Social Security Card Among Dollar Bills

Myths and Misconceptions about Retirement Planning.

Numerous studies have shown that Americans’ greatest fear regarding retirement is running out of money.  Even so, myths abound about planning for retirement, Social Security, the cost of medical care, and more.  Let’s explore the reality behind some of the most common retirement planning myths.

Social Security Card Among Dollar Bills

Social Security is going broke.

Approximately 50 percent of elderly Americans derive at least half of their income from Social Security.  For decades, Social Security has collected more than it paid out, with excess income going into the Social Security Trust Fund. According to the Social Security Administration, this fund held $2.91 trillion by the end of 2020.  However, due to the retiree population growing faster than the working population, as well as the fact that people are living longer, Social Security is starting to pay out more than it takes in. Without changes to the way Social Security is financed, the trust fund is projected to run out in 2034.

Of course, Social Security still collects taxes and pays benefits. According to recent estimates, however, it will only be able to cover 78% of scheduled benefits after 2034.  To avoid that scenario, Congress will have to take measures to strengthen Social Security’s finances, as it did in 1983 when the program’s reserves were nearly exhausted.  Given the program’s importance to retirees, and the fact that millions of older Americans have been paying into the system for decades, it is highly unlikely Congress would fail to take the necessary steps to protect it.

You can receive your full Social Security benefit when you turn 62.

While it is true that you can begin taking Social Security benefits at age 62, this will lead to a lower monthly benefit than if you wait until full retirement age.  What is your full retirement age? It depends on when you were born.  If you were born:

  • In 1960 or later, your full retirement age is 67
  • Between 1955 and 1960, full retirement age ranges from 66 and two months to 66 and 10 months
  • Between 1943 and 1954, full retirement age is 66
  • Between 1938 and 1942, full retirement age ranges from 65 and two months to 65 and 10 months
  • Before 1938, full retirement age is 65

Should you take your benefits at age 62?  “Expert opinion” differs, but the consensus seems to be that if you are in good health, and you have enough money to live comfortably without Social Security benefits, you may want to delay taking them to maximize your monthly benefit later on.

All of your medical care will eventually be covered by Medicare.

Medicare does not pay for all of a person’s medical care.  Original Medicare (Parts A and B) covers hospital visits and outpatient care but not dental and vision care. Nor does it cover the cost of prescription drugs.  Although Medicare Advantage plans can provide greater coverage, they generally have high premiums.  Most Americans fail to include enough money in their retirement budget to cover the expense of annual medical care, let alone the cost of long-term, in-facility care.  It is estimated that for a couple aged 65, out-of-pocket medical costs will approach $600,000 over the course retirement.

You don’t have to plan for retirement because you want to keep working.

This may seem like a reasonable assumption when you have a well-paying and satisfying job, you’re young, and you’re healthy.  The reality is quite different.  According to a Retirement Confidence Survey, 43 percent of current retirees left the workforce earlier than they expected. While mandatory retirement at a set age was abolished in 1986 by an amendment to the federal Age Discrimination in Employment Act, many of us lose our jobs for other reasons or cannot continue to work due to health problems.  Simply put, you may not be able to work as long as you want.  The best protection against running out of money in retirement is to have a realistic, detailed retirement plan.

Contact a New York Estate Planning Attorney

Please contact us today to schedule a time to discuss your estate planning needs. 

Power of Attorney

Powers of Attorney: General or Limited?

Power of Attorney

One estate planning document likely to come into play sooner rather than later, for most people is a power of attorney.  Powers of attorney allow you, the principal, to name someone else to act on your behalf if you are unwilling or unable to act.

While there are several different kinds of powers of attorney, a financial POA can be used to ensure that you can still manage your bills and other money-related tasks even if you’re not the one executing those tasks.

Powers of attorney can be given for broad financial powers or for very specific instances.  It can be nerve-wracking to name someone else with broad powers to act on your behalf with regard to finances.

