Still Time To Capture Extra Social Security Benefits

index-photo[1]Caution: The Loophole is Closing Soon!

Many of my clients receive Social Security checks each month, and very few (i.e. none) feel that those checks are too large. If you knew that you could increase the size of your Social Security check by taking advantage of a loop-hole when you started your benefits, you would probably wouldn’t want to overlook that. Many people, however, have done just that, and failed to maximize their benefits for the rest of their retirement. The loophole in the law which permits such an increase, however, is about to be closed by a change in the law. For married clients considering when to start their Social Security benefits, it is definitely time for a close look. If you have already started to receive benefits, there may technically be a solution, but you probably won’t like it.

When Congress passed the Senior Citizens Freedom to Work Act in 2000, it was intended to let retirees delay receipt of their Social Security check and continue working in order to increase the later size of their benefit. Clever financial professionals discovered that there were fully legal strategies which could exploit the lackadaisical way the law was drafted in order to increase a married couple’s benefits. With the “lightning speed” at which our government works, after only 15 years, that mistake is being fixed. On October 30, 2015, the Senate passed an approved House bill to eliminate these strategies (Bipartisan Budget Act of 2015), but delayed implementation for six months and grandfathered in people already exploiting the technique. President Obama signed the new law on November 2, 2015.

The strategy being eliminated involves the “file and suspend” and the “restricted application” elections, which made it possible for one spouse to file for Social Security benefits, but delay their right to get monthly checks. During the suspension of benefits, they continue to accrue the annual increase in Social Security benefits at 8% per year. How many investments earn a guaranteed 8%? In the meantime, the non-filing spouse elects to receive spousal benefits under the earnings record of the spouse who filed. This gets a stream of income coming into the house, while letting the main benefit continue to grow for a few more years. This would also increase the size of the “survivor’s benefit” if the suspended spouse later dies. Ask anyone who has been retired for a while if they wish they had started with a larger base benefit. The longer we live, the more we wish we hadn’t been in such a hurry to get that check.

The purpose of this article is not to educate you on the intricacies of this strategy, so I’m not going to run examples here. There are a wealth of articles already published in magazines and on the internet on the issue. (Just search “Social Security file and suspend”). AARP has good information, and economist Laurence Kotlikoff has written extensively for PBS and NPR on the issue. Instead, the two points I want to make are:

  1. There is a current strategy that may increase net income for couples in their 60’s who haven’t yet elected Social Security benefits but are eligible to do so; and
  2. That strategy is going away unless you take advantage of it in the next 4 months.

If you are already obtaining benefits, the full use of this strategy might require you to repay benefits received to-date from other savings, and effectively hit restart on your benefits. The numbers can be attractive, but many people just don’t like the thought of giving back the money they already received. (I told you that you wouldn’t like it.)

For all of you who may be eligible for Social Security benefits but haven’t started taking them yet, I heartily encourage you to get some advice on this issue ASAP. Don’t just “wing it”, and don’t put it off. Talk to your financial advisor, or give us a call to set up a time to come in an talk with an expert about how the system works, and how you can best game the system. When in doubt, I’d err on the side of asking some questions.

Feel free to give us a call if you’d like to schedule a time to sit down and talk with a professional about these issues, or any other planning issues on your mind.


Retirement Account Beneficiaries: How the Tax Rules Change

puzzledollarWhen considering the manner in which beneficiary designations are set forth for tax-deferred retirement accounts (IRA’s, 401(k)s, and 403(b)s), several factors need to be considered; including simplicity, tax considerations, and beneficiary protections. This article may frequently refer to IRA accounts, but the core rules are the same for 401(k)s and 403(b)s.

Basic Concepts during the Owner’s Lifetime

To speak in broad generalities, if these tax-qualified retirement accounts are funded with “pre-tax” money, as in a traditional IRA, most people understand that the money can’t be taken out without penalty prior to age 59 1/2, and must start to be taken out no later than 70 1/2 with at least annual Required Minimum Distributions (RMDs) to the owner thereafter. The RMD is calculated based upon the balance in the account on December 31 of the preceding year, divided by your life expectancy under IRS tables (Publication 590). The older you get, the greater the percentage you must withdraw. In the meantime, the money grows tax-deferred. As it is distributed, it is taxed as ordinary income.

