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Wednesday, October 29, 2008

Getting Started: The Revocable Living Trust

The University of Georgia's Mary L. McCormack wrote the following article entitled "Getting Started: The Revocable Living Trust:

The subject of a living trust as an estate planning tool generates quite a bit of discussion. A living trust is an arrangement you create during your lifetime to provide for yourself and your family both before and after your death. It has built-in flexibility that can work very well with your overall estate plans. Though there are many advantages to using this estate planning tool, it is not a substitute for a will.

revocable living trust

Looking at Both Sides

  • Reduction of probate costs. Although you can enjoy the use of the assets you place in a trust during your lifetime, a living trust removes those assets from your estate for probate purposes. Therefore, you save the probate and administration costs you would incur if those same assets were distributed by the terms of your will.
  • Speedy distribution of trust assets. By establishing a living trust during your lifetime, you are setting up a method of managing and distributing your assets. Because a living trust escapes the probate process, the plan of distribution you describe is set in motion immediately at your death. There are none of the delays that occur under distribution by will, and you can be sure your assets ultimately will benefit the charitable institution(s) that mean so much to you.
  • Flexibility of planning. Most living trusts are revocable. This gives you the freedom to amend, add to or even completely revoke the trust agreement as you wish.
  • Freedom of control. Living trusts give you the freedom to name both the beneficiaries and the trustee. Most likely you will name yourself as the trustee during your lifetime and maintain the right to appoint and select successor trustees and beneficiaries. You also control the income and principal and how much of it you wish to use during your lifetime.
  • Investment management. You may choose to appoint a professional trustee such as a bank trust department or trust institution. This frees you from the worry of the day-to-day management of assets, yet if you remain as co-trustee, you still may direct investment goals, including instructing your trustee to change investment strategies.

If you wish, you can give your trustee broad powers and allow the trustee to make the decisions, do all the paperwork and collect the dividends and interest and credit them properly. You would receive periodic and detailed accounting statements, including year-end data for tax purposes. Should you suffer a prolonged illness, your trustee could even pay your medical and household bills.

  • Confidential trust terms. A living trust is private. Unlike a will, no one, other than the beneficiaries, needs to know the contents of a trust.
  • Charitable contributions. Once your needs and those of your family are met, trust assets can be distributed to charitable organizations like UGA.
  • Tax savings. Although all the assets in a living trust are subject to estate taxes, a living trust may be drafted to make the most of estate tax advantages afforded under federal law. After your lifetime, the value of the assets distributed immediately to a charitable institution completely avoids estate tax.

Some Final Thoughts

Keep in mind that there's no income tax charitable deduction when you create a revocable trust, and the level of income is not guaranteed. The trust's assets can be invested in highly rated securities, of course, but the yield is dependent upon economic and market conditions. From your standpoint, these drawbacks may be more than offset by your right to retain control of the trust terms and investments.

A living trust generally is not a stand-alone document. It is advisable to have a pour-over will since it is difficult to get every asset into a trust.

A living trust gives you flexibility while you receive income from your assets during your lifetime, and it can provide asset management after your death.

Friday, October 24, 2008

2009 Annual Gift Exclusion Increases to $13,000

Just a quick note here - The IRS has provided in Rev Proc 8-66 that the Annual Gift Exclusion amount for 2009 has been increased to $13,000.

This means that individuals may give $13,000 in gifts each year to other persons without having to file a gift tax return. Should you be married, you can "split" these gifts and essentially give another person $26,000 in one year...but you need to file a gift tax return in that case to advise the IRS of what you've done.

Thursday, October 23, 2008

When Your Aging Parents Need You

Caregiving can bring guilt and anxiety—and it can be a gift as well.

By Sally Wadyka for MSN Health & Fitness
© Keith Brofsky/Getty Images

For most children, their parents are the people in charge of taking care of them from infancy and even into adulthood. Mom and Dad were there to bandage your boo-boos, sing you to sleep, and soothe you when you were sick. But as the population ages—and more are afflicted with age-related diseases such as Alzheimer's, stroke and cancer—the tables are often turned on parents and their now-adult children.

