Do I Need POD Account for my Checking Account?

When you open up most investment accounts, you’ll be asked to designate a beneficiary. This is an individual who you name to benefit from the account when you pass away. Does this include checking accounts?

Investopedia’s recent article asks “Do Checking Accounts Have Beneficiaries?” The article explains that unlike other accounts, banks don’t require checking account holders to name beneficiaries. However, even though they’re not needed, you should consider naming beneficiaries for your bank accounts, if you want to protect your assets.

Banks usually offer their customers transfer-on-death POD account. This type of account directs the bank to transfer the customer’s money to the beneficiary. The money in a POD account usually becomes part of a person’s estate when they die but is not included in probate, when the account holder dies.

To claim the money, the beneficiary just has to present herself at the bank, prove her identity and show a certified copy of the account holder’s death certificate.

You should note that if you are married and have a checking account converted into a POD account and live in a community property state, your spouse automatically will be entitled to half the money they contributed during the marriage—despite the fact that another beneficiary is named after the account holder passes away. Spouses in non-community property states have a right to dispute the distribution of the funds in probate court.

If you don’t have the option of a POD account, you could name a joint account holder on your checking account. This could be a spouse or a child. You can simply have your bank add another name on the account. Be sure to take that person with you, because they’ll have to sign all their paperwork.

An advantage of having a joint account holder is that there’s no need to name a beneficiary, because that person’s name is already on the account. He or she will have access and complete control over the balance. However, a big disadvantage is that you have to share the account with that person, who may be financially irresponsible and leave you in a bind.

Remember, even though you may name a beneficiary or name a joint account holder, you should still draft a will or trust. Speak with a qualified estate planning attorney to make sure about all your affairs, even if your accounts already have beneficiaries.

Reference: Investopedia (August 4, 2019) “Do Checking Accounts Have Beneficiaries?”

 

Comments Off on Do I Need POD Account for my Checking Account?
What Will New Acts of Congress Mean for Stretch IRA s?
Lunch Meeting

What Will New Acts of Congress Mean for Stretch IRA s?

The SECURE and RESA acts are currently being considered in Congress. These acts may impact stretch IRA s. A stretch IRA is an estate planning strategy that extends the tax-deferred condition of an inherited IRA, when it is passed to a non-spouse beneficiary. This strategy lets the account continue tax-deferred growth over a long period of time.

If a parent doesn’t need her Required Minimum Distributions, does it make sense to do a gradual Roth IRA conversion and use the RMDs to pay taxes on the conversion? Or should the parent invest the RMDs in a brokerage account?

There are several options in this situation, according to nj.com’s recent article, “With Stretch IRAs on the way out, how can I plan for my children’s inheritance?”

Congress is considering legislation with the SECURE and RESA Acts, that would eliminate the ability of children to create a stretch IRA, one that would let them to stretch distributions from the inherited IRA over their lifetimes.

Under the proposed SECURE and RESA Acts under consideration, the maximum deferral period will be 10 years. If the beneficiary is a minor, the period would be 10 years or age 21.

The best planning strategy for a parent would depend on her overall finances and what she wants for her children’s inheritance.

The conversion to a Roth may be a good planning move, depending on her tax bracket. Putting the money in a brokerage account is also an option.

A parent may also want to think about using the RMD proceeds to purchase a life insurance policy held by an irrevocable trust for the benefit of her children.

It’s best to contact an experienced estate planning attorney, so he or she can review the details of the parent’s finances and help her choose the best options for her situation.

Reference: nj.com (October 15, 2019) “With Stretch IRAs on the way out, how can I plan for my children’s inheritance?”

 

Comments Off on What Will New Acts of Congress Mean for Stretch IRA s?

What Did Chicago PD Actress Marina Squerciati Receive from her Mom’s Boyfriend’s Will?

Millionaire John R. Jakobson’s son, who is the executor of his father’s estate, is attempting to stop Marie Squerciati from speaking out by using the dead man’s statute, which protects the assets of the dead from claims of communication by the living to serve their interests.

