Choosing the Right Guardian for Dependents

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Caring for and raising your family is one of life’s most rewarding privileges. Have you ever thought about who would manage this responsibility if you couldn’t? It’s something no one wants to consider. Yet choosing a legal guardian for your dependents is among the most important decisions you’ll make when putting your final matters in order.

Once accomplished, it may bring you more peace of mind than just about anything else. If you have children under age 18 or others that rely on you for their physical and financial support, it’s essential that you name a legal guardian in your will who will be responsible for their care if you are unable or pass away.

What’s a Legal Guardian? A legal guardian is a person or persons you appoint to take legal responsibility for the personal and property interests of your dependent children or adults if you are unable or pass away. A legal guardian essentially assumes your parental role – caring and providing for your children or dependents in every way, including physically, emotionally and financially.

Why and How Should I Appoint a Guardian? If you pass away or become unable to care for your dependents without a will in place or you do not name a guardian in your will, the court determines who gets custody of your dependents. Name the guardian(s) you want to be legally responsible to raise and provide for your children or other dependents if you become unable in your will or trust. Consult a family law attorney to help you meet the requirements for appointing a legal guardian.

Read the full article on choosing the right guardian for dependents here.

Courtesy: Passare.com

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New Estate Planning Rules

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For years the federal estate tax has been a big concern for Estate Planning but today’s rules provide a new set of tax saving opportunities many people are not aware of. This story from The Wall Street Journal explains. Many experts feel the new tax rules present opportunities that often contradict past advice. “The conventional wisdom has been turned on its head because of changes in both the income tax and the estate tax,” says Suzanne Shier, chief tax strategist at Northern Trust in Chicago.

The biggest thing the new tax rules did was free hundreds of thousands of Americans from worrying about federal estate tax. Think back to 2004 when people who passed away with assets worth more than $1.5 million were subject to estate tax at rates close to 50%. Now compare that to last year when Congress set the estate tax at 40% and raised the exemption to $5.34 million. Because the federal estate tax now affects so few people, people should review their Estate Plans to look for more tax saving opportunities.

Here are a few tips to keep in mind.

  1. Tap the Right Assets – To meet cash needs, take out a loan rather than sell appreciated investments in taxable accounts, especially with interest rates low.
  2. Reset Capital Gains – You can find substantial savings on capital gains by carefully choosing which assets to hold until death. Take advantage of a federal provision known as the “step-up,” which cancels the long-term capital-gains tax on assets you hold until death. The “step-up” automatically raises your asset’s “cost basis” to its full market value as of the date of death.
  3. Rethink Your Trusts – The “step-up” provision also affects tax-saving trusts. In the past, spouses needed to have a trust in place so their estate got the full value of two federal estate-tax exemptions. Now a surviving spouse can claim the unused portion of a partner’s exemption: so if a man dies and leaves $1 million to his children, his widow can claim his unused $4.34 million and add it to her own exemption, which would give her more than $9 million for use at her death. For a couple with a net worth of less than $5 million, financial planner Jon Robertson believe you should get rid of any existing trusts you may already have. “It will preserve the step-up, minimize administrative fees and keep things simpler.”
  4. Reconsider Gifting – Take a hard look at the gifts you make to people before death. “There’s almost no reason to make gifts anymore unless someone needs help,” said financial planner Deena Katz. When you consider the top rate on long-term capital gains is 23.8%, compared with 15% a few years ago, the best course for people who won’t owe estate tax is to forgo the gift and wait for the “step-up.”
  5. Beware of State Taxes – Nineteen states charge an estate tax or an inheritance tax on those receiving the assets, or both. While some states have exemptions as large as the Federal Governments, the tax break is much lower in other states. If you live in a state that has death taxes, the good news is there is a trend toward larger exemptions. States like New York, Minnesota, Tennessee, Illinois and Maryland have all raised theirs with further increases in the works for other states. Read more here.

Courtesy: Passare.com

5 Retirement Healthcare Savings Tips

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One of the biggest expenses retirees will face will be paying for health care. How can you manage your medical costs to ensure your wealth lasts through retirement?

Here are five ways to save.

