Posts By: Gene Osofsky

People used to think that retirement was a time of placidity and relaxation, a time when all of life’s big surprises were behind you and most days and years would now bring an unchanging idyllic existence…

It seems unlikely that this was ever an accurate portrayal of any phase of human existence, including retirement, but people seemed satisfied to believe it at the time.  Recent events, however, have put retirement under some serious scrutiny, and what has been found is that (especially lately) retirement is just as fraught with losses, gains, and unexpected changes as any other time of life—perhaps more!

In retirement, as with anything else, foreknowledge and preparation can make all the difference.  This recent article in U.S. News and World Report entitled 5 Big Financial Changes for Retirees in 2010 can help prepare retirees for what’s ahead.  And in spite of what general opinion would have you think, the news isn’t all bad!  New Roth IRA rules and a suspension of mandatory retirement plan withdrawals are two changes that will work in retirees’ favor.  But taking advantage of these changes could have a negative effect on your 2009 tax return if you don’t take precautions.

Contact your financial advisor or estate planning attorney for the low-down on how to best use, protect and preserve your retirement income.  With the right preparation, you just may be able to have that relaxing (if not completely care-free) retirement after all.

Posts By: Gene Osofsky

A child paralyzed in a tragic accident; a spouse diagnosed with Parkinson’s disease and then placed in assisted living after a terrible fall; mounting medical bills.  How does one plan for a situation such as this?  Kate Michelman certainly thought she and her husband had planned for every eventuality—she is a well-known and well-to-do public figure, they have excellent medical insurance, long-term care insurance—and yet still they found themselves “on the brink of losing everything”.

Michelman’s story is frightening precisely because it could happen (and is happening) to any of us. The unfortunate truth about medical insurance, long-term care insurance, and Medicare / Medi-Cal for those who qualify,  is that they often cover “most of the cost” of medical treatment—but “most” is woefully lacking when faced with the reality of the high cost of medical care. Deductibles, Co-payments, Share of Cost, the  Medicare Prescription Drug “donut hole” and “uncovered services” can sometimes create a huge personal obligation.

And so we ask again, how does one plan for a situation such as this? The answer begins with “help”.  The medical industry, insurance industry, and government benefits programs are staggeringly convoluted and confusing.  Enlist help in navigating their requirements and regulations. Find a professional who can help you build a plan to make the best use of those systems and what they offer. Find other professionals who are well-versed in peripheral systems who can support that plan.

Medical care in the United States has become a mountain of cost, and even the young and healthy cannot afford to ignore it any longer. 

Posts By: Gene Osofsky

The Wall Street Journal says that family limited partnerships are finding renewed favor as an estate planning tool, thanks to recent tax-court decisions.

In an article entitled “Covering Your Assets” Journal writer Mark Klimek asserts that despite some IRS opposition, tax court rulings in recent years have endorsed the use of FLPs when they are used to preserve a family business for future generations.

“Setting up such a partnership could be especially useful right now for families with businesses,” according to the article.   In its present form, “[t]he Obama budget calls for the estate tax to be restored next year at a rate of 45 percent for estates worth more than $3.5 million, or $7 million for couples. Income-tax increases for high earners are on the agenda as well.” Approval awaits Congressional action.

The article goes on to describe many of the dos and don’ts of FLPs, but of course each family’s situation is special, and you should consult an estate planning attorney before making decisions about any specific strategy.

In any case, the time to act is now. According to one expert quoted in the Journal article, “There’s a realization that any kind of estate planning you can do this year is good, because 2009 will probably end up being the most favorable year for taxes ever.”

Posts By: Gene Osofsky

How are you feeling about your retirement these days?  According to Chuck Jaffe’s article in MarketWatch most people’s answer to that question is not so good. According to Jaffe, Americans are losing confidence in the market’s ability to support their retirement (with good reason), and the most common reaction to this lack of confidence is to reassess their future and plan to put off retirement a few years.  But what if your retirement date isn’t a matter of choice?

The tagline of Jaffe’s article is “Raise Retirement Satisfaction By Lowering Your Standards”, but what Jaffe really seems to be saying is not so much to “lower your standards” , but rather to be educated about the market and be realistic about your standards. “Getting a better handle on your future — so that you can either say today you’ll be able to live comfortably in retirement or make plans that raise your comfort level in time — requires sound knowledge of where you actually stand today. That requires taking inventory of your assets, expenses and plans.”  Regretfully,  planning for the cost of Long Term Care is often given little consideration when couple’s plan their future.  The good news, however, is that there are options, but many clients may be unaware of them. See our articles, The “Spousal Protection Plan“,  and “Developing A Long Term Care Plan For An Incapacitated Spouse”.

