The Estate Planning Needs of Women
June 27, 2010
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.
- 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.
- 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 Medi-Cal application process when they’re caring for their older relatives.
- 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 that they and their partner both have adequate insurance policies, they also need to keep the premium payments current and the policies in force, so that they are available to pay claims when the time comes.
All of these things can be discussed 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.
Can You Really Afford Long-Term Care Insurance?
June 26, 2010
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.
It’s a Dog’s Life
June 25, 2010
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 seem 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. For example, California permits the creation of a Pet Trust, either as part of your “Living” Trust or as a stand-alone document. 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 to find out what can be done to keep the peace in your family—canine or human.
More News About the Repealed Estate Tax
June 17, 2010
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 for persons dying in 2010, although Congress could still reinstate it retroactively; this leaves us free to look ahead and plan for 2011 when the estate tax is now set to return at a whopping 55%. If you’re wondering how all these changes will impact your estate planning, we may be able to help with some answers and with some techniques to “hedge” against the return of the estate tax.
How To Choose Your Executor or Personal Representative
June 14, 2010
Serving as someone’s executor or personal representative under a Last Will and Testament can be a HUGE job, and may not be right for the faint of heart. Although nomination is commonly considered an honor, there is a lot of work involved, and an executor must have a great capacity for organization, attention to detail, the ability to meet deadlines, and more. You may be tempted to name your favorite sibling or eldest child just to keep from hurting any feelings, but your family and heirs will not be well served if you choose your executor based on emotion rather than ability.
Keeping this in mind, here are 4 things to consider when choosing your executor or personal representative:
- Your executor should be trustworthy. Your executor will be privy to all of your financial secrets: reviewing estate assets, determining your liabilities and paying off creditors, settling outstanding debts, and making distributions to heirs. Chances are you don’t want all that information spread throughout the family or community.
- Your executor should be organized. The person you choose will be in charge of a number of detailed tasks, both large and small. He or she will be making lists of assets, working with your attorney to meet court deadlines, making timely distributions for estate taxes, and more. Missing or being late for one of these many steps can draw out the entire process, costing your heirs both time and money.
- Your executor should be financially savvy. One of the responsibilities of executor is to keep the estate viable (making sure the mortgage and fees continue to be paid) during the probate process. If you have investment accounts you’ll want to ensure they won’t languish and lose their value before they can be distributed to your heirs.
- Your executor should have heart. Although probate is a can be a difficult and detailed process, it is at its core about the people you love. Your executor should have the ability to be caring and compassionate during this emotional time.
If you don’t know anybody you would trust with all of these responsibilities don’t lose faith, there are other options. For example, you can choose a bank or financial institution as your executor, or you can ask your estate planning attorney to recommend a professional fiduciary. The goal is to find someone who will serve you well and work with your attorney to ensure a smooth probate for all involved. Another approach is to create and fund a trust, where the duties after your demise would be handled by your Successor Trustee. However, many of the same concerns that apply to your Executor (if you only have a Will) also apply to your Trustee. Talk to your attorney about choices and the difference between administering a probate estate created by a Last Will and Testament, on the one hand, versus a trust estate created by a Trust, on the other. You may find the talk very helpful.
World Elder Abuse Awareness Day is June 15
June 10, 2010
As we age we become vulnerable. We begin to doubt our memories, our bodies are not as reliable as they used to be, and technological advances outstrip our abilities to keep up with them. With this vulnerability comes the opportunity for abuse.
Unfortunately, elder abuse is becoming more and more common, both physically and financially. Seniors are a growing class of individuals with money in savings or retirement, and there is no shortage of scam artists looking to take advantage of them financially. The truly sad fact is that most financial elder abuse is committed by someone close to the victim, a person in whom they have placed their trust. In such cases, the abuse may not be pre-meditated, but that in no way makes the abuse acceptable.