The Roth versions of these accounts remove the RMD requirement for the original account owner, so the money can continue to grow tax-deferred. Roth accounts can also be distributed tax-free so long as the rules are met (such as a minimum 5 years holding period, and distributions after age 59 1/2).

There are more subtleties to this discussion, but this is a sufficient backdrop for the focus of this article, which is how the accounts are handled after the original account owner dies.

Surviving Spouse as Beneficiary

If there is a surviving spouse of the original account owner named as beneficiary, he or she has two options. A surviving spouse can direct the account to be treated as a spousal rollover, or instead as an inherited account. A spousal rollover lets the surviving spouse treat the account as though it was their own account all along. This means it continues to be tax-deferred, can be accessed without penalty after 59 1/2, and RMDs must begin at 70 1/2. While this is the most common approach, it can present a problem for younger spouses who might need access to the money before 59 1/2.

In those cases, such as where a surviving spouse hasn’t hit 59 1/2, a spouse may desire to elect it as an inherited account, which can be accessed anytime without penalty (which is nice), but the account will be subject to annual RMDs each year after the account owner’s death, based on the surviving spouse’s life expectancy, whether the RMDs are needed or wanted (not as nice). There are also options to use the deceased spouse’s life expectancy in the calculation of an Inherited IRA instead, which may be helpful if the surviving spouse is older than the original account owner. Finally, if the IRA owner died prior to age 70 1/2, the surviving spouse can elect to take the entire balance out, at once or in pieces, at any time or times over the next five years, and pay income tax (if a Traditional account, not a Roth) upon those distributions. Using this alternative, after 5 years the money must all be taken, taxes due must be paid, and the tax-deferral stops.

Under any method, Traditional accounts are taxed as income when distributed, and Roth’s are generally free of income tax.

Non-Spousal Beneficiary

When the surviving spouse is not the beneficiary, the only option is an Inherited IRA. In these cases, the question of how the schedule for when RMDs must be taken from Traditional IRA accounts becomes a little more complex, depending on the beneficiary.

It is important to note that for even a Roth account, a non-spouse beneficiary must take at least annual RMDs based upon life expectancy or otherwise as discussed below. The Roth rule about “no RMD necessary” does not apply to Inherited Roth accounts.

An individual named as beneficiary, such as a child or sibling, can spread the RMDs out over his or her lifetime, using the same type of life-expectancy calculation as the original account owner would use, however, since the beneficiary is (usually) younger than the original owner, the RMD calculated is smaller. This means that the amount which remains growing tax-deferred remains larger for a longer period. This is often called the “stretch” of a retirement account.

The beneficiary can access the money more quickly if they desire, but no matter what else happens it has to be taken out no later than by the end of their life expectancy using the RMD calculation. If the beneficiary passes away after inheriting an IRA, the account will pass to his or her named beneficiaries, but the RMD calculation on any remaining balance will continue to be based upon the life expectancy table as though the original beneficiary hadn’t died. The RMD is not re-calculated to accommodate the age of the next new beneficiary.

As an alternative, if the original account owner died when younger than 70 1/2, the individual beneficiary can elect to take the entire balance out, at once or in pieces, at any time or times over the next five years, and pay income tax (if a Traditional account, not a Roth) upon those distributions. Using this alternative, after 5 years the money must all be taken, taxes due must be paid, and the tax-deferral stops.

If your beneficiary is your probate estate, or a charity, or a trust not designed to accommodate retirement accounts, the distribution rules are less flexible.  Such beneficiaries are not considered qualifying “designated beneficiaries” for calculating a lifetime stretch. This makes sense, because these beneficiaries don’t have a “lifetime”.  Such non-designated beneficiaries may continue the account owner’s RMD schedule if the account owner was required to take RMDs (i.e. over 70 1/2), or else they must use the option of taking the entire account out within 5 years and pay income tax (if a Traditional account, not a Roth) upon those distributions. As with individual beneficiaries using this 5-year alternative, after 5 years the money must all be taken, taxes due must be paid, and the tax-deferral stops. Note that there are some “fixes” which may be accomplished to mitigate these rules if an estate or trust is named when an intended individual beneficiary would be better served if they can get the “designated beneficiary” treatment, however it is better to get the designations correct initially.

