We ask clients to trust us with a lot of very personal information. As such, we tend to treat them like family and share our lives with them. Our annual Halloween costume pictures continue to be a big hit year after year.
People are living longer than ever these days, and while that is a good thing, it definitely presents challenges. Regardless of you or your loved one’s stage in life, good planning requires that you ask good questions. And asking good questions can sometimes be uncomfortable, unpleasant or overwhelming. We have come up with 7 questions that need to be asked by the time someone turns 70. If you address these 7 things, it will make aging easier on you and your family.
A little discomfort now can make ALL the difference later. One of the keys to this exercise is not taking an emotional approach. We naturally think of ourselves as 15 years younger than we really are. That means when we turn 70, we actually still feel like we’re 55! That’s a big difference. One way to combat this is to look at the cold, hard facts about aging:
- People reaching the age of 65 will live, on average, 19.2 more years. That’s 84, if you don’t want to do the math.
- 36% of people aged 65+ reported some sort of disability in 2012. (That’s 1 out of every 3 people.) Limitations in daily living activities because of chronic conditions will only increase with age.
- Statistics vary, but it is generally thought that 70-80% of people who reach 65 will need some sort of care during the rest of their life!
- 1 in 3 older women are widows. And according to the Wall Street Journal, 86% of widows live in poverty. Almost half of women 75+ live alone.
- And according to David Laibson, who specializes in behavioral finance at Harvard University, about half the 80-year-old population is not in a position to make important financial decisions due to rates of dementia and other kinds of cognitive impairment. This means it’s important to make these decisions sooner rather than later.
So, what are the questions we want you to think about and ask yourself?
- Who’s in charge here? Every plan for aging needs a good helper. (Think Power of Attorney, executor or trustee.)
- Do you have the correct powers in place? If you have a Power of Attorney, does it have the correct provisions to allow the most flexible planning options as you age?
- Is your estate plan up to date? Lives constantly change, which means your estate plan needs to be tweaked to match the circumstances.
- What care will be needed… and when? This is a great question, without a concrete answer, but it’s important to be realistic and anticipate the possibilities.
- Have you explored ALL the asset protection options? Even before care is needed, there are some important steps that can be taken to help pay for care when it is eventually needed.
- Are you maximizing available benefits now? If care is needed now, are you sure that you are accessing all available help, like VA and Medicaid?
- The best way to answer Question #6 is by answering Question #7: Have you gotten the advice of an experienced elder law attorney? Experienced elder law attorneys deal with these issues everyday, which means they are always up on the latest laws, benefits and local care options.
One final encouragement from Dave on this topic, “It is far easier to have a plan pre-70 and tweak it here and there as the situation changes, rather than having to make all the big decisions during a crisis or once decision-making impairment has begun.” Addressing all 7 of these questions is something that all of our plans do. If answering these questions feels overwhelming, don’t stress! We guide our clients through the decision-making process everyday. And when the time comes to start implementing the plan, we work as a support for your family, making sure that things go as smoothly as possible. Give us a call at 217-726-9200 if you have questions, or check out one of our upcoming workshops.
We have a common saying with our kids, “Fair doesn’t mean equal.”
Many of us want equality to be synonymous with fairness — maybe because it seems easier to make things equal than to navigate the complexity of fairness. But think about raising kids. Did you make sure everything was equal?
I doubt you kept track of each dollar spent to make sure it was the same for each child. One child may need braces, while the other has straight teeth. One may need money for music and sports, while the other doesn’t have an interest in those types of things. One child could have health issues and another doesn’t. One could need help with college, while another gets a scholarship. We provide our kids with what is appropriate and what we think they need, regardless of whether it is equal.
And the same should be true of your estate plan. Sometimes, it is okay to treat your children “unequally” because this really may be the fairest approach.
Here are six instances in which you might not want to treat your kids equally when it comes to your plan:
- Greater financial need. One of your kids may need more help financially. Kids are not equal in terms of their financial success or ability to succeed in a career. One of them may simply need more than others because of their financial situation.
- Health needs. A child (or even a grandchild) may have health needs that result in increased costs. Health issues can also limit one’s work options or earning potential, therefore making their need for financial assistance greater.
