Posts By: Gene Osofsky

Many retirees (or soon-to-be-retirees) have been living and saving under the assumption that Medicare would pay for a bulk of their medical costs during retirement, but a recent article in the Wall Street Journal reveals that counting on Medicare may not be the safest bet anymore. According to the article, one of the most important facts that retirees need to understand about Medicare is that “Medicare pays for very little long-term care, and you’ll still need significant savings to cover the rest of your medical expenses.”

This statement may come as a shock to those who fall in the soon-to-be-retired category simply because they likely haven’t had to give much thought to post-retirement medical costs yet; but they may be in for a rude awakening when the time comes to rely on Medicare. “Two-thirds of those on Medicare also said they pay the same, or more, for healthcare now than when they were working. They have been unpleasantly surprised by the cost of Medicare Part B premiums, what you pay for doctor and outpatient coverage, with 44% paying more than they had expected.”

Fortunately, our readers can become aware of this need to be more proactive about their own healthcare, and can start planning now. How you should plan will depend greatly on your age, your current rate of saving, and many other factors. But becoming aware is the important first step.

Posts By: Gene Osofsky

If you follow current events at all it is impossible to ignore the fact that we are now in the thick of the Republican primary race—and that the Presidential election will not be far behind. With the political machine in full swing there have been quite a few news stories about the candidates’ financial backgrounds, and more than a little talk of “blind trusts.”

Many of our readers will already know that a blind trust is a vehicle which holds the wealth of a candidate (or a politician serving in office) in an effort to avoid any conflicts of interest. We thought this might be a good opportunity, however, to discuss trusts in general: Which trusts are out there, what are the differences between them, and what purposes do they serve?

Revocable Trust: A revocable trust is one of the most commonly used trusts because it is able to be revoked or changed so long as the grantor (the person who created the trust) is still living. There are many other trusts that fall under the category of “revocable trust”, including a pet trust (which addresses the physical and financial care of your pets), an education trust (which provides for your child’s educational expenses), and many more.

Irrevocable Trust: An irrevocable trust, logically, is one which cannot be revoked or changed after it has been signed. The irrevocability is what makes these trusts useful for tax planning and asset protection. Some types of trusts which fall under the category of “irrevocable trust” include life insurance trusts (which save the beneficiary on the policy from paying exorbitant estate taxes), spendthrift trusts (which reduce the beneficiaries’ estate taxes and protect trust assets from creditors’ claims), and more. It is important to note that any revocable trust becomes irrevocable upon the death of the grantor.

Charitable Trust: A charitable trust is one in which at least one of the beneficiaries is a charity or non-profit. These trusts allow the grantor to claim a portion of their contribution as a charitable deduction under income tax laws. A charitable trust can be either revocable or irrevocable to begin with, but if distributions will be made during the grantor’s lifetime the trust must be irrevocable.

Special Needs Trust: Sometimes also called a “Supplemental Needs Trust”, is a trust created for the benefit of a person receiving government benefits—this usually includes someone with a physical or mental handicap—and its purpose is to allow outside sources to provide the beneficiary with supplemental funds without endangering their right to receive government benefits. A special needs trust can be either revocable or irrevocable, but usually includes a clause instructing that the trust be dissolved if its existence disqualifies the beneficiary for government benefits.

We have only discussed some of the most commonly used trusts here, but there are many, many different kinds of trust which can be valuable for estate planning or asset protection.

Posts By: Gene Osofsky

If and when the time comes to choose a nursing home—either for yourself or for a loved one—how will you know how to choose the right one? A person’s living situation often has a lot to do with how happy they are, so it is important to choose carefully and wisely. When you do begin the process of choosing a nursing home, you don’t have to go into it blind. Here are a few things to consider and questions to ask when you start your search:

A Matter of Money – Nursing care is an expensive prospect, so one of your first considerations when looking for a nursing home will be how much it will cost and how you (or your loved one) will pay for it. Fortunately, it is likely that the entire cost will not have to come out of your personal finances. The Medicare.gov website offers an overview of different strategies to pay for quality nursing care. Your elder law attorney can help you navigate these—and other—options. You may also wish to download our free guide, “Consumer’s Guide To Medi-Cal Planning”. Many middle income persons are often surprised to learn that they may be able to qualify, although often this may require planning and professional guidance from an Elder Law Attorney.

 Check out the following guide published by California Advocates for Nursing Home Reform:  “How to Choose a Nursing Home”.

