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In Retirement Planning, Timing of Withdrawals is Everything

Monday, May 18th, 2015

Planning for retirement can be complicated. Many retirees rely on a combination of Social Security retirement benefits and retirement savings accounts such as IRAs. Knowing when it is in one’s best interest to start taking benefits or withdrawals is crucial: not too early and not too late.  Littman Krooks Elder Law

When it is “too early” to take benefits or withdrawals may be a matter of opinion. After all, if a retiree needs the funds at a certain time, he or she may be have no choice. However, in planning your retirement, it is important to know when taking money too early will carry penalties. With regard to savings in IRAs, if you withdraw funds before age 59 1/2, you will face a 30 percent mandatory withholding: 20 percent prepayment of income tax and a 10 percent penalty for early withdrawal. When it comes to Social Security benefits, keep in mind that taking early retirement benefits at age 62 means that you will receive a fraction of the benefits you would get if you waited until full retirement age or even longer. It’s also important to know that if you take early retirement benefits while still working, the money you earn over a certain amount each year may reduce your benefits, until you reach full retirement age.

At the other end of the scale, withdrawing money “too late” means failing to take your required minimum distributions from an IRA once you reach age 70 1/2. If retirees with pretax retirement accounts wait too long to withdraw retirement income, they can face a 50 percent tax. So whether you need the cash flow or not, be sure to take those required minimum distributions, even if it is only to reinvest the funds.

 

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New NightCare Program for Seniors with Alzheimer’s at Sarah Neuman Offers Respite to Caregivers

Thursday, May 7th, 2015

Our guest blogger this week is Amy Brandwene, LMSW. She has a Certificate in Gerontology and MBA in Marketing from Fordham University. She has worked with older people and their families in skilled nursing environments, assisted living and continuing care retirement communities.

As the sun sets, anxiety increases for some elders with Alzheimer’s or other forms of dementia. That’s because of “sundowning,” a condition characterized by increased confusion and agitation which starts in the late afternoon or early evening and often includes nighttime wakefulness, aggression and wandering. The Alzheimer’s Association estimates that some 25% of people with dementia suffer from sundowning. It takes a huge toll on caregivers who must choose between care and vigilance and their own sleep, and so, is a leading reason for people with dementia to be placed in nursing homes.

Littman Krooks Elder LawThe Sarah Neuman Center at Jewish Home has introduced the NightCare program designed to comfort and engage elders with this level of dementia, and to provide respite for their caregivers. Offered several nights per week, from 7 PM to 7 AM, the NightCare program is staffed by experienced, caring professionals like Ruth Mederski, LPC. She explains, “At night when these seniors can become more anxious, we are there to give reassurance.”

In additional to providing a caring and safe environment, the NightCare program offers activities designed to help these elders connect with others; conversation, games, and art, music and recreational programs can all be beneficial. For those who can participate, falls prevention and safe walking programs, as well as Tai Chi and elder-friendly yoga are available. There is a nurse who can administer medication, and if the elder also participates in the Adult Day program at Sarah Neuman, there is coordination between the day and night nurses.

The NightCare program at Sarah Neuman offers dinner after arrival, snacks and breakfast. The program will also include a caregiver support group to help families cope with the strain of dementia care.

Perhaps the most meaningful offering of the NightCare program is peace-of- mind for the caregiver. The son of one NightCare client has shared that “it’s a great relief knowing my mother is safe and cared for at night. I can sleep.”

For more information contact: Amy Brandwene, LMSW at Jewish Home’s Sarah Neuman Center in Mamaroneck, NY 914-864-5804.  She is currently the social worker for the Sarah Neuman Center’s Day Center and NightCare program.

 

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Changes in Medicare Advantage Plans

Thursday, April 30th, 2015

Medicare Advantage plans are used by more than 16 million elderly and disabled people. The system, an alternative to traditional Medicare, allows private insurers to manage health care benefits.

Reimbursement rates for insurers are announced by the government each April, allowing health insurance companies to plan which options to provide and in which areas to compete. The increase comes after Medicare Advantage payments had been cut for several years in a row, due to changes under the Affordable Care Act and declining spending on health care costs. The government said that the increase in payments was in response to expected growth in health care spending.

Payments that the U.S. government makes to health insurance companies operating Medicare Advantage plans will go up by 1.25 percent in 2016, a division of the U.S. Department of Health and Human Services announced. In February, the government proposed a 0.95 percent cut in payments to insurers.

The increase is good news for insurers, and perhaps for health care consumers as well. Health insurance companies had warned that cuts in payments could harm the elderly, because fewer insurers would find it profitable to compete in the marketplace, reducing consumer choice.

