What’s Going on in Congress with Alzheimer’s Legislation?

McKnight’s Senior Living reports in the article “Bill would aid those with younger-onset Alzheimer’s disease” that Senate Bill 901, also known as the “Younger-Onset Alzheimer’s Disease Act,” was introduced in the Senate by Senator Susan Collins (R-ME), chairman of the committee, Senator Bob Casey, ranking member, and Senators Doug Jones (D-AL) and Shelley Moore Capito (R-WV). Representatives Kathleen Rice (D-NY), Pete King (R-NY), David Trone (D-MD), Elise Stefanik (R-NY), Maxine Waters (D-CA), and Chris Smith (R-NJ) introduced the bill as H.R. 1903 in the House of Representatives.

Nutritional programs, supportive services, transportation, legal services, elder-abuse prevention and caregiver support have been available through the OAA since 1965. However, under the current law, only individuals over 60 are eligible.

“These programs would make a huge difference in the lives of individuals living with younger-onset Alzheimer’s disease, who don’t have support services available to them,” said hearing witness Mary Dysart Hartt of Hampden, ME, a caregiver to her husband, Mike, who has younger-onset Alzheimer’s.

About 200,000 individuals aged less than 65 have younger-onset Alzheimer’s disease, according to hearing witness Clay Jacobs, executive director of the Greater Pennsylvania Chapter of the Alzheimer’s Association, North Abington Township, PA.

“The need to reach everyone affected will grow significantly in the coming years,” he said.

Senator Collins was a founder and co-chair of the Congressional Task Force on Alzheimer’s Disease. She noted that she and Casey are leading this year’s OAA reauthorization efforts.

Senator Collins said she was also introducing the “Lifespan Respite Care Act” with Senator Tammy Baldwin (D-WI) Tuesday “to help communities and states provide respite care for families.” This legislation would earmark $20 million for fiscal year 2020, with funding increasing by $10 million annually to reach $60 million for fiscal year 2024. The program lets full-time caregivers take a temporary break from their responsibilities of caring for aging or disabled family members.

“Whenever I ask family caregivers, which included my own mother, about their greatest needs, the number one request that I hear is for more respite care,” Senator Collins said.

Reference: McKnight’s Senior Living (April 3, 2019) “Bill would aid those with younger-onset Alzheimer’s disease”

How are Baby Boomers Doing with Their Retirement Planning?

The baby boomers—those born between 1946 and 1964, ages 55 to 73—have about half (47%) of their group already in retirement.

CNBC’s recent article, “Baby boomers face retirement crisis—little savings, high health costs and unrealistic expectations,” says that the Insured Retirement Institute’s annual report, Boomer Expectations for Retirement, highlights the fundamental issues of too little savings, underestimating healthcare costs and unrealistic expectations of how much retirement income they’ll actually need.

Too little savings. The three “legs” of the retirement “stool” are Social Security, private pensions and personal savings. These aren’t in great shape, as the average Social Security check is $14,000 a year, and just 23% of boomers ages 56-61 expect to receive income from a private company pension plan, with only 38% of older boomers expecting a pension. Most boomers haven’t saved nearly enough in their personal savings, with 45% of boomers having absolutely nothing saved for retirement.

Underestimating health care costs. Retirees frequently underestimate health expenses, especially long-term care costs. Many people don’t understand the system: half of the survey respondents say they haven’t calculated the cost of long-term care insurance, because they say they’ll rely on Medicare. However, Medicare has no coverage for long-term care. Just eight percent of boomers say they have purchased a long-term care policy.

Underestimating retirement income. The average amount spent by Americans 65-74 is $55,000 annually. However, most baby boomers don’t believe they’ll need near that amount. To that point, about 60% say they will need less than that on which to live. Their backup plan is to downsize, go back to work, or ask their children for help.

Of those who aren’t confident they did an adequate job preparing for retirement, the top two things they wish they’d done differently were to have saved more (63%) and to have started saving earlier (58%).

Reference: CNBC (April 9, 2019) “Baby boomers face retirement crisis — little savings, high health costs and unrealistic expectations”

What You Need to Know About IRS Impersonators

You get a phone call from an IRS impersonator who says he is from the Internal Revenue Service (IRS). He says that you owe back taxes and that the authorities will come and arrest you, unless you wire money or buy prepaid debit cards immediately. Of course, these callers are not with the IRS. They are thieves. These con artists target older Americans and bilk people out of millions of dollars a year. Here is what you need to know about IRS impersonators.