According to statistics from the National Institute on Aging, there were 37 million people age 65 or older in 2006; that's about 12 percent of the population. But by 2030, as the Baby Boomer generation ages, that number is predicted to rise dramatically. Projections forecast that approximately 71.5 million people—about 20 percent of the population—will be 65 or older. Alzheimer's disease currently affects 5 million Americans, and strokes, which also afflict about 5 million people, are the number-one cause of adult disability.

Finding answers to tricky questions

For most adult children who are thrust into a caregiving role for a parent, the change happens suddenly. "It usually starts with a phone call, and it's like getting hit over the head," says Andy Cohen, CEO of, a Web site that offers support and advice to caregivers.

Read the remainder of this excellent article by clicking here.

Monday, October 20, 2008

Financially Preparing for Special-Needs Kids

Sarah Palin's son Trig helps spark a national conversation

Posted September 30, 2008

Sarah Palin's 5-month-old son, Trig, who has Down syndrome, has sparked a national conversation about kids with special needs: the extra care they require, available government benefits and the pros and cons of prenatal testing.

One topic that has gotten less attention is the financial stress that parents often face. Many kids with special needs require financial support throughout their lives, and while government assistance often covers basic medical care, holding assets over $2,000 can make them ineligible. That means advance financial planning, through wills, estate planning, and trusts, can be essential to ensuring kids with special needs have the support they require once they grow up.

"If [parents] fail to deal with these issues now, it will jeopardize their child's quality of life down the road," says Tanya Harvey, an attorney who focuses on special-needs planning in the Washington, D.C., law office of Bryan Cave.

Here are tips from leading experts in the field of financial planning for kids with special needs on how to get started:

1) Establish legal guardianship. After a child reaches the age of 18, he is considered an adult. But some kids may still need a guardian, says Harvey. One of her tests includes asking whether a child would impulsively buy a pretty diamond in a store window. If the child shouldn't be held responsible for such a purchase, then he needs to have a legal guardian, or else the contract would be binding.

Karen Greenberg, director of Prosperity Life Planning, a nonprofit that teaches financial planning to families of children with special needs, along with her husband and associate director, Jaret Vogel, are urging Congress to adopt a special-needs tax credit that would help parents pay for the cost of establishing such a guardianship. Their proposal would provide up to $5,000 in tax credits to offset the cost of legal fees.

Families often can't afford to set up a guardianship, which involves court expenses and doctors' fees, so they don't do it, say Greenberg and Vogel.

2) Describe your child in writing. Greenberg recommends writing down a "minibiography" of children that could be given to any future guardians or caretakers. It should include medical information like allergies but also personal preferences, goals, and details about friends.

3) Protect your child's eligibility for public benefits. Medical care can be so expensive that even relatively wealthy families may need to rely on Medicaid and Social Security income. Because having more than $2,000 in assets threatens that eligibility, "you want to make sure that if your child is going to receive any money, that it's in a special-needs trust so it doesn't disqualify them," says Harvey. A lawyer or financial professional can help establish a special-needs trust, which doesn't count against the $2,000 limit. Money left to the child through a will should be directed into this trust.

Parents often choose to set up a trust that goes into effect when they die, says Harvey, to allow them flexibility to spend that money in different ways in the meantime. But families may be better off setting up the trust immediately if a grandparent wants to leave money to the child, for example.

Greenberg adds that another benefit to establishing a trust is that the money is then considered separate from the parents' assets, which protects it from creditors and divorce settlements.

4) Consider insurance policies. Life insurance that pays out upon the death of the second parent—often called "last to die" policies—can help parents ensure their child has enough money after they both die without straining their budgets too much beforehand.

When Greenberg, who has an autistic son, examined her budget several years ago, she decided to purchase such a policy. It pays out $650,000 on the death of Greenberg or her former husband, whichever comes second, for about $2,000 a year. In addition, for years, she tucked away about $400 a month into a special-needs trust, which now holds around $55,000. That means that if both she and her former husband were to die, their son would have the $650,000 life insurance payout and the $55,000 trust. Together, she calculates, that will generate an income of around $35,000 a year—enough to pay the bulk of his expenses.

