 Regardless of whether you’re single or married, divorced or widowed, a parent or not, you need an estate plan, particularly if you are over the age of 60. This is true for men and women, but women face some challenges that make it even more important to start planning even sooner.
Women typically live longer, they’re more likely to be custodial parents and they approach retirement differently than men. In general, women tend to be caregivers – worrying about everyone else but themselves – but when it comes to estate planning, it’s more important that they care for themselves first. If Your Income Depends on Others One key aspect of estate planning women will often overlook is what will happen when their husband, parents or other relatives die. According to the U.S. Census Bureau, 36 percent of women 65 and older are widowed, compared to 12 percent of men 65 and older. If you are dependent on someone either financially or emotionally, what happens if something happens to them, if they are disabled or they die? For example, if a husband starts to receive his pension payments, but chooses to get the maximum benefit in his lifetime — it means the benefits will end at his death. If he predeceases her, she has nothing. However, if she’d planned for that 20 years prior to his death, there might have been ways to avoid this. Here is another common scenario. A businessman with significant wealth, will often put his business advisers in charge of his estate plan, rather than his wife and/or children. Yes, the advisers would have a fiduciary duty to the wife upon his death, but they’d have all the power to make decisions about what would be sold, how it would happen, and how it was valued. For a lot of women, the key is to start planning early. Have discussions with your spouse or family members and set things up with longevity in mind. Start talking to your family about what their estate plans are. For example, if you’re a caregiver for a parent, talk to your siblings and parents about the potential implications of that: Does your time caregiving have implications for how your parent’s estate is divided? Plans Will Vary Your estate-plan focus will vary depending on your situation. Are you married or single? Children or no children? For a single woman without children, the most difficult decision is going to revolve around who will take care of you, in the event an illness incapacitates you, and who will make your medical and financial decisions. For married women with children, often the first two estate-planning concerns are naming a guardian for the children and planning for income replacement through life insurance. For women who are widowed, key considerations include making sure their estate plan has been revised to reflect the husband’s death and to assess whether there are different financial-planning opportunities and challenges to consider. A first step for anyone who’s gone through a divorce is to check the beneficiary designations on retirement and other financial accounts. Often people will walk away from their spouse, but then never do any of the cleanup work. New Marriages Women who remarry or those who come to a marriage with significant assets, should think carefully about their estate plan before tying the knot. Women tend to be hesitant to discuss their net worth going into a new relationship, but that can be a big mistake. If they keep control of their assets separately, if they divorce, the new spouse won’t have access to that money. In Washington, a spouse of someone dying without a Will gets 100% of the Community Property and 50% of the deceased's separate property. If the spouse dies with a Will, the Will language controls. However, not all assets pass under the Will. Some pass by beneficiary designation (think life insurance and IRA) and some by joint tenancy with right of survivorship (think checking/savings accounts). There are a couple of ways to forestall that issue, though none are ideal. One tactic is to make sure beneficiary designations on retirement plans are set such that your children or other heirs inherit — but those designations need to be in place before you get married. Changing beneficiary designations after you get married may be difficult, because some financial-services firms won’t allow changes that entail disinheriting a spouse without the spouse’s consent. Another solution is to set up a trust, naming a child or other relative as the recipient, and put assets into it before you get married. You can still borrow from the trust, but the husband will not have access to that money if you die. Women who remarry should realize that any assets they brought to the marriage are on tap to pay for the new spouse’s medical bills — that includes nursing-home care, which can quickly drain one’s resources. It doesn’t matter whether you’ve been married two days or 50 years, the spouse will have to pay for medical care. Your assets are going to be on the line for their medical care, and you can’t get around that. Women who bring a significant amount of money to a marriage should consider protecting their assets by purchasing a long-term-care policy for her spouse, setting up a trust before the marriage, and working with an attorney prior to the marriage. Estate Planning is Important The prospect of estate planning can be overwhelming. The first hurdle is simply facing the fact of death. The next hurdle is trying to get a handle on complex topics that are often difficult to understand. Then there’s the question of finding and hiring an attorney. No matter what your age or how much money you have, consider getting these items into place:
At Tacoma Elder Care, we are always working on ways to help you. If you are just beginning to think about your planning, we highly recommend attending one of our FREE workshops to learn more about how to start, and the most important documents everyone needs to have in place. Contact us today to register, or to schedule a FREE consultation.