Wealth Advisor’s recent article, “Wall Street mogul John R. Jakobson promised mistress that their love child Marina Squerciati would get a ‘big surprise’ in his will–then left Chicago PD star Nothing” reports that documents filed with the Manhattan Surrogate Court state vague terms the man who died aged 86 in April 2017— and who reportedly had many affairs—allegedly used when stating plans for his will.

‘I’m a gentleman and you may read into that only good,” the senior Jakobson purportedly told his mistress in 1981 about their alleged daughter, now 37, who went on to star as Officer Kim Burgess on Chicago PD.

The mogul’s widow, Joan Jakobson, said she didn’t know about Mariana, who kept her family life a secret, until she found out she was left out of the will. Jakobson’s three living children from his marriages were included in the will. However, the family of the man, who at 25 became one of the youngest people to buy a seat on the New York Stock Exchange in 1955, has refused to acknowledge her as one of his children.

Marina is the allegedly product of his affair with her mother Marie Squerciati, who was a television writer in the 1970s and 80s and reporter for the Village Voice, as well as The New York Times. The affair was said to have lasted for a year and led to Marina’s birth in 1981. For her whole life, Marina kept her father’s identity a secret, as he allegedly paid her mother $1,200 a month for more than 20 years. That monthly check was used for Marina’s nanny and for her apartment in New York City. Jakobson also reportedly paid for Marina’s schooling including the $175,000 tuition for Dalton School, then $131,000 for her education at Northwestern University, where she graduated from in 2003 with a bachelor’s degree in theater.

Even though Jakobson made oral promises that he’d provide a “substantial” trust for Marina in his will, it looks like he didn’t. When Marina got engaged, her mother allegedly asked Jakobson for a gift to which he allegedly reaffirmed that she “would receive money under his will.”

In her court filings, Marina contends that the price of her silence was “extraordinary” and that she missed out on the opportunity to build a relationship with her alleged father and was denied “any relationship whatsoever with her half-siblings.”

The Squerciatis contacted his estate last fall to ask if Marina was named a beneficiary, according to court papers.

Attorneys for the family say Marina’s claims have “no basis in fact or law” and “amounts to nothing more than an avaricious attempt to enforce an alleged, vague oral promise made to [her] mother, rather than to herself, and which resulted in no legally recognizable injury to her.” They note that even if Marina could prove that Jakobson was her father, she had no written evidence of his promise to leave her money in his will… and that she had “ample opportunity as an adult” to have her father put his word in writing.

Marina was offered a $50,000 settlement by the Jakobson lawyers.

Reference: Wealth Advisor (October 14, 2019) “Wall Street mogul John R. Jakobson promised mistress that their love child Marina Squerciati would get a “big surprise” in his will–then left Chicago PD star Nothin

Comments Off on What Did Chicago PD Actress Marina Squerciati Receive from her Mom’s Boyfriend’s Will?

Sharing Legal Documents and Passwords

While parents are alive and well is the time to prepare for the future, when they begin to decline. An adult child who is a primary agent and also executor has questions about organizing documents and managing storage in a digital format, as well as how to secure their passwords for online websites. The advice from the article “Safe sharing of passwords and legal documents” from my San Antonio is that these two issues are evolving and the best answers today may be different as time passes.

Safe and shareable password storage is a part of today’s online life. However, passwords used to access bank and investment accounts, file storage platforms, emails, online retailers and thousands of other tools used on a desktop are increasingly required to be strong and complex and are difficult to remember. In some cases, facial recognition is used instead of a password.

Many rely on their internet browsers, like Chrome, Safari, etc., to remember passwords. This leaves accounts vulnerable, as many of these and other browsers have been hacked.

The best password solutions are stand-alone password managers. They offer the option of sharing the passwords with others, so parents would provide their executor with access to their list. However, there are also new laws regarding digital assets, so check with your estate planning attorney. You may need to create directives for your accounts that specify who you want to have access to the accounts and the data that they contain.

Storage of legal documents is a separate concern from password-sharing. Shared legal documents need to be private, reasonably priced and secure.

Some password managers include document storage as part of the account. The documents can be uploaded in an encrypted format that can be accessed by a person, who is assigned by the account owner.

Document vault websites are also available. You will have to be extremely careful about selecting which one to use. Some of the websites resell data, which is not why you are storing documents with them. One company claims to offer a “universal advance digital directive,” which they say can provide digital access worldwide to documents, including an emergency, critical and advance care plan.