Finally, if your beneficiary is a trust which is specifically drafted to accommodate retirement accounts, you can get the best of both worlds. A trust can qualify for the “stretch” treatment of the IRAs, permitting a lifetime of tax deferral. The question then becomes “Whose lifetime?”. If a trust can take the RMDs from the account and not give them to the ultimate trust beneficiary (i.e. it can accumulate the RMDs inside the trust from year to year), then the “lifetime” is that of the oldest possible trust beneficiary. Thus, if your children are the trust beneficiary, but upon their death it would go to their children, but if their children are all dead it would go to your brother, then your brother is the oldest potential beneficiary, and his life expectancy is used.

We instead often draft a trust which doesn’t “accumulate”, or hold the RMDs, but instead pays them as income to the beneficiary each year. This is sometimes called a “conduit” or “see-through” trust, because the trust passes the retirement account distributions annually to a beneficiary the IRS can predict, or “see”, and lets us then use that individual’s age for calculating the RMD schedule. In the example above (children, grandchildren, then brother), the life expectancy of your oldest child at your death would determine the available tax-deferral stretch and RMD schedule.

In many families with several children, the children are relatively close in age, and everyone is satisfied to use the age of the oldest of the children to calculate the RMD stretch. Sometimes, however, when the children are widely separated (such as a second marriage, or the “surprise” child), it is worth the extra effort to let each child use their own separate ages to calculate the RMD schedule. This can be achieved by a little more attention to the beneficiary designation, identifying each separate trust share of the children as a separate beneficiary.

For example, assume a trust is a “see-though” trust which pays the RMD to the children each year. The children are aged 50, 48 and 30 when their parent dies. The parent has named the trust as the primary beneficiary upon his or her death. The trust would ordinarily separate the account into three pieces for each of the children or their trust share, and each child would thereafter have their own account. Each account, however, would have to calculate annual RMDs based upon the age-at-death of the oldest child who was 50. That life expectancy is about 34 years according to the IRS, so each beneficiary has to take 1/34th out the first year after death, 1/33rd the second year, 1/32nd the third year, and so on. That schedule is set at the time of death. That schedule is fine for the older children, but the 30 year old has an IRS life expectancy of 53 years. Instead of having an RMD of 1/34th, they might want to reduce the RMD (and lengthen the period of available stretch) so that they only have to take 1/53rd the first year, 1/52nd the second, etc. To achieve this goal, we modify the IRA beneficiary designation from just “The Smith Trust dated 1/1/2015” to reflect instead “1/3 to Child A’s Separate Share of the Smith Trust dated 1/1/2015, 1/3 to Child B’s Separate Share of the Smith Trust dated 1/1/2015, and 1/3 to Child C’s Separate Share of the Smith Trust dated 1/1/2015.”  Now there are three separate beneficiaries of the IRA, and each trust share can use its beneficiary’s age to set the stretch.

So Why Name A Trust as Beneficiary?

While naming a trust or trust shares as beneficiary requires a little more work up front, it can provide significant protection to the beneficiaries from a variety of risks, such as;

Legal Capacity: If you name a minor as a beneficiary, or if your beneficiary dies and the account passes from them to a minor, that child can’t take title to property. Instead, a Guardian may need to be appointed by the court to oversee the asset until the child attains age 18, at which time the youngster has complete access to spend the money any way she desires.

Creditors: While your retirement accounts are very secure against creditors for you and your spouse under federal and most state laws, the rules change when these accounts become inherited accounts. The U.S. Supreme Court ruled in 2015 that such assets are not entitled to the asset protection given to “retirement funds” under federal law. Thus, they are exposed to any current or future claims against the beneficiary, such as debts, liens, lawsuit judgments, foreclosure deficiencies, bankruptcy, etc. If a trust is designed to protect a beneficiary against such risks, then it makes sense to wrap this protection around the retirement assets as well.

Long Term Care: If a beneficiary has an inherited retirement account, he will usually be ineligible for government assistance with long-term nursing care stays until that account is entirely depleted. A trust can be designed to shelter this account, taking it “off the books” for consideration by the government in applications for such benefits so that the money stays with the family to cover needs for which the government won’t provide.

Children with Special Needs: If a member of the family has a disability which permits them to obtain government benefits, receipt of an inheritance outside of a proper trust, including inherited retirement accounts, can disqualify them from their important benefits.

