The Fine Print about Reverse Mortgages

Realtor with keysA reverse mortgage is a mortgage you can take out when you’re 62 years or older. This plan lets you stay in your home as you age. The Federal Trade Commission says that it’s turning your equity into cash without having to sell your home. However, the FTC warns that reverse mortgages can be tricky, so you need to do your homework.

wfmz.com’s article, “Life Lessons: Reverse mortgages: When are they dangerous,” reports that Elder Law attorneys have had adult children come to their offices wondering how they were named in a foreclosure lawsuit, when it was the mother’s reverse mortgage.

When parents pass away, their homes are commonly inherited by their children. In the case of parents with a reverse mortgage, however, the children could also be named in a foreclosure. This can come as quite a shock to adult children. Seniors also may not understand that they have to keep paying for the upkeep of the home.  If you’re married and there’s just the one name on the mortgage, it could also spell trouble for your spouse.

The rules state that if you’re out of the house for a year, the reverse mortgage company is allowed to foreclose. In addition, a reverse mortgage may not provide enough cash to assist you, especially if you need around-the-clock at-home care costing as much as $12,000 a month. Despite these dangers, a reverse mortgage still may be right for you.

A reverse mortgage would be a good option, if a person insists on staying in the home and they have a family caregiver.

There are also Medicaid programs that may help pay for nursing home care as well as waiver programs through Medicaid that may help pay for assisted living and home care with the ability to keep your home and can leave it to your children or spouse.

If you have more assets, talk to an Elder Law attorney to develop a plan that protects those assets. For example, in some states you can pay a relative to be your caregiver.

Reference: wfmz.com (January 24, 2017) “Life Lessons: Reverse mortgages: When are they dangerous”


Retirement in Special Needs Families

Bigstock-Elder-Couple-With-Bills-3557267The big challenge for many Special Needs Families is balancing the financial needs of retirement with the long-term needs of a child with a disability. Those latter needs typically will outlive the parents.

Morningstar’s recent article, “Retirement Planning for Special-Needs Families,” explains that the need is growing. One in every five Americans has a disability, and 20 million families have at least one family member who has a disability, says the National Disability Institute. The costs can be extremely high, with the lifetime cost of caring for a person with autism ranging from $1.4 million to $2.4 million, according to an advocacy and research group. Lifetime costs are similar for people affected by other severe impairments.

While government benefit programs provide some assistance, the eligibility rules vary depending on when a disability is incurred. There’s a set of rules for people disabled as children (prior to age 22) and another for those disabled at older ages. Here some key topics for consideration and action:

  • The care plan should include the safety of the child, along with aspects of life fulfillment, including work, learning and play.
  • Projected cash flow needs will depend on the type of disability, the capability of the individual needing care and the level of care needed.
  • Investment allocations. Families who have a child with special-needs should be more conservative in how they allocate their retirement portfolios, and maintain a higher level of cash.
  • Government benefits include Social Security, Medicare and Medicaid.
  • Families need to understand all of the government rules on asset and income limits for a person with disabilities.
  • A Special Needs Trust is a critical part of a family retirement plan.
  • Beneficiary designations must be structured properly, because inheritances can jeopardize government benefits eligibility.

Quality planning is complicated. Families who have children with special-needs should consult with an experienced special needs trust attorney.

Reference: Morningstar (January 17, 2017) “Retirement Planning for Special-Needs Families”


Beware of Financial Abuse of the Elderly

Bigstock-Senior-couple-standing-togethe-12052331Scams targeting senior citizens are on the rise, so the real question isn’t if a scam will be tried, but when.

TC Palm’s recent article, “For seniors, financial scams may be closer than thought,” notes that one financial study found that 71% of elder financial abuse was suspected of being committed by the elders’ adult children.

In some instances, it can be an impatience to inherit or having a sense of entitlement because their care of the parent can justify their accessing funds to which they feel entitled. This could involve frequent dinners out, filling up the gas tank, or paid vacations for all their help … and typically the rest of the family has no idea that it’s happening. It’s not uncommon to have a sibling who cares for the senior parents, end up feeling entitled to a tropical vacation, a new car, or a down payment on a house on the parents’ tab, while the other siblings are unaware that this is happening to their parents.

Many state laws aren’t sufficient to protect elders in these types of situations. Currently, investigations go nowhere because, in many cases involving familial elderly abuse, it’s one person’s word against the other. Therefore, what can a person do to protect a senior when the adult children have reasonable explanations for money spent or money that’s needed?

