Paul R. Tierney Law

Planning for Digital Assets as Part of Estate Planning

“Few of us plan our legacy for when we’ve died and how we’ll live on in the lives of others.”

As technology continues to advance and we are increasingly living more of our lives online, it’s time to think about what our digital legacy will be, says The Scotsman in the article “The ghost in the machine—what will happen to online you after death?” In our increasingly digital world, we’ve shared the news almost immediately when a celebrity dies, grieved when our online friends die and been touched by stories of people online who we have never met in RL — Real Life.

Most of us have digital assets and online accounts. It’s time to think about what will happen to them when we die.

Estate planning attorneys are now talking with clients about their digital assets and leaving specific instructions about what to do with these online accounts and social media, after they pass.

There’s a trend of creating video messages to loved ones and posting them online for the family to see after they pass. Facebook has a feature that allows the page owner to set a legacy contact to manage the account, after the account owner has died. Other technologies are emerging to allow you to gather your digital assets and assign an individual or individuals to manage them after you die.

It is now just as important to think about what you want to happen to your digital assets, as it is to your tangible, earth-bound assets when you die. What’s also important: considering what you want to happen to your data, how accessible and enduring you want it to be and how it will be protected.

People in their older years have seen amazing leaps and changes in technologies. We’ve moved from transistor radios to VHS to DVD to Blu-Ray. We’ve gone from land line home phones to smart phones that have the same computing power or more than a desktop. The first social media site was launched in 1997, and websites like Myspace have come and gone.

Will the current websites and software still be available and commonly used in five, ten, fifty, or one hundred years? It’s impossible to know what the world will look like then. However, unless a plan is made for digital legacies, it’s unlikely that your digital legacy will be accessible to others in the near and far future.

Here’s the problem: even if your executor does succeed in memorializing your Facebook page, will there be things on the page that you don’t want anyone to see after you’ve gone? There’s a wealth of data on social media to sift through, including items you may not want to be part of your digital legacy.

Consider the comparison to people who lived during previous ages. We may not be able to see their lives online, but they have left behind physical artifacts—letters, diaries, photographs—that we can hold in our hands and that tell us their stories. These artifacts will survive through the generations.

A digital estate plan can ensure that your data is managed by someone you trust. Talk with your estate planning attorney to learn how to put such a plan in place, when you are creating your legacy. Your last will and testament is a starting point in today’s digital world.

Reference: The Scotsman (May 16, 2019) “The ghost in the machine—what will happen to online you after death?”

Continuing to Work without a Retirement Plan, No Plan at All

“Cleo Parker had a simple plan before retiring: She would work well into her 60s as a marketing analyst in the automotive business. But recently, she has been searching for a Plan B.”

The problem with having no set date to wrap up your working life, is that things don’t always go as planned. For Ms. Parker, a long-time job with an ad agency ended when she turned 50. She worked a series of short-term contract and full-time positions for a decade, and her last full-time job ended in 2018. The problem, according to the article “Why Working Till Whenever Is a Risky Retirement Strategy” from The New York Times, comes when workers run up against age discrimination, being overqualified for many jobs and having to convince employers that you are really, truly, okay with being paid far less than you were paid in your prior career.

In other words, it’s fine to plan to postpone retirement and keep working. However, you also need a backup plan, if things don’t go the way you planned.

Today’s older American understands that working longer is a better way to secure his or her retirement. A study from the Employee Benefit Research Institute found that 33% of workers expect to retire between the ages of 65 and 69, and 34% plan to retire at age 70, or beyond, or never.

Another study, from the Center for Retirement Research at Boston College, found that 37% of workers retired earlier than planned, and that the odds of their success fell as the goal became more ambitious. Of the 21% who planned to work to age 66 or later, 55% failed to reach that target date.

The most common causes of early retirement are not choice, but health problems and job losses. Other reasons may be age discrimination, which makes it difficult for older workers to get new jobs. The quality of work matters too. Being motivated to work and feeling that you are accomplishing something matters as much to the older worker, as it does to the younger worker.

