Moving to a Care Community? Check the Fine Print

Reading the fine print when purchasing a home in a retirement community or a care community is intimidating. The typeface is tiny, you’ve got boxes to pack and movers to schedule and, well, you know the rest. What most people do, is hope for the best and sign. However, that can lead to trouble, advises Delco Times in the article “Planning Ahead: Moving to a care community? Read the agreement.”

If you don’t want to read the fine print or can’t make head or tails of what you are reading, one option is to ask your estate planning attorney to do so. Without someone reading through and understanding the contract, you and your family may be in for some unpleasant surprises. Here are some things to consider.

What kind of a community are you moving into? If you are moving to a Continuing Care or Life Care Community, your documents will probably have provisions regarding health insurance, entry fees, deposits, a schedule of costs, if you need additional services, fees for moving to a higher level of care and provisions for refunds and estate planning.

When you enter an Assisted Living facility, which is referred to as “Personal Care” in Pennsylvania, you may find yourself signing documents regarding everything from laundry policies, pharmacy choices, financial disclosures and statements of your rights as a resident. Not every document you sign will be critical, but you should understand everything you sign.

If moving into a nursing home that accepts Medicaid, you and your family need to know that nursing homes that accept Medicaid are not permitted to demand payment on admission from either an adult child or a power of attorney from their own funds. However, Pennsylvania does have support provisions regarding children, that are called “filial responsibility.” This should not be a problem, as long as you speak with an elder law attorney who can make sure you have completed the Medicaid application correctly and are in full compliance with all of the requirements.

If your adult children ask you to sign documents and “don’t worry” about what documents are, you may want to sit down with an attorney to review the documents. When someone is not trained to review these documents, they won’t know what red flags to look for.

If someone signs the document who is not the applicant/future resident, that person may become responsible for the costs, depending upon what role you have when you sign: are you a guarantor or indemnitor? That person typically agrees to pay after the applicant/resident’s funds are exhausted. The payments may have to come from their own funds. Sometimes the “responsible party” is simply the person who handles business matters on the applicant’s behalf. You’ll want to be sure that the person signing the papers understands what they are agreeing to.

Almost all agreements will say that the applicant, or the person receiving services, is responsible for payment from their own assets. However, if someone signing the documents is power of attorney, they need to be mindful of what they are signing up for.

If possible, the person who will receive services should be the one who signs any paperwork, but only after a thorough review from an experienced attorney.

Reference: Delco Times (Feb. 5, 20-19) “Planning Ahead: Moving to a care community? Read the agreement”

Be Careful Granting Power of Attorney

Power of Attorney abuse has emerged as a serious problem for elderly people who are vulnerable to people they trust more than they should, reports the Sandusky Register in the article “Consumer beware: Understanding the powers of a Power of Attorney” The same is true for a Durable Power of Attorney for Health Care document, which should be of great concern for seniors and their family members.

This illustrates the importance of a Power of Attorney document: the person, also known as the “principal,” is giving the authority to act on their behalf in all financial and personal affairs to another person, known as their “agent.” That means the agent is empowered to do anything and everything the person themselves would do, from making withdrawals from a bank account, to selling a home or a car or more mundane acts, such as paying bills and filing taxes.

The problem is that there is nothing to stop someone, once they have Power of Attorney, from taking advantage of the situation. No one is watching out for the person’s best interests, to make sure bank accounts aren’t drained or assets sold. The agent can abuse that financial power to the detriment of the senior and to benefit the agent themselves. It is a crime when it happens. However, this is what often occurs: seniors are so embarrassed that they gave this power to someone they thought they could trust, that they are reluctant to report the crime.

Similarly, an unchecked Health Care Power of Attorney can lead to abuse, if the wrong person is named.

The following is a real example of how this can go wrong. An adult child arranged for their trusting parent to be diagnosed as suffering from dementia by an unscrupulous psychiatrist, when the parent did not have dementia.

The adult child then had the parent admitted into a nursing home, misrepresenting the admission as a temporary stay for rehabilitation. They then kept the parent in the nursing home, using the dementia diagnosis as a reason for her to remain in the nursing home.

The parent had to hire an attorney and prove to the court that she was competent and able to live independently, to be able to return to her home.