This is sound advice not just in retirement planning, but in any kind of planning—including estate planning and long term care planning.  There is a lot of conflicting information out there, and a lot of assumptions; our firm can help you navigate the terrain and make an informed choice about your future. More importantly, we can help you create a Long Term Care Plan to coordinate with your estate plan,  in order to help you conserve the value of your estate for your spouse or children.

Posts By: Gene Osofsky

Do you consider yourself an organized person? It seems that when it comes to organization some people have the gift for it and some people simply don’t. If you’ve ever had (or have currently) the overwhelming job of sorting through the estate of a deceased loved one, you know how very grateful you can be if that loved one had that gift for organization. If, on the other hand, you find yourself sorting bewilderedly through the estate of a less organized loved one, do not despair—Suzanne Barlyn of the Wall Street Journal has some advice to help you through it in her article, “The Mess They Left”.

The truth of the matter is that you can be a wonderfully organized person in life and still inadvertently leave a mess for your heirs simply because you don’t know what will be important after you’re gone. Here a few tips that will make a world of difference to the executor of your estate:

  • Keep all of your estate planning documents (will, trust, powers of attorney, etc) together in one place, and make sure your executor knows the location.
  • Keep updated lists of assets with your estate planning documents—including life insurance policies, retirement and investment accounts, bank accounts, property, etc.
  • Make it as easy as possible for an executor to find any remaining debt you may have. File your bills in a tidy and logical location.
  • Make a list of personal property and your wishes for it; this may be the hardest thing for you, but it will prevent emotion-driven bickering among your heirs. You would be surprised at what kinds of trinkets people will fight over.
  • Don’t be secretive about your advisors. The people who advised you in life can be of invaluable service to your executor after you’ve passed away.
  • Give the name and contact information of your estate planning attorney to your heirs ahead of time. The world of probate  or trust administration can be strange and entangled, and your Estate Planning attorney can serve as a guide to your loved ones who may still be confused and in shock.

Whatever your natural tendencies may be, a little organization can be one of the greatest gifts you leave behind for your heirs. An hour or two you spend now getting your paperwork in order can save your executor weeks—or even months—after you’re gone.

Posts By: Gene Osofsky

At the end of the day, when all of the decisions have been made and documents have been signed, many estate planning clients still have one question: Should I tell my Fiduciaries that I’ve nominated them as executor, healthcare agent, guardian, trustee, etc; and how much should I tell them?

The answer to the question is yes; unless you have an extraordinary circumstance which makes secret-keeping best for the time being, you should absolutely inform your fiduciaries that they’ve been named. Most fiduciaries will be honored to know that you place such trust in them. This is not to say that you need to explain the entirety of your estate plan to them, or even tell them in which order they’ve been named, but it is polite to let someone know that you’ve nominated them for a role.

Healthcare agents especially have a need to know that they’ve been nominated, as they will need a copy of your HIPAA Authorization in order to get information from the hospital staff, and a copy of your healthcare directive both to prove their authority, and to make medical personnel aware of your wishes for treatment.

It is also important to let your fiduciaries know that being nominated places them under no legal obligation. If and when the time comes they are unwilling, or feel that they are no longer prepared to take on the responsibility for which they have been nominated, they are perfectly free to decline. (This is also why it is so important for you as the creator to nominate secondary or back-up fiduciaries.)

Part of the process of informing your fiduciaries is also preparing them. Give them the name and contact information of your attorney and let them know if the attorney is available to answer any questions they might have. Let them know where a copy of your estate plan can be found so they aren’t flying blind when something happens to you. And if you feel comfortable, inform them of the finer points of your plan, your specific wishes, and help prepare them for the role they may someday step into.

Telling your fiduciaries just how much faith you have in them, and how important they are to you can be a very moving process, and often has the unexpected result of opening the eyes of both parties to the quality of the relationship, and bringing you even closer together.

Posts By: Gene Osofsky

The second annual National Healthcare Decisions Day is coming up on April 16, and there has never been more reason to consider what your own wishes are, and especially to make those wishes known. As difficult as it may be to think about the end of your parent’s, your child’s or your own life, not doing so—and not talking about it—can have unintended consequences.

