Homeschooling Grandchildren (It Can Be Done) – Home Educator

While the quarantines, shutdowns, and social distancing measures related to the pandemic have been difficult for everyone, the elderly have been particularly hard hit. Since seniors face the most health risks from COVID-19, most of them have been careful to avoid close contact with their family members, and this has left many grandparents unable to visit with their grandchildren for close to a year now.

This loss of in-person connection for such an extended period of time can cause people to feel isolated and lonely, which can eventually lead to mental health issues like depression. At the same time, children who are unable to spend time with their grandparents may experience confusion and anxiety over their lost relationship.

 

With this in mind, here are a few tips for helping seniors maintain a connection with their grandchildren during the pandemic using web-based technology like FaceTime, email, and instant messaging (IM). And though video chats, texts, and IMs will never replace in-person visits, they offer one of the most effective ways of keeping those relationships—and everyone’s spirits—as strong as possible during these dark times.

 

  1. Reading Stories

One way for grandparents to feel more connected with their grandkids is to read stories over video chat or smartphone. Choose a favorite book at the grandchild’s reading level, and take turns reading pages. This can give the grandchild the added benefits of improving reading skills, building their vocabulary, and helping them develop their speaking abilities. By picking a regular time to call and read together each week, it can also give both of them something to look forward to.

 

  1. Playing Games

Even though in-person visits are too risky right now, family game night can still happen. Grandparents and grandkids have many options for online gaming, including even classic board games, such as Scrabble, Monopoly, and Clue. Like their traditional counterparts, online games also help children develop math and vocabulary skills while they are having fun.

 

  1. Emailing, Texting, and Instant Messaging

Texts, emails, and IMs sent to one another on a regular basis can help grandparents stay connected and up-to-date with the latest developments in their grandkids’ lives. To catch up with one another, seniors can talk about what is happening in their lives and ask the grandkids to discuss the latest events in their own lives. When grandchildren use texts and emails, it also helps them practice writing out their thoughts and work on their spelling and grammar.

 

  1. Mailing Letters or Postcards

These days, letter writing almost seems like lost art. But sending personal letters and postcards is a great way for grandparents and grandchildren to connect with one another. Handwritten letters and postcards can also be prized keepsakes that will help grandchildren remember their grandparents long after they are gone. When possible, children should be encouraged to hand-write letters and postcards instead of typing and printing them out. They can also decorate their letters or postcards with drawings and art.

 

  1. Group Video Chats and Phone Calls

Tech-savvy grandparents can use video chat apps like Skype, FaceTime, and Google Duo to visit with the grandkids in a group setting, where everyone can see and interact with one another. Even extremely young children like toddlers can participate in video chats, which can help them bond with their senior loved ones, even across vast distances. And if video chats aren’t something a senior feels comfortable with, a similar experience can be achieved simply by using a phone. Even short, 15 to 20-minute calls made on a regular basis can help grandparents and grandkids feel more connected and less isolated.

 

For the Love of Your Family

With coronavirus infections and deaths currently surging to record levels, it’s more critical than ever for parents and grandparents to ensure their estate planning is complete and up-to-date, including naming both short and long-term guardians for your minor children. If you’ve yet to name guardians for your kids, you should do so immediately.

 

In addition to ensuring your kids will be protected and provided for no matter what, the estate planning process itself can offer a unique opportunity to enhance your connection with your children and grandchildren. Communicating clearly about what you want to happen in the event of your death or incapacity (and talking with your kids about what they want) can foster a deep bond and sense of intimacy.

 

With people living longer than ever before, more and more seniors require long-term healthcare services in nursing homes and assisted living facilities. However, such care is extremely expensive, especially when it’s needed for extended periods of time.

Traditional healthcare insurance doesn’t cover such services, and though Medicare does pay for some long-term care, it’s quite limited, difficult to qualify for, and requires you to deplete nearly all of your assets before being eligible (though proactive estate planning can help shield your assets). To address this gap in coverage, long-term care insurance was created.

Intensive Care

First introduced as “nursing home insurance” in the 1980s, this type of insurance is designed to cover expenses associated with long-term skilled nursing services delivered in a nursing home, assisted living facility, or other senior care setting, though some of today’s policies cover care delivered in your own home as well.

Such intensive care is required when you are no longer able to care for yourself, often in the later stages of your life. These policies cover the cost of skilled nursing services that support you with basic self-care tasks, such as bathing, feeding, dressing, walking, and using the bathroom. These are known as activities of daily living (ADLs).

