Aging in Place: Reality or Dream?
A geriatrician holds the hand of an elderly woman with arthritis.

Aging in Place: Reality or Dream?

Seniors crave their independence and a sense of place. Almost all wish to remain in their own homes and to “age in place.” Being independent in your senior years benefits everyone. However, if aging brings illness, professional home caregiving may be unaffordable, says The Winston-Salem Journal in the article “Who will help me to age in place?”

Even though they want to remain independent, family member participation may be necessary for this to happen. Family caregivers may live with aging parents, serving as guardians, trustees or power of attorney agents on their parent’s behalf. They may perform many tasks, including cooking, cleaning and monitoring their medical or home care. They may take care of the home and take aging parents on outings.

Loyalty to aging parents runs the gamut, from daily contacts and living together, to children who vanish as soon as they are financially independent. While our biology may dictate that close family members are genetically predisposed to care for us most, it’s not everyone’s experience.

If your goal is to have parents, children and grandchildren all spend time together as the generations move through their lives, the time to start is while you are parenting. The most important thing you can do to increase the likelihood of having family members who value each other and care for each other, is to raise children with love and kindness.

You should limit the amount of time that children spend with electronic devices. Making family connections and teaching caregiving skills within the family, requires time and attention. Teach your children empathy and caregiving through gardening, caring for plants and pets and letting them see how you take care of siblings, parents, grandparents, friends and the less fortunate through volunteer work.

Our children learn more from what they see, than what we say. By teaching your children to respect and care for those they love, you will be creating a family legacy based on your values. This will be as much a part of them, as any inheritance you can leave them.

Part of caregiving is taking care of the legal and financial side of your life. Ensure that your family members have an estate plan in place, including a will, financial power of attorney and health care power of attorney. Caregiving for others involves preparing for the ups and downs of life. This shows your children that there are things we do for ourselves and for others that make life easier for those we leave behind. It is an important life lesson for each generation.

Reference: The Winston-Salem Journal (March 5, 2019) “Who will help me to age in place?”

How to Combat Elder Financial Abuse

One estimate is that the amount of elder financial fraud is $30 billion a year, defining it as the theft of money by thieves who include con artists, strangers, caregivers or trusted friends or family members. According to Consumer Reports, in the article “3 Critical Ways to Prevent Elder Financial Abuse,” these crimes are often not reported. Sometimes, the seniors are too embarrassed to admit that they were fooled, or they don’t want to put a family member at risk. They often don’t know they have been scammed, or are physically unable to articulate what has happened to them.

This is starting to change, as banks are starting to increase their reporting of suspected elder financial abuse. Last year, U.S. banks reported roughly 25,000 cases of suspected elder financial abuse to the U.S. Treasury. That’s more than double the amount reported in 2013, as reflected in data from the U.S. Treasury department’s Financial Crimes Enforcement Bureau.

One reason behind the surge is demographics: although the baby boomers are getting older, they have a tremendous amount of assets and are vulnerable to being defrauded.

However, the increase in reported cases may also be bolstered by big pushes from the federal government, states, and the financial industry to fight elder financial abuse. New regulations are now in place to encourage people who are on the front lines for elder abuse: brokers, bankers and financial advisors.

FINRA, the self-regulatory agency that oversees brokers, now requires them to ask clients, no matter how young or old, to provide the name and contact information for a trusted family member or friend. If the broker believes that person is being exploited, they have someone to contact. The new regulations also allow brokers to put a hold on withdrawals from a client’s account, if they believe there may be elder financial abuse occurring. The hold is for 15 days but can be extended 10 more days.

From the federal government, the Senior Safe Act became law in 2018. It enables the employees of any financial institutions to report concerns about elder abuse, without fear of being held liable for disclosing private information. To qualify for this protection, financial institutions are required to provide training to staff about recognizing the abuse. At the state level, NASAA (the North American Securities Administrators Association, a group of state regulators) adopted a rule in 2016 which mandates that brokers and financial advisors report any suspected abuse to state authorities. The rule also allows them to stop withdrawals on accounts and protects brokers and advisors from liability, if they stop account disbursement. Sixteen states have enacted versions of the rule, and there are six more states working on legislation.

