What are the Details of the New SECURE Act?

The SECURE Act proposes a number of changes to retirement savings. These include changes to parts of IRAs and 401(k)s. The Act is expected to be passed in some form. Some of the changes look to be common sense, like broadening access to IRAs and 401(k)s, as well as including updating the rules to reflect that retirement is now a longer period of life. However, with these changes come potential limitations with stretch IRAs.

Forbes asks in its recent article “Are Concerns Over Stretch IRAs And The SECURE Act Justified?” You should know that an IRA is a tax-wrapper for your investment that is sheltered from tax. Your distributions can also be tax-free, if you use a Roth IRA. That’s a good thing if you have an option between paying taxes on your investment income and not paying taxes on it. The IRA, which is essentially a tax-shield, then leaves with more money for the same investment performance, because no tax is usually paid. The SECURE act isn’t changing this fundamental process, but the issue is when you still have an IRA balance at death.

A Stretch IRA can be a great estate planning tool. Here’s how it works: you give the IRA to a young beneficiary in your family. The tax shield of the IRA is then “stretched,” for what can be decades, based on the principle that an IRA is used over your life expectancy. This is important because the longer the IRA lasts, the more investment gains and income can be protected from taxes.

Today, the longer the lifetime of the beneficiary, the bigger the stretch and the bigger the tax shelter. However, the SECURE Act could change that: instead of IRA funds being spread over the lifetime of the beneficiary, they’d be spread over a much shorter period, maybe 10 years. That’s a big change for estate planning.

For a person who uses their own IRA in retirement and uses it up or passes it to their spouse as an inheritance—the SECURE Act changes almost nothing. For those looking to use their own IRA in retirement, IRAs are slightly improved due to the new ability to continue to contribute after age 70½ and other small improvements. Therefore, most typical IRA holders will be unaffected or benefit to some degree.

For many people, the bulk of IRA funds will be used in retirement and the Stretch IRA is less relevant.

Reference: Forbes (July 16, 2019) “Are Concerns Over Stretch IRAs And The SECURE Act Justified?”

How Can I Avoid a Retirement Home and Live at Home?

Staying at home requires planning. The sooner you begin, the more prepared you’ll be, even if you’re around at 102.

The Washington Post’s article, “Aging in place helps you to avoid a retirement community or nursing home,” explains that there’s plenty of work to do.

You might start by remodeling or retrofitting your home to suit senior-specific issues, such as decreased mobility or impaired eyesight (think replacing a bathtub with a walk-in shower or improved lighting). Some seniors add a first-floor bedroom and bathroom and an outdoor ramp onto their homes. Other changes can include wider doorways (the better to potentially accommodate a wheelchair or walker), a bathroom with grab bars and an easy-access shower.

This is known as universal design, which means building or remodeling a home to accommodate all ages and abilities. It can usually be implemented or planned by builders or contractors who are Certified Aging in Place Specialists (CAPS), an educational designation offered by the National Association of Home Builders.

Even if you can’t afford a major remodel, there are some simple changes you can do, like installing shower grab bars or improving interior and exterior lighting to avoid falls and other accidents. You can also secure throw rugs to the floor with special two-sided tape to prevent slips.

You can speak with an elder law attorney about health agencies, resources for financial assistance, elder abuse prevention, as well as estate planning, Medicare, Medicaid and other state programs.

Keep busy by taking yoga at the local rec center, business or computer classes at the public library, or even getting a roommate to help combat loneliness and keep feeling connected and emotionally healthy.

For dining, in addition to the community-based food delivery from Meals on Wheels, you can get restaurant food or groceries delivered to your home by services, such as Uber Eats, Caviar and Peapod.

There are also a number of meal prep companies—Blue Apron, Hello Fresh, and others—that make it easier to put a healthy meal on the table, without the need to journey to the grocery store.

