The Pros and Cons of Long-Term Care Insurance

May 14th, 2012
Elder Law, Health Care
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Do you have long-term care insurance? SHOULD you have long-term care insurance? These are questions that currently plague many forty-, fifty-, and sixty-somethings, as well as some precocious thirty-somethings. We’ve been hearing and reading more and more about long-term care insurance in recent years, but we still don’t seem to have any kind of firm consensus about whether it’s a good investment—whether it’s a necessary investment—or not.

This recent article from CBS online, entitled Why Long-Term Care Insurance Is Important, argues that “LTCI is a tool that can help preserve and protect financial assets, provide flexibility to choose the type of care, offer the ability to choose where care is received, help to ensure high-quality care, and provide financial and emotional support for the family.” This article helps readers not only understand why LTCI might be important, but what are the important questions to ask when considering whether and which long-term care insurance might benefit you and your family.

Of course, not everyone thinks long-term care insurance is necessary. Another article, this one from the Wall Street Journal, provides both sides of the argument. The pro-LTCI writer argues that “For those who buy and keep their policy it is a no-regret proposition. No one who has paid premiums and receives their benefits from the policy regrets having paid those premiums.” You pay a small regular sum over the course of a few decades, and when the time comes you are saved from bankrupting your family by paying as much as $250 a day, often for months or more.

The opposition writer against long-term care insurance argues that the likelihood that you’ll need to use the insurance policy is exaggerated. “It may be more useful to learn that 67% to 70% of seniors who do go into a nursing home are discharged within 90 days, and that after two years, less than 6% of those admitted will still be there.” This is important information to have, but $250/day for even 30-60 days can quickly wipe out a significant portion of a retiree’s savings.

Whatever you choose, make sure you account for your decision in your retirement and estate plans. Talk about the decisions with your estate planner, your financial advisor, and especially with your children. Long-term care expenses can be significant, and it’s always best to be as prepared as you can possibly be.

An Estate Plan Can Highlight Religious Values… Within Limits

April 27th, 2012
Estate Planning
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All parents hope to pass their values onto their children; and of the many values they hope to pass on religion and spirituality often tops the list. In some cases, religious values are so important to a parent that they will even include mention of these values in their estate plan. Our firm strongly believes that an estate plan is not just about money, but about leaving a legacy, and we often encourage our clients to include mention of their values—religious or otherwise.

Formalizing a legacy of values is not always as easy as leaving a financial legacy, however; and as this recent article in the Wall Street Journal mentions, there is a limit to how far a parent or grandparent can go in dictating religious values to their heirs. The article points out that “being too restrictive in an estate plan in an effort to pass on religious values—say, disinheriting children who marry outside the faith—can create divisions within a family and spark extended, costly legal battles, all while failing to have any impact on the heirs’ beliefs.”

One of the most common value-imposing strategies used by parents in estate planning is to require that children marry within a certain faith in order to receive their inheritance. This strategy has worked in some instances, for example, “in a 2009 case that was closely watched by estate planners, the Illinois Supreme Court—overturning the decisions of lower courts—unanimously ruled that a Jewish man, Max Feinberg, and his wife, Erla, could legally cut off their grandchildren who chose to marry outside of the Jewish religion.”

This strategy is often hurtful, however, and quite frequently expensively controversial, causing some heirs to challenge the will or trust; a process which can take many years and thousands of dollars to resolve. It is often better to explore other options as far as passing on values. “One increasingly common alternative to strict provisions that may penalize certain heirs is to leave money for children and grandchildren in a trust and give the trustee discretion to make distributions based on broader criteria that you set out when creating the trust… That way you provide guidance on how you would like your money to be distributed, but you leave some leeway for the trustee to consider special circumstances that you may not have anticipated and to weigh the consequences of each decision on distributions.”

A trusted and sensitive estate planner can talk to you about what is important to you and your family, and help you choose the best and most respectful way to pass on your wealth and your values.

Compassion is Key When Talking to Aging Parents

April 25th, 2012
Elder Law
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Being a caregiver is one of the most difficult (and rewarding) jobs on the planet; but sometimes when it comes to strong-willed aging parents, getting them to admit they might need a caregiver is more difficult than the caregiving itself. Take the story of David Solie, published recently in the Los Angeles Times; “David Solie thought he was being a good son and a competent manager. But his strong-willed mother was having none of it.”