5) Avoid common family-related mistakes. "A lot of parents say, 'How about if I give money to a relative?'" says Harvey. But doing so is a mistake, she says, because not only is the relative not legally bound to spend that money on your child but a creditor or divorce settlement could take it.

Greenberg recalls looking into her options for her son in the 1980s, when the common wisdom held that parents should leave money to their other children, who would then be expected to care for their sibling with special needs. But Greenberg doesn't like the idea of burdening siblings, who have often already experienced so much stress.

Family members and friends planning to leave money to a child with special needs should also be encouraged to do so through a special-needs trust instead of leaving money directly to the child, which could interfere with benefits eligibility. Grandparents may even want to have their wills looked over by an attorney to make sure any gifts don't threaten that eligibility.

SOURCE: US News & World Report

Sunday, October 19, 2008

Medicare Enrollment Period Starts November 15, 2008

It’s that time, once again, to make changes to Medicare options. According to CMS, which is the government entity that oversees Medicare, the six weeks from November 15, 2008 through December 31, 2008 is a hectic time of the year otherwise known as the Annual Election Period (AEP.) Once a year, Medicare allows enrollees to opt in or out of Medicare Part D and Medicare Part C -- otherwise know as Medicare Advantage Plans. Before we get into what that means, some background is in order.

Medicare consists of four parts -- Part A, Part B, Part C and part D. The majority of Medicare enrollees have Part A and Part B. In addition they may have an employer-sponsored supplement or a Medigap policy to go along with Part A and Part B. The fourth part of Medicare is Part D or prescription drug coverage. Most people think that the "D" in Part D is because of the word "drugs." Actually it’s because there is a Part C. Part C is the Medicare Advantage program. It was started in 2003 as part of the Medicare Modernization Act -- the same Act that created the Medicare Part D prescription drug coverage. Medicare Advantage Plans have been around for some time. Before 2003 they were known as Medicare + Choice Plans. With Medicare Advantage, Medicare pays a private insurance company to take over and administer someone’s Medicare benefits. That person is still a part of the Medicare system. He or she doesn't leave the system. A person is simply now receiving his or her benefits from a Private company not the Government.

Back to the massive stack of mail from Medicare that is coming and will be coming over the next few months. Hopefully your people are sitting down. This gets confusing. From November 15, 2008 through December 31, 2008, those eligible for Medicare have the option to change existing Medicare Advantage Plans and/or Medicare Part D. This period is called the Annual Election Period or AEP.

There is also another period of time from January 1, 2009 through March 31, 2009 that is called the Open Enrollment Period or OEP. During OEP, a person can enroll in Advantage but cannot change Part D status, meaning if there is just a Part D, a change or cancellation to the drug Plan cannot occur at this time. If there is a Medicare Advantage Plan which includes Prescription Drug Coverage (MAPD), a change can be made by purchasing another MAPD. Or, if there is just prescription coverage, an MAPD can be purchased. Going the other direction from an MAPD to prescription coverage only, is not allowed.

On April 1, 2009 and thereafter, Medicare institutes a lock-in period. During this time, no changes to drug coverage or an MAPD are allowed. As with most government programs there are a few exceptions to the rule. If a person has moved out of the area the plan operates in, or if a person becomes a resident in any long term care facility, or if a person involuntarily loses coverage, that person can enroll for new coverage under a Special Election Period or SEP. Finally, most people who are eligible for or who are on Medicaid can change coverage whenever they choose.

So why the big deal? Why does someone need to be aware each year of what is going on? The reason is the insurance companies that sponsor the Medicare Advantage and the Part D Plans have the option to change what they offer each year. Changes may come as a result of directives from Medicare, from previous years' claims experience, or from a multitude of other issues. Asking 10 people if there are pending changes to the plans they are in will result in 9 of them replying they have received notice of adjustments or premium changes. However, not all changes are for the worse. There are some instances where the plans have gotten better. Nevertheless, from year to year most plans will have changes. Sometimes a plan may pull out of an area thus forcing an individual to make an unwanted change.