Labor-force participation rates for workers 62 and older have been on the rise for the last 25 years, but those increases are mostly among better educated workers. College grads tend to be healthier, don’t work at physically demanding jobs, and are valued by their employers.

Working longer has another benefit: it allows you to delay Social Security claims, which increases monthly benefits. It also can mean more years of saving for retirement and fewer years of being dependent upon retirement savings.

However, even in a healthy employment market, counting solely on working until “whenever” to make a retirement plan work is a risky strategy. For the older worker, the chances of a full economic recovery to prior salary levels are not great. Early retirement, when it’s not by choice, can also lead to significant drains on retirement funds.

The most popular ages to retire — 62 and 65 — are tied to the first year of eligibility for Social Security (62) and Medicare (65). But neither of those ages maximizes an individual’s Social Security benefit.

Reference: The New York Times (May 16, 2019) “Why Working Till Whenever Is a Risky Retirement Strategy”

What Everyone Wants to Know about Retirement

“Google recently unveiled the 10 questions Americans ask most about retirement.”

It probably comes as no surprise that the question asked the most about retirement is simply, “How much money do I need to retire?” That and nine other questions are a good indicator of what is on most American’s minds, when it comes to retirement, says Next Avenue in the article “The No. 1 Question Americans Ask About Retirement.” The other nine questions:

2. How can I retire early?
   3. When can I retire?
   4. What is the right retirement age?
   5. How much to save for retirement?
   6. How to save for retirement
   7. How to retire at 50
   8. How to retire?
   9. What is full retirement age for Social Security?
   10. Where to retire?

Let’s look at the first question. It’s not an easy one to answer, because how much you need to retire depends on many different factors. For years, the magic number was $1 million. Not that everyone reached that goal, but that was the goal. But as we are living longer due to advances in medical care, and the higher cost of medical care and higher living costs in general, that $1 million may not last as long as it used to.

One personal finance guru now says that $5 million is the magic number. Others think that number is far too high, but that $1 million may not be enough.

Another formula is that you should have six times your starting salary saved at age 50, and that when you reach 67, you should have ten times your starting salary saved.

The real answer: it depends. Where you live, how you spend, market returns, how long you live and other factors all have to be considered. Some of these you can control, some you cannot. However, regardless of what rule you follow for retirement, a few things are agreed upon by all:

• Start saving early and make regular contributions to retirement accounts.
• Set up automatic enrollment and auto-escalation of your retirement plan.
• Cut out unnecessary expenses.
• Bump up retirement contributions every time you get a raise.

If you want to retire early, you’ll need to supersize some of those rules, like dramatically cutting out all but the essentials when it comes to spending and ramp up savings.

All this interest in “how much” comes at a time when a staggering number of Americans are completely unprepared for retirement. About 60% of working age people don’t have any retirement assets from either an employer-sponsored 401(k) or similar plan, an IRA, or a defined benefit plan.

Reference: Next Avenue (May 7, 2019) “The No. 1 Question Americans Ask About Retirement.”

Queen of Soul’s Handwritten Wills Raise More Estate Problems

“Aretha Franklin's handwritten wills might not pass muster in some states. However, a court in Michigan, where she died, is more likely to take them seriously, experts say.”

The three handwritten wills found hidden in Aretha Franklin’s suburban Detroit home in May, may not be easy to figure out, says NBC News in the article “Aretha Franklin’s handwritten wills raise tangled legal questions.” There were a total of 16 pages, filled with scratch-outs, notes in the margins and the occasional digression.

In many states, these documents wouldn’t even qualify as wills, because they were not notarized and there is no evidence of any witnesses to Franklin’s signature. However, the iconic singer died in Michigan, and courts there are more likely than other states to take these documents seriously. Every state has its own laws about wills and estate documents. Michigan allows for “holographic” or handwritten wills, as long as they are dated and signed and as long as the “material portions are in the testator’s handwriting.”

One attorney who reviewed the scanned copies that were posted online, remarked that the wills seem to be dated and each page seems to be signed. One of the wills is dated March 2014, and two are dated 2010. However, legal experts have said it’s not quite clear whether the wills are in Franklin’s handwriting.

