Helping Retirees Offset Inflation

Helping Retirees Offset Inflation

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Inflation will continue to rise well into 2023 and beyond without significant course corrections. Bankrate’s Third-Quarter Economic Indicator poll projects inflation will be more significant than previous expectations over the coming twelve to eighteen months. Even in the best economic outcomes for 2023, maximizing allowable benefits to offset inflationary pressures is a smart strategy.

Rising prices may create a gap between your income plans and real bill-paying requirements. Withdrawing higher amounts from retirement savings can affect your retirement plan’s long-term sustainability. When planning bill pay strategies, remember prices typically don’t rise evenly across all sectors. Medical care costs have risen significantly in recent decades yet rose slower than overall inflation at 4 percent in the past year. However, fuel, food, and utility costs are up sharply for the same period.

Targeting a level of growth that exceeds an already accounted-for level of inflation is part of a good retirement strategy. Still, it can’t account for short-term excessive inflationary pressures. Taking distributions in the short term must remain in balance with maintaining long-term investment growth to preserve retirement income. There are steps you can take to achieve this balance.

Budget Review and Adjustment to Short-Term Spending

Finding ways to cut costs is the easiest way to avoid taking increased distributions or asset spending. Conserve energy use in your home and group errands that require car transportation to like locations to reduce gasoline use. In inflationary times, trimming discretionary expenses like dining out, vacations, or home renovation can help your budget. If you are already tightening your budget with these techniques, you may consider picking up some part-time work to close the income gap without upending your retirement planning.

Ensure Proper Wealth Allocations

Historically, stocks averaged annual returns to stay ahead of inflation. A balance of cash, bonds, ETFs, value stocks with dividends, and market sector investment rotations help maintain financial stability in uncertain times.

The S&P 500 is the lowest in a decade, decreasing over 17 percent. However, the Great Recession of 2007-9 saw the index down 38.4%. Historic market trends indicate that bullish investors will return to the stock market by mid-2023. Not assessing historical trends and re-adjusting your portfolio can make you miss a big chunk of the recovery and potential gains.

This graph of model asset allocations from T. Rowe Price’s investment strategy for retirees can help guide retirement investment strategy by general percentages.

T.Rowe Price

Maintain an Appropriate Stash of Cash

Managing short-term income with long-term growth makes a regular review of your plans necessary. Investing is never a set-and-forget process since personal needs change, corporations’ profitability fluctuates, and market realities change according to economic conditions. Particularly in the equities market, investing trends cycle by market sector. Even though inflation will reduce the spending power of cash on hand, cash availability is crucial for those unavoidable and unforeseen expenses.

Generally, a healthy cash position can cover one to two years of expenses in early retirement and keep you from withdrawing from your longer-term investments. This is particularly true when periods of inflation coincide with the declining market value of your investments.

Maximize Your Social Security Benefits

Work longer to obtain the maximum Social Security will pay based on your best thirty-five years of income. Earning more money to pay into the system will yield a larger payout (up to a point) when you claim your benefits. Delay your benefits up to age seventy, and you will receive a higher monthly payment.

During inflationary times, Social Security benefits automatically adjust to ensure purchasing power adjusts for inflation. If you have not yet claimed your benefits, remember the COLA maintains your benefits to adjust for inflation. When you are ready to claim your benefits, there are options depending on if you are married or divorced. Spouses and ex-spouses must carefully consider scenarios, particularly regarding survivor’s benefits, when one spouse predeceases the other. Divorced from a ten-year marriage for a minimum of two years and still single? You may be entitled to file for benefits based on an ex-spouse’s earnings. Bankrate reviews scenarios for Social Security spousal benefits.

Consider Inflation as You Update Broader Financial Plans

Effective retirement strategies rely on accurate estimates of household spending and adaptation to new norms. This number will change yearly, particularly in an inflationary environment. Your retirement strategy will require adjustments depending on personal circumstances, market conditions affecting your investments, and prevailing inflation rates.

As retirement planning links closely to your overall estate and legacy planning, it is crucial to coordinate the two. An estate planning attorney or an elder law attorney can help to ensure any trusts you create will have sustainable funding and make other recommendations about retirement plans and how they affect your estate planning goals.