According to Maggie Jones, studies conducted by researchers at the Dana-Farber Cancer Institute revealed that not discussing your end-of-life wishes with your doctor is likely to lead to a more expensive death, a more painful death, and a more traumatic experience for your loved ones… the only thing it did not lead to was a longer life.

Talking about death and your end-of-life wishes does not have to be a difficult or painful conversation, especially if you don’t wait until the last minute.  Dr. Anthony Back encourages people to “pace themselves by having ongoing end-of-life discussions, rather than waiting until there’s only time for one big, emotionally loaded conversation when the patient is near death.”

At our firm we agree with Dr. Back.  We discuss your healthcare and end-of-life wishes during our planning sessions whether you’re 82 or 28, and we include your wishes as part of your estate plan by encouraging you to execute a healthcare directive as part of your plan.

Posts By: Gene Osofsky

What is the most important component of an estate plan? This is a question that comes up a lot in our practice, and as you might guess, different families will have different answers.  

The Trust: Many families feel that this is the heart of the estate plan, and as such the most important part.  As the document that outlines your wishes for distribution amounts, designates beneficiaries, nominates trustees, defines your incapacity and lists your assets—there is definitely reason to think the trust an important part of your plan.

Healthcare Directive: Some people are more concerned with how their end-of-life wishes are carried out than with the distribution of their estate. Those people consider the healthcare directive—the document that sets out your wishes for medical treatment, resuscitation, and healthcare agents—the most important component of an estate plan.

Guardianship Documents: Parents of young children are often more concerned with the guardianship portion of their estate plan than any other portion; they trust that as long as their children are in the hands of loving and responsible guardians all the rest is secondary.

The Will: Some believe the will to be the most important document.  This is especially true of single people at the older or younger end of the spectrum, who feel they don’t have enough assets to require a trust.

Powers of Attorney: Very few people feel this document by itself is the “most important”, but most people understand that as the document that confers fiduciary powers on your chosen agents, the Power of Attorney has an importance of its own.

These components are all helpful and necessary pieces of an entire estate plan, but the most important part of your estate plan is something else entirely; something  grantors and beneficiaries, rich and poor, young and old, attorneys and clients alike can all agree on—the most important part of your estate plan is creating it!

Posts By: Gene Osofsky

As an estate planning firm it is our job to keep our clients prepared for what’s coming. This means helping prepare them not only for the eventuality of death, but also for what is coming in life; retirement, the possibility of divorce, new children or grandchildren, and even taxes. Estate taxes especially are of great concern these days, and although we don’t yet know exactly what the new administration and Congress will do on the tax front, this article from CNN’s Money.com gives us an idea of where they may be headed.

There are many ways that we can help prepare you—and your heirs—for the future,  whether it be to protect your (and their) assets from predators during your lives or to provide for your loved ones after your death. You are welcome to contact our office to learn how we can help your family become prepared.

Posts By: Gene Osofsky

There is a saying that goes something along the lines of “the only thing worse than getting old is the alternative,” which is said to express pretty well the dismay, betrayal, confusion and sometimes horror that go along with the aging process. Americans are living longer than ever—which really means that there are more opportunities for our bodies to fall apart on us—and elderly Americans are finding that they don’t have the means to pay for all the support and care (often professional care) that their aging bodies require.

Long-term care for elderly Americans can be extremely expensive; instead of heaping that cost upon their children (who in many cases may not be willing or able to pay it) many Baby Boomers are opting to invest in long-term care insurance to cover all or a portion of their anticipated long-term care costs.

If you are considering purchasing long-term care insurance the AARP has a wonderful article to help you through the process. The article covers everything from an easy overview of what long-term care insurance is and what costs it will traditionally cover, to key issues to consider before purchasing a policy.

The thing about growing old is that we all know it’s going to happen; the least we can do is prepare ourselves and our families for what’s coming. That means preparing emotionally, organizationally, and financially. If long-term care insurance can help with one or more of those things it brings us one step closer to growing old gracefully, and just as important—growing old peacefully.

And for those who may not be able to qualify because of health issues, or cannot afford the cost of insurance, there may still be a safety net.  A government subsidy under the Medi-Cal Long Term Care Program may be available to help with nursing home costs, depending upon your circumstances. While our firm does not sell long term care insurance, where appropriate we have helped numerous clients qualify for a nursing home subsidy under the Medi-Cal program,  while simultaneously asssiting them  preserve their life savings and protect their family home.