Kansas and Missouri Estate Planning

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What Does Medicare Cost?

Costs depend on Medicare coverage.

Health care is important at every stage of life.

Paying for health care can cause stress at any stage in life.

As you age, the anxiety over health care may increase.

According to a recent CNBC article titled “Here’s what you should know about Medicare costs if you’re nearing age 65,” it is important to understand Medicare.

Fidelity investments approximates the health care costs for a couple in retirement at $285,000.

This estimate excludes the care not covered under the basic Medicare plan such as vision, dental, over the counter medications, and long-term care costs.

Yikes!

So, from where do these estimated numbers come?

Is Medicare not free?

The answer is not a simple one.

Medicare premiums are free for Medicare Part A if you have a 10 year work history.

But what, there is more.

You do not escape the deductibles.

The deductible for Medicare Part A is $1.364 per benefit period with caps on the benefits.

Also, Medicare Part A is not all-encompassing.

It includes hospital stays, some home health benefits, skilled nursing, and hospice care.

For more coverage, you will need to purchase additional plans.

What are these options?

The first is Medicare Part B.

This covers medical supplies and outpatient care.

The standard monthly premium for 2019 is $135.50.

But what, there is more.

Those who earn more will pay more.

The deductible for Part B is $185.

After the deductible, you pay 20 percent of covered services.

For prescription drug coverage, you will need to sign up for the Part D plan as well.

Those parts of Medicare don’t cover prescriptions, so a Part D drug plan is needed or you can purchase an Advantage Plan.

The Advantage Plan is also known as a Part C plan.

Should you choose this route, your Part A and Part B plan will be delivered by the same insurance company.

How much does a Part D plan cost?

In 2019, the cost is $32.50 per month and the deductible is $415.

Again, those who earn more will pay more.

How do you sign up for Medicare?

If you take Social Security before age 65, you will be enrolled automatically.

One or two months before you turn 65, you will receive your card in the mail.

The cost of your Part B premium will be automatically taken from your Social Security.

If you have not yet taken Social Security, you will need to enroll yourself in Medicare.

You can enroll within a window of time that is opens three months before your 65th birthday to three months after your birthday.

The exception would be if you are still working at age 65.

If this is the case, you can enroll later in Medicare without a penalty.

Unless you have medical coverage from your employment, Part B is required.

Failing to enroll will give you a 10 percent penalty for each year you are not enrolled.

There is also a penalty for not enrolling in Part D when you are first eligible, unless you are working with insurance from your employer.

How much is this penalty?

The penalty for Part D is 1 percent for every month you should have been signed up.

Some couples choose to supplement their benefits with a Medigap plan.

You cannot have both a Medigap plan and an Advantage Plan.

Instead, you should choose the best option for you.

One item to note is that dental and vision coverage may be limited on an Advantage Plan.

There is a lot to consider when signing up for Medicare.

Researching and understanding your options and obligations will help you to avoid penalties and find the plan to fit your needs.

Reference: CNBC (August 29, 2019) “Here’s what you should know about Medicare costs if you’re nearing age 65”

Are There Any Tax Deductions for Long-Term Care?

Long-term care costs and taxes are financial stressors in retirement.

You are getting older.

Your age says this is true, as confirmed by the increasing number of candles on your birthday cake.

Your body reminds you of this fact, too.

Long-term care costs are coming, if they are not already here.

Great.

One more expense to add to your bills and your tax responsibilities.

There may be some good news.

According to a recent Kiplinger article titled “Deduct Expenses for Long-Term Care on Your Tax Return,” you may be able to receive a tax deduction on some long-term care expenses.

What expenses might you deduct?

You could include medical expenses and eligible expenses for assisted living, in-home, or nursing home care.

To be eligible, certain requirements must be met.

What are these requirements?

A given expense must be medically necessary.

It can include personal care, preventative care, therapeutic treatment, rehabilitative treatment, and other services.

You may be able to include meals and lodging at a live-in facility, if the primary reason for being there is qualified medical care.

You must also be chronically ill and the care must be prescribed by your licensed health care practitioner.

What constitutes chronically ill?

You must require help in two daily living activities for at least 90 days.

