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Viewing entries tagged with 'directive to physicians'
Stepping in Financially For An Older Relative at a Time of Need
Stepping In Financially For An Older Relative at a Time of Need
No one wants to give up control of their lives. That’s true for someone who’s 20 or 80. But if you sense an older relative is slowing down, or if a serious illness is threatening the finances of any loved one, it’s time to fashion a battle plan.A good first stop is a fiduciary fee-only financial planner – a financial expert with the experience to step into a tense situation and help you create a system for locating key information so you can make the necessary critical decisions. Of course, the best way to set up a system is to work with the relative before there’s a problem or in the early stages of illness. Some suggestions:
Understand their condition and strike a cooperative balance: The first step in helping someone in a crisis is not to talk about the money but to understand the crisis. Before talking about money issues, do everything possible to understand how they’re feeling and most important, how they want to handle family, work and money issues at each stage of their illness. It’s not unreasonable for someone to want to keep control until the point when they really have to give up the reins. Get them to talk about what they believe will be triggers for them to give up control, and then find out how they would like to proceed and formulate a transition plan.
Talk about legal documents: Does this parent, relative or friend have a will and necessary health directives in place? Health directives name a single individual to manage all key health decisions if a patient cannot make them; a will depending on their assets and lifestyle situation – if they have kids to raise or a business to run, for example – check to see what detailed legal instructions they have in place to manage their finances or run their business if they are incapacitated. And if those plans have not been made, they need to be made immediately with the help of a fiduciary fee-only CFP® professional and necessary tax and legal experts. An individual who is ill needs to designate people whom they trust to handle health and personal finance decisions. But if they have not planned for the future of their business, that is a third and very detailed step that needs to be addressed in collaboration with other family members as well as key co-workers or executives.
Talk about long-term care provisions: According to the American Association of Retired Persons, the average nursing home stay is 2.5 years. Whether an individual chooses long-term care in the home or in a facility, it’s important to understand that while some direct medical expenses will be covered by private insurance, Medicare or Medicaid, most of the cost including daily living expenses, will not.
Get a handle on bills and other key financial events: It’s not the most pleasant dinner table conversation, but if more people planned their affairs with the assumption that they could die or become permanently incapacitated tomorrow, survivors would have a much easier time running or settling matters in their absence. Such planning goes beyond having simple wills and powers of attorney in an easy-to-find location. It makes good sense to establish the following:
Prepare Now for Estate Tax Law Changes
Prepare Now for Estate Tax Law Changes
The nonstop discussion of health care reform and the economy this year crowded out discussion surrounding estate tax law sunset, due to expire December 31, 2009. However, it appears likely the estate tax will be continued at 2009 levels through 2010. What does this mean? More than likely, as of this writing, the 2010 estate tax top rate will be 45 percent and the exemption will be $3.5 million per person.For now, conservative Congressional lawmakers dream of killing the estate tax seems to be dead, at least through 2012. The ever expanding federal spending continues, fueling the need for every tax Congress can dream of and maintain. That means it’s a good time to talk to tax and financial experts about the best ways to pass your holdings to the next generation no matter what happens with the future of the “death tax.”
If you suspect your estate or the estate of relatives you might inherit from may fall prey to the estate tax, it makes sense right now to enlist the help of experts. Assets may be expected to grow over time, and your estate may turn out to be larger than you may think. You should be talking to board-certified estate planning attorneys, as well as fiduciary, fee-only CFP® professionals for solutions to estate tax issues. This is one area where solutions are readily available, procrastination being the largest tax due to your inaction.
Here are some things to keep in mind as you prepare for those conversations:
Give during your lifetime: You can now give $13,000 per calendar year per recipient without paying gift tax or affecting your 1 million dollar lifetime exemption. You can also pay someone's tuition or medical bills directly, or give to a charity, without paying gift tax on the amount, thereby reducing the size of your estate and your eventual estate tax bill after you die.
Check whether your state charges an estate tax: Roughly half of all states charge estate tax, and that’s a recent thing. States previously received a slice of the federal estate tax, which no longer happens, so it’s important to consider the state’s impact when making an estate plan.
Think about a life insurance trust: Whether you need it for estate liquidity or for other purposes, an irrevocable life insurance trust can be created to keep the proceeds of the insurance out of your taxable estate. An added benefit is that such trusts may permit spousal access to the cash value of the policy. Yet note the word “irrevocable” – it means a decision that cannot be changed.
Know if your assets are expected to increase: A grantor-retained annuity trust, or GRAT, is an irrevocable trust popular among families with assets expected to appreciate in value. Such appreciation can be passed on to heirs with minimal tax consequences with proper estate planning.
The bottom line remains it is always better to have an estate plan, than not to have one! Today, make an appointment to have your wills, power of attorney, directive to physicians, guardianship, and power of attorney for health care drafted by a competent estate attorney in your state. It also pays dividends to consult with your fiduciary fee-only advisor in advance, as this individual can aid in sorting through the many decisions to be made in your estate planning. Begin 2010 on a good note by taking care of this for your family!
