This will be a very short post. I would like to say that I have confidence that the legislature will take care of business by the end of the year and we will have a freeze on the previous estate tax exemption, that being $3.5 million per person, with all the same taxes and regulations as were in force in 2009. I would like to say that the legislature has a long-range plan to address the ambiguity and uncertainty they left us with when they failed to pass any substantive law relating to estate taxes.
Every now and then, an "expert" or "political analyst" will prognosticate on the future of the Federal Estate Tax, but there is no confidence in their writing. These prognosticators are always sure to include this caveat, or that disclaimer, because while they might think they have some insight, they really might as well be throwing darts at a donkey's hind-end.
The sad fact is that we will likely watch the legislature do nothing substantive with estate tax reform and EGTRRA will be left to sunset to the preordained 2011 rates and ceilings. I would list those rates and ceilings, but I have no confidence in the legislature whatsoever and might find myself waking-up tomorrow with something totally new and different.
Stay Tuned.............
Tuesday, October 12, 2010
Monday, August 23, 2010
Don't Pass it by, Pick It Up
I have a dog and I try to walk her every day, or she tries to walk me. We have issues, but somehow or other we seem to get outside together each morning and sometimes each evening. Maybe it is just me, or maybe I am becoming more sensitive to this, but, I seem to notice a lot of litter, garbage and debris both on the roads, in parks and on private property.
I, like most people I see walking along, with, or without four-legged friend attached, walk right around, through or by litter all the time. After walking with my dog around the same pond everyday for several weeks, I decided to try to pick-up a couple pieces of litter each day to see if it would make any difference in the appearance of that park.
Now, I do not always walk the same route and there are times, this year in particular, where the path around this pond were not passable, but, I have to admit that by picking trash up every day, I have noticed a marked difference. In fact, this has become a bit of an obsession for me and I have unofficially adopted that park as my litter-free zone.
Now, I am not writing this for a pat on the back or for some kind of kudos, what I do want to impress upon anyone reading this is that if I can do this, so can just about anyone else. Besides being able to enjoy a cleaner park and a safer environment for other critters who share that space, you also receive a feeling of accomplishment and pride in your neighborhood.
I have been trying to think of ways to expand this concept to not only my neighborhood, but to my town and beyond to other suburbs in my area. I also ride a bicycle as that is one form of exercise that I can do on regular basis, at least while the weather stays relatively nice and have been dismayed to see how much trash can accumulate on the sides of nature trails over time. Instead of continuing to ride past all this trash, I plan to dedicate a portion of each ride to parking my bike and walking along for 10-15 minutes to pick-up trash along certain stretches of the trail.
I think this is doable as I don't think that I will be challenging Lance anytime soon and the walking and bending over won't hurt my waistline either. My purpose for this blog is to challenge others to do the same. It doesn't take much to carry an extra plastic bag with you and to pick-up a little bit of trash/litter each time you walk your dog, or go out for some exercise. Yes, you will be let down sometimes that the next time you walk that way, there may be more litter replacing what you picked-up, but, if done over time, people get the message and actually start taking care to look for and find the nearest trash can.
I know battling litter is nothing new. I know that there are people out there more eco-conscious than myself. I also know that there will be litter no matter what I do, but, I find myself taking a stand, here, now. Just think about it the next time you are out walking, it might just give your day a lift.
I, like most people I see walking along, with, or without four-legged friend attached, walk right around, through or by litter all the time. After walking with my dog around the same pond everyday for several weeks, I decided to try to pick-up a couple pieces of litter each day to see if it would make any difference in the appearance of that park.
Now, I do not always walk the same route and there are times, this year in particular, where the path around this pond were not passable, but, I have to admit that by picking trash up every day, I have noticed a marked difference. In fact, this has become a bit of an obsession for me and I have unofficially adopted that park as my litter-free zone.
Now, I am not writing this for a pat on the back or for some kind of kudos, what I do want to impress upon anyone reading this is that if I can do this, so can just about anyone else. Besides being able to enjoy a cleaner park and a safer environment for other critters who share that space, you also receive a feeling of accomplishment and pride in your neighborhood.