- One may not need it. For instance, if a disabled child already has their basic needs taken care of through government benefits and healthcare, then it could make things harder for that child to receive money from your estate. If you are confident that siblings will help provide for any extras this person may have in the future, you may be able to disinherit that child without affecting their quality of life.
- Some are better stewards. If one child has consistently made bad financial choices, and you have repeatedly bailed them out, it might make sense to leave them less because you are not confident they would use it well. Or, if you do decide to leave them a similar amount, you may want to take steps to protect their inheritance with specific rules, and someone to help manage it for them. (But not a sibling!)
- Early inheritance. Quite often adult children have a significant financial need and parents give them substantial help. After this happens, it might be good to consider adjusting the amount that child would receive in an inheritance. When this situation occurs, without adjusting the amount left in the estate, the child who didn’t need help often feels they are being punished for never needing help.
- Family farm or business. One child may rely on the family farm or business for their livelihood. If one child has spent a lifetime helping you grow your farm or business, it may be best to leave them more of the total estate so their livelihood is not negatively affected.
Some people still can’t get over the “unfairness” of leaving “unequal” amounts to their children. If you decide to leave equal amounts to each child, we encourage you to consider leaving specially tailored rules for each child, so the inheritance can be handled more fairly.
Protecting Our Kids From Threats
Another important part of an effective estate plan is helping protect our kids from threats. Whether it’s their own wild spending, a future divorce, a lawsuit or financial problems, an effective plan can help anticipate and mitigate these types of challenges. Some kids are more exposed to threats than others. Some kids are better able to handle money than others. The rules you create for your plan need to reflect that. As a parent you should feel free to handle things how you think best, without being tied by guilt into making everything exactly equal.
Involve Your Kids in the Planning Process
We often encourage our clients to involve their family in the planning process. This is especially important when considering leaving “unequal” inheritances. Effective communication with your family about why you have decided to do things the way you have can eliminate a legacy of misunderstanding, misinterpretation of your actions, and pain that children experience when parents don’t communicate about the plan ahead of time.
We have seen many adult children upset by their interpretation of their parents’ plan when the parents leave behind no explanation for their rationale, or fail to discuss ahead of time why they’ve chosen to do what they have. Estate plans can seem like a final accounting of a parent’s love. Because of this, it is really important to do the hard work of communicating with your family, either ahead of time or through your plan.
As with many estate planning matters, this is a complicated one with best solutions varying from family to family. We can’t possibly cover all the nuances in one blog post. Our process walks families through difficult decisions like whether to leave equal amounts to your children in your plan. You have the knowledge about your unique family. We are the experienced guide that helps create an effective plan based on that knowledge.
If we can be of assistance to your family, please give us a call at 217-726-9200. If you’d like to learn more about creating an effective estate plan, we encourage you to attend our next workshop, Aging With Confidence: 9 Keys to Wise Planning & Peace of Mind. It’s a great way to learn about holistic, effective planning at every life stage, along with a great way to get to know us better!
Have you ever heard the phrase, “stupid tax”? I hate paying a stupid tax, because it’s always something that could have been avoided.
A few years ago my wife and I went with my parents to see an Illini basketball game in Champaign. After eating at the Ribeye on Neil Street (good food!), I ran through the snow to get the car. As I approached the car I had a sinking feeling.
I had forgotten the tickets.
Thankfully, the box office was able to reissue forgotten season tickets, but I had to pay a stupid tax of $5 for every ticket being replaced!
We all get stuck paying a stupid tax every now and then. A few dollars isn’t bad as far as a stupid tax is concerned, but when it comes to estate planning, mistakes can be very costly. One of my primary goals is to help you and your family avoid paying any stupid taxes by thoroughly thinking through things and planning ahead.
Recently, a younger high profile celebrity died without thinking through what would happen to his estate if he suddenly passed away. His estate ended up paying a $12 million stupid tax. While most people won’t make that big of a mistake when it comes to planning, we see people all the time who did not properly plan, and therefore, end up owing a stupid tax. And the most frustrating part? It could have been avoided.
If you’re not sure whether your estate will be slapped with a stupid tax, we encourage you to give us a call at 217-726-9200 or attend an upcoming workshop on estate planning. Wills & Trusts: How to Get Started is a great way to learn more about effective planning.