On a more personal level, there are three things family members and friends can do to prevent elder financial abuse. One is to stay in touch and ask questions of aging parents. Isolation and cognitive impairment are the biggest risk factors. Make sure that your parent is keeping up with bill paying, and whether he or she is in contact with new friends, strangers who may not have their best interests in mind.

If your parent is willing, start by offering to help with a few financial tasks, like bill paying. Keep it low key, by including a visit with the task. If you see things are not being handled well, stay on top of it.

Another step is to set up checks and balances, by making sure that critical legal documents are in place. There should be a will, a healthcare proxy, a HIPAA release form and a durable power of attorney. The durable power of attorney will let you pay bills and manage finances, if and when they can no longer manage. If there is no will or estate plan in place, make an appointment for your parent with a qualified estate planning attorney as soon as possible.

Consider streamlining aging parent’s finances. If they have too many credit cards and too many bank accounts, it may make things easier if they can pare things down to one bank and one credit card. Be very careful with retirement accounts, like 401(k)s and IRAs, to avoid any taxes and penalties.

Simplifying money management and being involved with your parent’s finances and their lives can help prevent financial elder abuse.

Reference: Consumer Reports (Feb. 22, 2019) “3 Critical Ways to Prevent Elder Financial Abuse”

Planning for the Sad Truth of Growing Old Together

If it’s any comfort, there are now some 20 million widows and widowers in America, according to a study from Merrill Lynch and Age Wave that focuses on widowhood, as reported by CBS News’ Moneywatch in “A retirement planning must-do for married couples.” The study, “Widowhood: The Loss Couples Rarely Plan for—and Should” takes a detailed look at what happens, when the first spouse dies.

It should be noted that women are three times as likely as men to be the surviving spouse, since women historically tend to live longer. Widowers tend to marry younger women, leaving many older women to need to learn how to live as senior singles.

More than half of all of those surveyed who had lost a spouse, said they had not planned for it.  More than three-quarters of married retirees said they would not be financially prepared for retirement, if their spouse passed away.

Losing a spouse is the hardest thing for married people, particularly if they have never been single. Some 75% of those who had lost a spouse, said it was the single hardest thing they’d ever had to deal with. Half of them experience a household decline in income of 50%—or more. Adjusting to that loss of income is a big concern.

When the first spouse passes, the surviving spouses report that they were overwhelmed with paperwork and didn’t know how to begin.

You can plan for this unpleasant eventuality, and you should. Just as having an estate plan in place will help loved ones, planning for one of you to become widowed will help the other.

What should couples do in advance?

  • Know what all your assets and accounts are and how to access all accounts.
  • Make sure both names are on all accounts and deeds.
  • Be able to access cash.
  • Keep credit card debt separate.

Here’s some advice from the surviving spouses:

  • Avoid making big decisions, until at least a year has passed.
  • Find all important documents and pay bills on time.
  • Notify banks, financial advisors and employers.
  • Reevaluate your retirement strategy, following a financial audit of your new situation.
  • Update your estate plan and check all beneficiary designations.

Losing a spouse is a difficult and painful experience.  However, many people report that afterwards they found courage and strength they never knew they had and are living a full and rewarding life.

Reference: CBS Moneywatch (Sep. 12, 2018) “A retirement planning must-do for married couples”

Why You Should Have an Advance Directive

An advance directive is a legal document that states a person’s preferences for medical treatment and medical decision-making, reports Valley News in an informative article titled “Advance Directives Provide Clear Guidance for Care.”

There are two components that make up an advance directive: a durable power of attorney and a treatment preferences section.

The durable power of attorney for health care allows you to appoint someone to make medical decisions, if you lack the capacity to make those decisions for yourself.

