Posted by Wellesley Estate Planning Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Tue, Apr 10, 2012 @ 10:18 AM
Last week we began our consideration of court appointed Guardianships and Conservatorships. We discussed situations we run into frequently as attorneys and some of the ways in which seniors in need can get help in a variety of scenarios. This week our consideration continues with an in depth look at Guardianships and Conservatorships.
Guardianship
Terminology varies from state to state, but in general, guardianship (sometimes called "guardianship of the person") applies to probate court appointment of a fiduciary ("guardian") to make decisions in regard to the protected person's personal care. The protected person may be called a "ward" under some state laws, but that term is being phased out as unfavorable. A guardian generally does not have control of the protected person's finances, although state law or the specific terms of the guardianship may authorize the guardian to hold small amounts of the protected person's funds if no conservator has been appoint ed and the protected person does not have a durable power of attorney.
Conservatorship
Conservatorship refers to probate court appointment of a fiduciary ("conservator") to administer the finances and assets of the protected person. In some states, conservatorship may be called "guardianship of the estate." Conservatorship is much like trusteeship, although the powers of and restrictions on the conservator are defined by statute and regulation, rather than a voluntary trust agreement or trust declaration, and are typically are much less flexible than the powers authorized for trustees. Conservatorships are also analogous to durable powers of attorney. However, one of the key differences between conservatorships, trusts and durable powers of attorney is that conservatorships are court-supervised and directly accountable to the court. It is common for conservators to be required by state law and regulations to account annually to the probate court. Such accounting needs to be accurate to the penny.
Conservatorship is also similar to a decedent's probate estate administration. Like a probate Personal Representative or Executor (except where a decedent's will waives bond), a Conservator may be required by law to obtain a probate bond through an insurance company to insure his or her fidelity to proper administration of the protected person's assets and income. The costs of the probate bond and of the administration come out of the assets of the protected person. The amount of coverage of the bond is set by the court to cover the assets under the conservator's administration, and may cost anywhere from just under $1,000 per year to considerably more. The probate judge may have the authority to waive the probate bond requirement under certain circumstances, such as where the spouse is the conservator and is the primary devisee under the protected person's will.
A conservator does not have plenary power to do whatever financial transactions he or she feels are warranted. For example, a conservator needs specific court authorization to sell real estate in most states.
Compensation of Fiduciaries
In most circumstances, the fiduciary is entitled to "reasonable compensation." Reasonable compensation often is based on a list of criteria such as the time spent, lost opportunity to do other work that the fiduciary normally does, difficulty of the work, etc. Unlike provisions under some state probate codes for Personal Representatives of decedents' estates, reasonable fees for a conservator or guardian are not related to a percentage of the value of the protected person's assets that the fiduciary manages.
Imposing Minimum Restrictions
For a guardian and/or conservator of an adult, the probate code generally imposes a standard that the protected person's rights are to be removed to the minimum degree necessary to protect him or her. This is because the removal of personal rights and liberty by the court is analogous to a civil form of imprisonment. Where a protected person is capable of making some kinds of decisions safely and prudently in regard to his or her living conditions, care, or finances, the theory is that his or her rights to make such decisions should be preserved as long as possible. On a practical level, keeping seniors involved in their care and financial decisions also helps to keep them engaged with life, reality, and higher mental functions, so this legal construct is very consistent with practical experience in care giving for seniors who are in a process of deteriorating mental capacity. There is a growing movement nationwide to maximize decision-making by adults who are under guardianship and/or conservatorship.
Maximizing the decision-making by protected persons can make it more difficult for the fiduciary, since he or she is not able to make unilateral decisions where the protected person retains decision-making power. How this works out in practice depends very much on the personalities of the protected person and fiduciary. When circumstances are such that retained decision-making by the protected person unduly hampers the process of making or implementing needed decisions, the fiduciary can file to obtain guidance or an order of the court. If you have any questions or would like to discuss issues raised in this newsletter in more detail, please feel free to contact our office. To learn more about how our
Life Care Planning services can help you or a loved one get the care they need in the most cost efficient manner call (800)-946-4295 (24/7) and register for a free education workshop hosted at the Estate Planning & Asset Protection Resource Center in Wellesley, MA. You can also register for a workshop by
Clicking Here. If you have been handed the difficult task of caring for a spouse of family member with Alzheimer’s the information found in the
Complete Alzheimer’s Resource Kit, available free online at
www.BostonMemoryLawyer.com, will help you discover many of the strategies that smart families take to protect their loved one, their home, and their hard-earned savings from long-term care costs. You can also listen to an interview with master caregiver Jo Huey on the
Podcast Section of
www.Dsullivan.com.
Posted by Wellesley Estate Planning Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Thu, Mar 29, 2012 @ 11:49 AM
Understanding the Importance and Implications of Guardianships and Conservatorships – PART ONE
Often in estate planning, attorneys present the idea of guardianship and/or conservatorship as a bad thing - something to be avoided. In a perfect world, we could move through our lives from cradle to grave without such things as guardianships and conservatorships. But in order to achieve this perfect world, we have to do advance planning to provide for our own care if we become impaired or incapacitated, and we need trustworthy, responsible and financially astute family members who are willing and able to assist us. For some people, these "perfect world" conditions do exist. However, for many others, they do not.
As attorneys we are increasingly running into the following situations:
1. Seniors come to us, often brought by their children or children-in-law, when mental incapacity has set in, and although they appear to have willing and able family members who can take care of them, assist with making personal care and living decisions, or manage their finances, the seniors do not have the necessary delegation documents in place to empower these helpers as their agents. If you need information and help to assist a family member with dementia or Alzheimer’s visit www.BostonMemoryLawyer.com where you will be given free online access to the Complete Alzheimer’s Resource Kit, which will help you discover care giving tips and secrets crucial to helping a loved one with Alzheimer’s or dementia.