Meet with an experienced estate planning attorney to discuss your situation and figure out who might become named as Power of Attorney and Health Care Power of attorney on your behalf. The attorney will be able to help you make sure that your estate plan, including your will, is properly prepared and discuss with you the best options for these important decisions.

Reference: Sandusky Register (Feb. 5, 2019) “Consumer beware: Understanding the powers of a Power of Attorney”

 

Your Most Important Asset Is Not Your Bank Account

It’s hard to think about getting older. When something is challenging, the usual human response is to procrastinate. We can’t slow down the aging process, but we can prepare for it. One of the things that needs to be done to prepare for aging, is discussed in the article from The Mercury titled “REINVENTING RETIREMENT: Your most important asset—it’s not what you think.” Good health is definitely important, but there’s something else to consider: your independence.

We hate to think about becoming dependent upon others, but that is often what occurs with aging. This is an asset that needs to be planned for and managed, like any other. Here are some tips for each decade:

Health Care Directives in Your 50s. You need to have a will and you need to have it updated, as the years go by. However, in mid-life you need to make sure to have a living will and power of attorney. Estate planning is a tool used to protect your independence and your wishes as you grow older. These two documents are a critical part of your estate plan. A health crisis or an accident can happen to anyone, but planning can ensure that your wishes are followed. Put your wishes on paper, with an attorney, so that they are enforceable. Just telling someone what you want, is not going to do it.

Home and Belongings in Your 60s. The kids are out of college and have their own careers and families. Do you still need that big house? Downsizing could bring you tremendous freedom now. Yes, you have to go through all of your belongings which is a lot of work. However, consider how your life would change if you had less stuff, a smaller home and lower bills? This one move could change how your retirement succeeds—or fails.

Stay Connected in your 70s and 80s. Connecting with your community is critical at this time of life. When you are actively engaged with your community, you’ll be busy with activities that you enjoy. You will hopefully be making contributions that draw on your years of experience and knowledge. Hope and having a purpose in life is not just for the young. The healthiest and most independent lives, are lived when people are engaged with other people, with a life that has meaning and purpose.

Planning for your retirement is about much more than your bank account. Speak with an estate planning attorney to make sure that your estate plan protects your independence, conveys your wishes and plans the coming stages of your life to be as rewarding—or maybe more fulfilling—than the past.

Reference: The Mercury (Feb. 10, 2019) “REINVENTING RETIREMENT: Your most important asset—it’s not what you think”

 

Should You Accept that Early Retirement Offer?

The number of job cuts due to voluntary severance, including both buyouts and early retirement offers, went as high as 46,100 in 2018, says Money in the article “This Is the Only Time You Should Accept an Early Retirement Offer.” Those numbers are up considerably from 2017, and the expectation is that more are on the way.

For people who have been at their companies for a decade or more and are over age 55, be prepared, just in case an early retirement offer comes your way, by doing a lot of analysis. There’s a key fact you need to be highly aware of: where’s your income coming from?

The idea is simple: if you are not going to be getting paid every two weeks, then how are you going to generate that income? Now that the bull market has ended, you’ll need to be aware of how market volatility may impact your numbers. Here are a few things to consider, when that offer arrives at your workspace:

How close are you to retirement age? Buyouts are tempting because they are big chunks of cash—sometimes, six months to a year and a half of pay. If you’re in your early 60s, this might be a way to exit. However, remember that your income change will have an impact on your Social Security benefit, since there will be six months to a year and a half less of income in your earnings history. If you start taking Social Security early before your Full Retirement Age, your monthly benefit could be at least 25% less in lifetime benefits, than if you waited until FRA.

Once you reach 59½, you can start taking money out of your 401(k) without the 10% early withdrawal penalty–but that’s going to reduce your nest egg.

How are you going to pay for health insurance? Buying health insurance privately is expensive, especially if your income is too high to qualify for premium subsidies under the Affordable Care Act. Find out how much you’ll have to pay for health insurance and see if you can manage that. Note that your premiums and deductibles are going to rise every year. See if you can negotiate having healthcare covered as a part of your buyout. Another option is to go on the company’s COBRA health coverage, which any company that employs more than 20 people must offer to departing employees. That’s expensive too—usually about 102% more than the cost of the plan as an employee.

How big is your nest egg? If you’re living mortgage free and have a healthy nest egg, you might be able to take the early retirement buyout. However, unless you’ve got enough to withdraw 4% of your portfolio annually, you may be in for a tough retirement ride.

