Longevity's Deleterious Effect on Life Savings
Due to medical care advances, Americans who are 65 years of age and over now represent 13 percent of the population-40 million-and are living longer than ever. According to the 2010 census, the fastest growing group is seniors aged between 85 and 94. By 2050, it is estimated that this age group will make up 20 percent of the population.
As seniors age, most of their savings are used to pay for retirement living expenses and health care. Adult children often mistakenly believe that government benefits such as Medicare will cover most medical bills. Because of this, few people today have enough money to leave an inheritance to the next generation.
]]> Changes to Family StructureIn today's world, more than half of first marriages end in divorce and 75 percent of divorced people remarry. This has led to an increase in blended families, with 65 percent of families including children from a prior marriage.
As new family members are added, tensions can increase when it is time to do estate planning. While putting together the estate plan, family members must struggle with difficult questions such as to what extent step relatives should be provided for in the will. This can cause resentment among blood relatives, as they may feel entitled to receive a greater share of the estate than their recently added step relatives.
Unfortunately, there are no easy solutions to resolve the family disputes. However, experts strongly recommend that parents talk with their heirs about the estate plan when the parents are still living and address any conflicts between potential heirs.
Parents should encourage their heirs to work out any disputes among themselves, but offer a solution only when the heirs cannot resolve the dispute. By letting their heirs know of their wishes and reasoning behind the estate plan, parents can address hurt feelings and resentment before they die and make any changes to their plan to correct any unforeseen problems or issues.
Source: "With more blended families, estate planning gets ugly," USA Today, 3/14/12
]]>Defining Children
The legal definition for the term "children" has undergone many levels of evolution. Originally, many states refused to include illegitimate and adopted children as offspring in inheritance determinations. Now, in addition to including these family members many states are also enacting laws covering children born using artificial means.
Cryopreservation of genetic material for future family planning needs is becoming more common. The practice is often used by cancer patients before undergoing chemotherapy as well as people in high risk occupations like the military. The number of children born using these methods is on the rise, doubling over the last decade.
]]> Although this issue will not affect every family, it is important to discuss the possibility while drafting a will. If the use of frozen genetic material may result in future offspring, it is important to provide specific language as to who qualifies as a child and receives an inheritance.Internet Questions
In addition to reproductive advances, technology has shifted the way everyday tasks are completed. In this age of social media, Internet succession is an important consideration. It is important to include language stating whether beneficiaries can access online accounts after death.
This can allow loved ones to close Facebook and email accounts, or manage blogs as well as online financial and commercial sites. Designating a person to oversee these accounts can save loved ones future headaches, especially if bills are often paid online.
How to Prepare a Plan that Covers These Issues
The key to a successful estate plan is proper language and inclusion of the right provisions. Without a strong estate plan, confusion can lead to litigation - a financially and emotionally costly process for all involved. Many forms of litigation can be avoided by simply discussing these issues with your estate planner and ensuring they are addressed in your will.
Source: "E-mails and Embryos: 21st Century Estate Planning," Greater Lansing Business Monthly,
]]>Those who do not have an estate plan are not alone. It is estimated that only 35 percent of Americans have a will and even fewer have a trust. Within these dismal statistics lies an opportunity for those suffering from a chronic disease to improve their lives, and the lives of their families, by having an estate plan.
]]> Elements of an Effective Estate PlanBefore starting your estate plan, it is important to gather together contact and emergency information about your family, caregivers and others you want involved in carrying out your wishes. Once you have done that, contact an estate planning attorney to assist you in drafting the following documents:
Estate planning may seem unfamiliar, intimidating or perhaps morbid. However, an estate plan that fits your specific needs can minimize taxes and the emotional hardship to your loved ones.
Source: "Declining Health Is Scary: Estate And Financial Planning Can Protect You", Forbes, 10/17/11
]]>On a basic level, estate planning helps to ensure that your assets are distributed according to your wishes after you die. In addition, executing a power of attorney will ensure that your wishes regarding medical care are known, in the event of accident or illness.
]]> It is easy to think that you shouldn't worry about estate planning until you have reached an advanced age. However, to ensure that any personal property you have is properly entrusted to whomever you choose, you must have a legally solid estate plan in place. In addition, accidents can happen at any stage of life, which means that all adults should have proper power of attorney established.When contemplating your estate plan, it is important to discuss your decisions with whomever you would like to appoint as your power of attorney. It is also often advised to discuss any property decisions with your family and any others whom the decisions may dramatically affect. This sort of open communication can help your loved ones avoid costly and confusing legal proceedings after you are gone.