Imprudence: Individuals who inherit retirement accounts can do whatever they want with the funds. We see inexperienced beneficiaries spending the money too quickly, rather than saving it for their future security. Even worse, many an inattentive beneficiary has elected to have the entire account distributed to them following a death, and they are very surprised by the large income tax bill they face on the entire account the following April 15th.  Often, they no longer have funds available to pay the tax at that time, and problems ensue. If we create a trust to protect a beneficiary from his own financial inexperience, whether for just a while or for their entire lifetime, it often makes sense to include the retirement assets within the scope of this protection.

In a nutshell, if you are protecting family members with a trust after your death, if often makes sense to take the little extra effort to extend this protection to the retirement assets they will obtain as well.

Income Taxation of Retirement Accounts in Trusts

The distributions from inherited Traditional retirement accounts are treated as income, and are income tax-free when they come from Roth retirement accounts. Some questions emerge about how taxation may be different with a trust involved. Provided that the trust income, including the retirement account distributions, is being paid to the trust beneficiary, the trust itself has no tax liability. Instead the trust is merely a conduit, and just the income (including payments from retirement accounts) ends up on the beneficiary’s tax return. In these usual cases, the trust files an informational Form 1041 to tell the IRS what the beneficiary received, so that the IRS knows where to look for that income. The beneficiary receives a K-1 to tell them what income to report on their own return.

In some cases, however, we don’t want the income going right to the beneficiary. What if they are being hounded by creditors, or applying for governmental benefits, and that income would just be subject to claims from such outsiders? In those cases, the selected Trustee of the trust might elect to retain the income inside of the trust instead, in order to provide further protection. In such cases, the IRS then considers the income to be taxable to the trust, and the trust pays tax on the income. Trusts with retained income are subject to a similar “tiered” income tax rate structure, but the tiers are compressed.

For example, a single individual sees their income tax rates increase from 10% to 39.5% as their income increase in tiers (roughly, 15% marginal rate at $9,000; 25% marginal rate at $37,000, 28% marginal rate at $89,000, 33% marginal rate at 186,000, and the maximum 39.5% rate after $406,000). A trust with retained income hits the 25% marginal rate at only $2,500, 28% at 5,800, 33% at $8,900, and hits the maximum 39.6% rate at $12,500. Thus, the same rates are used, but smaller amounts cushion between tiers. For this reason, income is usually paid to the beneficiary, because it will see lower tax rates. When a beneficiary is in jeopardy, however, it is often better to pay a bit more in taxes and have the remaining income be protected than to distribute the income to the beneficiary to save taxes but then lose the balance to a creditor. Many trust designs give us flexibility to pass income when appropriate, and retain income (and pay tax through the trust) when necessary.

Notably, to the extent income is retained in the trust (and taxes paid), it is added to principal, and when thereafter distributed at an appropriate time, it is not again taxed.


The question of how to designate the beneficiaries, both primary and contingent, on your tax-qualified retirement accounts clearly requires you to weigh and balance a number of factors, including simplicity, taxes and protection. Please consult with your financial, tax and/or legal counsel for specific guidance regarding how these strategies should be employed in your unique case, because everyone has his or her own set of needs, goals and circumstances.

If you would like more information regarding these issues, please feel free to contact us for a complimentary consultation.

Note: the information included above is obviously general in nature, and should not be relied upon by any individual or entity for their specific circumstances. Contact us or another attorney or professional advisor for advice regarding your unique situation .

Are Your Beneficiary Designations A Disaster?

Senior_Couple_Together[1]For many families, life insurance and retirement accounts are the largest assets which pass to beneficiaries following a death. Despite this fact, people often don’t pay much attention to the way beneficiaries are designated on these assets. This relaxed attitude can destroy an otherwise successful estate plan, because such “beneficiary designated” assets often do not pass under the terms of a Will or Trust.