The treatment preference, which is sometimes referred to as a living will, lets you specify what kind of treatment you would want in a difficult circumstance. Treatment and care preferences usually focus on what you would want at the end of life or if you were in a permanently unconscious state. There are other preferences that can be expressed, including pain control, blood transfusions, mental health care and spiritual care. Another preference: who should—and should not—be involved in discussions about treatment.

Most people want to express their wishes to avoid aggressive measures being taken to extend their lives, when the end result will be suffering and a delay of their passing. Others chose to avoid the financial burdens that may or may not result in any kind of change in their health or the quality of their life.

Some have these documents prepared to make it clear that they want to spend their final months, weeks or days at home with loved ones with care only to relieve pain or care, so they can be conscious and able to speak with those around them.

Advance directives are a blessing to loved ones since they do not have to make hard choices in a crisis situation. They know what their aging parent or spouses wishes.

It’s important to choose the person you want to be responsible for your care well in advance. Make sure it’s someone you trust, who knows you well and will be able to make hard decisions in a highly emotional time. They’ll also have to be able to communicate with your doctors and family members.

These documents are bound by the laws of your state, so speak with an estate planning attorney who practices law in your state of residence. They’ll be able to prepare these documents on your behalf, along with a will and other estate planning documents.

Reference: Valley News (Sep. 1, 2018) “Advance Directives Provide Clear Guidance for Care”

Being Forward-Thinking About Assisted Living to Avoid a Crisis

We always think there will be time to plan for assisted living, until something happens and then we are facing an emergency. When a loved one is discharged from the hospital and can’t return home, there’s little or no time to find the right place for them to live. As Next Avenue advises in the article “Planning Ahead for Assisted Living,” don’t wait for the emergency.

Many people deal with assisted living this way. Adult children uproot their lives and relocate to be near their aging parents. Spouses feel helpless when their husbands or wives refuse to even consider moving to a facility, yet they are not safe at home.

The senior often pushes back against leaving their home, which is understandable. However, when illness or aging takes a toll, it’s just a matter of time before they understand, usually the hard way.

One woman was the very model of aging-in-place, until turning 85. Then illnesses and a chronic condition started making it hard for her to move around. When she was taken to the hospital, she had to take a clear look at her situation. It was distressing, but she realized she had to make a change.

By 2030, the number of Americans age 65 and older is expected to increase dramatically, and for the first time in our country’s history, the number of older Americans will be higher than the number of children.

We may not know what life has in store for us. However, we can plan ahead.

Some people start looking at CCRCs–Continuing Care Retirement Communities. These are facilities that include independent living, assisted living and nursing home care, all on the same property. Some have secured memory care for those living with dementia.

Research the costs, policies, and programs of the long-term facilities you may be considering. There are different services offered. Assisted living facilities are state-licensed housing communities that offer residents a range of services. They usually do not offer medical care. A skilled nursing facility/nursing home will have medical services.

Services in assisted living communities vary. Some offer meals and help with bathing, dressing and mobility, medication management, education and social activities. They may be large or small, with residential homes, where three or four residents live with a paid caregiver. Those are known as “adult foster homes.” Others are “assisted living homes,” which usually have 10 or so residents. In these facilities, the caretakers don’t live in the house, but 24-hour care is provided.

Here are some questions to ask, when visiting assisted living communities:

  • Is the facility clean? Does it smell?
  • What is the culture and atmosphere of the place?
  • Are the residents and employees smiling, or does everyone look downcast?

It is recommended that people visit the facility several times, at different times, to get a better sense of the facility.  You should also eat in the dining room a few times. Are people friendly? How is the quality of the food? Set up a meeting with the people who run the facility and your family members.

Don’t dismiss the concerns of your loved ones when visiting facilities. They need to be comfortable, and it’s very important for them to have a voice in making this decision.

Reference: Next Avenue (Jan. 21, 2019) “Planning Ahead for Assisted Living”

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How Do We Live Our Lives When A Loved One Has Alzheimer’s?