Medicare allows the Advantage companies to start marketing their plans to the public on October 1 and the companies can release information on intended changes to existing plans. For any pending changes, a beneficiary should receive an Annual Notice of Change (ANOC.) Most people will receive this document in November. People need to take the time to review changes. They need to be aware of the plan they are in and the benefits it provides when they might need to use the coverage.

Medicare Advantage Plans can be a great fit for many Medicare enrollees. As with anything, one size does not fit all. During the six-week period when changes can be made, people owe it to themselves to evaluate their options. In the past, many Advantage Plan companies made a big push during this change period to move people out of existing plans and into new ones. Medicare has changed the rules on how companies can induce people to change. In the past, seniors were invited to attend presentations where they received free meals as an inducement to attend. Starting in 2009, only snacks can be provided. Preliminary indications are that pie and coffee are on the menu. Personally we like Pecan pie and free pie is good pie.

On the National Care Planning Council website, at, is a link to all medicare approved advantage plans in every state. All the plans listed in an area can be found there. Finally, those people who need help or who are facing changes should contact a trusted insurance agent. Medicare Advantage plans are only available from someone who is licensed to sell health insurance.

Friday, October 17, 2008

Family Wealth Planning Institute Personal Family Lawyers & Story of My Life Team Up To Preserve 'Priceless Conservations'

The Family Wealth Planning Institute™ and Story of My Life® announce a partnership program to capture and preserve "Priceless Conversations™" that clients create when they create their estate plan with a Personal Family Lawyer® law firm. The Story of My Life website deposits these precious memories into its perpetual, secure Vault to store them for their loved ones and ensure they are never lost.

Long Beach, CA (PRWEB) October 5, 2008 -- The Family Wealth Planning Institute™ and Story of My Life® announce a partnership program to capture and preserve "Priceless Conversations™" that clients create when they create their estate plan with a Personal Family Lawyer® law firm. The Story of My Life website deposits these precious memories into its perpetual, secure Vault to store them for their loved ones and ensure they are never lost.

The mission of the Family Wealth Planning Institute is to help parents make smart legal and financial decisions during life and leave the world a better place when they are gone. One way it achieves its mission is to train Personal Family Lawyers throughout the nation on how to help their clients pass on more than just their money. After the final "I"s are dotted and "t"s crossed in the Wills and Trusts, the tape recorder is then turned on and the Personal Family Lawyer captures, documents and preserves her client's most valuable wealth … the intellectual, spiritual and human assets that are most often lost when someone dies.

Alexis "Guiding our clients to pass on more than just their money is what makes being a lawyer truly meaningful," says Alexis Martin Neely, America's Personal Family Lawyer, founder of the Family Wealth Planning Institute and author of Wear Clean Underwear! A Fast, Fun, Friendly - and Essential - Guide to Legal Planning for Busy Parents. "For our VIP membership clients, we have a new Priceless Conversation each year allowing our clients to build and leave behind a true Legacy Library™ for their loved ones."

The annual audio recordings are uploaded to the Story of My Life site, and permanent data storage space is purchased from the Story of My Life Foundation, a 501(c)(3) not-for-profit, which preserves Stories and files for users in perpetuity.

"Story of My Life is thrilled to be the repository of these special recordings," says CEO and co-founder Patrick Tardif. "Our intention is to capture stories in whatever digital format - whether text, important documents, audio and video - and ensure the technology stays up to date so the files are accessible in the future. These Priceless Conversations are indeed just that - priceless, and deserve the utmost care in storing and preserving them for private access by future generations."

To locate your neighborhood Personal Family Lawyer®, in Ohio, contact Golowin Legal. In other states, visit or call 866-999-3974.

Tuesday, October 14, 2008

New FDIC Rules for Inter Vivos Trust Accounts

On September 26, 2008, the FDIC issued interim final regulations entitled Deposit Insurance Regulations; Living Trust Accounts. The interim rules amend 12 CFR 330 and took effective immediately, pending a sixty day comment period before finalization.

