In our last post we wrote about what matters most when choosing a long-term care living situation, suggesting that it’s not always the place that matters most, but the mind-set of the elderly person who will be living there, and how involved that person is in the decision-making process. However, this does not mean that the quality of each living place doesn’t matter at all. In fact, according to the Wall Street Journal great care should still be taken when selecting a long-term care living situation… especially if you’re considering a Continuing Care Retirement Community (CCRC).

If you are considering a CCRC for yourself or an elderly loved one, you may want to read this article in the WSJ, which mentions that although more and more older Americans are drawn to the benefits offered by a Continuing Care Retirement Community, those benefits “often come at a steep price and ‘considerable risk.’”

The article goes on to mention that “So-called CCRCs—which typically offer fine dining, health clubs and on-site long-term care—have grown in popularity along with the aging of the population, particularly among the upper-middle class and affluent,” but that “the economic downturn is making it tougher for potential new residents to sell their existing homes and fill openings in new and expanded communities, which are generally regulated by state governments. As a result, low occupancy levels are challenging the industry’s financial models.”

We mention this because many of our clients are at a time in their lives when they or their elderly parents are looking into long-term care living situations, and we see how difficult it is to sort through all the choices and find a place that fits. Not only is quality of life an important factor (maybe the most important factor), but for many people the cost of the place they choose may mean the difference between leaving their children an inheritance and dying penniless.

We urge any of our readers who are in the market for long-term care living arrangements to look carefully at all their options; ask questions, do the research, and don’t be afraid to ask for help or a second opinion.

Anyone who has been following our blog knows that the expiring Bush tax cuts (including the repeal of the estate tax this year and the tax’s reinstatement next year) have given lawmakers no end of trouble as they struggle and debate—and debate and struggle—to agree on new tax legislation moving forward. In fact, The Wall Street Journal calls the issue “a ticking time bomb,” while the New York Times warns that “an epic fight is brewing.” It seems that the only thing everyone does agree on is that something has to be done before December 31, 2010.

Unfortunately, according to both news sources, politics takes precedence over legislation. “The tax fight will serve as a proxy for the bigger political clashes of the year, including the size of government and the best way of handling the tepid economic recovery,” warns David M. Herszenhorn of the NY Times, “’…this is code for the role of the federal government, the debate over the size of government and the priorities of the nation.’”

According to David Wessel of the WSJ party lines are clearly drawn. “The Obama administration is pressing to extend the Bush tax cuts for everyone with an income under $250,000 a year and to raise taxes on those above. A recent Pew/National Journal poll found that only 11% of Democrats favor extending all the Bush tax cuts.” Meanwhile, “Republicans are happily staking out the no-new-taxes turf, playing to their traditional constituency. Pew says 52% of Republicans favor extending all the Bush tax cuts.”

It would certainly give taxpayers some comfort if legislation could be passed quickly and decisively, but Herszenhorn warns that it’s not likely to happen, “Given the partisan gridlock of recent months, there is a chance that the battle could go down to the last minute, or even — in the face of a stalemate — that the tax cuts could be allowed to expire completely, a development that… lawmakers in both parties say could be the worst outcome.”

Either way, the best advice we can give our readers is to be prepared. Just because lawmakers keep putting off a decision doesn’t mean you should. Talk to your attorney about the best way for your family to weather the coming storm. Be aware of changes to tax laws and update your estate plan accordingly.

Everybody thinks it won’t happen to them. Or rather, everybody knows it’s going to happen to them eventually, but nobody thinks it’s going to happen tomorrow, or next week, or even next year. The “it” of which I speak is, of course, death. It is this perceived immortality that allows so many people to put off their estate planning until it is too late.

But today’s blog post is not a cautionary tale about a family who put off their planning and regretted it, today’s post is about the peace and relief that forethought and planning brings not just to your family, but to you as the person making the plan.