Evaluate Staff and Policies – Taking the time you need to evaluate the staff and the policies of the homes on your list will quite possibly be the most important part of your decision-making process. This article from the “Our Parents” website provides a comprehensive list of questions to ask yourself, the nursing home staff, the residents, and more before you make your decision.

Visit the Nursing Home: Visit and Talk to Families of Residents.   You can get a real inside feel for the facility in this manner.

Location, Location, Location – Finally, we all know that location is everything, and this is true of nursing homes as well. Issues of location ranging from how close the home is to family and friends, to what kind of view can be seen from the windows can all be of the utmost importance.

 Check out the Guide on the website of California Advocates for nursinNursing Home Reform:

sing a nursing home may well be one of the most difficult decisions you will ever make, so it’s best to go into it prepared. Don’t be afraid to get in touch with the professionals who can help you make the best possible decision for yourself and your loved ones.

Posts By: Gene Osofsky

Everyone knows that because 2012 is the last year on the Mayan calendar it is thought by some to be “the end of the world as we know it.” Most of us don’t believe that the end of the world is nigh, but that doesn’t stop us from contemplating how we’ve lived our lives, what we might put on our “bucket lists,” and what words of wisdom we’d like to pass on to the next generation. For estate planning and elder law attorneys—as well as our clients and readers—this is most likely something we’ve already considered, and hopefully something we’ve planned for as well.

Many people believe that “putting your affairs in order” simply means making your financial arrangements and updating your legal documents; and although these tasks certainly are of immense importance, putting your social, familial and emotional affairs in order is just as important. We’ve written often on our blog about how to put your financial and legal affairs in order, so today we’d like to talk about the other side of things. Some of the suggestions you’ll see below may strike you as small or obvious, but when dealing with the day-to-day tasks and challenges that life brings it’s sometimes all too easy to lose sight of the little things.

1. Tell your family how you feel. If you’re close to your family you may think you do this all the time anyway; but even if you speak to your family often, writing a letter letting them know what they mean to you and how much you love them can make a different kind of impact. A letter is also something tangible your family can keep and treasure after you’re gone.

2. Make family history a priority. How much do you know about the lives of your grandparents and great-grandparents? How much do you wish you knew? Most of us don’t think that our lives or our stories are all that important in the grand scheme of things, but your grandchildren and great-grandchildren may feel differently. Take a shot at writing your memoirs for the benefit of curious future generations. If you think you’re not a writer, or have trouble knowing where to start, there are plenty of books and resources to help you get going.

3. Do something just for you. Whether it’s written it down or not, everybody has a bucket list, a catalogue of things they dream of doing before they die. Well, there’s no time like the present. Nobody lives forever, and the time to do the things you love and see the places you dream about is always right now. Whether you’re taking big leaps or baby steps, don’t let another year go by without making one of those dreams on your bucket list a reality.

Posts By: Gene Osofsky

Do you already have an estate plan? Or perhaps you don’t have an estate plan per se, but over the years you’ve collected all of what you feel are the necessary documents to provide security and protection for your family and your assets after your death? Well, you may want to take a moment to review that existing estate plan of yours. According to this recent article there are five common mistakes made in estate plans, and just one could end up derailing your goals for yourself or for your family.

Some of the common mistakes listed in the article are things that are very easy to fix once you’re aware of them—listing the wrong beneficiary on an old retirement account or life insurance policy, for example. All too often people get a new job or new policy and list the right beneficiary at the time, then that policy goes in a drawer or filing cabinet for years. During those passing years you may get married or divorced, or you may have children. Any of these big life events require changing those beneficiaries. Luckily, making that change is generally a quick and easy fix.

If you aren’t worried about your retirement or life insurance beneficiaries, consider what what will happen to your children in the event of an emergency. Many clients agonize over who to name as guardians of their minor children, but forget to review those decisions every few years. The energetic young couple you chose 7 years ago might now have children of their own, or have moved to another state, and may not be as ideal a choice as they once were. If you listed your parents 10 years ago you might decide in the intervening years that an aging couple is not quite as able as you thought to take on so much added responsibility.

If your trust was prepared years ago when the estate tax laws were different, you may need to update your trust.  Many trusts prepared in the 1990’s under old tax law could actually undermine your wishes if not brought into compliance with current tax laws.  Specifically, the mandatory “trust-split” on the first death common to older trusts may no longer be necessary. Even worse, they could now result in the surviving spouse having only limited access to a couple’s assets after the first spouse’s death.  Also, if one spouse is now receiving Medi-Cal benefits to help with nursing home expenses, an update of your estate plan is usually a “must”.

