

The statistics aren’t encouraging. About three quarters of Americans are likely to need long-term care, but very few are ready for the costs.

Bigstock-Beautiful-woman-looking-throug-20311445A recent article from Think Advisor paints a dismal picture of Americans who are just not preparing themselves for the inevitable facts of aging. The article, “Now You Can Add Long-Term Care to Death and Taxes,” says this may be one of the biggest disconnects in the USA: the gap between how many Americans will need long-term care versus what people actually think they’ll need.

Just 46% think they’ll need it, according to a new study that surveyed 2,000 people to see how prepared Americans were for the realities of long-term care.

Another misconception is the out-of-pocket cost of long-term care. The study found that the actual out-of-pocket cost of long-term care is more than $47,000.  However, many Americans think it’s about half that, $25,350.

In addition, $47,000 is the low end of the scale for the yearly cost per stay. While some assisted living costs may be $45,000, semi-private nursing homes are closer to $85,000. Private nursing home care is $97,455, according to the study, which was conducted by Digital Third Coast. The study was made up of 57.7% males and 42.3% females, while 56% were age 35 and younger, 33% were 36 to 55 years old and 11% were 56 and older.

Can you believe that 64% have nothing saved for long-term care, and 67% can’t contribute to a parent’s long-term care? The study found that Americans intend to save about $657 per month for long-term care.

Another issue between reality and perception, is the age that people think they’ll be when they need any sort of long-term care. Most study participants say it’s 79 years old.  However, it’s actually 73 years old, according to the study. Women will require long-term care on average for 3.7 years, and men will need it for about 2.2 years.

People in our country also have worries about putting relatives in long-term care, the study found. For example, 73% are concerned about physical/sexual mental abuse. About 41% said the cost was more than anticipated, and 48% hadn’t expected to put loved ones in long-term care. Only 33% actually have had discussions with family about when care is necessary.

One thing we do know is what we want when it comes to long-term care. We want quality of care, but we also want low costs, and we want facilities that are not too far from family members.

We just don’t want to think about how that’s going to be paid for.

Reference: Think Advisor (August 6, 2018)“Now You Can Add Long-Term Care to Death and Taxes”

Opioid Epidemic Now Impacting Estate Planning

Some folks don’t want to leave anything outright to a child with a dependency issue, because of what can happen to the money.

Estate planning often serves as a reflection of a family’s experiences. In this instance, estate planning is used to protect the family and individuals with substance abuse problems.

OpoidEstate planning attorneys hear all kinds of stories about bizarre family dynamics and difficult relatives. However, the national opioid epidemic is relatively new to the estate planning world. Sadly, it is likely here to stay.

The Pittsburgh Tribune-Review’s recent article,“Pittsburgh attorney sets up 'opioid trusts' for beneficiaries with addiction issues,” reports that the American Family Survey, commissioned annually by the Deseret News, found that 12% of families in 2017 said they had an opioid-addicted relative. Opioid overdoses nationally are the leading cause of death for people younger than 50, according to the Centers for Disease Control and Prevention in 2017.

The opioid epidemic has led some attorneys to get creative and establish what are being called “opioid trusts.” Some folks don’t want to leave anything outright to a child with a dependency issue, because of what can happen to the money.

Estate-planning attorneys are regularly asked to create trusts for beneficiaries with intellectual disabilities, who are entitled to public-health benefits through Social Security or Medicaid and receive supplemental trust payments that add to those.  However, the so-called opioid trust is somewhat different.

Parents may be paying for the child’s basic support needs. However, is that money going to buy drugs? If so, have they cut him or her off completely?

With an opioid trust, there’s no support to the child. This sounds cruel, but medical experts say it’s to get the child to embrace recovery. The goal is to get him into recovery and, eventually he might be able to stay clean long-term. An opioid trust is created to pay recovery-related expenses, such as rehabilitation bills, therapist payments and treatment bills. Optimally, the child gets a job. It’s this “tough love” that’s the only way this type of trust will work.

The money is never distributed directly to the beneficiary, nor is any property that could be easily converted into drug money.  However, you can give them other, in-kind benefits, like the use of a car—but not the title to the car.

Naming a trustee can be challenging in this kind of situation. This is a situation where a professional trustee, rather than a family member, may be a better choice. Achieva, a Pittsburgh-based organization, handles standard trust disbursements and has a team of social workers and counselors who work with trust beneficiaries.

An estate planning attorney will be able to help your family distribute assets through an estate plan that protects the family from the impact of addiction.