Annuities are used by some people as a means of ensuring a steady stream of income. However, they are complicated, and the fees are high. Immediate fixed annuities allow you to hand over a big chunk of cash to an insurer. You then receive a check every month for either a set amount of time, or for the rest of your life. You should be cautious but explore this as an option.

Finally, do you have a second career lined up? Some buyouts give people who were planning on moving into a different career path at retirement the incentive to move forward. It can also provide them with the financial cushion to seek a job in their new career, which can sometimes take months.

Of course, the concern is that not taking a buyout may lead to a less friendly position in the future. Many workers who turn down a buyout, find themselves leaving the company within about a year, often with a less generous package. It may not have been what you had in mind for the start of your retirement, but hopefully you can turn it into a positive springboard to the next stage of your life.

Reference: Money (Oct. 29, 2018) “This Is the Only Time You Should Accept an Early Retirement Offer”

Downsizing Boomers Find Help from Senior Move Management Companies

When faced with the task of pulling up roots and moving her family from a big midwestern city to a smaller town, Laura Schulman found it overwhelming. However, she did enjoy some of the tasks, including handling all the details of organizing and packing and setting up a new home. Nine years later, she decided to start a company that would help seniors downsize, before moving to smaller homes, apartments or assisted living facilities.

As reported in Columbus CEO’s article Estate Planning and Retirement: How to Downsize Like a Diva,” Schulman and her team at A Moving Experience take the work and worry out of a move, so seniors can focus on the emotional challenges that come with this kind of move. When people are not at their physical best, downsizing can be extremely upsetting. It can get to the point, where many people wait until the very last minute and then panic sets in.

Her company is one of many senior move management companies that help seniors with this transition. The companies organize possessions, create a floor plan for new residences, schedule and oversee moving companies, handle any sales or donations of items that are no longer needed or wanted and even pack and unpack after the move.

What’s just as important: they provide the seniors with the emotional support needed during a very trying time. It’s not easy to be faced with the reality that they must leave their home after decades or even a lifetime. Equally upsetting: coming to terms with the limitations of aging.

Children and family members may not be as sensitive to their parent’s emotions about a move like this, or they may be equally uncomfortable. Having a non-family professional may serve as a buffer and a facilitator for everyone.

The increase in the number of these types of companies is due to the enormous number of Baby Boomers entering retirement. Most will be downsizing, as they leave one-family homes and move to smaller living spaces. With 10,000 turning 65 everyday, a projected 79 million Americans will be 65 or older by 2030. Clearly, aging is a big business.

Senior moving management charges range in pricing from $40 to $120 per person nationwide, with the average price for help costing around $3,000, plus the charge of the moving company.

The money is considered well-spent by many. One family called on a senior moving company, when their mother had to leave her long-time home in one state and relocate to an independent senior living community near family members in another state. The siblings reported that they needed help from someone who would be patient and understand the process their mother was going through. The senior mover worked to make the new home layout, as close to the mother’s original house as possible.

Nonprofit organizations are also getting involved in helping seniors move, with several agencies helping seniors, who can’t afford the services of a private company.

Reference: Columbus CEO (Jan. 21, 2019) Estate Planning and Retirement: How to Downsize Like a Diva”

How Can I Make a Trip to the ER Easier for an Alzheimer’s Patient?

Trying to make someone with Alzheimer’s comfortable in an ER is not an easy thing. However, there are some things you can do to make the stimulation-saturated environment a little less overwhelming, says The Advocate in the article “Alzheimer’s Q&A: What should I know before taking someone with Alzheimer’s to the emergency room.”

Start long before you must go to the ER, by creating a list of your medications and have a few copies with you.

Bring the medication list and any assistive devices, including hearing aids, dentures, an extra pair of glasses and any walking aids, like a walker or a cane.

Also, have a list of contact information for all healthcare providers and family members. If you have a power of attorney, bring that as well. If the individual has an advance directive or any other documents, like a do not resuscitate (DNR), bring those just in case. Make sure to have all health insurance information.

Expect a wait, so bring snacks. A portable music player with the person’s favorite soothing music and headphones may provide some comfort. Magazines or books that are used during quiet times at home may be useful. Don’t bring anything of value, like jewelry or a wallet. And don’t bring a crowd. Small children, unless there is no one who can care for them, or other family members, are best left at home.