People who are eligible for Medicare have the opportunity to switch from original Medicare to a Medicare Advantage plan, or vice versa, or switch from one Medicare Advantage plan to another, during the open enrollment period from October 15-December 7.

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Home Sharing May Be A Viable Option for Seniors

Wednesday, April 15th, 2015

By Bernard A. Krooks, Certified Elder Law Attorney®

As baby boomers enter retirement, a trend is emerging: more and more single seniors are choosing to live with roommates.

This living arrangement may be especially attractive to widows or widowers in retirement who own a home that is too large or expensive for one person. Other options such as selling the home to move into a smaller one, moving into a retirement community, or living with an adult child, may not be as appealing as staying put and welcoming a roommate.Littman Krooks Elder Law

People in retirement find home sharing to be a viable option because it allows a certain lifestyle to be maintained, preserves one’s independence and adds the positive element of companionship. Loneliness and isolation are significant problems for many single people in retirement, and home sharing can be a solution. Many people living in a home sharing situation cite the sense of community as a positive factor. Simply having someone to ask how one’s day is going or help out with little things can make a huge difference in one’s outlook.

Saving money is a big motivator as well. A shared household is more efficient, and single individuals whose adult children are grown may find that paying all of the expenses of a household on their own is not feasible. Roommates can share in all household expenses. This reduction in costs makes it possible for single seniors to stay in a larger home and can be an important way to preserve their financial advantages.

Of course, living with roommates often requires accommodation. Seniors may not have lived with a roommate since their college years and adapting to different personalities and lifestyles may take adjustment. Some seniors in a group housing arrangements have found it useful to hold house meetings and set house rules.

Setting up a household with another single friend may be the most common set-up, but cooperative households have been formed by seniors who did not know each other previously. Home sharing is being organized through websites, workshops and meetings for potential housemates to get to know each other. In considering potential roommates, it is important to talk beforehand about expectations and potential differences in lifestyle to determine whether compatibility exists.

Although it may be common for one roommate to move into a home owned by another and pay rent, other groups of seniors have invested in a home together. Joint ownership of a home and joint checking accounts for roommates may not be the norm, but they have worked in some instances for close friends committed to living cooperatively.

Overall, home sharing can be a practical and enjoyable option for seniors. “The Golden Girls” may have had the right idea after all.

 

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It’s Time to Protect Your Family and Your Future – 2015 National Financial Literacy Month

Tuesday, April 14th, 2015

In support of the 2015 Improving Financial Awareness & Financial Literacy Campaign built around National Financial Literacy Month (April) and six month later during National Estate Planning Awareness Week (3rd week in October) the following estate planning article contains a very important message.

Over 50% of our adult population does not have a current or up-to-date estate plan to protect themselves and their family’s assets; that’s half your family, friends, and associates.

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Estate planning is a financial process that can protect you and your family and is a very important component of your overall financial planning. Now is the perfect time to put your estate planning house in order. If you don’t have an up-to-date estate plan and you happen to get hurt or sick and cannot manage your financial affairs, the courts will have to appoint someone to manage them for you. The person they appoint might not be the one you would want to perform those tasks.

Without an estate plan, when you pass away, your affairs will be settled by default through a complex legal system called “probate.” The handling of your financial affairs can turn into a costly and frustrating ordeal for your family and heirs.

The crafting of a good estate plan starts with planning, followed by the proper drafting and signing of appropriate legal documents such as wills, trusts, buy-sell agreements, durable powers of attorney for asset management, and an advanced health-care directive or health-care power of attorney. Having these documents in place saves you and your family a lot of money and time at a very difficult and emotional time. 5-2-Graphic-EPArticle
Your estate planning should also address the coordination of the way you hold title to your various assets, your beneficiary selections, and the possible transfer of certain assets while you are alive.

Regardless of the extent of your net worth, estate planning is important for everyone. Complex strategies may be used by wealthy people to reduce death taxes and costs. Others may only require a simple will and/or trust to pass on property to their heirs and provide for minor children.

Even if a simple will is all you require, an estate plan is an essential part of your financial planning. Everybody will need it someday. The time to address or update your estate plan is now.

For more information on estate and financial planning content, contact
V.Sabuco@TheFinancialAwarenessFoundation.org.