With high rates of elderly abuse, specifically financial abuse, action needs to be taken. In many instances, a financial plan can help to avoid this type of abuse.

Estate planning and elder law attorneys can help with planning and strategies to prepare for these financial possibilities in a family. Financial and estate planning can provide answers to questions about becoming incapacitated, children’s potential feelings of entitlement because of their care for their parents and the potential for fighting among the children.

It’s not pleasant to think about your own passing, but making plans can help your family and loved ones with the event and the aftermath.

Failing to address our own human frailty just makes us more susceptible. But being prepared for all possible outcomes gives the greatest protection for you and your family.

Reference: TC Palm (FL) (December 14, 2016) “For seniors, financial scams may be closer than thought”


Like Gene Wilder, Many Opt to Keep Alzheimer’s Disease a Secret

Happy-old-coupleComedic actor Gene Wilder, who died last week at age 83 from complications of Alzheimer's disease, didn’t tell anyone about his illness for at least three years. That's common, reports Investment News in “Hiding Alzheimer's, like Gene Wilder did, is natural, so prepare for it with all clients.”
The star of Willy Wonka and the Chocolate Factory and many other successful comedies is said to have wanted his fans to keep laughing over his life's work instead of being sad about his failing health.
Most Alzheimer's patients will hide their symptoms as long as they can because they'll lose control of their lives if their family or friends are under the impression they can’t take care of things on their own.
The first thing to recognize is that cognitive impairment is a significant risk. Financial advisers and elder law attorneys should take steps to protect these clients' finances from the impact of debilitating conditions like Alzheimer's. This is best accomplished before they notice any changes in the individual’s behavior. With dementia and Alzheimer's so common in the elderly, criminals frequently target older individuals because they can more easily be swayed into releasing money or disclosing personal information.
The first thing elder law attorneys will do is have their clients execute a legal document that lists the family members or friends whom the attorney can contact to discuss private information if he or she believes the client is starting to have cognitive problems. Clients may need some time to consider this difficult issue. However, if they refuse to provide this information, financial planners will often require them to sign a different document that releases the adviser from liability if the client is harmed because of his or her cognitive decline.
Get the complete legal picture from an experienced elder law attorney.
Advisers may also have a checklist to complete each year about their clients to monitor changes and document them over time. When they see “red flags,” like a client with memory loss or difficulty understanding the consequences of decisions, advisers may ask that a trusted contact start attending planning meetings.
Hearing a professional tell you he or she thinks you might have dementia is never welcome news, but this may be the opportunity to get medical assistance and to plan ahead for potential issues in the future.
Reference: Investment News (September 1, 2016) “Hiding Alzheimer's, like Gene Wilder did, is natural, so prepare for it with all clients”


Which One of Us Should Take Care of Mom and Dad?

Middle aged coupleWith Americans living longer, many Baby Boomers now find themselves giving financial and emotional support to their aging parents. An important part of this process is discussing living and end-of-life plans to determine who will take care of mom and dad. Siblings need to discuss expectations with each other, says US News in “Dividing the Caregiving Responsibilities Between Siblings.”
Decades ago, the task of caring for parents fell to the eldest daughter. Now, with families living all over the country and women’s paychecks a necessary part of family incomes, the answers are not as clear. Plus, siblings with differing incomes and obligations may also disagree over how to pay for care and health services for the parents.
There’s no rule that says responsibilities have to be divided equally. The fact that a sibling lives in a different time zone doesn't mean he or she can't pitch in. In many instances, siblings out of the area can call regularly to check in on a parent, pay their bills online, hire help or visit to relieve the local caregiver.
Here are some ideas for dividing the caregiving duties among siblings.
· Don’t wait until the ride home from an emergency room visit. Talk about the options when everyone is calm and healthy, including your parents so they can be a part of the conversation as well. When there’s an agreement on responsibilities, write it down.
· If you're factoring in Medicaid coverage for your parents, talk with a Medicaid or elder law attorney in your parents’ state.
· Match up your parents' needs with your siblings' abilities and find the best fit based on their strengths, aptitudes and willingness to help.
· Don’t be afraid to get some outside help if you and your siblings can't provide all the help your parents need.
Caregiving can be terribly stressful, so communicate early and often with your brothers and sisters to avoid some of the headaches.
Reference: US News (July 13, 2016) “Dividing the Caregiving Responsibilities Between Siblings”

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