Reference:Pittsburgh Tribune-Review(August 21, 2018) “Pittsburgh attorney sets up 'opioid trusts' for beneficiaries with addiction issues”

Generational Divide Between Musicians Now and Then

As singers and actors from prior generations die and we learn about their business lives

Maybe people who went into the music in the past, led with their hearts and souls, like Aretha, but the difference in income is astronomical.

ArethaAs singers and actors from prior generations die and we learn about their business lives, there’s a huge disparity between their earnings and that of today’s artists. Stars from the past, beloved and working into their later years, continue to pass away with estates that wouldn’t be deemed sufficient for a CEO to change jobs today.

Wealth Advisorsays in its new article, “Aretha Franklin’s Estate Almost Criminally Undervalued Even At $80 Million,”that description now fitsAretha Franklin, the Queen of Soul.

She sold 75 million records and is credited as a songwriter on hundreds of albums by other artists. However, even the most generous estimates of her career earnings are no more than $80 million.

Compare her to Taylor Swift. She started at about the same age, has been working one fifth as long and the same calculations say she’s worth more than $300 million.

The mega stars in Aretha’s imperial period didn’t earn as much as they do today. Management was often aggressive and took a huge chunk of every dollar earned from the artists’ record sales, concerts, merchandising and media appearances.

Aretha also didn’t do herself any favors, by allowing her husband to manage her early career. When they divorced, he took a lot of her lifetime earnings with him. A raw deal or not, it was the way the industry worked at the time. As a result, paying alimony meant she had to keep working for her ex.

That may be why Taylor Swift hasn’t gotten married. Despite a finely crafted prenuptial agreement and trusts to protect her money, a wrong decision could cost her hundreds of millions of dollars.

The music industry has changed dramatically. Traditional revenue sources never really grew much bigger than they were in the 1960s. Some, like selling the actual music, tanked and have yet to revive. Today’s music icons, like Taylor Swift, thrive because they manage their own tours and take in ticket income rather than record sales. Many own their own publishing outlets, and that maximizes their percentage of every song they sell. That’s not how it worked in Aretha’s day.

 However, Aretha died with money in the bank. Her children will inherit considerable sums. She most likely gave huge amounts to charity and did it in the most tax-efficient way her advisers could find.

Just like Prince, it’s safe to say that sales of her recordings will take a leap, anything as yet unreleased will be repackaged and her name and image will start being monetized. As a brand and a legend, she will be enjoyed by new generations of music lovers. Her family will benefit, and her fans will grow in number.

Reference: Wealth Advisor (August 20, 2018) “Aretha Franklin’s Estate Almost Criminally Undervalued Even At $80 Million”

When Was the Last Time You Reviewed Beneficiary Designations?

Most people fill out beneficiary forms when they start a new job, open an investment account and open bank accounts. Then they forget about those forms—often for decades.

Talk about a train wreck waiting to happen: beneficiary designations from three or four decades ago can really create a problem for your heirs—or those you thought were your heirs.

Bigstock-Financial-consultant-presents--14508974Most people fill out beneficiary forms when they start a new job, open an investment account and open bank accounts. Then they forget about those forms—often for decades. Those people named as beneficiaries way back when, are now their heirs—whether they want them to be or not.

Wealth Advisor’srecent article, “Designated Survivor: Beneficiary Designations Can Make–or Break–Your Estate Plan,” reminds us that beneficiary designations override the terms of your will or trust. To avoid any unintended consequences, it’s very important to review your designations with your estate planning attorney. Think about the following:

Children. Many people name their children as beneficiaries on their accounts and other assets, without knowing the consequences of this choice. If a minor inherits an asset in this way, a guardianship proceeding will likely be required to appoint a guardian to receive and manage the inherited assets on behalf of any minor child. The court proceedings are costly and time-consuming. In many states, the court will place restrictions on how and when the money can be used for the beneficiary during the guardianship. When you designate a person with disabilities as a beneficiary, it may impact his or her ability to qualify for public benefits. These issues can be avoided by naming a trust as the beneficiary.

Major Life Changes. We all experience changes. They can include major changes like birth, death, marriage, divorce, a new home, or a job change. However, people frequently neglect to look at their estate plans and beneficiary designations, when these events occur. Coordinating your beneficiary designations with your estate plan, can eliminate the need to update your beneficiary designations with each life change. At the very least, it will give you with some guidance on the types of situations that should cause you to conduct a review and to update these forms.