The fact of the matter is that our lives are not static or stagnant, they are constantly growing and changing, and estate planning documents will need to grow and change with them. If it has been more than 2 years since you last reviewed your plan, it’s time to get out the magnifying glass and give your documents another good look. You might just save yourself and your loved ones some unwanted surprises.

Posts By: Gene Osofsky

We all want to ensure our loved ones are protected and provided for, but sometimes the process of doing so can appear overwhelming, and prevent you from even taking the first steps. When it comes to protecting your family and your future with an estate plan, the process can actually be as easy as 1… 2… 3…

1. Assessment. The first step to creating a plan that can protect your family, your future, and your family’s future begins with simply taking stock of what you have and where you are. Begin by making a list of all your assets, including your house, stocks, investments, bank accounts and personal property. Next consider your responsibilities and goals: what are your plans for the future or for retirement? Who do you wish to provide for in your will? Do you have a spouse or children who might benefit from a trust?

2. Implementation.  Now it’s time to put all that information you gathered in step one into play. The particulars of your estate will have a great impact on how you build your estate plan: A small estate and straightforward inheritance plan may require only a well-drafted will, while a larger estate may benefit from the asset protections found with a trust. Your goals for the future and your wishes for your family will have an equally large impact on your choice of estate planning strategies as well, including whether to include an education trust for young students, a pet trust for your furry family members, or a retirement trust to protect your own investments. An estate planning attorney can help you understand your options and implement the strategy you feel works best for your family.

3. Follow-Through. Once your estate plan is drafted, signed, and tucked safely away you’ll want to ensure that it continues working as you intend it to. The best way to do this is to review your plan with your estate planning attorney every 2 or 3 years. Your family and financial situation is likely to change over the years—estate taxes and laws change as well—and all the hard work you put into creating your plan can be undone if you don’t keep up with the changes.

Posts By: Gene Osofsky

The answer to the title question is that just about every family can benefit from a trust. The rich and famous tend to utilize trusts because of the privacy they provide, the long-term asset protection, the tax benefits, and their flexibility; but each and every family, regardless of fame or income, can reap the exact same benefits making a trust a part of their estate plan.

According to this article on the CNN Money website, you can benefit from a trust “if you have a net worth of at least $100,000 and meet one of the following conditions…

  • “A sizable amount of your assets is in real estate, a business or an art collection;
  • You want to leave your estate to your heirs in a way that is not directly and immediately payable to them upon your death. For example, you may want to stipulate that they receive their inheritance in three parts, or upon certain conditions being met, such as graduating from college;
  • You want to support your surviving spouse, but also want to ensure that the principal or remainder of your estate goes to your chosen heirs (e.g., your children from a first marriage) after your spouse dies;
  • You and your spouse want to maximize your estate-tax exemptions;
  • You have a disabled relative whom you would like to provide for without disqualifying him or her from Medicaid or other government assistance.”

The article goes on to explain that depending on your assets, your family, and your goals you may have a number of different trust options to choose from. The article gives very helpful explanation of the various types of trusts you may have available to you, and will give an idea of just how powerful and flexible a trust can be.

What the article doesn’t mention is that some of these trusts can be used in conjunction with each other, to provide layers of protection and control of your assets. The world of trusts is complex, but full of potential. Please contact our office (or your own local estate planner) to learn more about trusts, and determine how a trust might be good for your family.

Posts By: Gene Osofsky

Most parents (even parents of adult children) want to provide for their children—but not necessarily right away, and maybe not all at once. According to a recent article in Barron’s, “A growing number of parents are shunning the time-honored practice of handing big inheritances to their children when they turn 21. Instead, they’re waiting until the kiddies are in their 30s and 40s.”

The reason for this is that more and more parents are coming to realize that there is a learning curve associated with handling large sums of money, and dropping a large inheritance in your child’s lap may be giving he or she more than they can reasonably handle all at once, essentially setting your child up for failure. “Premature distributions to heirs can have the same effect as the jackpot has on lottery winners… The money becomes a burden, and your child may not fully develop into the adult you hope to raise.”