I have been trying to think of ways to expand this concept to not only my neighborhood, but to my town and beyond to other suburbs in my area. I also ride a bicycle as that is one form of exercise that I can do on regular basis, at least while the weather stays relatively nice and have been dismayed to see how much trash can accumulate on the sides of nature trails over time. Instead of continuing to ride past all this trash, I plan to dedicate a portion of each ride to parking my bike and walking along for 10-15 minutes to pick-up trash along certain stretches of the trail.
I think this is doable as I don't think that I will be challenging Lance anytime soon and the walking and bending over won't hurt my waistline either. My purpose for this blog is to challenge others to do the same. It doesn't take much to carry an extra plastic bag with you and to pick-up a little bit of trash/litter each time you walk your dog, or go out for some exercise. Yes, you will be let down sometimes that the next time you walk that way, there may be more litter replacing what you picked-up, but, if done over time, people get the message and actually start taking care to look for and find the nearest trash can.
I know battling litter is nothing new. I know that there are people out there more eco-conscious than myself. I also know that there will be litter no matter what I do, but, I find myself taking a stand, here, now. Just think about it the next time you are out walking, it might just give your day a lift.
Friday, June 4, 2010
It has been a while since I have posted to my blog. I thought I would wait until Congress acted on the Estate Tax issues, thinking they would take care of their previous oversight at the first available opportunity. While there are talks in committee regarding the Estate Tax and avoiding the Sunset provision of EGTRAA we will be facing in 2011 should they (Congress) not address the issues involved, there is really nothing substantive to report at this time.
I feel no more comfortable today than I did two months ago in predicting what the status of the Federal and State Estate tax will be in 2011, or for the remainder of 2010 for that matter. The uncertainty of the whole situation has left many thinking that they should wait until this is all cleared-up before initiating an estate plan. If your choice is to wait until the Federal Government finalizes all these issues, you will not have any planning in place in your lifetime.
There is a solution. It is quite simple really. It is a 3 part process that will ensure your estate plan will work for both you and your family.
1. Develop the Best Plan You Can Now.
Take the time to look at where you are now and where you want to be 10, 20, or 30 years from now and seek out an attorney who will work with you to create a plan that will work for you and your family now and into the future.
2. Continue to Update and Maintain Your Plan.
If you can count on anything beyond death and taxes, it is that things will continue to change. The laws will continue to change, your financial and personal situations will continue to change and I will continue to learn more about both over time. Staying on top of your estate plan over time can save substantial amounts of money that might otherwise be lost to taxes and/or lost opportunities.
3. Transfer Your Wealth in and Efficient and Effective Manner.
By being consistent and purposeful about your planning, when something does happen, you either become disabled, or die, your assets and documents are where they are supposed to be and transferring those assets is much simpler and more effective.
At the Law Office of William J. Dennis, we utilize a 3 step process and work with you, your family and other professional advisers to ensure that you and your family have an estate plan that will work as intended when it is needed.
1. You Tell Us About Your Family, We Will Tell You About the Law and Together We Will Create an Estate Plan that Works.
You are the expert when it comes to you and your family. We start with a conversation about you and your family and the goals you have for your estate plan. I will give you an overview of my practice and review basic estate planning concepts with you. Based on your situation and goals, we will give you several possible options to consider. Once you have chosen an option, we will work together to design the plan you want. We will then make sure that assets and beneficiary designations are properly in place.
2. Formal Updating and Maintenance Program.
As discussed above, things change. It is necessary that we work to keep your estate plan current so that it is as effective, 5, 10, 20 years from now as it is today. We meet with clients each year to go over plans and advise clients of changes in the law that might affect their Estate Plans and opportunities that arise due to some of those changes.
3. Efficient and Effective Transfer of Wealth.
If the first two steps have been administered properly, the third step is made much simpler. Working together over time, we can ensure that assets are structured correctly, titled correctly and/or designated such that your Estate Planning Goals and Objectives are met and that your assets are transferred to your loved ones in an efficient and effective manner.
If you would like to learn more about this subject, please feel free to call me to schedule an initial consultation at 630-613-7700. Initial consultations are always free, or you can visit my website at www.wjdennislaw.com.
I feel no more comfortable today than I did two months ago in predicting what the status of the Federal and State Estate tax will be in 2011, or for the remainder of 2010 for that matter. The uncertainty of the whole situation has left many thinking that they should wait until this is all cleared-up before initiating an estate plan. If your choice is to wait until the Federal Government finalizes all these issues, you will not have any planning in place in your lifetime.