Before your coverage kicks in, most policies require that you demonstrate you have lost the ability to engage in at least two or three ADLs. Most policies also have a deductible, or elimination period, which is a set number of days that must elapse between the time you become disabled (eligible for benefits) and the time your coverage kicks in.

Many policies offer a 90-day elimination period, but others can be longer, shorter, or even have no elimination period at all. Of course, the shorter the elimination period, the more expensive the premium.

Additionally, long-term care policies typically come with a predetermined benefit period, which is the number of years of care it will pay for. A benefit period of three to five years, for example, is a quite common duration for such policies. Most policies also come with a cap on the dollar amount of coverage that will be paid for care on a daily basis, known as a daily benefit amount.

Getting Covered

Obviously, the younger and healthier you are when you buy the policy, the cheaper the premiums will be, so the sooner you invest in coverage, the better. In fact, most policies exclude certain pre-existing conditions, so if you wait until you become ill, it can be impossible to find coverage.

Increasing Premiums, Decreasing Benefits
With the elderly population booming, there has been a surge in demand for long-term care services, which has led to a marked increase in the cost of such policies. At the same time, many insurers have been cutting back on the benefits their policies offer.

If you are looking to purchase long-term care insurance, you should speak with multiple insurance providers and compare their benefits, care options, and premiums. Different companies may offer the same coverage and benefits, but they can vary dramatically in price. Always ask about the insurance company’s history of rate increases, including the amount of the most recent increase.

Choose Wisely

For the best chances of success when shopping for a policy, get help from a fee-only planner, who is not compensated based on your choice of coverage. When meeting with an insurance provider, you must get answers to following three questions about your policy:

  1. How long is the elimination period before the policy begins paying benefits?
  2. What capacities, or ADLs, must you lose before coverage kicks in?
  3. How many years of care are covered?

Buying long-term care insurance should be a family affair, because you are going to need your family members to advocate for you and file a claim for the policy when you need to use it. Given this, make sure your family knows what kind of policy you have, who your agent is, and how to make a claim.

What’s more, you should pre-authorize the right person to speak to the insurance company on your behalf, and not just rely on a power of attorney. That said, you should definitely have a well-drafted, updated, and regularly reviewed power of attorney on file as well.

Keep Your Policy Updated

Once you are in your 40s, your long-term care policy should be reviewed annually to evaluate new insurance products on the market and update your policy based on your changing needs. And whatever you do, once you have a policy in place, make sure you don’t miss a premium payment, because if you stop paying, even for a short period of time, you’ll lose all of the money you invested and will have no access to the benefits when you need them.

Here's why you need an Estate Plan - My Press Plus

October 19th-25th, 2020 is National Estate Planning Awareness Week, so if you’ve been thinking about creating an estate plan, but still haven’t checked it off your to-do list, now is the perfect time to get it done.

When it comes to putting off or refusing to create an estate plan, your mind can concoct all sorts of rationalizations: “I won’t care because I’ll be dead,” “I’m too young,” “That won’t happen to me,” or “My family will know what to do.”

But these thoughts all come from a mix of pride, denial, and above all, a lack of real education about estate planning and the consequences to your family of not planning. Once you understand exactly how planning is designed to work and what it protects against, you’ll realize there is no acceptable excuse for not having a plan.

Indeed, the first step in creating a proper plan is to thoroughly understand the potential consequences of going without one. In the event of your death or incapacity, not having a plan could be incredibly traumatic and costly for your family, who will be forced to deal with the mess you’ll have created by neglecting to plan.

While each situation and family are unique, in this multi-part series I’m going to discuss some of the things most likely to happen to your loved ones if you fail to create a plan. This is the first:

Your family will have to go to court
If you don’t have a plan, or if you only have a will (yes, even with a will), you’re forcing your family to go through probate upon your death. Probate is the legal process for settling your estate, and even if you have a will, it’s notoriously slow, costly, and public. But with no plan at all, probate can be a true nightmare for your loved ones.

Depending on the complexity of your estate, probate can take years, or even decades, to complete. And like most court proceedings, probate can be expensive. In fact, once all of your debts, taxes, and court fees have been paid, there might be little left for your loved ones to inherit. And for whatever is left, your family will have to pay hefty attorney’s fees and court costs in order to claim them.