Working with a financial professional or using financial planning tools while creating your estate plan can provide insights. As inflation continues to present economic challenges for household expenditures, it’s important to review your existing retirement plans regularly, as you do for your estate plan. Ultimately, an appropriate allocation in stocks that receive a regular review in combination with managed spending and flexibility provide the most important tools retirees

Contact our Ruston, LA office by calling us at (318) 255-1760 to speak to one of our experienced estate attorneys. We can work with your financial advisor to develop the best financial solutions for retirement.

A Comparison of Elder Law and Estate Planning

A Comparison of Elder Law and Estate Planning

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You might wonder what estate planning and elder law are and how they differ as you plan for the future. Both financially and in terms of health care. Estate planning and elder law also have some similarities. A comparison of elder law and estate planning will be addressed below.

Even though these two types of law are for different stages in life, they are often handled at the same time. This is because many people wait till later in life to start their estate planning process. When an older person creates an estate plan, they may also need some elder law counseling. To better understand the two areas of the legal field, we will look at the solutions they provide. As well as the questions they answer, and how they can work together.

Estate Planning

The main goal of estate planning is to choose legal documents that will determine what will happen to you and your assets once you have passed away or become incapacitated. An estate planning attorney will help you make important decisions, such as:

  • Who makes medical and financial decisions if you are unable
  • Who is allowed access to your medical records
  • How assets are distributed after you are gone
  • Who cares for minor children if you become incapacitated or die
  • Who manages money for your minor children if you are no longer able
  • How to handle your funeral arrangements and burial

Durable Powers of Attorney

By using a general durable power of attorney document, you can name a person, or persons, to make financial decisions on your behalf either immediately or  if you are no longer able to do so. Expressing your end-of-life wishes requires designating a person to make healthcare decisions for you by completing a health care directive. By completing a Health Insurance Portability and Accountability Act (HIPAA) form, you will give your health care providers permission to share your medical records with the people listed on your HIPAA form.

Wills and Trusts

In your will, you can name the beneficiaries of your estate as well as a guardian to care for any minor children you may have at the time of your death. You can also name a person to manage the money you leave for their benefit. Some people create a trust, or trusts, to hold their assets during their lifetime and after death. They then sign a pour-over will that moves assets into their trust(s) upon death.

Elder Law

Whereas estate planning focuses mostly on what happens after a person dies, the area of elder law focuses on a person’s last years or months. This can include planning for long-term care and applying for government assistance, such as Medicaid, Medicare, and veterans’ benefits, if applicable. Using elder law tools and strategies, an elder law attorney can help you find ways to preserve your assets while preparing to apply for benefits.

Like estate planning, it is best to start the elder law planning process well in advance. To qualify for benefits, such as Medicaid, you may have to sell or transfer ownership of some assets years before applying for benefits. Gifting or transferring assets out of your name must be done according to government requirements, so applying for benefits can be a complicated process. Hiring a skilled attorney can make the difference between receiving benefits quickly or not at all.

Since seniors are at a greater risk for discrimination, neglect, and abuse, elder law attorneys can help seniors and their family members recognize when a senior’s rights are being violated and take legal action to counter and remedy the situation.

Tying Estate Planning and Elder Law Together

It is best to start your estate planning process as soon as possible. The decisions involved could come at any time due to an accident or an illness. Planning for end-of-life care and the benefits associated with it may come later in life, but preparing well in advance lets you legally reduce assets for an extended period to qualify for benefits, like Medicaid.

Even younger families just starting their estate planning process may look at elder law planning at the same time for senior family members’ needs. Some estate planning tools, such as trusts, are often used when helping a parent plan for Medicaid. Even other government benefits for long-term care expenses. An attorney experienced in both estate planning and elder law can advise you in these areas. They will help you navigate complicated processes.

This article offers a summary of aspects of estate planning law. It is not legal advice and does not create an attorney-client relationship. However, it is of upmost importance to know the comparison of elder law and estate planning. For legal advice, contact our Ruston, LA office at (318) 255-1760 to speak to one of our experienced estate attorneys.

How to Cover the Cost of In-Home Care

How to Cover the Cost of In-Home Care

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We all want to know how to cover the cost of in-home care. It brings up several decisions that need to be made. Including where your home will be. We may ask ourselves, “Am I able to remain in my home independently, or do I need assistance?” If the answer is daily assistance, we have three main options.