  1. Get a Medicare Supplemental Plan – One of the biggest misnomers is the idea Medicare will cover all your medical costs; not true. Even for those who qualify, Medicare can come with very high deductibles and co-pays. To protect yourself against out-of-pocket expenses, enroll in a Medicare supplemental insurance plan called Medigap. It can help pay for any co-payments, co-insurance and deductibles that Medicare doesn’t cover. Keep in mind, there is a monthly premium for Medigap and to get a policy, you must already have Medicare Part A and Part B. Also Medigap policies only cover one person, so if you want coverage for you and your spouse, you will have to buy two separate policies.
  2. 2. Enroll in Medicare Part D – While Medigap can help pay for some expenses, it won’t cover everything. For example, it does not pay for prescription drugs. To get coverage that helps pay for drug costs, enroll in the Medicare prescription drug plan called Medicare Part D. Be aware, Most Part D plans also have a coverage gap or “donut hole,” which limits your coverage after you’ve spent a certain amount on drugs. The good news is prescription drug companies are required to participate in Medicare’s Coverage Gap Discount Program, which offers discounts on drugs to people who fall in the coverage gap. With all the insurance plans available, it’s important you choose a plan based on your prescription history. Medicare offers a free online Plan Finder Tool that can help you decide what is best for you.
  3. Save Money on Prescriptions – When possible, retirees should switch from brand-name drugs to generics. They’re just as effective and can result in big savings. Also it’s important you choose the right pharmacy to fill your prescriptions. According to a Consumer Reports study, Costco’s pharmacy offered the lowest prices while CVS had the highest. Another way to save on prescriptions is by ordering in bulk. Ask your pharmacist if they offer a discount on bulk orders.
  4. Live a Healthy Lifestyle – Poor health can result from a lack of physical activity, poor diet or bad habits. By staying active, retirees can increase their energy, require fewer visits to the doctor, improve heart health and potentially live longer. According to the American Heart Association, physically active people save $500 a year in health care costs. With fewer visits to the doctor and limited medical bills, overall health expenses should decrease.
  5. Plan Early for End-of-Life Care – Medical costs during the last year of life can drain your savings. To make a plan for End of Life care, the first step is to create an Advanced Directive or Living Will that specifies the medical actions you want taken if you’re no longer able to make decisions for yourself. Next, consider buying Long-Term Healthcare Insurance, which covers home care, assisted living, hospice care and nursing homes. It can be a good investment if you can afford it, as it helps cover out-of-pocket expenses, which most people will eventually need. According to Fidelity Investments, the average retired couple will need more than $220,000 to cover out-of-pocket medical expenses during retirement. There is also a tax benefit to having Long-Term Healthcare Insurance. The IRS considers their premiums a medical expense.

Read more here.

Courtesy of Passare.com.

How Life Gets Better As We Age

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Many assume as we age life becomes less satisfying, but a growing body of research shows in many ways life gets better. Is it possible that everything we’ve been led to think about aging is wrong? This story in the Wall Street Journal makes the case. “The story used to be as we age satisfaction with life went downhill, but the remarkable thing is that doesn’t seem to be the case,” said Timothy Salthouse, a professor of psychology at the University of Virginia.

Growing evidence indicates:

  • Sense of well being improves with age
  • Friendships tend to grow more intimate with age
  • Intelligence continues to develop and expertise deepens with age

The ability to resolve conflicts by seeing problems from multiple perspectives appears to flourish with age Of course, some people don’t age as well as others. Chronic conditions become increasingly common at advanced ages, but those who fall into the “stereotype of being depressed, cranky and irritable” constitute “no more than 10% of the older population,” said Paul Costa, a scientist emeritus at the National Institutes of Health. “The other 90% of the population isn’t like that at all.”

Here are five myths about aging that recent research has dispelled.

Myth 1: Depression Is More Prevalent in Old Age

According to a 2014 study, emotional well-being actually improves until the 70s. “Contrary to the popular view that youth is the best time of life, the peak of emotional life may not occur until well into the seventh decade,” said Professor Laura Carstensen, director of Stanford University’s Center on Longevity. Why? Older adults tend to focus on positive emotions and see the good more than the bad in life. “Older adults tend to be happier, less anxious, less angry and adapt well to their circumstances,” said Karen Fingerman, professor of human development at the University of Texas at Austin.

Myth No. 2: Cognitive Decline Is Inevitable

Because of their vast knowledge and experience, older adults who are tested in real life situations make wiser decisions than younger adults. Studies indicate, barring dementia, older adults perform better problem solving in the real world than younger people. “Lab tests underestimate the abilities of older adults,” said Lynn Hasher, a professor of psychology at the University of Toronto. Lab tests, “tell us what people can do in artificial situations” but in the real world “most of what we do is based on the knowledge we have acquired.”

Myth No. 3: Older Workers Are Less Productive

The stereotype is older workers are less adaptable and productive but studies show “there is no relationship between age and job performance,” said Harvey Sterns, director of the Institute for Life-Span Development and Gerontology at the University of Akron. In fact, studies show in jobs that require experience, older adults have an edge. “Older workers know how to avoid severe errors,” said Matthias Weiss, academic coordinator at the Max Planck Institute for Social Law and Social Policy.