In this article in Market Watch Chuck Jaffe tells the moving story of his brother Rob, who insisted 2 years ago on creating an estate plan even though he and his wife were both healthy. As Jaffe puts it, “While not pleasant subject matter, it was not morbid… you’d rather be drinking lemonade on the veranda, but it wasn’t a sharp stick in the eye.” However, when Rob became unexpectedly ill in May of this year the estate plan turned out to be a comfort to Rob and his family—such a comfort, according to Jaffe, that Rob “made me [Chuck] promise that I would write about him… when his time was up, because his story would help others.”

“People need to understand… how big a blessing it is to know — when their time comes — that they have everything in order, that they don’t need to stress or worry about how things they worked their whole life for are going to turn out. … I would not want to waste a minute of my life now having to do estate planning or worrying that I live long enough to get documents filed or whatever garbage comes with it… Focusing on death and dying while you are living, that’s easy; having to focus on death when you are dying, that would be unimaginable.”

In our business we frequently see how much easier it is for people to create a plan when they’re healthy, as opposed to the stress that comes with creating a plan when they are sick. Thank you Mr. Jaffe for sharing your brother’s moving story. We hope that your (and your brother’s) words will help motivate others to take comfort in planning ahead.

Our country may be facing a simultaneous growth and recession… unfortunately, according to journalist John Leland, the two seem to be at odds. What we are referring to is the growth of the elderly population and the recession of funds available to help this aging community pay for the care they need.

The economic downturn of the past few years has hit the elderly with a double-whammy. Many of them lost close to all of their savings when the stock market bottomed out, and now budget cuts to state-funded home-care services threaten to force many of them out of their homes and into hospitals or nursing facilities.

“’I’m not getting a cost-of-living adjustment, and now I’m not getting food,’ said Joyce Plennert, 83, who is on a waiting list for Meals on Wheels in Palatine, Ill. ‘Now I’m worried my home services will be cut. Without that, I’d be in a nursing home, if I could find one with room.’”

According to the above-mentioned NY Times article, a number of states have already made cuts to home-care services, including Alabama, Arizona, California, Colorado, Florida, Kansas, Mississippi, Missouri, Nevada, New Jersey, New York and Texas. “The situation is grim, and it’s safe to say that present trends are expected to continue,”

These budget cuts impact more than just senior citizens—they affect the professional caregivers and home aides who lose their jobs when state programs are cancelled, as well as the families of the elderly. When these seniors lose their ability to live at home it’s their families who will have to pick up the slack either by contributing to the costs of care or more often by become the caregiver themselves.

If you or a loved one is facing a loss of benefits due to budget cuts don’t be afraid to explore your options. Geriatric care managers can help families through confusing times, and other advisors such as elder lawyers, estate planners, financial planners and others can offer invaluable advice when creating your plan for the future.

With all the estate tax proposals currently floating around the Senate the future of the estate tax is anybody’s guess… but that doesn’t mean we’ll stop trying to figure it out. A recent article in the Wall Street Journal touches on some of the more recent (and more controversial) proposals floating around Washington.

The proposal that is currently getting the most attention comes from Vermont independent Sen. Bernie Sanders and three Senate Democrats who say that “It’s time for multi-millionaires and billionaires to pay their fair share.” And pay they would! According to Sanders’ proposal “the [estate tax] exemption would be $3.5 million for an individual or as much as $7 million for a couple, with a tax rate of 45%. But estates with taxable assets between $10 million and $50 million would pay a 50% rate, and estates valued above $50 million would pay 55%. A further 10% surtax would apply to assets above $500 million.”

Of course, it’s too early to get worked up just yet, Sanders’ proposal is just one of many right now, and the debate still rages in the Senate with no clear winner in sight. Of course, if no action is taken the estate tax will come back in 2011 with a 55% tax rate on estates above a mere $1.2 million.

