Annapolis, Maryland Wills, Trusts & Estate Planning

Taking Control After Alzheimer’s By Planning for Care Costs - Annapolis Estate Planning

Facing Alzheimer’s is never easy. The impacts of this condition can be felt in every area of life, and it can be hard to escape the added stress. While there is no easy fix for dealing with the repercussions of Alzheimer’s, there are ways to plan ahead to cope with and cover the costs of care.

Budget for Care and Insurance Costs

Regardless of whether you have a family history of Alzheimer’s, you should still make an effort to prepare for long-term care when planning for the future. Even without an Alzheimer’s diagnosis, long-term care is almost an inevitable part of every senior’s future, so it makes sense to include this kind of care in your financial planning. Doing so helps you avoid unpleasant surprises, like finding out that Medicare will not cover the care you need.

Contrary to popular belief, Medicare offers no financial support when it comes to long-term care. However, if you know this ahead of time, you can plan for other ways to finance these costs. For veterans, there may be additional benefits you can tap into. This may include using a VA long-term care facility or accessing financial resources to help you hire in-home care or modify your home. Another benefit of planning ahead is that you are more likely to afford long-term care coverage. This kind of insurance is not for everyone, but if you know you are at increased risk for Alzheimer’s and you are planning in your 50s, long-term supplements may be more accessible for you.

Though death can be difficult to think about, you should consider planning ahead for when that time comes. Burial insurance can ease the financial burden of loved ones when it’s time to make funeral arrangements. This type of insurance can cover funeral costs and help pay off debt, such as loans and medical bills. Before you purchase a policy, decide on a budget by thinking about the funeral arrangements and any debts you want to be covered.

Know How Alzheimer’s Care Needs Will Progress

Often, the need for long-term care is sudden for seniors. This can make it a little more difficult to find compassionate, affordable care. If you or a loved one is showing signs of Alzheimer’s and have had a medical diagnosis, you are in a position of being able to plan out your care more efficiently. That’s because Alzheimer’s typically follows a predictable path of progression. The level of care needed will follow this same path. During the beginning stages, Alzheimer’s patients can still take care of themselves, but they may have difficulty controlling emotions, staying organized, and interacting with others. At this point, seniors may just need a little extra help around the house with cleaning and other daily tasks.

As the disease advances, however, those with the condition can become a danger to themselves and will need constant care. This can mean living with a family member or hiring a home health aide to provide more stable supervision and assistance. In the final stages of Alzheimer’s, nursing homes or skilled-care facilities are a necessity, and unfortunately, death is also inevitable. Knowing this information can be heartbreaking, but it does help individuals and family members better prepare for the financial strains of Alzheimer’s.

Prepare Yourself and Your Family for the Emotional Costs

Bracing your finances for the costs of Alzheimer’s care can save you and your family a lot of headaches as time passes. The real costs of this devastating disease, however, are those that don’t impact your bank account. Knowing what is ahead can be disheartening, but watching the progression of Alzheimer’s in a loved one can be emotionally draining as well.

So, in addition to putting together a financial strategy, be sure to find ways to manage those complicated emotions. For patients, that may mean going to therapy, finding a support group, or looking for a constructive outlet for your pain and anger. It’s common for seniors to experience depression and anxiety after being diagnosed with the disease, but it’s crucial to your well-being that you seek self-care and support. Self-care is also important for caregivers and loved ones so that they can stay strong throughout this painful journey.

Alzheimer’s can leave individuals and their family members feeling helpless. However, you do have the power to plan for the costs of Alzheimer’s care and prepare for the years ahead. By doing so, you will give everyone peace of mind during a time already filled with pain.

Reference: This post is by guest writer June Duncan, caregiver and author of the upcoming book, The Complete Guide to Caregiving: A Daily Companion for New Senior Caregivers. Books can be purchased at her website, http://riseupforcaregivers.org/.

Holden & Campbell, LLC – Annapolis Estate Planning

New Rules on Benefits Appeals for Veterans - Annapolis Estate Planning

Following the adoption of new rules, there will now be options for veterans to appeal their disability benefits. The hope is that these three new processes will speed up cases.