In that case, the probate court or Franklin’s family would have to seek out a handwriting expert or a forensic document examiner to study the handwriting. The examiner would need to see a more recent handwriting sample, to see if the characteristics of the handwriting match. However, there’s a lot of room for skepticism of any handwriting analysis. There’s no precise means of measuring and assessing handwriting, so there are doubters.

Another potential problem: the probate court would have to be certain that the documents were intended to be treated as a last will and testament. If there’s any doubt, verifying the pages will become more challenging. How can the court be sure that she meant the documents to be her will, or if she was just gathering her thoughts? The probate court would need to study the content of the documents and consider the circumstances in which they were written.

Franklin was 76 when she died in 2018 of pancreatic cancer. At the time, lawyers and family members said that she did not have a will. Her attorney, David Bennett, who had been her lawyer for four decades, filed the wills in a probate court in Michigan. He told a judge that he was not certain whether they were legal under state law.

The wills have been shared with Franklin’s four sons or their attorneys, but no decision had been reached regarding whether they were valid. In a statement, the estate said that two of the sons had objected to the wills.

Franklin is not the first celebrity to die without a will, and she certainly won’t be the last. James Brown’s estate has been tied up due to probate, family and copyright issues, since his death in 2006.

These high-profile cases of people who die without wills should encourage the rest of us to make sure that our estate plans are in place. We may not have amassed the wealth or possessions these celebrities have, but even our “normal” estates will create unnecessary headaches, expenses and strife for our families, if we do not prepare in advance for our own passing.

Speak with an experienced estate planning attorney and help your family avoid any additional stress after your passing, with a complete estate plan.

Reference: NBC News (May 23, 2019) “Aretha Franklin’s handwritten wills raise tangled legal questions”

Retirement Account Millionaires are Back

“The number of people with $1 million or more in their 401(k) or IRA increased in the first quarter.”

They are the triathletes of retirement savers — people who have saved and invested their way into having millions in their workplace retirement accounts. Their numbers may be small, and in some cases, their earnings aren’t that big, but their retirement accounts are giant-sized.

As reported in the Washington Post article, “Want to be a 401(k) millionaire? Here’s what it takes,” the number of retirement account millionaires sank a little in the volatile markets of year-end 2018. Fidelity Investments reported that for the fourth quarter of 2018, there was a 28.6 percent drop in the number of 401(k) millionaires in its plans. However, they’ve come back.

The company, the largest administrator of workplace retirement accounts, reported that the number of people with $1 million or more in their 401(k) plans increased to 180,000 in the first quarter of 2019, up from 133,800 reported in the last quarter of 2018.

You don’t have to have your retirement account with Fidelity to join the ranks of retirement account millionaires, but there are some investment practices to learn from them.

The power of time. These people started saving early in their careers, most of them for at least 30 years. They also aren’t earning six-figure incomes. It helps if you contribute as much as the IRS allows. The maximum amount of money workers may contribute during 2019 is $19,000. The 50-and-older set can contribute an additional $6,000.

Steady as she goes. Consistency is key. These millionaires continued to save, even as they purchased homes and raised children. They contributed at least 15 percent to their plan. That may be a combination of what they are putting in and an employee match, but that seems to be a key number. If your employer offers a “automatic increase” where your percentage increases every year, sign up for it.

Always make the match. Don’t leave free money on the table. If there’s a company match, 401(k) millionaires take full advantage, always contributing enough to get the match.

Go for the long run. That means taking some risk. Most of these 401(k) millionaires invest in equity mutual funds. They understand that one of the biggest risks to their retirement savings is inflation.

Stay calm and keep saving. The retirement account millionaires don’t panic, when markets get volatile. They also don’t let falling stock prices deter them from buying equities. Instead, they see tumbling markets like a sale: an opportunity to buy at a lower price.

Can’t imagine yourself taking these steps, or think it’s too late? Don’t give up! Remember, to be a triathlete, you have to push yourself past your physical limits. The same is true, if you want to become a 401(k) millionaire. You’ve got to push yourself to save more and don’t fear the stock market.