Here is a summary of the new regulations:

The FDIC is adopting an interim rule to simplify and modernize its deposit insurance rules for revocable trust accounts. The FDIC's main goal in implementing these revisions is to make the rules easier to understand and apply, without decreasing coverage currently available for revocable trust account owners. The FDIC believes that the interim rule will result in faster deposit insurance determinations after depository institution closings and will help improve public confidence in the banking system. The interim rule eliminates the concept of qualifying beneficiaries. Also, for account owners with revocable trust accounts totaling no more than $500,000, coverage will be determined without regard to the beneficial interest of each
beneficiary in the trust.

Under the new rules, a trust account owner with up to five different beneficiaries named in all his or her revocable trust accounts at one FDIC-insured institution will be insured up to $100,000 per beneficiary. Revocable trust account owners with more than $500,000 and more than five different beneficiaries named in the trust(s) will be insured for the greater of either: $500,000 or the aggregate amount of all the beneficiaries' interests in the trust(s), limited to $100,000 per beneficiary.

SOURCE: Wills, Trusts & Estates Prof Blog

Make sure your money is 100% protected! FOR MORE DETAILED INFORMATION get a free special report on "If Your Bank Fails, Will You Get Your Money Back? What You Need to Know About FDIC Coverage." Click Here.


***Note: After this post was originally created, the following rules came out:

Deposit Insurance Coverage
Changes to FDIC Deposit Insurance Rules for Revocable Trust Accounts
Revised as of October 8, 2008

Summary: The FDIC has adopted an interim regulation simplifying the rules for insuring revocable trust accounts - commonly known as payable-on-death accounts and living trust accounts. The new rules are easier to understand and apply, and provide at least as much coverage as the former rules for revocable trust accounts. The revised rules take effect today and apply to all existing and future revocable trust accounts at FDIC-insured institutions. The FDIC welcomes comments on the interim rule for 60 days after its publication in the Federal Register.

Under the interim rule:

  • The concept of "qualifying" beneficiaries based on certain family relationships has been eliminated.
  • For each account owner with combined revocable trust deposit balances of $1.25 million or less at a single bank, the maximum coverage will be determined by multiplying the number of different beneficiaries by $250,000. (This will apply to the vast majority of revocable trust accounts.)
  • For each account owner with combined revocable trust deposit balances of more than $1.25 million and more than five named beneficiaries, coverage is the greater of $1.25 million or, as before, the aggregate of all beneficiaries' proportional interests in the trust deposits, limited to $250,000 per beneficiary.
  • In determining coverage for living trust accounts, a life estate interest is valued at $250,000.
  • Irrevocable trusts that spring from a revocable trust upon the death of the revocable trust owner will continue to be insured under the revocable trust rules.

Continuation of FIL-99-2008

All FDIC-Insured Institutions

Suggested Routing:
Chief Executive Office
Head of Deposit & Branch Operations
Compliance Officer
Training Officer

Related Topics:
FDIC Deposit Insurance Regulations 12 C.F.R.
Part 330

Draft Federal Register Notice

FDIC Call Center at 1-877-275-3342

FIL-99-2008 - PDF (PDF Help)

Printable Format:

FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at

To receive FILs electronically, please visit

Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562- 2200).

Financial Institution Letters
Revised as of October 8, 2008

Deposit Insurance Coverage
Changes to FDIC Deposit Insurance Rules for Revocable Trust Accounts

The FDIC Board of Directors has issued an interim rule to simplify the coverage rules on revocable trust accounts without decreasing coverage. The FDIC believes the interim rule will make the regulation easier for depositors and bankers to understand and apply. It will also result in more rapid deposit insurance determinations following bank closings and will help strengthen public confidence in the nation's banking system.


Two types of revocable trust accounts are insured under the FDIC's coverage rules: informal trust accounts and formal trust accounts. Informal trust accounts consist of a signature card on which the owner designates the names of beneficiaries to whom the funds in the account will pass upon the owner's death. These are the most common type of revocable trust accounts and generally are referred to as "payable-on-death" (POD) accounts. The other type of revocable trust accounts are accounts established in connection with formal revocable trusts. Formal revocable trusts are created for estate planning purposes and are referred to as living or family trusts.