Either way, you’ll want to be prepared, and the only way to do that is to keep in contact with your estate planner and make sure that your plan is designed to handle anything. Although it may be tempting to wait to update your estate plan until a clear decision is made, all that really does is leave your family unprepared if something should happen to you while the tax is in flux. Contact our office to find out what adjustments should be made to your estate plan to keep your family protected while lawmakers continue to debate the future of the estate tax.

“I take you to be my lawfully wedded spouse, to have and to hold from this day forward, for better or for worse, for richer, for poorer, in sickness and in health, to love and to cherish; from this day forward until death do us part.”

These aren’t just sweet words designed to bring a tear to your parents’ eyes on your wedding day, these words mean something—they mean that you intend to take care of your spouse all of your (or their) life. This includes retirement, and it even includes the months or years following your death.

You might think that caring for your spouse during retirement isn’t any different than caring for your spouse the rest of the time, but that isn’t necessarily true. In many ways retirement requires us to look at familiar things with new eyes. So how can you go about the familiar job of loving and caring for your spouse during a new and unfamiliar time? U.S. News and World Report has some suggestions in this article entitled 5 Ways to Protect a Surviving Spouse in Retirement.

When you choose to retire your financial resources suddenly become finite. You may still have an income in the form of a pension, social security, or withdrawals from savings accounts; but you can no longer count on regular pay raises or bonuses. According to author Mark Patterson, the key to protecting your surviving spouse (or even yourself!) during retirement is with maximization, preservation and planning. People often say they want to enjoy their retirement and spend their last penny on the day they die; but not at the expense of their spouse’s livelihood should he or she live 5, 10, or even 15 years after the first spouse is gone.

The good news is that you can enjoy your retirement and protect your surviving spouse. All it takes is a little bit of forethought and a lot of planning. The forethought you have to do yourself, but we can help you with the planning. Call our office and let us help you show your spouse once again how much they mean to you.

The American Association for Long-Term Care Insurance recently released a report on the costs of long-term care insurance, and the results were surprising. Most people mistakenly believe that long-term care insurance is going to be expensive and difficult; but in fact, according to the report, “over one-fourth [of buyers under the age of 61] paid less than $999-per-year.” And in fact, “fewer than one in 10 (9.3%) pay $3,500 or more.”

This is great news! This means that long-term care insurance could cost you less than $100 per month! The trick is that you have to think about it early. “Age at the time of application plays an important role in determining the cost for long-term care insurance the Association study reports. While 41.5 percent of buyers under age 61 pay between $500 and $1,499-per-year, only 20.8 percent of buyers who are ages 61-to-75 pay within this range.”

This is not to imply that if you’re over the age of 75 you’re out of luck. You’re not likely to get the same great rates as someone in their 50’s, but you still may not have to pay an arm and a leg for long-term care insurance. According to the report, of applicants aged 76 and older only 28.2% end up paying an annual premium of $4,000 a year or higher. Actually, almost half of applicants in this age range still end up paying less than $2,500 a year. This may not be the attractive $500/year you could have gotten in your 50’s, but it also isn’t the thousands of dollars a month most people seem to be afraid long-term care insurance is going to cost them. In fact, it’s only a little over $200/month.

If you’ve been thinking about long-term care insurance, don’t wait any longer. This is one situation where time is not on your side; the quicker you act the better it will be.

We’re all about equality, but the fact is that women have different estate planning needs than men. Whether they’re single or married, have children or no children, women have different things to think about when it comes to estate planning. This means that women need to be involved in the planning process: Express their own wishes, voice their own concerns, and ask their own questions. Here are three of the ways that women are different from men—and how it affects their estate planning.

