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FAQ about Planning: Six Timely Tips


When is it the right time to . . .

Often, I get this FAQ about numerous topics.  Here is a variety pack of FAQ and some general guidelines.

Have estate planning documents prepared or reviewed

Everyone needs a last will and testament, power of attorney, and living will.  If a healthy person who is younger than 55 is in a stable first marriage, owns all assets jointly with a spouse, is not a small business owner or real estate investor, and has no heirs who receive means-tested government benefits, then internet documents might be fine.

Anyone else should not be penny-wise and pound foolish.  See an experienced estate planning lawyer when your marital status changes, you have stepchildren or a special needs child, you own a business or investment real estate, or you begin to receive Medicare, or have a diagnosis of a serious health issue https://keystoneelderlaw.com/wills-powers-of-attorney-and-trusts/

A lawyer should not automatically prepare documents as you initially request, but should first ask you probing questions to identify your underlying concerns and objectives. 

Decide whether buying an annuity is best

An annuity is often not a wise investment.   Commissioned sales agents might say that an annuity is a “guaranteed, can’t lose investment.”  That might not be true because of surrender fees and other limitations.

Banks and credit unions now make more profit in commissions from the sale of annuities than from holding funds on deposit.  Some set annuity sales quotas for their “financial advisors.”

Many of the best investment advisors will not sell an annuity.  They start by reviewing all of your assets, and create a plan for your needs and risk tolerance.  They charge a flat percentage annually of the funds they manage, whether you earn a 10% return or lose money.  Employ a professional financial advisor and ask that person how an annuity fits into your plan, if at all.

Buy long-term care or hybrid insurance

Just as it is too late to buy property insurance when your house is on fire, long-term care insurance (LTCI) is not available when your health history identifies you as a poor risk.   LTCI is most affordable when a person is younger and healthy.   LTCI should pay for home care as well as facility care. Here is a shoppers guide which covers many FAQ about LTCI: https://www.naic.org/documents/prod_serv_consumer_ltc_lp.pdf

When financial priorities such as paying a mortgage or raising children leave little extra money, life insurance is more important than LTCI.  When the mortgage is paid and kids are grown, consider LTCI or “hybrid” insurance, which combines life insurance and LTCI.

Your financial advisor can help you decide how to be wise in setting aside any available funds for LTCI as you consider other investment options. 

Give up control of your assets to your children

Think twice before giving up control of your assets. While an irrevocable trust can be a safe way to set aside assets for your children, it is certainly understandable if you want to keep control of your assets. Using a transfer on death or payable on death designation on your accounts is an option at some financial institutions.

Putting assets in a child’s name can be foolish. It exposes you to a risk of loss if your child faces an unexpected lawsuit, divorce, illness or creditor dispute.  It also creates problems when trying to get governmental help to pay for your future care.

Sometimes if a client has sold their home and is living in a care facility, we might advise putting the names of one or two children on bank or investment accounts as part of a plan to simplify future estate administration.  But if a child tragically precedes you in death, having to pay inheritance tax to recover your assets will feel like salt in your wound.

Get a care aide to help at home

When a person struggles at home to do something that was once routine, they are in a “danger zone” of risk of suffering an accident or decline in medical condition that requires hospitalization.  Even if the problem that caused hospital admission is cured or fixed, complications leading to overall functional decline after discharge are not unusual.

A homecare aide can make the bathing process safer, help to monitor when to take medications, provide companionship, and assist with completion of incidental activities such as shopping, house cleaning, laundry and cooking.   Family members may be compensated at fair market rates if care needs and services have been properly documented. 

Sometimes there can be resistance not only to the cost of home care, but also to an outsider being admitted to the home.  My children have been encouraged to remind me that “Dad, you were so wise to buy the LTCI that it would be a shame to waste it and not use it!”

Move to a retirement community

If you have the freedom to make a choice, consider your options while you can.  

If you move to a 55-plus community, no services will be provided by the community to meet your long-term care needs.  Homeowner association fees that were subsidized by the developer during marketing, before maintenance costs were significant, probably will increase.   Some 55+ residents have reverse mortgages and might neither be able to pay their share of future association costs nor afford to relocate to a care facility when they need it.

A Continuing Care Retirement Community (CCRC) is an attractive option for independent living. In addition to providing opportunities to share interesting social experiences with active neighbors, the CCRC also has facilities on its campus to provide quality services for personal care and skilled nursing care if you need them.  Avoid any CCRC that does not have adequate secured dementia care.

Visit https://keystoneelderlaw.com for additional information such as FAQ about Powers of Attorney and FAQ about Medicaid Planning.

Dave Nesbit, Attorney