Time & Life Update Newsletter

The Top Ten Mistakes in Estate Planning for 2012

Posted by Wellesley Estate Planning Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Jan 24, 2012 2:42:00 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. 

 


Tags: Protective Trusts, Alzheimer's Disease, asset protection, Estate Planning, Lifetime Protection Program, Mistakes, Nursing Homes, probate

What is "Life-Care Planning" and Does It Apply To Me?

Posted by Dennis Sullivan & Associates on Jun 24, 2011 4:08:00 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:

  • 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.

  • 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:

  • The confidence knowing you could handle an unexpected life event if it occurred.

  • 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.

  • Asset protection insurance – your retirement savings would not be jeopardized. (Caution:  You must still protect your assets from financial exposure in excess of policy limits.)

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.

Tags: life-care plan, in-home care, long term care, Protective Trusts, Retirement