Reference: Washington Post (May 20, 2019) “Want to be a 401(k) millionaire? Here’s what it takes,”

Even a Late Start toward Retirement is Better than None at All

“Some people start preparing for retirement as soon as they get their first part-time jobs in high school. Others wait until they pay off their largest bills, like house loans, car loans and student loans.”

There are also people who wait until they become senior citizens to begin planning for retirement. That’s a little on the late side, but the important thing, says the article “Retirement Planning: Start now to help Social Security, Medicare” from Martinsville Bulletin, is to get started. That’s better than doing nothing.

It’s easier if you start earlier. Let’s consider the high school student who diligently puts away 10% of a $7.25 per hour gross minimum wage earning for a year on an average 20-hour work week. That’s $750 into a retirement plan after one year. If that student never went to college, never learned a trade, got a raise or a promotion, they would still have $34,600 in personal savings in 46 years. It’s not a lot, as retirement savings go, but it’s better than nothing.

If the same high school student put those savings into an Individual Retirement Account (IRA), more would have been saved. The more time your money has to grow through compounding, the more money you’ll have.

Saving a little money every month could make a big difference later on. This year, the average monthly Social Security benefit rounds out at about $1,460 per person, calculated by combining a worker’s highest paid years in the workplace. That’s not enough for retirement. The answer? Start saving early.

It is not as easy to build a nest egg in a few years, but it’s possible.

Many people don’t wake up to the reality of retirement, until they reach age 62. There’s still time to plan. They can put money into IRA accounts, and at age 62 they can save as much as $7,000. Those IRA contributions count as tax deductions.

Roth IRAs are a little more flexible, but there are no tax deductions with contributions. On the plus side, when money is withdrawn, you’re not paying taxes on the withdrawals.

Another important planning point for seniors: if you’ve had health issues, it’s a good idea to keep working to maintain your employee health insurance. The healthier you are, the lower your health insurance costs will be during retirement. However, health costs do tend to increase with age, so that has to be factored into your retirement planning.

For people who take a lot of medication to control chronic conditions, they’ll need to look into health insurance outside of the workplace. That usually means Medicare. Most seniors are eligible for free Medicare hospital insurance, which is Part A of a four-part option, if they have worked and paid Medicare taxes.

Part A helps pay for inpatient care in a hospital or skilled nursing facility after a hospital stay, some home health care and hospice care. Part B helps to pay for doctors and a variety of other services. Part C allows HMO, PPO and other health care organizations to offer health insurance plans for Medicare beneficiaries. Part D provides prescription drug benefits through private insurance companies.

The Social Security Administration advises people to apply for Medicare three months before they celebrate their 65^th birthday, regardless of whether they plan to start receiving retirement benefits right away.

Whether you’re 26 or 56, you need to plan for retirement. You also need to have an estate plan, and that means making the time to meet with an experienced estate planning professional to discuss your life and your retirement plans. You’ll need their guidance to create a will and other documents.

Advance planning will always be better than waiting until the last minute, for retirement and estate planning.

Reference: Martinsville Bulletin (May 17, 2019) “Retirement Planning: Start now to help Social Security, Medicare”

Financial Scams Targeting Seniors: How To Protect Yourself

“Billions of dollars are lost to financial scams every year, and seniors are particularly at risk. One widely cited study found that older Americans lose $36 billion a year to elder financial abuse. This includes exploitation, fraud and trust abuse.”

It’s scary to think about. A time in life when people have the most assets under their care, is also the time that aging begins to take its toll on their bodies and their cognitive abilities. The legions of individuals actively preying on seniors to take advantage of them seems to be growing exponentially. What can you do?

Marketplace offers tips on how to best protect yourself and loved ones from scammers in its article “Concerned about financial scams? Here’s your guide.”

Stay in touch with family members, especially if they have lost loved ones to death or divorce. Isolation makes seniors vulnerable to scammers.

Try not to be judgmental and be empathetic, if someone reveals that they have been scammed. Seniors who have been scammed are embarrassed and fearful.