2. Seniors have documents in place, but the people named are dead or no longer available, willing or appropriate to serve. For this reason and several others such as changes in the law, changes in one’s health, and changes in one’s financial situation, it is good practice to review your financial and legal documents on a periodic basis. To help our clients deal with changing situations we created the Life Time Protection Program. The Lifetime Protection Program provides clients with on going support, financial review, document review, any udates that are needed, estate tax planning, and the ability to contact our office with any questions or concerns.
3. The people who the senior trusted and anticipated would be appropriate have become exploitive and abusive to them.
4. Seniors have been conned into paying for, or agreeing to pay for, fraudulent products and/or services.
Elder abuse in its many forms - including fraud by unscrupulous "vendors," financial exploitation, and physical or emotional abuse by "friends" and relatives - is a huge problem in the United States. The topic is being exposed in the 21st century much like child abuse and spousal abuse came into public view and began to receive legislative solutions during the late 20th century.
Crisis Situations
Another increasingly common situation is where seniors do not have agent-delegation planning in place and end up in a medical or living condition crisis where they are putting themselves or others at risk. Loyal family members and friends are very concerned, but nobody has the power to assist once they learn what needs to be done. No one should end up like Terri Schiavo. Ms. Schiavo did not have complete health care documents spelling out her wishes in the event of her incapacity or irreversible terminal illness. Her husband and parents waged war through years and years of heartfelt legal battles…not to mention heartbreak, tears and hard feelings. If you do not have the appropriate healthcare and disability documents your loved ones may be subjected to the same hardships as Terri Schiavo’s family in the event of your incapacity.
Alternatively, seniors may have excellent voluntary delegation planning in place, but the seniors are noncompliant about what they now need to do for their own safety and care. For example, they may need to live in an assisted living community or nursing home, but they voluntarily check themselves out and depart. They are free to make their own decisions, even though imprudent or unsafe, so they can walk right out and put themselves in danger. If they have access to an automobile, they put the general public at risk as well. If you or a parent would like to learn more about senior living options please contact our office at (781) 237-2815 and request information about Life Care Planning and Senior Living Options. We have helped clients get the care they need, both at home and in assisted living and nursing facilities, without sacrificing their hard earned life savings to pay for it.
Adult Protective Services
In emergencies, where the seniors are unwilling to cooperate and their stubbornness is putting themselves or others at risk, often the first call should be to Adult Protective Services (APS). APS is a state agency, typically within the department of "human services" or "social services" of the particular state. APS generally will appoint a social worker or other staff person to investigate, perhaps with local police in order to gain access to the senior and entry into the home. In Massachusetts call your local Aging Service Access Point (ASAP). Please call our office if you need help locating your local ASAP.
Seeking Court Protection
Whether or not ASAP gets involved, and whether or not the case is an emergency or just a situation where the senior needs help and is not willing or able to sign voluntary agent-delegation documents, the solution is often a guardianship and/or conservatorship for the senior, if he or she meets the applicable standards of incapacity. (Less commonly, where mental illness other than dementia is the apparent cause, "involuntary commitment" may be necessary to place the senior is a hospital psychiatric ward for analysis.)
Conclusion
If you have any questions or would like to discuss issues raised in this newsletter in more detail, please feel free to contact our office. To learn more about how our Life Care Planning services can help you or a loved one get the care they need in the most cost efficient manner call (800) 946-4295 (24/7) to register for a free education workshop hosted at the Estate Planning & Asset Protection Resource Center in Wellesley, MA or learn more about the workshop by visiting www.MASeniorWorkshop.com. If you have been handed the difficult task of caring for a spouse of family member with Alzheimer’s the information found in the Complete Alzheimer’s Resource Kit, available free online at www.BostonMemoryLawyer.com, will help you discover many of the strategies that smart families take to protect their loved one, their home, and their hard-earned savings from long-term care costs. You can also listen to an interview with master Alzheimer's caregiver Jo Huey on the Podcast Section of www.Dsullivan.com.
Stay tuned for Part Two of “Understanding the Importance and Implications of Guardianships and Conservatorships” which will be published online next week.
We hope this information is helpful for you and your family.
To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer's particular circumstances.
Posted by Wellesley Estate Planning Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Tue, Jan 24, 2012 @ 01:42 PM
We enter 2012 with a roller coaster economy, elections, and changes in tax law as well as, medical and nursing home costs going skyward. All these changes together with the Baby Boomers retiring in record numbers and Alzheimer's disease at almost epidemic proportions, updating and maintaining your estate and asset protection plan is an absolute necessity.
In order to help families manage these changes and uncertainties, the Estate Planning and Asset Protection Law Center of Dennis Sullivan & Associates has provided the top 10 mistakes to avoid in estate and asset protection planning for 2012. For more information on how best to protect your life savings and eliminate these and other mistakes, attend one of our Trust, Estate & Asset Protection workshops by calling 800-964-4295 (24/7) or by registering online.
Mistake No. 1: Failing to Update and Maintain Your Estate & Asset Protection Plan
Statistics show that 86% of all trusts don't work often because the trusts were not maintained and updated to reflect current circumstances. Planning is an ongoing process because of the changes in our lives and the law. An estate plan should be reviewed on a regular basis to make sure it is protecting you and your family. That is why we created the 19-Point Trust, Estate and Asset Protection Review to help you discover where problems may exist in your planning and the opportunities you have to fix the problems before it’s too late. For more information on how you can review your own planning, refer to our 19-Point Trust, Estate & Asset Protection Guide, which is available on our website at www.DSullivan.com.
We also offer existing clients a Lifetime Protection Program to make sure their planning stays on track for the years ahead.
Mistake No. 2: Not Planning to Avoid Probate
"I have a Will...I'm all set"...