Daily activities include tasks like bathing, toileting, transferring, dressing, or eating.

It may include cognitive impairment, if you require supervision for your safety and health.

You will need the condition to be certified in writing within the past twelve months.

What must you do to claim these deductions?

You will need to itemize you tax return.

To qualify, the expenses must exceed 10 percent of your adjusted gross income.

If your adult children are providing care, can they receive a tax deduction?

They can if they are able to claim you as a dependent.

Can you receive a deduction if you have long-term care insurance?

You can receive a limited deduction for certain long-term care insurance premiums.

You will follow the same itemization steps and have the same adjusted gross income requirements as with the qualified expenses.

There are limits regarding the types of insurance and the age of the insured as there is an age cap.

The insurance can only cover long-term care costs.

What does this mean?

Hybrid policies do not qualify.

You must have a traditional policy.

Although these deductions likely will not prove helpful until you reach your 70s, it is important to understand your options and to plan accordingly.

Make sure you consult with your CPA every step of the way.

Reference: Kiplinger (September 4, 2019) “Deduct Expenses for Long-Term Care on Your Tax Return”

What is the Difference Between a Quitclaim Deed and a Warranty Deed?

Quit claim deeds and warranty deeds are not the same.

If you own real estate, you have a deed.

A deed is essential to the buying, selling, and transferring of a property.

According to a recent Bankrate article titled “Quitclaim vs. warranty deed: What you need to know,”  the type of deed you have for the property is important.

The two basic types of deeds are quitclaim deeds and warranty deeds.

How are these distinct?

A quitclaim deed does not guarantee the title status of the property.

The buyer or recipient only receives what the property owner actually owns.

A quitclaim is sufficient in cases where there are no liens or other issues with the property ownership.

When would this be a good option?

If you own the property fully, you can use a quitclaim deed to transfer ownership to a trust or a limited liability company you control yourself.

A warranty deed is best when other parties are involved, unless it involves adding the name of a spouse or transferring your interest in a divorce.

If your situation involves greater complexity, you should have a warranty deed in place.

With a warranty deed the sellers or owners of the property are guaranteeing that they hold ownership to the property and have the legal authority to transfer their ownership interests.

This protects the buyer who can sue if the seller misrepresented their ownership.

How is this important for estate planning?

Let us say your children inherited your family home together under a warranty deed.

One child wants to sell and the others do not.

The one child finds a buyer and sells the property.

The siblings who wanted to keep the property and the buyer could sue the renegade sibling since the ownership was misrepresented.

When buying a home from an inherited estate, a warranty deed is the safest choice.

Even if the buying and selling takes place between family members, the warranty deed will protect the legal rights of the buyer.

In short, a warranty deed is the safer option.

If you have real estate as part of your estate plan, work with an experienced estate planning attorney to ensure your plan sufficiently addresses your property ownership according to your specific situation.

Reference: Bankrate (September 4, 2019) “Quitclaim vs. warranty deed: What you need to know”

Will the Family of Charles Manson Make Money on a Movie Song?

Money could be going to the Manson family.

Quentin Tarantino finds success after success in his films.

His most recent Once Upon a Time…In Hollywood with its all-star cast is no different.

According to a recent Wealth Advisor article titled “Charles Manson’s grandson can profit off of Once Upon a Time…In Hollywood,” the success of this movie about the Manson murders could have undesired consequences.

Why?

The movie includes a song titled “Look at Your Game, Girl.”

So what?

The song was written by Charles Manson.

Tarantino used the song because he believed royalties would be paid to families of the murder victims.

Guns N’ Roses had recorded this same song in 1993.

When the album went platinum, a settlement with the victims was arranged.

Now, this may not be the case.

Apparently, this judgement was not extended.

Yikes!

What is the result?

Any music licensing feed, royalties, or profits will likely go to the grandson of Charles Manson.

This not what Tarantino had hoped.

Reference: Wealth Advisor (August 27, 2019) “Charles Manson’s grandson can profit off of Once Upon a Time…In Hollywood”

Why Should I Review My Current Estate Plan?

Estate plans must be adjusted to the changing needs of your family.

Do you think estate planning is a one-time event?