It took more than a year and a half, but the Department of Veterans affairs has announced that new appeals rules have been enacted that will streamline the appeals process. Veterans whose disability benefits have been rejected, will now have one of three options to pursue their claims. Reforms were passed by lawmakers in 2017, so this has been a long time coming.

In the past, disability appeals languished for years. The VA is now hoping that the most difficult reviews can still be finished in less than a year in most cases, reports the Military Times in the article “VA’s benefits appeals process will see a dramatic changeover next month.” The target for cases that don’t go before the Board of Veterans Appeals is an average of about four months for a final decision.

A successful appeal can result in thousands of dollars in monthly benefits payouts for veterans who’ve previously been turned down for what they believe are service-connected injuries and illnesses.

“(This) is the most significant reform in veterans’ appeals processing in a generation and promises to improve the timeliness and accuracy of decisions for our nation's veterans,” said House Veterans’ Affairs Committee Chairman Mark Takano, D-Calif.

Veterans groups primarily support the appeals changes, but some have expressed concerns about the new system limiting veterans’ options for future reviews in favor of getting faster resolutions.

Parts of the new process were implemented as pilot programs at select sites in recent months. In the past, the cases involved a combination of all three options with cases reset and repeating steps with every new submission of case evidence.

With the first of the three new appeals processes, veterans can file a supplemental claim where they introduce new evidence in support of their case. The appeal is handled by specialists at a regional office who make a final decision.

The second option allows veterans to request their cases be reviewed by a senior claim adjudicator instead of the regional office. Those reviews are for clear errors or mistaken interpretations of a statute. If they find mistakes, they can require corrections for the cases.

The third option allows veterans to appeal directly to the Board of Veterans’ Appeals. Those cases are anticipated to take the longest to process due to the legal prep work. Veterans can obtain a direct decision or request a hearing before the board.

A choice is being offered to veterans who have cases currently pending in the system. They can stay with the current system or they can opt to go with the new process.

Reference: Military Times (January 22, 2019) “VA’s benefits appeals process will see a dramatic changeover next month”

Holden & Campbell, LLC – Annapolis Estate Planning

Make the Most of Your Money in 2018 – Annapolis Estate Planning

The start of a new year is a great time to set yourself up for success. These tips will help you address insurance costs, taxes, protect yourself from identity theft and boost your retirement savings.

Why not spend some time now, while the year is still young, to take steps that will bring you closer to your financial goals for 2018? Kiplinger has some great pointers to share in the recent article, “12 Smart Financial Moves for the New Year.”

1.  Review your insurance premiums. Reconsider all your insurance coverage, particularly auto. This can be an easy way to free up extra cash. Ask your current insurer for all available discounts and get quotes from other insurers for the same amount of coverage.

2.  Increase your retirement-savings contributions. If you've been maxing out your 401(k) or are turning 50 this year, up your automatic contributions to take advantage of higher limits and catch-up opportunities. You should also set up automatic monthly contributions from your bank account or paycheck into an IRA. This will allow you to save before you have an opportunity to spend it.

3.  Make a charitable-giving plan. When you earmark funds for charity, think of the ways you can contribute—by writing a check, giving appreciated securities, giving to a donor-advised fund, or making a tax-free transfer from your IRA (if you're older than 70½). Ask your estate planning attorney how the new tax law may impact your charitable-giving strategies.

4.  Make the most of the new tax law. Speaking of the new tax law changes, look at how it may affect your IRA conversions, home-equity loans, medical-expense deductions and 529 college-savings accounts.

5.  Plan for your RMDs. If you're already older than 70½, or if you're reaching that milestone in 2018, start planning for your required minimum distributions (RMDs). Determine from which IRAs, 401(k)s, or other accounts you'll need to withdraw money and consider which investments from which you'd like to draw. You may also want to investigate making a tax-free transfer of your RMD to charity, which will become more common now that fewer people will be itemizing under the new tax law.

6.  Make some Medicare decisions. If you're going to be 65 this year, start thinking about Medicare. If you don't have health insurance through a current employer (or a spouse's current employer), then you’ll need to enroll within the three months before the month you turn 65 and the three months after that. If you're still working and have health insurance through your employer (or if you're covered by your spouse's employer), you may not need to sign up just yet. However, be very careful to avoid paying a late-enrollment penalty or missing out on important coverage. You should also plan out how you're going to fill in the gaps in Medicare—like with a Medicare supplement policy and Part D prescription-drug coverage, or by having medical and drug coverage through a Medicare Advantage plan.