Yet, the most burdensome part of probate is the frustration and anxiety it can cause your loved ones. In addition to grieving your death, planning your funeral, and contacting everyone you’re close with, your family will be stuck dealing with a crowded court system that can be challenging to navigate even in the best of circumstances. Plus, the entire affair is open to the public, which can make things all the more arduous for those you leave behind, especially if the wrong people take an interest in your family’s affairs.

That said, the expense and drama of the court system can be almost totally avoided with proper planning. Using a trust, for example, we can ensure that your assets pass directly to your family upon your death, without the need for any court intervention. As long as you have planned properly, just about everything can happen in the privacy of our office and on your family’s time.

No more excuses
Given the potentially dire consequences probate can cause for your family, you can’t afford to put off creating your estate plan any longer. Next week we’ll look at how the lack of an estate plan will cost you control of who inherits your assets as well as when and how the inheritance is received.  

 

With the risks still posed by COVID-19, we all need to face the possibility that we could get sick, even if we take great care of ourselves through good nutrition, sleep, and exercise. And even if you don’t need to be hospitalized, if you do experience symptoms and test positive, you might have to stay quarantined for enough time that you’d lose income. These risks highlight the need for everyone, regardless of their age or current state of health, to have some form of disability insurance coverage.

You might think you don’t need disability insurance, especially if you’re young and in good health. Hopefully, you’re right. Unfortunately, though, becoming disabled can happen to anyone at any time. This isn’t specific to coronavirus either; it has always been true.

The sad fact is that, according to the US government’s statistics, one in four 20-year-olds become disabled before reaching retirement age. That makes it even more important that you consider how to protect yourself with insurance.

And this is especially important: you must get the actual insurance before something happens. If you’re already sick, you can’t buy disability insurance to make up for lost income.

So now is the time to prepare. Here’s some information to get you started.

What Qualifies You for Benefits (And What Doesn’t)
Let’s get clear on one thing that applies to the coronavirus pandemic: only medical quarantine qualifies you for disability benefits. That means only medical self-quarantine related to COVID-19, which is verified by a doctor, will qualify you. Socially quarantining to decrease your chance of contracting the virus in the first place won’t qualify you for your disability insurance benefits. Disability insurance also won’t cover you if you lose income or health insurance because your employer has closed or laid you off.

Also, disability insurance is not the same as health insurance. Though your failed health is the reason you’d get access to your disability insurance in the first place, disability insurance will not cover your medical bills. Disability benefits are basically to help you pay housing and food costs. But in a time when you’re dealing with disability, it’s good to have those bills covered while you are focused on healing and self-care.

There are two different types of disability insurance and knowing the difference will help you save a lot of time.

Short-Term Disability Insurance
Short-term disability insurance normally lasts around 3–6 months, sometimes up to a year or two. It covers about 60–70% of whatever your salary is. The premiums you pay are often higher than long term coverage, ranging from 1–3% of your annual income. So for someone making $50k a year, it would range between $60 to $125 every month. The percentage depends on what kind of health risks the insurance company determines you have. If you smoke, for instance, the premium will probably be higher, just like with many health insurance policies. If you have a risky job, such as dealing with heavy machinery, premiums will likely be higher as well. A major upside, though, is that payouts usually happen within two weeks, which can be a huge relief in an emergency.

Financial expert Dave Ramsey points out that, because of the higher premiums and shorter span of coverage time, you might want to consider building up a solid emergency fund with 3–6 months of expenses instead. You can consider that personal short-term disability coverage that you don’t have to pay premiums on. But if you’re living paycheck-to-paycheck and can’t foresee saving that much (like 80% of American workers, according to CNBC), and your employer doesn’t offer short-term disability insurance, it is something you may want to consider buying yourself.

Long-Term Disability Insurance
This is the type of insurance that is most important to get, no matter what. This is the type that will last through a long recovery or treatment period. Look for a “non-cancellable insurance policy”, which will keep the insurance company from being able to cancel your policy if you have any health changes.

Long-term disability insurance may pay you benefits for a few years or until your disability ends. Most policies cover 40–60% of your salary, but ones that pay up to 70% do exist, and you should try to find one. These policies also cost 1–3% of your yearly income, but they tend to be on the lower side than short-term. A major difference between the two forms of insurance is that it can take up to 6 months to see a payout. This means that it’s not the best option for covering costs if you have to go into medical quarantine for COVID-19.

