Eve Kaplan, CFP®
Eve Kaplan
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Consider Having These Vital Estate Documents

February 1st, 2010

Consider Having These Vital Estate Documents

By Eve Kaplan, CFP® Practitioner

Are you familiar with the term ‘Longevity Law’? This term was coined by an Elder Care Attorney to refer to the new generation of legal documents tailored specifically to Boomers and our aging parents. Some of these may be familiar to you (Power of Attorney, for example) but some are relatively new ways to respond to aging and caregiving crises.

This new generation of legal documents helps over 40 million Boomer adults in the US (21% of the adult population) helping aging parents or relatives.

I refer to these documents frequently as a financial planner because I work with estate and elder care attorneys on behalf of my clients to make sure we’re all on the same planning page:

1. Power of Attorney (PoA): The PoA legally appoints someone (e.g. spouse, adult child) to carry out your personal business if you can’t. PoA come in various flavors: general PoA, limited PoA, durable PoA, regular PoA and springing PoA. Some PoA issues to be aware of are include:
• A traditional PoA strips your agent of the ability to act on your behalf precisely when you need it most (when you’re incapacitated). A solution may be designing  a durable PoA with someone you trust – so it remains in effect upon your incapacity. Another possibility is a springing PoA that “springs to life” if two physicians certify you have an incapacity (this can get tricky, however).
• A general PoA doesn’t restrict the agent from legally acting on your behalf, but a limited PoA does. Both durable and springing PoA can specify your agent spend money for home healthcare, for example.
• There may be a conflict of interest if a potential heir carries out directives to spend money on long-term/health care. One way to solve this is to create a separate Gifting Power of Attorney (note: this assumes you have enough folks around to fill these various functions).

2. Healthcare Directives (these sometimes include living wills and do not resuscitate orders): These documents essentially appoint a health care proxy to make decisions for you. They’re critical when you’re incapacitated (e.g. in hospital) and can’t speak on your own behalf. It’s important to be as specific as possible. If you have an “ageing in place” clause in your Power of Attorney paperwork, you also should have a similar clause in your Healthcare Directive.
Sometimes family members are grateful when you’ve elected to discontinue life support when things become dire. This would be a hard decision for your family or friends to make on your behalf, but they’d be honoring your stated desires if you spell this out in legal paperwork. Doing so takes the onus of responsibility and guilt off the shoulders of your loved ones.

3. Sibling Support Agreement: Elder care attorneys create these in consultation with siblings to head off conflicts before they arise. Financial relationships and responsibilities can be put clearly into writing, including 1) who pays for what, 2) who has access to financial accounts and 3) who will inherit what. These documents can help siblings sort through issues when a parent comes to live with one sibling, needs financial support or enters an assisted living facility/nursing home. A typical sibling support agreement has a waiver of some inheritance rights by the non-supporting sibling(s) and other considerations regarding expenditure of the parent’s money. These agreements can help determine who declares a parent as a deductible dependent, who may get a deduction for long-term care insurance premiums, etc. They also may include a mediation clause to smooth conflicts. Note sometimes these agreements are not enforceable or may be challenged if serious disputes arise amongst siblings or a parent dies and disinherits a sibling.

4. In Terrorem and Advancement Clauses:  In Terrorem clauses can disinherit a “troublemaker” who may try to contest a will; an example would be attempts by a non-caregiver sibling to challenge the caregiver sibling for funds intended to compensate the latter for his/her care of an aging parent. In Terrorem clauses succeed in disinheriting a “troublemaker” if he/she loses a Will contest.  Advancement Clauses help parents (who advance an asset to one child to pay for care) deduct this value from the inheritance so one child doesn’t end up getting a larger inheritance than the parent intended.
The logical end of all life is death. Like taxes, it’s inevitable. However, we can create a better space for our parents and ourselves by working more closely with professionals (elder care attorneys, financial planners) to close loopholes in care, clarify estate intentions and solve problems before they wreck family relations.

For more information about the above, please call my office: 908-898-0549.

Copyright © 2008 by Eve Kaplan

Eve Kaplan is a Fee-Only (no products sold) Certified Financial Planner in Berkeley Heights. Kaplan Financial Advisors, LLC is a Registered Investment Advisor in NJ and NY. Eve can be reached at 908-898-0549 or via her website: www.KaplanFinancialAdvisors.com

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Consider Updating These Vital Estate Documents

December 1st, 2009

Consider Updating These Vital Estate Documents

By Eve Kaplan, CFP® Practitioner

As Boomers get older, they’re learning (sometimes too late) that having the right kind of estate documents for our aging parents can prevent family meltdowns. Standard estate documents can get a “make over” and there’s a new generation of legal documents tailored specifically for the 40 million Boomer adults in the US (21% of the adult population).