7.  Select your military pension. If you're in the military and joined between the years 2006 and 2017, you'll have a big decision to make on your retirement benefits this year. You can stay with the current retirement system, which gives you a nice pension—but only if you stay for 20 years or more. You could also opt for the new system, which reduces the pension but also provides matching contributions for the Thrift Savings Plan that current service members can keep immediately.

8.  Make the most of the new tax law. The new law changes some key financial strategies for charitable giving, IRA conversions, home equity loans and more. Speak with your estate planning attorney to learn if there are new opportunities for your estate plan. Don’t miss out!

Reference: Kiplinger (January 5, 2018) “12 Smart Financial Moves for the New Year”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

Military Service Members Must Make a Big Pension Decision in 2018 – Annapolis Estate Planning

For those who joined the military in recent years, a big decision is looming for their future. They have to make a choice next year between staying in the old retirement system or opting for the new one.

Figuring out whether or not to stay with the current military retirement system or choosing to join the new system may be a challenge, but you have an entire year to educate yourself as to which one is best suited for you and your family.

Kiplinger’s recent article, “The Big Pension Decision Military Service Members Must Make in 2018,” explains that if you joined the military from 2006 through 2017, then you have from January 1 to December 31, 2018, to decide whether to switch to the new “blended retirement system.”

If you do nothing, you’ll continue to be covered under the old plan. Those who join the military after January 1, 2018 will be enrolled in the new system automatically, while those who entered the military before 2006 remain in the old system.

The current military retirement system provides a generous pension. It starts at 50% of your base pay every year for life, if you stay in the service for 20 years or up to 75% if you remain for 30 years. However, if you leave the military before 20 years, you get nothing. About 80% of all service members don’t stay long enough to collect a pension. Contrast this with the new system, which reduces the pension to 40% of your base pay if you stay for 20 years or 60% if you stay for 30 years. However, you’ll also get an automatic contribution of 1% of your base pay to the federal Thrift Savings Plan after 60 days of service, and matching contributions for the next 4% of your pay (which you can keep after two years of service). Those who joined the military before 2018 can keep the matching contributions right away without waiting for two years. The matching contributions continue for up to 26 years of service.

Even if a person doesn’t plan to stay in the military for 20 years, they’ll come out ahead with the new system. A person who may stay to make his “20” should compare payouts under the old and new system, and calculate how much he’ll need to save in the TSP to make up the difference.

There are several sources for information for active-duty service members and members of the Reserves and the National Guard. The Defense Department’s website has a wealth of information about the Blended Retirement System, including a Reserve Component fact sheet for members of the Reserves. USAA’s website has a calculator designed for use by as for active-duty service members and members of the Reserves and National Guard.

Reference: Kiplinger (November 10, 2017) “The Big Pension Decision Military Service Members Must Make in 2018”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

Planning for Assisted Living’s High Cost – Annapolis Estate Planning

There are steps you can take now to prepare for the cost of assisted living, which is only likely to increase in years to come.

The sad truth is, for most people, savings and Social Security checks simply won’t be enough to cover the cost of assisted living. Many people find themselves needing to combine several different sources, including the generosity of family members, the proceeds of the sale of the family home and, if it was purchased well in advance, a long-term care insurance policy.

Consumer Reports provides some helpful advice to help you afford assisted living in its recent article, “11 Ways to Afford the Assisted Living Care You Need.”

Life insurance. If you or your parent have been paying premiums on a whole or universal life policy for a decade or more and are comfortable leaving less to heirs, an option is to access the policy’s built-up cash value. If you borrow from the policy or withdraw your cost basis (the amount paid in premiums), there’s no tax owed. If you cash in the policy entirely, you’ll pay ordinary income tax on everything but the cost basis. You can withdraw up to your cost basis and borrow the rest.