Someone may have spent a lot of time and money constructing a  written estate plan to govern the assets passing to beneficiaries, and providing protection for the beneficiaries under the written plan. When the names written in on a life insurance form or retirement account beneficiary designation aren’t coordinated with the underlying plan, problems ensue. Just a few examples of problems we have seen include:

  • The worker who wasn’t married when she was hired, and forgot to add her spouse or children as beneficiaries under her employer sponsored life insurance, resulting in the need to probate the benefit;
  • The husband who named his wife as the primary beneficiary on his 401k, and their two children as contingent beneficiaries, but forgot to update the form when they had a third child. The wife died first, and when the husband died, the third child was excluded from the benefit;
  • The well-meaning uncle who named his nephew with Down’s Syndrome as a beneficiary of his life insurance, resulting in a loss of governmental benefits which the child was receiving unless the family completes an expensive court process to create a semi-effective trust to preserve the benefits;
  • The father who named his wife a 50% beneficiary of his life insurance, and each of his two young children 25% beneficiaries. The children were minors when their father died, and could not take title to assets. The mother had to hire an attorney to have the court appoint a guardian to oversee the children’s money until they turn 18. The judge appointed a local attorney who will make all decisions until then (with annual fees charged for oversight, investment management and distribution decisions), and at age 18 the kids can do whatever they want with the money; and
  • The mother who named her oldest child as beneficiary of her IRA, “knowing” that he would “do the right thing” and share the money with his siblings. You can guess what happened there.  Not only did her son want to keep the money, but further he was informed by his tax advisor that if he did give it to the others, he would get hit with income tax obligations and potential gift tax issues..

Beneficiary designation forms, while seemingly easy to complete, are very important. Properly considering your beneficiary designations is critical. Don’t just throw names on the form, and do not take the advice of clerical staff at a financial institution. They often don’t really know the ramifications of what they say. Talk to your attorney, and if necessary have the attorney help with completing the forms. Just because the form only gives you a line or two for beneficiaries doesn’t mean you have to fit your information into that space. You can usually attach a separate letter of instruction if you need to be accurate and complete.

Under no circumstances should you name a minor or a person with special needs as a beneficiary. These beneficiaries should have a trust, or at least a custodian under the Pennsylvania Uniform Gifts to Minors Act, therefore avoiding a court appointed guardian.

Life insurance and retirement account assets are important and valuable. Give the process of setting up the beneficiary designations the respect and attention it deserves in order to see that your family gets the benefit of your hard work.

How Can You Plan for the Unknown?

Everyone has a plan, at least in their own mind, for how they would like to see their assets handled after they are gone. For many, that involves benefiting their children or grandchildren, while others might include community or charitable organizations.

In most of these plans, however, the structure is based upon the current circumstances of the beneficiaries, and the current nature of the assets. Such plans fail to take into consideration the fact that the estate plan may not work to aid the beneficiaries until many years from now.  Suppose that you have a vacation house that you know your daughter loves to enjoy with her family, while you have a business interest that you intend to pass to your son who works with you in the business.  The assets are of roughly equal value, and you have prepared a Will which leaves the house to your daughter, and the business to your son, and then splits the remaining assets equally.

Now, let’s fast-forward 15 years.  What has happened to the value of the house? Has it skyrocketed from surrounding development, or perhaps dropped in value due to maintenance issue or decline in the neighborhood generally?  Is the business still viable, or have you perhaps already sold your interest to your son? Maybe the business has expanded and grown substantially in value?  Has your daughter moved with her family and relocated to an area where she no longer can reasonably use the vacation home, or has your son taken his own career in a different direction such that taking over the business doesn’t really factor into his own plans?  The only thing we are certain will stay the same in our lives is the presence of constant change.

When planning for assets with significant value, it is important to keep plans flexible in order to provide the ability to address changes in goals, value, and other circumstances over time.  For example, the above plan might be better served to incorporate the ability to permit the respective children to select the designated assets as a portion of their share of the estate, while allowing the assets to instead be sold and the value distributed equally through the estate if no so selected.  If the son still wanted the business, and the daughter still wanted the vacation home, they would have first rights at those, however if interests or values had changed then the plan would still provide for each to get a fair treatment under the estate.

Harold Wilson said “He who rejects change is the architect of decay. The only human institution which rejects progress is the cemetery.”  A good estate plan can go a long way to providing contemporary protection for your family despite the change our lives may bring. This can permit us to embrace the inevitable change in life while maintaining the peace of mind that comes from knowing we have taken care of our family.