According to the article, Mr. Solie (who “had cared for hundreds of elderly patients as a physician’s assistant” ) and his mother did not speak for almost three years after he tried to convince her that she “should move someplace easier to navigate — an assisted living complex, perhaps.” Mr. Solie also expressed that his mother “should relinquish her role as chief caregiver to Roger [Solie’s brother], who could be placed in a group home.”

These kinds of suggestions are often very difficult for independent and strong-minded seniors to hear, and with good reason; after having taken care of themselves, their children, and in some cases taken care of their own parents as well, in their time—it’s not easy to have someone come along and say they can’t do it anymore.

The key, says Mr. Solie, is to recognize and respect a parent’s psychological needs as well as their physical limitations. Once they were on speaking terms again, Mr. Solie started “asking his mom questions about her life and listening intently to her stories. Acknowledging to his mother that there were no longer easy ways to reconcile her safety and her desire to stay put, he asked what would work for her. Then mother and son struck compromises that built a network of support around her and Roger in their home.”

The process of transitioning elderly parents from independent lifestyles they may not be able to handle anymore will be made much easier if you begin the process by asking and listening, instead of simply telling. If the ultimate goal is to increase ease and avoid frustration, shouldn’t that be the goal of each conversation along the way as well?

Avoid the Most Common Estate Planning Mistakes

April 23rd, 2012
Estate Planning
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In a world where bureaucracy and taxation become more present and complex every year, it has become absolutely necessary for every family to have an estate plan. Not all estate plans are created equal, however, and it takes a little bit of research—or a conversation with the right advisors—to determine which plan will be the best fit for your family.

A recent article in Forbes may not be able to tell you which of the many estate planning options will work best for your family, but it does list some of the major errors in estate planning to look out for and avoid; and in light of what you just read in the paragraph above, number one on the list is not having a plan at all.

If you’re reading this you probably already know on some level how important an estate plan is, so it’s the remaining six errors you’ll want to consider most carefully; these include common mistakes such as #2, using online or DIY programs rather than professionals to create your plan, the problem with which is that “estate planning documents should represent the culmination of a well thought out financial and estate plan. An amalgam of stand-alone documents does not a plan make. Furthermore, those pesky nuanced requirements (i.e. the “formalities”) for a validly written and executed document will vary from state to state. Internet sites can provide you with documents but no actual advice that fits you in the context of your specific financial and personal life.”

The error listed as #7, leaving assets to children outright rather than in trust, is another mistake commonly made by those who my not yet understand just how useful a well-thought-out estate plan can be. As the article points out, the problem with leaving assets to children outright is that those assets are just as likely to end up in the hands of creditors or ex-spouses as in the hands of your children or designated heirs. The right trust can give your heirs complete access to their inheritance while providing protection from divorce or debt.

The important point to take away from this article is that an estate plan is not something to be hastily created, checked off the list, and tucked away to collect dust and be forgotten. An estate plan can serve as a roadmap for your family, serving as a reminder of values, as a guide for your children, and as a shield against loss and attrition.

The Good News and The Bad News About Retirement

April 20th, 2012
Estate Planning, Retirement Planning
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The good news is that Americans are living longer, the bad news is that it costs a whole lot more to retire than it used to. But the rising cost of retirement has more to do with just longer life expectancy. As this recent article in the New York Times points out, “Social Security and Medicare are being eyed for cutbacks and 401(k)’s produce ever-varying lump sums.” This means that people are learning to think differently about saving, to think differently about planning for the future, and especially to think differently about when and how they will retire.

Another related article from U.S. News and World Report mentions that “the average expected retirement age and been gradually increasing over the past seventeen years from age 60 in 1995 to 64 in 2005,” and most recently to 67 in 2012. In addition to influencing your financial planning, this shift in the retirement age can also influence your estate planning in some of the following ways:

1. Gift-giving. Parents and grandparents may now choose to hold off on giving significant cash gifts to their heirs; socking that cash away for a longer retirement, if necessary.