Reference: Washington Post (July 1, 2019) “Aging in place helps you to avoid a retirement community or nursing home”

Planning for the Impact of Medicaid

One of the most complicated and fear-inducing aspects of Medicaid is the financial eligibility. The rules for the cost of long-term care are complicated and can be difficult to understand. This is especially true when the Medicaid applicant is married, reports Delco Times in the article “Medicaid–Protecting Assets for a Spouse.”

Generally speaking, to be eligible for Medicaid long-term care, the applicant may not have more than $2,400 in countable assets in their name, if their gross monthly income is $2,313 or more. That’s the 2019 income limit.

There are Federal laws that mandate certain protections for a spouse, so they do not become impoverished when their spouse enters a nursing home and applies for Medicaid. This is where advance planning with an experienced elder law attorney is needed. The spouse of a Medicaid recipient living in a nursing home, who is referred to as the Community Spouse, is permitted to keep as much as $126,420 and a minimum of $25,284, known as the “Community Spouse Resource Allowance,” without putting the Medicaid eligibility of the spouse who needs long-term care at risk.

Determining the Community Spouse Resource Allowance requires totaling the countable assets of both the community spouse and the spouse in the long-term care facility, as of the date of admission to the nursing home. The date of admission is referred to as the “snapshot” date. The community spouse is also permitted to keep one-half of the couple’s total countable assets up to a maximum of $126,420 in 2019 and no less than the minimum of $25,284. The rest of the assets must be spent down.

Countable assets for Medicaid include all belongings. However, there are a few exceptions. These are personal possessions, including jewelry, clothing and furniture, one car, the applicant’s principal residence (if the equity in the home does not exceed $585,500 in 2019) and assets that are considered inaccessible, such as a spouse’s retirement accounts.

Unless an asset is specifically excluded, it is countable.

There are also Federal rules regarding how much the spouse is permitted to earn. This varies by state. In Pennsylvania, the spouse is permitted to keep all of their own income, regardless of the amount.

The rules regarding requests for additional income are also very complicated, so an elder law attorney’s help will be needed to ensure that the spouse’s income aligns with their state’s requirements.

These are complicated matters, and not easily navigated. Talk with an experienced elder law estate planning attorney to help plan in advance, if possible. There are many different strategies for Medicaid applications, and they are best handled with experienced professional help.

Reference: Delco Times (June 26, 2019) “Medicaid–Protecting Assets for a Spouse”

A Will, Power of Attorney and Health Care Power of Attorney: Three Documents Everyone Should Have

These three documents combined allow you to designate who you want to be responsible for your well- being, if you are unable to communicate to others on your own behalf and name who you want to receive your property. Having a will, power of attorney and health care power of attorney are the foundation of an estate plan and peace of mind, says the article “Simple steps to peace of mind” from the Traverse City Record Eagle.

If you die without a will, your state has a plan in place for you. However, you, or more correctly, your family, probably won’t like it. Your assets will be distributed according to the laws of inheritance, and people who you may not know or haven’t spoken to in years may end up inheriting your estate.

If your fate is to become incapacitated and you don’t have an estate plan, your family faces an entirely new set of challenges. Here’s what happened to one family:

A son contacted the financial advisor who had worked with the family for many years. He asked if the advisor had a power of attorney for his father. His mother had passed away two years ago, and his father had Alzheimer’s and wasn’t able to communicate or make decisions on his own behalf.

Five years ago, the financial advisor had recommended an estate planning attorney to the couple. The son called the attorney’s office and learned that his parents did make an appointment and met with the attorney about having these three documents created. However, they never moved forward with an estate plan.

The son had tried to talk with his parents over the years, but his father refused to discuss anything.

The son now had to hire that very same attorney to represent him in front of the probate court to be appointed as his father’s guardian and conservator. The son was appointed, but the court could just have easily appointed a complete stranger to these roles.

The son now has the power to help his father, but he will also have to report to the probate court every year to prove that his father’s well-being and finances are being handled properly. Having a will, power of attorney and medical power of attorney would have made this situation much easier for the family.

Guardianship is concerned with the person and his or her well-being. Conservatorship means a person has control over an individual’s financial matters and can make all decisions about property and assets.