Unless the individual is having a life-threatening emergency, you will likely have to wait, and you may be waiting a while. Provide simple step-by-step explanations of what is taking place and be honest with them about why they are in the hospital and what is happening.

Focus on keeping them calm and comfortable. Offer a snack and if possible, find a quiet space in the waiting room.

Make sure that the hospital staff is aware you are there with a person who has Alzheimer’s or dementia. They may not have training in caring for dementia patients, so be prepared to advocate for your parent or loved one. Offer suggestions in communicating with the person and ask doctors and medical personnel to limit their questions, which may increase stress and anxiety. Speak with the doctor privately, if possible.

Request that the staff avoid using any physical restraints or medications to control the person’s behavior, unless absolutely necessary. Let the staff know about any fever, medication side effects or changes in mental status. Never leave the person alone in the ER or the evaluation room.

Reference: The Advocate (Jan. 20, 2019) “Alzheimer’s Q&A: What should I know before taking someone with Alzheimer’s to the emergency room”

How Do I Include My Pet in My Estate Plan?

A recent survey of pet owners showed that nearly half (44%) of pet owners have prepared for the future care of their animals, in the event their pets outlive them. With traditional financial planning instruments like living trusts, life insurance, and annuities, pet owners can have peace of mind knowing their pets’ needs will be met.

Forbes’s article, “3 Financial Planning Tips For Pets Owners,” says that typically, “pet estate plans” should cover more than simply who will care for the pet, when you are no longer around. Expenses such as food, doggie day care, veterinarian bills and medication should also be considered.

20% of all respondents in the survey said they have financially planned for their pets’ future care. About 38% said they added the pet’s future caregiver as a beneficiary to a life insurance policy and 35% added more coverage to their life policies. 13% also recently purchased annuities naming the pet’s caregiver as the beneficiary.

However, many pet owners forget about end-of-life planning. Consider an individual trust for your pet or donating funds to your local humane society or pet shelter.

One question many have before adding a new animal to the family, is whether they can afford it. The cost of an animal from a breeder can be high, so a more affordable option is to check out your local humane society or animal rescue group. Remember that the costs of food, vet bills and other supplies are just as important to think about, before making a pet a part of your family. Pets are too often returned to animal shelters, because pet parents were unable to afford to properly care for the pet.

Last, ask about pet insurance at your veterinarian. Many clinics offer plans and staff members will be able to talk to you about the right option based on the type of animal, breed, age and other criteria of your pet.

Simple steps like these will make certain your pets are cared for properly and affordably.

Reference: Forbes (January 27, 2019) “3 Financial Planning Tips For Pets Owners”

How Would Cinderella’s Story Be Different, if Dad Did Estate Planning?

The story never really focuses on why Cinderella is placed in such a dire position in the first place. However, The National Law Review article titled “A Cautionary Fairy-Tale–If Only Cinderella’s Father Had An Estate Plan” does. It starts with a light-hearted tone, but the details quickly move to how many different ways that this family situation could have been prevented with proper estate planning.

To refresh your memory: Cinderella’s mother died, her father remarried and then he died. She is basically a slave to her evil stepmother and stepsisters, in her own home.

Let’s start with what would happen, if there had been no estate plan. If the family lived in Missouri, half of her father’s estate would go to her stepmother, and half of the estate would be split between Cinderella and her stepsisters. As a minor, her portion of the estate would be placed in an UTMA account–Uniform Transfers to Minors Act. There would be a court-appointed custodian, who would be required to use these funds for her health, education, maintenance and support. The court would have likely appointed the Evil Stepmother, who would not likely have complied with the guidelines. A second option would have been for the money to be placed in a trust for Cinderella’s benefit, but the Evil Stepmother would likely have been named a trustee, and that would not have worked out well either.

What Cinderella’s father should have done, was to create a Revocable Living Trust Agreement, stating that certain assets are the separate property of the father (Schedule A), that certain assets are the property of the Evil Stepmother (Schedule B) and that certain assets are community property of the father and the Evil Stepmother (Schedule C).

A neutral successor trustee would have been named—a friend, fiduciary, corporate trustee or perhaps the Fairy Godmother—to oversee the trust. At the death of the father, the trust should have directed that the trust be divided into two subtrusts, known as an A/B split trust.