There is a solution. It is quite simple really. It is a 3 part process that will ensure your estate plan will work for both you and your family.
1. Develop the Best Plan You Can Now.
Take the time to look at where you are now and where you want to be 10, 20, or 30 years from now and seek out an attorney who will work with you to create a plan that will work for you and your family now and into the future.
2. Continue to Update and Maintain Your Plan.
If you can count on anything beyond death and taxes, it is that things will continue to change. The laws will continue to change, your financial and personal situations will continue to change and I will continue to learn more about both over time. Staying on top of your estate plan over time can save substantial amounts of money that might otherwise be lost to taxes and/or lost opportunities.
3. Transfer Your Wealth in and Efficient and Effective Manner.
By being consistent and purposeful about your planning, when something does happen, you either become disabled, or die, your assets and documents are where they are supposed to be and transferring those assets is much simpler and more effective.
At the Law Office of William J. Dennis, we utilize a 3 step process and work with you, your family and other professional advisers to ensure that you and your family have an estate plan that will work as intended when it is needed.
1. You Tell Us About Your Family, We Will Tell You About the Law and Together We Will Create an Estate Plan that Works.
You are the expert when it comes to you and your family. We start with a conversation about you and your family and the goals you have for your estate plan. I will give you an overview of my practice and review basic estate planning concepts with you. Based on your situation and goals, we will give you several possible options to consider. Once you have chosen an option, we will work together to design the plan you want. We will then make sure that assets and beneficiary designations are properly in place.
2. Formal Updating and Maintenance Program.
As discussed above, things change. It is necessary that we work to keep your estate plan current so that it is as effective, 5, 10, 20 years from now as it is today. We meet with clients each year to go over plans and advise clients of changes in the law that might affect their Estate Plans and opportunities that arise due to some of those changes.
3. Efficient and Effective Transfer of Wealth.
If the first two steps have been administered properly, the third step is made much simpler. Working together over time, we can ensure that assets are structured correctly, titled correctly and/or designated such that your Estate Planning Goals and Objectives are met and that your assets are transferred to your loved ones in an efficient and effective manner.
If you would like to learn more about this subject, please feel free to call me to schedule an initial consultation at 630-613-7700. Initial consultations are always free, or you can visit my website at www.wjdennislaw.com.
Monday, March 8, 2010
2010 Estate Tax Overview
2010 Estate Tax Overview
Last year the Federal Estate Tax Exemption amount was $3,500,000.00 and the Illinois State Estate Tax Exemption amount was $2,000,000.00.
This year the Federal Estate Tax was repealed because Congress could not agree upon legislation to amend the existing law, so, we are left with the following set of facts:
There is no present Federal Estate Tax;
There is no present Generation Skipping Tax;
The Illinois Estate Tax Exemption remains at $2,000,000.00;
The Gift Tax Exemption amount remains at $1,000,000.00;
There is a "sunset" provision written into the existing law that will revive the Federal Estate Tax Exemption in 2011 with an exemption amount of $1,000,000.00. Should that happen, the Illinois State Estate Tax will "re-couple" with the Federal Estate Tax. (that means that rather than collect their tax separately, the State of Illinois will take a percentage of the Federal tax assessed). The tax rate will be between 45-55%.
Now, back to 2010. The legislature has promised to pass legislation establishing a Federal Estate Tax Exemption amount. This legislation when passed will be retroactive, meaning that even if Congress does not get this law passed until December, the tax will be applied retroactively back to January 1, 2010. So, even if you should happen to die this year when there is no estate tax in effect, your estate could still be taxed at whatever level and rate the legislature decides upon.
Let's make this even more confusing by adding there is a legal argument that taxing retroactively is unconstitutional. This could go the route of the recent Medicaid revisions, not for the same reason, but bringing about the same effect of being tied-up in the Court system, while leaving people up in the air not knowing which way to turn.
Back again to 2010. The current rules allowing a "step-up" in the income tax basis of a decedent's assets is eliminated for 2010. Generally, the income tax basis of the decedent's assets will "carry over" to the recipient of the asset, likely increasing the capital gains tax paid when the asset is sold. This could mean those with large appreciated assets in their estates will either be paying increased capital gains tax, or the heirs who inherit these assets will be paying an increased capital gains tax, depending upon when the asset is sold.