Talk about the scams that you have heard about with loved ones. They may not know about the scams, and this may give them better awareness when the call comes.

If anyone in the family calls with an urgent request for money—often about a grandchild who is in trouble overseas or a fee for a prize that needs to be claimed immediately—pause and tell them that you need time to consider it.

Don’t send or wire money to anyone you don’t know. Gift cards from retailers, Google Play, iTunes or Amazon gift cards are often used by scammers to set up fraudulent transactions.

Once one scammer has nailed down contact information for a victim, they are more likely to be contacted by other scammers. If a loved one is getting calls at all hours of the day, they may be on a list of scam prospects. Consider changing the number, even though that is a hassle. The same goes for email addresses.

You can prevent scams, by talking with people you trust about your financial goals. Talk with an estate planning attorney about creating an advance medical directive and medical power of attorney, then do the same for finances. A power of attorney for your finances allow someone who you know and trust to make financial decisions for you, if you become incapacitated, by illness or injury.

There are different powers of attorney:

General: A designated person can control parts of your financial life. When you return to normal functioning, the power of attorney ends.

Durable: This power of attorney remains in effect, if you become incapacitated.

Springing: This power of attorney is triggered by a life event, like the onset of dementia, an accident or disease, makes you mentally diminished or incapacitated. Certain states do not permit this type of power of attorney, so check with your estate planning attorney.

Reference: Marketplace (May 16, 2019) “Concerned about financial scams? Here’s your guide”

Estate planning attorneys see them all the time: the mistakes that people make when they try to create an estate plan or a will by themselves. They learn about it, when families come to their offices trying to correct mistakes that could have been avoided just by seeking legal advice in the first place. That’s the message from the article “Five big estate planning ‘don’ts’” from Dedham Wicked Local.

Here are the five estate planning mistakes that you can easily avoid:

Naming minors as beneficiaries. Beneficiary designations are a simple way to avoid probate and be certain that an asset goes to your beneficiary at death. Most life insurance policies, retirement accounts, investment accounts and other financial accounts permit you to name a beneficiary. Many well-meaning parents (and grandparents) name a grandchild or a child as a beneficiary. However, a minor is not permitted to own an asset. Therefore, the financial institution will not name the minor child as the new owner. A conservator must be appointed by the court to receive the asset on behalf of the child and they must hold that asset for the minor’s benefit, until the minor becomes of legal age. The conservator must file annual accountings with the court reflecting activity in the account and report on how any funds were used for the minor’s benefit, until the minor becomes a legal adult. The time, effort, and expense of this are unnecessary. Handing a large amount of money to a child the moment they become of legal age is rarely a good idea. Leaving assets in trust for the benefit of a minor or young adult, without naming them directly as a beneficiary, is one solution.

Drafting a will without the help of an estate planning attorney. The will created at the kitchen table or from an online template is almost always a recipe for disaster. They don’t include administrative provisions required by the state’s laws, provisions are ambiguous or conflicting and the documents are often executed incorrectly, rendering them invalid. Whatever money or time the person thought they were saving is lost. There are court fees, penalties and other costs that add up fast to fix a DIY will.

Adding joint owners to bank accounts. It seems like a good idea. Adding an adult child to a bank account, allows the child to help the parent with paying bills, if hospitalized or lets them pay post-death bills. If the amount of money in the account is not large, that may work out okay. However, the child is considered an owner of any account they are added to. If the child is sued, gets divorced, files for bankruptcy or has trouble with creditors, that bank account is an asset that can be reached.

Joint ownership of accounts after death can be an issue, if your will does not clearly state what your intentions are for that account. Do those funds go to the child, or should they be distributed between heirs? If wishes are unclear, expect the disagreements and bad feelings to be directly proportionate to the size of the account. Thoughtful estate planning, that includes power of attorney and trust planning, will permit access to your assets when needed and division of assets after your death in a manner that is consistent with your intentions.