We only have hard numbers for the people who have reported the theft to the Treasury Inspector General for Tax Administration (TIGTA), so the total scope of the crimes is likely much larger. The TIGTA started keeping track of these cases in late 2013. Since then, more than 15,000 people have lost nearly $75 million to these illegal schemes.

The average amount stolen is nearly $5,000 per victim. One man paid the crooks more than $500,000. The agency knows of at least one person who killed himself after realizing he had paid money to the scammers.

Thankfully, the word is getting out about these con artists, and would-be victims are reporting the impersonators. More than 2.5 million people have contacted TIGTA to report suspicious calls from people claiming to be with the IRS.

What to Do If You Get a Suspicious Phone Call

The TIGTA agents say that if you get a phone call from someone who claims to be an IRS employee, just hang up. Do not engage in conversation with the person. Do not try to pull a prank on him or blow an air horn into the phone. Get off the phone immediately.

There have been several instances in which impersonators got angry at the people they tried to victimize and took revenge. They spoofed the phone number of the person they called and reported fake accounts to the police of violent criminal activity, like an armed home invasion happening at the person’s house. This behavior is “swatting,” named for SWAT teams that respond, sometimes with deadly force.

Therefore, hang up immediately and call the authorities. If someone called but you did not fall for the scheme, report the crook at the TIGTA website, tigta.gov. Call the TIGTA hotline (800-366-4484), if the con artists got some of your money.

What to Do If You Might Owe Back Taxes

The IRS contacts people by mail about delinquent taxes. They do not start the process, by telephoning people and threatening to arrest them, throw them in jail, or kick them out of their houses. The best thing to do if you are worried about whether you owe taxes, is to go to the IRS website, irs.gov, and ask them if you owe any back taxes. If you do, they will work with you and set up a payment plan. It will not involve going to WalMart to buy prepaid debit cards for the IRS.

Keep yourself safe from impersonators and financial predators. Do not anger them, but do not ignore the situation if you actually do owe taxes. Interest and penalties can add up quickly. You will sleep better at night, if you get a payment plan and know what to expect.

Your state’s regulations might be different from the general law of this article, so it would be a good idea to talk with an elder law attorney in your area.

References:

AARP. “Meet the Lawman Who Went After IRS Imposters.” (accessed April 11, 2019) https://www.aarp.org/money/scams-fraud/info-2019/timothy-camus-interview.html

 

When Should I Start My Estate Planning?

Only 42% of Americans have a will or other estate planning documents, according to a 2017 Caring.com study. Among parents of children under 18, only 36% have created a will.

USA Today’s recent article, “Estate planning: 6 steps to ensure your family is financially ready for when you die,” explains that if you die without a will, state laws will decide what happens to your property or who should be legally responsible for minor children. That might be OK in some circumstances, but in others, a grandchild with special needs might not receive the resources you want him to have, or an estranged family member might get your house.

For some reason, people believe that if they don’t do anything, things will “work out.” They often do not. Here is what you should consider:

Create a will. This document states who should get your money and possessions, as well as who would become a guardian to your minor children, if both parents die.

A living will. This legal document states what medical procedures you want or don’t want, if you’re incapacitated and can’t speak for yourself, such as whether to continue life-sustaining treatment. Powers of attorney let you appoint someone you trust to make legal, financial and health care decisions for you, if you are unable.

Trust. This is a legal entity that holds any property you want to leave to your beneficiaries. With a trust, your family won’t have to go through probate. Trusts also let you to set up instructions for how and when property is distributed. A trustee will manage the trust. Make sure you let people know, when you’ve designated them as a trustee. Name a secondary trustee, in case the primary trustee cannot or will not serve.

Beneficiaries. If you have investment accounts and retirement plans like a 401(k), make certain that the individual you’ve listed as the beneficiary is the person you want to receive those funds.  Remember to appoint a contingency or secondary beneficiary, just in case.

Work with an experienced attorney. Estate planning can be complicated, so get some professional legal help.

End-of-life planning isn’t really fun, but it’s necessary, if you want to have full control over your life and your assets.

Reference: USA Today (April 1, 2019) “Estate planning: 6 steps to ensure your family is financially ready for when you die”

We are proud to sponsor the SLCO’s Aging Mastery Program.

We are proud to continue supporting the Salt Lake County Aging Mastery Program. We want to thank Judith Madsen for inviting us to present at the River’s Bend and Tenth East Senior Centers for another year.