The FDIC's former rules stated that all revocable trust accounts (both POD accounts and living trust accounts) were insured up to $250,000 for the interest of each "qualifying beneficiary" designated by the owner of the account. Qualifying beneficiaries were defined as the owner's spouse, children, grandchildren, parents, and siblings.

Summary of the Interim Rule

The interim rule eliminates the concept of qualifying beneficiaries. The relationship between the trust owner and the beneficiaries no longer affects deposit insurance coverage. Under the interim rule, coverage is based on the existence of any beneficiary named in the revocable trust, as long as the beneficiary is an individual, a charity, or another nonprofit organization.

For revocable trust account owners with balances of $1.25 million or less in one FDIC- insured institution, the interim rule eliminates the former requirement that based coverage on the proportional interest of each beneficiary in the trust deposit. For each trust owner with combined revocable trust account deposits of $1.25 million or less at a single bank, the maximum coverage will be determined by multiplying the number of different beneficiaries by $250,000. (This will apply to the vast majority of revocable trust account owners.) Note that for revocable trust deposits that are jointly owned, the $1.25 million threshold would apply to each co-owner's share of all revocable trust deposits at one FDIC-insured bank.

For revocable trust accounts where the owner has more than $1.25 million in one FDIC- insured institution and has named more than five different beneficiaries in the revocable trust(s), the maximum coverage is the greater of either $1.25 million or the aggregate amount of all the beneficiaries' proportional interests in the revocable trust(s), limited to $250,000 per beneficiary. (The impact of the interim rule results in no depositor being insured for an amount less than he or she would have been entitled to under the former revocable trust account rules).

In addition, the FDIC reminds insured institutions that the rules for coverage of informal revocable trust (payable on death) accounts require that the names of all trust beneficiaries be disclosed in the institution's account records. The FDIC also encourages bank customers to make certain that the names of living trust beneficiaries are included in the bank's account records.

The attached draft Federal Register notice provides details on the rule changes. Once the interim rule is published in the Federal Register, the FDIC will distribute a copy of that document in a follow-up FIL and highlight the due date for comments.

Sandra L. Thompson
Director Division of Supervision and Consumer

Sunday, October 12, 2008

Long-Term Care Insurance: Pricey But Necessary?

One of the most common questions I get is "Should we purchase long-term care insurance? Is it worth it?" The answer to that question is up to the individual client, but usually people feel that it's "too expensive" as they pay it while healthy, and it transforms into a "lifesaver" when one becomes ill and the insurance is paying out.

The following is an article from AP Business Writer Dave Carpenter.

cHICAGO – Joyce Smith visited friends recently at a modern nursing home that made her thankful she has long-term care insurance. With relatively plush conditions, including large private rooms and lots of space and privacy, this was the type of safety net she could live with someday.

Turning to her husband, she said: “You keep paying that long-term care, Harry!”

While the Green Valley, Ariz., couple are healthy and hope they are years away from filing a claim, they figure they’ll end up in much better hands thanks to the long-term care policy they secured six years ago when Harry was 54 and Joyce was 60. They acted after watching Joyce’s mother Gladys fall ill and go into a nursing home without such protection, draining her life savings of $200,000 in 2 1/2 years.

“If you’re able to, you should have it,” Joyce says of the coverage. She takes comfort in knowing that she and her husband will be able to provide for any daily assistance they may need in later years.

The Smiths are among 8 million Americans with long-term care insurance — an area where insurers expect big growth as baby boomers zero in on their senior years.

The projections are high because the reality is that about 70 percent of people over 65 will require some type of long-term care services during their lifetime, according to the National Clearinghouse for Long-Term Care Information. It might come at any age, actually; 40 percent of people currently receiving long-term care are 64 or under.

But adding a significant extra cost can be daunting, especially at a time when many are focused on saving for retirement.

So can figuring out what level of benefits you want and how long a period to pay for. Most people get three, four or five years of coverage, because only 20 percent of today’s 65-year-olds will need care for more than five years. The more you sign up for, the higher the cost.