Veterans Benefits. Veterans and veterans’ survivors eligible for a Veterans Affairs pension, could be eligible for an increase in monthly pension benefits (an enhanced or special monthly pension). There are specific requirements, as well as income and net worth limits, but the asset test is a somewhat subjective decision made by the person processing the application.

HELOC. Homeowners who want or need to keep a home in the family can apply for home equity loans or home equity lines of credit. Be aware of all the setup costs, fees for loan processing, origination, and underwriting, appraisals and document preparation.

Reverse Mortgage. Homeowners 62 and older may use this when only one spouse is entering assisted living. A reverse mortgage allows you to tap into your home equity for cash.

Assisted Living with Flexible Pricing. There are very expensive, all-inclusive pricing models that include all services—three meals a day, 24-hour on-call aides, and transportation in one price. There are also less costly “levels of care” or “tiered pricing” models.

Sidestep the Sizzle. Consider a residence housed in an older building or one with fewer beds. Remember that the shiny new facilities operated by big chains will offer more amenities—but at a cost.

Coverage Gaps. Did you know that you or your parent could be waiting six months for the payments from a long-term-care insurer to start? Therefore, you could be forced to cash in a CD early and your bank might waive the early withdrawal penalty for an urgent need, like assisted living care.  However, if they don’t help you, the penalty is minimal.

Writing Off the Cost of Care. There are tax benefits to high medical expenses. Deductible medical expenses include long-term care insurance premiums, as well as the cost of the medical services provided in the facility. Once the total medical expenses are more than 10% of your AGI, the remainder can be deducted from federal income taxes.

An experienced elder law attorney can help guide you or a loved one, to plan for what will occur, if and when assisted living care is needed.

Reference: Consumer Reports (August 31, 2017) “11 Ways to Afford the Assisted Living Care You Need”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

Will One Million Be Enough for a Comfortable Retirement? – Annapolis Estate Planning

It used to sound like a lot of money, but a new report says even with $1 million in retirement savings, where you live could make the difference between a comfortable retirement and running out of money.

Depending on what state you live in and how long you live, having a million dollars may or may not be enough to fully enjoy your retirement. A new report from GOBankingRates reveals the state-by-state costs of living and other factors to determine how long a million dollars would last for retirees 65 and older.

Research by the Missouri Economic Research and Information Center multiplied the Bureau of Labor Statistics’ mean annual expenditures for that age group by a cost-of-living measure for each state. They then separated out annual spending on health care, housing, groceries, transportation, and utilities.

Think Advisor’s recent article asks “How Far Does $1 Million Go in Retirement?”

It appears that the takeaway from the number crunching is this: if you want to stretch your dollars as far as possible, retire in the South.

The calculations are conservative and don’t factor in any entertainment or travel. Without those, it would be a pretty grim retirement. It also doesn’t consider inflation’s impact on purchasing power as we get older. Inflation can be more dramatic for seniors due to medical costs. Those expenses can account for a bigger percentage of expenses and have increases at a higher rate than the economy overall.

Estimates indicate that health-care costs for retirees will rise at an average annual rate of 5.5% in the next ten years, according to HealthView Services, a developer of retirement health-care cost projection software.  As an illustration, from 2012 to 2016, the average annual broad inflation rate in the U.S. was 1.9%.

The calculations for the annual expenditure numbers also don’t take into account any return on the money seniors are presumably holding while they’re in retirement. Those gains could offset purchasing power that’s lost to inflation.

Despite these caveats, the information is useful in starting to show the relative power of a fixed sum of savings from one state to another.

For many, the notion of a million-dollar savings fund for retirement is a dream. There are many who make do on much less. For others, a million won’t be nearly enough to fund the kind of lifestyle they want in retirement. Health issues make planning very difficult.

If you are planning on retiring in the next few years, now is the time to begin getting a handle on your costs of living. Start tracking the amount of money that you spend now and create a budget so you can see where your money is going.  You will then know how much you’ll need for retirement.

Reference: Think Advisor (August 22, 2017) “How Far Does $1 Million Go in Retirement?”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

Health Care Considerations and Retirement - Annapolis Estate Planning

Consulting financial and tax advisers as part of planning the retirement process is essential to get the health-care piece covered. Enjoying truly golden retirement years means a lot of different things to different people, but it should include planning for long-term health care now so we obtain the end-of-life care we desire without becoming a burden on our children or the state.