I don't know of anyone who thought we would find ourselves with no Federal Estate Tax, even if it is only for one year. This also leaves doubts as to whether any meaningful legislation can be passed to amend the existing 2011 "sunset" provision. That will be the subject of another blog.
This year the Federal Estate Tax was repealed because Congress could not agree upon legislation to amend the existing law, so, we are left with the following set of facts:
There is no present Federal Estate Tax;
There is no present Generation Skipping Tax;
The Illinois Estate Tax Exemption remains at $2,000,000.00;
The Gift Tax Exemption amount remains at $1,000,000.00;
There is a "sunset" provision written into the existing law that will revive the Federal Estate Tax Exemption in 2011 with an exemption amount of $1,000,000.00. Should that happen, the Illinois State Estate Tax will "re-couple" with the Federal Estate Tax. (that means that rather than collect their tax separately, the State of Illinois will take a percentage of the Federal tax assessed). The tax rate will be between 45-55%.
Now, back to 2010. The legislature has promised to pass legislation establishing a Federal Estate Tax Exemption amount. This legislation when passed will be retroactive, meaning that even if Congress does not get this law passed until December, the tax will be applied retroactively back to January 1, 2010. So, even if you should happen to die this year when there is no estate tax in effect, your estate could still be taxed at whatever level and rate the legislature decides upon.
Let's make this even more confusing by adding there is a legal argument that taxing retroactively is unconstitutional. This could go the route of the recent Medicaid revisions, not for the same reason, but bringing about the same effect of being tied-up in the Court system, while leaving people up in the air not knowing which way to turn.
Back again to 2010. The current rules allowing a "step-up" in the income tax basis of a decedent's assets is eliminated for 2010. Generally, the income tax basis of the decedent's assets will "carry over" to the recipient of the asset, likely increasing the capital gains tax paid when the asset is sold. This could mean those with large appreciated assets in their estates will either be paying increased capital gains tax, or the heirs who inherit these assets will be paying an increased capital gains tax, depending upon when the asset is sold.
I don't know of anyone who thought we would find ourselves with no Federal Estate Tax, even if it is only for one year. This also leaves doubts as to whether any meaningful legislation can be passed to amend the existing 2011 "sunset" provision. That will be the subject of another blog.
Saturday, February 6, 2010
Being Thankful
I saw that a colleague of mine named Peggy Hoyt has written a book on thankfulness titled "Thank Everyone for Everything" and it reminded me that I have been taught that my whole life. That the concept is so simple so as to escape us when we really need it. I know there are so many people who are hurting right now, feeling helpless and alone and not knowing where to turn. I am not going to make a religious bend out of this post as I don't feel that being thankful need be a religious endeavor, though thankfulness certainly is a big part of mine.
Being thankful need only involve looking outside of yourself and realizing that everything is not about you. We get wrapped-up in the 'me' of everything and forget that we are not alone. Not alone in problems, not alone in despair, not alone in misery, or pain. Just like we are not alone in celebration, not alone in laughter, not alone in love, compassion, healing, belonging, I think you get the picture, the list is as endless as it is diverse.
Now, I have not read Peggy's book yet, and it may have nothing to do with what I have written, but Thank You Peggy, for reminding me to be Thankful and thank you all who have read this.
Being thankful need only involve looking outside of yourself and realizing that everything is not about you. We get wrapped-up in the 'me' of everything and forget that we are not alone. Not alone in problems, not alone in despair, not alone in misery, or pain. Just like we are not alone in celebration, not alone in laughter, not alone in love, compassion, healing, belonging, I think you get the picture, the list is as endless as it is diverse.
Now, I have not read Peggy's book yet, and it may have nothing to do with what I have written, but Thank You Peggy, for reminding me to be Thankful and thank you all who have read this.
Monday, February 1, 2010
Unmarried couples, What Happens If?
My wife and I were talking to an acquaintance about a business related issue when out slipped the fact that the person she had been living with for the past 9 years had just recently died. She was plainly devastated. Both had grown children and had been in previous long-term relationships that either did not work, or, had ended when their previous spouse had died. "The worst part", our friend went on to say, "Is that once he died everything changed." She went on to say that she had no say in his treatment while he was alive, she had no say in any of his burial arrangements, she had to get her things out of his house within one week of him dying and that his kids have not spoken to her since the funeral. This all has happened within the last few months and it will be a long time before she gets over this, if she ever does.