2. If your estate plan includes a Retirement Trust you will absolutely want to talk to your estate planning attorney before making any significant decisions regarding your plans for retirement.

3. Long-Term Care Insurance. The longer you’re working, the longer you may be able to contribute to a long-term care insurance policy. Consider adjusting your contributions accordingly.

Everybody’s happy about a longer life expectancy, and there are many people who are happy to push off retirement a few years as well, but it does require a little extra planning. “If life expectancy continues its upward curve, you’ll have your work cut out for you, because you may need to think about what you want to do in your 10th and 11th decades.”

Transfer of Home Ownership Does Not Replace an Estate Plan

April 18th, 2012
Estate Planning
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Imagine this: You’re retired, your only significant asset is your home, you’re very close to your child or children, and you don’t want the cost of creating an estate plan. In such cases, what’s the harm of simply putting your home in the name of your child to avoid probate and then be done with it?

We’ve gotten this question more than once at our office, and we almost always advise against it. There are a number of reasons to keep your home in your own name, and this article in the Huffington Post points out two of the biggies: Property taxes and your child’s liabilities.

These aren’t the only reasons to keep your home in your own name, however. Other reasons include:

* Your relationship with your child may not be as great as you think it is. Once the home is in their name they have no obligation to continue to let you live in it one, two or ten years down the line.

* You have more than one child. Putting your home in one child’s name can cause a rift of bad feelings between siblings. The alternative, of putting the home in the names of all your children, only makes it more vulnerable to liabilities and paperwork errors.

* There are other, safer ways to avoid probate. One of those ways is with a Revocable Living Trust. A Revocable Living Trust is flexible and reliable, and doesn’t have to be expensive. In fact, a Revocable Living Trust can actually end up saving your family money in the long run.

Don’t make a mistake that could end up causing you to lose your home. Contact our office to discuss how we can help you protect your family and your assets from probate and liabilities.

A “New Wave” of Lawsuits May Force Children to Pay for Elderly Parents’ Nursing Costs

April 16th, 2012
Elder Law
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Many of our clients and readers are caregivers of elderly parents; they have chosen to take responsibility for their parents—whether it be physical responsibility, financial, or other. But what if instead of making that choice, you had responsibility for your aging parents thrust upon you? This is exactly the issue addressed in this recent article from Elder Law Answers.

“John Pittas’ mother entered a nursing home for rehabilitation following a car crash. She later left the nursing home and moved to Greece, and a large portion of her bill at the nursing home went unpaid. Mr. Pittas’ mother applied to Medicaid to cover her care, but that application is still pending. Meanwhile, the nursing home sued Mr. Pittas for nearly $93,000 under the state’s filial responsibility law, which requires a child to provide support for an indigent parent. The trial court ruled in favor of the nursing home.”

The article points out that many states still have filial responsibility laws on the books, but that those laws are rarely enforced. This ruling by the Pennsylvania Supreme Court does not bode well for Baby-Boomers, many of whom are finding themselves caught between caring for elderly parents and for grown children who have not yet left the nest.

Perhaps one of the most disturbing things about this case is that the nursing home was given so much leeway. The Pennsylvania Supreme Court found that “the law does not require [the nursing home] to consider other sources of income or to wait until Mrs. Pittas’s Medicaid claim is resolved.” This would seem to condone (if not encourage) a litigious mind-set among nursing homes. As if this weren’t bad enough, the court “also said that the nursing home had every right to choose which family members to pursue for the money owed.” If you are one of many siblings you could find yourself involved in a lawsuit merely because you live the closest, are the wealthiest, or called mom more often than your brothers or sisters.

The best way to ensure that your family doesn’t find itself embroiled in a similar lawsuit is to ensure that you (or your elderly parents) have a plan in place to pay for long-term care. Contact our office to explore your options.

Have You Seen This Person?

March 23rd, 2012
Elder Law
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If you are a Caucasian woman, aged 35 or older, possibly married, very likely working full or part-time—then there is a good chance that you are also (or will soon be) serving as a caregiver for an aging parent or relative. At least this is what a recent report released by the National Alliance for Caregiving, AARP, and MetLife indicates.