A will alone does not avoid the probate process; actually, it guarantees it. In Massachusetts, the probate process takes a minimum of 1 year; it is also public, so family and financial matters become public record. Probate can be avoided by executing and funding a trust. Trusts are extremely flexible estate planning documents that should be considered as part of your estate plan. Trusts can also provide disability planning where a will cannot.
Mistake No. 3: Not Coordinating Your Assets to Your Trust(s)
Not coordinating investments and other assets to a trust means that probate will not be avoided. Probate is the process by which assets of a deceased person are passed to those who will inherit them. The probate public process can take up to one year and can be very expensive. By properly coordinating your assets to your trust, you can avoid probate and save your family time and money. For many who have created a trust, they miss the critical step of properly coordinating their home and investments to their trust.
Mistake No. 4: Not Reviewing Your IRAs and Investments To Make Sure They Are Safe and Productive for You Based on Your Age and Objectives
Whether you are growing your savings to fund your retirement or are in retirement, it is important to manage your investments and minimize your investment risk. With the current economic climate you want to make sure now more than ever that you have an investment program designed especially with your goals and safety in mind.
For more information on trust and investment management, please call our office 781-237-2815 to request a copy of our DVD series, "Safe Investing for Seniors," which we provide as part of our educational series for members of the Lifetime Protection Program.
Mistake No. 5 Not Planning for Disability
If you become disabled, what will happen to your family? Who will make your financial decisions? If the proper disability documents are not part of your estate plan, your family may be forced to go to court to appoint a guardian or conservator just to be able to participate in your health care and financial decisions. If you have executed the proper documents years ago but have not updated them, your family could still be forced into court. Many of the top hospitals in Massachusetts do not accept disability documents that are more than 1 year old. The most effective way to avoid these issues is to plan ahead with a trust that will provide for your family financially if you are disabled and to have current disability documents.
Mistake No. 6: Not Planning to Avoid State and Federal Estate Taxes
A trust is an effective way of doubling the amounts that a married couple can pass tax-free to their children and grandchildren. The federal estate tax-free amounts are constantly changing. The exemption amount is scheduled to drop to $1 million per person in 2013, unless it is changed before then. It is important to consider how the growth of your assets over time will effect your tax situation. The state of Massachusetts also imposes a separate estate tax on all estates over $1 million. Therefore, for both federal and Massachusetts purposes it is important to utilize the tax-free amounts, up to $2 million for a married couple, but it is not automatic. Your planning should address both state and federal estate taxes, which can be substantial.
Mistake No. 7: Not Considering the Potential “Double Taxation” on Retirement Benefits
Taxes on IRAs and other retirement benefits can be as high as 70% before your children or grandchildren can collect a cent. This is because IRAs and other retirement benefits are taxed once as part of your taxable estate and again as income when the money comes out of the fund. By planning to avoid this “double taxation” you can stretch out and protect your IRA and retirement benefits, create tax savings, and increase the growth of the fund.
Mistake No 8: Not Planning to Avoid the Cost of Nursing Home Care
One out of every three people over 65 and one of every two people over 80 will need nursing home care for some period of time. Increasing health care and nursing home costs are one of the greatest threats to a comfortable retirement. In Massachusetts, nursing home care costs range from $12,000-$15,000 per month, $144,000-$180,000 per year. Because long-term care is so expensive, many families have elected to execute a Protective Trust to keep their life savings from the reach of a nursing home and protected for the spouse so they avoid nursing home poverty. For additional reports and guides on avoiding nursing home poverty, please visit our website www.DSullivan.com.
Mistake No. 9: Believing Estate Planning is for The Elderly
No one can predict what will happen or when, and as the saying goes, “It’s better to be safe than sorry.” Not executing basic estate planning documents can cost your loved ones time and money. To take the first step in protecting you and your family visit www.DSullivan.com and register for a free educational workshophosted by the estate planning and asset professionals at Dennis Sullivan & Associates. Upcoming workshops will take place at 10AM and 2PM on Thursday, February 2; and Friday, February 17. Check our website for future dates and times as well as helpful educational reports, guides, videos and other resources such as CDs and DVDs.
Mistake No. 10: Not Planning to Protect Children and Grandchildren's Inheritances
Any significant gift or inheritance raises the question of whether the recipient will be able to have full enjoyment after the transfer, given considerations relating to potential creditors, divorce, or lawsuits against a beneficiary. Is the beneficiary able to handle investment and spending decisions, and will the beneficiary be subject to pressure from a spouse or other individual to place the assets into joint names, to make gifts that they might not otherwise want to make, or to make high-risk investments or loans?
If it has been a while since you’ve created your estate plan or even if it has only been a couple of years, you owe it to yourself and your family to find out if your plan is going to protect you and them when you need it. Eliminate ALL these above-mentioned, common mistakes and misconceptions by scheduling a Trust, Estate & Asset Protection review based on our unique, 19-point review process to make sure you have protected your home, spouse, life savings and legacy for 2012 and beyond.
For additional educational information call us at (781)-237-2815, to request our latest DVD on "Life-Care Planning and Safe Investing for Seniors", register online or call 800-964-4295 (24/7) to attend a Trust, Estate and Asset Protection Workshop where the 19 Point Self Guided Trust, Estate and Asset Protection review process will be discussed. We are hosting educational workshops on the following dates:
Thursday, February 2 @ 10 a.m. and 2 p.m.
Friday, February 17 @ 10 a.m. and 2 p.m.
Thursday, March 1 @ 10 a.m. and 2 p.m.
We look forward to hearing from you.
Posted by Wellesley Estate Planning Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Mon, Nov 07, 2011 @ 03:25 PM
With the number of families affected by Alzheimer’s Disease growing daily, it is becoming vital information for almost everyone to learn how to manage this dread disease and its far-reaching ramifications.
What Are The Predictions?
