BLOG

In an interesting study published by The American Journal of Public Health, researchers discovered that life expectancy has increased for older men. The number of years spent active and free of disability has also increased for men.  However, life expectancy for women has not increased as much as it has for men, and neither have the number of years women spend active and free of disability.  Consequently, although women still outlive men, older women no longer have more active years than men do. Women are also more likely to experience disability when they grow older.
 
Although modern medicine has added years to our lives, the disabling conditions and diseases of aging still threaten our quality of life as we grow older.  Unforeseen medical conditions may impair our independence or decision-making ability.   It is more important than ever for women to be prepared with a well-crafted estate plan that addresses the possibility of mental or physical disability.
 
Contact your estate planning attorney to ensure that your estate plan protects you if you ever become disabled or incapacitated.
 

The use of trust protectors is growing more common in living trusts. A trust protector is a person or entity empowered to watch over your trust, and ensure that it is not affected by changes in the law or family circumstances. Having a trust protector in place allows a long-term trust to be more flexible and to adapt to these changes. A trust protector can also be helpful if you anticipate that there may be conflict between your beneficiaries, or if you have concerns about the trustee you selected.
 
You can name a trust protector in your trust document and specify the trust protector’s powers. The more specifically you define the trust protector’s powers, the more likely your estate planning wishes are to be fulfilled. Some of these powers may include removing and replacing a trustee, allowing the trust to be amended due to changes in the law, and resolving disputes between trustees. A trust protector can also be given the power to change distributions from the trust, add new beneficiaries, or make investment decisions. Your estate planning attorney can help you define your trust protector’s powers.
 
When choosing a trust protector, it is a good idea to appoint an independent third party rather than a family member or beneficiary. An accountant or lawyer is often a good choice. Speak to your estate planning attorney to determine if it would be beneficial to use a trust protector to safeguard your trust.
 

Long-term care is often needed due to aging, chronic illness or injury, and with people living longer, most of us will need it for at least some time before we die. But it is not just for the elderly—a good number of younger, working-age adults are currently receiving long-term care due to accidents, illnesses or injuries. It is better to assume you will need long-term care and plan for it than to simply hope it doesn’t happen to you or a family member.
 
Long-term care can be provided in your home, in an assisted living facility or in a nursing home. All can become very expensive over time. Costs for long-term care are hard to estimate. The actual costs will depend on the kind of care you need, how long you require it, and where you live. Expect these costs to increase as the cost of medical care continues to rise.
 
Long-term care expenses are not covered by health insurance, disability income insurance, or Medicare. If you do not plan for these costs, and you or a family member requires long-term care, the results can be financially devastating for your family.
 
Actions to Consider

• Find out what costs are for long-term care in your area. Your financial and/or insurance advisor will be able to give you some parameters. You can also ask friends and neighbors; you probably know someone who has a family member receiving care at home or in a facility.
• Have an honest discussion with your spouse (and possibly other family members) about these costs and your desires about long-term care, should you need it. Most people want to stay in their homes. Find out what it would cost to make that happen. For example, you may need renovations to your home, home health care, or other resources.

If you have questions about planning for long-term care, please do not hesitate to contact my office.
 

For best results, your estate plan will require periodic attention. Generally, any significant change in your family, financial, or health status should prompt a review of your estate plan. The following is a list of examples:
 
Personal and family changes:

• You marry, separate or divorce;
• Your health, or the health of your spouse, declines;
• Your spouse passes away;
• A child is born or adopted;
• A beneficiary gets married or divorced;
• A family member develops special needs or requires extra care;
• A minor becomes an adult;
• A beneficiary’s attitude toward you changes;
• A beneficiary develops a substance abuse problem;
• A beneficiary displays poor financial management skills;
• The health of a parent or other beneficiary declines;
• A family member dies.

Family finance changes:

• The value of your assets changes significantly;
• You anticipate the sale or transfer of a family business;
• You buy real estate in your own or another state;
• The value of a family member’s assets changes dramatically;
• A beneficiary gets into financial difficulties;
• A parent or other relative becomes financially dependent upon you.

Other Changes:

• Federal or state tax laws change;
• You move to a different state;
• You change your mind about a trustee, guardian, or administrator you selected;
• A successor trustee, guardian, or administrator moves, becomes ill, or changes his/her mind about serving.

Some of the most generous provisions of the tax code are those that permit beneficiaries of IRAs and other qualified retirement plans to defer income tax on the plans until time of withdrawal. This allows the IRA or qualified plan to grow significantly more than if it were subject to tax on gains each year.
 
Another equally generous provision of the tax code permits beneficiaries to withdraw only a minimum amount from IRAs or qualified plans each year. By taking only these “required minimum distributions” a beneficiary can stretch out distributions over the better part of his or her lifetime, resulting in further deferral of income tax on the amount remaining in the plan.
 
Unfortunately, most beneficiaries fail to take advantage of this latter provision and withdraw all of the IRA or qualified plan funds immediately, thereby losing the significant tax advantages of tax-deferred growth.
 
A common misconception is that one should not name a trust as beneficiary because it is overly complicated and doesn’t permit a stretch out. While naming a trust does add a thin layer of complexity, a properly drafted trust not only permits the stretch out, but it is the only approach that ensures maximum income tax deferral, if that is your objective.