With a general power of attorney, you allow your agent to handle any financial issues in your place.  This means your agent can do anything you could do, such as making gifts, setting up investments, selling assets, or transferring funds.

There are several examples of situations in which a general financial power of attorney could work well.  A spouse, for example, might name their partner under a general financial power of attorney so that the partner has access to all accounts.  Likewise, an adult child helping an aging parent with a range of financial tasks might need a general power of attorney to carry out those responsibilities.

However, there are several reasons to consider when it makes more sense to choose a limited or specific power of attorney.  If there is no need to grant someone sweeping financial powers in your life, give yourself the peace of mind of limiting those powers to very specific circumstances. Giving someone full authority over your finances could allow them to make decisions that you did not want.  Legally, if your POA was general, your agent has discretion on these matters, even if you would not have supported the actions they took.

There are three primary ways to do this: allowing specific actions, limiting the power of attorney to acting in specific period, and naming triggering events.

With specific actions in a limited power of attorney, you grant your agent the ability to carry out one or more specific tasks.  For example, you might give your CPA power of attorney to pull your previous year tax returns and speak with the IRS on your behalf.  You might give your real estate agent power of attorney to sign closing documents at an out-of-state real estate transaction.  With these limited powers, your agent is fully capable of carrying out the task at hand, but you don’t have to worry about potential overreach.  You can also use restrictions to limit what they can do, such as allowing them to help with checkbook balancing, but not making gifts.

If you know you’ll only need help during a particular time period, you can give your agent authority to act within that window.  This is appropriate if you have an out-of-country trip planned, are undergoing surgery, or have some other short-term need.

Finally, triggering events are those events that must occur in order for your agent to obtain authority over the document.  For example, you can declare a sudden illness as an event that enables your agent to take action.

While it’s still important to choose someone you trust as your power of attorney agent, you might feel more comfortable limiting their powers.  Discuss your options with an experienced estate planning lawyer for more support.

Contact an Experienced Estate Planning Attorney

Please contact us today to schedule a time to discuss your estate planning needs. 

Sentimental assets

Sentimental Assets and Your Will: Understanding When Someone Can Challenge Your Wishes

Emotions can run high after a loved one dies, particularly if your familys assets include items with sentimental value, and the last thing you want is for your family to start fighting after you pass away.

Sentimental assets

Defuse Conflict Over Sentimental Items Before You Pass Away

How can you prevent your heirs from fighting over items with sentimental value?  Many people believe that a statement in a will or trust that basically says “tangible personal property should be divided as my heirs see fit” will solve the problem.  However, this can lead to a host of potential conflicts.  A better approach is to put specific items that you believe are of interest to certain family members in writing, and then discuss your decisions in advance with your family.  In this way, many emotionally charged disputes can be avoided.

What if you are convinced that a former spouse, one of your children, or the spouse of one of your children will cause trouble no matter what you specify in your will?  In this case, you might want to consider a no contest clause.  In essence, this clause makes the risk of challenging your will outweigh the potential benefit of doing so.  A no contest clause generally stipulates that if a beneficiary contests the will’s provisions or its validity, his or interest in the will is forfeited. It is important to note, however, that you have to leave the heir in question enough of an inheritance to motivate him or her not to challenge the will.

When a Challenge to Your Will is Inevitable

The good news is that, generally speaking, challenging a will isn’t easy.  And that’s especially true if there is a valid document in place that was drafted by an experienced attorney, signed by you, and duly executed according to your state’s law. Even in cases without all those dotted “i”s and crossed “t”s, successfully overcoming a will can prove difficult. However, it does happen.

Challenging a will must be done in a formal process called a will contest, or caveat. Caveat proceedings are most common in cases where more than one document exists and the beneficiaries disagree as to which is the “true will.”  Contests can also arise when there are holographic (i.e. handwritten) wills, confusing written statements, uncertain verbal statements, surprising or grossly unfair provisions, apparent deathbed revisions, or questions about the circumstances under which a will was made.

