Q – My mom’s been thinking about selling her home, which she has maintained even though she is currently living with a relative. After doing some research online, I realized there are some significant tax implications of selling a home, especially when it is mortgage free. Is there a better option to allow her to minimize the tax costs and maximize her assets?

A – The best bet is to have an estate planner review your mother’s specific circumstance and those assets that can be found in her property. However, there are a few options available such as reverse mortgages, trusts, and transfer of assets. Otherwise, at the time of her death, the property will be transferred to the named recipient as outlined on her will. An inheritance and/or estate tax will apply, which can be substantially less than the taxes your mother could pay if selling her home. At that stage, the person responsible for the estate under the will can sell the property to pay for funeral costs, can distribute profits to named family members, rent the home, or live in it themselves. Talk to an estate planner before making any definite decisions about how to handle your mother’s estate!

Sources:
1. ThinkGlink
2. Wikipedia

Q – My mother recently decided to formalize her will and get her estate in order and has asked me if she can name me as estate executor on her will. I’m open to taking responsibility for her affairs after her death, but I don’t know much about the process. What are the responsibilities of an estate executor in Oakland?

A – While it’s not uncommon for adult children to be appointed estate executors for their aging parents because there is already a strong element of trust in the relationship; you should first know that it won’t be an easy job. If your mother’s affairs are in good order, the estate executor process itself could go smoothly, but dealing with the emotional repercussions of losing a parent while managing all the responsibility can be a challenge. But, if you are sure you’re up to the job, here is a lists of tasks you may be responsible for carrying out:

• Beginning the probate process – filing the will and petition for probate. Specific probate laws apply for the process in Oakland and may vary between states.

• Notifying the family – close family members can be notified that their loved one has deceased.

• Obtaining death certificates and EIN (Federal tax number for the estate)

• Determining and collecting the deceased assets (locating documents that verify value of the estate and make an inventory list)

• Letting people know who the executor is – family members and friends with claims will need to get in touch with the estate executor

• Managing the property of the estate – paying bills, taxes and other legalities

• Settle Finances – filing income tax returns on behalf of the deceased

• Distributing assets – distribute assets to those named on the will

• Be removed as executor – once the estate is settled, petition the courts to be removed as executor

Sources:

1. Third Age  Alan S. Novik
2. AFSP

Image: Toronto Lawyers

“Longevity risk” is the term used to describe the increased lifespan of baby boomers which can ultimately result in them outliving their assets and funding for retirement. Not only are baby boomers living longer into their senior years than previous generations, but unlike their parents who had pensions to support them into old age; only 70% of baby boomers will retire with pensions today. Is it possible for seniors to live longer with fewer assets and income available to them?

According to a recent study by Ernst & Young, there is a very real risk that baby boomers and future generations who live longer will outlive their retirement funds. The study showed that 3 in 5 senior middle-class retirees who maintain the lifestyle they have prior to retirement will run out of money before they die. While many seniors may dream of vacationing during the winter months and living extravagantly to celebrate their senior years; they may in reality have to sacrifice these dreams in lieu of a more modest lifestyle, saving the hard-earned money they made during their working years to provide for the regular costs of living both before and during retirement.

Younger generations should start planning today to provide for their senior years by saving a percentage of their earned income in a retirement plan to provide for retirement living; and some baby boomers who have yet to save need to act fast and adjust their lifestyles so they have the money to fund their futures.

ConsumerAffairs  Fred Yager

Q – What is senior financial abuse, and how can it be prevented?

Senior financial abuse is any situation where a senior and/or their money are exploited for monetary gain. Seniors in Oakland are a major target of financial abuse because they can be dependent upon others, they can be trusting, and they may have minimal experience managing their financial affairs; oh, and they also control 70% of personal assets in North America. Financial abuse takes a number of forms; some seniors may be financially exploited by their own family members, their caregivers may take advantage of their money, and may be stolen from through elaborate scams.

Tips to Avoid Senior Financial Abuse:

1.    Protect personal information – SSN, PIN numbers and other financial data should be protected and never given to anyone (except a financial power of attorney)
2.    Background checks and references – anyone hired to work for a senior, as a laborer or caregiver should be thoroughly screened with background checks and follow up on personal and professional references
3.    Never pay for anything – often sweepstakes or lottery scams require a senior to pay money in order to claim a prize. Seniors should never have to pay to receive winnings
4.    Have a backup – seniors should seek the help of a trusted family member to review and oversee major financial transactions. Having a second set of eyes to assist with decisions will help protect seniors from financial abuse
5.    Report it – report any suspicious persons to senior advocacy agencies and the local police

Sources:
1.   Associated Content Susan Rand
2.    Sun-Times News Group Terry Savage

Talking to your senior parents about estate planning can be an uncomfortable subject, because many adult children don’t want to feel like they’re interfering with their parents’ personal affairs. Estate planning typically includes a legal will that outlines distribution of assets; a financial power of attorney which dictates who will look after a senior’s finances when they become unable; a medical power of attorney, the person responsible for carrying out a senior’s medical wishes; and a living will, which establishes a senior’s healthcare wishes if they become unable to speak for themselves. Discussing your senior parents’ estate early on with them ensures that you understand the role that they expect you to play after their deaths or during a medical emergency so that their wishes are carried out.