  1. Move in with or receive daily assistance from a loved one
  2. Relocate to assisted living or a nursing home
  3. Pay for in-home care services

Of these three options, in-home care is the most desired. However, it comes with a cost, as there are strict Medicare and Medicaid limitations to benefits that cover in-home care services. However, despite the high price and limitations, many people are finding ways to afford this more desirable option.

Don’t completely write off Medicaid.

Medicaid coverage varies greatly depending on the state you live in and may cover long-term in-home care if you qualify for a waiver. There may be a waitlist for benefits, so the sooner you apply, the better.

Use your veteran’s benefits.

An often-overlooked veterans’ benefit is Aid and Attendance, offering help with out-of-pocket expenses. Veterans who have served a minimum of one day during wartime, were on active duty for a minimum of 90 days, and honorably discharged may be eligible for this benefit. If qualified, the veteran receives a tax-free, monthly cash payment to use for care. For veterans and their families, this can help offset the cost of in-home care significantly.

Your life insurance policies may help.

Those with life insurance policies may learn that coverage may apply to in-home care. Some life insurance policies have a feature known as “accelerated benefits.” This feature allows the policyholder to use the insurance within the policy before death occurs. Typically, accelerated benefits are for those who have disabilities related to chronic conditions or require ongoing or long-term in-home care. If your dependents are not relying on the money, you may consider using accelerated benefits to cover the cost associated with in-home care.

Consider a reverse mortgage.

Reverse mortgages were created to help seniors live at home for as long as possible. Therefore, if your home is paid off or a significant amount of equity has been accumulated, a reverse mortgage may be an excellent option to cover the cost of in-home care. A reverse mortgage gives seniors the opportunity to take out home equity in the form of payments or as a lump sum.

Reverse mortgage qualifications include the following:

  • You must be 62 years of age or older
  • The home must be owned — either completely paid off or with a minimal balance
  • The issuing bank appraises the house to determine the value based on the senior’s age and payout

Take advantage of annuities.

An annuity combines personal investment with an ongoing insurance plan. It is a custom contract that an insurance company issues, turning an investor’s premium into an income stream that is fixed and guaranteed. After the investment has matured, the policyholder can begin withdrawing.

Many people only see annuities as a way to help seniors grow their money and assist with living expenses. However, the income earned from the annuity can very well be enough to cover the cost of in-home care.

In-home care is an option!

In-home is the most desired option for those who require daily assistance. Not only does it take away the obligation for loved ones to become caretakers, but it also enhances the quality of life for seniors and allows them to live in the most comfortable place- their home.

Despite the high cost associated with in-home care, this option may be more financially feasible than many realize. It may take some creative thinking and proper planning, but it is possible.

Elder law attorneys have the knowledge to combine estate planning with financial planning and offer guidance for long-term care options, including in-home care. We invite you to contact our Ruston, LA office by calling us at (318) 255-1760 to speak with one of our professionals today about Medicaid, VA benefits, and long-term care expenses.

Elder Abuse Prevention

Elder Abuse Prevention

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In a perfect world we could believe that our elderly loved ones aren’t being intentionally harmed. However, the truth is that senior citizens are one of the most vulnerable populations when it comes to abuse. The National Council on Aging reports that one in ten American seniors (60+) have fallen victim to elder abuse. It is also estimated that only one of every twenty-four abuse cases is reported. This suggests that as many as five million elders are abused every year.

Elder Abuse Defined

The Centers for Disease Control defines elder abuse as “an intentional act or failure to act that causes or creates risk or harm to an older adult. An older adult is someone age 60 or older.” While abuse can vary greatly, there are five different types of abuse:

  1. Physical abuse is the intentional injury to or harm to another. It can result from kicking, hitting, grabbing, pushing, biting, pinching, or any forceful action.
  2. Neglect occurs when the basic needs of a person are not being met. This includes personal care, medical, nutritional, hygiene, and housing. It can be classified as unintentional or intentional abuse.
  3. Psychological or emotional abuse can be characterized by verbal or nonverbal behavior that caused distress, fear, psychological suffering, or mental anguish. This type of abuse can include manipulation, threatening behavior, humiliation, intimidation, harassment, shaming, criticism, isolation, exploitation, or power dynamics.
  4. Sexual abuse is the act of any forced, non-consensual, or unwanted sexual contact, interaction attention, or exploitation. This abuse can take many forms. For example, it may include non-consensual touching, exposing the elder, intercourse, exposing oneself to the elder, verbal obscenities, and sexual advances.
  5. Financial abuse takes place when someone, usually a caregiver or trusted individual, illegally or improperly takes advantage of a senior’s money, benefits, belongings, property, or assets for the benefit of someone other than the elder. This type of abuse can include identification theft, stealing money from bank accounts, fraud, incorrect billing of services, and selling off assets.

The Elder Abuse Prevention and Prosecution Act

To fight the growing elder abuse epidemic, the Elder Abuse and Prosecution Act was signed into law on October 18, 2017, by President Donald Trump. This act enhances the government’s focus on elder abuse prevention by utilizing a multi-faceted approach to protecting elders by punishing perpetrators.

The goals of the Elder Abuse and Prosecution Act (EAPPA) are as follows.

  • Improve local, state, and federal data collection on elder abuse.
  • Support and improve the prosecution of elder abuse.
  • Improve elder abuse technical assistance and training for law enforcement.
  • Improve provided victim assistance programs and resources.
  • Increase penalties for perpetrators of email and telemarketing scams targeting elders.

Elder Abuse Prevention Components

EAPPA proposes five main changes to protect the elderly from this abuse include:

  1. The Department of Justice is required to designate Elder Justice coordinators. These coordinators are responsible for serving as legal counsel, assisting with the prosecution, and increasing public awareness.
  2. The Attorney General and FBI coordinate elder abuse crime training programs for current and upcoming FBI agents.
  3. It is the Attorney General’s responsibility to coordinate with all law enforcement divisions to establish the best data collection practices. They are also responsible for establishing a group that shares all relevant information for prosecuting and uncovering elder abuse cases.
  4. The Director of the Office for Victims of Crime is required to utilize the data to present an annual report to Congress with an analysis of elder abuse. This will include recommendations on how to improve current services for elder abuse victims.
  5. The federal criminal code expanded to include fraudulent attempts to induce participation in a business opportunity, commitment to a loan, or investment for profit through email or telemarketing.

The elder abuse epidemic is a significant issue in America, and our country was long overdue for help from Congress. However, seeing laws like EAPAA pass over the last few years provides hope that our country will eventually see an end to this epidemic that affects our beloved elders. For more information on elder abuse laws, please contact our Ruston, LA office by calling us at (318) 255-1760.

Respite Care Working Hand in Hand with Caregivers

Respite Care Working with Caregivers

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Caregiving is a selfless duty that offers fulfillment and exhaustion all at once. While many find gratification in caring for others, they must tend to their own lives and responsibilities. Because of this, caregivers typically experience some extent of burnout. To avoid burnout, it is critical for all caregivers to remember to take care of themselves. We can have respite care working hand in hand with caregivers.

Caregiver Burnout

Caregiver burnout is the emotional, physical, and mental exhaustion from the stressors that coincide with caring for a loved one. It is typically accompanied by feeling under-supported, overwhelmed, and underappreciated.

Burnout is most likely to happen when caregivers are not taking care of themselves. This can eventually affect the caregiver’s ability to provide quality care, which can be harmful to both the caregiver and the individual receiving care. A study conducted by the Journals of Gerontology concluded that caregivers under high levels of strain and responsibility had a significantly higher mortality rate and poorer health outcomes compared to those with less or no caretaking pressures.

Fortunately, burnout can be prevented or minimized by taking precautions such as healthy eating, exercising regularly, getting adequate sleep, and utilizing respite care to ensure regular breaks are prioritized.

Respite Care Services

Respite care is an essential component of caregiving. It provides support for caregivers by offering temporary relief. This enables the caregiver to take much-needed breaks from the high demands of caring for a sick, disabled, or aging loved one.

