Feeling Squeezed? You Might be a Sandwich

The phrase “sandwich generation” is used to describe people who are caring for their parents and their children at the same time. The number of people who fall into this category is growing, according to an article from The Motley Fool, “How to Help Your Parents Retire Without Derailing Your Own Retirement.” A survey found that about 16% of Americans are currently caring for an elderly relative, and this number is expected to double within the next five years.

What’s worse, very few people are planning for this situation.

Planning is the only way to stop what has been called a self-perpetuating cycle. Without planning, caring for parents could derail your own retirement, making you need the support of your children when you get older, and while your kids are trying to save for their children’s college educations and preparing for their own retirement. Sound familiar?

What can you do to prevent this cycle?

See if your parents qualify for any assistance programs. There are government and private programs to help with housing, food, utilities and healthcare. The programs vary by location and the situation of the people who are seeking help, but there is help, if you know where to find it.

If parents are over 65, there is something called Supplemental Social Security Income, or SSI. This is in addition to the regular Social Security benefits and might be enough to close the finance gap. In 2019, SSI provides up to $771 per month for an individual or $1,157 for a couple, if the requirements are met.

Cost cutting. If your parents don’t have a budget, help them create one so you can all be aware of how much money is coming in and how much is going out of the household. Could they tighten their discretionary spending? They could also consider a reverse mortgage on their home, if they have enough equity. Are you willing or able to have them come live with you?

Selling items could also free up cash for living expenses. If they have a house filled with memorabilia, or valuable antiques, and are willing to do so, they can combine downsizing with making some income.

Creating a plan. Get everyone in the room—parents, siblings and spouses. Discuss the challenges ahead and make sure that everyone is clear on what expenses everyone can help with. Housing and healthcare are necessary. Luxury cars and vacations are not.

If the adult siblings need to adjust their own spending to help the parents, be realistic with each other. How much are you able to contribute, and how much are you willing to contribute? No one sibling should have to shoulder the burden themselves, unless they are wildly wealthy, and it won’t make a dent in their lifestyle.

Along with the financial planning, make sure that your parents have an estate plan. They’ll need a will, a power of attorney for finances and a healthcare power of attorney. The cost of working with an estate planning attorney to ensure that this is in place, is far less than dealing with court proceedings, if you need to pursue guardianship or settle the estate without a will.

Reference: The Motley Fool (Aug. 25, 2019) “How to Help Your Parents Retire Without Derailing Your Own Retirement”

Succession Planning For Business Owners
Asset Growth Concept - Coins in the jar

Succession Planning For Business Owners

A business owner without an estate plan, is a business owner whose business and personal estate are both in jeopardy, says the Augusta Free Press in an article that asks “Own a business? 5 reasons you need an estate plan.”

You need more than a will to plan for incapacity. If you become ill or incapacitated, a will isn’t the estate planning tool that will help you and your family. What you need is a power of attorney (POA). This document names another individual or individuals to manage your finances and your business dealings, while you are unable to do so. Your estate planning attorney can create a power of attorney that limits what the named person, known as an “agent” may do on your behalf, or make it a broad POA so they can do anything they deem necessary.

Your state’s estate plan may not align with your wishes. Every state has its own laws about property distribution in the event a person does not have an estate plan. A popular joke among estate planning attorneys is that if you don’t have an estate plan, your state has one for you—but you may not like it. This is particularly important for business owners. If you have a sibling who you haven’t spoken to in decades, depending upon the laws of your state, that sibling may be first in line for your assets and your business. If that makes you worried, it should.

Caring for a disabled family member. A family that includes individuals with special needs who receive government benefits requires a specific type of estate planning, known as Special Needs Planning. This includes the use of trusts, so a trust owns assets the assets for the benefit of such a family member without putting government benefits at risk.

 

Help yourself and heirs with tax liability. If your future plan includes leaving your business to your children or another family member, there will be taxes due. What if they don’t have the resources to pay taxes on the business and have to sell it in a fire sale just to satisfy the tax bill? An estate plan, worked out with an experienced estate planning attorney who regularly works with family-owned businesses, will include a comprehensive tax plan. Make sure your heirs understand this plan—you may want to bring them with you to a family meeting with the attorney, so everyone is on the same page.

Avoid fracturing your own family. An unhappy truth is that when there is no estate plan, it impacts not just the family business. If some children or family members are involved in the business and others are not, the ones who work in the business may resent having to share any of the business. How to divide your business is up to the business owner. However, making a good plan in advance with the guidance of an experienced advisor and communicating the plan to family members will prevent the family from falling apart.

There’s no way to know how family members will respond when a parent dies. Sometimes death brings out the best in people, and sometimes it brings out the worst. However, by having an estate plan and business plan for the future, you can preclude some of the stresses and strains on the family.