As a general rule, if your beneficiaries wish to start a caveat process, they must successfully allege one of the following claims:

Lack of Testamentary Capacity — The testator (i.e. the deceased) was not of sound mind when the will was made, did not know the value of their estate, or otherwise did not understand the consequences and effects of the will.

Invalid Execution — The will was not executed according to the laws of your state. This argument is raised when there are questions about the capacity and/or signatures of either the testator or the witnesses.  The court will typically presume that the will was properly executed, so the caveator (the person challenging the will) must overcome that presumption, usually with the help of their attorney.

Negligent Execution — A clerk or attorney made a mistake when drafting or executing the will, thereby accidentally contradicting your intentions.

Undue Influence — The caveator claims you were coerced, wrongfully pressured, or subjected to duress when making the will.

Fraud — The will is fraudulent or a forgery.  Caveators may also argue that your intentions were colored by fraud.  For example, let’s say you disinherit your nephew because your niece falsely accuses him of stealing your money.

A Second Will — The caveator believes there is another document that supplements or supersedes the purported will.

If you have questions about how you can start protecting assets of sentimental value or how the caveat process works, our office is here to help.

Contact a New York Estate Planning Attorney

Please contact us today to schedule a time to discuss your estate planning needs. 

Estate Planning

Why Do People “Put Off” Estate Planning?

Estate Planning

The statistics are rather alarming.  In 2005, 50 percent of Americans had a will; today, only 32 percent of us have one.  Meanwhile, only one in three Americans over the age of 55 has a durable power of attorney, and a mere 41 percent of this same demographic has advance health care directives.

Why is this?  According to statistics culled from a range of sources, Americans lack estate plans for the following reasons:

  • 47 percent say “they haven’t gotten around to it”
  • 29 percent think they “don’t have enough assets to leave to anyone”
  • 49 percent don’t believe their assets are worth enough to worry about estate planning

Other common explanations include being too busy, thinking estate planning is only for “old” people, and not wanting to think about the inevitability of death.

In truth, proper estate planning isn’t just about what happens to one’s assets after death, it’s about taking control of one’s life.  Everyone can benefit from having an estate plan.  At the very least, your plan should include all of the following documents:

Last will and testament.

A last will and testament allows you to accomplish a number of important goals.  You can name your beneficiaries and specify the assets you want them to receive; name a guardian for your minor children; and choose the person you want to settle your estate (known as the Executor).

Power of attorney for health care.

Also known as a health care proxy, this important legal document allows you to name a person you trust to make health care decisions on your behalf if you are no longer able to make them on your own.

Power of attorney for finances.

A power of attorney for finances is similar in concept to a power of attorney for health care.  It allows you to designate another person to make decisions about your finances, such as income, assets, and investments, when you can longer make them yourself.

Living will.

This allows you to express your wishes regarding what medical treatments you want, or do not want, in an end-of-life situation.  A living will differs from a power of attorney for health care in that it details your specific wishes, whereas a power of attorney for health care allows someone else to make health care decisions for you.

HIPAA release.

A HIPPA release lets you choose who can receive information about your medical condition. Hospitals and medical providers can be prosecuted for violating the Health Insurance Portability and Accountability Act (HIPAA) if they reveal your medical information to people not named in your HIPPA Release.

Estate planning can help you accomplish many other goals as well.  For example, trusts can protect your privacy and enable your estate to avoid the delays and frustration of probate. Trusts can also stipulate when and under what conditions your heirs will receive their assets, which is helpful if you think your children are not mature enough to manage an inheritance.  An irrevocable trust can protect your assets against threats like long-term care costs, divorce, creditors, lawsuits, and more.

As you can see, proper planning allows you to seize complete control of your affairs while you are alive and after you pass away.

Contact an Experienced Estate Planning Attorney

Please contact us today to schedule a time to discuss your estate planning needs. 

Estate Planning checklist

When Was the Last Time You Updated Your Estate Plan?

