Little things mean a lot

Tis the season to state the obvious. Ironically, the obvious isn't always obvious to everyone. So let's make an attempt to do something good and wholesome with the closing weeks of 2010. I believe we can do that best by getting back to basics and remembering some very simple things that will one day become important to each of us, if they aren't already.

The basics are true all year long, actually. But during the holidays, and it doesn't matter which holidays you and your family might celebrate, the basics are especially true. And the basics are these, as we age we tend to become less mobile and less socially active. However, our desire to spend time with people and feel cared for sticks with us throughout our lives.

A personal visit from a friend or family member is invaluable to an elderly person who doesn't get out as much as they used to. This is especially true during the holidays, when the cold wind, icy sidewalks, and blowing snow conspire to make even a short walk outside a real risk for many of our more seasoned citizens. You may be surprised how uplifting your presence can be to an old friend, a relative, or a former neighbor who spends much of their time indoors, often alone. The social interaction of your time spent together is like gold to many of the elderly. It lifts their spirits and buoys their outlook on the future. So if you have friends, or family members who might be alone this season, I encourage you to take the plunge and visit if you can.

Of course many of us have relocated far from our hometown's through marriage, work, or circumstances that may be beyond our control. That distance can make visiting in person difficult. However you can still reach out and make a someone in your life feel special and cared for. A phone call, or a card that includes a personal note can go a long way toward making a distant friend or relative feel the warmth of your caring, even from across a continent, or an ocean.

We should all keep in mind too that gifts are just as rewarding to receive at 90 as they were when we were 9. Practical or sentimental gifts can remind the recipient of how important their family ties still are, even if they don't see you in person as often as they once did. Certainly, grandma probably has no need for a skateboard, or an Xbox – but there are a whole host of inexpensive options that have the ability to let grandma know that her children, grandchildren, and even great grandchildren are thinking of her and value her presence. If that gift can be presented in person, all the better. But even a brief interaction with a package delivery person can make someone in your life feel brighter and more enthusiastic during the holidays.

I sincerely hope you, your family, and your friends enjoy a wonderful holiday season this year. If for no other reason than the end of the year tends to encourage us to reflect a bit on what is important to us, and how we might be more engaged and active in our own lives in the coming year. For that, we can all be grateful. Hopefully, grateful enough to call, write, and visit those we think of often, but seldom see.

The Federal Estate Tax Lapsed for 2010

The federal estate tax lapsed for 2010, and barring no action by Congress it was scheduled to return on Jan. 1 with an exemption of $1 million per person and a maximum rate of 55 percent. 

I have good news to share with you.  The long wait for action to address the unknown status of the federal estate tax may be approaching an end.  In a December 6, 2010 online posting by the New York Times, they reported that President Obama announced a tentative deal with Congressional Republicans on Monday.

An excerpt of the article appears below, and a link to the full article is included.  The accompanying photo by Joshua Roberts of Reuters appeared with the article.

Mr. Obama made substantial concessions to Republicans. In addition to dropping his opposition to any extension of the current income tax rates on income above $250,000 for couples and $200,000 for individuals, he agreed to a deal on the federal estate tax that infuriated many Democrats. The deal would ultimately set an exemption of $5 million per person and a maximum rate of 35 percent — a higher exemption and far lower rate than many Democrats wanted.

http://www.nytimes.com/2010/12/07/us/politics/07cong.html?pagewanted=1&_r=1&nl=todaysheadlines&emc=a2

 

But the NY Times article also cautioned that the deal is not supported by all parties.  So resolution may be within sight, but it is not yet a finalized deal. 

“The House Democrats have not signed off on any deal,” Representative Chris Van Hollen of Maryland, who has been representing House Democrats in formal negotiations on the tax issue, said Monday night. “We will thoroughly review and discuss the proposed package in the caucus.”

Some senior Democrats said an agreement by Mr. Obama to accede to Republican demands on the estate tax could lead to a revolt among lawmakers.

With this positive news in the air, it may be time to schedule a meeting to adjust your estate plans to maximize the impact of this likely change in the federal estate tax law.  Call me for an appointment, or leave a comment with a question below.

 

Protecting yourself from fraud

Identity theft and other forms of preventable fraud are nothing to sneeze at. However, as attention grabbing as the word, “fraud” might be, the operative word in that sentence is, “preventable.” Much of the fraud that affects the public today can be prevented relatively easily through simple changes in the way we think about our personal information, and how we handle it. I think you will agree that preventing a crime from happening is far better than being forced to jump through the hoops that are required to repair the damage done, after the fact.

Whether you are young and just starting out in life, or well into your golden years, we all have to consider the reality of fraud, and the profound damage it can do to us if left unchecked. So consider these simple changes to your way of thinking that just might help you prevent identity theft, and fraud, from being a part of your personal life story.

