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May 2008
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Long-Term Care Issues
Planning For Today And Tomorrow
These days, it is common for many people to live 20 or more years beyond the normal retirement age (NRA). As the years go by, financial and estate plans that once seemed satisfactory may need to be reevaluated and adjusted. Some areas of special concern are asset management, health care, and living arrangements.
YourWill
A will is a formal, legal document instructing your survivors in the settlement of your estate. Often, the prospect of writing a will brings up feelings of discomfort. And yet, devising a will is one of the most important factors in estate planning, and one that should promote feelings of security. Having a will in place means that heirs will be provided for, and your distribution wishes will be met. Like many people, have you postponed the task of writing a will? Or, is it time to review a will drafted years ago?
Composing a will---and keeping it up-to-date---helps to ensure that you control how your estate is divided. However, an estate that is not covered by a will (also known as an intestate estate) will bring into effect your state's intestacy rules. These rules govern how your estate will be divided and by whom. Some people may believe their estate is too minor to need a will, but even if you believe this the case, you should consider writing one anyway. The reason is simple: If you die without a will, you automatically forfeit the chance to direct the dealings of your estate. In addition to facilitating bequests, a will is an opportunity for you to designate your own executor, guardians for minor children, and other fiduciaries.
Managing Assets and Making Decisions As you get older, you may no longer want to continue managing your assets, and may wish to transfer that responsibility to others. A variety of arrangements are possible to achieve this objective, among them:
1) Revocable and Irrevocable Trusts
. If you want to retain control over property, while delegating responsibility for daily management to others, you may want to consider a revocable trust.
This arrangement allows you to monitor the management of your assets, yet offers the flexibility of changing the trust as experience and circumstances suggest. As added protection, a revocable trust may remain unfunded as long as you are legally competent. Alternatively, if you wish to relinquish ownership of assets altogether, you could establish an irrevocable trust. Trusts can also be used to avoid probate, minimize your potential estate tax liabilities, or to help fund the payment of estate taxes.
2) Durable Power of Attorney.
This allows you to appoint a trusted relative or friend as a representative in legal and financial decision making. The powers granted may be limited or broad in scope, and may vary from state-to-state. Also, consider drafting a living will and health care proxy. A living will is a medical directive, written in advance, that sets forth your preference for medical treatment in the event you are unable to direct your own health care. A health care proxy allows you to appoint someone to make medical decisions on your behalf.
Long-Term Care
There are many long-term care options for those who are unable to live independently, but are not yet in need of full-time care in a nursing home. Assisted living facilities (ALFs) provide a protected environment with a semblance of independent living. Generally, some daily meals are provided in a communal dining room and minimal assistance (such as with washing and dressing or with medications) is available. Continuing care communities offer a combination of independent living and health care support. If family members work, adult daycare centers, either publicly or privately funded, can provide social opportunities and activities to relieve boredom and provide companionship. In some cases, home health care may be the solution. A financial professional can help you determine whether longterm care insurance (LTC) may be right for your situation.
Periodically Review Plans
You should periodically review your existing financial arrangements, because your needs will change with time. In the transition to the later stages of life, fresh needs and concerns, such as those involving asset management, health care, and living arrangements, may call for revisiting plans made at an earlier age.
(Matt V. Fiamengo is a qualified member of Million Dollar Roundtable as he has helped hundreds of seniors navigate their financial affairs. He is a Chartered Life Underwriter and a Registered Health Underwriter. For an interview or details on this issue, phone him at (775) 851- 8838 or e-mail: MattProClu@earthlink.net)