There is a key difference between powers of attorney and conservatorship and guardianship. The person gets to name who they wish to have power of attorney. It’s someone who knows them, who they trust and they make the decision. With conservator and guardianship, it’s possible that someone you don’t know and who doesn’t know your family, holds all your legal rights.

A far better alternative is simply to meet with an estate planning attorney and have him create these three documents and whatever planning tools your situation calls for. Start by giving some thought to who you would want to be in charge of your life and your money, if you should become unable to manage your life by yourself. Then consider who you would want to have your various assets when you die. Take your notes with you to a meeting with an estate planning attorney, who will know what documents you need. Make sure to complete the process: signing all the completed documents, funding any trusts, retitling any accounts and finally, making sure your family knows where your documents are. This is a road to peace of mind, for you and your family.

Reference: Traverse City Record Eagle (June 23, 2019) “Simple steps to peace of mind”

Top Four Facts to Know about Estate Planning

Estate planning can save your family the stress of court cases and family feuds before the process of settling your estate begins. A plan that you create will provide tremendous peace of mind to those who are left behind. The sorrow of losing a loved one is more than enough for a family to experience, says NewsGram, in the article 4 Things You Must Know About Estate Planning.” You had better to have a plan to ensure that your estate is executed with as little acrimony as possible.

Estate planning focuses on planning for how an individual’s assets will be preserved, managed and distributed after their death. It also addresses how the person’s financial life, including their property, is to be managed, in the event they become incapacitated because of an accident or an illness. This is done with the help of an experienced estate planning attorney.

The core of estate planning while you are living, is to protect your assets, protect your estate from having to pay unnecessary taxes and protects you and your wishes, if you are incapacitated or pass away. Here are four key things everyone should keep in mind while preparing their estate plan.

Age should not be a factor. Anyone who is of legal age and owns anything has an estate. An estate refers to anything of value that you own. It does not mean a $10 million mansion. A home, a car, bank accounts, retirement accounts and personal possessions make up an estate, regardless of their size or value. Once you have assets, you need an estate plan. We don’t know when we are going to die, but we can be sure that if you have no estate plan, the state will determine who receives your assets. You may want to make those decisions for yourself. That’s what an estate plan does.

You need an estate planning attorney. Estate planning crosses into several different legal practice areas. Asset management, tax planning, real estate, guardianship and other areas need to be addressed by a legal professional who understands how these elements all work together. An estate planning attorney has a professional responsibility to help you document your wishes for incapacity and death.

However, they do more than that. The estate planning attorney will help you fine-tune your wishes, gain clarity on what you want to happen during life and death and translate that into the legal language that ensures that your wishes are achieved.

Planning helps avoid or minimize probate. Depending on where you live, probate can be a simple process or one that takes a long time. The estate planning attorney will help you plan to pass your assets to your spouse or the next generation to avoid going through the court process known as probate. This is a process of authenticating your will, verifying that the assets in the will are correctly named, paying off any outstanding tax balances and approving the distribution of the assets. With a good estate plan, you can make this a simple process.

An estate plan works to minimize family squabbles. Disagreements over estates, including personal possessions as well as money, routinely tears families apart. You don’t have to be wealthy or even a celebrity to have a family that is fractured over a misunderstanding or someone feeling like they were not treated fairly. This is another area where an experienced estate planning attorney can help bring you through the process of distributing assets, with a deep dive into how your decisions may be received by various family members.

To get started, contact an experienced estate planning attorney in your community. If you have an estate plan but haven’t reviewed it in more than four years, it’s time for an update. A number of laws have changed on the federal level that may require some changes to your estate plan. If you have had any major life events, you also need a review.

Reference: NewsGram (June 5, 2019) 4 Things You Must Know About Estate Planning.”

What Does ‘Getting Your Affairs in Order’ Really Mean?

That “something” that happens that no one wants to come out and say is that you are either incapacitated by a serious illness or injury or the ultimate ‘something,’ which is death. There are steps you can take that will help your family and loved ones, so they have the information they need and can help you, says Catching Health’s article “Getting your affairs in order.”