Once you have examined your assets and contemplated power of attorney, it is advisable to speak with an experienced estate planning lawyer. Given the complexity of the law regarding the construction and execution of estate plans, related taxes and gift rules, the expertise of counsel is ultimately invaluable.
Source: "Get ahead of your estate planning," CNN Money
]]>The new law was championed by the "2nd Wives Club," an offshoot of the organization "Mass Alimony Reform." The group's primary concern stemmed from the reality that previous state law was requiring certain women to contribute portions of their paychecks to the previous spouses of their current married partners.
]]> The Alimony Reform Act of 2011 modified the formula that courts must apply when calculating alimony payments for certain couples. The new calculations take into account the length of marriages which last for less than 10 years. In addition, the law mandates that payments cease if the partner who receives the funds moves in with a romantic partner or reaches the age of retirement.Under ordinary circumstances, marriages lasting fewer than five years will support alimony payments for no longer than half the marriage's length. Alimony payments will be ordered for no longer than 60 percent of the length of marriages lasting six to ten years.
Payments can also be limited due to various factors including earning capacity and certain "rehabilitative" thresholds. However, it is important to note that judges retain discretion in extraordinary circumstances. The courts will also maintain the right to grant transitional and reimbursement alimony in certain situations.
For spouses who are divorcing in Massachusetts after fewer than 10 years of marriage, the new law will affect you. Please consult an experienced family law attorney with any questions or concerns you may have.
Source: "Massachusetts Alimony Law Limits Payment to Ex-Spouses," ABC News, 9/27/11
]]>As Massachusetts business succession planning lawyers, we know how difficult such decisions can be.
Sometimes the lack of succession planning is due to sibling rivalry. Parents who establish a business may not know how to find appropriate roles for all interested children.
Another possibility is that the founder of the business has remarried and is unsure about how to divide assets among a new spouse and children from a previous marriage.
Or it could be that the parent who founded the business has a hard time letting go. For some people, particularly those used to being in control, the tendency to hang on to the reigns too long can be hard to overcome.
In any case, the challenge is to face the future with clear vision and a rational plan. An attorney with knowledge of business issues and estate planning can be very helpful in making the hard decisions needed to make a succession plan work effectively with a minimum of family control.
]]> As an example of what NOT to do, much attention is turning now to the Murdoch family. In the December issue of Vanity Fair magazine, author Sarah Ellison examines the turbulent succession story involving Rupert Murdoch, the octogenarian media mogul, and his three children by his second wife. The children are Elisabeth, Lachlan and James.The conflict among the Murdochs shouldn't obscure the fact that businesses that feature family members often perform very well. "Family firms are managed with lower risk and higher overall financial health" compared to other businesses, according to a research article published last year by the business school at New York University.
Source: "The Lessons of Succession Planning for a Family Business, Murdoch Style," Forbes, 11-4-11
]]>The economics of growing old are putting the squeeze on baby boomers on more than one front. It's not only that their own investment accounts have lost value and that they may be trying to put kids through college. Aging parents from the Greatest Generation increasingly need help as well.
Forbes reported recently on one case in point. A 92-year-old woman named Violet still lives in her own home. Her husband has dementia has is in a care facility.
Violet's combined income from a small pension and Social Security are not sufficient to both support herself and pay for her husband's cost of care. Her husband's income is also insufficient.
Violet and her husband have three children - all daughters. Could the daughters help their parents?
]]> That is easier said than done. One daughter has lost her job and has not yet found another. The other two are working and doing pretty well. But they are uncertain about how to proceed in helping their mother in a way that is fair to everyone.One step that can be useful in situations like this is a family meeting to get all of the issues and concerns on the table. It also makes sense to make contact with a Massachusetts family law attorney.
A lawyer can identify and act upon issues like changing the title to a home, creating a trust, or other tangible actions needed to finance a care-giving arrangement.
Source: "How Much Should You Help Your Aging Parents Financially?" Forbes, 9-8-11
]]>In Massachusetts, that decision certainly isn't made any easier by the mediocre marks given to the state's nursing homes in a recent study by AARP.
The study by the AARP Public Policy Institute rated Massachusetts only 30th among the states in a measure of nursing home care that analyzed the quality, availability and affordability of long-term care.
The price tag of long-term care in Massachusetts is a major concern. Only five states are more expensive for residents who pay their own costs. Deborah Banda, the AARP state director for Massachusetts, says the study shows that the state needs to rethink the way doctors and care facilities get reimbursed.