We recommend that, even if you decide to pass on short-term disability in favor of emergency fund savings (or if your employee already covers it), you should definitely consider a long-term policy to protect your earnings. Remember, though, it will only pay a percentage of the income you’d be taking in otherwise. Make sure you also have health insurance and as much savings as you can get to protect yourself as well.

Dedicated to empowering your family, building your wealth and defining your legacy,

It’s an unfortunate fact that predators emerge during times of crisis to take advantage of people. That means the COVID-19 pandemic can leave your elderly parents vulnerable in more ways than one. But even when things go back to normal, this chronic problem of financial exploitation will still be a risk.

We see it happen far too often. Maybe your parents live several hours away, or in another state or country, and someone in their community gets close to them. Or maybe they have a close relationship with a financial advisor who isn’t really looking out for their best interests. This person could even be another family member, friend, business partner, hired caregiver, professional advisor, or just a casual acquaintance.

Sometimes, when bad actors become involved with your parents’ lives and assets, it can lead not only to a loss of money, but even a loss of personal freedom. One of the worst cases of this I’ve heard of is the case of Milo, a retired veteran living in Arizona, and his son Greg, who lives in California. It all started when Milo asked Greg to help him protect his small amount of money from a family member who was “borrowing” it freely. All Milo had was a savings of $140,000 and payments of $3,700 per month from social security, a pension, and veteran’s benefits.

To help his father out, Greg applied for guardianship of Milo’s money, and the court granted it. But at the same time, without notifying Greg, the court appointed a professional financial Conservator that neither Milo nor Greg knew. The Conservator quickly set to draining Milo’s small savings, with the court barring Greg from filing any more motions.

The situation escalated even further when the Conservator decided to move Milo from his assisted living facility to a cheap lock-down facility where he wouldn’t even have access to the outdoors. This would, of course, free up more money for the Conservator to access. Before this could happen, though, Greg hurried to pick his father up and bring him back to California with him.

Now, the two are essentially on-the-run from authorities, who are trying to bring Milo back to Arizona and under the control of the Conservator. Milo and Greg are out of funds and are now trying to raise capital to mount a legal battle and free Milo from this terrible situation.

The scariest part is that Milo and Greg had all the proper legal documents in place. Sometimes, though, that is not enough to protect your parents from being taken advantage of—even to this extreme. Especially in a time of stress and confusion like the COVID-19 pandemic we are currently living in, it is vital to be vigilant and get the best possible counsel to avoid something like this happening.

This isn’t meant to make you paranoid or distrustful of the people around you, or of how your parents handle their own lives. Well, maybe it is a little. Mostly, though, it’s a call to encourage you and your family to be aware, educated, and empowered in knowing what risks are possible for your parents, and for your future inheritance.

Look out for the following “red flag” actions from influencers:

  1. Preventing important communication between family members;
  2. Withholding documents from other family members;
  3. Encouraging financial gifts or economic benefits to recently met connections (usually in the same network as your parents’ “new friend”);
  4. Naming recently met connections as attorney-in-fact (under a financial power of attorney), or as a joint owner on financial accounts, real estate, and other assets;
  5. Giving financial advice that may not be in your or your parents’ best interests, but rather in the interests of the advisor.

We recommend you start talking with your elderly parents now about how they want their affairs to be handled. Also, you should immediately investigate any situation where you suspect your loved ones are being taken advantage of. There have been too many cases of financial abuse or inappropriate influence where family members are too late to stop the bad actor.

Ideally, you’ll know the value of your parents’ tangible assets (i.e., home, car, business, stocks) and intangible assets (i.e., generational stories, personal relationships, theological legacies). Additionally, you should be working with an advisor to help you understand how family dynamics and the law will impact you, and everything that matters to you and your parents when they’re gone.

Dedicated to empowering your family, building your wealth and defining your legacy,

If you or your parents have a retirement account, (or any investment accounts for that matter) now is a perfect time to get connected to how those accounts are invested. While you may have outsourced all of this to a broker, which is fine, I don’t believe you should ever allow your investments to be made without your clear understanding of exactly what you are investing in as well as how and whether your investments align with your plans for the future.  

Some brokers and advisors believe this, too. Unfortunately, because it takes more time to ensure you understand your investments, many brokers and advisors would rather keep you in the dark. Now is not the time (or ever, really) for you to be okay with being in the dark about your investments.

Educate Yourself
If you or your parents have a retirement account, and you are not intimately connected to how those assets are being invested, it’s time to get more involved.