It would have been insensitive of me to offer my opinion at that time, after the fact. It would have just been the sort of 'I told you so' that she did not need at that time. Instead we both hugged her and let her know that if she needs someone to talk to, we will listen. We will also keep her in our prayers and visit her more often to see if we can offer any help to her.
The partnership, whether opposite sex, or same sex is not really as important as what it means to the partners. If there is a commitment to another that is important to preserve in some way, then it is important that it be in writing. The state of Illinois does not recognize unmarried couples in many ways. What happens when one partner becomes incapacitated? Who makes decisions regarding financial management? Who makes the health care decisions?
In the scenario above, since the couple was not married, the doctors/hospital looked to the family (adult kids) who made at the very least, choices inconsistent with what their father wanted. His expectation was that his live-in life partner would take care of him, make the health care decisions for him, but since he could no longer speak for himself, the system took over and that did not happen. Our friend, was shut out and made a spectator of a series of events that has led her to what what she is left with today, a gaping hole in her life with limited means of healing the wound and finding some sort of closure.
What could have been done so that his wishes would have been followed and she would not have had to go through the added pain of not being included? A Power of Attorney for either, or both, finances and health care would be a start. Separate Revocable Living Trusts spelling-out the terms and conditions relating to 'who makes what decisions' and 'who gets what' would have helped address the longer term issues. The re-titling of assets can be an effective tool as well.
I think the single most important factor is to consult with an Estate Planning attorney who will listen. Listen to what each partner brings to the relationship and to what extent each partner wants the other partner involved should one of them become incapacitated, or die. A well documented estate plan consisting of Separate Revocable Living Trusts, Health care Power of Attorney, Durable Power of Attorney for Property and Living Wills could have spelled-out the wishes and goals of each partner for the other.
Additionally, keeping the Estate Plan current and updated is extremely important, because changes in the couples circumstances must be documented correctly or the couple risks losing the effectiveness of the plan.
If you have questions, or, if you want to talk more about this type of planning, please contact me to schedule an appointment. Initial consultations are free.
My wife and I were talking to an acquaintance about a business related issue when out slipped the fact that the person she had been living with for the past 9 years had just recently died. She was plainly devastated. Both had grown children and had been in previous long-term relationships that either did not work, or, had ended when their previous spouse had died. "The worst part", our friend went on to say, "Is that once he died everything changed." She went on to say that she had no say in his treatment while he was alive, she had no say in any of his burial arrangements, she had to get her things out of his house within one week of him dying and that his kids have not spoken to her since the funeral. This all has happened within the last few months and it will be a long time before she gets over this, if she ever does.
It would have been insensitive of me to offer my opinion at that time, after the fact. It would have just been the sort of 'I told you so' that she did not need at that time. Instead we both hugged her and let her know that if she needs someone to talk to, we will listen. We will also keep her in our prayers and visit her more often to see if we can offer any help to her.
The partnership, whether opposite sex, or same sex is not really as important as what it means to the partners. If there is a commitment to another that is important to preserve in some way, then it is important that it be in writing. The state of Illinois does not recognize unmarried couples in many ways. What happens when one partner becomes incapacitated? Who makes decisions regarding financial management? Who makes the health care decisions?
In the scenario above, since the couple was not married, the doctors/hospital looked to the family (adult kids) who made at the very least, choices inconsistent with what their father wanted. His expectation was that his live-in life partner would take care of him, make the health care decisions for him, but since he could no longer speak for himself, the system took over and that did not happen. Our friend, was shut out and made a spectator of a series of events that has led her to what what she is left with today, a gaping hole in her life with limited means of healing the wound and finding some sort of closure.
What could have been done so that his wishes would have been followed and she would not have had to go through the added pain of not being included? A Power of Attorney for either, or both, finances and health care would be a start. Separate Revocable Living Trusts spelling-out the terms and conditions relating to 'who makes what decisions' and 'who gets what' would have helped address the longer term issues. The re-titling of assets can be an effective tool as well.
I think the single most important factor is to consult with an Estate Planning attorney who will listen. Listen to what each partner brings to the relationship and to what extent each partner wants the other partner involved should one of them become incapacitated, or die. A well documented estate plan consisting of Separate Revocable Living Trusts, Health care Power of Attorney, Durable Power of Attorney for Property and Living Wills could have spelled-out the wishes and goals of each partner for the other.