1. Don't give out personal information over the phone. This is especially true if you are asked for information by someone who called you. We always have to be careful when sharing personal information, but when you're on the receiving end of the call, you are assuming that the person on the other end really is who they say they are. Sadly, that is not always the case. If someone calls and identifies themselves as a bank employee who is checking your account security, do not give them your bank account number, PIN, or password. Ask for their name and branch location, then either call them back using the phone number printed in the phone book for that branch, or go visit in person. More often than not, you will find that the person who represented themselves as a bank employee on the phone, is not an actual employee of the bank.

2. Review and reconcile your bank statements regularly. Many of us can find and correct small mistakes quickly and easily, before they become bigger, more debilitating financial problems, if we simply check our statements on a regular basis.

3. Store personal information securely, even if it is in your home. Leaving personal information like account numbers, social security numbers, and similarly sensitive information out in the open can lead to accidental disclosure. Unless you are willing to share your personal records with your plumber, furnace repair person, pizza delivery man, or the neighbor who comes over to chat now and then – put your papers securely in a desk drawer, filing cabinet, or safe. Roving eyes cannot see what is not visible, and it is easier to prevent the opportunity for temptation than it is to prevent temptation itself.

4. Check your credit reports annually, or more frequently if possible. The process is simple, but the rewards can be profound. A single erroneously opened credit account in your name has the potential to cripple you financially. So check those reports as often as you can. If you find an account that is listed as yours, but shouldn't be – you have the opportunity to correct that error before it does damage to you.

5. Do not respond to e-mail requests for bank account numbers, passwords, or other personal information. Most of us do not have secure e-mail accounts that use encryption. The result is that any personal information you send via e-mail can be easily read by people other than those you intended it for. A secondary, but no less important concern, is the fact that some unscrupulous individuals fish for personal information by sending e-mails that appear to be legitimate requests for personal information, but are in fact an attempt to defraud anyone who replies to the e-mail request. A good policy is to never share personal information through e-mail.

NEWS FLASH: Yankees Beat the Miami Dolphins!

Yes I know, that's impossible. But the heirs of George Steinbrenner, who died recently at the age of 80, certainly came out ahead of the heirs of Joe Robbie, the former owner of the Miami Dolphins who died in 1990.

Steinbrenner's timing couldn't have been better. His heirs will inherit the team without having to pay any estate taxes on a $1.1 billion estate. See “How Steinbrenner Saved His Heirs a $600 Million Tax Bill” from the Wall Street Journal here.

Contrast this with Joe Robbie. When he died in 1990 the heirs had to sell the football team and the stadium at fire-sale prices in order to pay a whopping $47 million estate tax bill.

Unlike most owners Joe Robbie built his own stadium entirely with private capital. The stadium had to be sold along with the team and it no longer bears Joe Robbie’s name. For more details see “Yankees vs. Dolphins: Steinbrenner’s Final Victory”

You could say, "Yeah, but his heirs are still wealthy." True. But it really isn’t just about money. Robbie's intentions were defeated; his family was removed from the success he worked so hard to build from his very modest depression-era beginnings. Estate planning affects the heart as well as the pocket book.

(What happens to the ultra-wealthy can happen to any small business owner…often with more devastating results. I’m always available to share my experience and knowledge to create a better estate plan.)

 

My thanks to my associate Greg Turza who practices in the state of Illinois for this clever commentary on estate planning. 

 

Estate planning for the rest of us

An acquaintance asked me about estate planning, not long ago. They weren't asking for professional advice, they were literally asking if I could explain what estate planning is, and how it might affect them. It's a good question, one that I wish more people knew the answer to. So this space seems like a perfectly reasonable spot to address the issue.

First, it's worth knowing that estate planning is not limited to the DuPont's and Carnagie's among us. Admittedly, Bill Gates and Warren Buffet have amassed fortunes so large as to suggest that significant thought needs to go into the planning of their estates. But estate planning isn't just about money. It's also about security, philanthropy, and control of our own interests.

One aspect of estate planning includes our health care plans. Not only can estate planning help determine our eligibility for Medicaid benefits, it can also allow each of us to issue specific directives about our own future health care. Even if a health crisis leaves us unable to speak for ourselves at some point, our prior planning can provide documentation of our wishes, which enables us to maintain control of our own destiny, even if we are temporarily, or permanently incapacitated.

In fact, our estate planning can extend to the appointment of a specific person to act as our health care representative, as well as our desire to donate organs upon your death. It isn't just about our money and holdings. It is in a very real sense about us, as people.

Yes, estate planning allows us to make decisions in our prime that will come into play even after we are gone. And those decisions are legally binding on those who may, or may not agree with our wishes. Remember, this is your own estate and your own life you are planning to protect.

Beyond health care, estate planning allows us to designate who speaks on our behalf should the need arise. Entering into a power of attorney allows us to appoint the person we trust most to oversee our personal business if we are unable to conduct our affairs ourselves. Many people assume that we must appoint our lawyer when we issue a power of attorney. And you certainly can do that if you wish to. But you can also give that authority to your spouse, or a child, or a close personal friend, or anyone else you wish. A power of attorney is yours to give, or revoke, at your discretion. Estate planning can help you enter into, or terminate a power of attorney, on your terms.