The good news is that there are ways to guard against elder abuse; and one of the best ways to guard against it is to be aware of it. June 15th is World Elder Abuse Awareness Day, and we urge our readers to participate and find out how they can learn more about this issue.
To learn more about the warning signs and risk factors, and what you can do to help prevent elder abuse, click here. If you think that someone you know may be the victim of elder abuse, either physically or financially, you can help. The National Center on Elder Abuse has a help hotline, as well as a list of warning signs, and community outreach opportunities.
Ensure that Your Retirement Savings Go to the Right People
June 8, 2010
Do you know how your retirement plan fits into your estate plan? Ideally you would never have to worry about this; you would spend the last penny of your savings on the day you die. But life rarely works out according to ideal circumstances, and the reality is that doing a little bit of estate planning for your retirement savings can save your heirs a whole lot of money and confusion.
The good news is that it’s fairly quick and easy to make arrangements for the distribution of your retirement assets after you die—that’s why you fill out all those beneficiary forms when you start a new job or open a new retirement account. The bad news is that it’s also fairly easy to forget about these forms as the years go by, which is how too many people end up inadvertently leaving their retirement assets to a divorced spouse or aging parents rather than to their current spouse or children. How can you ensure that your retirement savings will go to the right people?
- First and foremost, you’ll want to review your beneficiary designation forms frequently: every 2-5 years, and whenever you experience a major life event.
- Second, always name contingent beneficiaries! You may feel that if you name your spouse as the primary beneficiary you’ve done all you need to do, but in life you should always have a fallback plan, and your retirement assets are no exception.
- Third, don’t count on your will to take care of everything. Your named beneficiaries on your retirement account will override the beneficiaries named in your will. If you are certain you want to leave your retirement assets to your estate, do so through a living trust and under the advice of an estate planning attorney.
- Fourth, if you’ve named minor children as beneficiaries (either primary or contingent), make sure you name a guardian for your kids and a trustee for their assets. You may want to use those retirement funds to provide for the kids if anything happens to you, but minors cannot legally control assets, and they’ll need someone to manage their inheritance for them until they come of age.
If you have more questions about fitting your retirement assets into your estate plan, more information is available in this article from InvestorGuide.com, or call our office to arrange a more detailed and personalized review.
How to Find the Perfect Senior Living Arrangement
June 3, 2010
When it comes to living arrangements, senior citizens have far more options available to them today than they ever have in the past: independent retirement communities, assisted independent communities, at-home assisted living, at-home nursing care, live-in nursing homes… the list can go on and on. Having all these options available is almost certain to make it easier to eventually find the right living arrangement, but it doesn’t necessarily mean the search itself will be easier. In fact, having so many options and facilities to consider can often make the search that much more confusing.
The search for the right living arrangement—either for yourself or for an aging family member—can be much easier if you know ahead of time the right questions to ask and the important things to look for. This article in U.S. News and World Report shares 9 things to look for in your search for an assisted living facility, including:
- Making sure the facility is licensed
- Ensuring the facility’s financial stability
- Getting referrals
- Making visits to assess the facility’s staff
- Asking what current residents have to say
- Considering whether it can meet not only your current but also your future needs
- Asking about payment options (including Medicaid, called “Medi-Cal” in California)
- And more
Having so many different options these days means we can hope that finding the right senior living arrangement is a much more personal—and pleasurable—task than it has been in the past. Some of the best retirement communities or nursing homes have long waiting lists, so starting your search early will improve your chances of finding the place that’s right for you. But be careful, nursing home and assisted living contracts can contain surprises and should be carefully considered; or better yet, have an attorney look at the contract for you. And, if you are finding a place for your parent or other infirm family member, try to avoid signing the contract yourself unless you plan on being financially responsible for payment. It is often better to ask you parent or loved one to sign the contract and, if they are unable to do so, then sign only as their “agent” if you have valid agency authority.
With the many choices now available there’s no reason not to have exactly the senior living situation you want and need.
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