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CARING FOR LOVED ONES

More and more, as our population ages, many of us are taking care of aging spouses or parents. According to the Mayo Clinic, 33% of adults provide such care. Most caregivers feel an obligation to do so out of love.

However, caregivers often find that providing that care is emotionally and physically, and often financially, draining. It is essential that caregivers know their limits. The danger is that the everyday stresses and challenges of providing such care often lead caregivers to forget about themselves, which can lead to depression, social isolation, financial difficulties, stress, fatigue, loss of interest in activities, frequent pain or headaches, and other effects.

 

When we get on an airplane before we take off the flight attendants always instruct passengers that, if the oxygen masks drop down, be sure to place them on you before you help others. Why? If you pass out from lack of oxygen, you cannot help anyone else, so by taking care of yourself you are in a position to care for others. This is not selfishness – it is a necessity. 

 

When “Mary” first came to see us, her husband of over 40 years had advanced Alzheimer’s and other physical conditions, and qualified for skilled nursing level care. Caring for him was a 24-hour job – he would wander off at all hours of the day and night, and other behaviors and

Mary needed to dispense his medications throughout the day and evening. We immediately sensed that Mary was on the verge of a nervous breakdown, but this was her husband, her love, to whom she had pledged herself in sickness and in health. She could not imagine abandoning her “obligation” to him by placing him in a nursing home, and, sadly, they did not qualify for Medicaid Waiver for in-home care.

We worked hard to make her understand that caring for her husband was killing her. As we talked, it became ever clearer that she could not keep up her current pace. I asked Mary how caring for her husband was affecting her; she admitted that she was under constant stress, was depressed, didn’t have any social life, and was generally wearing down. I then asked her what would happen if she were to wear down so much that she died from overwork while caring for her husband. She was startled – she hadn’t considered that. The answer was, there would be no alternative – he would have to go to a nursing home.

 

It took a couple of meetings with her, but she finally came to realize that in the long run, she was not doing her husband any favors by keeping him at home; her best course of action would be to find a great nursing home for him, and visit him frequently and get stronger physically and emotionally herself so she could continue to play an important role in her husband’s life for a long time to come.

 

If you are going to care for a loved one in the twilight of his/her life, then there are things which you should do to maintain your physical and mental health, such as:

 

  • Seek and accept help from family and support groups, including online.
  • Keep connected with family, friends, even clergy.
  • Find out from your loved one’s medical staff, or others, what resources are available to you and your loved one.
  • Give yourself permission to spend “me time” to rejuvenate your physical and mental conditions – then do it! Even a short time for yourself each day can make a huge difference.
  • Maintain good, healthy habits.
  • Exercise – it improves your mood and reduces stress.

 

You should consider all of your options, but always consider your needs as well as your loved one’s. Remember, to be an effective resource for your loved one, you need to put the oxygen mask on first before you can help others!

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Now is a Good Time to Review Your Estate Plan.

It has certainly been a strange year and it feels as though we are finally heading out of it and things are “getting back to normal”. It makes me very happy to hear everybody talking about all of their upcoming plans for travel and trips to visit family because they missed out on a lot of planned events this past year.

Let me tell you what has really hit home for me, is how painful lack of planning can be and how it can affect your family in many ways. There are far too many lessons that we have learned from the past year, but one, in particular, is how a lack of planning can devastate a family.

Before you head out on all of your great adventures and trips, please take a moment for yourself and put your own oxygen mask on. Please pull out your estate planning and take a quick look at it. Make sure that the documents read the way that you want them to read and that you understand them.

Furthermore, make sure that all of your beneficiary designations on your life insurance and retirement accounts match what you intend for them to do and do not incorrectly believe that your Will controls how those assets are distributed.

As we have stated in many other blogs and articles, the beneficiary designations on these items are the most important thing and will trump what you have in your Will. Just confirm that your plan is the way that you intend it to be and that there are no unintended consequences.

If you have not had it reviewed by a professional in the last three or four years, take the time now to bring it to someone to review to ensure that everything is the way that it needs to be.