 

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Harper Lee Case and the Ability to Consent

Monday, April 6th, 2015

Harper Lee, the author of To Kill a Mockingbird, is 88 years old and resides in an assisted living facility in Alabama. She has maintained a lifelong aversion to publicity and an insistence that she would never publish again. When HarperCollins announced that a book by Lee would be published in July, questions immediately arose. Public communication from Lee about the book came only from her publisher, her literary agent and her attorney. Lee’s friends expressed concern over whether she has the capacity to consent to the publication of the work, Go Set a Watchman, and as a result, a formal investigation was undertaken by the State of Alabama.

After extensive interviews with Lee, her friends and employees at the facility, the investigation was closed without a finding of abuse or neglect. Regardless, this case highlights the importance of a senior’s ability to consent and the potential for abuse.

For consent to be legal and proper, the person consenting needs to have sufficient mental capacity to understand the implications and ramifications of his or her actions. If it is unclear what a senior understands about a transfer of property or a document such as a will or trust, then the potential for wrongdoing arises. Seniors can be at risk from investment swindles, phony charities and other forms of financial fraud. They can be exploited by strangers, health aides or even friends and family members. It is important to be alert for warning signs that someone may be taking advantage of a senior’s inability to consent, and get help if such exploitation is suspected.

If elders or their loved ones suspect that a senior has been taken advantage of, they can get help from the New York State Office of Children and Family Services. Residents can call 1-800-342-3009 (press Option 6) for the phone number of their county adult services office or visit this link for more information.

 

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Comparing Different Options in Life Insurance

Wednesday, March 18th, 2015

Certain forms of life insurance can be used as an investment and estate planning tool as well. Understanding the different options, term life insurance and permanent life insurance, can help to protect your family’s economic security in the event of an unexpected death.

Term life insurance
Term life insurance is pure risk protection, and it is what many families consider to be essential. The premium is paid for a certain term, or number of years, and the death benefit is paid out only if the insured person dies before the term ends. Term life insurance is much less costly than permanent life insurance, for the simple reason that the insurance company expects to only have to pay out the death benefit for about five percent of policies.

Within term life insurance, a common type is guaranteed level premium term life insurance, in which the annual premium remains the same for the entire term of 10, 15, 20 or 30 years. Insurance companies may also offer return premium term life insurance. With this type, some of the premiums paid are returned if the policyholder outlives the term, minus fees that the insurance company retains. This type of term life insurance is more expensive.

Permanent life insurance
With permanent life insurance, there is no fixed term, and the policy is in place for the insured person’s entire life. As long as the premiums are paid, then a death benefit will be paid when the person dies. Because the insurance company knows it must pay out a benefit, the premiums it charges are much higher than for term life insurance.

Permanent life insurance is typically comprised of an insurance portion and a savings or investment portion. The insurance company invests part of the premiums paid, and the policy builds up a cash value on a tax-deferred basis. The policyholder can usually borrow against the cash value.

The basic form of permanent life insurance is known as whole life insurance. A more flexible form is known as universal or adjustable life insurance. With a universal life insurance policy, one may choose to pay premiums at different times and increase the death benefit. One may also select a fixed death benefit, or an increasing amount equal to the face value of the policy plus the cash value amount.

 

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The Cost of Aging in America

Friday, February 27th, 2015

emily newhookOur guest blogger this week is Emily Newhook, the community relations manager for the online master of public health (MPH@GW) offered through the Milken Institute School of Public Health at The George Washington University. She lives in Washington, D.C. Follow her on Twitter @EmilyNewhook.

In 2010, there were 40.3 million Americans ages 65 and older — 12 times the number in 1900. Thanks to the incredible number of medical advances made over the past century, aging Americans are living longer, in greater comfort, and in better health than ever before. But can we afford it? This is the focus of The Cost of Aging in America, a new infographic published by MPH@GW, the online MPH degree offered through the Milken Institute School of Public Health at the George Washington University.

Today, the average health care expenses for those 65 and older is $10,082. While income levels of aging Americans are increasing, they simply aren’t keeping up with the rising costs of their medical bills. It is estimated that by 2040, aging adults will spend more 45 percent of their household income on health care.

In addition, it is projected that 70 percent of those over 65 will require long-term care at some point in their lives. However, 90 percent of aging Americans want to remain in their homes for as long as possible. The costs associated with in-home care are exorbitant — and often out of bounds for many patients and families.

What does this mean? The rising costs of health care for aging Americans also affects their loved ones. The AARP estimates that family caregivers provided a whopping $450 billion in unpaid care in 2009 alone.

The MPH@GW Cost of Aging infographic also illustrates that when it comes to professional caregivers, we are not providing adequate compensation or training. It is expected that within the next 10 years, the demand for paid caregivers will grow 49 percent. While personal care aides and home health aides might be one of the fastest growing careers, they also average the lowest salaries — a measly $20,000 a year. Training is minimal — federal mandate only requires 80 hours of training to be certified as a personal care aide — and turnover is high.

