Mon, 28 September 2009
One of the more common questions asked of me is “should I take Social Security early?”. The questioner is referring to the ability to take Social Security as early as age 62, rather than waiting till the full time retirement age of 65. (By the way that age gradually increases for those born after 1937 until it reaches age 67 for those born 1960 or later.) Taking early Social Security reduces your monthly payment by ½ of 1 percent for the number of months before age 65 you start those checks coming. If you enroll at age 62 you will get roughly 75% of what you would receive at age 65. Ok, those are the basics. So, what’s the answer?
Well, it depends. There isn’t a “one size fits all” solution here. But let’s analyze this a bit. One consideration is going to be, “How long do I think I will live and what is my break even point?” For example, if I wait until age 65 to take my benefit how long will I need to live before I come out ahead by giving up a lesser benefit at an earlier age? That may also be impacted by what I do with the money if I take it early. If I have sufficient other income and I invest the Social Security that will affect the calculation.
But, wait. That’s not the only consideration. If I am still working when I take an early benefit I can lose some of that Social Security if my income exceeds a certain level (this changes from year to year). And, what about my spouse? When one spouse dies, the surviving spouse is entitled to receive the larger of the two checks. So that may work into this as well.
As you can see, there are many things to consider. There is a certain amount of guesswork involved as well. The best answer I can give, however, is to consult with your professional advisors – financial, tax and elder law – to run some numbers. What is best for you will most likely not be best for the person seated next to you. There are just too many variables for there to be one right answer. But, one thing I can unequivocally say is that you should “run the numbers” before you reach age 62. It might be right for you and you wouldn’t want to pass up that opportunity if it makes financial sense.
Category:Long term care planning -- posted at: 6:00am EST
Mon, 21 September 2009
I met with a family with the following scenario. Dad needed nursing home care and the family had done no long term planning. We talked about how under Medicaid rules the couple’s assets would be counted, divided in half and that Mom would be able to keep 50% of the assets up to a maximum of $109,540 and the home. We went through a list of their investments. I then asked if they had anything else of value. Son, Joe, mentioned that Dad had just signed up for Jets season tickets at the new stadium the Giants and Jets will be opening in 2010. “We want to keep the tickets in the family”, he said. “Dad can just transfer them to us, right?” That got me thinking. “I’m not so sure”, I replied.
If you’re a sports fan, by now you know all about seat licenses. Both the Giants and Jets are selling season tickets in a new way. Before you can have the privilege of buying a game ticket you must pay a fee, called a seat license. The better the seat, the higher the fee. Joe told me that the license for his family’s seats cost Dad $60,000. So, what do you think will happen if Dad just transfers his seats and later applies for Medicaid?
Certainly there is no mention of NFL seat licenses in any state Medicaid regulations. But, doesn’t the license have a value? Teams are telling their fans that they can resell the license, that it’s really an investment. It isn’t a stretch, then, for the State to treat the transfer of the license from one generation to another as a transfer for less than fair value subject to a Medicaid penalty. Especially since the State is facing huge budget deficits and can ill afford to pay out benefits to huge numbers of its residents. So, do I think that the State will let it go? Not likely.
Back to Joe and his parents. I told him that any transfer of the seat license had to be for fair value. But, that’s easier said than done. No one really knows what resale value they have since the licenses are brand new and can’t even be resold yet. There is a lesson to be learned though. Families with season ticket plans may want to consider transferring them to the next generation while healthy. Just another reason it’s a good idea to plan for long term care, and if you’re a Jet fan like me, you don’t want to miss out on the possibility of a Super Bowl trip. It’s gotta happen one of these years – right?
Category:Medicaid -- posted at: 6:00am EST
Mon, 14 September 2009
I discussed in last week’s post how a guardianship may not be possible where Mom needs help but is not necessarily incompetent. So, what other options are there? Mom’s health has been in gradual decline. The family sees it. Sometimes they agree that action is necessary, some times not. They have had more than one conversation with Mom about the need for long term care planning, for example moving Mom to a safer environment.
The problem, however, is that the family (usually the children) are uncomfortable in their role. Mom, understandably, is not thrilled with the suggestions, and may even be hostile. Roles are reversed. The child assumes a parental role, taking care of the parent, who cannot, or will not, consider the risks that lie ahead. Yet the child is waiting for the parent to say “yes” and can only go so far on his/her own without that permission. So nothing is accomplished and the family simply moves from crisis to crisis, always seemingly reacting to events, not preparing for them.
That’s when you need to introduce an outside person into the conversation. As I explain to clients, I can say things to your parents that will be heard differently than if you say them to your parents, or if I say them to my own parents. I may, in fact, say the very same things that the family has been telling Mom. But, now it’s different. Mom may have been waiting for the children to take the next step. It isn’t just talk anymore. One step turns into the next and that’s how problems get solved. That process can start with an elder law attorney. It can also begin with a trusted advisor, such as your financial planner or accountant.
Another opportunity that so many families let pass is when a crisis occurs. Mom is in the hospital or rehabbing in a subacute care facility. She wants to go home. The family relents. That may, however, be the best time to make a change. It doesn’t have to be a permanent one from the start. But you’ve got doctors and medical staff to support you as well. If everyone is telling Mom what needs to be done the focus isn’t on the children. It is a whole lot easier for Mom to accept.
Just a few options to consider. Time isn’t on Mom’s side. Her health will continue to decline. Sometimes it’s a matter of waiting for, and recognizing, the opportunities that present themselves, and then seizing upon them. In the end, Mom may come to accept the changes as necessary, or at least grudgingly allow the children to take the action they know is necessary to insure Mom’s continued well being.
Category:addNewCategory -- posted at: 6:00am EST
Mon, 7 September 2009
The caller gives me the following fact pattern or some variation. Mom’s health is deteriorating. Her behavior is becoming extremely erratic, in some cases violent or abusive. In some cases it’s dementia. In others it’s alcohol or the side effect of the medications she is taking. Bills go unpaid. Spending is out of control. The house is falling into disrepair. The family has spoken to Mom but hasn’t gotten anywhere. She refuses to sign a power of attorney or health care directive or take any direction or assistance from family. The caller would like to know more about guardianship.
I listen patiently and then start by explaining that guardianship isn’t suitable for everyone. And it isn’t easy to obtain. Now that can be a good thing, but it also can be a bad thing. You see, the first step in seeking guardianship is a decision by a court that Mom is incompetent, that she legally cannot make decisions for herself. We have a long history of individual rights in this country. Taking away that freedom is not something we take lightly. So the process of declaring someone incompetent is not an easy one.
Mom has to be examined by two doctors who must agree that she is incompetent. (The exact process may vary from state to state.) Then the court appoints an attorney to represent Mom. The attorney must meet with Mom and report back to the court. And here is where the problem usually occurs. If Mom is aware of what is going on, she may object to the process. She may become angry with her children and tell her attorney to go back to the judge and tell him she doesn’t want to be declared incompetent and that she will fight it.
She tells the attorney that her decisions are hers to make. Her children may think she is incompetent but where is the line between bad decisions and mental incompetency? It is not an easy one to draw. In many cases I must tell the children that attempting a guardianship will probably fail. Even worse, it may drive the parent away from seeking or allowing the children to help, actually making the problem worse. In those cases, then, what other options are there? More on that in next week’s post.
Category:Long term care planning -- posted at: 6:00am EST