Log in to your retirement account or pull your last statement and look. Many brokerages select investment funds for their clients’ portfolios based on rates of growth. They’ll offer investment options based on a few tiers of growth and risk, and very often you have no idea what your assets are actually invested in.

Labels like “slow-growth” or “conservative” or “high-growth” or “income” aren’t enough to tell you exactly where your money is invested. So, what you want to do now is look at your statement, which should contain the names of the funds chosen for you, and you can go from there to do your research. Look up each of the funds on sites like Yahoo Finance to see what you are investing in, and whether you understand these companies, believe in their future growth, and want to stay invested there.

Go through this process with your parents, too. The money they have invested in the stock market is part of your overall family wealth. If it’s not there to support them through their senior years, that financial responsibility will eventually fall to you. Having these conversations with them now can be difficult, but it’s important.

If you have a broker you work with, call them now, and ask to get on a video conference. Then, have them help you review each investment, why it’s been chosen, and whether there may be better or other options for you or your parents.

Here’s the key: make sure you understand it, and don’t hang up the phone until you do. If your broker is using words you don’t understand, keep asking questions until you do understand. If you need a referral to an advisor give us a call.

With everything that is happening in the world—and with the volatility of the stock market and our current reality —knowing your options is vital to preserving the full legacy you and your parents have worked hard to build.

Dedicated to empowering your family, building your wealth and defining your legacy,

As you already know, the COVID-19 pandemic means there’s no more “business as usual”. So don’t just hope you can survive until things return to normal. Strategize, now, on how you can take what control is in your sphere of influence. Once you have attended to your (and your parents’) immediate needs, it will be time to consider more long-term plans.

In this time of stress and chaos, your parents may be resistant to talking about estate planning. It may feel too pessimistic to plan for the worst amid a scary situation. However, that’s exactly why it’s important right now to do so. Plus, since hopefully you are staying inside, you may have the time to dedicate to getting these tasks taken care of.

Here are actions you can, and should, take to ensure you and your family are fully protected legally.

Update Your Health Care Documents

Above all, you first need to ensure that both you and your parents have your health care documents in order. This will be an invaluable reference point for those who are assisting you, whether they be friends, family, or medical professionals.

There are three important and distinct documents you should have in place: Your advanced directive, HIPAA waiver, and living will. They are separate documents but all work together. Think of them like the legs of a stool. If just one is missing or defective, the stool will fall – with you in it!

Your advanced directive identifies and gives legal authority to whom you would like to make your medical decisions if you are unable to do so yourself. Many people think spouses automatically have this legal authority and therefore don’t need this type of document for each other. That is a mistaken belief which can cost married couples substantial time, money, and anguish when a medical emergency arises.

A HIPAA waiver is important because even though your advanced directive gives authority to someone of your choosing to make medical decisions for you, privacy laws will prevent your doctor from sharing your medical information with that person. I see a lot of advanced directives which include a HIPAA section, but this is not legally sound and often fails. For starters, the privacy laws mandate the HIPAA waiver be written in a certain font style and size. Trust me on this. You want your HIPAA waiver to be a standalone document.

Your living will is different from your last will and testament. While a last will deals with the decisions to be made after death, a living will pertains to decisions which are to be made while you are still alive. This is where you will provide guidance on when you would want to be placed on life support, removed from life support, whether you want to donate your organs, etc.

Even if you have already created your medical directives, I urge you to take out any existing documents now and review them. Have your circumstances changed? Do you have additions to make? Encourage your parents to do the same thing, and to communicate with you about what their documents say. If you are unsure whether your health care documents are in ship-shape, call us, and we’ll be happy to review them for you.

Ensure Your Estate Plan is Up to Date and In Order

Your healthcare documents are an important start, but you should also review (or create) powers of attorney, a last will, and perhaps even a living trust. Remember that it’s never an inappropriate time to plan. Getting this in order will provide you and your loved ones peace of mind. And we’re here to support you, virtually now, as well. We can take care of you, and your family, fully online. Call us, we’re here.

 Dedicated to empowering your family, building your wealth and defining your legacy,

I’m dealing with working from home, managing my business and my team remotely, operating in shifts with my wife to take care of my children during the day, homeschool them, all while keeping a nervous eye on our stockpile of toilet paper. But perhaps my biggest challenge is feeling like my parents and in-laws are taking COVID-19 as seriously as I wish they would.