Start with the concept of incapacity, which is an important part of estate planning. Who would you want to speak on your behalf? Would that person be the same one you would want to make important financial decisions, pay bills and handle your personal affairs? Does your family know what your wishes are, or do you know what your parent’s wishes are?

Financial Power of Attorney. Someone needs to be able to pay your bills and handle financial matters. That person is named in a Financial Power of Attorney, and they become your agent. Without an agent, your family will have to go to court and get a conservatorship. This takes time and money. It also brings in court involvement into your life and adds another layer of stress and expense.

It’s important to name someone who you trust implicitly and whose financial savvy you trust. Talk with the person you have in mind first and make sure they are comfortable taking on this responsibility. There may be other family members who will not agree with your decisions, or your agent’s decisions. They’ll have to be able to stick to the course in the face of disagreements.

Medical Power of Attorney. The Medical Power of Attorney is used when end-of-life care decisions must be made. This is usually when someone is in a persistent vegetative state, has a terminal illness or is in an irreversible coma. Be cautious: sometimes people want to appoint all their children to make health care decisions. When there are disputes, the doctor ends up having to make the decision. The doctor does not want to be a mediator. One person needs to be the spokesperson for you.

Health Care Directive or Living Will. The name of these documents and what they serve to accomplish does vary from state to state, so speak with an estate planning attorney in your state to determine exactly what it is that you need.

Health Care Proxy. This is the health care agent who makes medical decisions on your behalf, when you can no longer do so. In Maine, that’s a health care advance directive. The document should be given to the named person for easy access. It should also be given to doctors and medical providers.

DNR, or Do Not Resuscitate Order. This is a document that says that if your heart has stopped working or if you stop breathing, not to bring you back to life. When an ambulance arrives and the EMT asked for this document, it’s because they need to know what your wishes are. Some folks put them on the fridge or in a folder where an aide or family member can find them easily. If you are in cardiac arrest and the DNR is with a family member who is driving from another state to get to you, the EMT is bound by law to revive you. You need to have that on hand, if that is your wish.

How Much Should You Tell Your Kids? While it’s really up to you as to how much you want to share with your kids, the more they know, the more they can help in an emergency. Some seniors bring their kids with them to the estate planning attorney’s office, but some prefer to keep everything under wraps. At the very least, the children need to know where the important documents are, and have contact information for the estate planning attorney, the accountant and the financial advisor. Many people create a binder with all of their important documents, so there are no delays caused in healthcare decisions.

Reference: Catching Health (May 28, 2019) “Getting your affairs in order.”

Long-Term Care Costs and Your Estate Plan

There are many misunderstandings about long-term or nursing home care and how to plan from a financial and legal standpoint. The article “Five myths about nursing home costs and estate planning” from The Sentinel seeks to clarify the facts and dispel the myths. Some of the truths may be a little hard to hear, but they are important to know.

Myth One: Before any benefits can be received for nursing home care, a married couple must have spent at least half of their assets and everything but $120,000. If the person receiving nursing home care is single, they must spend almost all assets on the cost of care, before they qualify for aid.

Fact: Nursing homes have no legal duty to advise anyone before or after they are admitted about this myth.

Several opportunities to spend money on items other than a nursing home, include home improvements, debt retirement, a new car and funeral prepayment. An elder law attorney will know how to use a Medicaid-compliant annuity to preserve assets, without spending them on the cost of care, depending on state law.

There are people who say that an attorney should not help a client take advantage of legally permitted methods to save their money. If they don’t like the laws, let them lobby to change them. Experienced elder law and estate planning attorneys help middle-class clients preserve their life savings, much like millionaires use CPAs to minimize annual federal income taxes.

Myth Two: The nursing home will take our family’s home, if we cannot pay for the cost of care.

Fact: Nursing homes do not want and will not take your home. They just want to be paid. If you can’t afford to pay, the state will use Medicaid money to pay, as long as the family meets the eligibility requirements. The state may eventually attach a collection lien against the estate of the last surviving homeowner to recover funds that the state has used for care.