The price varies widely based on age, policy type, benefit level and number of years purchased, among other things, and can range from hundreds to thousands of dollars a year. Someone seeking protection equal to today’s average annual cost of care, about $55,000, would pay $1,064 a year for a standard policy purchased at age 55 or $2,013 for a similar policy at age 65, according to the American Association for Long-Term Care Insurance, an industry group.

As a benchmark, Consumer Reports Money Adviser recently noted that, in general, coverage may be largely unaffordable for people with a net worth below $200,000 to $300,000, not including their home. If you’re in that category, you will likely have to rely on government programs for any long-term care, which can cost you your choice of care facilities and, like Gladys, all your savings.

Other drawbacks also exist, including the limits and conditions of many policies.

But foregoing it is risky. Retiree health costs can be enormous without even factoring in the savings needed to cover long-term care expenses.

A man retiring at 65 in 2008 will need anywhere from $64,000 to $159,000 in savings to cover health insurance premiums and out-of-pocket expenses in retirement just for a 50 percent chance of having enough money, according to the Employee Benefit Research Institute, and $196,000 to $331,000 for a 90 percent chance.

A woman the same age would need $86,000 to $184,000 for a 50-50 chance and $223,000 to $390,000 to have a 90 percent chance.

The Smiths, who are retired, pay $4,995 a year for a joint policy with MassMutual that will provide extensive long-term care benefits for an unlimited time — now rare — when they become eligible by virtue of needing help with daily living activities. They consider themselves fortunate they locked in for that amount, having been told by their agent recently that it might cost triple the amount today.

“It’s one of those insurance products that’s kind of difficult to understand,” says Harry, a retired firefighter. “I studied it for nearly a year. ... But it gives you peace of mind to have it.”

Having the insurance also protects children from a potentially heavy burden.

“We’ve had friends tell us ‘We’re not getting long-term care, let the kids take care of us,”’ says Joyce, who with her husband has two daughters and a son. “Well, that’s not being very nice to the children. We don’t want our kids to have to take care of us.”

Thursday, October 09, 2008

Long Term Care's Impact On The Family

"Families are not necessarily drawn together in a time of crisis. Very often, they are blown apart." says Nancy Dykeman, an educator of long term care planners.

Nancy illustrates this problem with an example:
Imagine a young family. The father is working toward a career promotion; he coaches his kids' soccer teams. His wife works part time. They have two children. The mom's parents are retired, healthy and live in Arizona, playing golf and loving life. Then the unthinkable happens - the young mom suffers a stroke. Months of rehabilitation and care at home follow. Grandma and Grandpa travel back and forth from Arizona, often staying for long periods to help, even though their retirement dream is slipping away.

Dad must continue working to support his family, but his employer is tired of the time he spends on the phone and his coming in late or leaving early. A promotion is off the table.

What about the kids? Their mom, confidante and best friend is hurting and no longer fun. All of her energy goes into trying to recover. Kids' roles change too. They must help prepare meals, keep things picked up, and support their dad and grandparents.

Who knew this young wife and mother would need long-term care? Would the impact be different had it been one of the grandparents? Whenever anyone of any age needs long term care, it's a family issue.

Dykeman says that Long-term care insurance (LTCI) would have been a priceless gift for this family because it "protects the family, allowing them to think and work together without the stress and sacrifice of constant crisis mode." It also allows each family member to keep their normal role, rather than that of a caregiver.

Make sure you have a plan - it's critical for all adults, of any age. Whether it includes long term care insurance, annuities, or Medicaid planning and asset protection, consult with a professional to ensure you and your family are taken care of.

Monday, October 06, 2008

Do Your College Age Children Have Healthcare Directives? DO YOU?

We should all protect our families and our assets with legal documents like wills and trusts, but what are our essential needs and what can we do on our own to save on legal fees? Family financial and legal expert, Alexis Martin Neely, is the author of "Wear Clean Underwear: A Fast, Fun, Friendly and Essential Guide to Legal Planning," and shared some valuable advice in an appearance this week on View From the Bay on KGO in San Francisco.