Latest studies indicate that the number of Americans with Alzheimer’s Disease could double by 2020 (9 million people) and quadruple (to 16 million) by 2050.
What To Do.
The first step is to tap available resources and become informed about the disease. The Alzheimer's Resource Kit (retail value of $197) can be downloaded free and is an invaluable source of information for the patient, family, and caregiver.
Next, it’s important to build a support network that may include other families dealing with Alzheimer’s, relatives and friends. Individuals who are suffering from memory loss and their families should, of course, also address the health-related issues with their doctors. While there is no cure yet for Alzheimer’s, there are a variety of treatment options and significant research continues.
Another crucial step is estate and asset protection planning with a reputable elder law attorney. Establishing powers of attorney for both health care and financial matters is the only way a family member can legally make decisions for a loved one if he or she becomes mentally incapacitated. There are multiple other legal issues to discuss during the Alzheimer’s estate planning process, and each individual’s needs vary.
How To Pay for Alzheimer's Care?
Medicare is a type of public health insurance for age 65 and older. However, Medicare does not pay for long-term care. The criterion is that there must be some actual improvement to your condition. Since diseases like Alzheimer's and Parkinson's have no known cure today, rehabilitation is not possible, so Medicare will not pay.
Unlike Medicare, Medicaid will pay for Alzheimer's, Parkinson's, or dementia-related diseases, or a decline in functioning due to the aging process. You must, however, exhaust all your resources (including your spouse's) before you will be eligible, that is unless you take steps to protect your home, spouse and life-savings so you can avoid nursing home poverty. We can help. To learn more, call our office. In addition, visit our website, www.DSullivan.com to download our free elder guide The Massachusetts Elder Guide to Medicaid, Nursing Homes and Asset Protection or watch our educational video on "How To Avoid Nursing Home Poverty."
Take Control - Establish A Life-Care Plan.
With longevity, comes expense. (We are all living longer and may have many years ahead of us post-retirement, so it is all the more important that we plan ahead for those years.) Life-care planning is an integrated planning approach that addresses the health care, legal, and financial issues of aging and disability. As such, it is critically important for seniors and their families to begin talking about a life-care plan. If executed properly, a life-care plan can save seniors and their families lots of trouble and heartache.
The goals of a quality life-care plan include, maintaining the health and well-being of your loved one; assessing long-term care options in the home and outside the home; identifying all sources of income available to pay for care; obtaining eligibility for public benefits programs like SSDI, VA, and Medicaid benefits; protecting assets. In addition, the life-care plan provides the services of a Geriatric Care Manager (GCM) to assist with the development and implementation of the plan. It also provides assistance with living arrangements and placements, coordination of available community resources as well as working with the family to provide support, guidance, and advocacy.
What Are The Special Benefits for Veterans?
The Veteran's Administration (VA) has reported that thousands of Massachusetts veterans may not be receiving the disability benefits they deserve. One of the VA's best-kept secrets, which is an excellent potential source of funds for long-term care, is a veteran's benefit for non-service connected disability.
Most VA benefits and pensions are based on a disability that was incurred during a veteran's wartime service. This particular benefit, however, is available for individuals who are disabled due to issues of old age, such as Alzheimer's, Parkinson's, multiple sclerosis, and other physical disabilities and have the additional requirement of needing the aid and attendance of another person in order to avoid the hazards of his or her daily environment.
These benefits can be a blessing for the eligible disabled individual who is not yet ready for a nursing home. A veteran married to another veteran can receive a maximum of $1,949 per month in benefits and a widow can receive up to $1,056 per month (for the year 2011). The applicant must be “permanently and totally disabled” based on VA standards, which means he/she need only show that he/she is in need of aid and attendance on a regular basis. Someone who is housebound or in an assisted living facility and over the age of 65 is presumed by the Veterans Administration to be in need of aid and attendance.
For more about these benefits, download our free guide entitled, "The Nuts and Bolts Guide to Veterans Benefits". If you have questions, please call our office 781-237-2815. To learn more about how to protect yourself, your spouse, your home and life-savings from increasing medical and nursing home costs, you may register online or call 800-964-4295 (24/7) to attend one of our Trust, Estate & Asset Protection Workshops. Upcoming dates in Wellesley are as follows:
Friday, November 18 @ 10AM & 2PM
Thursday, December 8 @ 10AM & 2PM
Thursday, December 15 @ 10AM & 2PM.
Posted by Dennis B. Sullivan, Esq., CPA, LLM on Fri, Jul 22, 2011 @ 11:23 AM
There are many reasons to consider a mid-year tax and financial review. At this time last year, income tax planning was particularly challenging. As a result of mid-December's last-minute legislation, which renewed many already expired deductions, there is much less uncertainty involved in tax planning for 2011.
As such, you might consider that a mid-year review provides you more time to plan as well as to implement tax or other savings steps. In this newsletter, we shall discuss important mid-year tax and financial planning topics. Another very important area to consider is your Life Care Plan.
2011 Mid-Year Income Tax Plan
Federal Income Tax Rates. The same 6 federal income tax rates that applied in 2010 will continue to apply through 2012. So, depending on your taxable income, you’ll fall somewhere between the 10% and 35% bracket.
Long-Term Capital Gains & Qualifying Dividends. Long-term capital gains and qualifying dividends will continue to be taxed at a minimum rate of 15% through 2012; if your income (including any long-term capital gains and qualifying dividends) puts you in the 10% or 15% income tax bracket in 2011 and 2012, a special 0% rate will usually continue to apply.
Alternative Minimum Tax (AMT). While regular income tax rates and the maximum rates that apply to long-term capital gains and qualifying dividends were extended through 2012, the latest AMT “fix” (increased AMT exemption amounts) is effective only through 2011. So, if you may be subject to the AMT this year, you alreadt know what the relevant exemption amounts will be ($74,450 for married filing jointly, $48,450 for unmarried individuals, $37,225 for married filing separately); howeve, the AMT for 2012 is unclear. There will probably be another AMT fix later in the year, but for now, AMT exemption amounts will show sharp decreases in 2012, significantly increasing the number of taxpayers caught in this parallel tax system.