Trusts. You may have, or want, a revocable trust in your estate plan. This will give you additional privacy, flexible administration and important protections for your beneficiaries. Beneficiary designations are an ideal way to transfer your assets into your trust and to leverage the benefits of trust planning, without impacting the ownership of assets during your lifetime.

Retirement Accounts. When it comes to selecting beneficiaries for income tax deferred assets, like IRAs or 401(k)s, it’s usually a spouse who is named as the primary beneficiary. This maximizes the income tax deferrals and other administrative privileges provided to surviving spouses. Deciding on the contingent beneficiary is a little harder, because there are income tax and other considerations that should be evaluated when making this decision.

The best way to preclude problems, is to review all of the accounts that have a beneficiary designation to ensure that they still reflect your wishes. Doing so will save your heirs a great deal of time and stress and eliminate any surprises. Talk with your estate planning attorney to ensure that all of your assets will transfer to the heirs you want, not the ones you forgot about years ago.

Reference: Wealth Advisor (August 6, 2018)“Designated Survivor: Beneficiary Designations Can Make–or Break–Your Estate Plan”

If You Have 529 or ABLE Accounts, Be Prepared for Changes

Notice 2018-58 talks about changes to tax laws that will impact 529 plans related to tuition refunds, K-12 education and rollovers to ABLE accounts for disability-related expenses.

Tuition refunds, K-12 education costs and rollovers to ABLE accounts for disability-related expenses, will now reflect recent tax law changes.

MP900442387New regulations that reflect changes from the 2015 Protecting Americans From Tax Hikes (PATH) Act, and the 2017 tax overhaul will be issued by The Internal Revenue Service (IRS) and Treasury Department, as reported by Think Advisorin the article, “IRS, Treasury to Issue 529 Plan Regs.”

Notice 2018-58 talks about changes to tax laws that will impact 529 plans related to tuition refunds, K-12 education and rollovers to ABLE accounts for disability-related expenses.

Taxpayers, beneficiaries, and administrators of 529 and Achieving a Better Life Experience (ABLE) programs can rely on the rules detailed in the Notice until the U.S. Treasury Department and IRS issue regulations that clarify the three changes.

The new regulations will simplify the tax treatment of a special rule added under the PATH Act for a beneficiary of a 529 plan. This is typically a student who gets a refund of tuition or other qualified education expenses. It can happen when a student drops a class mid-semester, according to the IRS and the Treasury. If the beneficiary recontributes the refund to any of his or her 529 plans within 60 days, the refund is tax-free.

The Treasury Department and IRS regulation will stipulate that re-contributions wouldn’t count against the plan’s contribution limit.

The 2017 tax law allows distributions from 529 plans to be used to pay up to a total of $10,000 of tuition per beneficiary (regardless of the number of contributing plans) each year. These can be for an elementary or secondary (K-12) public, private or religious school of the beneficiary’s choosing.

Another change in that law lets funds be rolled over from a designated beneficiary’s 529 plan to an ABLE account. That type of account is created to pay for disability-related expenses for those who become disabled before age 26 for the same beneficiary or a family member.

Under the new IRS and Treasury regulations, rollovers from 529 plans, and any contributions made to a designated beneficiary’s ABLE account may not exceed the annual ABLE contribution limit, which in 2018 is $15,000. The exception is certain permitted contributions of the designated beneficiary’s compensation.

Reference: Think Advisor (July 30, 2018) “IRS, Treasury to Issue 529 Plan Regs”

What Happens When an Estranged Daughter Shows Up…After Her Father is Gone?

Kim, who goes by the name Viola La Valette, is after part of her father’s $900 million estate.

She says her father was suffering from Alzheimer’s disease, and that’s why he cut her out of the will. However, she also hadn’t seen or spoken to him for more than two decades.

GrundyregThere’s a big estate battle brewing in Britain, where the 61-year-old daughter of Reg Grundy, Kim Robin Grundy, is challenging her father’s second wife with a will contest. Kim, who goes by the name Viola La Valette, is after part of her father’s $900 million estate. The fact that she refused to see him, even while he was supporting her, is not making her a popular figure.

Starts at 60’s article, “Reg Grundy’s daughter says he had Alzheimer’s when he cut her from will,” says that the TV tycoon, who was responsible for Australian shows like Neighbours and Wheel of Fortune, died in May 2016 at the age of 92. He left the majority of his estate to his wife.

However, his daughter is now investigating his mental state and health before he died.