Estate Planning checklist

For many, an estate plan is created and never looked over again – until it’s necessary to do so.  But did you know that you should really look at your estate plan as something that grows and changes with you?

Think about what has happened in your life since the last time you looked over your estate plan.  Maybe you bought a new home, got married, or welcomed your second child.  Each of these events demonstrates exactly why keeping your plan up to date is just as important as creating a well-designed plan in the first place – because life is full of beautiful changes.

And life will continue to offer these changes, especially as you grow older.  Your health, financial situation, income, and the overall value of your assets continuously change with you and over time.  Plus, the needs of your loved ones will change over time as well.  After all, people get divorced, remarry, have children, buy and sell homes, start a business, change jobs, and sometimes they suffer unforeseen financial difficulties like bankruptcy or personal problems like alcoholism.

By having an established schedule to review, and, if necessary, revise your estate plan on a regular basis you’ll be able to account for every change life brings your way, and better protect both you and your loved ones in the process.  But, if you believe any recent life events may have impacted your estate plan’s effectiveness, we urge you to have your plan reviewed immediately.

On top of that, the law is constantly changing.  Over the years, new laws may take effect and others may be repealed which could make some options for protecting assets less attractive than they were previously or offer new opportunities for wealth preservation and growth.  Working with a knowledgeable estate planning attorney as you update your estate plan will ensure you have a strategy in place that will take advantage of every legislative update.

So, whether or not you and your loved ones have experienced any recent life changes, it’s best to have your plan reviewed at least every two years to make sure your existing strategy takes into account any changes to the law, tax code, or financial landscape.  It’s a great feeling to know you have thoughtfully prepared for your and your loved ones’ future financial, physical, and emotional well-being with your estate plan.  Now, it’s simply a matter of keeping your plan up to date so that the same level of carefully considered protection lasts for years to come.

Contact a New York Estate Planning Attorney

Please contact us today to schedule a time to discuss your estate planning needs. 

Retirement

Can You Still Retire Comfortably On A Million Dollars?

Retirement

Once upon a time, amassing a million dollars for retirement meant that your golden years would be very golden indeed.  But what about now—is a million dollars still enough money to enjoy a luxurious retirement?

The good news is that more than 20 million people in the United States have over a million dollars.  The bad news is that depending on your lifestyle, and how you want to live in retirement, one million may not be enough.  Today, the opportunities for what once might have been considered a retirement on par with the “lifestyles of the rich and famous” could require closer to one million dollars, perhaps more.

Why?  One reason is that in today’s economic climate, a million dollars translates into a sustainable annual income of $30,000-$40,000.  That’s down from over a decade ago, where a million dollars could generate approximately $70,000-$80,000 in sustainable annual income.

While a sustainable annual income of $30,000-$40,000 is nothing to sneer at, a successful retirement depends on proper management and prudent decisions.  One of the classic mistakes is to make a major purchase upon retirement, such as a boat or membership in a private golf club.

The consensus among investment professionals is that a million dollars can still provide you with a comfortable retirement, but proper planning, realistic expectations, and a sustainable cash flow are the keys to success.

One realistic expectation to set when saving for retirement is the expense that comes with funding long-term care costs.  Americans are living longer than ever before.  And while this is great news, it comes with a downside.  For example, the median annual cost of a private room in a nursing home has hit six figures in the U.S. at $111,000 in 2022, and the cost of nursing home care and other types of long-term care are expected to rise dramatically in the future. Sadly, many families exhaust their life savings within a year or two of a family member entering a nursing home.  Meaning, your one or two million dollar nest egg could disappear in the blink of an eye.  Fortunately, we can help you obtain the care you need without losing the assets you have worked a lifetime to build.

One way to ensure you and your family are protected for the future is to start pre-planning now. Together, we can use a wide range of tools to help you create a plan that will give you the peace of mind by knowing you will be able to receive the care you need in the future, without losing your life savings.

Contact an Experienced Estate Planning Attorney

Please contact us today to schedule a time to discuss your estate planning needs. 

