How Do I Protect Property If I Need Long-Term Care?

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Nearly 90% of those over age 65 would say they’d prefer to stay in their home and live independently as they age. However, even if you are one of those people, you need to make certain that you have a long-term care plan in place to ensure your assets can go toward the things you want, rather than unexpected healthcare costs.

The Observer-Reporter’s recent article entitled “Protecting Your Assets is Only Half of Your Long-Term Plan” explains that there are many factors, like chronic conditions and lifestyle choices, that can increase healthcare expenditures as you get older. Understanding and planning for the potential costs now, could be the difference between spending your savings on health care expenses, instead of on the things you want.

You may be concerned about being a burden to family and friends as you age. That’s common since nearly three-quarters (72%) of parents expect their children to become their long-term caregivers. However, just 40% of those children are aware they were tapped for that role!

Research shows that when family and friends assume the role of primary caregivers, they have a 60% chance of exhibiting clinical signs of depression—six times more than the general population. Having your family and friends become your caregivers may be best for you financially, but it probably isn’t in their best interest.

You should have a sound understanding of the cost and burden that long-term care can put on your family and friends. This is the first step to preparing your long-term plan. It is important to understand that there are a few different long-term planning options available, with varying levels of care coverage. One is Medicaid, which is a means-tested government health insurance plan that can cover some or all of the care you may need in a skilled nursing facility. However, what it covers is income- and asset-based. Medicare may cover some limited long- term care for rehabilitation but typically not custodial care.

There is also long-term care insurance which can fill many of the gaps that Medicare and Medicaid may leave. Most plans are customizable and have options for full or partial coverage for all of the types of long-term care. However, there may still be gaps in your coverage.

Ask an elder law attorney about other options and resources.

Reference: (Washington, PA) Observer-Reporter (Feb. 17, 2020) “Protecting Your Assets is Only Half of Your Long-Term Plan”

What Do Farmers Need to Create an Estate Plan?

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Planning for the end of life is intimidating for everyone, but when the plan includes a family business like a farm or ranch, things can get even more challenging. That’s why estate planning, that is, planning for the distribution of assets once you die, is especially important for aging farmers. The details are in the article “How farmers can start an estate plan” from Bangor Daily News.

Death and dying are not easy to talk about, but these conversations are necessary, especially if the family wants to continue as a farming or ranching family. For aging farmers and their families, here are a few tips to demystify the planning process and help get things started.

What are your goals? Think of estate planning as succession planning. This is about making decisions about retirement and handing down a business to the next generation. If you had a regular job, you’d have far less to consider. However, succession planning for a family business owner involves more resources and more people. Having a clear set of goals makes that transition easier. Add to that list: your fears. What don’t you want to happen? If your children don’t know how much you want them to keep the farm in the family, they may take other actions after you die. Share your goals, hopes, and yes, worst-case scenarios.

Build a team of professionals. The number of moving pieces in a family farm means you’re going to need a strong team. That includes an estate planning attorney who has worked with other farm families, an accountant, a financial advisor, and an insurance professional. Depending on your family’s communication skills, you might even consider bringing a counselor on board.

List your assets. Don’t assume that anyone in the family knows the value of your assets. That includes deeds to land, titles of ownership for vehicles, information about any property mortgages, or loans or leases. If you are leasing land to others, you’ll need the lease agreements as well as property titles. If your lease agreements are based on a handshake, your attorney may request that you formalize them. A verbal agreement may be fine while you are living, but if you should pass and your heirs don’t have the same relationship with your tenant, there could be trouble ahead.

Consider who will be in charge when you are not there. Whether you are planning to work until you die or making a retirement plan, one of the hardest decisions will be to name a successor. Inter-generational politics can be tricky. You’ll need an unbiased evaluation of who the best candidate will be to take things on. However, going into this now is better than hoping for the best. That’s when things go south.

Talk to your estate planning attorney. Just as people should start planning for their retirement as soon as they start working, planning for the transition of the family farm is something that should start when it is years in the future, not when the transition is a few months away. It’s a process that takes a long time to do right.

Reference: Bangor Daily News (March 5, 2020) “How farmers can start an estate plan”

C19 UPDATE: Should You Bring Mom Home from the Nursing Home Now?

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If you have a loved one currently living in a nursing home, you’re probably worried about them right now. You may not be able to visit them or check in on their care. You may be afraid that the next COVID19 outbreak will strike their facility.