 

According to a recent article in cincinnati.com, titled “Consider health care when retirement planning,” long-term health care may be a considerable expense during our retirement years, with most of this spent during the last three years of life.

 

Health care spending has outpaced inflation over the past decade—from a 6% increase to just 2.5% for core inflation.

 

So what do we do about rising long-term care costs?

 

You should examine your cash flow in retirement: monthly income versus expenditures and line that up with the cost of Medicare Parts A, B and D, which is about $1,700 for an individual. With a supplemental "Medigap" C plan, you add $2,200 per year in premiums. That’s close to $4,000 per person or $7,900 per couple.

 

Generally speaking, your total premiums and health care costs under Medicare can be estimated based on two factors. A study by the Employee Benefits Research Institute in 2013 predicts that a 65-year-old retired couple will need to fund $255,000 to $360,000 in Medicare premiums alone (including Medigap), as Medicare will cover only 62% of medical costs. Also, remember that Medicare doesn’t cover long-term health care. When you run out of funds, Medicaid fills the gap, which means costs for in-home health care and nursing homes must be covered by other sources, such as long-term care insurance.

 

Here are some things to consider when planning for a retirement with long-term health care:

 

• Will you have savings and assets at retirement to cover your projected health care costs?
• Are you and/or your spouse in reasonably good health now and does your family have a track record of living into their 80s or 90s?
• Will you work during any stage of retirement and earn money?
• Do you know when you want to start taking Social Security, and why?
• What do you project will be your annual income and expenses during retirement, and have you looked at possibly needing to increase your annual income beyond inflation to address potentially higher health care costs?
• If you need long-term care, have you factored in those needs and costs?
• Do you have an understanding of various types of long-term care insurance policies?

 

Discussing your plans with an experienced estate planning or elder law attorney when planning for retirement is critical to enjoying your retirement years without becoming a burden on children or the state.

 

Reference: cincinnati.com (January 19, 2015) “Consider health care when retirement planning”

Holden Campbell, LLC - Annapolis, Maryland Estate Planning Attorneys

Where to Find More Money for Your Aging Parents - Annapolis Estate Planning

 We asked experts to let us in on a few resources most people overlook.

 Need more cash to help care for mom and dad? A recent Oprah Magazine article, titled “Sanity-Saving Secrets For Caring For Your Aging Parents,” has some ideas where to look for funds to support your parents in retirement.

 Here are some of those ideas from the original article: 

• Survivor Benefits. If your mother or father has passed away, your surviving parent may be eligible to receive survivor benefits from the Social Security Administration. For instance, a widow age 65 or older could see about $15,000 annually, if she takes advantage of this potential benefit. 

 

• Life Insurance Settlement. This isn’t always a great idea. Why? Liquidating a life insurance policy can many times produce significantly less money than the death benefit, which can still be a great deal of money.

 

• Prescription Discounts, Federal Food Programs, Tax Breaks. BenefitsCheckup.org, created by the National Council on Aging, shows you how to find sources of assistance for your parents.

 

• The Family House. We’ve talked about this one before. A reverse mortgage gives those age 62 and older the ability to convert a portion of their home’s equity into cash without having to sell it. Talk to your estate planning attorney before doing this—appraisal fees, a credit report, title insurance and more could add up to thousands of dollars.

 

• Veterans' Benefits. Most honorably discharged veterans are eligible for VA medical benefits, but there is a financial cut-off and some veterans with a high income or net worth are not eligible.

 These are just a few of the things to look at when considering ways to produce more cash for retirement. It’s best to speak with a qualified estate planning attorney to see what’s best for you and the specific situation of your parents.

 Reference: Huffington Post, The Oprah Magazine (December 19, 2014) “Sanity-Saving Secrets For Caring For Your Aging Parents”

Holden Campbell, LLC - Annapolis, Maryland Estate Planning Attorneys

Medicaid Eligibility for In-Home Care Improves for New Jersey - Annapolis Estate Planning

The newest amendment to  New Jersey's Medicaid program will allow those who earn too much to qualify for full assistance — but who can't afford the cost of the care they need — to receive help through the creation of a trust account at a bank.