The entire report, entitled “Caregiving in the U.S., A Focused Look at Those Caring for Someone Aged 50 or Older” is 73 pages long, but you needn’t read the entire thing to get an insider’s peek at the state of caregiving today. And the report isn’t limited to caring for an aging relative; it includes statistics on those caring for special needs children, as well as family members of any age.

Some of the more interesting statistics listed in the report are:

* 40% of Caregivers are aged 50-64.

* 63% of those receiving care are over the age of 75.

* 67% of Caregivers are women.

* 76% of Caregivers are Caucasian.

* 89% are caring for a relative (36% of the time it is the caregiver’s mother.)

* Over half of caregivers are employed while caregiving; and…

* Caregivers provide an average of 19 hours of caregiving per week (in addition to their regular employment.)

It is worthwhile to note that according to this study most of these caregivers are unpaid for the care they give, which makes sense if they are caring for a family member and are doing it voluntarily—but a full 43% said that they felt they did not have a choice to take on the role.

Our office can’t prevent you from one day needing a caregiver (or one day having to serve as a caregiver) but we can help you plan for when that day may come. Thinking and planning ahead can keep you—and your loved ones—from ending up in a situation where you feel you have no choice.

Will You Need a Probate Attorney?

March 21st, 2012
Probate and Estate Administration
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The subject of probate is one that nobody wants to learn about too early; in fact, most people would probably avoid it altogether if they could. Unfortunately, the probate process can be very confusing and frightening when you are forced to become intimately acquainted with it—especially if you have no prior experience with or knowledge of it.

For a beneficiary, probate can be lengthy, expensive and frustrating; but if you have been named as executor, probate can suddenly become an overwhelming maze of deadlines, notifications and potential liabilities. This is why many executors choose to hire a probate lawyer to help them through the process.

If you are the executor of a small estate with a straightforward will and one or two beneficiaries who are not contentious then you can probably do without an attorney. But you will want to think about hiring an attorney if you are serving as an executor under any of the following circumstances:

* There are a number of beneficiaries who are not on friendly terms, or a number of beneficiaries receiving varying sizes of inheritance.

* The decedent had large estate with many different assets, especially if the assets are not commonly held.

* The decedent was a resident in a different state than your own home state.
A large number of creditors are making claims on the estate.

* There is a disagreement about the will, or if more than one will was found.

* The will is challenged or contested.

These are only a few of the reasons why you might want to consider hiring an attorney to help you through the probate process. If you aren’t sure whether you’ll need an attorney, don’t hesitate to call our office for a consultation. We can help walk you through the process and consider any obstacles that might arise. A little bit of foresight, and knowing you have an experienced professional on your side, can make all the difference in the probate process.

The High Emotional—And Financial—Cost of Alzheimer’s Disease

March 19th, 2012
Elder Law, Health Care
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Alzheimer’s is a disease that affects everybody it touches—husbands, wives, children and grandchildren—they all bear witness to their loved one’s slow demise.

Sadly, emotional stress is not the only stress that accompanies Alzheimer’s disease; those loved ones serving as caretakers may carry a huge amount of financial stress as well. The cost of caring for an Alzheimer’s patient can run anywhere from $64 a day to $77,380 a year, and because Alzheimer’s disease can be such a long-lasting disease (a person can suffer from Alzheimer’s for up to 20 years) the costs of care can end up being astronomical. It’s obvious that people can’t do it alone.

Long-term care insurance can be very helpful in paying for the costs of care necessary for a loved one suffering from Alzheimer’s… if your loved one has thought ahead and purchased the policy before they or their spouse began suffering from symptoms of Alzheimer’s. Some people may not have thought ahead and hope that government programs will be able to help with the high cost of care. Medicaid can be helpful … if you fall in the right category and know how to navigate the complex system. (Medicare doesn’t cover the cost of long-term care.)

Unfortunately, learning how to navigate the system is not something you can do in an hour or two. Because your experience will depend on a number of unique factors we can’t give you an easy set of instructions to follow. The best advice we can give is to say that right now, the best way to navigate the Medicaid/Medi-Cal system is to find someone who knows the system to assist you. Most estate planning and elder law attorneys help their clients with these issues on a regular basis. If you want to ensure that you and your loved ones will be cared for no matter what the future may bring, don’t be afraid to ask your attorney for help.