The problem? This company is located in a state that does not permit the creation of a legally binding advance directive, unless it is in writing, includes state-specific provisions and is signed in front of either two qualified witnesses or a notary.

Talk with your estate planning attorney about securing estate planning documents and how to protect digital assets. Their knowledge of the laws in your state will provide the family with the proper protection now and in the future.

Reference: my San Antonio (October 14, 2019) “Safe sharing of passwords and legal documents”

Comments Off on Sharing Legal Documents and Passwords
Putting off Getting Hearing Aids? Don’t—Your Brain Will Thank You!
Senior couple sitting outdoors

Putting off Getting Hearing Aids? Don’t—Your Brain Will Thank You!

If it seems like every day brings something new to worry about, take heart—this is something that you can do something about. People with moderate hearing loss were twice as likely to experience cognitive decline as their peers, while those with severe hearing loss faced five times the risk, according to a study from Johns Hopkins University School of Medicine that was written up in Next Avenue’s article “A Delay In Getting Hearing Aids Can Mean More than Hearing Trouble.”

Another study, from the University of Colorado at Boulder, found that the brain’s ability to process sound declines, as the person’s ability to hear decreases. The study looked at adults between the ages of 37 to 68 who had their hearing tested and their brains examined. None was being treated for hearing loss, although a few felt that their hearing was not as good as it once was.

The subjects underwent hearing tests, and tests using visual stimuli to see how they were processing information. They also underwent electroencephalograms that showed that not only were their brain’s visual centers firing when seeing the stimuli, but the hearing center was also active in those who had suffered some hearing loss.

In other words, parts of the brain that used to process sounds were now processing visual signals, as the hearing part of the brain was being repurposed to process images.

The brain repurposing different areas for different functions, is known as “cross-modal recruitment,” which is not a new concept. Other areas of the brain can be affected, including the pre-frontal cortex, which is in charge of higher-level thinking and executive functions.

If this part of the brain is needed to help overcome hearing loss, then there’s less capacity for putting new information into long-term memory, for comprehending and responding to sounds and conversation.

The researchers also found that people in the study regained some of their losses, after being fitted with very high-quality hearing aids.

Unfortunately, many adults delay getting their hearing tested and getting hearing aids. The stigma associated with getting hearing aids as a marker of aging, is one reason. The other reason is that hearing loss is a very gradual process and people get used to not being able to hear.

Reference: Next Avenue (October 21, 2019) “A Delay In Getting Hearing Aids Can Mean More than Hearing Trouble”

 

Comments Off on Putting off Getting Hearing Aids? Don’t—Your Brain Will Thank You!

How Bank Employees Can Protect Seniors from Financial Exploitation

Bank employees can now be the front line of defense for older Americans, who might be the victims of elder financial exploitation. You frequently hear tragic stories about older people getting tricked into withdrawing their life savings and handing their money over to con artists. Sometimes, an observant person at the bank can intercede and prevent these crimes.

New legislation protects the workers from getting sued for trying to help. The new rules provide training on how bank employees can protect seniors from financial exploitation. The workers learn how to recognize and report suspected financial abuse of seniors, while preserving the individual’s privacy. Originally titled as the Senior Safe Act, the law bears the title “Economic Growth, Regulatory Relief, and Consumer Protection Act.”

Types of Financial Exploitation

Older Americans lose millions of dollars a year to fraudulent scams. Some of the most common schemes include:

  • A senior gets an email that says he inherited money from an overseas relative, and he needs to send money to an account in another country. The rip-off artist will explain they need to make sure the senior’s bank can receive a transfer for the inheritance. In reality, there is no inheritance or long-lost relative. Once the senior wires the money, the thief breaks off contact and keeps the money.
  • Someone calls an older adult, claiming to be with the IRS. The caller threatens the only way the senior can avoid getting arrested is to send money that day.
  • Other telephone scams include telling the older person he needs to wire money to another country, because his grandchild got arrested or got hurt and is in the hospital.
  • A friend, relative, caregiver, or another person close to the older adult convinces, tricks, or bullies him to taking money out of his account, making the fraudster a joint owner of the account, or transferring the asset to the thief.
  • Someone posing as a home repairman tells the aging homeowner he needs work done for the safety of his house. The repairman’s quote of a few hundred dollars escalates into tens of thousands, as the crook claims to find more and more problems, or he repeats work unnecessarily.
  • A shady charity or pseudo-religious organization sweet-talks the senior into handing over his retirement savings.