Elder couple looking at paper comparing aging at home vs nursing home care.

Aging in Place vs. Nursing Home Care: Important Factors to Make the Right Choice

Elder couple looking at paper comparing aging in place vs nursing home care.

A growing portion of the older population wants to stay in their homes as long as possible.  This is known as “aging in place” and has several benefits when it is appropriate for the individual. However, there are some other care concerns to consider when deciding whether someone is at the point of needing additional help.

COMFORT AND FAMILIARITY

Most people want to remain in their homes because of the comfort, familiarity, and memories within it.  Moving into assisted living or a nursing home is a big change for anyone, but especially for a senior who feels the loss of their independence during this transition.  Remember that, when it is safe for them to stay there, someone’s home can support their overall mental and physical health.

If staying in the same place is important to your loved one, look for ways to ease your mind while also protecting their independence.  Is there a neighbor or friend who can check on them each week?  Can you drop in every other weekend to make sure things are going well?

SAFETY CONCERNS

Many adult children or other loved ones start thinking about these issues because they’re concerned over safety.  Triggering events prompting a conversation about additional care needs include a loved one beginning to show signs of dementia or suffering one or more physical incidents like a fall in their home.

YOUR TIME AND PROXIMITY

As a family member, it’s natural to want to do everything you can to care for a loved one. Caregiving, however, can be very difficult and time-consuming.  It can be even more challenging if you don’t live nearby.  If your time and that of other family members can no longer support a loved one, a nursing home or assisted living may be the answer.

FINANCES

Whether or not your loved one owns their home is the first consideration.  Ongoing mortgage payments are just part of the puzzle.  It can be hard for people to part with their home, but maintenance concerns and costs can be problematic.  Evaluate the age of appliances and yard maintenance required, too.  At some point a home might be more trouble than it’s worth to the occupant.

MEDICAL SUPPORT NEEDED

If a loved one only needs help with light housekeeping or meal preparation, they may not need to move to another location, especially a nursing home.  Local organizations or a part-time hire could help with these needs while allowing your loved one to stay in their home.

However, if they have more advanced medical needs or challenges with multiple activities of daily living, in-home care from a medical professional could bridge the gap.  For more advanced situations, a nursing home might be appropriate.

There are other care options along the spectrum in between care services provided by family and a nursing home.  Part-time help from someone local such as a nurse, in-home care providers, assisted living, and adult day care are just a few.  For someone who needs extra support but does not require the support of a formal nursing home, these options are well worth exploring.

Contact a New York Estate Planning Attorney

Please contact us today to schedule a time to discuss your estate planning needs. 

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Preserving Your Legacy: What Entrepreneurs Should Know About Estate Planning

entrepreneur

Many entrepreneurs refer to their business as their “baby” and rightfully so.  Like a child, entrepreneurs nurture their business from an idea through conception, to growth, and maturity. Running a business is much like raising a child.  Both require a lot of time, tears, resources, and effort to be successful.  People often prepare for what would happen to their children in the event they pass away unexpectedly, however, they don’t necessarily consider what would happen to their business – and how that would affect their family.  While it can be scary to consider, life is uncertain.  Creating an effective estate and succession plan is an ongoing process that will change in each phase of the business’s life.

Business owners pour blood, sweat, and tears into their business, often struggling and making sacrifices for the company to survive, in an attempt to create a legacy that will provide for themselves and their families.  But what happens when they are no longer around to run their business?  Entrepreneurs should be aware of the unique issues they face when creating an estate plan.  They must take action to ensure their business continues on long after they are gone.

Entrepreneurs often think that estate planning and succession goals happen later in life or at maturity of the business.  Let’s face it, the upkeep of running a business is more than enough to worry about, much less considering one’s own mortality in their younger years.  In the past, young entrepreneurs and start-up owners were less likely to plan for these things right out of the gate.  As we continue to come out of the pandemic, the roles have reversed for the first time in history, allowing 18-34 year olds to take the lead when it comes to creating an estate plan.

