Retirement Subjects Dear to the Heart!

Long Term Care Insurance

I want to caution you here that there is no policy that is free of rate increases! Watch the little tiny words that speak about “No Increases, unless there is an overall rate increase in your group or state.”

These policies premiums are rising so fast that they are becoming almost unaffordable except for those folks who don’t need the insurance anyway. That is, they have enough assets to cover almost every situation.

Also, if you are looking at one of these policies, recall our charts on inflation. If a policy pays a maximum room rate today of say $300.00 and you have bought the policy in  your mid 50’s, how much will that room really cost in say 15 years!!!! If that policy doesn’t have an inflation factor it may not be worth having a policy!

These policies seem warranted only for those middle income brackets who can afford the premiums but most likely will not be able to afford long term care. CHILDREN! It may be wise for you to consider helping with the premiums on these policies!! Get, all the siblings together and fund at least 50% of the necessary premiums. 

Life  Insurances

Do you really need those large life insurance policies?  Why? Estate planning and taxation liquidity perhaps but beyond those reasons, you need to take a good look at decreasing your insurance coverage’s as the years increase.

Do not buy any special life insurance policies, for examples, a policy that will pay $????  if  you die in an accident or of a stated disease.

Medicaid 

Wow! What a difficult subject. The rules change by each state so you’ll need to research what your home state’s rules and regulations.

I suggest you get advice from an elder care attorney—one who specializes in elderly laws. Call the National Academy of Elder Care Attorneys for a referral in your area  800-881-4005.

In general we can take a look at some Federal Guidelines for qualifications regarding Medicaid. Generally, you and your spouse will not be able to qualify for Medicaid benefits if your half of the joint assets are worth more that $84,120. Some items are exempt such as: car, cemetery plot (good idea to buy them today!), IRA’s, annuities (not in all states), home improvements.

The 3 year transfer of assets law was repealed so some folks are still transferring assets. Some states also allow the transfer of your house to the caregiver if you have lived there more than two years.

Note, that eligibility today does not affect future eligibility.  That is, if you spend all of your assets to provide for long term care, than at some point you can qualify for Medicaid. Caution here may also be necessary as some states have been known to sue the estate for some any Medicaid payments.
Kiplinger’s Personal Finance Magazine had an excellent article on Medicaid in the March, 2000 issue. Ask your local library for a copy  of the issue and Xerox it for your  files. You can also call your state’s Medicaid office and at least ask for some of the paperwork. Nursing home care Medicaid has it’s own set of rules and regulations in Florida. My daughter runs a nursing home in Tallahassee and is rather familiar with the requirements, so call me, I’ll ask Jamie and pass it on to you!

Mortgages

Pay them off? NO! Not unless the rates are much greater than what your investments are earning. Too many  seniors just rush to pay off the mortgages without really looking at the dollar and cents issues involved. Do Not Pay  Them Off without an analysis. Call or Email me.  Caution is necessary here as most lenders will not take too serious a look at seniors who are applying for a mortgage on their home. Unless of course, you’re dealing with some of those less than honest mortgage brokers! Another exception will be:  

Reverse Mortgages

Wow! Need a few hundred a month to change your lifestyle? If your home is paid off or has a low mortgage, reverse mortgages may be just the financial tool you need to look at in a serious manner. These are difficult issues and require a lot of analysis and serious decisions but do not eliminate the reverse mortgage if your financial condition warrants a look at this subject. See the article on the net at www.seniorresource.com  on reverse mortgages. Click on finance and then on reverse mortgages. If you are considering a reverse mortgage please read this site.  

Family Preparations

It’s more important than funeral preparations! Get the family ready! Make a list of all the special assets, jewelry, collections, antiques and sentimental things. I’ve seen a awful lot of family fights start with some silly little asset!

Husbands—make a list of all the assets you own and what you think they are worth this year. Get an instruction booklet ready that tells your spouse where to go for advice, appliance repairs, car repairs and financial advice. List if you want a series of investments that your spouse should invest in with any life insurance proceeds.

I update my “instruction booklet” every year between Christmas and New Years.  List everything  you can think of that will be relevant in the months following your death. I’ve even got detailed instructions on the Christmas lights, just in case my wife wants to put them up after I go to heaven!

There are some awesome books that will help you in this area. These books help you outline and detail all the accounts, numbers and assets that you own.

Also be aware of some things that you might want to seek further advice on:

            Joint Checking Account. Caution here—if your
            secondary signer has credit problems, do not let
            them sign on your account as their creditors can
             attach “your” account!

                      Durable Power of Attorney

                      Health Care Power of Attorney—
 
                   see  www.seniorresource.com  for an example

                      Living Will, Florida Version if you’re in
                     Florida. Download one version
                     from www.livingwithdignity.com

Now, be sure that all this good material is somewhere where your spouse can find it easily. I suggest originals be kept outside the house but a full set of copies should be kept at the house and perhaps a copy with another family member.