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 We understand that using a DIY website to draft a will can save money and time, and in a pinch it’s better than nothing, but often they can lead to expensive and unpleasant estate planning mistakes and disastrous results!!
One of the biggest reasons you should avoid online wills is that the forms do not always say what you think they do, and the form cannot be tailored to your specific needs. In other words, unless you are an attorney and can understand what the form says, how do you know if it’s accurate? If there are mistakes, your loved ones could end up in court, spending thousands of dollars to contest the will. Keep in mind DIY estate-planning websites are not specific to you or your unique situation. They typically offer “packages” with the same document labeled with three different names, often containing typos. Worse, the packages are often missing key estate planning documents. This is a bulk product offered to make make money on a large scale - not a local person who knows you and your situation. Sometimes the sites claim to have attorneys on staff, but access to specific help for your personal documents is rarely available. If personal advice is offered, it will typically cost a great deal more than the “package” and is done through emails or online chats. For this to be even somewhat helpful, you will need to know the exact questions to ask. Online DIY Wills Vs. Hiring a Professional For some people with complicated personal and financial lives, today’s complexities may not be fully addressed with a do-it-yourself service for wills and trusts. While many of us would prefer to fill in the blanks in silence than having to talk to someone about our doubts or concerns, it’s highly advised you seek professional advice. If you prepare your taxes yourself and they end up incorrect, you and the Internal Revenue Service may end up working things out. If you decide to do your estate planning by yourself, you may never know the consequences of your mistakes… but your loved ones will. According to the AARP article, Haven’t Done a Will Yet? “Only 4 in 10 American adults have a will or living trust.” Considering that these simple documents can avoid financial disasters, protect your family and loved ones, assure you can afford care if you become disabled or incapacitated, and leave behind your assets so that your loved ones can benefit from them after your death – Why do we wait? What Good Estate Planning is About? Our power to express our preferences is what good estate planning (or life planning) is all about. The documents which provide detailed instructions are critical to avoid probate and court involvement, reduce administrative confusion and provide clear instructions in the event of your death. The four basic estate planning documents are a will, a trust, power of attorney for financial matters and an advance health care directive. If you plan to use any or all of them through a DIY site, expect to be offered a fill-in-the-blank approach. Keep in mind that each state has its own probate code (the body of law governing estate planning and implementation). The software package you use may have different names for the same documents I have listed above. Some of the DIY sites provide these documents, but only if you purchase the higher-end packages. Some offer limited attorney consultation, and in many cases that means a drop-down of questions with pre-written responses, not an actual conversation with an attorney or any type of advice based on your specific situation. Pros and Cons of DIY Estate Planning The advantage of using a DIY service is that you will have a plan, as quickly and cheaply as possible, and that may be better than having no plan at all. This is especially true regarding getting a will, power of attorney and advance health care directive. Those handle most emergencies for people who don’t own real estate or much else. Most presume that you already know what you want, but the reality is that many people have no idea what they want or need. Once you get into the complexities of family dynamics and perhaps trust language specific to your state and situation, DIY estate planning can cause more challenges than working with a local professional who will walk you through each step and draft your documents specific to you. At Tacoma Elder Care, we are always working on ways to help you. If you are just beginning to think about your planning, we highly recommend attending one of our FREE workshops to learn more about how to start, and the most important documents everyone needs to have in place. Contact us today to register, or to schedule a FREE consultation.  Estate planning is a critical part of financial planning, but something many Americans procrastinate about. Yet drafting a will and a health care proxy or power of attorney, maybe creating a trust, and maximizing your loved ones’ inheritances by minimizing taxes, are all important matters you don’t want to leave to chance.