Whatever the con game, the senior loses hundreds or thousands of dollars. Some elderly people are left with next to nothing to live on for their remaining years.

Many of these crimes involve going to the bank and withdrawing large sums of money or wiring money from the bank to an overseas account. You would think bank employees would see red flags when an 85-year-old lady comes into the branch and wants to withdraw $20,000 or wire it to another country.

Bank employees seldom report their suspicions or take action on them, because they were afraid of violating regulations that protect customer privacy. Over half of financial advisors admitted they do not report it when they see financial exploitation or suspect it is happening. Hopefully, with the new law and the training the rules now require, the number of seniors who suffer financial abuse will decrease.

References:

AARP. “In Sync: Senior Safe Act, BankSafe Fight Financial Exploitation through Training.” (accessed October 31, 2019) https://blog.aarp.org/thinking-policy/senior-safe-act-fight-financial-exploitation-through-training

Comments Off on How Bank Employees Can Protect Seniors from Financial Exploitation
Remaining Even and Fair in Estate Distribution
Senior couple sitting outdoors

Remaining Even and Fair in Estate Distribution

Treating everyone equally in estate planning can get complicated, even with the best of intentions. What if a family wants to leave their home to their daughter, who lives locally, but wants to be sure that their son, who lives far away, receives his fair share of their estate? It takes some planning, says the Davis Enterprise in the article “Keeping things even for the kids.” The most important thing to know is that if the parents want to make their distribution equitable, they can.

If the daughter takes the family home, she’ll need to have an appraisal of the home done by a certified real estate appraiser. Then, she has options. She can either pay her brother his share in cash, or she can obtain a mortgage in order to pay him.

Property taxes are another concern. The taxes vary because the amount of the tax is based on the assessed value of the real property. That is the amount of money that was paid for the property, plus certain improvements. In California, property taxes are paid to the county on one percent of the property’s “assessed value,” also known as the “base year value” along with any additional parcel taxes that have become law. The base year value increases annually by two percent every year. This was created in the 1970s, under California’s Proposition 13.

Here’s the issue: the overall increase in the value of real property has outpaced the assessed value of real property. Longtime residents who purchased a home, years ago still enjoy low taxes, while newer residents pay more. If the property changes ownership, the purchase could reset the “base year value,” and increase the taxes. However, there is an exception when the property is transferred from a parent to a child. If the child takes over ownership of the home, they will have the same adjusted base year value as their parents.

If the house is going from parents to daughter, it seems like it should be a simple matter. However, it is not. Here’s where you need an experienced estate planning attorney. If the estate planning documents say that each child should receive “equal shares” in the home, each child receives a one-half interest in the home. If the daughter takes the house and equalizes the distribution by buying out the son’s share, she can do that. However, the property tax assessor will see that acquisition of her brother’s half interest in the property as a “sibling to sibling” transfer. There is no exclusion for that. The one-half interest in the property will then be reassessed to the fair market value of the home at the time of the transfer—when the siblings inherit the property. The property tax will go up.

There may be a solution, depending upon the laws of your state. One attorney discovered that the addition of certain language to estate planning documents allowed one sibling to buy out the other sibling and maintain the parent-child exclusion from reassessment. The special language gives the child the option to purchase the property from the other. Make sure your estate planning attorney investigates this thoroughly, since the rules in your jurisdiction may be different.

Reference: Davis Enterprise (Oct. 27, 2019) “Keeping things even for the kids”

 

Comments Off on Remaining Even and Fair in Estate Distribution

How Long-Term Care Services and Supports Compare Across the United States

Many Americans have little or no retirement savings. When they retire, the hard, cold reality hits them. They cannot afford to live in the community, where they raised their children. They will have to look for a less expensive place to live. One of the most significant expenses for aging adults is long-term care. If you are looking at different options for where to settle for your golden years, you should explore how long-term care services and supports compare across the United States.