Respite care is unique for each situation. It can take place in one’s home, nursing or residential facilities, or adult day care centers. It may only be for a few hours while the caregiver runs errands, or it can be for a few days to weeks, depending on the circumstances. The type of support varies greatly as well and may include:

  • Assistance with household chores, errands, or tasks
  • Transportation to medical appointments
  • Assistance with bathing, dressing, and hygienic needs
  • Basic medical care
  • Companionship

Types of Respite Care

Arrangements for respite care are made ahead of time by the caregiver, and these arrangements can take the form of many types. The most common types of respite care are as follows:

  • Informal care is generally provided by family members or friends. It does not involve a respite professional and is an excellent solution for occasional, short-term breaks.
  • In-home care services come to you and offer temporary relief or can be regularly scheduled. An agency or an individual caregiver can provide in-home care aids or respite services.
  • Day services are an excellent option for adults who enjoy socialization and time out of their homes. These services are provided at various locations, such as senior centers or churches, and allow for supervised socialization under medical care. These services permit caregivers to go to work or complete other daytime tasks.
  • Residential care is much like a temporary nursing home or assisted living facility. It allows for overnight stays and is a good option if a caregiver must travel or needs a longer break.

Being a caregiver is a full-time responsibility. To provide the best care for a loved one, the caregiver must ensure that they are taking care of themselves too. Respite care plays a vital role, as it recharges the caregiver so burnout can be avoided and all have the best outcome. Respite care are working hand in hand with caregivers.

If you are caring for aging parents or someone with a special needs disability, learn more about respite resources available to you. For assistance, please contact our Ruston, LA office by calling us at (318) 255-1760.

Coverage for Long-Term Care

Coverage for Long-Term Care

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The improvement in medical care and healthier lifestyles are making people live longer. Because of this, more of us will need some form of long-term care in our later years. As a result, the cost of long-term care has been rising. Wharton estimates nursing home costs will increase by 4.7% and home health care by 6.9% by 2030.

Many seniors will receive some long-term care services from relatives, friends, or neighbors. However, many others will need professional help, whether in their home, an assisted-living facility, or a nursing home. There are different ways to pay for these types of long-term care. If you are able to plan well in advance for your long-term care needs, long-term care insurance could be a good option.

Traditional Long-term Care Insurance

Traditional long-term care insurance policies are similar to health, home, or auto insurance policies. You typically pay the insurance company regular premiums to keep the policy in effect and file claims. If you need them to pay for services your policy covers.

Like health insurance policies, you can choose the amount and types of coverage you want your long-term care insurance policy to cover. Policies state how much reimbursement you can receive on a daily or monthly basis over a certain number of years or up to a lifetime maximum. You may be allowed different amounts depending on the care you are receiving, such as care in your home or nursing home.

Another policy feature you may get to choose is the waiting period between when you start needing care and when you start receiving benefits. Ninety days is a typical waiting period; however, you can pay more to start receiving benefits after 30 days, or you can pay less and wait 180 days before benefits start.

What Long-term Care Insurance Covers

The long-term care insurer will dictate what they will cover and what they won’t cover. Some conditions are often not covered by insurers, such as alcoholism and drug addiction. Some preexisting conditions, such as heart disease or cancer, may not be covered right away. If you have a preexisting condition, find out if the insurer will cover needs connected to that condition before you sign up.

Generally, you can be eligible for benefits when you can no longer perform a certain number of daily living activities. This can be such as eating, dressing, getting into and out of chairs and beds, bathing, and using the toilet. Often you won’t need to pay premiums while you are receiving benefits.

Usually, you’ll lose your coverage if you stop paying your premiums before you need to receive benefits. Unfortunately, you don’t get your premium payments back if you never use the coverage. The insurance company keeps the money.

Hybrid Policies

Many long-term care policies these days are combined with other benefits, such as life insurance. These policies are referred to as hybrid or linked-benefit policies. For this type of policy, you will likely pay a lump sum or several fixed annual payments.

With a hybrid policy, you will get coverage similar to what you would get with a traditional policy. In addition to an amount of life insurance that will go to your heirs if you don’t use the long-term care benefits. If you do need to use the long-term care benefits, the life insurance payout would be reduced or eliminated. This extra flexibility usually comes with a higher premium.

Consult with a Professional

There are many factors to consider before committing to a long-term insurance policy. You may determine that you don’t even need one. Do an ample amount of research and talk with an insurance professional or an elder law attorney.