Although I’m not an attorney, my role as financial planner means I refer to these documents frequently when I work with estate and elder care attorneys on behalf of my clients.

Here are some things to consider in Power of Attorney documents (one of the Big $ — the others are living wills, medical health care directives and wills):

1. Power of Attorney (PoA): The PoA legally appoints someone (e.g. spouse, adult child) to carry out your personal business if you can’t. PoA come in various flavors: general PoA, limited PoA, durable PoA, regular PoA and springing PoA. Some PoA issues to be aware of are include:

• A traditional PoA strips your agent of the ability to act on your behalf precisely when you need it most (when you’re incapacitated). A solution may be a durable PoA with someone you trust – so it remains in effect upon your incapacity. Another possibility is a springing PoA that “springs to life” if two physicians certify you have an incapacity (this can get tricky, however).

• A general PoA doesn’t restrict the agent from legally acting on your behalf, but a limited PoA does. Both durable and springing PoA can specify your agent spend money for home healthcare, for example.

• There may be a conflict of interest if a potential heir carries out directives to spend money on long-term/health care. One way to solve this is to create a separate Gifting Power of Attorney (note: this assumes you have enough folks around to fill these various functions).

2. Healthcare Directives (these sometimes include living wills and do not resuscitate orders): These documents essentially appoint a health care proxy to make decisions for you. They’re critical when you’re incapacitated (e.g. in hospital) and can’t speak on your own behalf. It’s important to be as specific as possible. If you have an “ageing in place” clause in your Power of Attorney paperwork, you also should have a similar clause in your Healthcare Directive.

3. Sibling Support Agreement: Elder care attorneys create these in consultation with siblings to head off conflicts before they arise. Financial relationships and responsibilities can be put clearly into writing, including 1) who pays for what, 2) who has access to financial accounts and 3) who will inherit what. These documents can help siblings sort through issues when a parent comes to live with one sibling, needs financial support or enters an assisted living facility/nursing home. A typical sibling support agreement has a waiver of some inheritance rights by the non-supporting sibling(s) and other considerations regarding expenditure of the parent’s money.

4. In Terrorem and Advancement Clauses:  In Terrorem clauses can disinherit a “troublemaker” who may try to contest a will; an example would be attempts by a non-caregiver sibling to challenge the caregiver sibling for funds intended to compensate the latter for his/her care of an aging parent. In Terrorem clauses succeed in disinheriting a “troublemaker” if he/she loses a Will contest.  Advancement Clauses help parents (who advance an asset to one child to pay for care) deduct this value from the inheritance so one child doesn’t end up getting a larger inheritance than the parent intended.

The best planning helps prevent conflict amongst family members as someone approaches death. For more information, please call my office: 908-898-0549.

Eve Kaplan is a Fee-Only (no products sold) Certified Financial Planner in Berkeley Heights. Kaplan Financial Advisors, LLC is a Registered Investment Advisor in NJ and NY. Eve can be reached at 908-898-0549 or via her website: www.KaplanFinancialAdvisors.com

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Tough Talk for Adult Caregivers of Aging Parent(s)

July 1st, 2009

Tough Talk for Adult Caregivers of Aging Parent(s)

By Eve Kaplan, CFP®

Here are some startling statistics regarding the prevalence of a somewhat ignored subset of the US population: adult children caring for their aging parent(s). Did you know approx. 21% of our adult US population (44.4 million people) are caring for their parents in some capacity? As our population ages, we see that more than 50% of 60 year olds in this country have at least 1 living parent.

The average adult caregiver in the US is 46 years old. Nearly half juggle 40+ hour work weeks (and running their own households) with an average of 8 hours/week of care for a parent or loved one. Although the average span of care giving is 4.3 years, 30% of caregivers have been doing so for 5+ years.