Despite the high cost of care, the AARP study also pointed out numerous problems with the services available to nursing home residents. Despite lots of rhetoric in recent years about increasing the availability of community-based care, there still aren't enough people receiving that before they enter a care facility.
]]> States that ranked well in the AARP report allocate up to 60 percent of their long-term care funds on community-based care for the elderly and disabled. In Massachusetts, that figure is less than 40 percent.Dr. Judy Ann Bigby, the Massachusetts health and human services secretary, pledges that the state will do better. The creation of more community-based group homes would be one good place to start.
Source: "Mass. nursing care found lacking," Boston.com, 9-8-11
]]>It's time for each of us to put his or her financial house in order. With stresses and uncertainties all around, few of us believe we are living in the best of possible worlds. To paraphrase the eighteenth-century philosopher Voltaire, however, each of us must cultivate our gardens. And that includes our financial gardens.
The first step, for those with 401(k)s or other retirement accounts, should be to review those accounts in light of the recent volatility in the markets. You need to know where your money is invested and how those investments are performing.
In fact, you should review all of your employee benefits, as well as your estate and tax planning arrangements. For example, take the question of insurance. Do you have too much insurance or not enough insurance to cover potential hits to your income from a disability? You should also consider whether your life insurance arrangements are sufficient to cover any dependents you may have, in the event of an untimely death.
]]> A review of this type will lead naturally into estate planning questions. Are the beneficiaries in your will still as you want them? In the time since you put the documents in place, you may find there has been an intervening life event among you or your children, such as marriage, divorce or the birth of a child. Make sure your property will still go where you want to go.Think of it as cultivating your garden.
Source: "A Financial To-Do List for the Rest of 2011," US News, 8-3-2011
]]>Same-sex marriage has been legal in Massachusetts for several years. The federal government, however, does not recognize these marriages. This means that homosexual couples who are legally married in Massachusetts do not receive the same benefits that straight married couples do in certain areas. This affects matters that include Social Security survivors' benefits, family and medical leave, and the right to file joint tax returns.
The federal recognition issue recently became an issue in Cambridge, where some city and public school workers who chose to put their same-sex spouses on their health insurance were facing taxation by the federal government. The value of those health insurance benefits is not taxable to heterosexual married couples.
]]> The city council in Cambridge did not think that was fair. So the council voted to grant stipends to same-sex city employees to cover the cost of the federal tax. "This is about equality," said city council member Marjorie Decker.Another council member, Leland Cheung, agreed. "This is ultimately a fairness issue. Two people who do the exact same job should be paid exactly the same for what they are doing at work," he said.
Conservative groups, such as the Massachusetts Family Institute, expressed concern with the Cambridge policy. But it is unclear how long the federal disapproval of same-sex marriage will continue. In fact, last winter President Obama ordered the U.S. Justice Department to no longer defend the constitutionality of the federal Defense of Marriage Act.
Source: "Cambridge, Massachusetts to Pay Wedded Gay Workers to Offset Tax," Huffington Post, 7-10-11
]]>A Massachusetts psychologist, Dr Erlene Rosowsky, recently spoke about the challenges involved in care-giving relationships involving elderly parents. Recognizing these challenges can be important part of estate plan arrangements for families who are dealing with care-giving arrangements and other elder law issues.
For adult children who take on a frontline care-giving role for an elderly parent, one of the key issues is the need to avoid becoming overwhelmed by the role. Care-giving can be a rich, meaningful experience. But it can also become so intense and demanding that it threatens to engulf the caregiver in anxiety and exhaustion.
Given the demands of care-giving, it's important for care-givers to take breaks and not be on duty all the time. The moments of respite will be good for all concerned.
]]> Many families are affected by care-giving arrangements. According to one survey, 1 in 4 U.S. households provides some type of care to an older adult. Many of these care-givers are middle-aged people caring who are also involved in raising their own children.The stress on people in this "sandwich generation" should not be denied. About 2 of every 5 people providing elder care have children of their own under age 18, so this involves a lot of people.
Talk with an experienced Massachusetts elder law attorney at our firm about how care-giving arrangements should be reflected in your estate plan.
Source: "Speaking of Aging: How to Be a Parent to Your Parent," West Roxbury Patch, 6-12-2011
]]>To address these issues, a committee of Massachusetts medical and public policy leaders recently recommended the use of a new form for patients in care facilities. The committee calls this form Medical Orders for Life-Sustaining Treatment.
The form is two pages long and is laid out in a check-box format. The check boxes are designed to address contingencies. For example, if someone does not want to be connected to a breathing machine, they would not check the box corresponding to that intervention.