I am sorry.

You are wrong.

According to recent Wicked Local article titled “Five Reasons to Review Your Estate Plan,” reviewing your estate plan regularly is essential to protecting your loved ones and your assets.

What are reasons to review and update your estate plan?

You have minor children.

When you created your estate plan, you did not have children.

Maybe you had children, but have added a few more.

You will need to select guardians for these little ones.

This person will rear your children should you and your spouse be unable to do so.

You will also need to adjust your estate plan so your assets will be protected for them.

Your estate is valued above the state and federal exemption amounts.

Tax planning is an important part of estate planning.

Some states have a lower estate tax threshold than the federal limit.

Some states even have an inheritance tax.

These could impact you whether you are single or married.

Fortunately, neither Kansas nor Missouri has its own estate or inheritance tax.

Whew.

Work with an experienced estate planning attorney to minimize the impact of taxes on your estate.

Your last estate plan is several years old.

Laws change.

As new laws go into effect, your estate plan should reflect the changes.

Be sure to include digital asset planning in your updated estate if you have not done so already.

You have accounts with beneficiary designations.

Not all assets pass through a last will or trust.

Some assets and accounts are inherited through beneficiary designations.

Review annuities, retirement accounts, and life insurance policies to make sure you are not leaving an inheritance to your ex-spouse.

You want to plan for long-term care costs.

Your estate planning, retirement planning, and financial planning are interconnected.

Make sure your estate plan does not disqualify you from Medicaid, if you will require this for long-term care.

You should also use long-term care planning to protect your assets within your estate planning, to include long-term care insurance.

If any of these factors apply to you, schedule an appointment with an experienced estate planning attorney to review the plan you have in place.

He or she will be able to advise and adjust to meet your current situation.

Reference: Wicked Local (August 29, 2019) “Five Reasons to Review Your Estate Plan”

Do I have Enough Moola to Retire?

The need for money does not disappear in retirement.

You cannot predict the course your life will take.

The Great Recession took jobs and retirement savings from many Americans.

When life knocks you down, you do not need to stay there.

According to a recent Consumer Reports article titled “Will you have enough money to retire?,” you can adjust and still have a financially sound retirement.

What can you do?

Review finances.

You bring home a paycheck.

You also have taxes, deductions, and bills.

Calculate how much money you have after these expenses.

This will help you know how much you have available to save.

Cut the fat.

Evaluate what expenses you need.

Compare the costs and consider switching providers.

A little bit can go a long way.

Pay off debt.

You do not want to carry debt into retirement.

Start with the highest rate debt first.

Reconsider big ticket items.

Purchase a used car rather than a new vehicle.

Choose a vacation close to home rather than traveling far away.

Move to a smaller home.

Prioritize retirement savings.

Does your employer provide matching benefits for retirement contributions?

Take advantage of this.

It is free money.

What if you are self-employed?

Set up your own IRA or solo 401(k).

These accounts are off-limits until retirement.

Stay employable.

Do not let your current certifications or licenses lapse.

Never stop learning.

If you can meet future needs, you may continue to work if you need more money for retirement.

Incorporating these strategies into your financial plan will set you up for a more relaxed retirement.

Reference: Consumer Reports (August 29, 2019) “Will you have enough money to retire?”

What Exactly is a "Shared Living Arrangement"?

Roommates may be an option beyond college.

The "cost of living" can be expensive for anyone.

Whether you are young and paying off college debt or older adding health care costs, you may be looking for ways to save money.

According to a recent The Mercury article titled “Do shared living arrangements make sense?,” shared living arrangements may be an viable cost-saving option.

Some immediate benefits include sharing responsibility for mortgages, taxes, and utilities.

Throughout history, generations of families have lived together.

When Gretchen and I lived in Germany, this was the norm among our neighbors.

If you need to save on expenses, shared living space can be a good choice.

Do not commit blindly.

Discuss household expectations, financial issues, and estate planning needs.

Not every family will enter into the same arrangement.

Some parents may choose to buy a home with their adult children.

Often this is easier and more cost effective than retrofitting a current home to fit the needs of an aging parent.

Be careful when it comes to "titling" property, too.