World Elder Abuse Awareness Day was observed recently, and we shared some helpful information in our email newsletter. (Sign up for our educational newsletter here.) Elder abuse is a complex issue that can encompass physical and emotional abuse, neglect, and exploitation. It’s estimated that 5 million older Americans are victims every year. And while that is far too many, it is estimated that for every 1 case of reported abuse, there are 23 more out there that go unreported!
The focus of World Elder Abuse Awareness Day this year was financial exploitation, which can take many forms. In developed countries like ours, abuse often involves theft, forgery, misuse of property and power of attorney, as well as denying access to funds.
Sadly, we see these things here in the office far too often. That’s why a few years ago we created a series on elder fraud. In this three part series, we explore common scams to watch out for, PLUS seven questions that can stop elder fraud in its tracks. Click on the links below to learn more so you can protect yourself or your loved ones:
- Granny Got Robbed – learn the two primary types of elder fraud and what you can do about them.
- Granny, Can I Borrow Your Flat Screen TV? – learn specific elder fraud scams to watch out for.
- Granny, We Need to Talk – learn 7 questions to ask of aging loved ones that will help you know if they are being targeted for elder fraud.
It will take a community of loved ones, neighbors, professional advisors, case workers, etc. to continue to fight this shameful trend of taking advantage of seniors. Speaking up and educating people are important steps in the battle.
This is the real life story of two sisters, an annuity, nursing home costs, and why Medicaid Planning matters.
Mom did not have a lot, but she owned her home, had a steady retirement income, and had purchased two annuities. Each in the amount of $50,000.
Each daughter was named the beneficiary of “their” annuity and would, therefore, receive the $50,000 from the annuity when Mom passed away.
The older daughter fell on hard times and asked her mother if she could cash-in the $50,000 annuity. Mom agreed and the older daughter received her $50,000 “inheritance.”
The younger daughter, not needing her money, left her annuity in place as Mom had originally intended.
Unfortunately, several years later, Mom had a stroke and had to enter a nursing home. She privately paid for the nursing home costs until nothing was left but the home and the younger daughter’s $50,000 annuity.
But the annuity wasn’t truly the daughter’s. Mom was listed as the owner because she was still alive and would, therefore, have to spend the younger daughter’s inheritance before she could apply for Medicaid.
Of course this was very upsetting to the younger daughter. She was the one who hadn’t requested her money early. She was the one following Mom’s original plan for the money to pass upon her death. And yet, she was the one “being punished” financially by her Mom’s stay in the nursing home.
One of our attorneys sat down with the sisters for several hours listening to their story and devising a plan. In the end, we were able to develop a strategy that would allow an immediate transfer of the house to the daughter (thereby equalizing the daughters’ inheritances) while qualifying Mom for Medicaid several months later.
The mother continued to get the care she needed as she aged, and the daughters got a resolution to a very sticky situation. It was a very satisfying experience for our attorney and the two sisters!
We work with families everyday to find solutions to the challenges of estate planning — complicated family circumstances, business and farm succession planning, paying for a nursing home. It is our greatest pleasure when we can help families figure out legal solutions for complicated problems.
What Should You Do Next?
If you want to learn more about planning for exorbitant nursing home costs, check out the following resources:
- Download a copy of our Medicaid FAQ (that ran in a local publication) to learn more about paying for nursing care, qualifying for Medicaid, etc.
- Sign up for our Medicaid Planning report. This series of emails will teach you the basics about planning for Medicaid and applying for the benefit, plus provide you tangible steps to get started.
- Attend a free workshop to learn more about effective planning at every stage of life. At our workshop, Aging With Confidence: 9 Keys to Wise Planning & Peace of Mind, you’ll learn about creating an aging road map, easy-to-unerstand keys to aging with peace of mind and clear next steps to guide your planning. Check for upcoming dates here. Call 217-726-9200 to RSVP.
- If you need help right away, just give us a call at 217-726-9200. We understand that many cases like these are urgent. Our Elder Care Advisor, Melissa Coulter, will be more than happy to discuss your situation and what immediate actions should be taken.
If you already know what an elder law attorney does, then you may be wondering when it’s best to contact them for help.
Anytime there is a transition period or crisis situation, your lawyer can help lay the groundwork for care and help get more benefits to pay for that care. Having a lawyer can help you understand your options if your loved one must move from their home or needs more care in an assisted living or nursing home facility.