The AARP Public Policy Institute compiles a reference book every year, called “Across the States: Profile of Long-Term Services and Supports.” Over the last 25 years, the book has grown to include thousands of data points and valuable analysis to make sense of the numbers.

The 2018 edition of the AARP reference book contains a wealth of information for people wanting to find a state that offers generous services and support to seniors. You can find information by state about things like:

  • The current age demographics and expected numbers for the future
  • How many people in the state are disabled
  • How much care costs in that state
  • Information on the numbers of family caregivers
  • Services available in the home and community
  • Nursing facilities
  • The long-term services and supports which Medicaid provides in that state
  • Demographic data about income, poverty and living arrangements
  • Private long-term care insurance statistics (95 percent of Americans do not carry this insurance)

We do not have a national system that provides Medicaid-funded long-term services and supports (LTSS). Unlike Medicare, Medicaid programs are different in every state. Medicare does not provide long-term care services, so most people rely on Medicaid to pay for some of all of their LTSS. One state might have all the services you need at little or no cost, and a neighboring state might provide much less assistance. Some people improve their quality of life immensely, by moving to a nearby state.

Differences in State LTSS Programs

The 2018 AARP report is 84 pages long, so we cannot cover all the details in this article. Here are a few of the highlights:

  • Some states (including New Mexico) spend 73 percent of their total LTSS funds on home and community-based services (HCBS) for the elderly and disabled, compared to only 13 percent in some other states (Kentucky and New Hampshire). Adequate care services in the home and community can make it possible for a person to continue living at home, rather than having to move into a nursing home.
  • Some states are spending less on LTSS and HCBS now than they did in 2011.
  • Southern states have higher rates of poverty among older adults than other regions of the country. Fewer than 30 percent of the people age 65 and over in Alaska, Hawaii, New Hampshire, and Maryland live below 250 percent of the national poverty level. This compares to 42 percent of older adults living in Mississippi, Louisiana, Tennessee, New Mexico, Kentucky, Alabama, Arkansas, and West Virginia. Since part of the Medicaid funds come from state sources, a poorer state will have more people in need but fewer dollars to fund the services they need.
  • The demographics about people in need encompass more than just poverty. Cognitive difficulties and self-care needs are factors as well as income. These needs vary significantly from one state to the next. Only five percent of older people in Colorado have self-care needs, compared to 11 percent in Mississippi. Only six percent of older people in South Dakota have cognitive challenges, compared to 12 percent in Mississippi.
  • Medicaid spent a total of $75 billion on home and community-based care services for older adults in 2013, compared to family caregivers, who provided services worth $470 billion in that year.
  • Oregon has 121 units in assisted living and residential care communities per 1,000 people age 75 or older. Louisiana only has 20 units per 1,000 people in this age group.
  • Only seven percent of people living in long-term care facilities in Hawaii receive antipsychotic medication, compared to 20 percent in Oklahoma.

You should consider many factors when evaluating where to live when you retire. Get information from multiple sources. Get advice from friends, relatives and social services agencies.

Every state makes its own regulations. Be sure to talk with an elder law attorney near you to find out how your state might differ from the general law of this article.

References:

AARP. “Across the States: Profiles of Long-Term Services and Supports.” (accessed October 31, 2019) https://blog.aarp.org/thinking-policy/across-the-states-profiles-of-long-term-services-and-supports

AARP. “Across the States 2018: Profiles of Long-Term Services and Supports.” (accessed October 31, 2019) https://www.aarp.org/ppi/info-2018/state-long-term-services-supports.html?CMP=RDRCT-PPI-CAREGIVING-082018

 

Comments Off on How Long-Term Care Services and Supports Compare Across the United States

Steps to Take as a Parent’s Condition Takes a Turn

Your Parent’s Condition – An 80-year-old man had seizures several months ago. He was treated in the hospital and since then, has had some lapses in short-term memory. His long-term memory is okay, but he is not retaining day-to-day matters very well. His awareness of a loss of some functionality has left him frustrated and a little depressed, as described in the article “Dear Counselor: Need options as father’s condition worsens” from the Davis Enterprise. The use of some antidepressants and medication has been helpful, and he seems better. However, what should the children be doing, at this time, to prepare for what may come next?