Additionally, keeping the Estate Plan current and updated is extremely important, because changes in the couples circumstances must be documented correctly or the couple risks losing the effectiveness of the plan.
If you have questions, or, if you want to talk more about this type of planning, please contact me to schedule an appointment. Initial consultations are free.
Monday, January 18, 2010
Why You Should be Concerned About Medicaid
Medicaid is the government paid medical assistance for the low income elderly, right? Yes, it is. But your client has a sizeable nestegg. So, your question should be how much money is enough? What is the threshhold amount below which Medicaid planning is advisable?
The answer is, "It depends", but let's look at some of het factors, or variables, that influence the answer. First, the fact is we are living longer, or as I have heard it put, "We aren't dying the way we are supposed to anymore." Thirty years ago the average life expectancy was somewhere in the late 60's, early 70's. Twenty years ago the average life expectancy was around the mid to late 70's, ten years ago the late 70's to early 80's. Today, living into your 90's is fairly common. I have heard numerous reports that opine that children born within the last 5 years have a better than equal chance of living well past 120. No, that is not a typo, 120.
Second, since we are living longer, the chances of developing some type of mental disability, such as Alzheimer Disease or Dymentia are on the rise.
Third, the rise in mental disability increases the average length in nursing homes because while the mind no longer works properly, the body continues to run just fine.
Additionally medical and nursing home costs are increasing every year. I won't go into exact costs in this area as it varies so wildly from individual to individual, but, you don't have to be old and reside in a nursing home to feel the bite of medical expenses. In the Chicago area the average monthly nursing home cost if between $6 - 7,000.00 per month, which equates to between $72 - 84,000.00 per year. This number does not include incidentals like hospital deductibles, drug deductibles, physical therapy, etc.
Even though we are retiring later, the average retirement age remains somewhere between 65 - 72. Retirement you no longer produce new income and are now living off your savings, pension and social security.
Now that we know some of the facts, let's apply these factors to some real life situations. Let's say Mr. and Mrs. Smith have $500,000 of assets, both are 70 and are just recently retired. They live in a house that is paid-off and are getting an unheard of rate of 5% on their investments. Between social security, a pension and interest income, they live comfortably on $30,000 per year gross without eating into any of their savings.
Ten years down the road, it is necessary for Mr. Smith to enter a nursing home because he has developed Alzheimer disease. The average cost per month has probably risen to over $7,000 per month. Mr. Smith enters the nursing home and begins self-paying for care and continues like this for the first three years. Three years at $7,000 per month equals $252,000, which does not include anything but the basic nursing home costs.
That leaves Mrs. Smith with approximately $300,000 to live on. Mrs. Smith lives fairly comfortably on social security, pension and interest income until at age 90 she enters a nursing home with dementia. By that time nursing home costs have increased to $7,500 per month and $90,000 per year, which still does not include other expenses she has to incur.
Mrs. Smithh lives for 5 years in the nursing home. Unless family helps with the bills, Mrs Smith will be forced into the Medicaid arena to help pay a portion of her continuing care. Additionally, Mr. and Mrs. Smith were unable to leave anyting for their kids. Now, the government will tell you that savings are for retirement and not to make the next generations wealthy, but I think if you talked to Mr and Mrs Smith, they would disagree to some extent. The fact is that most parents want to be able to leave something to their children, grandchildren and/or charity.
There are many strategies for protecting asssets and qualifying for medicaid and the most effective strategies involve pre-planning and maintenance. The worst outcomes stem from waiting too long and going through what is called "crisis" planning. A crisis plan is one where mom and dad are being forced to spend down their assets to become eligible for Medicaid. They find themselves having to attempt to effect changes in their portfolio now, without the benefit of pre-planning strategies.
Don't let this happen to you or ones you love. Schedule an appointment to meet with me and let me tell you what can be done to get you eligible for Medicaid and save some of your assets to give to your loved ones without incurring any fines, penalties or pay-backs.
The answer is, "It depends", but let's look at some of het factors, or variables, that influence the answer. First, the fact is we are living longer, or as I have heard it put, "We aren't dying the way we are supposed to anymore." Thirty years ago the average life expectancy was somewhere in the late 60's, early 70's. Twenty years ago the average life expectancy was around the mid to late 70's, ten years ago the late 70's to early 80's. Today, living into your 90's is fairly common. I have heard numerous reports that opine that children born within the last 5 years have a better than equal chance of living well past 120. No, that is not a typo, 120.