Often business owners don’t consider what would happen to their “baby” without a leader.  What happens after the owner passes away – when the court system ties up the business assets for months or even years until your estate is settled?  Or even worse, they hand the business over to an unprepared family member.  Without a proper estate and business succession plan in place, these scenarios are entirely likely.

Successful estate and succession planning requires a team of professionals.  The team should include an estate planning attorney, accountant, financial planner, and an insurance agent.  An important first step in creating the plan is consulting with an estate planning attorney and then ensuring that all of the professionals are in communication with one another in order to accomplish their succession goals.

Please contact us today to schedule a time to discuss your estate planning needs. 

dad

Protecting a Child’s Inheritance

Protecting A Child's Inheritance - Estate Planning Law Center

A number of our clients have expressed concern about protecting the inheritances of their children.  Sometimes, they worry about the security of a child’s job and what will happen if he or she loses that job in a tough economy, cannot pay bills, and loses the inheritance to creditors. Other times, they worry about the influence sons or daughters-in-law have over their children, and what would happen if their child got divorced.  Some parents wonder if their children are mature enough to handle an inheritance and if they can make sound, long-term decisions on their own.  Fortunately, there are a number of ways for you to leave an inheritance to your children and protect that inheritance against threats such as these and more.  In addition to their ability to avoid probate and minimize taxes, trusts are some of the most effective tools to protect your children’s inheritances.  Here are a few examples.

Discretionary trusts.

With these types of trusts, the trustee has complete discretion to determine trust distributions and the beneficiary cannot demand distributions.  The grantor of the trust can provide guidance about distributions and withhold distributions if a child is facing divorce, bankruptcy and/or personal problems that may impact his or her ability to manage the inheritance wisely.  In addition, creditors cannot access trust assets.

Spendthrift trusts.

These trusts prevent the beneficiary from voluntarily or involuntarily transferring his or interest in the trust and protect trust assets from most creditors.

If you are concerned about protecting your children’s inheritance against threats posed by creditors, predators, or even their own poor decisions, we can structure your estate plan to provide the level of protection ideal for your particular situation.

Please contact us today to schedule a time to discuss your estate planning needs. 

people

If Your Children Have Turned 18, They Need Their Own Legal Documents

When your children turn 18, they are legal adults.  They might not act like adults all of the time, and you may still be supporting them financially, but in the eyes of the law they are indeed adults.  This means that you can no longer automatically make certain decisions for them, including health care decisions.  Furthermore, you can no longer obtain medical information about your adult children without their authorization—even in an emergency.

Puberty can change the way teens recognise faces

Consider the following scenario.  Your son is away at college and gets severely injured in a car accident.  When you become aware of what has happened you immediately call the hospital for information about his condition, but nobody will tell you anything.  This is because the law—specifically, a statute enacted in 1996 called the Health Insurance Portability and Accountability Act (HIPAA)—prevents the disclosure of a patient’s health information without the patient’s consent.  The hospital in question could be prosecuted for violating HIPAA guidelines.

This is why your adult children need a legal document called a HIPAA Release.  It allows your adult children to list the people who are permitted to receive medical information about them. 

Another crucial legal document your adult children need is a Health Care Proxy.  It allows them to name a person they trust to make health care decisions on their behalf if they cannot do so themselves. Medical decisions covered by a Health Care Proxy can include the types of treatments allowed in an end-of-life situation, such as the use of a feeding tube, as well as do not resuscitate orders. 

Similarly, a Power of Attorney allows your adult children to designate a trusted individual to make financial decisions if they cannot make them on their own.

If your adult children have their own Health Care Proxy and Power of Attorney documents, and they name you as their agent, you will be able to make medical and financial decisions on their behalf if they become incapacitated.  If you are named in your adult children’s HIPAA release, you can get medical information about their condition in an emergency.

Please contact us today to schedule a time to discuss your estate planning needs.