1. Women live longer than men. Among the senior citizen population (65 and older) more than three times as many women as men are widowed. This longer life expectancy means two things; first of all it means that women are the ones who will likely have to deal with taxes. When a married person dies their assets can transfer to their spouse tax free. This doesn’t avoid taxes it merely delays them, and the surviving spouse (the woman) will have to be the one to minimize the tax burden on the children. Second of all, women have to worry more about their retirement savings lasting them to the end. Estate planning is partially about distribution of your remaining assets when you die—it takes careful planning to ensure that you’ll have remaining assets after a long and active life.
2. Women are the caregivers. This includes taking care of young children and elderly parents. Statistically, women are the ones who will initiate the estate planning process—mainly because they are concerned about the guardianship of young children. Women are also the ones who will eventually have most need of a caregiver agreement or help navigating the Medicaid application process when they’re caring for their older relatives.
3. Women need to be most concerned about loss of primary income. Because men are still generally the primary breadwinners in a family, women are the ones most often left out in the cold when their spouse passes away and they lose that income stream. Women need not only to make sure they and they’re partner both have adequate insurance policies, they need to plan to keep those insurance proceeds avoid heavy taxes upon death.

All of these things can be discusses and planned for with your estate planning attorney—and it doesn’t take away from your spouse or children. In fact, having your own plan in order actually helps the important people in your life. So don’t wait any longer, plan to protect yourself today and in the future.

There seems to be some confusion nowadays about whether “a dog’s life” refers to a life of ease or toil, but for these wealthy canine heirs life is definitely the former!Whether it’s a wealthy eccentric leaving millions to a dear canine companion or whether it’s a lover of animals leaving a portion of their estate to charity, more and more dogs (and other animals) are being included in wills and trusts.

Naming your pet in your will or trust may be odd, but it’s perfectly legitimate. Unfortunately, disinherited family members may not always agree. When Leona Helmsley passed away in 2007 she left $12 million to her dog Trouble, but that amount was reduced by Judge Renee Roth of the Manhattan Surrogate Court to a mere $2 million. The current canine court battle is over the will of Miami heiress Gail Posner, which leaves $3 million to her dog Conchita, as well as $26 million split between seven of her bodyguards, housekeepers and other personal aides.

Naming your pet in your will may be perfectly legitimate, but the truth is that there is nothing to stop disgruntled family members from contesting your wishes. If you choose to do something “unusual” in your will or trust, or if you know of family members who are likely to make trouble, it may be necessary to take extra precautions to ensure your wishes are followed. Inform your estate planning attorney of the potential conflict and discuss what steps can be taken to prevent it. In some cases “no contest clauses” can be added to a will or trust to discourage court battles. In other cases a simple meeting of all family members with your attorney to explain your wishes and reasoning will do the trick. Talk to your attorney or call our office to find out what can be done to keep the peace in your family—canine or human.

Six months into 2010 and the estate tax repeal is still making news. This time it’s a story about Texas billionaire Dan L. Duncan who died in March, leaving all of his billions to his spouse, family and various charitable organizations… and none to the government:

“Had his life ended three months earlier, Mr. Duncan’s riches — Forbes magazine estimated his worth at $9 billion, ranking him as the 74th wealthiest in the world — would have been subject to a federal tax of at least 45 percent. If he had lived past Jan. 1, 2011, the rate would be even higher… Instead, because Congress allowed the tax to lapse for one year and gave all estates a free pass in 2010, Mr. Duncan’s four children and four grandchildren stand to collect billions that in any other year would have gone to the Treasury.”

According to the NY Times article this news is meeting with mixed reactions. Opponents of the estate tax (sometimes called the death tax) are hoping to make the repeal permanent. Others, however, don’t agree:

“’The ultrawealthy in this country will still be able to pass on enormous wealth to the next generation,’ said Chuck Collins, who studies income inequality and has worked with billionaires like Warren E. Buffett and Bill Gates to promote an estate tax. Mr. Collins argues that the tax is a ‘recycling program for economic opportunity.’”

Whatever happens in future years, considering that this year is already half over it can only be hoped that heirs and executors won’t have to worry about the tax being reinstated and made effective retroactively; which leaves us free to look ahead and plan for 2011 when the estate tax comes back at a whopping 55%. If you’re wondering how all these changes will impact your estate plan today, tomorrow, or years in the future please call our office.