Alexis is the founder of the estate planning law firm of Martin Neely & Associates in Southern California, as well as the Family Wealth Planning Institute, a nationwide cadre of Personal Family Lawyers guiding parents to make the best legal decisions throughout life and being there for loved ones afterward.

She says everyone over 18 needs an Advance Health Care Directive & Durable Power of Attorney. If you have assets, you should also have a Will & a Living Trust. If you have minor children, you should also have a Kids Protection Plan.

She raised a great point that many parents don't think about - go watch the show to find out the important legal documents that all young adults need to have in place.

During the segment Alexis shares what legal documents you must have in place for you, and your kids! At the end, listen as she explains, what you should look for and the questions you should ask when searching for the perfect attorney to handle your family planning for a lifetime.

If you have college age kids, this is a VERY TIMELY and IMPORTANT topic. Make sure BOTH you and your adult kids have these important documents in place to avoid problems in the event they are injured or incapacitated.

Before you send them back to school, make sure these documents are in place!

If you have prepared these documents in the past, be sure to have them reviewed for compliance with HIPAA laws! Our office can help you with those needs, as well as the Kids Protection Plan, Wills and Living Trusts. If we can help you with these things, please contact us at 614.487.8887 x3 or through the Golowin Legal Website.

Thursday, October 02, 2008

Two Legal Documents Every Adult Needs No Matter The Size of Your Bank Account

Teen_2 As of your 18th birthday, you became an adult in the eyes of the law.

Even though your kids may still act like teenagers (or you may feel like one), in the eyes of the government, turning 18 means you need to have legal documents in place in case of an accident.

Every adult should have in place an Advance Health Care Directive and a Financial Durable Power of Attorney. Estate planning is not just for rich people. These legal documents are important for everyone who loves their family.

If you don’t have these legal documents in place and something scary happens, it will make life a whole lot more difficult for the people you love.

An Advance Health Care Directive (also known as a Health Care Power of Attorney and Living Will) does two things: first, it names the person you want making health care decisions for you if you cannot make them for yourself and second, it lets that person know how you want them to be made.

This is important because if you are in the hospital and cannot communicate, you need someone to make decisions for you and you want them to make those decisions as you would want them made, without question.

If you don’t have this document in place, it could create a huge rift among your family as the people you love fight about what you would have wanted.

The important thing in this document is that the whoever you name is also given authority under the new (within the past three years) Health Insurance Portability and Accountability Act (aka HIPAA).

If your health care agent (the person named in your Advance Health Care Directive) is not designated as your agent under HIPAA, they will not be able to look at your medical records, which makes it mighty hard for them to make health care decisions for you.

By the way, if you have college age kids going off to college, you’ll want to get this in place for your kid. Otherwise, when you call the school nurse to discuss your child’s illness, you may find no one can or will talk with you because they would violate HIPAA if they did.

We get frantic calls in our office at least once or twice each fall from parents looking for legal documents for their college-age kid for just this reason.

The second legal document you absolutely need to have in place as an adult is a Durable Power of Attorney. This document names someone to make financial and legal decisions for you if you can’t make them for yourself.

Beware of the one-page standard durable power of attorney you find on the internet where you just check off a list of applicable powers. I’ve seen family members try to use those to access their loved ones assets and then not be able to because the form was too generic.

It’s important for your kids going off to college to have this in place too because if they are in an accident you are going to need to take over paying the bills and get access to bank accounts and make legal decisions. But, you will have to go through a long and expensive court process if there’s not a signed Durable Power of Attorney in place.

It’s the same for you too. If you are in an accident, and you don’t have a Durable Power of Attorney in place,it will be difficult for your family to deal with things on your behalf.

So, regardless of the amount of money you have in the bank, get your Advance Health Care Directive (or living will) and your Durable Power of Attorney in place at the bare minimum. Oh, and of course, if you have kids under 18 at home, get your comprehensive Kids Protection Plan in place too.

None of this has to do with money. It has to do with making life as easy as possible for the people you love. Contact Golowin Legal today to protect your loved ones.

SOURCE FOR POST: Family Wealth Matters by Alexis Martin Neely