And … you may be struggling with the decision about whether it’s best for them to stay in the facility, or if you should bring them home.

These are all reasonable concerns. There have been more than 5,670 coronavirus deaths in long-term care facilities nationwide, according to state health data reported by NBC News on April 15.

But would Mom or Dad fare better, even with all due social distancing, in the family home?

Some issues to carefully consider if you are struggling with this question now:

  • Are you prepared to shoulder the entire burden of care for your loved one now? If not, are there other family or community resources that could help – and can you access them in the current situation?
  • What does your loved one want? Do the benefits of moving them out outweigh the stress of disruption and displacement?
  • Can you really keep your elderly loved one safer at home … especially if they have chronic conditions such as heart, lung, or kidney disease?
  • How long will you be able to keep up with your loved one’s care at home … and
  • Will your loved one be able to return to the facility if you cannot keep up … or after the danger has passed?
  • Will your loved one lose their Medicare or Medicaid benefits if they leave the nursing home?

These questions, and more, should be addressed before making the decision to remove your loved one from a nursing facility. Check with an elder law attorney who is familiar with your situation, state and federal laws, and nursing home policies who can explain your options and guide you to an informed decision.

Resources: NBC News, Coronavirus deaths in U.S. nursing homes soar to more than 5,500, April 15, 2020; March 18, 2020;

Why are Two Brothers Fighting Over Their Mother’s Life?

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An elderly mom is at the center of a court battle between her two sons. Her eldest son is set to face off against his brother in Nassau County Court, arguing he wants to keep their mother on a ventilator and feeding tube, while his sibling wants to pull the plug.

The New York Post’s recent article entitled “91-year-old LI woman mouths ‘I want to live’ on video amid legal battle” reports that the older brother, Edward, submitted the video he says was taken in November. It shows their mother even mouthing the words, “I want to live.’’

The mom, Arline, has been physically incapacitated since suffering a string of circulation and breathing problems over the past year, Edward said. His brother, Kyle, asked a judge to declare him her sole guardian, noting that he hopes to take her off life support. However, he contends that this is what their mom would want.

Kyle accuses Edward of keeping their mom alive against her will, so he can stay in her Long Beach home and “plunder” her assets, including the total $5,400 she collects every month from Social Security and her pension. Kyle requested that the hospital take Arline off life support pursuant to her 1999 living will, in which she’d asked not to be kept alive by machines if she ever became seriously ill.

Edward says that his mother clearly changed her mind and denies he has a financial stake in keeping her alive. In fact, if her health improves enough that she can be moved from the hospital into a nursing home, as he hopes, her income and estate (and both sons’ inheritance) worth approximately a quarter-million dollars to each of them, will soon be eaten up by nursing-home costs, Edward argues. Edward says that he gave up his career in Colorado as a mortgage and real estate broker to come back to New York to care for her.

In his mother’s “I want to live” video, filmed in November from her hospital bed, Edward asks Arline, “You have no leg, right?” referring to a recent amputation of her left leg due to circulatory problems. She nods yes.

“You understand that?” he asks.

Again, she nods yes.

“You have a feeding tube in you, you understand that, right? You have a tracheotomy and you have the thing breathing for you?” Edward asks his mom.

His mother nods yes, each time.

Edward then urges her to mouth the words, “I want to stay alive,’’ just to be absolutely clear. She does.

“With everything wrong with you, do you still want to stay alive?” he asks again, gently.

Yes, she nods.

A week after the video was taped, she executed a living will, with the help of an elder law lawyer, that states, “I wish to be treated aggressively for all conditions” and directs doctors “to continue to prolong my life as long as possible, within the limits of generally acceptable health care standards.”

Edward said that the hospital staff conducted a competency hearing administered by a psychiatrist, and she was determined to be competent. He insists that there’s still a chance their mother’s health will improve.

Reference: New York Post (Jan. 5, 2020) “91-year-old LI woman mouths ‘I want to live’ on video amid legal battle” 

How Should I Prepare for My Child’s Future?

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It’s been a common path for millennials and their predecessors to go to a four-year college and get a job. If they were short on funds, they’d take out some loans. However, there have been some signals that this norm is changing. With worries about a student debt crisis and with the experience of recent graduates, new college-age students are increasingly turning to alternatives to the established route to create their own debt-free future.