Life Care Plan
Life-Care Planning is a new area of law that helps families respond to the challenges of long life, illness and disability. A life care plan includes the following:
- Legal care, wills, trusts, powers of attorney and advanced directives; Medicaid planning; guardianships; and protection of the elder's right to safe and effective care.
- Care coordination, including locating in-home care, nursing home care, family education and decision-making support - for the rest of your loved one's life.
Learn more about the benefits and our recommendations for the best way to approach your life-care plan. It is critically important for seniors and their families to begin talking about a life-care plan because circumstances in life can change quickly, and if there are no plans in place, a stroke, dementia or other life-changing situation could occur suddenly, robbing you of your ability to make end-of-life financial and estate planning decisions. A properly executed life care plan preserves the wishes of the planner and gives his/her family peace of mind, knowing those provisions will have already been secured. Obviously, this kind of forward thinking goes hand in hand with conducting a mid-year financial and tax review.
Client Workshop for Life-Care Planning
On July 26 at 2PM at The Wellesley College Club we are inviting our clients and their guests to learn more about life-care planning from three guest speakers on topics including: aging at home, assisted living options and financial considerations for retirees.
Where To Begin?
A good way to start your mid-year planning is to identify personal circumstances that may have changed: marriage, divorce, births, deaths, retirement, career change, changes in income or anticipated changes in income and expenses, including medical expenses, investment performance, etc.
Improved Tax Planning
A mid-year check up on your tax liability will provide more tax-planning opportunites for you than rushing to plan for your taxes at year’s end. Using last year’s tax return, you can make adjustments to your income and deductions for this year. By then it's too late. If you owed taxes or received a refund last year, you might want to adjust your estimated tax payments or withholdings or your retirement plan distributions. This is also an excellent time to make sure you’re saving necessary receipts and other documents now to avoid a scramble at the end of the year. Consider the contributions you are currently making to your retirement plan. Have you evaluated your required minimum distribution requirement? If you have a traditional IRA, would now be the time to convert it or part of it to a Roth?
Life Planning for Financial Considerations
If you have already retired, will your current plan provide you with enough income over the long term? If you are concerned about running out of funds, you may consider a lifetime annuity which will pay you and your spouse for the rest of your life. You may also want to evaluate whether a reverse mortgage makes sense for you. What are your Social Security strategies? Would you benefit from using the “file-and-suspend” option? These are just some of the considerations to review as part of your life care plan.
Investments?
Would now be a good time to consider rebalancing your portfolio? Are your investments safe and productive? Maybe now is the time to consider a review of your investments not only to make sure they are coordinated with your trust, but also to see if they fit your current needs and long-term health plan.
What About Insurance?
Do you know the terms and the amounts of all your coverages: house, life, auto, etc.? Has your insurance kept up with your personal circumstances? What about life insurance? Long-term care insurance? If you’re married, have you considered sharing a long-term policy instead of purchasing two individual ones?
As you can see, there are so many different areas that you can review and improve if you really undertake a review of your “financial and tax situation.” Certainly leaving all this work to the end of the year is risky, particularly with so many things changing these days and so many different strategies and programs potentially available to you that could significantly improve your financial and/or tax picture.
For additional information and education about your tax, financial and life care plan options, call us at 781-237-2815, or attend a Trust, Estate and Asset Protection workshop by calling 800-964-4295 (24/7) or registering online (www.DSullivan.com). We are hosting educational workshops at 10AM and 2PM on the following dates:
Thursday, August 18
Thursday, September 15
Thursday, September 29
To learn more about tax planning, retirement strategies and estate planning, visit our website to watch Dennis Sullivan discuss these topics on the national talk show, “Leading Experts.”
Posted by Dennis B. Sullivan, Esq., CPA, LLM on Fri, Jul 08, 2011 @ 12:18 PM
Approximately 55 million retirees, the disabled, and children who have lost parents receive Social Security benefits. More than 46 million Americans are covered by Medicare. As the number of new Medicare and Social Security beneficiaries rises sharply with the upcoming wave of retiring Baby Boomers, can these programs continue to be viable? Experts predict that Medicare will be exhausted by 2024 and Social Security will be bankrupt in 2036.
"The financial shortfalls confronting both Social Security and Medicare are substantial and -- absent legislation to correct them -- quite certain," wrote Charles P. Blahous III and Robert D. Reischauer, two trustees of Social Security and Medicare. "Elected officials will best serve the interests of the public if financial corrections are enacted at the earliest practicable time." Solutions that are undertaken early can be more of a gradual cure as opposed to last-minute, painful remedies like high tax increases and deep benefit cuts.
What’s Happened?
The sluggish economy is hurting Medicare and Social Security because fewer people are working and contributing payroll taxes that fund these programs. Medicare also suffers the high cost medical care. In addition, people are living longer and having costly procedures like bypass surgeries and hip replacements later in life.
What Does Medicare Cover?
Medicare is our countrywide health insurance program for people 65 or older and is financed by payroll taxes paid by workers and employers. It is also partially funded by monthly premiums deducted from Social Security checks. Medicare assists with the cost of health care but does not cover all medical expenses or most long-term care. The program has 4 parts:
- Hospital Insurance: for inpatient care, some in-home care and hospice care;
- Medical Insurance: for doctors' services and other miscellaneous medical services and supplies not covered by hospital insurance;
- Medicare Advantage: These plans are available in many areas so that people with Medicare Parts A and B can choose to receive all their health care services through one of the provider organizations under Part C.
- Prescription Drug Coverage: for doctor prescribed medications.