This process rarely runs smoothly – and rarely isn’t burdened by irritation, impatience or resentment. Here are some tips for making this process go as smoothly as possible:

1. Avoid Talking Down to Your Aging Parent. This is a tough issue. What parent enjoys being told what to do by a child (albeit an adult one)? The biggest challenge talking to an aging parent is avoiding triggering the “no” or “I don’t know” response. Aging parents often will stall or reject advice by adult children because their parental control is being challenged. Sometimes this forms a barrier or hurdle that the adult child can’t breach alone. One helpful strategy is to offer an aging parent 2 clear choices. Example: “Mom – you said you want to continue to live at home but you can’t get up the stairs. You either can consider moving to housing without stairs or invest in a new bathroom and bedroom downstairs for XXXX dollars. Which do you prefer?” This works better than handwringing about the risk of falling down stairs, and dire threats to an aging parent.

2. Outsource Instead of Reinventing the Wheel. Adult caregivers never were trained to take care of aging parents. How can an adult caregiver navigate through all the confusing information to make decisions on a parent’s behalf? Consider working with professionals (a financial planner, geriatric care manager, elder care attorney, insurance specialist) as a positive way to avoid expensive mistakes. View us and other professionals as “an investment” instead of “an expense.” Sound financial, estate and insurance planning could return the benefit of up to hundreds of thousands of dollars – by helping avoid costly mistakes.

3. Be Pro-Active Instead of Re-Active.  Start a “Mom, Dad, We need to talk?” conversation before there are any problems. Cover issues like “their ideas about aging in place” and nursing care assistance. In their later years, do your parent(s) want to be near their grandchildren? Be near friends in Florida? Ask what happens if their money can’t cover their expenses beyond the next 4-5 years? Start a conversation and start planning early – the best strategies (estate, financial, other) are put into place years in advance.

4. Record Relevant Documents Your Parents Have – and Note What’s Missing. Some parents won’t give financial content info (e.g. how much money they have in accounts) to adult children but determine where their bank/investment accounts are held (and account numbers), real estate holdings, if they have basic estate documents (health-care directives, durable power of attorneys, living wills and regular wills), medical information (physicians, insurance company, medications), other insurance information (policy numbers and company names), the names and phone numbers of financial and other advisors, and the location of important records (where keys to safe-deposit boxes are kept, etc).  Knowing this is especially important if you live far away because you may need this information on short notice in the event of an emergency.

Copyright © 2008 by Eve Kaplan

Eve Kaplan is a Fee-Only Certified Financial Planner™ Practitioner in Berkeley Heights, NJ. She helps coordinate financial planning services for aging parents (and their adult children) by working with other professionals. She can be reached at 908-898-0549.

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Special needs Financial Planning Issues

June 1st, 2009

Special Needs Financial Planning Issues

by Eve Kaplan, CFP(R)

If you’re the caregiver of a special needs child or adult, you may find yourself in an unfamiliar new world of perplexing medical, emotional and financial concerns. For many, caregiving does not stop when a child reaches the age of 18 or 21 — it can continue (in many forms) beyond the end of your life and throughout the life of a special needs child/adult.

Here are some critical issues to consider when thinking about the financial aspects of caring for a special needs child or adult:

1. If your child is under the age of 21, your local school district is an excellent way to identify various programs. The Individuals with Disabilities Act (IDEA) provides children with disabilities “a free and appropriate public education” that matches their needs. Individual Education Plans (IEPs) tailored to your child’s specific short- and long-term education goals often embrace a broad range of work/study, vocational and respite programs — along with subsidized transportation and other resources.

2. Budget for additional medical expenses not covered fully by your health insurer. All qualified medical expenses exceeding 7.5% of your adjusted gross income are tax-deductible. Legal fees to arrange guardianship often can be included as qualified medical expenses. Work with your health insurer (and provide evidence, as needed) to continue coverage for your adult child as long as possible. NJ allows coverage to age 30 for special needs adults.

3. Consider professional advice to sort through financial and legal issues. I work with families to identify key funding issues that have bearing on them AND their special needs child. Having this situation requires additional planning since there are long-term ramifications for your financial well-being.

4. Consider how your child will be cared for (financially) once he or she is an adult. Some programs (Supplemental Security Income – SSI, and Medicaid) may be appropriate.
5. Review your legal documents to make sure a special needs individual is cared for after your death. Your current will and other legal documents may not address the specific planning issues relevant to a special needs child — such as lifelong supervision and care. For example, I work with estate attorneys together to determine if a special needs trust makes sense or not – and how it can be funded. Special needs trusts are designed so gifts and inheritances from family members don’t jeopardize a special needs individual’s eligibility for government benefits (e.g. SSI and Medicaid).