Failing to fund trusts. Funding a trust means changing the ownership of an asset, so the asset is owned by the trust or designating the trust as a beneficiary. When a trust is properly funded, assets funding the trust avoid probate at your death. If your trust includes estate tax planning provisions, the assets are sheltered from estate tax at death. You have to do this before you die. Once you’re gone, the benefits of funding the trust are gone. Work closely with your estate planning attorney to make sure that you follow the instructions to fund trusts.

Poor choices of co-fiduciaries. If your children have never gotten along, don’t expect that to change when you die. Recognize your children’s strengths and weaknesses and be realistic about their ability to work together, when deciding who will make financial decisions under a power of attorney, health care decisions under a health care proxy and who will best be able to settle your estate. If you choose two people who do not get along, or do not trust each other, it will take far longer and cost more to settle your estate. Don’t worry about birth order or egos.

The sixth biggest estate planning mistake people make, is failing to review their estate plan every few years. Estate laws change, tax laws change and lives change. If it’s been a while since your estate plan was reviewed, make an appointment to meet with your estate planning attorney for a review.

Reference: Dedham Wicked Local (May 17, 2019) “Five big estate planning ‘don’ts’”

Suggested Key Terms: Estate Planning, Will, Joint Ownership, Trusts, Beneficiaries, Co-Fiduciaries, Executors, Power of Attorney, Health Care Proxy

 

 

Financial Scams Targeting Seniors: How To Protect Yourself

“Billions of dollars are lost to financial scams every year, and seniors are particularly at risk. One widely cited study found that older Americans lose $36 billion a year to elder financial abuse. This includes exploitation, fraud and trust abuse.”

It’s scary to think about. A time in life when people have the most assets under their care, is also the time that aging begins to take its toll on their bodies and their cognitive abilities. The legions of individuals actively preying on seniors to take advantage of them seems to be growing exponentially. What can you do?

Marketplace offers tips on how to best protect yourself and loved ones from scammers in its article “Concerned about financial scams? Here’s your guide.”

Stay in touch with family members, especially if they have lost loved ones to death or divorce. Isolation makes seniors vulnerable to scammers.

Try not to be judgmental and be empathetic, if someone reveals that they have been scammed. Seniors who have been scammed are embarrassed and fearful.

Talk about the scams that you have heard about with loved ones. They may not know about the scams, and this may give them better awareness when the call comes.

If anyone in the family calls with an urgent request for money—often about a grandchild who is in trouble overseas or a fee for a prize that needs to be claimed immediately—pause and tell them that you need time to consider it.

Don’t send or wire money to anyone you don’t know. Gift cards from retailers, Google Play, iTunes or Amazon gift cards are often used by scammers to set up fraudulent transactions.

Once one scammer has nailed down contact information for a victim, they are more likely to be contacted by other scammers. If a loved one is getting calls at all hours of the day, they may be on a list of scam prospects. Consider changing the number, even though that is a hassle. The same goes for email addresses.

You can prevent scams, by talking with people you trust about your financial goals. Talk with an estate planning attorney about creating an advance medical directive and medical power of attorney, then do the same for finances. A power of attorney for your finances allow someone who you know and trust to make financial decisions for you, if you become incapacitated, by illness or injury.

There are different powers of attorney:

General: A designated person can control parts of your financial life. When you return to normal functioning, the power of attorney ends.

Durable: This power of attorney remains in effect, if you become incapacitated.

Springing: This power of attorney is triggered by a life event, like the onset of dementia, an accident or disease, makes you mentally diminished or incapacitated. Certain states do not permit this type of power of attorney, so check with your estate planning attorney.

Reference: Marketplace (May 16, 2019) “Concerned about financial scams? Here’s your guide”

Suggested Key Terms: Elder Financial Abuse, Scams, Trust Abuse, Exploitation, Power of Attorney, General, Durable, Springing

 

 

Even a Late Start toward Retirement is Better than None at All

“Some people start preparing for retirement as soon as they get their first part-time jobs in high school. Others wait until they pay off their largest bills, like house loans, car loans and student loans.”

There are also people who wait until they become senior citizens to begin planning for retirement. That’s a little on the late side, but the important thing, says the article “Retirement Planning: Start now to help Social Security, Medicare” from Martinsville Bulletin, is to get started. That’s better than doing nothing.