La Valette, who is Reg’s daughter from his first marriage to Patricia Lola Powell in 1954, appeared in court recently to formally contest the will.

Her attorney reportedly claimed that Grundy suffered from “Alzheimer’s disease and cognitive impairment” before he died.

It was previously reported that La Valette refused to see her father and cut off all contact with him for more than 20 years before he died, which left him heartbroken. His wife said at the time that he had always supported his daughter and allowed her a glamorous lifestyle. Because of this, she never had to work and could live in luxurious hotels.

Alzheimer’s disease is one of more than 100 types of dementia. The disease presents differently in each individual. As a result, it’s difficult to definitely know when a person may lose his capacity to make important decisions.

The term “capacity” means that an individual has the ability to understand decisions about important personal matters, can voluntarily make those decisions and can communicate those decisions to others. Because of the unknowns with Alzheimer’s disease and dementia, it’s crucial to make plans while a person still has capacity.

Having a will in place in the early stages of any type of dementia or before any issues of capacity arise is critical to the success of an estate plan.

It’s not yet known if Grundy really had Alzheimer’s disease or any kind of dementia.

Reference: Starts at 60 (August 6, 2018) “Reg Grundy’s daughter says he had Alzheimer’s when he cut her from will”

Not Wealthy? You Still Need an Estate Plan!

If you die without a will, you won’t have the opportunity to designate the guardian you want to care for your minor children. Instead, a judge will decide this.

There’s a saying about people who don’t have an estate plan created. They have a will, it’s just not the one that they want. Decisions are made by the state, and that includes who raises their kids.

Bigstock-Extended-Family-Outside-Modern-13915094If you’ve got young children under the age 18, says CNBC in a recent article, “You don’t have to be wealthy to put this estate plan into place,” you really need to make sure that you have a will. That’s where you can convey your wishes as to who should raise your children, in case tragedy hits and both you and your spouse are not able to.

If you die without a will, you won’t have the opportunity to designate the guardian you want to care for your minor children. Instead, a judge will decide this. It may be someone you really never considered for that essential responsibility.

That’s why a will is so critical for families with young children. You can also avoid or at least lessen conflicts between relatives by adding a guardianship clause in your will.

Without a will, the state’s intestacy laws will dictates how your cash and assets will be distributed when you die. Typically, the intestacy laws say that your estate will pass to your closest living relative—your spouse, your kids, your parents and your siblings.

These laws also stipulate how assets are divided among your family members. For example, in New York, your surviving spouse gets 50% of the balance, and your children get everything else.

But what if that's not what you want? Then you better have a will.

It’s also important to know that your will won't override your beneficiary designations for your retirement accounts and life insurance.

While you’re at it, a couple of other documents you'll need to get your basic estate plan together, are your financial power of attorney and medical directives. Power of attorney grants a person that you name to oversee your finances, if you're incapacitated. Medical directives allow you to state how you want to receive health care, if you’re unable to communicate your wishes.

An estate planning attorney can help you create the documents you need, to ensure that your children and you and your spouse are protected, before and after death. It’s an important part of your responsibility and will also provide you with peace of mind.

Reference: CNBC (August 8, 2018)“You don’t have to be wealthy to put this estate plan into place”

Medicare Facts and Penalties You Need to Know

Make sure to review your coverage and plan in advance to avoid any penalties.

Start with the basics, to make sure you’re making informed decisions.

Bigstock-Senior-Couple-8161132Created in July 1965 as part of the Social Security Act, Medicare is how most adults over age 65 cover their healthcare costs. Medicare has four parts. They are Part A: Hospital, Part B: Outpatient Services, Part C: Medicare Replacement and Part D: Prescription Drugs. This useful article from Think Advisor, “Essential Medicare Facts & Penalties Advisors Should Know on One Page,” covers Medicare fundamentals.

As a general rule, if you are 65 and you or your spouse have paid Medicare taxes for at least 10 years, you may enroll in the program. Those under 65 may also enroll, if they are disabled or have end stage renal disease.

Let’s look at the different parts of Medicare:

Part A is free for most people. If you didn’t pay Medicare taxes, you may be able to enroll and pay for Part A. If you’re under 65 and didn’t pay into Medicare, you may be eligible if you have been entitled to Social Security or Railroad Retirement Board disability benefits for 24 months or you are a kidney dialysis or kidney transplant patient.

Everyone is required to pay a premium for Medicare Part B, which is deducted from your Social Security retirement payment. If you’re eligible but haven’t yet begun to receive a Social Security retirement benefit, Medicare will send you a bill.