Second, since we are living longer, the chances of developing some type of mental disability, such as Alzheimer Disease or Dymentia are on the rise.
Third, the rise in mental disability increases the average length in nursing homes because while the mind no longer works properly, the body continues to run just fine.
Additionally medical and nursing home costs are increasing every year. I won't go into exact costs in this area as it varies so wildly from individual to individual, but, you don't have to be old and reside in a nursing home to feel the bite of medical expenses. In the Chicago area the average monthly nursing home cost if between $6 - 7,000.00 per month, which equates to between $72 - 84,000.00 per year. This number does not include incidentals like hospital deductibles, drug deductibles, physical therapy, etc.
Even though we are retiring later, the average retirement age remains somewhere between 65 - 72. Retirement you no longer produce new income and are now living off your savings, pension and social security.
Now that we know some of the facts, let's apply these factors to some real life situations. Let's say Mr. and Mrs. Smith have $500,000 of assets, both are 70 and are just recently retired. They live in a house that is paid-off and are getting an unheard of rate of 5% on their investments. Between social security, a pension and interest income, they live comfortably on $30,000 per year gross without eating into any of their savings.
Ten years down the road, it is necessary for Mr. Smith to enter a nursing home because he has developed Alzheimer disease. The average cost per month has probably risen to over $7,000 per month. Mr. Smith enters the nursing home and begins self-paying for care and continues like this for the first three years. Three years at $7,000 per month equals $252,000, which does not include anything but the basic nursing home costs.
That leaves Mrs. Smith with approximately $300,000 to live on. Mrs. Smith lives fairly comfortably on social security, pension and interest income until at age 90 she enters a nursing home with dementia. By that time nursing home costs have increased to $7,500 per month and $90,000 per year, which still does not include other expenses she has to incur.
Mrs. Smithh lives for 5 years in the nursing home. Unless family helps with the bills, Mrs Smith will be forced into the Medicaid arena to help pay a portion of her continuing care. Additionally, Mr. and Mrs. Smith were unable to leave anyting for their kids. Now, the government will tell you that savings are for retirement and not to make the next generations wealthy, but I think if you talked to Mr and Mrs Smith, they would disagree to some extent. The fact is that most parents want to be able to leave something to their children, grandchildren and/or charity.
There are many strategies for protecting asssets and qualifying for medicaid and the most effective strategies involve pre-planning and maintenance. The worst outcomes stem from waiting too long and going through what is called "crisis" planning. A crisis plan is one where mom and dad are being forced to spend down their assets to become eligible for Medicaid. They find themselves having to attempt to effect changes in their portfolio now, without the benefit of pre-planning strategies.
Don't let this happen to you or ones you love. Schedule an appointment to meet with me and let me tell you what can be done to get you eligible for Medicaid and save some of your assets to give to your loved ones without incurring any fines, penalties or pay-backs.
Friday, January 1, 2010
Happy New Year
It is now officially 2010 and as I look back over the last year I find myself wondering where it went. The first part of the year seemed to drag, but the last 6 months just flew by. I know there is a list a mile long of things that I meant to get done but didn't for one reason or another. We all make resolutions and some we keep, some we don't.
I have resolved to get a handle on my health, lose weight and get in shape this year. Some may see this a several resolutions, but, I see them as so inter-connected as to be one resolution. I have been over-weight for several years now and it seems that I add a few pounds and get just a little bit more out of shape each year. I am a big guy and people have always said that when you're tall you can hide alot of weight and still look, O.K. While that may be true, it is also true that when you are over-weight your body will be more inclined to succumb to ailments and disease. You get to a certain age and you can no longer allow the body to just take care of itself. It needs help and not just occasionally. I am laying out a plan to eat right, exercise and follow-up with my doctor to make sure everything is under control.
This is analogous to estate planning. I know alot of you out there either have no estate plan, or, have an inadequate or outdated estate plan. You mean to do something about it, but, ______________, you fill-in the blank with your exuse(s).