Disclaimer Planning for Powerful Estate Flexibility

Estate planning is a combination of art and science, much as how medicine is practiced in this county. We have to keep one foot firmly rooted in the present, while stepping forward into the future with the other foot to anticipate events which most hope will be many years away.  Such forward-looking plans must necessarily involve efforts to determine what the future will look like, and how we would like our families to be positioned for success.  Combining what we know about today with what we expect down the road, families can work towards development of a plan which has the strongest support for our families.

Science deals with things which are certain, or can be established with reasonable certainty. For example, when a family consults with me, we can have a fair degree of precision about important factors such as who is currently in the family, the nature and extent of the current assets, the current laws affecting their lives, and the tax code provisions which are now operating. Even in the face of such certainty, however, an artistic element arises as we discover the goals each person has for their family, protection necessary for their family in the immediate future, and the best strategy to combine these needs with the known items above.

As we look into the future, however, the exercise of judgment and discretion becomes even more of a legal art, as we must attempt to anticipate what might arise in the future, both in our families and in the world around us, and how to best position our own plan to provide critical support when our family needs it most. What will the family look like in the future?  What will their needs be?  How will our assets have evolved?  What laws and tax code provisions will be in effect then?  The certainty of change is just about the only thing we can reliably depend upon, and thus the importance of flexibility in our planning has never been more important.

The Tax Relief Act passed by our Congress at the end of 2010 has done nothing to reduce the need for flexibility.  Indeed, if anything, it has made flexibility in our planning all the more important.  For example, some people have become aware that the applicable exclusion amount before Federal Estate Taxes start robbing our children of an inheritance has been increased all the way to $5,000,000.  That is more than the $3,500,000 amount in effect in 2009, less than the complete abatement of estate tax we saw in 2010, and far greater than the $1,000,000 exemption amount scheduled to return in 2013.  What amount should we rely upon in planning our estates?

For my clients, the answer has essentially remained unchanged: don’t count on any specific number.  The benefit of starting with a plan which focuses on the goals you have for family helps to assure that we don’t let the “tail wag the dog”, which can happen when we focus on taxes alone instead of what we are trying to achieve for our loved ones.  For years, as our nation struggled with uncertainly and change in the estate tax code, we have incorporated flexible disclaimer provisions in many plans where it presented the best approach. This technique permits a surviving spouse to decide later, after a spouse has passed, how to structure the assets to take best advantage of the tax code in effect at that time. In other families, however, the need for certainty, or the benefit of advance decision making far removed from the emotional and financial turmoil of the recent loss of a spouse, makes more sense.  Again, by starting with the goals and needs, instead of just the tax posture, we can work to the best solution. This approach can permit us to focus on important goals for our families, like preserving their inheritance, protecting against divorce or debt problems our children may experience, and planning for a smooth and efficient administration, while still maintaining the strength of available Estate Tax reduction or elimination strategies.

With a disclaimer-based plan, we don’t define in advance any specific amount which the surviving spouse must permit to pass into a tax-protected trust.  In families where control of, and access to, the family assets is of paramount concern, this will give the surviving spouse control over all of the assets upon the passing of the first spouse. If, based on the tax code as it exists at that future time, it makes more sense for some of the assets to pass into a Family Trust to provide protection against the federal Estate Tax when the surviving spouse also passes on, then the surviving spouse can “disclaim”, or give up, certain assets from their own name or trust. Such assets will in most cases pass into a Family Trust to protect the surviving spouse, while still remaining free of federal Estate Tax upon the future passing of the surviving spouse. Thus, the family can have their cake and eat it too, with a plan that permits structure for efficiency and protection of our beneficiaries, while postponing tax elections in a changing environment until the very moment such decisions absolutely must be made.

This type of planning is very powerful for many families in our area, and yet should not be attempted alone. With the guidance of an estate planning attorney, your family can have this protection and flexibility without the risk of missteps which can otherwise destroy the plan.  Is this approach best for your family?  Only after a personal consultation, involving an individualized assessment of your goals, interests, needs, assets, family and beneficiaries, can we make a recommendation tailored for you.  We offer these consultations to families for free, in the hope that it will encourage you to stop wondering “what to do”, and instead start getting answers about what is best for you and your family. Please take the time to discover what a good estate planning lawyer can do for your family, now and far into the future.

