Difficult
Discussions
Have
you ever noticed that some discussions are easier to initiate than other
discussions? Interestingly, some of the most difficult discussions are
with members of our own family. Perhaps you can recall a few important
discussions you have had with your parents, your spouse or your
children. Some of the topics for discussion can be  rather embarrassing
to initiate...by either party.
This article will review one topic that every family needs to discuss
sooner, rather than later. So, what is this topic? It is estate
planning.
The
Challenge
Have
you had a frank discussion with your family members about your wealth
and your eventual post-mortem plans for it after you are gone? Family
members seem to avoid discussions about their personal wealth, whether
it is substantial or modest. For example: If you have adult children, do
they understand the how much they may inherit, the when the
inheritance may be distributed to them and the why they
may be treated differently than their siblings regarding their
inheritance? If your children do not understand now, then how will you
prevent misunderstandings after you are gone?
A recent survey, conducted by the AARP/Scudder Investment Program, found
that the failure to have this difficult discussion could trigger family
fall-outs in the future. The survey of Americans age 50 and over
discovered that 20% of the respondents experienced family fights over
inheritance issues. However, of the respondents reporting no
conflicts, 63% said they had known what to expect in advance and 82%
of them believed they were treated fairly.
These survey results, together with abundant anecdotal evidence, clearly
underscore the benefits of discussing difficult inheritance issues with
your loved ones. Nevertheless, you should address other related issues
to avoid unexpected problems.
Incapacity
Fiduciaries
As
part of your difficult discussions, be sure to address your plans for
avoiding an expensive and embarrassing court process in the event of
your incapacity. Let your family know who will be making your personal,
health care and financial decisions when you cannot, due to an injury or
illness. Will it be one or more family members, third-party
professionals, or maybe a combination of the two? While you are at it,
be sure to discuss the game plan to handle your potential Long-Term Care
needs, including how you plan to pay for it!
Post-Mortem
Fiduciaries
The
reality of death can be emotionally and even physically traumatic for
the loved ones you leave behind. Even so, many financial and
non-financial matters must be resolved promptly and correctly. For
instance, final expenses, bills and taxes will not wait to be paid.
Your family should know today whom the go-to person or institution would
be when the time comes. Do they? This will eliminate any unnecessary
surprises and hurt feelings. In addition, such advance notice will give
your loved ones time to become acquainted with the post-mortem
fiduciaries (e.g. personal representatives and trustees) you have
selected, especially if they are third-party professionals. Similarly,
any non-professionals you may have appointed will have time to prepare
for their future duties.
The
Treasure Hunt
Were
you incapacitated (or worse) today, who would know where you keep all of
your important financial and legal papers? Have you created an inventory
of your assets? Have you reviewed and recorded the ownership
arrangements, as well as the beneficiary designations, regarding these
assets? Are the titles and designations current? Will your final legacy
to your family include an unpleasant Treasure
Hunt through your various papers and effects? To make matters worse,
how will they know when the Treasure Hunt is completed?
A little bit of time identifying, organizing, valuing and updating your
asset inventory now will pay big dividends when your incapacity or
post-mortem fiduciaries assume their responsibilities. [Note: During an
asset inventory, more that one person has discovered that an ex-spouse
is still an unintended co-owner or beneficiary of their assets.]
Conclusion
Like
most things in life, prior planning is the key to success. However, when
it comes to your estate plan, proper planning and open communication
today are essential for family harmony later.
Long
Term Care
Do you have a plan for your Long-Term Care? Will you end up in a nursing
home and outlive or severely deplete your financial resources? Too often
people avoid
facing the reality of the Long-Term Care threat, avoid taking action
while they still can and avoid communicating their Long-Term Care game
plan to their loved ones. This article addresses the topic head-on,
reviewing the facts and the insured solution.
 The
Facts
The odds of falling prey to Long-Term Care are
staggering. There is a 43% chance that someone age 65 or older will
eventually enter a nursing home during their lifetime.1
Most of these nursing home stays will last about 2½ years2
-- and such care is not cheap. A year in a nursing home averages more
than $40,000, and can exceed $100,000 in some parts of the country.3
Unfortunately, many
Americans hold the mistaken belief that Medicare and Medicare
Supplemental Insurance will cover their Long-Term Care expenses. At
best, Medicare will pay for all or part of the first 100 days of care.
That is all. The lion's share of all Long-Term Care costs is paid from
the assets of individuals needing the care. Once those assets are spent
down to the defined poverty levels for their state, such individuals
may qualify for Medicaid...the government welfare program. Against this
backdrop, is it any surprise that Long-Term Care Insurance is the
fastest growing type of insurance purchased in this country?4
LTC
Insurance
With the odds better than 2 in 5 that you will
need Long-Term Care and spend about $40,000 per year for 2½ years, the
need for Long-Term Care Insurance (LTCI) is obvious. In fact, for most
married couples, Long-Term Care expenses of $200,000 (i.e. $100,000 per
spouse) can quickly drain their cash assets and even require liquidation
of non-cash assets just to pay for their care. Fortunately, an
appropriate LTCI policy can be designed to fit almost any budget. Most
LTCI policies share some common features you should know, to include the
following:
- Benefit Amount: How much will the
policy pay?
- Benefit Triggers: When will the policy
pay benefits?
- Inflation Protection: Will the
purchasing power of the Benefit Amount increase?
- Level of Care: Are Custodial and
Intermediate Care covered, along with Skilled Nursing Care? Is Home
Health Care covered?
As with any form of insurance, the policy is only as good as the ability
of the insurance company to pay your claim. Check out the financial
strength and reputation of the insurance company before you sign on the
dotted line. [Note: There are over 100 companies selling LTCI.5]
Summary
The scope of insurance options available for
your Long-Term Care protection extends well beyond this brief overview.
You should seek competent legal counsel to interpret the contractual
provisions of any LTCI policy before submitting an application for
coverage.
1
Working Woman (September, 1997)
2
The Boston Globe (May 12, 1997)
3
The Wall Street Journal (March 31, 1999)
4
Fortune (August 17, 1998)
5
Mutual Funds (September, 2001)
Copyright © 2005 Integrity Marketing Solutions. All rights
reserved. Some artwork provided under license agreement. This
publication does not constitute legal, accounting or other professional
advice. Although it is intended to be accurate, neither the publisher
nor any other party assumes liability for loss or damage due to reliance
on this material.
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