Examples of transition times when an elder law attorney can help:
- If you or your loved one are in the hospital or a rehab facility and may be unable to return home.
- If you or your loved one are in an assisted living facility but are needing a higher level of care, possibly a skilled nursing facility.
- If your loved one is unable to stay at home without additional help from family or caregivers to help with Activities of Daily Living.
Learn more in this video from Attorney David Edwards:
If you or a loved one is experiencing a transition where paying for care is a challenge and concern, we urge you to call us at 217-726-9200 and speak with our Elder Care Advisor, Melissa Coulter. She loves helping families find solutions for this very stressful time of life. If you want to learn more about planning at every stage of the lifespan, feel free to attend an upcoming workshop, Aging With Confidence: 9 Keys to Wise Planning & Peace of Mind.
The Truth About Adding Your Kids to Your Bank Account
Many parents think that “adding their children’s names to their bank account” is an easy way to be sure their kids can help if something unexpected happens, but it can cause some unintended consequences. Legally, what you are doing is naming a child as a joint owner of the account. This can have big legal implications that you might not intend. Despite friends or bankers telling you it’s a good idea, this sort of “coffee shop” legal advice can cause big problems down the road.
While naming your child(ren) as joint owner of your bank account could insure that bills and other obligations can be taken care of without you, it is best to understand what other problems you may be creating for yourself and your child by adding them to your bank account.
5 Risks of Simply Adding Your Child’s Name to Your Bank Account
There are many potential issues that could come up later if you add your child to your bank account now. Here are just a few to think about:
- If you die, the child on the account gets all the money in the account. This can be a real problem if there are several children in your family, but you only named one of them on the account. Even if you intended for all the children to share the money upon your death, legally the money belongs to the child whose name is on the account.
- If the child on your account gets sued or divorced, YOUR money in your bank account could be at risk.
- If your child becomes disabled (through a car accident or a stroke) after you are already disabled, then their spouse will gain control of the account and your money.
- If creditors come after your child, they could come after YOUR money in the “joint account.”
- If your child is on the account as a joint owner, then they have every legal right to come and take ALL the money from the account anytime they want. And there is not much you could do legally to stop them from doing so. You’re probably thinking, “My child would NEVER do that.” But money makes people do strange things. We see it nearly everyday.
2 Solutions That Can Prevent Future Problems
1. Power of Attorney
If you want a child to be able to pay your bills if you are sick, then name them a Power of Attorney instead of adding them as a joint owner of your bank account.
2. Payable Upon Death
If you want your money to go to your child or children at death, use a payable on death designation or give instructions in your will or trust.
Experienced Estate Planning and Elder Law Attorneys Can Help
Ultimately, you need to find solutions to accomplish your goals without creating unintended problems down the line. This is why it’s important to have the help and advice of an experienced estate planning and elder law attorney. Attorneys use legal tools like Powers of Attorney, trusts, wills and payable upon death designations to make sure things will go smoothly upon death or disability.
The most effective attorneys can help you solve problems without causing extra stress and unwittingly creating more problems down the road. Experienced estate planning and elder law attorneys should be able to anticipate the potential problems that your current actions may cause and prevent them through the use of legal solutions.
To continue learning more on the topic, download our free report, 12 Reasons Not to Give Your Property or Your Money to Your Kids Right Now. We also offer a free monthly workshop for the community — Aging With Confidence: 9 Keys to Wise Planning & Peace of Mind. You can find upcoming dates for those workshops here or give us a call at 217-726-9200 to save yourself a spot.
The secret to avoiding disaster in the Magic Kingdom — plan ahead.
So much of parenting is about planning and anticipating problems BEFORE they happen. And trips to Disney World are no exception. We know from experience that our kids get worn out if they days are too long. So, now we purposely build in days to quit early and have some down time back at the pool. On our most recent trip, I was reminded once again of how disastrous bad estate plans can be when minors are involved. Cinderella’s father made her life even more difficult by not anticipating what would happen if he died. Keep reading to find out what he could have done differently.
7 Important Things Cinderella’s Father Could Have Done Better
You’re probably familiar with the age-old story — Cinderella’s mother dies when she’s a young child, leaving just her and her father. Sadly, while Cinderella is still a minor, her father dies after remarrying a woman with two children of her own. His estate is left to his widow. (A regular occurrence in the real world.) And we all know what happens next: the wicked stepmother takes control of the estate of the benefit of herself and her own daughters. Treated as a servant in her own home, Cinderella is reduced to befriending rodents and birds.