Kiplinger’s recent article entitled “How to Stay Flexible in Saving for Your Child’s Future” says that student debt is leading to obstacles when it comes to achieving major milestones of financial freedom. Of the young millennials surveyed, nearly half (47%) said they delayed purchasing a home because of their education-related debt, 40% delayed saving for retirement and 31% waited to move out of their parents’ home. A total of 28% of parents said they delayed saving for their own retirement in order to pay for their children’s education.

Saving for a child’s future now looks different than when these 18-year-olds were born.  It certainly will be the case when they leave the nest. As a result, it’s critical for parents to try to give them help, by learning how to adapt to the changing times.

With the gig economy and digitally-enabled side jobs, parents have more flexibility to maintain their financial goals, while preserving their personal lives.

Because there are many possibilities for how a child may choose to find their way with college, job-hunting, and career path, it is important to consider flexibility when saving for a child’s education. This is one of the big benefits of a 529 plan. Although you’re responsible for fees and taxes if you make a withdrawal that isn’t for a qualified education expense, the penalties aren’t too steep. Federal income tax is imposed on the plan’s growth, plus a 10% penalty on the growth. Therefore, depending on the amount withdrawn, the penalty may be very little.

Nonetheless, the tax penalties may worry parents enough that even when their goal is to save for their child’s future education, they want to spread their savings into multiple accounts. This has some clear advantages when the child decides not to go to college after high school. The good news is that there are plenty of options to account for both possibilities.

  • Other investment accounts: You could also create a brokerage account with money earmarked for a child. This gives parents complete flexibility in how the money is used. The money can be used for expenses other than education, but the downside is not having the tax benefits of the 529 plan (tax deferral and potential tax-free growth).
  • Trusts: a trust allows parents to keep complete control over the funds and lets parents provide instructions to the trustee, on how the trust can be used.
  • Custodial accounts: These accounts are managed by a guardian (or custodian) until the child is an adult. These accounts are pretty easy to set up but don’t have the restrictions that can be placed on trust funds.

The digital world has changed everything, including how we plan for our children and their future. Be flexible and make your plans accordingly.

Reference: Kiplinger (Dec. 27, 2019) “How to Stay Flexible in Saving for Your Child’s Future”

Succession Planning for Family Owned Farms

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Succession planning is not thought of as fun, simple, or quick. That’s true. A recent article from Ag Web puts it clearly: “Succession Planning Takes Leadership.” It also takes time, knowledge and guidance from smart professionals, including estate planning attorneys, financial advisors, and accountants. Let’s look at four important elements that should be present in any succession planning:

Clarity. Transitioning leaders need to answer a few questions. What do they want for themselves, for their operation, and for their stakeholders? Developing a successful plan by guessing what other family members want, rather than asking them directly can undo good planning. Having private conversations with individual members of the family will lead to more honest answers.

Certainty. Many times, families are not in perfect harmony about what succession looks like, which can lead to some uncertainty. Family leaders must step up and be decisive, and their decisions may not be popular with everyone. However, if a leader lets someone else make decisions, the situation becomes murky and confusing.

Continuity. It can take two or five years to create a succession plan, depending on the complexity of the operation and the number of family members involved. The actual succession itself can take ten years to unwind, depending on the time horizon for the transitioning leadership. A big problem for any process that takes so long is the loss of focus and momentum. Your team of professionals should be able to help mitigate this challenge.

Communication. A strategy for communication needs to be built into the succession plan, although it is often overlooked. Develop a timeline and establish when you will communicate progress and/or milestones to stakeholders. Your professional team may be needed to help with both the timeline and the communication strategy. Family members need to know what is happening, even when it seems like nothing big is occurring.

With strong leadership in each of these four factors, the succession plan is more likely to succeed. With less stress and an increased level of trust and clear communication, the family will work together to achieve the leader’s goals.

Reference: Ag Web (December 5, 2019) “Succession Planning Takes Leadership”

Stay-at Home Moms After the Children Become Adults

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When many people are thinking about retiring, women who have been stay-at-home moms often find themselves in an awkward position. People who have worked outside the home sometimes assume the stay-at-home mom will go to college, open a business, or start a career after the children grow up and move out of the house.

Indeed, many people who have worked outside the home create a “second act” for their lives, after they retire from their day jobs. There are many options available to stay-at-home moms after the children become adults, including choosing to retire and not pursue a second act.