Each year, we have the pleasure of meeting the wonderful people that have signed up for and attend the program. The program covers many subjects to help seniors learn how to manage their finances, health, scams, and the legal challenges they may face in the future.

Calvin presented on Advanced Planning. The presentation included wills, trusts, power of attorney, and medical directives. We often present at county and city senior centers and you may find upcoming events on our events page or by signing up for the newsletter or blog. Click here to join the newsletter and the blog.

If you are interested in learning more about the Aging Mastery Program or to sign up for it, please reach out to us or contact Judith Madsen at jhmadsen@slco.org. Click here to read more about the Aging Mastery Program.

Estate Planning with Loved Survivors In Mind

There is a strong need for clarity regarding the rules about what happens when a spouse from a second marriage, who is not an owner of the home, wants to remain in the home after the death of the owner. A kind-hearted practice is to allow the surviving spouse to remain in the home and enjoy the memories the couple shared, says The Union in the article “Estate planning from the heart.”

Giving the surviving spouse the ability to remain in the home, honors the relationship of the spouse with the decedent. It is an act of kindness. However, it does need to be made legally enforceable, in case there are any challenges. Several considerations need to be evaluated in the estate plan:

Can the surviving spouse manage the cost of the home? This may include a monthly mortgage payment, property taxes, homeowner’s dues, insurance, yard upkeep, interior and exterior maintenance and any repairs that are needed to keep the home working.

Another concern is whether the surviving spouse will continue to be able to maintain the home in the immediate and distant future.

The surviving spouse’s health, including physical and mental abilities, needs to be considered. Will the survivor be able to manage if dementia strikes, or if they are afflicted by a serious illness and left in poor health? All of these challenges need to be considered, when drafting language regarding the rights of a person to remain in the decedent’s home. For instance, if a person is not mentally competent to live on their own, health problems or the declining condition of the property may arise.

A standard of care needs to be made regarding home maintenance and update. It may get very specific, including details like pet care and clean-up, internal cleanliness, the presence of roommates or boarders and an annual or semi-annual inspection to be sure that the home remains in good condition.

The most common problem for a surviving spouse is the financial ability to remain in the home and pay the bills. One solution may be to permit the survivor to stay in the house for two years, creating a trust that can support the cost of maintaining the home during the hardest period of mourning. This gives the surviving spouse time to recover and adjust to the loss.

If the surviving spouse does not have the mental capacity to remain in the house, the choices are difficult. Ideally, both spouses are involved in planning for this possibility, long before the owner of the property dies. There is nothing pleasant or easy about this. However, it must be done. Ignoring it, makes a bad situation worse. Will the person need care, how will that care be paid for, etc.? Don’t leave it for the family to manage.

In the case of a second marriage, leaving the house to an individual who does not have the ability to manage it, creates a difficult situation, unless the decedent is able to leave enough assets in trust for the surviving spouse to maintain the home. There should be no assumption of the ability of the surviving spouse to care for the home, as an unexpected illness or accident could make a person who is healthy at the time of the signing of the agreement, change to one who needs a great deal of help.

The key to a surviving non-owner spouse is to address the “what-if’s” early on, in the context of the estate plan. A plan should be put in place, which may involve trusts or other estate planning tools, to allow the surviving spouse to remain in the home, if that is the couple’s wish, and a plan “A,” “B,” and “C” for the unexpected events that occur in the course of aging.

An estate planning attorney will be able to create a plan that makes sense for the spouse, the surviving spouse and the heirs. A family meeting will be helpful to ensure that everyone involved knows what the plan is, so there are no misunderstandings, and all can act from a place of kindness.

Reference: The Union (April 7, 2019) “Estate planning from the heart”

Having a Generous Spirit is a Good Thing for Many Reasons

Many people give generously throughout the year, for birthdays, to help children or grandchildren with college costs or just because they want to help family or friends. However, according to the New Hampshire Union Leader’s article “Lifetime (noncharitable) giving has many advantages—and not just for tax purposes.”

Lifetime giving means that you are more involved with giving, than if your giving occurs after you have died. Perhaps the best part of gifting with warm hands, is that you are able to enjoy seeing the recipient (donee) benefit from your gift. It’s a good feeling to see a person have his life enriched by your generosity.

It should also be noted that sometimes, giving away something can be a way of liberating yourself. With less property, there’s less for you to manage, insure or provide upkeep.

If you die with no will, the intestacy laws of your state will determine who gets what. With a will, you have the opportunity to make your intentions known clearly. However, since you will not be alive, you won’t be able to see the actual transfer of property. A beneficiary might decide that they don’t want an asset. It is also possible that someone who always told you that he loved the painting in the foyer of your home, may decide to sell it, instead of keeping it.