Perhaps the most commonly known aspect of estate planning is the drawing up of a will. But even that can be more far-reaching than most people realize. You have the opportunity to not only decide what happens to your holdings after your death, you also have the chance to establish a trust if you wish to, so that you can provide for the care of a family member, or another charitable cause that is important to you. Trusts can also be used to minimize a tax burden, in some cases. Estate planning can even allow an individual to develop a strategy to avoid probate on some holdings. A practice that allows a well planned execution of our wealth, no matter how big or small, that keeps it all in the family, for lack of a better term – rather than running the entire contents of our lives through the court system before it is distributed to our heirs, or whomever we wish it to go to.

The assumption that only the very wealthy have any need, or the even the option of engaging in estate planning, is incorrect. Almost anyone who has something of value to leave behind can benefit from estate planning. And even those who do not have significant wealth can benefit in terms of health care planning.

Each and every one of us has a unique situation to deal with as we walk through life. There is no blanket answer or master plan that will work for everyone under every possible circumstance. Perhaps the practice of estate planning would be more readily understood of we called it Individualized Planning, instead?

It's worth thinking about, at least.

Dollars to donut holes

When I was young, my father would often say, “I'll bet you dollars to donuts...” and then make some wild pronouncement about what was happening in the news. I was thinking about that the other day when I realized two things. One, that I'm not entirely sure what my dad's expression was supposed to mean. I suspect it had something to do with the price disparity between a dollar, and a donut. But now that dollars and donuts are becoming ever closer in value – the meaning may be reversed in the not-too-distant future.

The second thing that came to mind was the fact that many older American's are becoming increasingly focused on...not donuts, but the donut hole. More specifically, how the new health care bill passed by Congress and signed into law by the President, might affect their prescription drug benefits – both now, and in the future.

That's an entirely reasonable concern. So it seems reasonable to touch on the subject, at least momentarily, and in a somewhat generic manner.

The term, “donut hole” refers to a prescription drug benefit, or lack of benefit, that affects many American's who are covered under Medicare Part D. And to those who are affected, this is a serious issue. In fact, there almost 50,000 residents in Connecticut who fell into the so-called donut hole in 2009. So we're not talking about small potatoes, here. The benefits are important, and the dollars being spent are considerable.

In short, if your total drug costs were more than $2,830 for the calendar year, 2010 – you are in the donut hole. The gap in coverage means that you will be required to pay the full price for your pharmaceuticals, until the cost rises high enough for you to qualify for catastrophic coverage. This year that threshold has been set at $4,550.

The difference, for those who do not have a calculator handy, is $1,720.00

The total cost of your prescription drugs is tallied up as the total of what you paid, as well as what your plan paid out, over the course of the year.

The effort to close the donut hole is incremental. Each year the hole is scheduled to get smaller and smaller, until it completely disappears by 2020.

This year the hole closes just a small amount, with a check for a $250 rebate being issued to each Medicate Part D recipient who was impacted. Next year, the plan is scheduled to offer donut hole dwellers a significant discount on name brand prescription drugs (50 percent) and a somewhat smaller discount for generics, which are less expensive to begin with.

So there is a light at the end of the tunnel. The donut hole is getting smaller. Nine years from now, it should be gone completely. I hope that offers some encouragement to those who are stuck in it for the moment.

Have a wonderful Thanksgiving. For all our trials and tribulations, we are still fortunate whenever we get to enjoy the opportunity to spend time with our family and friends.

Who ever heard of a Pooled Trust?

The New York Times ran an outstanding article last week, detailing the basics of Pooled Trusts. Most American's are not familiar with the term, or the tool – but thanks to the Times, a much larger audience had the opportunity to read about a means of caring for aging family members, while intelligently keeping the wolf away from the door.

The unfortunate reality for many of us is that a time may come when we can no longer manage to personally provide appropriate care for a loved one in our own home, or in their own home for that matter. But at the same time, we may not have the financial capacity to afford private care providers that would be able to fill the gap.

Pooled Trusts are designed to bridge that void.

Rather than reiterate the content of a well written and very informative piece, I will simply recommend that anyone with an elderly family member read this piece, if for no other reason that to gain some basic insight into an option that may be available and viable, in certain circumstances.

You can find the story on the Internet at: http://www.nytimes.com/2010/11/05/business/businessspecial5/05TRUST.html?_r=3&adxnnl=1&src=twrhp&adxnnlx=1289307765-CdcouVKW+F0EwVbdadQHMQ

As a woman who has faced these issues in my personal life, with my own family members, I am intimately aware of the emotional and financial drain that advancing age and health issues can impose on a family. In order to deal with these issues to the best of our ability, we need to be aware of our options, and informed regarding the pros and cons of each of those options. This story is a good step in the right direction on that count.

I am so pleased the New York Times published Tara Siegel Bernard's excellent article on this very important topic.