Work with an experienced estate planning attorney to determine what is best given the laws in your state.

For other families, it is simpler to have an aging parent simply move in with an adult child.

If you do this, make sure to have written agreement on the parent helping with monthly expenses.

You should also include payment for any alterations made to the home for the aging parent.

Having these in writing will be helpful should the parent need to apply for Medicaid.

A third option is for an adult child to move in with the aging parent.

An adult child can buy into the home as a joint tenant with right of survivorship.

Work with an experienced elder law attorney to determine what options are best for your circumstances, especially when it comes to Medicaid, real estate ownership, and estate planning issues.

Reference: The Mercury (August 28, 2019) “Do shared living arrangements make sense?”

Feeling "Sandwiched" Children and Aging Parents?

You do not have to care for others alone.

You have aging parents.

You have children of your own.

You are also nearing retirement.

You feel pressure in all directions.

According to a recent The Motley Fool article titled “How to Help Your Parents Retire Without Derailing Your Own Retirement,” you are not alone.

Nearly 16 percent of Americans are currently providing care for an aging relative.

This number will continue to rise as the population ages.

Neglecting your own saving for retirement, does not do you (or anyone you love) any favors.

What can you do to protect your future, while also caring for your children and parents?

Look into government assistance.

The government has many programs for citizens at different life stages.

Research whether your loved ones might qualify for help with food, utilities, housing, or healthcare.

For example, there may be the option of Supplemental Social Security Income for those over age 65.

What does this do?

In the year 2019, this provides up to $771 per month if your parent is single or $1,157 for a qualifying couple.

Cut costs.

You should have a budget.

Your parents should also have a budget.

Keeping track of money will help remove unnecessary expenditures.

It will also help you understand what steps need to be taken to cover costs.

Have a sale.

Whether you need to simply downsize or have valuable antiques, selling possessions can help.

Use the money to take care of expenses.

Create a plan.

You and your parents will continue to age.

You cannot neglect your own future needs.

Discuss future needs with your family .

Be realistic about the cost of your parents care and the care you may need in the future.

If you have siblings, work together now to better care for your parents later.

One sibling should not bear the responsibly alone.

Working with an experienced financial advisor and estate planning attorney can help you meet the needs and demands of aging.

Reference: The Motley Fool (August 25, 2019) “How to Help Your Parents Retire Without Derailing Your Own Retirement”

What are Some Perilous Pitfalls in Business Succession Planning?

Businesses require careful succession planning.

Do you have a business?

If yes, do you have a plan in place for the challenges life throws at you?

According to a recent Kenosha News article titled “Five events that can ruin a succession plan” your business will not survive without a plan.

Your business likely is your financial security and your retirement plan.

You need to protect it.

How do you do this?

Address the five D’s of succession planning.

Death.

Your death does not mean your business needs to die with you.

You need to select and train a successor.

Create a plan for transitioning leadership.

Purchase business interruption insurance and life insurance to support the business through the transition.

An experienced estate planning attorney can help you create a plan and coordinate with the appropriate insurance professionals to meet the needs of your business.

Disability or Disease.

Some surprises in life are unpleasant.

No one wants to believe an illness or disability will take them away from work.

It can happen.

You should make plans in the event, for whatever reason, you become unable to work or make decisions for the business.

Without safeguards in place, your business could lose value or go under completely.

Divorce.

The love of your life could become your worst nightmare.

Your ex-spouse could take more than your heart.

He or she could take your livelihood.

If you are in the planning stages of your wedding, add "create a prenuptial agreement" to your checklist to protect the business in the event of divorce.

Drama.

Business are comprised of humans.

Where humans exist, drama and conflict may follow.

With no plan in place, your employees will begin to worry about their security.

They may look for other jobs.

They may frighten vendors.

Having a plan in place and communicating this to your employees will help keep drama from starting.

Drive.

You may have many people with great big-picture ideas.

Not everyone works in details, however.

Your success plan should include details and directions for implementation so important operations will not fall through the cracks.

Creating a succession plan protects more than you.

It provides security for your employees and the customers you serve.

Reference: Kenosha News (August 25, 2019) “Five events that can ruin a succession plan”