Dallas Estate Planning Law Blog

Recent statistics show healthy, retired couples over the age of 65 could pay $275,000 for healthcare during their retirement years. Residents of Texas and elsewhere can expect to pay an additional $97,000 a year for long-term care services in a private room in a nursing home. Studies show the cost of long-term care has increased three times faster than inflation since 2004.

The cost of long-term care spending since 1980 has gone from $30 billion to a staggering $225 billion in 2015. Most Americans over age 65 rely on Medicare to cover routine medical care and hospital procedures. However, Medicare does not cover long-term care. Medicaid will pay for a significant portion of expenses, but if a person has more than $2000 in assets, chances are he or she will not qualify.

Family dynamics have changed with adult children reversing roles with their parents and having sit-down talks about finances. In a recent survey, parents in Texas over age 60 admit they have never discussed estate planning with family members. Adult children worry that conversations about money, wills and designating personal representatives could cause conflict or even sour relationships with their parents.

Studies show that 90 percent of family members wait until something tragic happens before talking about finances and important legal issues. Experts recommend approaching the conversation by encouraging parents to discuss their end-of-life goals, including topics about declining health and funeral arrangements. Parties should be prepared to shut down conversations, however, if talks become strained or stressful for them.

Making long-term financial arrangements for a disabled family member may get easier. Until recently, people with disabilities could only own $2000 in assets to continue to receive state and federal assistance. The Achieving a Better Life Experience Act was created in 2015 to allow states, such as Texas, to launch tax-advantaged savings programs for disabled individuals. An ABLE Savings Account differs from a Special Needs Trust, which has a minimum contribution of $10,000. In most states, ABLE accounts can be started with just $25 and may be a better option than inheritance trusts.

State and federal benefits such as Supplemental Nutrition Assistance Program, Medicaid and Supplemental Security Income would be jeopardized if assets exceeded $2,000. No longer will disabled people be forced to live poor to keep their benefits. Under the new ABLE Act, individuals with disabilities can have assets up to $100,000 before it affects their resource limit for SSI.

An increasingly tough economy has left many people in difficult financial situations. Recent studies show one in three people in the United States are counting on an inheritance from family members to reach financial security. In Texas and elsewhere, one of the most common ways for younger generations to receive an inheritance is through unspent IRA balances.

Most retirees wait to take distributions from IRAs because of tax consequences. Those lucky enough to inherit an unspent IRA should know the special rules that can add a lifetime of benefits that some people miss out on. The most common choice for a beneficiary is the spouse of the deceased, and the rules are simple for that person to inherit an existing IRA account. The surviving spouse can roll the existing IRA over into his or her name or a created account, but penalty-free withdrawals and minimum distributions depend on the spouse's age.