A good elder law attorney will know how to help the family meet those requirements, so that the adult children are not sued by the nursing home for filial responsibility collection rights, if applicable under state law. The attorney will also know what exceptions and legal loopholes can be used to preserve the family home and avoid estate recovery liens.

Myth Three. We’ve promised our parents that they’ll never go to a nursing home.

Fact: There is a good chance that an aging parent, because of dementia or the various frailties of aging, will need to go to a nursing home at some point, because the care that is provided is better than what the family can do at home.

What our loved ones really want is to know that they won’t be cast off and abandoned, and that they will get the best care possible. When home care is provided by a spouse over an extended period of time, often both spouses end up needing care.

Myth Four: I love my children equally, so I am going to make all of them my legal agent.

Fact: It’s far better for one child to be appointed as the legal agent, so that disagreements between siblings don’t impact decisions. If health care decisions are delayed because of differing opinions, the doctor will often make the decision for the patient. If children don’t get along in the best of circumstances, don’t expect that to change with an aging parent is facing medical, financial and legal issues in a nursing home.

Myth Five. We did our last will and testament years ago, and nothing’s changed, so we don’t need to update anything.

Fact: The most common will leaves everything to a spouse, and thereafter everything goes to the children. That’s fine, until someone has dementia or is in a nursing home. If one spouse is in the nursing home and receiving government benefits, eligibility for the benefits will be lost, if the other spouse dies and leaves assets to the spouse who is receiving care in the nursing home.

A fundamental asset preservation strategy is to make changes to the will. It is not necessary to cut the spouse out of the will, but a well-prepared will can provide for the spouse, preserve assets and comply with state laws about minimal spousal election.

When there has been a diagnosis of early stage dementia, it is critical that an estate planning attorney’s help be obtained as soon as possible, while the person still has legal capacity to make changes to important documents.

The important lesson for all the myths and facts above: see an experienced estate planning elder law attorney to make sure you are prepared for the best care and to preserve assets.

Reference: The Sentinel (May 10, 2019) “Five myths about nursing home costs and estate planning”

Think It’s Elder Abuse? Here’s What You Need to Know

If you take those numbers for a single county in California, and multiply them across the nation, you’ll get a clear understanding of how our nation is aging and the number of vulnerable people susceptible to elder abuse in the coming years. With the growth of older adults, the risk will grow, reports Event-News Enterprise in the article “How to Recognize, Prevent and Address Elder Abuse.”

There are a number of types of elder abuse: physical, emotional, neglect and financial abuse. Overmedicating a resident of a care facility is one form of physical abuse. Self-neglect occurs due to physical or mental decline or from the senior’s inability to pay for their medications.

It’s estimated that 11% of all elder abuse cases in the United States occur in California. Financial elder abuse is the fastest growing form of elder abuse in the country.

Elder abuse is also the most unreported crime. There are a few reasons for this: the senior is embarrassed at having been taking advantage of. When the abuser is a family member, or a caregiver, the senior is often afraid to report the person for fear of being harmed. They are reluctant to report a family member. And they are reluctant to report a person they have come to depend upon for care. Who will take care of them?

The most common types of elder abuse are the romance scam, the grandparent/friend/family member facing an immediate emergency, imposter scams (Social Security or IRS scams), employment scams and sweepstakes/lottery/prizes scams.

To combat elder abuse, reporting all and any types of abuse is critical. Physical elder abuse must be reported to Adult Protective Services (APS) or the local police department. Reports to APS are kept confidential. Anyone who is a victim of financial scam or fraud should contact the local law enforcement, APS or the Federal Trade Commission (FTC). Think of it this way: you are not only defending yourself, but you may be protecting someone else from being scammed.

Sometimes people can get their money back, but it is difficult. The best way to prevent elder abuse is to be educated and forewarned about the scams, so as not to become a victim.

Most nursing care facilities or hospitals have an ombudsman or patient representative office. Contact the office—most offer the ability to remain anonymous.