It’s easier if you start earlier. Let’s consider the high school student who diligently puts away 10% of a $7.25 per hour gross minimum wage earning for a year on an average 20-hour work week. That’s $750 into a retirement plan after one year. If that student never went to college, never learned a trade, got a raise or a promotion, they would still have $34,600 in personal savings in 46 years. It’s not a lot, as retirement savings go, but it’s better than nothing.

If the same high school student put those savings into an Individual Retirement Account (IRA), more would have been saved. The more time your money has to grow through compounding, the more money you’ll have.

Saving a little money every month could make a big difference later on. This year, the average monthly Social Security benefit rounds out at about $1,460 per person, calculated by combining a worker’s highest paid years in the workplace. That’s not enough for retirement. The answer? Start saving early.

It is not as easy to build a nest egg in a few years, but it’s possible.

Many people don’t wake up to the reality of retirement, until they reach age 62. There’s still time to plan. They can put money into IRA accounts, and at age 62 they can save as much as $7,000. Those IRA contributions count as tax deductions.

Roth IRAs are a little more flexible, but there are no tax deductions with contributions. On the plus side, when money is withdrawn, you’re not paying taxes on the withdrawals.

Another important planning point for seniors: if you’ve had health issues, it’s a good idea to keep working to maintain your employee health insurance. The healthier you are, the lower your health insurance costs will be during retirement. However, health costs do tend to increase with age, so that has to be factored into your retirement planning.

For people who take a lot of medication to control chronic conditions, they’ll need to look into health insurance outside of the workplace. That usually means Medicare. Most seniors are eligible for free Medicare hospital insurance, which is Part A of a four-part option, if they have worked and paid Medicare taxes.

Part A helps pay for inpatient care in a hospital or skilled nursing facility after a hospital stay, some home health care and hospice care. Part B helps to pay for doctors and a variety of other services. Part C allows HMO, PPO and other health care organizations to offer health insurance plans for Medicare beneficiaries. Part D provides prescription drug benefits through private insurance companies.

The Social Security Administration advises people to apply for Medicare three months before they celebrate their 65^th birthday, regardless of whether they plan to start receiving retirement benefits right away.

Whether you’re 26 or 56, you need to plan for retirement. You also need to have an estate plan, and that means making the time to meet with an experienced estate planning professional to discuss your life and your retirement plans. You’ll need their guidance to create a will and other documents.

Advance planning will always be better than waiting until the last minute, for retirement and estate planning.

Reference: Martinsville Bulletin (May 17, 2019) “Retirement Planning: Start now to help Social Security, Medicare”

Special Needs Families and Special Needs Trust

“It's not just a matter of navigating day by day: Parents need the foresight to plan for their child's future—especially for when they will no longer be around.”

If nothing prepares a person for parenting, consider how much harder it is to be prepared to raise a child with special needs. Parents often sink in uncharted waters. It’s not just a matter of negotiating all of the day-to-day details, says Newsday in the article “Be ‘biggest advocate’: Parents plan future for adult children with special needs.” Special needs families need to plan for what will happen as the parents age, become ill or die.

As an adult child with disabilities ages, eventually there will be medical issues. If the parents are gone, who will be able to make medical decisions? Where they live, who will oversee their finances and who will be there for them to rely on in a parenting role? There are many questions and they all need answering.

For one family, raising their special needs daughter was a full-time challenge. Their daughter, now 24, has autism. The couple sought out others in their same situation, noting that often even their own family members could not relate to their daily experiences.

It takes a village for special needs families to do more than survive. That includes estate planning and elder law attorneys with deep experience in special needs planning, social workers, therapists and medical professionals. Here’s what needs to be top-of-mind:

Don’t wait to plan. Families often think they have time, but you never know when unexpected events occur. Have a plan in place for legal guardianship, finances and health care.

Work with experienced legal help. You want to work with an attorney who has a great deal of experience and knowledge in special needs law and estate planning. Someone who dabbles on the side of a real estate practice is not the right professional for the task.