Saying, “No Thanks,” to a Second Act

You worked hard for 20 or 30 years or longer, raising a family. You did not get evenings or weekends off. Even when the family took a vacation, you were still “on duty,” organizing and watching over everyone. You faced less respect than you deserved during those years, and now you face another chapter of disrespect. Some people assume you do not deserve to retire, because you never (in their minds) worked a “real job.”

Unfortunately, you will never convince those people you worked as hard as they did or harder and you have earned the right to spend your time however you want now. You did not need their permission to be a stay-at-home mom, and you do not need their approval now.

Kicking Your Previous Career into High Gear

You might have worked outside the home before becoming a stay-at-home mom. If you enjoyed the type of work you did then, you might want to go back to it. You might need to take a couple of courses at your local community college to get some of your job skills, like using specific types of software. Without kids at home, you can devote as much time as you want, without getting pulled in multiple directions.

Changing Careers

Of course, if you hated the employment you had in the past or want to try something new, you can always explore a job field that sounds interesting to you. You likely have more freedom now than ever before, so this could be the ideal time to explore new things.

Helping Others

Let’s say you always wanted to live in a remote part of the world while helping people. The Peace Corps actively recruits people over 50 to serve a tour of duty.

Sometimes people do not get to choose who they help. Many people who are thinking about retiring, find themselves serving as caregivers to elderly parents rather than sailing around the world.

Getting That College Degree

You might have started college but never completed the degree. Perhaps you earned your bachelor’s degree but now want to attend graduate school. On the other hand, life might have gotten in the way of you ever getting to start college. Many people choose to go back to school after they finish their child-raising careers.

Opening a Business

You might have a fantastic idea for a business you want to launch and run. There is no time like the present. With all of these options, the important thing is to make a decision. You do not want to have regrets one day, when you look back on this opportunity. Do your research, then have fun with whatever you choose.

References:

Huffpost “I Was A Stay-At-Home Mom For 22 Years. I Don’t Need A ‘Second Act’ To Feel Fulfilled.” (accessed December 12, 2019) https://www.huffpost.com/entry/stay-at-home-mom-after-50_n_5d812feae4b077dcbd6595ae

Second Marriages Need A Plan to Protect Children and New Spouses

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There are a number of issues in estate planning that are more important in second and subsequent marriages, as discussed in the article “Estate planning documents for second marriages” from the Cleveland Jewish News. A couple who each have children from a prior marriage are planning to marry again and blend their families. Consequently, the couple needs to address income taxes, a prenuptial agreement, pension and 401(k) benefits, Social Security, college funding, cost-sharing, and estate planning documents.

Here’s an example of how important estate planning is for blended families. A couple who each have children from their prior marriages get married. Twenty years later, the husband dies. He had wanted to provide for his second wife, so his will stated that all his assets went to his wife. They had the understanding that on her death, those assets would go back to his children.

What actually occurred was that his wife lived a long time after he passed, and she simply combined their assets. When she died, the money went to her children, and her husband’s children received nothing. The husband’s children didn’t believe that he meant to do that, but because of the lack of planning, that’s exactly what happened.

What were the alternatives? He could have set up a marital trust that would have held the assets for his second wife on his death, but upon the wife’s passing, would have gone back to his children. The trust document could prohibit the wife from transferring the assets in the marital trust to her children, and instead, guarantee that any assets remaining at her death would go to his children.

It’s wonderful to have a verbal agreement with your spouse, but if you don’t set up a formal legal plan, there’s no way to be sure that assets will be distributed as intended.

Another way to ensure that children from a blended family receive what they are intended is to have an independent person or entity, like a bank or a trust company, oversee a marital trust.

Other important documents include a durable financial power of attorney, durable health care power of attorney and a living will declaration.

Just as important as remarriage, anyone who has been divorced needs to review their estate planning documents to ensure that they reflect their new marital status, especially when they marry again. That is also the time to review beneficiary designations that appear on insurance policies, 401(k)s, pensions, retirement accounts, and investment accounts.

There’s no “set it and forget” plan for estate documents, so before you walk down the aisle a second time, or shortly after you do so, speak with an estate planning attorney to clarify your goals and put them into the appropriate estate planning documents.

Reference: Cleveland Jewish News (May 7, 2019) “Estate planning documents for second marriages”