Elder abuse is a terrible shame, when people take advantage of those who are least able to protect themselves. With strong public outreach and education programs, seniors who are aware of the scams and their own vulnerabilities will be better protected and able to defend themselves.

Reference: Event-News Enterprise May 29, 2019 “How to Recognize, Prevent and Address Elder Abuse.”

Do Veterans Need to Pay for Help to Apply for Benefits?

The Tribune-Review’s article, “Veterans don’t need to pay for help to apply for benefits in Pa,” explains that the issue of military veterans being charged when applying for benefits is a common problem in Pennsylvania. There are about 800,000 veterans in the Keystone State.

The article warns that there are still some who attempt to profit, by assisting veterans to sign up for their benefits.

Vets should never have to pay to apply.

In January, an Allegheny County company was fined $10,000 after an employee fraudulently represented that he was an accredited veteran service officer. Some of the claims handled by the Allison Park firm were from Westmoreland County.

Veterans should ask for assistance only from an accredited veteran service officer, an attorney accredited by the VA, or an accredited claims agent. These agents provide veterans and their dependents free assistance to identify, determine eligibility for and apply for a wide range of benefits on the local, state and federal levels. That benefits include the following:

  • Burial allowances;
  • Grave markers and headstones properly requested and placed;
  • The Disabled Veterans Real Estate Tax Exemption Program;
  • Veterans Emergency Assistance;
  • Pensions for blind and paralyzed veterans;
  • The Education Gratuity Program;
  • Service connected disability and non-service connected disability pensions;
  • Federal health care benefits; and
  • Survivor benefits.

You may be eligible for VA benefits, if you’re a uniformed servicemember, veteran, or spouse, child, or parent of a deceased or disabled servicemember or veteran.

A summary of benefits can be found at the Veterans Affairs website: https://benefits.va.gov/BENEFITS/benefits-summary/SummaryofVABenefitsFlyer.pdf.

Reference: (The Tarentum, PA) Tribune-Review (May 17, 2019) “Veterans don’t need to pay for help to apply for benefits in Pa”

Power of Attorney: Why You’re Never Too Young

When that time comes, having a power of attorney is a critical document to have. The power of attorney is among a handful of estate planning documents that help with decision making, when a person is too ill, injured or lacks the mental capacity to make their own decisions. The article, “Why you’re never too young for a power of attorney” from Lancaster Online, explains what these documents are, and what purpose they serve.

There are three basic power of attorney documents: financial, limited and health care.

You’re never too young or too old to have a power of attorney. If you don’t, a guardian must be appointed in a court proceeding, and they will make decisions for you. If the guardian who is appointed does not know you or your family, they may make decisions that you would not have wanted. Anyone over the age of 18 should have a power of attorney.

It’s never too early, but it could be too late. If you become incapacitated, you cannot sign a POA. Then your family is faced with needing to pursue a guardianship and will not have the ability to make decisions on your behalf, until that’s in place.

You’ll want to name someone you trust implicitly and who is also going to be available to make decisions when time is an issue.

For a medical or healthcare power of attorney, it is a great help if the person lives nearby and knows you well. For a financial power of attorney, the person may not need to live nearby, but they must be trustworthy and financially competent.

Always have back-up agents, so if your primary agent is unavailable or declines to serve, you have someone who can step in on your behalf.

You should also work with an estate planning attorney to create the power of attorney you need. You may want to assign select powers to a POA, like managing certain bank accounts but not the sale of your home, for instance. An estate planning attorney will be able to tailor the POA to your exact needs. They will also make sure to create a document that gives proper powers to the people you select. You want to ensure that you don’t create a POA that gives someone the ability to exploit you.

Any of the POAs you have created should be updated on a fairly regular basis. Over time, laws change, or your personal situation may change. Review the documents at least annually to be sure that the people you have selected are still the people you want taking care of matters for you.

Most important of all, don’t wait to have a POA created. It’s an essential part of your estate plan, along with your last will and testament.

Reference: Lancaster Online (May 15, 2019) “Why you’re never too young for a power of attorney”