A recent Medicaid change for New Jersey comes about in response to advocates who believed the state’s old Medicaid rules made seniors move to nursing homes prematurely because the state gave them no help with home health aides, adult day care programs, or assisted living residences.

The Bergen Record recently published an article, titled "N.J. to allow Medicaid to cover in-home elder care," reminding us that any income above the Medicaid eligibility limit of $2,163 a month that a senior or disabled individual receives can be placed into an irrevocable trust accounts. Withdrawals are then permitted for qualified living expenses and some of their care that they can afford. After that, Medicaid pays the rest, whether it's in a nursing home or in their own home.

"With these trusts, the individual who wants to live at home and age in place will have the capability of being able to live at home or remain in their communities while getting the long-term services and support they need," a state official said in original article.

New Jersey has earmarked three-quarters of the $125 million in its long-term-care budget for these new Medicaid enrollees.

Medicaid officials in New Jersey think that the changes may bring about additional Medicaid enrollees, but will save money long-term by postponing the nursing home. Medicaid funds these stays for roughly $205 a day. Still, some advocates and elder care attorneys worry that these trust arrangements could be too confusing and complex for the elderly and their caregivers, creating a potential "nightmare” for people trying to do this on their own.

Qualifying for Medicaid is already a time-consuming and laborious task. Seniors have to organize their bank and financial records for the past five years to show that they didn’t give any money to adult children or others to avoid spending inheritances on long-term care. The senior’s trustee is tasked with ensuring that all pension checks are deposited, the qualified living expenses are paid, and remaining funds are then paid to the care facility or back to Medicaid. These all have to happen within the same month to stay eligible.

If you have questions or want to discuss trusts and retirement planning, speak with an experienced estate planning. For issues related to Medicaid Qualification in your state, contact an experienced elder law attorney.

Reference: The (Bergen) Record (November 30, 2014) "N.J. to allow Medicaid to cover in-home elder care" 

Holden Campbell, LLC - Annapolis, Maryland Estate Planning Attorneys

Despite Law Changes, Trusts Are Still Impressive Tools - Annapolis Estate Planning

Irrevocable trusts, which are virtually unchangeable once established, have decreased in use, but revocable trusts, over which the grantor retains control, still flourish.

A recent Cincinnati.com article, titled “Trusts remain useful tool in estate planning,” addressed some confusion over the use of trusts in light of recent changes in the law.

One very popular estate planning tool, the revocable trust, remains very much the foundation for many estate plans and is used frequently. In this arrangement, the maker of the trust (the person planning his or her estate) retains total control over the assets, but bypasses probate should the trust maker become incapacitated or die.

Trusts can be funded with a wide variety of assets, too. For example, securities, life-insurance proceeds, and real estate, as well as tangible personal property, are commonly used to fund trusts.

A common use of a trust is to provide income and bequests for the trust maker’s surviving loved ones in a way that recognizes differences among the heirs when they succeed the trust maker as the trust beneficiaries. For instance, the trust could first provide just for the surviving spouse until he or she passes away, then for the children and perhaps the grandchildren. Alternatively, the trust could provide for the spouse and children at the same time. As for the children, a trust can be structured based on the children’s needs. The needs may provide that funds be paid out at specific ages or at a certain time, like when college tuition is due or the birth of a child. Sometimes it is prudent to give sole discretion to the trustee as to when to make payments to the beneficiaries. Guidelines for discretionary payments can be detailed in the trust document.

Another reason trusts are used is asset protection. The trustee is the legal owner of the trust property and the beneficiaries are only beneficial owners. When the beneficiaries (other than the grantor of a revocable trust) have no right to demand the property, then the creditors of the beneficiaries can’t get to the assets.

Questions about trusts?

Don’t just use a book of forms and boilerplate documents, and don’t try to find a reliable answer on the Internet. What you should do is find a local, experienced estate planning lawyer for specific legal advice. It’s worth the time, cost, and peace of mind.

Reference: Cincinnati.com (November 21, 2014) “Trusts remain useful tool in estate planning”

Holden Campbell, LLC - Annapolis, Maryland Estate Planning Attorneys