Taking care of these key tasks correctly limits the potential for family turmoil and possible legal battles should you become incapacitated, as well as after your death. An estate planner can help you prevent crucial missteps and assist you in adjusting your plans as your circumstances, and laws, change. Here are some helpful tips to consider:
Experience is critically important. Knowledge and specialized experience comes with being well-versed and up-to-date with the laws of your state. Otherwise, your estate plan could be deemed invalid by the court. Ask What, and How, the Estate Planner Charges The amount you’ll spend depends on the complexity of your needs, your location and your attorney’s experience level. Many offer packages, which will include multiple documents for one set price, such as a power of attorney (authorizing someone to make financial or legal decisions for you when you can’t) and other advance directives. A trust may cost more, but can help save on estate taxes, avoid probate (proving in court that a will is valid), save on time and court fees and put conditions on the disposition of your assets after you die. Some estate-planning attorneys charge by the hour. As a rule of thumb, these lawyers typically have hourly fees of $250 to $550. If you’ll use one who charges by the hour, ask approximately how long the process will take, so you have an idea of the total cost from the outset. Most estate planning can and should be done on a flat-fee basis with the understanding that updates are needed over the years as your situation — or even the law — changes. Recognize This Is an Ongoing Relationship While interviewing estate planners, be certain that you’ll feel comfortable with the person you choose. Since you’ll be sharing personal details of your life and finances, you’ll want to feel comfortable and listened to. A good estate planner should pay attention to even the smallest details and ask questions about your situation to tailor a plan unique to you and your needs. At Tacoma Elder Care, we are always working on ways to help you. If you are just beginning to think about your planning, we highly recommend attending one of our FREE workshops to learn more about how to start, and the most important documents everyone needs to have in place. Contact us today to register, or to schedule a FREE consultation. Bob Michaels is a shareholder at Smith Alling, P.S. in Tacoma, WA, and focuses his practice on elder law/estate planning, business and real estate matters. Bob’s daily practice consists of working with clients in preparing life-plan documents, such as Wills, Trusts, Durable Powers of Attorney, Health Care Directives, Community Property Agreements and other documents to determine the management and disposition of our clients’ affairs in the event of disability or death. Contact Bob today to schedule your FREE consultation.  A big question for boomers without children (Solo Agers) is, what happens when I am no longer physically or mentally able to make decisions for myself?
Decisions have to be made to create documents such as an advance health care directive or durable power of attorney for health care (also known as a “living will”); a durable power of attorney for finances and a last will and testament. The act of creating them will force you to survey your support system and determine who you want to make decisions for you if you are physically and/or mentally unable to make them for yourself. When You Don’t Have a Someone to Make Decisions for You If you become incapacitated and you have not executed these documents, a court judge will put your case into a conservatorship and will appoint someone (a conservator or guardian) to make decisions on your behalf, basically a “paid guardian.” The court may not appoint the person you would have selected, especially if they are not related to you or named in any document. The decisions the conservator makes for your care may be totally different from what you would have chosen for yourself. No matter how vehemently your loved ones argue on your behalf, the conservator will make decisions independently, or in conjunction with a court judge — based on their own belief system and preferences. Who Could Be Your ‘Agent’? If you are married or have a life partner, you will likely select your spouse/partner as the primary “agent” or appointee for your health care decisions. Your attorney will strongly encourage you to name at least one other person, and even a third, in case your spouse or partner and the first designee predecease you or becomes incapacitated. Singles should also name secondary agents in their planning. If you come from a large family and are close to your siblings and their children, you have the advantage of a long-term, well-known support system. Your job will be to choose the ones you are closest to or the ones you see as the most stable, adding them as agents in you documents and having a discussion with them about what you have done and what you expect of them. On the other hand, what if you do not have a