The Livens Law Firm

Dallas Estate Planning Law Blog

Americans procrastinate about wills, estate plans and money

Preparing and maintaining an updated will is one of the best things a person can do for his or her family. People who have assets and want to have them distributed in a specific manner after their death will need to layout their requests in a will. In Texas and elsewhere, over 30 percent of adults procrastinate about creating a will or any sort of estate plan.

When it comes down to financial matters, most Americans who fail to make retirement plan contributions lose out on the opportunity to grow their money. Studies show that 25 percent of workers fail to invest in retirement plans and are losing money because of it. Contributing $300 each month over 40 years would result in over $700,000 with an annual return of 7 percent. Those who delay contributing five years will only amass about $500,000 with the same return rate.

Long-term care planning for elderly parents

Many Americans are struggling with the financial reality of caring for a senior parent. With nursing home costs of more than $7000 monthly, most families feel they have no other recourse than to care for mom and dad at home. In Texas, more families are investing in long\-term care insurance to help offset the cost of care for their loved ones.

By opening the lines of communication now, adult children can find out where their parents stand in the event of a medical crisis. If parents are fortunate enough to have assets to cover future health care, now is the time to find out how those assets can be accessed. Experts also recommend an adult child having a power of attorney to oversee medical and financial matters.

Financial and tax options for an IRA inheritance

What happens when a person passes away and leaves an IRA to someone other than a spouse? A spouse who receives an IRA inheritance has the most flexibility and can treat the account as his or her own. Others will find that their options are limited, and making the wrong decision can have expensive financial consequences. In Texas and other states, four options are available for the beneficiaries of inherited IRA accounts.

Custodians or representatives often suggest cashing the account in. Some beneficiaries are unaware that options exist beyond full cash out of an IRA, but banks rarely offer other alternatives. Other options would be to spread the distributions out over five years. The money can be dispersed in installments or all at once at the end of the five-year term and are taxable upon withdrawal.

Retirement checklist for long-term care expenses

One of the biggest hurdles seniors face during retirement is the rising cost of health care. Medicare premiums and prescription drug costs can eat into savings quickly. On average, a 65-year-old person will spend over $200,000 on health care during retirement, and that does not include long-term care. In Texas and other states, retirees on a limited income are looking for ways to lower the cost of health care.

Preventive services offered by Medicare help seniors stay healthy. Free wellness visits are available every year, including diabetes testing and mammograms. Depression and some cancer screenings are also available yearly free of charge. By utilizing these services now, elders can stay in good health and reduce health care costs overall. Experts also advise addressing minor health issues before they become major events.

Start planning for retirement and long-term care now

No matter the age of a person, taking steps now to save for the future can help create a comfortable retirement. Everyone envisions their retirement to be enjoyable and comfortable. However, some may find they need long\-term care, and the last thing anyone wants is to run out of money. In Texas, people are making changes now to ensure that their senior years are happy and healthy ones.

One may want to strongly consider having six to 12 months of living expenses tucked away for unexpected emergencies. In the event of serious illness or job loss, it is important to have a plan in place and funds to cover expenses such as a mortgage or rent, utilities, insurance, and taxes. Consider canceling life insurance policies with high monthly fees in favor of long-term care insurance instead. Having a savings fund for emergencies will prevent the need to tap into retirement accounts.

How to handle a parent's insolvent estate

Studies show that debt among senior Americans is higher than ever before. Over one half of seniors will die with less than $10,000 in assets, according to the National Bureau of Economics. In Texas and other states, a higher percentage of seniors retire with a mortgage and credit card debt. When a family member passes away, is the estate responsible for any outstanding debt that may be left behind? 

When people die, their debts do not die with them. The debts become part of that person's estate, and some estates are insolvent and have no money to pay creditors. Survivors who are not spouses are not required or responsible for any debt left behind unless they have co-signed a note or have joint accounts with the deceased.

Important Medicare answers for long-term care planning

More senior Americans rely on Medicare for medical coverage when they retire, but it can be a difficult and complicated program. Gaining a better understanding of how the Medicare works will make it easier to integrate the program into long\-term care planning. In Texas and other states, individuals can apply for Medicare benefits when they reach the age of 65, although, some may be younger depending on certain disabilities or diseases. The benefits' costs are determined by the time worked and the payroll contributions made over one's lifetime.

Medicare is broken down into four separate parts. Inpatient hospital care is covered by Part A and is free to seniors and spouses who have worked a minimum of 10 years and paid into the program through payroll deductions. Doctors' visits and other outpatient services are listed as Part B; however, it can be costly and may include additional preventive procedures that are medically necessary. Part C is a Medicare Advantage plan that works with private health insurance and adds additional coverage. Part D is prescription drug coverage and has multiple plans and costs depending on the client's needs.

Inheritance money not necessary for millennials

The common misconception is that the millennial generation is bad with money. However, studies show they are most likely to be super-savers. Most work hard, ask for raises, contribute over 15 percent of earned income to 401(k) plans, and learn as much as possible about retirement, inheritance and debt management. In Texas and other states, millennials believe there will be no Social Security by the time they retire.

Millennials are defined as the generation born between 1980 and 1995 and are between 23 and 38 years old. In reports from Bank of America, millennials are better than older generations at managing money and are not doomed to a financial crisis as some predicted. About 57 percent have savings goals and are planning for future retirement. They budget and are assertive when it comes to cash flow and making sure it continues to grow.

Making money and long-term care the topic of conversation

Talking about money among family members is often considered taboo. Many believe it to be an uncomfortable topic. Studies show that families who are not discussing finances could make severe financial mistakes when planning for long\-term care. In Texas and other states, experts agree that talking finances while everyone is still healthy can help avoid problems down the road.

About 40 million adults in the U.S. will act as caregivers in their lifetime. Some under the age of 64 will have sacrificed careers to provide long-term care to loved ones. It is reported that 70 percent of Americans age 65 and older may need long-term care, and a portion of that burden may fall on adult children. It is essential that family members have conversations early to plan how long-term care will be covered.

Avoid probate with proper estate planning

An estate includes everything a person owns, including assets and outstanding liabilities at the time of death. Once all debts are fulfilled, what is left is known as net assets. In Texas, most people put off talking about estate planning, but by not having a plan in place, it can lead to the decedent's estate going into probate. Probate can be time consuming and expensive, but it can be avoided by utilizing one of the many financial devices available.

Joint ownership of properties gives the surviving spouse co-ownership or rights of survivorship. Having a signed beneficiary or transfer on death designation in place will cover pension payouts, IRAs, 401(k) plans, bank accounts, retirement accounts and life insurance policies. Gifting property and assets before death removes the potential for probate, but if the gifts are large, they may incur a federal gift tax. 

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