What Is The Government’s Response?
American seniors have worked hard, contributing to Medicare and Social Security for decades. With the looming U.S. deficit at issue, however, those benefits are now at risk because Congress is considering dangerous cuts to Medicare and Social Security. There are many efforts in place to fight for cuts to be made to wasteful government spending instead of hurting these valuable programs.
According to reports, the Social Security benefits for disabled Americans and their dependents would be the first to dry up with funding scheduled to run out in 2018. The part of the fund that pays retirees, however, has enough money to stay solvent until 2036.
If nothing is done to remedy this before then, benefits will have to be cut by 23 percent or the Social Security payroll tax increased to16 percent or some combination of the two.
Recommendations?
For future planning, the best advice for maximizing Social Security benefits is to continue to work as long as possible and to delay retirement to age 70, if possible. It is also a good idea to have some long-term care insurance - just in case.
Along with this, understanding strategies that married couples should use is key. Many people benefit from claiming later and too many claim early – not usually a good idea. In some instances, the lower-earning spouse should claim as early as possible and the higher-earning spouse as late as possible.
To get an idea of your monthly Social Security benefit, login to the Social Security website. (Visit the Social Security Administration’s benefit calculators website.) Also, read The National Academy of Social Insurance’s report, ‘When To Take Social Security: Questions to Consider.’ (Read the report from the National Academy of Social Insurance here.)
For Medicare to remain viable for the next 75 years payroll taxes would have to be increased by 24 percent or current benefit payments cut by 17 percent. The longer the US waits to address the pending shortages in Medicare and Social Security, the more painful it will be. Delaying good fiscal planning for Medicare’s future now may mean cuts for current beneficiaries rather than diminishing them for people who enter the program in the future.
This could mean that by age 65 or older the average individual could need $300,000 set aside for medical expenses and $300,000 for long-term care if you do not buy a long-term care insurance policy.
The bottom line here is simple. Social Security and Medicare will probably be around for many years to come; however, these programs should start to be viewed as supplements rather than primary sources of retirement income and health insurance.
To learn more about your options, call us at 781-237-2815 or to attend an upcoming Trust, Estate & Asset Protection workshop, call 800-964-4295 or register online .
For more information on how you can plan ahead to maximize your retirement earnings and protect your assets, visit our website to download our free guide on “The 7 Biggest Mistakes in Retirement & Estate Planning.”
Posted by Dennis B. Sullivan, Esq., CPA, LLM on Fri, Jun 24, 2011 @ 03:08 PM
Life-Care Planning is a new area of elder law that helps families respond to the challenges presented by long life, illness and disability. Life-care planning is about being an advocate for your loved one in every long-term care setting and assisting the family with those overwhelming decisions.
A Life-Care Plan includes the following:
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Legal Care, estate planning, including wills, trusts, powers of attorney and advanced directives; Medicaid planning; guardianships; and protection of the elder's right to safe and effective care for which he/she is entitled.
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Care Coordination, which includes locating in-home help and services, coordinating home health care and long-term care, family education and decision-making support - for the rest of your loved-one's life.
Life-Care Planning in Practice
Picture you and your wife and your close friends Kathy and Joe - all in your late 60s. You get together often and enjoy talking about wintering in Florida, lots of golf and enjoying your retirement years.
One day, Joe suffers a serious stroke which leaves him partially paralyzed. He will need full-time care. Joe's wife, Kathy, however, cannot provide the full-time care he needs on her own so she seeks the help of their daughter. The daughter is very willing to help, but she has a family of her own and is subject to her family's needs as well. Therefore, Kathy will have to get some in-home care for Joe to supplement what she and her daughter can do.
The end result here is that Kathy and Joe’s lifestyle has completely and unexpectedly changed. Their financial stability is now also at risk with the high cost of in-home care, which is quickly depleting their savings and putting their other assets in jeopardy. If this continues, Kathy faces the real possibility of becoming an impoverished spouse if she lives long into her senior years.
Time to Assess Your Situation
This is truly a heartbreaking situation, but not an uncommon one. Fearing the same thing could someday happen to you, you and your wife decide to consult with your estate planning and financial team.
You have no children, so you cannot count on them to help in case of a debilitating illness or injury. Imagine your legal and financial team reviewed your current assets and retirement plan. You have paid off your house, faithfully saved money in your 401(k) accounts, and have a healthy IRA. You even have a cottage on Cape Cod. A devastating illness, however, is no match for the typical American’s retirement savings.
The current cost of a nursing home is $12,000 per month, $144,000 per year and $720,000 for a 5-year stay in today’s dollars. In-home care costs are considerably less, at about half the cost of a nursing home stay. At these rates, a long-term care situation, even for one person, can easily wipe out a couple’s savings. In addition, a lien could be placed on your homes, preventing you and/or your spouse from selling them or obtaining a reverse mortgage or home equity loan. (Watch Dennis Sullivan explain how you can take control of your legacy, not leaving your estate to nursing homes or the IRS.)
Moral of the Story: Plan Ahead - Consider all the options.
After considering your age and the fact that you were both in good health, your estate-planning attorney might recommend looking into long-term care insurance. To reduce your premiums you might decide to buy a “shared” care plan. With a shared care plan, a couple can buy a plan for a set amount to be shared. So instead of buying two $300,000 plans, a couple may choose to buy one $500,000 plan to share, which can save some premiums. The benefits of such a plan include:
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The confidence knowing you could handle an unexpected life event if it occurred.
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The knowledge that if one of you became ill or injured, you would have the resources to be cared for in your own home and not be forced to move into institutionalized care.
Life can change in the blink of an eye, and although you can’t be prepared for everything, you can prepare for long-term care expenses as long as you coordinate your planning to cover risks and provide you with the flexibility and lifestyle that suit your comfort level and budget.