Reference: Augusta Free Press (August 13, 2019) “Own a business? 5 reasons you need an estate plan.”

Second Time Down the Aisle? Make Sure Estate Plan Is Ready

Image result for background wedding

It’s always a good idea to review your estate plan, especially when a major life event, like a second marriage, is taking place. The use of a pre-nuptial agreements gives prospective spouses the opportunity to discuss one another’s rights of inheritance, and clarify a great many issues, says nwi.com in the article “Estate Planning: Planning for second marriages.”

There’s a second opportunity to sign an agreement detailing inheritance rights after the wedding takes place, called a “post-nuptial agreement.” The problem is that once the wedding has occurred and you are both legally married, you might get stuck with some surprises and, well, you’re married. For most people, it’s better to set things out before the wedding, rather than after.

There also may have been dissolution decrees in one or both of the couple’s prior divorces that have requirements which must be satisfied. A spouse may be required to maintain life insurance with the ex-spouse as a beneficiary. This can have an impact on the couple’s estate plan. It is recommended thay you have everything discussed up front in the pre-nup.

The rest of the steps are those that should be followed for any estate review.

Make sure that the last will and testament reflects your new spouse. If there are any mentions of the prior spouse, you probably want to remove them.

Verify how all of the assets are owned. Will they continue to be owned by just one spouse, or converted to jointly owned? Does your estate plan have a trust, and if so, are assets owned by the trust? Does there need to be a change made to your trustees?

Many people don’t remember how their bank accounts are titled. Fewer still can tell you who their beneficiaries are on their retirement accounts, life insurance policies and bank accounts. Remember: the beneficiary designations are going to determine who receives these assets, regardless of any language in your last will and testament. Once you die, there is no way to contest that distribution. Review your accounts and make sure that the beneficiaries are up to date.

Part of your pre-nup and estate plan review will be to discuss inheritance rights for any children in the blended family. Do you want to leave assets only for your children, or do you want to leave assets for all the children? It’s not an easy conversation to have, especially at the start of the blending process.

Remember also that blended family dynamics can change over the years. When you review your estate plan next—in three to four years—you’ll have the opportunity to make changes that hopefully will reflect deepening bonds between all of the family members. Your estate planning attorney will help create and revise estate plans, as your life circumstances evolve.

Reference: nwi.com (May 5, 2019) “Estate Planning: Planning for second marriages”

 

Why an Attorney Should Help with a Medicaid Application

Image result for medicaid application

Elder law attorneys can be very helpful when planning for Medicaid coverage, and they can save money in the long run, ensuring that you (or a loved one) get the best care. Instead of waiting to see how wrong the process can get, says The Middletown Press, it’s best to “Use a lawyer for Medicaid planning” right from the start. Here’s why.

Conflict of interests. When a nursing home refers a family to people for preparing the Medicaid application, very often the person has dual loyalties: to the nursing home who refers them the work, and to the family who will pay them a fee for help with applying for benefits. Whose interests comes first?

Everyone wants the Medicaid application to be successful, but let’s be realistic. It’s in the nursing home’s best interest that the resident pays privately for as long as possible, before going on Medicaid. It’s in the resident or family member’s best interest to protect the family’s assets for care for the resident’s spouse or family.

An attorney has a duty of loyalty only to her client. She also has an ethical and professional responsibility to put her client’s needs ahead of her own.

Saving money is possible. Nursing homes in some areas cost as much as $15,000 a month. While every market and every law practice is different, it would be unusual for legal fees to cost more than a month in the facility. With an experienced attorney’s help, you might save more than her fee in long-term care and probate cost. Most attorneys will consult with new clients at little or no cost to determine what they need and what they want to achieve before paying a larger fee.

The benefit of experience. It’s all well and good to read through pages of online information, but nothing beats the years of experience that an attorney who practices in this area can bring to the table. Any professional in any field develops knowledge of the ins and outs of an area and applying for Medicaid is no different. Without experience, it’s hard to know how it all works.

Peace of mind from a reliable, reputable source. Today we hear a lot about “FOMO,” or fear of missing out. Consulting with an experienced attorney about a Medicaid application will help you avoid years of wondering, if there was more you could have done to help yourself or your loved one.

There are multiple opportunities for nursing home residents to preserve assets for themselves and spouses, children and grandchildren, particularly when a family member has special needs. However, here’s a key fact: if you wait for the last minute, there will be far less options than if you begin planning long before there’s a need to apply for Medicaid.

Reference: The Middletown Press (July 29, 2019) “Use a lawyer for Medicaid planning”

Long Term Care Decisions Cause Challenges for Families

One year at an assisted living facility in New Hampshire has a median cost of $56,000, and the median annual cost of a semi-private room at a nursing home is $124,000, reports Genworth, a national insurance company known for its annual “cost of care” survey.