Lifetime giving lets you react to changing circumstances and provides some control over how your assets are distributed.

After your death, your property and your estate may go through probate, which in some states can be a lengthy process. Lifetime giving also reduces the costs associated with probate and estate administration, because they won’t be included in your estate at the time of death. Assets that come out of the probate estate, reduces the likelihood of estate creditors or dissatisfied heirs. Lifetime gifts are private, while probate is public.

However, there are also tax advantages. If your gifting program is structured correctly by an experienced estate planning attorney, income and estate taxes can be decreased. Generally, a gift is not taxable income to the donee. However, any income earned by the gift property or capital gain subsequent to the gift, is usually taxable. The donor holds the responsibility of paying state or federal transfer taxes imposed on the gift. There are four taxes to be aware of: the state gift tax, the state generation-skipping transfer tax, federal gift and estate taxes and the federal generation-skipping transfer tax.

Many people give, because they want to support charitable causes or help friends and family enjoy a higher quality of life. The need to reduce the size of an estate to lower estate taxes is now less prominent, since the federal estate tax exemption is so high. It should be kept in mind that the new tax laws regarding federal estate taxes end in 2025. That may seem far away, but it will be here soon enough.

Another way to give, is to help with college expenses. Any gift must be made directly to a qualified institution. Similarly, if you’d like to help a friend or family member with medical expenses, a gift needs to be made directly to the healthcare provider. Not only are these types of transfers exempt from federal gift and estate taxes, but they are outside of the $15,000 annual gift exclusion gift you can make to an individual in any given calendar year.

This is a simple overview of gifting. An estate planning attorney should be consulted to create a plan for giving, that aligns with your overall estate plan and tax management plan.

Reference: New Hampshire Union Leader (April 7, 2019) “Lifetime (noncharitable) giving has many advantages—and not just for tax purposes”

What You Need to Know, If the Next Generation Is Inheriting the Family Farm

Understanding the tax liabilities for inheriting, buying or being gifted the family farm, is critical to avoid a costly financial misstep, says Capital Press in the article “The family farm is coming to you: What’s next?” You’ll need to work closely with your estate planning attorney and CPA to make sure you understand the basis in the real estate, especially if the property is sold and taxes will need to be paid. How you inherit the property, makes a big difference in the tax bill.

If you receive the property as a gift from parents while they are alive, then you retain their income tax basis in the property. If they inherited it also, they likely have a low tax basis. Farms with a basis of $50,000 that are now worth $2 million are not unusual. If the farm is sold, there will be a capital gains tax on the difference between the basis and the present value, which could be more than $600,000.

If you inherit the farm from a parent and then sell it for $2 million, its value at the time of their death, you would not have to pay a capital gains tax. That saves $600,000.

The estate tax may not be so bad, depending upon your state’s estate tax, which is probably lower than the highest capital gains rate. If you live in Oregon, you may be eligible for the Oregon National Resource Credit, which was created to reduce Oregon estate taxes on family farms. Your estate planning attorney will be able to help you plan for and manage these taxes.

If you bought the farm from a parent’s trust or estate for $2 million, then you have a $2 million basis in the property and will probably not owe any property gains tax, if you eventually sell it for $2 million.

Just be sure that you comply with all reporting requirements. If you are in Oregon and took the Oregon National Resource Credit, then for five out of eight years after the death, the recipient of the inherited property is required to file an annual certification to keep the credit that was used to lower the estate tax. Failure to comply, means that a portion of the estate tax will have to be repaid.

If you own the farm without other family members, you should start planning your next steps. To whom do you want to pass the farm? If you want to keep the farm in the family, work with an attorney who is familiar with farm families, so that you can keep working the land and reduce any disputes.

Farmers often separate business operations from the land, with the operations held by one business and the land held by another entity. This allows the estate planning attorney to plan for succession in how operations and land are transferred to the next generation. It also provides asset protection, while you are alive.

Make sure that your farm succession plan and your estate plan are aligned. A common issue is finding that buy-sell documents don’t align with the will or trust. Some farmers use a revocable living trust as a will, so they can incorporate estate tax planning and transition the farm privately upon death.

Reference: Capital Press (March 24, 2019) “The family farm is coming to you: What’s next?”