Our law firm is dedicated to informing you of issues affecting seniors who may be experiencing declining health. We help you and your loved ones prepare for potential long-term medical expenses and the need to transition to in-home care, assisted living care, or nursing facility care. Contact our office today to learn how we can help you afford the right level and best quality of long-term care.

This article offers a summary of aspects of elder law. It is not legal advice and does not create an attorney-client relationship. For assistance, please contact our Ruston, LA office by calling us at (318) 255-1760.

Nursing Home Questions to Protect Loved Ones

Nursing Home Questions to Protect Loved Ones

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A nursing home advocate plays a vital role in ensuring the well-being of your loved one. Residents in nursing homes and other long-term care facilities are disproportionately affected by the flu, pneumonia, COVID 19, and other contagious diseases. According to the American Family Physician Journal, a flu outbreak in a nursing home often affects 20 percent or more of the residents.

If you have a loved one in a nursing home or other long-term care facility, AARP has identified some specific questions to ask about the facility to help ensure the safety of your family member.

Inquire About Vaccinations:

  • What proportion of staff and residents are up to date on regular vaccinations? Compare these vaccination rates at any Medicare-certified nursing home to the state and national averages.
  • How is the facility educating staff and residents regarding the vaccine’s safety and effectiveness?
  • What type of access to vaccines do residents have?

Ask if Anyone at the Facility Has Tested Positive for any Infectious Disease Recently:

  • Include staff, residents, visitors, vendors, maintenance workers, and anyone with access to the facility.
  • How many people, if any, have tested positive?
  • What is the facility testing protocol for symptomatic individuals?

Understand the Steps is the Facility Taking to Prevent Outbreaks of Disease:

  • What are the screening protocols for staff and other people entering the facility?
  • How are positive cases being handled after identification? Do staff quarantine at home? Do residents move into isolation units?
  • What are the protocols for sanitizing the facility, and how often are they implemented?
  • Are there social distancing measures in place? What are the precautions for residents with roommates?

Find out if the Nursing Home Helps Residents Stay in Contact with their Families and Other Loved Ones:

  • What are the infection control measures for visitors?
  • Does nursing home staff help residents call their loved ones via phone or video?
  • Will the facility set up a regular schedule for residents to speak with family and loved ones?

Determine if the Facility Regularly Communicates Important Information to Residents and Their Loved Ones:

  • If there is an outbreak of an infectious disease within the facility, how long will it take to notify residents and their families or representatives?
  • How is the information shared?

Know if the Nursing Home is Fully Staffed with Doctors, Nurses, Aides, and Other Workers:

  • In the event of staffing shortages, what are the backup plans to ensure the needs of nursing home residents are met? The plan should include bathing, feeding, physical therapy, medication management, and social engagement.

Ask About the Maintenance of Healthy-Living Programs:

  • Are communal activities adapted for social distancing in exercising, entertainment, and socialization?
  • Are any services suspended, and if so, which ones?

If you have a spouse, parent, sibling, or other loved one living in a nursing home, they depend on you to advocate for their protection and wellbeing. Asking the right questions helps ensure that their nursing home facility or long-term care services prioritize their health.

For assistance, please contact our Ruston, LA office by calling us at (318) 255-1760.

What Life Insurance has to do with Estate Planning

What Life Insurance has to do with Estate Planning

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What Life Insurance has to do with Estate Planning

In the estate planning process, life insurance does not appear to affect how assets are disposed of at first glance. However, life insurance can be an integral, indispensably important part of a well-thought-out estate plan. There are numerous other benefits to owning a life insurance policy. Aside from providing a large sum of money to beneficiaries.

  • Life insurance provides immediate cash upon death that can pay debts, final income taxes of the insured, and funeral expenses.
  • Life insurance cash can also pay estate taxes and avoid the forced sale of assets.
  • Mostly, the proceeds from life insurance will pass to the named beneficiary free of income tax.
  • Life insurance proceeds can transfer to a trust as part of a will the insured created for the benefit of minor children, special needs, or elderly relatives.
  • The proceeds of a life insurance policy can be payable to someone other than the insured’s estate and avoid passing through probate when owned by an irrevocable insurance trust. For example, the funds can pay marital settlement obligations for spousal or child support.
  • If the insured owns a closely-held business, a life insurance policy can fund a buy out of their interest.
  • Proper beneficiary designation forms of a life insurance policy prevent proceeds from going through probate.