Stay in control. When children turn 18, they are adults. Parents and guardians will need to go through Surrogate’s Court to become the child’s guardian. Unless that is done, the parents and guardians will have no legal rights about the child’s medical, financial or other affairs. A successor guardian also needs to be named, so that when the parents are no longer able to serve, someone is in place to care for the child.

Create a Special Needs Trust. A trusts attorney with experience in Special Needs planning will be able to work with the family to create and structure a Special Needs Trust (SNT). A disabled person usually cannot earn enough to support himself, or the caregiver who remains at home to care for them and care-related expenses. The SNT helps to meet current needs and plan for future needs. The trust is used to preserve eligibility for any means-tested state and federal benefits. It allows the individual to have a better quality of life, by providing for expenses that are not covered by their benefits.

It’s very important that no assets be left to the child in an inheritance. Any assets must be placed in the trust. A well-meaning relative could put their eligibility for aid in jeopardy.

Parents and guardians also need to name a trustee and a successor trustee. The person needs to be competent, good with money management, organized and focused on caring for the loved one. It cannot be an emotional decision.

Parents of special needs children are advised to create a Letter of Intent, a narrative that outlines their child’s likes and dislikes, strengths and weaknesses, activities and friends they enjoy and other details that will help them to continue an enjoyable life, when their parents are gone.

Parent’s own estate planning must be done with an eye to maintaining the SNT and caring for their other children. This is a case when assets need to be distributed in a realistic and fair manner. If one sibling is the successor trustee, for example, they may need a larger portion of an estate to help care for their sibling.

Reference: Newsday (May 9, 2019) “Be ‘biggest advocate’: Parents plan future for adult children with special needs.”

Keep Calm and Don’t Change Your Social Security Plan

“The annual report on Social Security, issued by its trustees last month, forecasts that the program’s costs will exceed its income next year for the first time since 1982.”

Lacking any kind of reform, the Social Security trust fund will be depleted by 2035, and the system won’t be able to pay out all of the benefits that are expected—but don’t panic, says Barron’s in the article “No, Don’t Take Social Security Early. Yes, Even Though It’s Running Out of Money.”

Despite the headlines, it’s not as if the entire Social Security Administration is falling to bits. It’s not.  Whatever reforms Congress enacts, are not likely to be retroactive. This may be an issue for younger people, but not for people in their 50s and 60s.

Social Security benefits can start as early as age 62, the full retirement age, which depends upon your year of birth, or at age 70. The traditional thinking is that the best time to take benefits is when you are 70, assuming you have a long life expectancy and don’t have any urgent need for the money.

That’s because the size of your benefit grows while you delay taking benefits. A 62-year-old misses out on as much as 27.5% monthly, by not waiting until their full retirement age. Those benefits grow by 8% a year until age 70. We don’t know how long we are going to live, but if we can wait, the greater benefit outweighs the risk of change to the Social Security program for Congress.

The Social Security report estimates that even if Congress does nothing and the trust fund is allowed to run out of money in 2035, the ongoing revenue built into the system will still finance nearly 80% of the currently promised benefits.

To be conservative, assume that your Social Security benefits may decrease a little. But they’re not going away anytime soon.

It’s more likely that Congress will increase the Social Security taxes, reduce benefits for the wealthy or increase retirement age. Any restrictions on retirees are likely to be phased in gradually.

Baby Boomers are a massive voting block and one reason Social Security is projected to run short, is that this generation is approaching retirement. If Congress does not act to protect benefits, there will be many angry voters and they’ll definitely vote with this issue in mind.

Stay the course, experts advise. Do the planning you need to do for your retirement finances and consider that these headlines have come and gone in the past.

While you’re planning for the future, don’t neglect your estate plan. That includes the creation and update of a last will and testament, power of attorney and healthcare power of attorney. Depending upon your family’s situation, it might also include trusts or other estate planning strategies. Meet with an estate planning attorney to prepare for your future and protect your family.

Reference: Barron’s (May 19, 2019) “No, Don’t Take Social Security Early. Yes, Even Though It’s Running Out of Money.”