Talking to your elderly parents about estate planning becomes more important if they have not completed the necessary steps to protect their assets and secure their wishes. When approaching the topic of family estate planning, make sure that your siblings and immediate family members are involved so they don’t perceive your interests in your parents’ estate as self-serving. Ensure your parents understand you do not need to have the division of assets explained; it doesn’t matter how much they are planning on leaving you. What’s important is that they put the legalities in place to ensure they control what happens to their assets, even once they loose the ability to represent themselves.

Sources:
1. SeniorJournal.com Robert Valentine
2. FamilyEducation.com

Home Care Oakland and Alameda County provides senior care and elder home care in East Bay Area and Alameda County, including Alameda, Berkeley, Castro Valley, Emeryville, Fremont, Hayward, Livermore, Oakland, Pleasanton and Union City. For more help, please call Home Instead Senior Care Oakland at 510-663-3652.

Prescription costs for seniors without healthcare and prescription coverage may find that their medication costs make up a substantial part of their daily living expenses, and during the recession an increased number of seniors may be choosing to go without their required medication to keep money in the bank.

According to a study completed by The Society of General Internal Medicine in 2001, pre-recession 8% of seniors were not taking some or all of their prescribed medication, as a result of the costs, when paying out of pocket without prescription coverage. With the Commonwealth Fund projecting that healthcare costs for seniors will be as great as $5,000 by 2011; funding medical and senior prescription costs is becoming increasingly more unaffordable for seniors without benefits living on a fixed income. During these tough recessionary times, many elderly people may be more fearful that their retirement income will not last; so they might be hesitant about taking on even necessary medical costs like prescriptions. According to Kenneth Schafermeyer, Director of Graduate Studies at the St. Louis College of Pharmacy “for some [seniors], it’s either eating, or paying the mortgage, or paying for healthcare” and that is an unfortunate reality of the economic situation today. Seniors are forced to make tough decisions that impact both their health and their livelihood.

Sources:  CourierJournal.com

Self-Restriction of Medications Due to Costs in Seniors Without Prescription Coverage

Home Care Oakland and Alameda County provides senior care and elder home care in East Bay Area and Alameda County, including Alameda, Berkeley, Castro Valley, Emeryville, Fremont, Hayward, Livermore, Oakland, Pleasanton and Union City. For more help, please call Home Instead Senior Care Oakland at 510-663-3652.

Q1 – What is hybrid long-term care insurance?
A1- Hybrid long-term care insurance helps seniors fund their long-term care costs as they age with more flexibility and affordability than typical long-term care benefits. Seniors can invest a lump sum into their hybrid benefits in order to fund any future needs in LTC.

Q2 – How do seniors benefit from investing in hybrid long-term care insurance?
A2 – Seniors pay a lump sum amount based on what they can afford, so when it comes to funding any future long-term care costs, they don’t have to pay unaffordable rates out of pocket when staying at long-term care facilities. Unlike with LTC insurance, where seniors are forced to pay expensive monthly premiums even if long-term care or custodial is never needed; hybrid insurance sits in wait until the need for long-term care arises; and funds can be returned if they are never used.

Q3 – How are hybrid long-term care benefit amounts determined?
A3 – Seniors determine how much they want to invest into their hybrid long-term care insurance, and the benefit amount available to fund long-term care under the policy is determined based on age and health at the time it is purchased. Hybrid long-term care benefit amounts are always greater than the initial investment; for example, an $85,000 investment could turn into $120,000. Life insurance benefits also work the same way; a greater amount than initially invested could be returned to the senior’s airs at the time of death.

Q4 – How much does hybrid long-term care insurance cost?
A4 – With hybrid long-term care insurance, seniors determine how much they can afford to pay. However, typically hybrid long-term care insurance is a better investment for the elderly with a large lump sum amount of funds available; since the idea is that the amount of the policy funds all or of the majority of their long-term care needs. Typical hybrid long-term care insurance policies start around $50,000; with some insurance carries enforcing minimums and others making recommendations based on funding projected costs at long-term care facilities.

Sources: http://youandyoursblawg.blogspot.com/2008/06/hybrid-long-term-care-insurance.html
http://personalinsure.about.com/od/longtermcare/a/aa082006a_2.htm

Home Care Oakland and Alameda County provides senior care and elder home care in East Bay Area and Alameda County, including Alameda, Berkeley, Castro Valley, Emeryville, Fremont, Hayward, Livermore, Oakland, Pleasanton and Union City. For more help, please call Home Instead Senior Care Oakland at 510-663-3652.