The Survivor’s Trust (Trust A) would have gathered all the Evil Stepmother’s separate property and one half of the value of the community property assets. Trust B (The Decedent’s Trust) would have all of the father’s separate property, as well as half the value of the community property assets. The trust could have been structured, so that the Evil Stepmother could use the Survivor’s Trust assets as she wanted and could only receive income, if the assets to the Survivor’s Trusts were depleted.

The neutral successor trustee would either work with the Evil Stepmother or make sure that Cinderella’s share of the Decedent’s Trust was not being improperly depleted. At the death of the Evil Stepmother, the assets in the Decedent’s Trust would go to Cinderella.

Cinderella’s father could have also taken out a large life insurance policy to ensure that she was cared for, with the proceeds to be distributed to an UTMA account, with a neutral custodian or to a support trust with a neutral trustee.

The only way Cinderella could have recovered any assets would have been through litigation, which is the likely way this story would have turned out, if it happened today. It’s not ideal, but if a child has been left with nothing but an Evil Stepmother and two nasty stepsisters, a lawsuit is a worthwhile effort to recover some assets. Assuming that the Evil Stepmother either adopted Cinderella or was appointed her guardian by the court, there would be a fiduciary obligation to protect her, and an accounting of assets at the time of her father’s death would have been prepared.

Estate planning would have preempted the story of Cinderella. It does serve as a clear example of what can happen with no estate plan in place. Whether your blended family enjoys a great relationship or not, have your estate plan created, so that if things turn wicked, your beloved children will be protected.

Reference: The National Law Review (Jan. 16, 2019) “A Cautionary Fairy-Tale–If Only Cinderella’s Father Had An Estate Plan”

 

If you liked this blog post, check out these:

Include a Letter with Your Estate Plan

Am I Too Young to Think About Estate Planning?

Stressed About Estate Planning? We’ve Got You Covered!

Are You Ready to Retire? These Professionals Can Help

Are you thinking about retiring in 2019 or 2020? It seems like a simple concept: Just pick a month, run some numbers and turn off your weekly early morning wake-up alarm. However, it’s not that simple. According to an article titled “Professionals can ease a person into retirement” from the Cleveland Jewish News, most people need some help for both financial and non-financial planning.

A good place to start is with the financial side. Take inventory of all your assets to identify where you have assets and where you have liabilities. You’ll need to be brutally honest with yourself and your spouse. Are there gaps? Is your credit card debt bigger than you thought? Use this exercise to get a real sense of whether you can retire this year.

Next, take care of the legal aspects of retirement. You’ll need a will, durable power of attorney, health treatment directive (for end-of-life decisions) and a medical power of attorney. This last POA will give someone the legal authority to make care decisions for you, if you become incapacitated. If you already have a will but have not reviewed it in three or four years, it’s time for a review. Laws change, lives change, and what may have worked well for you and your family when the will was first created, may not work now. You’ll want to work with an estate planning attorney to create a plan, making sure assets are properly aligned with your estate plan and minimizing any tax liability for your heirs.

This is also the time to consider how you’ll pay for long-term care. Do you have a long-term care insurance policy in place? Speak with a reputable insurance agent, or if you don’t know one, ask your trusted advisors to make a recommendation. People don’t like to think about going into a nursing home for an extended period of time, but it happens often enough that it makes sense to have this type of insurance. It’s not cheap—but neither is paying out-of-pocket for care at a nursing facility.

When you’ll retire, and what you’ll do with your retirement years, which could last two or even three decades, is a big question. The answer may be based on your finances—can you realistically stop working full time, or do you need to continue to work for a few more years? Would part-time work fill any savings gaps? These are questions that can’t be answered, without a thorough financial analysis of your retirement income.

If you stop working, what will you do? Some experts advise asking a bigger question: Who are you, now that your work identity is gone? If you’ve planned well, or if you’re lucky, your retirement can be a time of great fulfillment, spending time with family, volunteering in the community and devoting time to taking better care of yourself. For some people, retirement from one career is an opportunity to spring into a new career, one that they’ve always put to the side, in order to earn a paycheck.

How much you can achieve of your dreams, depends on putting down a solid foundation of legal and financial resources. An estate planning attorney and a financial advisor are important members of your retirement success team.

Reference: Cleveland Jewish News (Jan. 9, 2019) “Professionals can ease a person into retirement”