The children should make arrangements to have their parents go see an estate planning attorney soon. The fact that only the wife is power of attorney, and that the forms have not been updated in many years is cause for serious concern. While their mom may be capable right now of handling his personal and financial affairs, the stress of caretaking for her husband is likely to take its toll on her. If the parent’s condition deteriorates, she will likely need help. If for some reason she’s unable to act, then it will be far better if the children, or one of the children, has the legal right to step in.

The first question is whether the father has the legal capacity to create new powers of attorney for financial management and health care. To execute a power of attorney, a person must have mental capacity. The legal standard for this is the same as it is for someone signing a contract: the person must understand and appreciate the consequences of the document being signed.

There are four broad categories of mental deficits that impact a person’s capacity: alertness and attention, information processing, thought processes and the ability to modulate mood. Short-term memory problems and depression may be considered deficits in both information processing and mood. However, that is only one part of the analysis.

Most estate planning attorneys will suggest that any client whose mental capacity may be questionable, should obtain a note from their treating physician that they are capable of understanding and signing legal documents. This is not a legal requirement, but it will help if there is a challenge to the documents he signed, and someone claims that he lacked capacity.

If the father indeed has capacity to execute a new power of attorney, then the adult children can be identified as alternates to the wife. If she is not able to act as an agent, then the siblings will be able to step up. However, if he is unable to execute a new power of attorney, the previous power of attorney would be the operative document. If for some reason, the wife is unable to perform as his agent, there is no one to serve as a backup.

In that case, a petition would need to be filed in the probate court to have a child or children appointed conservator. While that would give the child(ren) the same power as a power of attorney, they will also need to report to the court on an on-going basis. Conservatorship proceedings are expensive and time-consuming and should be a last resort.

These problems rarely get better over time. Speak with an experienced estate planning attorney as soon as possible to prepare for the future of your parent’s condition.

Reference: Davis Enterprise (Oct. 2019) “Dear Counselor: Need options as father’s condition worsens”

 

Comments Off on Steps to Take as a Parent’s Condition Takes a Turn
What Do I Need to Know about Medicare Advantage?
Elder Couple at Home with Bills

What Do I Need to Know about Medicare Advantage?

Monthly premiums for Medicare Advantage (MA) plans are anticipated to decrease by an average of $3.87 to an estimated $23 in 2020. That’s a 14% drop, according to the Centers for Medicare and Medicare Services (CMS). Roughly one-third of Medicare’s 60 million beneficiaries belong to these private insurance plans.

AARP’s recent article, “Medicare Advantage Premiums to Decrease in 2020,” explains that these plans include Medicare Part A. That covers hospital care, hospice, and some nursing home and rehabilitative services. These plans also include Part B, which helps pay for physician visits and other outpatient services, including lab testing, scans and other diagnostic services. Most Medicare Advantage plans also include prescription drug coverage.

The recently announced premiums represent a nationwide average. Actual monthly charges for Medicare Advantage plans will vary, depending on what the plan covers and where beneficiaries reside. CMS announced that premiums for Part D prescription drug coverage were also trending down by about 13.5% to a projected $30 a month.

Many Medicare Advantage plans also cover some dental, vision and hearing care. Over the past two years, CMS has also added other benefits that will hopefully improve the health of seniors. These services include in-home meals, transportation, adult day care services and improvements to beneficiaries’ homes. That may look like wheelchair ramps and shower grips. However, not all Medicare Advantage plans have these extra benefits.

The Centers for Medicare and Medicare Services projects that about 250 plans in 2020 will offer access to these supplemental services, impacting about 1.2 million enrollees.

Enrollment in MA plans has been steadily climbing. The Centers for Medicare and Medicare Services projects that more than 24 million people will be in an MA plan in 2020.

The agency says that 1,200 more Medicare Advantage plans will be available in 2020, than were being sold last year.

Reference: AARP (September 24, 2019) “Medicare Advantage Premiums to Decrease in 2020”

 

Comments Off on What Do I Need to Know about Medicare Advantage?