As of March 25th, the number of confirmed cases of COVID-19 across the United States was 54,453 cases across the United States with 737 confirmed deaths from the virus. And these numbers are still rising exponentially. 

When we first became aware of the novel coronavirus, there were several TV pundits and other authority figures saying that the virus was just another version of the flu. But in other parts of the world, we’ve seen COVID-19 overwhelm healthcare systems in a way the flu virus just hasn’t.

It seems, though, that many people of the older generation may still not be taking this seriously. And hey, they are the most battle tested of all of us. They’ve seen it all and survived it all and aren’t generally the types to give in to panic and stress. 

That said, they are also among the most vulnerable to the effects of COVID-19. And even with the stay at home order in place, I still feel like my parents are taking too many unnecessary risks. Here’s how I’m trying to express my concerns to them:

  1. Listening to them and determining the worries they have.
    I want to know what they have heard, what they are frustrated about, and what they are skeptical about. Everyone is frustrated with lines at the grocery store, toilet paper hoarding, and the hysteria of the crowds around them. I’m sure my parents do not want to feel like they are one of “those people.” I know I don’t. So I’m just trying to assure them that taking some precautions, especially staying home, is completely reasonable and can be done in a non-panicked way. I’m also trying to support them to make alternative arrangements during this time so they don’t have to go out.
  2. Emphasizing the risk in practical terms.
    I’m sharing articles and news with them that state the facts, soberly, like this one. My parents are bright and already have a good understanding about how viruses spread in general and they already know the basics of how important it is for them to wash their hands. But I want to ensure that is at the top of mind for them every day right now.
  3. Showing them I’m taking it seriously.
    I’m not getting together with my parents unless absolutely necessary, and when I do, I’m wearing a mask and keeping my distance as much as possible. I also shared the video created by Max Brooks, son of legendary comedian Mel Brooks, with them. Max created a PSA to convince younger people to be cognizant of how they might spread the virus to people who are the most vulnerable to it. It presents the situation in a succinct, somewhat lighthearted way. 

If you’re experiencing something similar with your loved ones, I’d love to hear your thoughts. Together, we can get through this. Let’s make sure our parents come through this with us.

Be well and stay safe.

Dedicated to empowering your family, building your wealth and defining your legacy,

Do your parents have an estate plan? Is it up to date? No matter how rich or poor you or your parents are, especially in the wake of the COVID-19 pandemic, you need to be asking these and several other questions. When your parents become incapacitated or die, their affairs will become your responsibility, and it will be impossible to ask them to clarify anything. So, if you do not know whether they have estate planning in place to help you best support them, read on.  

The Best-Case Scenario

In a best-case scenario, your parents have an updated estate plan, and they’ve walked you through it. They have provided an inventory of their assets that’s easy for you to find listing out everything they own and how it’s titled. Ideally, the plan also includes directions on how to handle their non-monetary assets, and a video, audio recording or written stories that pass on their values, insights and experience. On top of all that, it’s best if they’ve introduced you to the lawyer who set it all up, so you know who to turn to when the time comes.

Less-Than-Ideal Scenarios

If that’s not the case, you could have some holes to fill. If they’ve not done any planning at all, now is the time to encourage them to get it done and support them in any way you can. If they already have a completed plan, it’s likely that it has been sitting on their shelf or in a drawer for years, not updated, with no inventory of their assets and no way to capture and pass on their intangible assets. Even worse, their lawyer could have been using outdated systems that are no longer recognized, which can lead to trouble down the road.

It’s also possible that if they’ve never updated their estate plan, it no longer tracks with their current assets, and may even require complex actions that are no longer necessary upon their death. Worst of all, you may have no idea what your parents own or how to find their assets, and at their incapacity or death you’ll be left with a mess, even though your parents had good intentions and thought their planning was handled.

The Worst-Case Scenario

In a worst-case scenario (which we see more frequently than we’d like), your parents may have worked with someone who exerted undue influence over their decisions. This person may have led them to write something into their plan that they either didn’t really want to or wouldn’t otherwise have chosen if they understood all their options.  

Either way, it’s critical for you to know who your parents have worked with to create their estate plan, and how and why they made the choices they did. If you aren’t in the know, now is the time to find out. 

If your parents are already discussing these matters but have not yet included you, you can ask them to schedule a family meeting with their existing attorney. On your parents’ request, that attorney should look forward to walking you through your parents’ planning, the choices they made, and how you will be impacted in the event of their incapacity or death.