Here are some examples:
-You had a will and some other papers done and are all set. (even though those documents were drafted over 10 years ago)
-You assigned beneficiaries to all your assets so that everything will avoid probate. (including puting your children as joint owners on your house)
-I don't have time to do it right now, I just need to get through ___________________, (again fill in the blank)
-There is always tomorrow.
Those are just a few excuses I hear and there are as many more as there are people without adequate estate planning. I understand excuses, I have used excuses to explain why I haven't taken better care of myself. I'm too busy, I'm too tired, it's too cold out, it's too hot, I'll do it later, I'll do twice as much tomorrow, it's just one cookie, chocolate, extra portion., etc.
Life has a way of sneaking up on you and time slips away until we look at ourselves one morning and wonder what happened? How did I get like this? It all happens so slowly you hardly notice it a first, but then it snowballs until, BAAM, who is that fat guy in the mirror and what did he do with the real me?
With my health, I can move forward, change my lifestyle, eat a better diet, exercise and take better control of any lingering ailments with a doctor's care. With estate planning, you can do much the same. You can move forward and resolve to plan for your future and the future of your loved ones.
You can start by realizing that by not planning, or by having an inadequate plan, you leave yourself open to results that will likely not meet your expectations and/or goals.
You need to resolve to contemplate just what you do and don't want, what your goals for your estate plan are. More simply put, you need to decide how you want to be treated when you become disabled, and, where you want your stuff to go when you die.
Consult with an estate planning attorney to find out what needs to be done so that your goals and expectations can be met.
Resolve to maintain and update your plan on an ongoing basis, and that means regularly, not once, or every 5 years so that you will be taken care of when you become disabled and your stuff goes to who you want, when you want and the way you want when you die.
Let's not make any more excuses. I resolve to get in better shape this year. You resolve to take care of your estate planning this year.
I have resolved to get a handle on my health, lose weight and get in shape this year. Some may see this a several resolutions, but, I see them as so inter-connected as to be one resolution. I have been over-weight for several years now and it seems that I add a few pounds and get just a little bit more out of shape each year. I am a big guy and people have always said that when you're tall you can hide alot of weight and still look, O.K. While that may be true, it is also true that when you are over-weight your body will be more inclined to succumb to ailments and disease. You get to a certain age and you can no longer allow the body to just take care of itself. It needs help and not just occasionally. I am laying out a plan to eat right, exercise and follow-up with my doctor to make sure everything is under control.
This is analogous to estate planning. I know alot of you out there either have no estate plan, or, have an inadequate or outdated estate plan. You mean to do something about it, but, ______________, you fill-in the blank with your exuse(s).
Here are some examples:
-You had a will and some other papers done and are all set. (even though those documents were drafted over 10 years ago)
-You assigned beneficiaries to all your assets so that everything will avoid probate. (including puting your children as joint owners on your house)
-I don't have time to do it right now, I just need to get through ___________________, (again fill in the blank)
-There is always tomorrow.
Those are just a few excuses I hear and there are as many more as there are people without adequate estate planning. I understand excuses, I have used excuses to explain why I haven't taken better care of myself. I'm too busy, I'm too tired, it's too cold out, it's too hot, I'll do it later, I'll do twice as much tomorrow, it's just one cookie, chocolate, extra portion., etc.
Life has a way of sneaking up on you and time slips away until we look at ourselves one morning and wonder what happened? How did I get like this? It all happens so slowly you hardly notice it a first, but then it snowballs until, BAAM, who is that fat guy in the mirror and what did he do with the real me?
With my health, I can move forward, change my lifestyle, eat a better diet, exercise and take better control of any lingering ailments with a doctor's care. With estate planning, you can do much the same. You can move forward and resolve to plan for your future and the future of your loved ones.
You can start by realizing that by not planning, or by having an inadequate plan, you leave yourself open to results that will likely not meet your expectations and/or goals.
You need to resolve to contemplate just what you do and don't want, what your goals for your estate plan are. More simply put, you need to decide how you want to be treated when you become disabled, and, where you want your stuff to go when you die.
Consult with an estate planning attorney to find out what needs to be done so that your goals and expectations can be met.
Resolve to maintain and update your plan on an ongoing basis, and that means regularly, not once, or every 5 years so that you will be taken care of when you become disabled and your stuff goes to who you want, when you want and the way you want when you die.
Let's not make any more excuses. I resolve to get in better shape this year. You resolve to take care of your estate planning this year.
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