6. The internet has extensive resources. Here is some contact information specific to NJ: a) Division of Vocational Rehabilitation Resources 1-609-292-5987, b) Dept of Developmental Disabilities 1-609-987-0864, c) ARC of NJ www.arcnj.org d) National Assoc. of Mental Illness, NJ www.naminj.org For autism, contact www.aspennj.org For OCD, contact www.njocf.org . Finally, NAMI (www.naminj.org) is a good starting point for mental illness issues in general. For a more detailed list of resources and contact information, please call my office: 1-908-898-0549.

Don’t forget your needs and the needs of your other family members. If you have other children, encourage them to share their feelings and concerns. Sometimes caring for a special needs child or adult makes siblings feel overlooked. Consider joining specialized suport groups yourself that focus on disabilities or conditions but also address your emotional needs as a parent.

Copyright © 2008 by Eve Kaplan

Eve Kaplan is a Fee-Only (no products sold) Certified Financial Planner in Berkeley Heights. She can be reached at www.kaplanfinancialadvisors.com or 908-898-0549.

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What to Do About Aging Parents: A 15 Pt Check-List

July 1st, 2008

What To Do About Aging Parents: A 15 Pt Check-List

By Eve Kaplan, CFP®
A hundred years ago people were extremely old in the US if they lived past 65. What a difference living in 2008 makes! Reaching age 65 now represents just the 2/3 mark for many people expected to live to 95 and beyond.
Health, exercise and medical advances all make this possible in a way unimaginable through most of human history.
That’s wonderful news, but if your aging parents weren’t expecting to live into their 80s and 90s, it means they weren’t anticipating one or two decades of inadvertently becoming an emotional and/or financial responsibility to their adult children. This puts some adult children into a sandwich syndrome: supporting both children and parents.

If you’re an adult child of an aging parent, it’s vital you address various issues now since at least 40% of adults over 65 will require some sort of extended care to get through their last decades. Here’s a handy 15-point check list to consider:

1. Do you have a good understanding of how long your parents’ investment assets will carry them into the future?  Have they budgeted for the spiraling cost of health care for areas not covered by insurance or Medicare?

2. Do you have open discussions with your parents about their financial means? Or do you duck the issue or hear them telling you “I’m just fine” until you find out you need to bail them out financially?

3. Do they have long-term care insurance – including a home health care provision if they can be cared for at home?

4. Have you (or another relative or friend) been given power of attorney in the event your parent(s) become sick? Do your parent(s) have medical health directives and living wills so you can make informed medical decisions on your behalf?

5. Are you aware there is a 5 year look-back in the event your parents gift most of their assets away and want to tap state and federal resources? If they gift away assets in 2005, they can’t fully tap funded state/federal care resources for 5 years.

6. Do your parents have the means and inclination to move to an assisted living facility if it’s no longer viable for them to live at home?

7. Have you and your siblings discussed who will pay for what services – if needed – and who will spend more or less time being an advocate for an aging parent?

8. If you have a spouse, is he/she on-board with your plans? Or does this create friction and discord?

9. Have you considered “adult day care” for an elderly parent if he/she needs to be attended to during the day but is well enough to still live at home?

10. Have you or your siblings considered having your parent(s) move in with you to avoid sending them to a nursing home?

11. Are you aware that your parents can be listed as dependents if you provide over 50% of their living expenses? If you and your siblings together provide over 50%, you can rotate the privilege to deduct your parents as dependents.

12. If you’re self-employed, did you know you could deduct the eligible portion of a long-term care insurance premium – even if you don’t itemize deductions?

13. Are you up-to-date re: what Medicare covers? (and what it doesn’t cover)? Medicare covers the first 20 days of skilled nursing or home care and some coverage for the subsequent 80 days. After that, coverage ends unless your parent qualifies for Medicaid.

14. Eligibility for Medicaid (which helps individuals with low incomes and smaller resources) varies state by state but qualifying for long-term care generally means a person has to spend down his or her assets to a very modest level.

15. Have you considered seeing a financial planner WITH your parents so you have a neutral partner to facilitate difficult discussions about the present and future?

Copyright © 2008 by Eve Kaplan

Eve Kaplan is a Fee-Only (no products sold) Certified Financial Planner in Berkeley Heights. Kaplan Financial Advisors, LLC is a Registered Investment Advisor in NJ and NY. She can be reached at 908-898-0549.

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