You want to develop a relationship with their estate planning attorney now. This advisor can be one of the most important supporters of you and your parents during your time of need. It’s a relationship you will want to establish before you need it, so you won’t be scrambling during a time of crisis.

Dedicated to empowering your family, building your wealth and defining your legacy,

On December 20, 2019, President Trump signed the Setting Every Community Up for Retirement Enhancement Act (SECURE Act). The SECURE Act, is effective as of January 1, 2020. The Act is the most impactful legislation affecting retirement accounts in decades. The SECURE Act has several positive changes: It increases the required beginning date (RBD) for required minimum distributions (RMDs) from your individual retirement accounts from 70 ½ to 72 years of age, and it eliminates the age restriction for contributions to qualified retirement accounts. However, perhaps the most significant change will affect the beneficiaries of your retirement accounts: The SECURE Act requires most designated beneficiaries to withdraw the entire balance of an inherited retirement account within ten years of the account owner’s death.

The SECURE Act does provide a few exceptions to this new mandatory ten-year withdrawal rule: spouses, beneficiaries who are not more than ten years younger than the account owner, the account owner’s children who have not reached the “age of majority,” disabled individuals, and chronically ill individuals. However, proper analysis of your estate planning goals and planning for your intended beneficiaries’ circumstances are imperative to ensure your goals are accomplished and your beneficiaries are properly planned for.

Under the old law, beneficiaries of inherited retirement accounts could take distributions over their individual life expectancy. Under the SECURE Act, the shorter ten-year time frame for taking distributions will result in the acceleration of income tax due, possibly causing your beneficiaries to be bumped into a higher income tax bracket, thus receiving less of the funds contained in the retirement account than you may have originally anticipated.

Your estate planning goals likely include more than just tax considerations. You might be concerned with protecting a beneficiary’s inheritance from their creditors, future lawsuits, or a divorcing spouse. In order to protect your hard-earned retirement account and the ones you love, it is critical to act now.

Review/Amend Your Revocable Living Trust (RLT) or Standalone Retirement Trust (SRT)

Depending on the value of your retirement account, you may have addressed the distribution of your accounts in your RLT, or you may have created an SRT that would handle your retirement accounts at your death. Your trust may have included a “conduit” provision, and, under the old law, the trustee would only distribute required minimum distributions (RMDs) to the trust beneficiaries, allowing the continued “stretch” based upon their age and life expectancy.  A conduit trust protected the account balance, and only RMDs–much smaller amounts–were vulnerable to creditors and divorcing spouses. With the SECURE Act’s passage, a conduit trust structure will no longer work because the trustee will be required to distribute the entire account balance to a beneficiary within ten years of your death. You many now need to consider the benefits of an “accumulation trust,” an alternative trust structure through which the trustee can take any required distributions and continue to hold them in a protected trust for your beneficiaries.

Consider Additional Trusts

For most Americans, a retirement account is the largest asset they will own when they pass away. If you have not done so already, it may be beneficial to create a trust to handle your retirement accounts. While many accounts offer simple beneficiary designation forms that allow you to name an individual or charity to receive funds when you pass away, this form alone does not take into consideration your estate planning goals and the unique circumstances of your beneficiary. A trust is a great tool to address the mandatory ten-year withdrawal rule under the new Act, providing continued protection of a beneficiary’s inheritance.

Review Intended Beneficiaries

With the changes to the laws surrounding retirement accounts, now is a great time to review and confirm your retirement account information. Whichever estate planning strategy is appropriate for you, it is important that your beneficiary designation is filled out correctly. If your intention is for the retirement account to go into a trust for a beneficiary, the trust must be properly named as the primary beneficiary. If you want the primary beneficiary to be an individual, he or she must be named. Ensure you have listed contingent beneficiaries as well.

If you have recently divorced or married, you will need to ensure the appropriate changes are made because at your death, in many cases, the plan administrator will distribute the account funds to the beneficiary listed, regardless of your relationship with the beneficiary or what your ultimate wishes might have been.

What Happens Next

If you are a client, we’ll be reaching out to you over the coming weeks if your plan is affected by the SECURE Act. If you are not a client, and don’t have an ongoing relationship with a trusted advisor, we’d be happy to review your plan to determine if it is affected by the SECURE Act. And if you have yet to get an estate plan in place, there’s no better time to get that process started. Let us know if we can help and happy new year!

Dedicated to empowering your family, building your wealth and defining your legacy,