Estate Planning

This subject is too complex and comprehensive for our seminar but I want to outline a few areas that you should be aware of when you hire your estate planning team.  

Trusts are so common and so useful in today’s world that I’ll assume that most of us will end up using one form or another for our estate planning. Let’s just quickly define a few trusts. 

Bypass trust—shifts taxable estate to next generation. Surviving spouse can spend the income and the principal for some reasons.

Living Trusts--  extremely useful for certain situations.  I set one up for my father in law when he was first diagnosed with Alzheimer’s. The trust turned out to be a fantastic planning tool.  They are reasonable to setup, I heard a recent ad from a lawyer, stating that he would set up the living trust for less than $500. You retain control of your assets but you bypass probate when you die. There is no estate tax or income tax savings just avoidance of local probate rules and regulations. This alone makes your final asset disposition much more private.  A living trust,  may be better than a Will but you’ll still need a will. Trusts,  may provide some creditor protection, are sometimes more difficult to contest than a will, allows you to deduct estate planning fees while living and are often easier to amend than a will.

Further,  you can  choose which state laws are to be applicable, if there is some form of connection to the state and the trust can  provides for administration if grantor becomes disabled. Living trusts definitely make it easier to transfer those final assets and will save you time and costs in transferring those assets to the beneficiaries.  

NO MATTER HOW MANY TRUSTS YOU SET UP—YOU STILL NEED A WILL!

QTIP Trust is a trust that is designed to leave all of the income to spouse but shift the assets to another beneficiary upon the death of the spouse. Basically, designed so that assets that are exempt from taxation upon the first spouse’s death are transferred estate tax free to the next generation. They are also very useful if kids from first marriage are involved.

Do not proceed with any of  these plans or trusts without competent legal and tax advice. Do not use  your family attorney. You must use attorney’s and tax counsel who specialize in these areas. 

For example, in a recent case that I was involved in, a stock broker and the family attorney suggested to a surviving spouse that she just rollover her husbands IRA to her account. She followed their advice and paid over $78,000 in estate taxes that were unnecessary to pay if she would have  disallowed (not accepted) the inheritance and let it pass to the charitable foundation who would ultimately receive both her and her husbands estate assets.

If a large IRA or a closely held business is included, PLEASE, see an estate attorney!! If you net assets are over $700,000 I suggest that you see an estate attorney. Less than $700,000 that might grow to ???, see an attorney. In doubt? See an attorney.

For a nice article on the subject of trusts and estate planning go to the site, www.seniorresource.com  and click on the Finance link. Then look for the estate planning subject. While some of the article deals with California law I like the way the author has written the material for us non-lawyers!!! He covers living trusts, Totten trusts, gift tax and estate taxation. It’s a must read!  

Caution here—be sure that you are somewhat knowledgeable in this area. Not an expert, just know a few things like the above. Keep reading those articles and do not let any insurance agent or stock broker sign up for anything without your attorney’s advice!!!  

When in doubt call me or send me a copy of the documents,

I’m no expert but I can help.

 
  It’s a real puzzle, so you need some real expertise in the estate planning arena. Don’t be afraid to ask questions and spend planning dollars. The dollars spent can be deductible anyway! Don’t leave it to Uncle Sam—he’ll just cause you to roll over, when he wastes it!

Frauds, Con-artists and Rip-offs

If there is one thing that can make me truly angry it’s Senior Fraud! It’s so prevalent in our society but, we can, by working together, stop it from coming into your home.  Here’s some steps to help avoid frauds and rip-offs.

•  No phone purchases or solicitations of any kind!!
  

•  No unusual investments, even from trusted friends
       and family members.

• No unsolicited home repairs.

• No mail replies to any kind of special deals

• If it looks too good to be true—IT IS!!
  If someone says you’ve won something, you
       haven’t unless they deliver it with no cost or
       obligation on your part

• Guard your social security number, credit cards and
       ID numbers like your life depends upon it
       Because IT JUST MAY!

• If you don’t understand it---Have never heard of it
    before—Or you know, down deep, DON’T DO IT!

• Contests that cost Money! ARE A SCAM!
  

• Callable CD’s? ARE A SCAM!

 WHEN PRESSURED TO MAKE A DECISION! STOP!

CALL ME OR GIVE THEM MY CARD!

I have some  business cards and phone labels, for your use,  that basically say:

  “ I’m sorry, I can’t make a decision without my CPA’S and Certified Financial Planners approval. If you’d like to hasten the approval process, mail Mr. Kornmeier the relevant materials. His address  is 377 SW 14TH Avenue, Pompano Beach, FL 33069
 Please be sure to mention my name.

Stick these cards or labels wherever you think you might need them and be sure that you call me before you make a decision or give in to the hard sales tactics. 

These guys don’t have to break into your house
 to break your bank!