Families are often surprised to learn that health insurance and Medicare will pay little, if any, of the costs of long-term care, reports New Hampshire Business Review in the article “The dilemma of long-term care.” Some may try caring for a loved one at home, but this is stressful and often becomes unmanageable. Assisted-living facilities can be wonderful alternatives, if the family can afford them. Long-term care insurance is considered one of the important financial protections as we age, but relatively few people have it.

A growing problem with Medicaid-paid care, is that it can be hard to find a facility that accepts it. Not to mention that the loved one’s assets have to be down to $2,500 (note: this number varies by state), which requires advance planning or becoming impoverished through the cost of care.

Most people have no idea how this part of healthcare works, and then when something occurs, the family is faced with a crisis.

The Department of Health and Human Services projects that as many as 70% of Americans age 65 and older will need long-term care during their lives, for roughly one to three years. Yet little more than a third of all Americans age 40 and older have set aside any money to pay for that care.

There are ways to pay for long-term care, but they require planning in advance. This is something people should start to look into, once they reach 50. The top reason to do the planning: to take the burden of care off of the shoulders of loved ones. From a strictly financial viewpoint, we should all start paying premiums on long-term care as soon as we become adults. However, not everyone does that.

Families pay for long-term care with a mixture of assets:

  • Personal savings provide the most flexibility. This is not an option for many, as one half of American households with workers 55 and older had no retirement savings.
  • Veterans disability benefits can be used for long-term care services, but the non-disability benefits available to veterans are more limited. They may cover in-home services and adult day care, but not rent at an assisted living facility.
  • If a loved one owns a home, they can take out a reverse mortgage and use the lump sum or monthly payout for long-term healthcare needs. The money is repaid, when the home is sold or passed on to an heir.
  • Medicare will pay for some long-term care, but only under very limited conditions. It may cover skilled nursing care in a facility but not the care for daily living activities, including toileting, dressing and others. Coverage is all expenses for the first 20 days in a facility and then there is a daily co-pay of about $170 for the next 80 days, when all coverage stops.
  • Medicaid is the source of last resort, but what many families eventually turn to.

Planning in advance for long-term care is the best option, and while premiums for long-term healthcare may seem expensive, having insurance is better than having no insurance. For many families, watching the costs consume a lifetime of savings is enough of a spur to planning for long-term care. Speak with an elder law attorney about to prepare for long-term care needs, as part of your estate plan.

Reference: New Hampshire Business Review (May 23, 2019) “The dilemma of long-term care”

 

Power of Attorney: Why You’re Never Too Young

When that time comes, having a power of attorney is a critical document to have. The power of attorney is among a handful of estate planning documents that help with decision making, when a person is too ill, injured or lacks the mental capacity to make their own decisions. The article, “Why you’re never too young for a power of attorney” from Lancaster Online, explains what these documents are, and what purpose they serve.

There are three basic power of attorney documents: financial, limited and health care.

You’re never too young or too old to have a power of attorney. If you don’t, a guardian must be appointed in a court proceeding, and they will make decisions for you. If the guardian who is appointed does not know you or your family, they may make decisions that you would not have wanted. Anyone over the age of 18 should have a power of attorney.

It’s never too early, but it could be too late. If you become incapacitated, you cannot sign a POA. Then your family is faced with needing to pursue a guardianship and will not have the ability to make decisions on your behalf, until that’s in place.Meet Our Team CTA Image

You’ll want to name someone you trust implicitly and who is also going to be available to make decisions when time is an issue.

For a medical or healthcare power of attorney, it is a great help if the person lives nearby and knows you well. For a financial power of attorney, the person may not need to live nearby, but they must be trustworthy and financially competent.

Always have back-up agents, so if your primary agent is unavailable or declines to serve, you have someone who can step in on your behalf.

You should also work with an estate planning attorney to create the power of attorney you need. You may want to assign select powers to a POA, like managing certain bank accounts but not the sale of your home, for instance. An estate planning attorney will be able to tailor the POA to your exact needs. They will also make sure to create a document that gives proper powers to the people you select. You want to ensure that you don’t create a POA that gives someone the ability to exploit you.

Any of the POAs you have created should be updated on a fairly regular basis. Over time, laws change, or your personal situation may change. Review the documents at least annually to be sure that the people you have selected are still the people you want taking care of matters for you.

Most important of all, don’t wait to have a POA created. It’s an essential part of your estate plan, along with your last will and testament.

Reference: Lancaster Online (May 15, 2019) “Why you’re never too young for a power of attorney”

 

Image of Sigerson Book

Request a No-Cost, No-Obligation Consultation, and Receive a Complimentary Copy of our new book: The Family Estate Planning and Elder Law Guide