The scenario is worrisome, as no one can be sure that this is something B. Smith would have wanted, if she had been asked before the disease had progressed. However, one good thing has come out of it, according to the article “B. Smith’s Alzheimer’s raises question: How to protect your wishes when incapacitated” from USA Today. There are more discussions about expressing people’s wishes, before they become incapacitated from Alzheimer’s.

More families are experiencing this very same dilemma because of the increasing number of Americans suffering from Alzheimer’s and other forms of dementia. More than 5.7 million in this country are suffering from this disease, which currently has no cure and is most likely to impact seniors, women and African Americans, according to the Alzheimer’s Association.

Without advance planning, it’s impossible to know what someone would want to happen. Discussing this is critical, while a patient is still relatively healthy and able to communicate her wishes to family members and to an estate planning attorney.

People who work in this area say there are two areas that must be addressed. One is drafting legal documents with an experienced estate attorney to determine who should be entrusted with health care and financial decisions. There is also a need for document known as a “statement of values” that will help family members understand goals and wishes and not be left guessing.

These decisions are not easy to consider when a person is still well. However, thinking about them and putting them down on paper, and then having the necessary documents prepared to formalize them and make them enforceable are important.

Here are the documents needed:

Durable power of attorney: This lets a trusted family or friend make financial decisions, in the event of incapacity.

Power of attorney for health care: This document permits a family member or friend to make decisions about health care decisions.

A will. The will is for the disposition of assets after your death. It also names the person who will be in charge, the executor.

A revocable trust. This is one of many documents that can be used to allow you to set conditions and directions about assets, while you are still living but when you have become incapacitated. It can be changed at your direction. Hence, the term revocable. An estate planning attorney will know what type of trust should be used for your situation.

Only four out of 10 Americans have wills, with many hesitating to have them created because they think that only rich people need a will. However, without a will, or the other documents described above, the family is left in a terrible situation, where there will be additional costs, if and when decisions need to be made but no one has been legally empowered to make the decisions.

The revocable trust could bypass many unpleasant situations, like instructing a power of attorney to place your assets in a trust that was set up specifically to pay for your care in a skilled nursing facility of your choice, or to describe with great specificity who was allowed to live in your home, if you became incapacitated.

Another missing step: the family discussion. Getting everyone together to discuss planning for the future, isn’t as fun as going on a family vacation, but it is important. If someone is starting to have the effects of dementia, they may not remember what they told another family member. With everyone in the same room, there will be a better chance that their wishes will be clear.

The moment someone learns that they have dementia, is the time to put all these elements into place, before it is too late.

Reference: USA Today (Jan. 31, 2019) “B. Smith’s Alzheimer’s raises question: How to protect your wishes when incapacitated”

Should You Play Banker for Your Adult Children?

Many seniors are lending money to their adult children. The kids get a loan that might have cost them thousands of dollars of fees with a traditional lender, and the parents get an income stream that gives a better return than a savings account would. At least – that is what happens when everything goes as planned. If you are thinking about making a significant loan for your child to buy a house or car, you need to evaluate this question – should you play banker for your adult children?

Reasons That Parents Make Loans to Their Adult Children

In addition to the obvious motive of wanting to help their children, many parents want to find ways to make their liquid assets work harder for them. Let’s say you liquidate a significant portion of your investments out of concern about the stock market. In the past, you could dump that money into a savings account that would earn interest and be safer than the stock market.

The problem now is that savings accounts have extremely low yields. The average savings account currently pays only 0.06 percent interest per year. Many of the big, national banks pay only 0.01 percent. Making a loan to your child with an interest rate of 2.5 or 3 percent, can help the parents keep up with inflation. A savings account with a balance of $100,000 and a 0.01 percent yield will generate only $10 a year in interest. Lending your child the same $100,000 at 2.5 percent will get you $2,500 a year in interest.

How to Take the Idea for a Test Drive

Understandably, many parents worry about making a large loan to an adult child. Not to worry – you can make a loan for the down-payment instead of the entire mortgage. You risk a smaller amount, and both you and your child can find out if this type of arrangement works for all of you.