]]> The new suggested form differs from the well-established Do Not Resuscitate form. The DNR form was designed mainly for use by EMTs and other emergency first-responders. By contrast, the Medical Orders for Life-Sustaining Treatment form is intended to be used by all types of medical providers. It therefore allows patients to express preferences on many different treatment possibilities.Of course, stating a preference is one thing and making sure it is honored is another. That is why the new form has a section where a medical care provider can sign. In this context, the signature signifies that the providers and the patient discussed the patient's preferences.
The new form is being piloted in a program in the Worcester area. If you have questions about its application to your situation, contact an estate planning attorney at our firm.
Source: "End-of-life wishes unheeded, panel says in call for patient reforms," Boston.com, 4-14-11
]]>The Bush Administration's tax rules were set to expire at the end of 2010, and lawmakers had to act fast when they made the deal in December. The deal is now law, and has important implications for estate and tax planning.
Details of the Tax Deal
The tax rates for gifts had been anticipated to reach 55 percent, but the new rates cap the tax at 35 percent. In addition, the exemption is $5 million. Estate taxes have the same cap and exemption.
Couples who wish to give funds to their children can give up to $10 million without paying taxes.
An unusual aspect of the tax laws is the concept of "portability." If a deceased spouse has not used all of his or her estate tax exemption, the surviving spouse may use it - but only through 2012.
Who Will Benefit
The primary beneficiaries of the new tax laws are people with substantial assets. The vast majority of American households come in well under the $5 million limit for individuals and the $10 million limit for couples.
For households that come near or surpass those limits, however, the numbers are crucial.
]]> Time May Be LimitedThe new gift and inheritance tax laws are set to expire at the end of 2012. While this gives families a window of time during which to act, they should not wait to seek competent tax advice.
Massachusetts, for instance, has an estate tax system that all residents should be aware of. This tax is in addition to the federal estate tax.
In addition, portability becomes more complex for couples who are divorced or who have remarried. While the new tax rules may be a welcome break for many, there may be other, more favorable options to explore.
Source: http://www.reuters.com/article/idUSTRE70P90U20110126
]]>What happens, though, when someone is aging and becomes concerned about who will take care of his or her pet after the pet owner dies?
Fortunately, a new Massachusetts law allows pet owners to create trusts to care for pets after their owners' death or incapacitation. The new law became effective on April 7.
]]> In the past, pet owners did often attempt to provide care arrangements for their pets following the death of the owner. This type of arrangement was particularly needed for parrots, for example, because they can live for over 70 year.But now, under the new law, arrangements to take care of a pet no longer have to rely so much on the good will of the person named to provide the care. The pet trust law allows for the appointment of a trustee, as well as a separate "trust protector" to make sure the terms of the trust are followed.
Massachusetts had been one of only a few states without a pet trust law. Animal lovers across the state are eagerly embracing the opportunity the new law gives to make proper plans to take care of their pets, no matter what contingencies may arise. Talk with an experienced estate planning lawyer at our firm for more information about how to proceed.
Source: "New law gives teeth to pet trusts," Telegram.com, 4-16-11
]]>That old system is either gone or quickly vanishing. Instead of a defined-benefit pension, the norm is now a 401(k) or some other vehicle where people save for their own retirement.
How do you position yourself, in this challenging landscape? It starts, of course, with careful estate and tax planning.
Financial planning is also important, and experts have several suggestions for people who are saving, but want to take some money out. One is to begin with the four-percent rule.
If you draw only four percent from your retirement accounts, then the interest on the remaining total should be enough to account for the withdrawn funds. By drawing only four percent, for example, on a $1 million retirement portfolio, you are accounting for longevity, and the odds are that you'll still be able to draw from your account if you live to be 100.
]]> Another approach is following the whims of the stock market. Instead of a fixed four-percent annual withdrawal, you can take amounts based on your fund's performance. For good years, you take out more. For bad years, you take out less. That way, you'll never run out of money.Of course, to get to the point of having a healthy portfolio to count on, you have to not only save a portion of your salary but also invest in the right mix of stocks and bonds. Since stocks are more volatile, experts suggest increasing the investment in bonds as you get older. By the time you retire, you should have a good portion of your funds - let's say at least 75 percent - in bonds while leaving room for additional growth with some well-selected stock funds.
You can also talk with an experienced attorney at our firm. We can help you determine the tax ramifications of your withdrawals and the right mix of funds to tap so that your nest egg provides for your senior years.
Source: "How to Cash Out in Retirement," Wall Street Journal, 3-8-11
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