Our Recommendations
In our experience of more than 25 years helping people and their families in this area, it is the combination of the legal and financial protection, which is best. In-home care insurance pays for your family member to stay at home and also provides a care coordinator to make sure that he/she is taken care of and the level of care is maintained.
In addition to insurance, it is also very important to have all their assets protected with a protective trust in case an extended nursing-home stay is unavoidable. With the right legal protection of your home and life-savings, your spouse and your legacy will be safe. You will never become a victim of nursing home poverty. You will have done all you could to protect yourself, your spouse and your legacy. If this makes sense to you, please let us know; we will help you get started. To learn more about protecting your home, spouse, family and life savings, attend a free, educational Trust, Estate & Asset Protection Workshop . Register online or call 800-964-4295 (24/7) for upcoming dates.
Posted by Dennis B. Sullivan, Esq., CPA, LLM on Wed, May 04, 2011 @ 04:40 PM
Do you know the difference between Medicare and Medicaid? For ANY senior it is vital to know the difference. Your future may depend on it, particularly with the new statistics regarding Alzheimer's Disease and other incurable, long-term care illnesses.
According to the World Alzheimer Report 2010, Alzheimer's Disease is taking a terrible toll on the world – not to mention on individual families and their life savings. With no cure on the horizon, the problem is only expected to get worse.
According to Dr. Daisy Acosta of Alzheimer’s Disease International, “This is a wake-up call that Alzheimer's disease and other dementias are the single most significant health and social crisis of the 21st century.”
What’s even worse is that dementia is on the rise, and in the US almost half the seniors over age 80 have this tragic disease. For more information about what you can do to make your life as a caregiver better today, read our free Alzheimer's Resource Guide, or call our office for options about how to pay for care.
So what does this have to do with Medicare & Medicaid?
Medicare provides health care benefits for people over 65, the blind, and the disabled; while Medicaid provides medical benefits for the poor.
Medicare is mainly a type of public health insurance for those age 65 and older. It is their primary health insurance coverage. Many seniors do not realize that Medicare does not pay for long-term care. Actually, it is excluded! The confusion is easy to understand because Medicare does pay for rehabilitation. So, if a senior citizen is enrolled in the traditional Medicare plan and is hospitalized for a stay of at least three days, and is then admitted into a skilled nursing facility, Medicare may pay - for a short while. But once those Medicare benefits hit 100 consecutive days, you've hit the maximum.
In some cases, Medicare may not even cover the full 100 days. There must be some actual improvement in your condition, otherwise Medicare will decide that it is a long-term care need, and they'll cut you off. Medicare really only cares about you if you can get better. Since diseases like Alzheimer's and Parkinson's have no known cure today, rehabilitation is not possible, so Medicare will not pay for nursing home care if you have Alzheimer's or Parkinson's.
Unlike Medicare, Medicaid will pay for Alzheimer's, Parkinson's, or dementia-related diseases or a decline in functioning due to the aging process. You must, however, exhaust all your resources (including your spouse's as well) first before you will be eligible. Medicaid, however, is paid for by both federal and state funds but is "administered" on a state level. The federal government covers between 50-80% of the program costs within the state, and the state pays the rest. Therefore, rules can vary from state to state (even county to county) rather dramatically. Also, the law enables you to take steps to protect your home, life-savings and spouse so they are not impoverished if you go to a nursing home.
So, as you can see, Medicare is health insurance, and Medicaid is public long-term care coverage, but often there are stages in between that require examination and discussion. For more information, download our free elder guide The Massachusetts Elder Guide to Medicaid, Nursing Homes and Asset Protection or watch Dennis Sullivan being interviewed about how to avoid nursing home poverty on the national talk show, "Ask The Lawyer."
To learn more about your options, call us at (781) 237-2815; (800) 964-4295 (24/7) or register online to attend one of our free workshops. You need to be informed about your particular situation and for that you’ll need some honest, legal strategies to protect yourself, your spouse, and your hard-earned assets for the future.
Posted by Dennis B. Sullivan, Esq., CPA, LLM on Thu, Mar 24, 2011 @ 12:45 PM
The federal government is working to decrease spending in 2011 by making sweeping cuts to federally funded programs, in order to avoid a government shutdown. Many of these cuts will negatively impact seniors. The cuts began in House Resolution 1 (HR 1), passed by the House last month. Next, focus will turn to the 2012 budget where a new round of cuts will likely take place. Many believe it will target entitlement programs like Medicaid and Medicare.
As professional members of the AARP Legal Services Network, we have provided more than 300 community educational workshops for members of AARP and others to help them understand about problems that may exist in their planning along with signing opportunities for improvement. By better understanding their planning options, people are able to confidently take steps to protect themselves and their families. Click here for more information on our upcoming educational workshops. You may also download Free Elder Consumer Guides on Medicaid & Asset Protection, Nursing Homes & Assisted Living, Alzheimer's, and others.
Six Reasons You Can't Afford To Become a “Disadvantaged Older Adult”
According to the National Council on Aging (NCOA), the proposed spending cuts in HR 1 would harm senior citizens by severely cutting initiatives that help older Americans sustain their economic independence and physical and emotional health. HR 1 includes:
- Cuts of approximately $525 million in services specifically for low-income seniors (including a 64% cut to the Senior Community Service Employment Program);
- Cuts of approximately $1 billion in funding for Community Health Centers that serve seniors;
- Cuts of $390 million for home energy assistance;
- Cuts of $305 million for Community Services Block Grants that currently assist 2.3 million seniors;
- Cuts of $1 billion to programs that include senior volunteers; and
- Cuts of $625 million to the Social Security Administration (estimated to be over $1 billion by the Social Security Administration as noted below).