Part C is also known as a Medicare Advantage plan. It’s issued by a Medicare-approved private insurer. Even if you choose Medicare Part C, you still are required to pay a Part B premium. Although these plans cover all services in Part A and Part B, they frequently have other benefits like vision, dental, hearing, and prescription drugs.

Part D covers prescription drugs. Each Medicare drug plan list its approved drugs and a “tier” for them. A lower tier drug will generally cost less, and a higher tier drug will cost more.

The window to enroll in Medicare starts on the first day of the third month prior to your birth month and ends on the last day of the third month following the month of your birth.

There is a separate “late enrollment” penalty, if you go 64 continuous days or more beyond the end of your initial enrollment period and did not have a Medicare Prescription Drug Plan, a Medicare Advantage Plan (Part C) and another Medicare plan that offers prescription drug coverage, including a plan through an employer or union.

Make sure to review your coverage and plan in advance to avoid any penalties. If you make a mistake, you may end up paying a premium for certain types of coverage, for as long as you have Medicare.

Reference: Think Advisor (July 31, 2018) “Essential Medicare Facts & Penalties Advisors Should Know on One Page”

The Empire State Takes Steps to Protect Seniors from Abuse

Governor Cuomo announced that services for vulnerable adults at risk of abuse, neglect or financial exploitation will be improved through a new initiative

Talk about going big–New York’s Governor Cuomo is expanding services for seniors at risk of elder abuse with an $8.4 million package, combining state and federal funding.

MP900422370Governor Cuomo announced that services for vulnerable adults at risk of abuse, neglect or financial exploitation will be improved through a new initiative developed by the state’s Office of Victim Services and the Office for the Aging, named the Elder Abuse Interventions and Enhanced Multidisciplinary Teams Initiative.

The program will fund and support 23 existing multidisciplinary teams that are now fighting elder abuse and will establish additional teams to serve every county in the state by the fall of 2020, according to the website,longisland.com’s article, “Governor Cuomo Announces $8.4 Million To Combat Elder Abuse And Financial Exploitation Statewide.”

"New York remains steadfast in its commitment to protecting one of our most vulnerable populations and to holding those responsible accountable for their actions," Governor Cuomo said. "By expanding upon existing efforts to ensure we are able to serve every county in the state, we can prevent harm to vulnerable adults, reduce risk of exploitation and save lives."

Over the next three years, the Office of Victim Services will provide $2 million in federal funding each year, and the Office for the Aging will provide another $500,000 in state funding annually to create the E-MDT Initiative. The teams are staffed by professionals from aging services, adult protective, health care, financial services, criminal justice, victim assistance, mental health, and other disciplines. They will coordinate investigations and develop interventions to thwart elder abuse. The teams assist adults age 60 or older, who are at risk for harm or exploitation due to physical limitations, cognitive impairment or dementia and social isolation.

The Office for the Aging is working with Lifespan and Weill Cornell Medicine's NYC Elder Abuse Center to manage, monitor and distribute the funding this year. The funding will maintain and expand current enhanced multidisciplinary teams and create more teams to ensure that every county in the state is represented. The funds will also help to provide technical assistance and training; collect data; and provide teams with forensic accounting, geriatric psychiatry services, and community legal services, when appropriate for the cases they’re handling.

The federal funding lets the state use additional funds to support 23 existing multidisciplinary teams.

Chair of the Assembly Standing Committee on Aging, Assembly Member Donna Lupardo said, "New York seniors deserve to age independently and with dignity. Unfortunately, this freedom is often threatened by criminals who target them for exploitation. By establishing and funding multidisciplinary teams in every county across New York, we will provide seniors with a powerful ally to help protect and support them. I would like to especially thank Governor Cuomo and all of my partners in state government for these important resources needed to reduce elder abuse."

Crime victims who were 60 or older filed more than 4,000 claims for assistance that were approved by the Office of Victim Services between 2015 and 2017. This is roughly 17% of the more than 23,000 claims awarded by the agency over that two-year period.

If the budget and the effort sounds oversized, it’s not. A state-funded study in 2011 found that for every single case of abuse reported to adult protective services or other authorities, there are 23.5 cases that are not reported. In addition, a 2016 study from the Office of Children and Family Services found that the financial exploitation costs vulnerable adults and the state at least $1.5 billion every year.

Reference: longisland.com (August 1, 2018) “Governor Cuomo Announces $8.4 Million To Combat Elder Abuse And Financial Exploitation Statewide”

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