Depending on the amount of the mortgage and the total down-payment, the down-payment loan can help your child qualify for the mortgage and not have to pay for Personal Mortgage Insurance (PMI). PMI can add $100 or more to your child’s monthly mortgage payment.

Downsides of Parent “Bankers”

It could be devastating to you financially if your child does not make the loan payments. This situation could cause you to have to work for many extra years or not be able to retire at all. You could find yourself in poverty when you retire. You should only lend money that you can afford to lose.

You need to consider how lending a substantial sum of money will affect the amount of money your other children inherit. You should make sure that you work with your estate planner to protect your estate’s right to the money. Finally, consider how the loan will affect your relationship with your child and your other children. The Thanksgiving meal can be awkward, when family members borrow money from each other.

Tax Issues of Lending Money to Your Children

You must create the proper documents, like a mortgage or promissory note, to keep the IRS from treating the loan as a gift and imposing a steep gift tax.  It is necessary to charge at least the rate of interest that the IRS requires. These rates change every month, so you will need to check and re-check. You will also have to register the mortgage with an approved company for your children to take the mortgage interest deduction.

Legacy Planning Law Group can help you prepare the documents you will need to memorialize the loan and help you strategize how to make the loan work with your estate plan. We can explain how Florida’s laws might be different from the general law of this article.

References:

CNN. “Savings accounts with the highest yields.” (accessed January 17, 2019) https://money.cnn.com/2013/10/01/pf/savings-account-yields/index.html

AARP. “Should You Give Your Kids a Mortgage?” (accessed January 16, 2018) https://www.aarp.org/money/credit-loans-debt/info-08-2013/giving-your-kids-a-mortgage.html

Good Planning Avoids the Devastating Costs of Long-Term Care

If you don’t have a plan for long-term care, welcome to the club. However, you may not want to be a member of this club, if and when you need long-term care. A recent report from the U.S. Department of Health and Human Services found that people age 65 and older have a very good chance—70%—of needing long-term care. Despite this, most people are not putting plans in place, according to an article from Westfair Online titled Keybank poll reveals clients aren’t planning for long term care.”

This is true for people with assets exceeding $1 million and for people with more modest assets. In a study by Keybank, fewer than a quarter of high net-worth clients had plans in place for long-term care. This poses real financial risks, to the individuals and their families.

Consider the costs of long-term health care. One study from Genworth Financial reports that in 2017, the national median cost of a home health aide was roughly $49,000 a year, assisted living facilities could cost $45,000 (that’s not including medical services), and a private room in a nursing home came close to $100,000 annually. Costs vary by region, so if you live in an expensive area, those costs could easily go much higher.

Why don’t people plan ahead for long-term care? Perhaps they think they will never become ill, which is not the case. They may think their health insurance will cover all the cost, which is rarely the case.  They may believe that Medicare will cover everything, which is also not true.  We have seen cases come in the office where mom or dad didn’t plan and ended up spending all of their assets on long-term care.  No legacy was left to the kids.  Very sad.

Everyone’s hope is that they are able to be at home during a long illness, or during their last illness. However, that’s often not a choice we get. This is a topic that families should discuss well in advance of any illness. Talking with family about potential end-of-life care and decisions is important for setting expectations, delegating responsibilities and avoiding unpleasant surprises.

The other part of a long-term care discussion with family members needs to be about estate plans and decisions about the disposition of assets. Everyone should have a will, and all information including deeds, trusts, bank and investment accounts and digital assets should be discussed with the family. You’ll also need a power of attorney and health care proxy to carry out your wishes. An experienced estate planning attorney can help create an estate plan and facilitate discussions with family members.

Long-term planning is an on-going event. Life changes, and so should your long-term care plan, as well as your estate plan. You should also keep communications open with your family. They will appreciate your looking out for them before and after any illness.

Reference: Westfair Online (Sep. 7, 2018) Keybank poll reveals clients aren’t planning for long term care