So what actions can our health care system take to better support our aging population and the people who care for them?

The infographic suggests the following:

  • Invest in direct-care providers to better manage chronic disease.
  • Provide resources that help patients continue care beyond hospital walls.
  • Make it easier for providers to access patient medical records.
  • Increase end-of-life education.

What do you think?

What financial challenges do you anticipate as you or a loved one gets older? What resources do you have at your disposal? What changes would you like to see to address the rising costs of health care? Please share with us your opinions by leaving a comment below.

 

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Estate Planning Changes for 2015

Thursday, February 12th, 2015

By Erica Fitzgerald, Esq., Littman Krooks LLPErica Fitzgerald

The American Taxpayer Relief Act of 2012 (“ATRA”), enacted in January 2013, made changes to the laws governing Federal estate and gift taxes. Specifically, the Federal estate and gift tax exemption amount was set at $5,000,000, and provides for annual increases to account for inflation. As a result, as few as 1% of estates are expected to owe Federal taxes.

In 2015, the Federal estate and gift tax exemption is $5,430,000 for individuals, up from $5,340,000 in 2014. This means that individual estates valued at $5,430,000 or less will not be subject to Federal estate and gift taxes. The Federal lifetime gift exemption, which also increased to $5,430,000 in 2015, is tied to the estate tax. An individual can make gifts during his or her lifetime, but must file gift tax returns with the IRS. Specifically, an individual can give away up to $5,430,000 over the course of his entire life, over and above gifts which qualify for the annual Federal gift tax exclusion, without incurring Federal gift taxes. Dollar for dollar, however, the amount given away during the donor’s lifetime will reduce the amount that can be given away free from Federal estate taxes at the donor’s death. Individual estates whose value exceeds $5,430,000 are subject to a 40% Federal estate tax.

These two exemptions are not to be confused with the annual Federal gift tax exclusion, which will remain $14,000 in 2015. This annual exclusion allows an individual taxpayer to make gifts of up to $14,000 each to an unlimited number of recipients in a single year without having to file a Federal gift tax return on those gifts.

The Federal estate and gift tax exemptions currently available have shifted the focus of estate planning. Since most estates are now exempt from Federal estate and gift tax, estate planners focus on planning to minimize capital gains, income taxes, state estate taxes and creditor claims.

 

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Understanding the Stages of Alzheimer’s Disease

Friday, January 30th, 2015

Alzheimer’s disease starts with mild, sometimes unnoticeable symptoms that slowly have a more and more significant effect on a person’s ability to function. The rate of progression varies from a couple of years to twenty years or longer, but Alzheimer’s will eventually progress through the following stages, as described by Barry Reisberg, M.D. of the New York University School of Medicine’s Silberstein Aging and Dementia Research Center:

Littman Krooks Elder Law

Littman Krooks Elder Law

Stage 1: No symptoms of dementia are present. However, evidence shows that changes to the brain begin long before symptoms develop.

Stage 2: Very mild cognitive decline begins, which can be similar to normal changes associated with aging. The person may have trouble finding words or misplace things easily, but dementia cannot be detected in an exam.

Stage 3: Mild cognitive decline that starts to be noticeable to family or co-workers. Issues such as trouble remembering names, finding the right words, short-term memory, and planning and organization, but diagnosis may not be possible.

Stage 4: Moderate cognitive decline that can be diagnosed as early-stage Alzheimer’s disease. The symptoms are more clear in this stage, and will include short-term memory issues, trouble with mental math, difficulty performing complex tasks and changes in mood.

Stage 5: Moderately severe cognitive decline, also known as mid-stage Alzheimer’s disease. At this time, the cognitive decline is noticeable, and often the person’s ability to perform activities of daily living (ADLs) like cooking and grocery shopping begins to decline. Confusion is pronounced.

Stage 6: Severe cognitive decline occurs. Memory continues to get worse, and personality changes occur. The person may have trouble remembering their personal history, may forget the names of their spouse or caregiver and may need help with ADLs such as dressing and toileting. Changes in sleep patterns are common, and wandering can be a problem. Suspiciousness, delusions or compulsive behavior may develop.

Stage 7: Very severe cognitive decline, also known as late-stage Alzheimer’s disease. The person is no longer able to carry on a conversation, respond to the environment, or control their own movements. The person needs extensive help with ADLs, including eating and using the toilet. This stage of Alzheimer’s becomes fatal.

For more information about resources for Alzheimer’s patients and caregivers, visit http://alz.org.

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