“We Need To Have A Talk…”

Our ability to talk with others about unlimited topics is one of the most unique features which set all of us humans apart from the rest of the animal kingdom.  Yet too many families avoid talking about some of the most important and personal aspects of our lives. One example I see far too often is families who haven’t talked about what the future will look like when Mom and Dad get older.

Thinking, let alone talking, about aging can seem very hard.  While we all know subconsciously that the reality of our future, or that of our parents, as aging Americans, is unavoidable; fears about death and what lies beyond can stop a discussion before it even starts. I find even more troublesome for many people is a discussion about the time between now and then, the transition years.  While everyone may be strong and able now, the future is less certain.

What will happen as our vitality naturally gives way with the years, and how do we want that time to look?  This is further complicated by confusion about how planning fits into the discussion. Many people are familiar with the terms “Will”, “Power of Attorney”, “Living Will”, “Living Trust”, “Probate”, and others, and yet would confidentially confess that they don’t truly understand how all that machinery works.  No one wants to appear ignorant about something so important, and instead they feign understanding and ignore the issues for another day. But which day?

While imagining yourselves or your parents as aging individuals may seem unbelievable, it isn’t too soon to have those kinds of talks. Hoping that “it will all work out” is no substitute for having a plan in place, and the place to start that plan is by having a talk with your loved ones. Recent studies have shown that:

  • Family caregivers spend an average of $3,000 per year taking care of aging loved ones in their home.
  • Family caregivers assist 80% of aging parents with activities of daily living at some point.
  • The average Family Caregiver is a woman, married, and has a job and children herself.
  • Over half of the people passing on in any given year don’t have any written estate plan.

If our family is going to be left to handle a variety of responsibilities as our life naturally progresses, it seems appropriate to give them the assistance of our guidance, and the investment of our time and resources to make it smooth and efficient for them, while providing protection which they may need for their own lives.

What would you like the future to look like, and how would you like decisions to be made when you may not be able to participate in life with the vigor which you now enjoy?  Here are some topics we should all address with our parents or children as the years press forward:

  • What basic information do people need to know in an emergency?
  • Who is available, and for what, in an emergency situation?
  • What obstacles to living in your current home might arise, and how can those be addressed?
  • What would you like to see yourself doing in the coming years, and with whom?
  • What activities or goals do you want to work toward to avoid future regrets?
  • Where would you live if you couldn’t stay in your home?
  • Who will oversee your daily finances if you cannot?
  • Do you have or need someone to manage investment strategies in this complex world?
  • Who will have authority to make decisions about you, and about your finances, if you can’t do so?
  • Who is best for dealing with personal needs? With physicians or care providers? With government agencies and insurance companies?
  • How will your care be funded?
  • What insurance is available, and when should it be sought?
  • How will the important parts of our lives be remembered for the future?
  • When are bodies finally fail us, how do we want those final days handled, as well as the events which follow our passing?
  • What information, planning or protection do we want in place for the next generation?
  • Who can we talk with to get answers if we need help?

Many people have told me that they want to have this kind of talk with their family, but they don’t know where to start. Hopefully this information can provide a blueprint of what you might begin to address for your family. As with most things, it starts with having the desire to make it happen, and the simple words, “We need to have a talk…”

Can You Sleep When The Wind Blows?

Our Client Care Liaison, Sally Wightkin, was kind enough to bring the following story to my attention from her church bulletin. I think it is a lovely modern parable.

A young man applied for a job as a farmhand. When the farmer asked for his qualifications, he said, “I can sleep when the wind blows.” This puzzled the farmer. But he liked the young man, and hired him. A few days later, the farmer and his wife were awakened in the night by a violent storm. They quickly began to check things out to see if all was secure. They found that the shutters of the farmhouse had been securely fastened. A good supply of logs had been set next to the fireplace. The young man slept soundly. The farmer and his wife then inspected their property. They found that the farm tools had been placed in the storage shed, safe from the elements. The tractor had been moved into the garage. The barn was properly locked. Even the animals were calm. All was well. The farmer then understood the meaning of the young man’s words, “I can sleep when the wind blows.” Because the farmhand did his work loyally and faithfully when the skies were clear, he was prepared for the storm when it broke. So when the wind blew, he was not afraid. He could sleep in peace. (Author Unknown)

Can we all confidently say that we have made the necessary preparations to be able to sleep when the wind blows?