The NCOA is deeply concerned by the 64% cut to the Senior Community Service Employment Program (SCSE). According to NCOA, this is the only major job program that is targeted specifically to helping disadvantaged older adults who need to remain in or return to the workforce to avoid financial crisis. I don't need to tell you how many of us had nest eggs that we thought would help us avoid this, until the ongoing financial crises changed everyone's plans. The cut proposed in HR 1 would result in the loss of over 83,000 part-time jobs. "For older adults aged 55-64, who cannot yet claim Social Security, the loss of this program could be particularly devastating," said Jim Firman, president and CEO of the NCOA.
According to the NCOA, the $390 million cut in the Low Income Home Energy Assistance Program will force older Americans to make life and death decisions between buying food and medicine or home energy. Many of us thought we'd never be in that position, yet find ourselves only one catastrophe away, regardless of how diligent we thought we've been. This is why I am so passionate about helping people get past their fears of the complexity of proper planning. It IS very complex, but is not addressing your planning really an option?
AARP Greatly Concerned
The American Association of Retired Persons (AARP) who's mission is to improve the quality of lives of all Americans over 50, is greatly concerned with the immediate cuts contained in HR 1. AARP President W. Lee Hammond testified March 9 in front of the Senate to urge Congress not to cut funding for the Social Security Administration (SSA). As part of his testimony, Lee pointed out that the SSA received nearly 3,225,000 disability claims in 2010, the highest in its 75-year history. But instead of additional funding to assist with the increased workload, the agency is faced with aggregate funding losses of over $1.093 billion.
Hammond noted that AARP is also greatly concerned about the other cuts contained in the proposal, testifying, "We have equal concern for many other vital health care services and economic security programs, including severe proposed cuts to home energy assistance, nutrition programs and Medicare premium assistance for low income seniors. The budget reflects the priorities of this nation, and any budgetary cuts will impact people, not just programs."
It's Not About Money, It's About Quality Of Life
HR 1 eliminates funding for the Corporation for National and Community Service (CNCS) and the programs it administers, including the Retired and Senior Volunteer Program, the Foster Grandparent Program, and the Senior Companion Program (collectively the "Senior Corps"). CNCS's budget of about $1.1 billion includes $111 million for the Foster Grandparent Program, $63 million for the Retired and Senior Volunteer Program and $47 million for the Senior Companion Program.
An important facet of becoming a senior is also about perspective. Hopefully we become a little bit wiser, and we can be in a position to give back to future generations. The Foster Grandparent Program connects older volunteers with opportunities to provide one-on-one mentoring, nurturing and support to children with special needs, exceptional needs or who are academically, socially or financially disadvantaged. The volunteers themselves derive significant emotional and health benefits as a result of providing these services. Foster Grandparents may serve between 15 and 40 hours per week, and low-income volunteers receive a small stipend to help defray the costs of volunteering.
In 2010, approximately 29,100 Grandparent volunteers delivered 24 million hours of service to more than 137,000 children. The Retired and Senior Volunteer Program (RSVP) provides volunteers to work with nonprofit and public organizations, trains seniors to help them live independently, and provides volunteers to mentor more than 16,000 children. RSVP volunteers are non-stipend volunteers. The average federal cost per volunteer is approximately $140 per volunteer. RSVP also raises funds by applying for grants.
The Senior Companion Program provides volunteers who offer companionship and support to thousands of older and frail adults, helping them to remain independent and in their own homes at a cost much lower than institutional care. They transport clients to medical appointments, help shop for food and basic necessities, and provide companionship to offset isolation. Senior Companions, who receive a modest hourly stipend, also provide respite to family caregivers.
It might be a good time to ask ourselves what the impact would be if funding disappeared for these services and we found ourselves scraping by? Whether you're on the side of the argument that it's not the government's role to take care of these needs, or that it's the proper role of society to provide a safety net for it's citizens is not the debate here. The fact is that these are lean times for many, cuts are coming, and now more than ever we cannot be complacent in providing for our own needs and those of our families into the future.
What About The Promise of Those Programs You Paid Into All Those Years? The Targets for 2012
In a March 3 interview with The Wall Street Journal, House Speaker John Boehner said House Republicans' upcoming budget proposal would curb entitlements, including Social Security and Medicare, acknowledging the political risk of taking on such popular programs. Boehner also stated Republicans would do their best to persuade voters that this is a necessary step.
Medicaid cuts could also be coming. There is support within the Republican party to turn Medicaid into a block grant program. This would mean states would be given a lump sum of money to distribute as they see fit. Once the money is used up, there would be no additional Medicaid enrollees until the next fiscal year.
While it's difficult to predict if proposed changes to these programs will make things better or worse, we can be sure of this: it will be decided by politics. I don't know many citizens who prefer to have their future well-being decided by politics.
Conclusion
The coming years will bring great economic challenges for our senior population. Looming cuts to programs directly benefitting seniors are on the horizon with more planned for the future. Now more than ever it is important for seniors and their loved ones to work with trusted legal counsel to come up with a comprehensive plan that will cover how they will access health care and how it will be paid for. While health care is certainly the largest financial and personal concern for most seniors, it is not the only one. None of us likes to think of the inevitable scenarios as we age, but I've seen too many real life tragedies to be complacent about the need to make these conversations accessible to the general public. Our team members have degrees in law, taxation, finance and accounting. We have spent our professional lives understanding and more importantly helping people and their families unravel these complexities so they can confidently take the steps they need to protect themselves and their futures. But I can't expect the average person to do that on their own. The dilemma then is who to trust to guide you through the process.
It is our hope that our educational newsletters and our many workshops will allow you to get to know us, what we stand for, our values and our competencies, so that we may help you make an educated decision when the time is right.
Please contact us if you would like additional information on any of the topics addressed in this newsletter or if you would like to discuss a specific issue. To learn more about or to register for an upcoming workshop, call 800-964-4295 or register online.
To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer's particular circumstances.