Myth No. 4: Loneliness Is More Likely

Most people add to their social networks until age 50 then they tend to contract their social circle to maximize interactions with “close partners who are more emotionally satisfying,” said Carstensen. “Their loved ones seem to mean more than ever.” This doesn’t mean loneliness isn’t a problem for some older adults but on average, older adults are not as lonely as young people. “Older adults typically report better marriages, more supportive friendships, less conflict with children and siblings and closer ties with members of their social networks than younger adults,” said Carstensen.

Myth No. 5: Creativity Declines With Age

Creativity has long been seen as a youthful trait but studies pinpoint midlife as the time when it can be the most prolific. David Galenson, a professor at the University of Chicago, analyzed hundreds of famous artists, poets and novelists to see when they produced their most valuable work. His conclusion was creative genius comes into two categories: conceptual artists, who do their best work in their youth, and experimental artists, who need more time to reach their full potential. “People who are creative in older age aren’t anomalies,” said Galenson. Mark Twain, Paul Cézanne, Frank Lloyd Wright, Robert Frost and Virginia Woolf are just a few of the artists “who did their greatest work in their 40s, 50s and 60s. These artists rely on wisdom, which increases with age.” Read more here.

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Courtesy of Passare.com.

Making an Ethical Will for the Digital Age

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We found an interesting story in The New York Times about a new trend in Estate Planning that’s taken an ancient tradition and given it a high-tech makeover. For centuries, families have used “Ethical Wills” to pass on values and lessons like the importance of giving to charity.

Ethical Wills were an oral tradition until around the 11th century when Jewish families began to write them down and archive them. Today, Ethical Wills are once again being viewed as important legacy-builders because they convey a person’s values and pass on heartfelt wisdom to future generations. Some legal advisers are even adding them to their Estate Planning toolbox to deliver personal messages. Brian Luster of the Abernathy Group II believes an Ethical Will can help avoid family conflict. Luster uses Video Wills to communicate a client’s core values. “Families who watch the videos get to hear stories directly,” he said. “So you get to put a face to the name.”

Each of his videos cover a value that’s important to the patriarch or matriarch. The video are then edited and archived. Susan Turnbull, founder of Personal Legacy Advisors embraced Ethical Wills as an alternative to the legalese of Wills and Trusts. “An Ethical Will says who I am. It’s what you want your loved ones to understand.” But it’s not just Estate Planners who are adopting the ancient practice.

More and more people are creating their own Ethical Wills, DVDs, digital scrapbooks, videos and Facebook pages to put a human face and voice to their final legacy. There is even an iPhone app for creating Ethical Wills. April Bell, who owns a video storytelling business, co-developed the Ethical Will app called StoryCatcher. “When you capture someone on film, you get the essence of who they are,” said Bell. “Technology lets you include video clips, sound bites and even music in Ethical Wills,” said Scott Friedman of the law firm Lippes Mathias Wexler Friedman. Friedman believes videos are more effective than written Wills. “Being appropriately emotional in a video adds more dimensions than just words on paper,” he said.

The most unusual Ethical Wills these days can be seen online like Randy Pausch’s Ethical Will, which was published as the book “The Last Lecture.” In it he talks about the importance of seizing the moment in life. Pausch, an author and professor who died at age 47 of cancer, still has a Facebook page and his last lecture is still on YouTube.

To get started on your own Ethical Will, Turnbull encourages her clients to begin by using their smartphones to create audio files of their thoughts. “If I have a thought, I can pull out my phone and talk into it to start the process,” said Turnbull. “There’s no perfect time.” Barry Baines, author of “Ethical Wills: Putting Your Values on Paper” believes Ethical Wills can deepen our own lives. “Today, we don’t take time to self-reflect,” he said. “But putting together an Ethical Will early on helps you live life with more intention.” That way, life can be richer, he said. “We’re built for story and narrative.”

Read more here.

Choosing Your End of Life Team

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Choosing trusted loved ones and advisors to make important decisions when you most need help is essential for your peace of mind as you near end of life. If you’re creating an end of life plan, it’s a good time to choose people you trust to be on your end of life support team. It’s best to consider team members early.

Consider Your Needs

Choosing your end of life support team may seem challenging yet you can start by simply thinking about your needs. For example, do you have dependents or pets that will need guardianship? Do you have health issues to manage as you near end of life? Do you own property or a business that will need management if you become unable?

Consider Your Preferences and Resources

Think about who may be best suited, and what skills are most important for each role. For example, your Healthcare Proxy (HP) or Medical Power of Attorney (MPOA) should be accessible, available to travel and willing to support and defend your final care choices. Your Financial Power of Attorney (FPOA) should be able to manage your financial matters without conflicted interests.

Ask Key Questions

It may help to ask yourself questions like these as you consider your end of life support team: Will my choices stand the test of time? Think about how long and in what capacity you have known support team members. Consider how long you may need them to fill their respective role. For example, it may be best to choose a legal guardian who is capable of caring for minor dependents into adulthood. Read the full article on choosing your end of life support team here.