 

Social Security Scams Keep Going

It seems like scammers have become more aggressive and a frightening tone has gotten more than one otherwise sensible person embroiled in them. Crooks are calling and telling people that their Social Security numbers have been suspended, and that they need the number and the person’s bank account information to issue a refund, says KKTV’s report “Social Security officials hope to combat scam.”

In addition to the aggressive angry voice, is the fact that the caller ID has been “spoofed” or made to appear that the person is actually calling from the Social Security Administration or another government agency.

Nancy Berryhill, Acting Commissioner of the Social Security Administration, advises people to be very cautious and not to provide anyone with information like their Social Security number or bank account information to unknown people, either on the phone or over the Internet.

The SSA has launched a public service campaign warning about these calls, in the hope that consumers will realize that the SSA never makes threatening phone calls and never asks for gift cards in payment. The campaign is being run in conjunction with the Office of the Inspector General.

The scamming calls are nationwide. The message is clear: if you get this kind of a phone call, hang up.

While the SSA does occasionally call people, it’s usually someone who is working with the agency on an on-going matter, so that the call and the agent making the call is not a stranger.

Berryhill advises people that if they are contacted by someone claiming to be from the Social Security Administration or the Office of the Inspector General, they should get the person’s name, their phone number and then hang up. If the same person calls again, hang up. It is more than likely to be a thief.

Contact the local Social Security office and find out if a call has been made to you. Never provide a caller with your Social Security number.

Some of the crooks are able to get information about people, including part of their Social Security numbers, and they call stating that they are asking only to verify the entire Social Security number. Again, if someone from Social Security was really calling, they would have that information and would not need it to be verified.

Reference: KKTV (March 22, 2019) “Social Security officials hope to combat scam”

Photo Reference: 37664183_s

How Do I Cash in My Life Insurance Policy?

There are some drawbacks to using life insurance to meet immediate cash needs, especially if you’re compromising your long-term goals or your family’s financial future. Investopedia’s recent article “Cashing in Your Life Insurance Policy” says that if other options are not available, life insurance—especially cash-value life insurance—can be a source of needed income.

Cash-value life insurance, like whole life and universal life, builds reserves through excess premiums plus earnings. These deposits are held in a cash-accumulation account within the policy. You can access cash accumulations within the policy through withdrawals, policy loans, or partial or full surrender of the policy. Another alternative is selling your policy for cash, known as a life settlement. Note that although cash from the policy might be useful during stressful financial times, you could face unwanted consequences, depending on the method you use to access the funds.

You can usually withdraw limited cash from a life insurance policy, based on the type of policy you own and the insurance company. The big advantage is that the withdrawals aren’t taxable up to your policy basis, as long as your policy isn’t classified as a modified endowment contract (MEC). However, these can have unexpected or unrealized consequences. Withdrawals that decrease your cash value, could cause a reduction in your death benefits. This is a potential source of funds you or your family might need for income replacement, business purposes or wealth preservation. Cash-value withdrawals also aren’t always tax-free. If you take a withdrawal during the first 15 years of the policy, and the withdrawal causes a reduction in the policy’s death benefit, some or all of the withdrawn cash could be subject to tax. Withdrawals are treated as taxable, to the extent that they exceed your basis in the policy.

Withdrawals that reduce your cash surrender value could mean higher premiums to maintain the same death benefit, or the policy could lapse.

If your policy is determined to be an MEC, withdrawals are taxed, according to the rules applicable to annuities–cash disbursements are considered to be made from interest first and are subject to income tax and possibly a 10% early-withdrawal penalty, if you’re under age 59½ at the time of the withdrawal. Policy loans are treated as distributions, so the amount of the loan up to the earnings in the policy will be taxable and could also be subject to the pre-59½ early-withdrawal penalty.

Surrendering the policy can provide the cash you need, but you’re relinquishing the right to the death-benefit protection. You can sell your life insurance policy to a life settlement company in exchange for cash. The new owner will keep the policy in force (by paying the premiums) and get a return on the investment, by receiving the death benefit when you die.

To qualify for a life settlement, the insured must be at least 65 years old, have a life expectancy of 10 to 15 years or less, and usually have a policy death benefit of at least $100,000. However, the taxation of life settlements is complicated. The gain in excess of your basis in the policy is taxed to you as ordinary income. In addition to the tax liability, life settlements usually include up to a 30% in commissions and fees, which reduces the net amount you receive.

If you are interested in learning more about tax planning or how your life insurance policy can affect your estate plan, speak with your local estate planning or elder law attorney.

Reference: Investopedia (January 9, 2019) “Cashing in Your Life Insurance Policy”