We also encourage you to take the time, once your documents are review and updated as necessary, to talk to your family about your planning when you are on your adventures and at family gatherings to make sure that everybody knows what your wishes are and what your planning is for the future.

These simple steps will save heartache and avoid hurt feelings. The time is now to review prior to heading out. Enjoy your travels and please be safe.

If you are looking for advice in regards to estate planning, please call our office at 717-845-5390 or click the link here and we will contact you.

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Retirement planning with long-term care

Rawpixel-550992-unsplashQualified retirement plans (IRAs, 402(k)s, 403(b)s and the like) are a great way for families to be able to grow their wealth for the future and do so tax-deferred. There are numerous research articles that have proven that the tax deferral is extremely impactful when it comes to being able to accumulate wealth for a family.

Unfortunately, we often see clients who have spent their entire lives accumulating their retirement accounts but are now faced with the reality of long-term care costs.  Families of those who are going or have gone into a nursing home quickly discover that retirement plans such IRAs, 401(k)s, 403(b)s are countable resources when it comes to long-term care and Medicaid planning. Although many states allow different ways to protect retirement plans, currently Pennsylvania is not one of them.

One of the more difficult conversations that we have to have with financial professionals who represent our clients is that when a loved one enters a nursing home the only way to be able to protect assets for the spouse or for the family is to liquidate a retirement account.  Obviously, liquidation of a retirement account is not an ideal situation because not only will it trigger immediate tax consequences, but there are also other unintended consequences such as potential increases in Medicare premiums, etc.

Of all of the things that we do at Bellomo and Associates, the concept of a retirement plan and crisis planning is probably the most difficult and toughest conversation we need to have.  It does not make logical sense to liquidate a retirement account and trigger tax consequences and other consequences that are unintended, but if a person will likely remain in a nursing home for an extended period of time, it is often the only way to preserve that asset to ensure that it is there for the spouse or loved ones.

When this conversation comes up, we often talk to the family and to the advisor about not making an emotional decision but rather a decision based on data. Certainly, there is no way to know how long a loved one will live in a nursing home, but depending on the diagnosis and prognosis for the person, we can often make an educated guess.  If it is expected that the person will live for several months to several years, we often end up liquidating the retirement account because then we are able to protect either 100% of the assets for the spouse or 50% for the family members.  

These calculations are done not only by our office but also by the accountants and financial advisors who work with our families. We are very lucky to work with many competent professionals, and often are able to take a very difficult conversation and make it simple.  Although not ideal, preserving those assets for the family and for the future is often better than trying to save a few tax dollars in the short-term and losing it all in the long term.

If you or your family member is faced with this difficult decision, please contact your professionals immediately to help guide you through that conversation.

Jeffrey Bellomo

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The Five Must-Knows of Long-Term Care Planning

Number-3023926_640Long-term care is often very overwhelming and scary time of a person’s life.  Having specialized in helping families through this tumultuous process for over 15 years, I have learned several things that I pass on to clients on a daily basis.  I call them the Five Must-Knows of Long-Term Care Planning, and they are as follows:

  1.    It is never too late.
  2.    Preplanning is always better than crisis planning.
  3.    Long-term care is a team sport.
  4.    You must work with a qualified professional.
  5.    It is stressful, but planning is worth it.

 

  1.  It Is Never Too Late.  The one thing that I cannot stress enough is that, even if a loved one is in a nursing home or is going to need skilled-level care in his or her own home, options are still available.  Pennsylvania is a very generous state when it comes to allowing individuals to protect assets for families in crisis, to the tune of 100% for a spouse who is at home or 50% for a single widow or widower family member.  We often hear, “Well, we weren’t able to do anything ahead of time and our loved one already needs skilled-level care, so, therefore it’s too late.” It is essential to understand that it is never too late and that you should seek professional advice immediately.