Luckily, if you don’t want to bequeath a fortune to your children all at once, you have a number of options for ensuring your children are provided for and eventually receive the inheritance you intend for them. As mentioned in the Barron’s article, some of the most popular strategies include passing an inheritance through either a revocable or an irrevocable trust. A trust allows a parent to transfer assets to their children while still retaining control of when and how the assets will be distributed. Of these two options, a revocable trust can provide more flexibility, while an irrevocable trust can provide more asset protection, although both kinds of trusts provide a measure of each. You will want to discuss with your estate planning attorney which option will work best for your family.

With either trust option parents can choose to simply keep the inheritance in trust until the child reaches a certain age, or distribute funds slowly over the course of time, to better acquaint the recipient with the responsibilities of wealth. It is wise to give thought to how you wish to structure your gift to your children, especially if you feel they may be unprepared in their early years to receive your legacy.

Posts By: Gene Osofsky

As 2011 draws to a close just about everybody has their minds on vacation, travel, and gift-buying, so we just wanted to take a moment to remind all of our readers to take advantage of your tax deductions and allowances before the year is over. These may include sending a check to your favorite charity, giving a generous cash gift to children or grandchildren, or selling securities that have lost money this year.

This isn’t all you can do to wrap up your 2011 tax package. This article in the New York Times explains that the next two years of tax policy are likely to be a bit rocky, and that “beyond the usual recommendations… you should use this year to get your affairs in order for what promises to be an uncertain two years of tax policy.”

If you’re not sure which deductions might apply to you, our office (along with the article mentioned above) has come up with a list of tax breaks to consider:

1. Charitable gifts to most non-profit organizations are tax deductible; and while you can’t deduct any time you spend volunteering, you can deduct any out-of-pocket expenses incurred while volunteering.

2. You can give monetary gifts of up to $13,000 to as many individuals as you would like without incurring the gift tax.

3. The 30% energy tax credits of 2010 expired at the end of last year, but new (albeit lower) credits were passed for 2011. Check the energy star website for information if you made any energy-efficient improvements to your home this year.

4. If you are over 70½ you are currently allowed “to directly donate the required minimum withdrawal from [your] retirement account to charity.” (This is something that may disappear with new tax laws in 2012.)

5. Teachers are allowed to deduct up to $250 spent on classroom expenses.

6. A significant tax loophole set to end this year is one that “allows people whose marginal tax bracket is under 15 percent to pay no capital gains tax when selling securities held for more than a year.”

These are only a few of the tax strategies you may want to consider before the end of the year. For more tax-saving strategies please talk to your financial advisor.

Posts By: Gene Osofsky

Nursing homes during the holiday season tend to see a little more activity than they do during the rest of the year, whether because of families coming to visit loved ones, or local groups or individuals bringing holiday cheer to residents who may not have family living nearby.  Taking time to visit with nursing home residents during this time of year can be an immensely rewarding experience for all involved, especially if new or infrequent visitors keep a few simple rules of etiquette in mind:

1. Call the nursing home staff ahead of time to schedule your visit. This not only ensures that you won’t be interrupting any previously scheduled mealtimes or activities, it also gives the residents something to look forward to (and prepare for, if necessary.)

2. Be aware of what to expect. Some will have physical disabilities such as trouble with their hearing, eyesight, or ability to move freely. Some residents may have Alzheimer’s or dementia and may have trouble remembering people or conversations. If you aren’t sure how to respond in certain situations you can ask a member of the nursing staff for advice.

3. Knock before you enter a room. The residents’ rooms are their homes and should be treated as their personal and private space. It is polite to ask permission before entering a room or before handling personal objects on display, but residents will likely welcome queries or questions about photos or personal objects, and this is an excellent way to get a conversation started.

4. Be a good listener. Elderly residents have a lot of history and experience to share, and providing a friendly and attentive ear will be gratifying not only to your elderly friend or relative, but will likely be a fascinating experience for you as well.

5. Be aware of your host’s energy level. Nursing home residents can often tire quickly and 20-30 minutes may be a tiring visit for them. (On the other hand, if you and your host are in the middle of a conversation or game there is no need to rush through to stick to an arbitrary schedule.)

6. Bring photos, cards, or board games with you. Conversation will not always flow easily and freely, and having a back-up plan such as a deck of cards can dispel awkward silences. You may also consider offering to write or read letters for residents who may have trouble with these activities.

7. Don’t promise to visit again unless you truly intend to follow through and can even put it on your calendar right then and there. Nursing home residents may not get many visitors, breaking an appointment can be a heavy disappointment for your friend or relative.