large or close family? What if your family members have values so different from yours that you would rather not name any of them as your agent? In that case you will need to select among your friends, which can be challenging if all your friends are around your same age. If you are among the many child-free boomers who have spent their entire lives associating with like-minded, like-aged people, now is the time to look outside your comfort zone. You may know some younger people, but how do you go from knowing who they are to becoming close enough to ask them to be an agent on one or more of your estate and long-term planning documents? Even though most of your wishes will be spelled out in the documents already mentioned, only with familiarity and a true friendship will they feel confident having your power of attorney and believing they understand your values and what you want in your oldest years. Hire a Professional If you are still uneasy about whom you could name as your agent, you may want to consider a professional to take over your affairs and your decision-making if you become incapable of doing so yourself. Today, an increasing number of forward-thinking people are being proactive in seeking out a professional private guardian — someone they have met and with whom they are comfortable — to take over their affairs if they become unable to care for themselves and manage their lives in a safe and secure manner. A professional guardian is an individual who assumes a position of responsibility and trust over the affairs of a person who can no longer act in their own behalf. Often appointed by probate court, the professional guardian is charged with the responsibility of managing many of the day- to-day affairs of individuals who can no longer do so for themselves. Being a competent professional guardian is a complex job and may require expertise in the law, accounting, real estate, taxes, and more. You will want to consider whom you trust to make these kinds of arrangements for you on an ongoing basis, potentially for months or years. If you have a family member or friend you think would perform these duties for you, it’s best to have a conversation with them in advance to make sure they are willing and able. Choosing the Right Guardian or Fiduciary If the idea of giving your power of attorney to a professional guardian appeals to you, take time to do some research and be selective about whom you engage for this role. Consider interviewing several individuals. Select the one with whom you feel the most comfortable (and whose references are impeccable). You can then name the person to act as your agent to manage your estate and your personal affairs, as well as make medical and care decisions should you become mentally or physically incapacitated. This person will become the “agent” in your durable power of attorney and/or your advance health care directive documents. You can appoint him or her as a co-agent with a friend or relative you trust. Some of the questions you will want to ask your potential guardian or fiduciary are the following:
The Exception: Dementia You should be the one to decide what you are ready to turn over. The one exception is signs of dementia. You must understand that anyone who interacts with you on a regular basis may recognize this, contact others who care about you and together, with your best interests in mind, ask your primary care physician to provide the signature to have you placed under the full care of the guardian or fiduciary you have named in your legal documents. Fees and Meetings with Your Guardian or Fiduciary Guardians and fiduciaries charge by the hour. They get paid when their services are needed. Since most of their time is back-end loaded, their fees will come out of your estate at the time they become active as your agent. However, it’s advised that you meet for a yearly meeting, so they can get to know. The better they know you, the more confident they will feel that your needs are being met by their decisions and the more confident you will feel that they will make the right decisions for you. How to Find One Finding a professional guardian or fiduciary should not be difficult if you approach the search in the same way you would if you were looking for a competent doctor or dentist. Start by asking people you know. Other good sources are the National Guardianship Association and the Professional Fiduciary Associations in states where fiduciaries are licensed. Here at Tacoma Elder Care we can make some excellent recommendations. At Tacoma Elder Care, we are always working on ways to help you. If you are just beginning to think about your planning, we highly recommend attending one of our FREE workshops to learn more about how to start, and the most important documents everyone needs to have in place. Contact us today to register, or to schedule a FREE consultation.  Based on tax treatment and required minimum distribution rules, these are the three best and four worst beneficiaries to name for your individual retirement accounts.