Unfortunately, attorneys see these sorts of real life disasters everyday. The parents of modern day Cinderella’s aren’t bad people. They just failed to properly plan. They certainly didn’t wish for bad things to happen to their children. But that’s what happens when you don’t plan for things that are common to the human experience. (Like death.)
Here are 7 estate planning actions Cinderella’s father could have taken to better protect her once his wife died:
- Name guardians who share his values. See our Child Raising Priorities Checklist to help you decide what’s most important to you.
- Leave instructions for the guardian about how he wants her raised. This could include schooling preferences, where he wants her to live, religious upbringing, etc.
- Don’t think of planning as “all or nothing.” All of the father’s assets didn’t have to go only to the second wife OR only to his child. He should have considered dividing the assets between the spouse and Cinderella.
- Name an “outside” helper. Even in the best of circumstances, putting a stepparent in control of the stepchild’s money (or vice versa) can lead to frustration or awkwardness. A professional trustee (such as a bank, CPA or attorney) could have better balanced the interests of both Cinderella and her stepmother.
- Prioritize key needs for Cinderella such as future educations costs, wedding expenses, a down payment for a home, etc. Setting aside priority funds in a trust will make sure they are not spent on other things.
- Pass on a non-financial legacy. Cinderella’s father could have done a better job in transmitting his values, traditions, stories, faith and experiences, and this should have been especially important because Cinderella was so young when her mother died. By passing on a non-financial legacy, he could have insured that her mother’s things — photos, jewelry and other important “belongings” or memories were passed to Cinderella and not the stepmother. Read about 10 Non-financial Planning Issues You Should Consider here.
The type of planning that best protects minors when the unthinkable happens requires attorneys to act as counselors for the client. This also often involves collaboration with other professional advisors. By working as a team, these professionals who deal with real life Cinderella stories everyday can develop solutions for issues such as a creditor protection, remarriage protection, guardianship and special needs.
An estate plan is not really about YOUR DEATH. It’s about your CHILDREN’S LIFE if you’re not there to protect them anymore. You do everything you can to protect them right now — bike helmets, the best car seats, safe cars, healthy food, etc. but what if the unthinkable happens? Will all your protection go away if you go away? Preparation now avoids extra heartbreak and tragedy later. Read a real life story about lack of planning and the death of a young mother here.
Oftentimes, this is the single hardest activity a parent will engage in. We give guidance in person when clients go through this process with us. As always, feel free to give us a call at 217-726-9200 if you have any questions!
Every estate plan needs a good helper(s). Choosing those helpers can be tough. Your trustee, guardian, power of attorney or executor will be responsible for making decisions when you become disabled (like from a stroke or dementia) or pass away. But what exactly are they responsible for?
Your helper(s) will take on many financial, legal and managerial responsibilities on your behalf.
Here are 12 specific duties of a helper:
- Sell assets like cars, house or property
- Make tax decisions and file tax returns
- Pay bills
- File claim forms on IRAs, annuities and life insurance
- Follow the instructions of your Trust
- Make decisions about your care (at home, assisted living or nursing home)
- Manage investments
- Meet with attorneys and accountants
- Sign legal documents
- Negotiate sales of any property
- Referee disputes between other family memebers
- Tell beneficiaries “no” when they ask for money
It is especially important to choose a helper that you trust to manage your finances, as this will become a majority of their responsibility. A great way to decide if you have chosen the best helper is to look at how they currently manage their own life. How does it make you feel to envision your helper stepping in and managing your life right now? If it makes you nervous, perhaps it is best to reconsider whom you have chosen.
We are here to help you through the difficult decision-making process of choosing a trustee, executor, power of attorney or guardian. We guide people through this process all the time helping them know what they should consider when making this very important decision.
We have been through this with many families before, whereas the average family has only been involved in this process once, maybe twice. Let our experience guide you to peace of mind when it comes to choosing the right helper for your estate plan.
Learn more by reading “7 Types of Helpers to Watch Out For” here. Or check out “3 Myths About Choosing a Helper for Your Plan” to find out some common misconceptions about who you should choose.