 

  1. Preplanning is Always Better.  Although it is never too late, preplanning is much less expensive, and also much less stressful.  Although things can still be done in crisis, it is a very emotional time for a family, and asset protection can be very expensive.  In a perfect world, the planning would be done five years before an individual needs skilled-level care in a nursing home or in his or her own home.  I realize that timing is not something that anyone can control, but, certainly, the earlier, the better.

 

  1. Long-Term Care Planning is a Team Sport.  In our weekly workshops, we stress to our families that we want them to include their team, which often consists of other family members, financial professionals, accountants, and other important key people.  This can be a very stressful time and, oftentimes, very technical and important decisions have to be made. I never recommend going alone down this path, as having your family members and your other professionals there with you will provide not only peace of mind but also support and great advice.  Therefore, when you start thinking about long-term care planning, always remember it is a team sport, and the better the team, the better the decisions.

 

  1. You must work with a qualified professional. Asset protection planning and Medicaid planning are two very technical areas of the law. Most estate planning attorneys do not understand the intricacies of Medicaid and asset protection. I recently received a call from a client who was going to use another elder law attorney and I told him to ask the individual how many asset protection trusts Medicaid files that they did in the past month. I told the client that we did 10 asset protection trusts the month before and had 60 active Medicaid files. When the client called me back, she was laughing because she said that the individual told her that they hadn’t done any of either but that didn’t mean that they were not an elder law attorney. It is very easy to make a major mistake in these areas and causes major tax, financial, and other losses to a family. Be sure to use a firm that has a certified elder law attorney to make sure that the person knows the intricacies of the law.

 

  1. It is stressful but planning is worth it. Pre-planning is the best planning because it is done ahead of time without a lot of stress and it is much less expensive. However, even crisis planning is worth it. For a single individual or a widow or widower, if he or she is in a nursing home we can still protect 50% of their assets for a loved one. If there is a spouse, we are able to protect 100% of all assets, and qualify the person for Medicaid so that the state is paying for his or her nursing home stay. Sure, the process of collecting the required information, such as five years of bank and financial statements, and getting through the process is stressful and overwhelming, but the end result is well worth it.

Remember these five tips to protect your family and your assets. If you need further information, please come to one of our workshops or call the office.

 

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Review These Retirement Planning Criteria

401k piggy bankStock Investor’s recent article, “6 Retirement Estate Planning Criteria You Must Address,” says every retiree’s investment objective should address these six criteria:

  1. Minimum required yield. This is the first factor when looking for reliable long term income. It is calculated based on household income requirements and investable assets—typically IRAs, taxable brokerage accounts and other savings that are planned for retirement income. When the required percent of investment (portfolio yield) increases, so does the income risk. When the yield is too high to be practical, traditional thought says to liquidate some of your principal by gradually drawing down your investment portfolio over retirement years or by using an insurance product like a single premium immediate annuity.
  2. Income Reliability. This means the income, just like a paycheck, will be there regularly and will have a low risk of fluctuation—and an even lower risk of being reduced or eliminated.
  3. Income growth that keeps up with inflation. This can come from the investments organically growing their dividends over the years or from the excess income the actual investments produce that are accumulated and used to supplement future household income with inflation.
  4. Liquidity. This is the ease with which investment securities can be converted into cash. This will be a high priority, if you think a need could arise that would require an unplanned tap into the principal of the investment portfolio.
  5. Future capital preservation of the investment principal. Conventional wisdom says that retirement savings will be consumed and the savings will decumulate. Capital preservation is a priority, if you want to maintain the investment capital to meet future possible household major expenses—like assisted living costs or creating a testamentary special needs trust (a trust created at your death in your estate) to provide for a disabled child or grandchild, to provide for a grandchild’s college expenses or to donate a favorite charity.
  6. Simple transfer to the surviving spouse. In many instances, a spousal retirement account has just one person who builds, monitors, and manages the portfolio. Therefore, it’s important to have an easy transition for the surviving spouse to continue the management of the income portfolio.

Reference: Stock Investor (May 24, 2017) “6 Retirement Estate Planning Criteria You Must Address”

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