Individual retirement accounts are some of the most sensible investment vehicles. They are tax deferred, protected from most creditors and can easily be transferred to a beneficiary outside of probate. In addition, they do not have a true maturity date: For traditional IRAs, you have to take required minimum distributions (RMDs), mandatory withdrawals of a certain percentage of the account every year, starting the year after you reach age 70 and increase as you age. The major sticking point is what happens to these accounts upon your death: How can your beneficiaries optimize tax deferral and continue creditor protection? Who you leave these accounts to and how you leave them can either make or break these objectives? The following beneficiaries are the best options when it comes to passing on your IRA: Your Spouse. When you die your IRA typically turns into an inherited IRA. This creates different RMD treatment than when you take the distributions as the owner of the account. The main exception to the inherited IRA issue is transferring IRAs to your spouse. Your spouse is the only individual who has the option of transferring your retirement plans to his or her name at the time of your demise. If the surviving spouse is younger than the deceased spouse, the receiving spouse now uses their longer life expectancy, and the commensurate smaller required withdrawal percentage, for RMD purposes. This allows for smaller distributions, which means less taxable income and more funds to continue growing tax deferred. Younger Individuals. The concept of stretching RMDs is somewhat misrepresented to the public and is contingent on whether you live past April 1st of the year following the year you reached age 70. This is the actual time you must start taking RMDs or face a penalty. If you die before this time, meaning no one has ever taken an RMD from your IRA, your beneficiaries can stretch RMD distributions based on their life expectancies. This is a great benefit to younger individuals: Though they have to take RMDs even if they are younger than 70 years old (inherited IRAs must begin distributing by December 31st of the year after your death, no matter how old the beneficiary is), the percentages to withdraw are quite small based on the beneficiaries' long life expectancies. If you die after the required begin date, RMDs are based on the longer of either your life expectancy or your beneficiary's life expectancy. A See-Through Trust. Leaving funds to an entity that is not an actual human, such as an estate or charity, completely ruins RMD optimization: The beneficiary must withdraw all funds within five years. This can lead to an income tax burden that you would have wanted your beneficiaries to avoid. A see-through trust can receive RMDs based on the beneficiary's stretching abilities noted above (thus it "sees through" to their life expectancy) yet protect the proceeds by holding the funds in trust. This is particularly useful when a minor is the beneficiary of a trust, since a minor cannot receive these distributions outright because they cannot individually own property. A see-through provision is often just one component of a trust, meaning it is often just one part of a larger document. The following beneficiaries are the worst options when it comes to passing on your IRA: Your Estate. Naming "my estate" as beneficiary to your IRA is the absolute worst thing you can do: You potentially lose creditor protection of the IRA, ensure the five-year withdrawal rule for your beneficiaries, increase court and accounting costs and increase the time and complexity of your probate estate. Both A Person and a Non-Person. All beneficiaries to a trust must have a life expectancy (i.e. be human beings) or else the five-year rule for distributions applies. This mistake is usually made when an IRA owner leaves a large amount of the plan to family members and a small amount to a charity, such as 90% to children and 10% to a church. Remember that all the IRA funds must go to natural beneficiaries for stretch RMD purposes: Even leaving just 1% to a non-person invokes the five-year rule. One way around this shortfall is to move some funds to a separate IRA and leave that IRA solely to charity. This will benefit all parties: The charity receives all the funds in its IRA tax-free, and your beneficiaries receive inherited IRAs with stretch RMD treatments available to them. An Older Person. Leaving IRAs to an older individual is clearly bad for RMD purposes since the distributions are withdrawn at a higher rate. Of course, if you want to leave some funds to an older person and have no other assets to transfer, then RMD treatment might not really be a major concern for you. However, if there is a choice to transfer non-retirement assets instead, then those would be preferable. A Spendthrift or Person with Creditor Issues. Spendthrift beneficiaries who receive IRA funds are disasters waiting to happen. Remember that every penny taken out of an IRA, inherited or otherwise, is taxable income. Therefore, a person in financial straits would not only deplete an inherited IRA quickly but would also have to pay income taxes for every withdrawal. In addition, in 2014, the Supreme Court decided an inherited IRA is fair game for creditors during bankruptcy judgments. Instead of making your spendthrift relative the outright beneficiary of your IRA, consider naming a see-through trust and have another family member act as its trustee. As is often the case in estate planning, knowing the nature of the asset itself is usually not enough: You should know the future nature of the asset and the individual who shall be receiving it. At Tacoma Elder Care we help you understand the importance of estate planning, paying for long term care without going broke, asset protection, and life planning. Having a life care plan is essential in protecting you or your loved ones’ future! Consider attending one of our FREE Workshops to begin planning today! Contact us to register or to schedule your FREE consultation.  It is always critical to plan ahead and to have a support system in place.
Aging seniors face all sorts of uncertainties, but older, childless singles and couples are missing the fallback that many other seniors take for granted. Without adult children who can monitor an aging parent or help navigate a complex system of health care, housing, transportation and social services, who do you turn to? As baby boomers age, the number of childless seniors, both couples and singles, is rising. Close to 19% of all women ages 80 to 84 will fall into that category in 2050, up from 16% in 2030, according to a study by the AARP Public Policy Institute. Recent research by a geriatrician at the North Shore-LIJ Health System in New York coined a name for these seniors: "elder orphans." People without children "need to start thinking early about their future housing and future caregiving," says Lynn Feinberg, senior strategic policy adviser with the AARP institute and a co-author of the study. She suggests that they consider "what life will be like when they can't live without assistance." To be sure, aging parents can't always count on their adult children to lend a hand. For those parents, and for childless seniors, it's essential to start weaving a safety net that could last for years. The support system could include a network of friends and relatives who can keep tabs on you, advocates to help negotiate the health care system, a team of legal and financial professionals, and senior-friendly housing. One of the first steps childless seniors should take is to draft legal documents that will protect them if they become incapacitated. On the financial front, you should create a durable power of attorney and choose an agent who will manage your financial, legal and tax affairs should you become unable to handle these tasks yourself. Childless seniors often pick a niece or nephew to whom they are close -- or a trusted friend, cousin, sibling or clergy. If you do not have someone reliable who can take on the job, you could set up a revocable trust and assign a bank or trust company as trustee. You would move your assets to the trust, and the company would eventually take on financial tasks you assign to it, including paying bills and caregivers, processing medical claims, and overseeing your home if you're hospitalized or in a nursing facility. You can even tailor the trust's provisions to ensure that your physical and mental health is monitored. The document, for instance, could advise the trust company to hire a geriatric care manager to conduct periodic evaluations in the future, and to send a copy of the assessment to the person you choose as your health care agent. A big plus for going this route is that the chances of elder abuse are negated. Unfortunately, the majority of elder abuse is committed by family members. Whether you use an institution or a power of attorney, it's essential to build in checks and balances. You could direct the trustee or agent to send monthly statements to your accountant. If you create a revocable trust, you can appoint a co-trustee who may be given the power to monitor, and perhaps override, a trustee's decisions. You will also need to draw up health care directives. One is a living will, which will define your health care wishes under certain medical conditions. You'll also need to name a health care proxy, who will make decisions on your medical care if you become incapacitated. As you age, the proxy's role could intensify. He or she must keep an eye on your mental and physical state, hire caregivers, and arrange for you to move to new housing if necessary. Your proxy should be someone you have ultimate faith in and a strong connection with. If you do not have someone who can pick up the role, you may be able to hire a professional. Some elder law attorneys can become a health care proxy, or you may choose to hire a professional fiduciary to oversee your affairs. It's a good idea for a childless senior to widen the circle of potential helpers -- people and organizations that can keep an eye on you and pitch in if need be. Your network could include friends, volunteer organizations you work with, neighborhood groups and senior centers. Turn to a Team of Experts A cornerstone of your support system should be a professional advisory team. The team would include a certified public accountant, a financial planner, an estate-planning lawyer or elder law attorney, and perhaps a geriatric care manager. The financial planner would develop a blueprint to pay for long-term care and other services. A care manager could look for signs of dementia and arrange for services, such as home care. You could direct team members to exchange information, especially if your mental capacities decline. They can also watch out for financial elder abuse. Your safety net should include an array of aging-related community services. While you may not need resources now, you can start investigating what's available. At Tacoma Elder Care, we are always working on ways to help you! We have put together a list of local resources and contacts we highly recommend who may be able to assist. If you are just beginning to think about your planning, we highly recommend attending one of our FREE workshops to learn more about how to start, the most important documents everyone needs to have in place, and meet some of these folks who can help you begin building that support system. Contact us today to register, or to schedule a FREE consultation. |