Do not underestimate the importance of having cash funds immediately available in an uncomplicated way. Often the passing of a loved one or family member comes with a string of expenses that often exceed cost expectations. Much of what Americans have resides in investments like 401ks, IRAs, housing, and other illiquid assets with very little cash on hand. Life insurance proceeds protect families from having to force the sale of these assets at unfavorable tax rates. Some inheritable assets come with immediate payment requirements. Homes not fully paid off, cars, and the like can leave families with short-term liabilities requiring cash.

Understanding Estate Planning Strategies with a Life Insurance Policy

One of the more popular estate planning strategies that fit many situations is an irrevocable life insurance trust (ILIT). Though a beneficiary or third party cannot rescind the trust, modified, or amended post creation, it still offers heirs several financial and legal advantages. These advantages include asset protection, favorable tax treatment, and assurance beneficiaries use the proceeds in a manner concurrent with the benefactor’s wishes. Typically, life insurance policies are the chief assets held in an ILIT.

Before purchasing a life insurance policy, particularly if you want to create an ILIT, speak with your estate planning attorney regarding potential income and estate tax consequences. If you have an estate large enough, it can be subject to federal and state estate taxes depending on the applicable laws in place at the time of your passing. Your ILIT should be in place before binding a life insurance policy to it. Remember that states have different laws regarding an ILIT; to avoid problems, your ILIT must follow your state’s rules.

Using a Gifting Strategy for your Life Insurance Plan

It is possible to gift an existing life insurance policy to your ILIT. Unfortunately, if you were to die within three years of making the gift. The policy amount can be included in your estate for tax purposes due to a rule known as a “lookback period.” In effect, this isn’t making the policy proceeds taxable, but it adds the policy proceeds amount to the total value of the estate, in turn making it part of your estate subject to taxes. As federal estate tax exemption amounts frequently change, it is prudent to fund your ILIT by purchasing a new policy. Doing so will avoid the possibility of a lookback period.

When using an ILIT, whether or not you are married, use the second to die, survivorship policy, or are single and have an individual policy must be considered. Choosing between variations of permanent life insurance for your ILIT, such as whole standard life, universal life, and variable life insurance, can be confusing. Your estate planning attorney can guide you to your best option.

If you own a business and one adult child will take over the business while the other adult children are not interested or involved in the enterprise. Then the life insurance proceeds can provide the cash. To buy out those heirs’ business interests while leaving the business intact. Blended family systems can also benefit from life insurance payouts to ensure that all children receive an inheritance. Not just the children of the last surviving spouse.

Life insurance should be a part of your family estate plan. It can increase the wealth your heirs inherit. And provide a ready source of cash for immediate financial obligations after your death. Which form of life insurance best suits your needs will depend on your age and situation. Speak with your estate planning attorney about how a life insurance policy can be an effective way to transfer wealth to your beneficiaries. Please contact our Ruston, LA office by calling us at (318) 255-1760 to discuss your situation. We are here to help.

 

 

 

 

 

 

 

Why You Should Write a Letter of Intent

Why You Should Write a Letter of Intent

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Why you should write a letter of intent. There are numerous issues that can be addressed by a letter of intent (LOI), both in the business arena and in more personal contexts. Your LOI is a valuable piece in your estate planning, and although it is an informal letter, it can more fully represent your intentions after you die. Everyone knows they need to make a will, but this lesser-known document can also be a crucial estate planning tool.

What is a Letter of Intent?

The letter itself has no legal standing, so it can’t supersede a will. Still, a letter of intent, also called a letter of instruction, can be of enormous practical and emotional value to your loved ones. A letter of intent conveys essential information about personal and financial matters in combination with your will. Since letters of intent are not legally binding and do not replace a will or trust, they are not a requirement; however, they are an excellent complement to those legal documents.

 

Why You Should do it

A parent may write an LOI to express their hopes and dreams for their children in detail if both parents die, mainly when their children are still minors. An LOI often influences family court judge’s decision-making concerning children. Particularly, if you have a child with special needs, an LOI can outline how to help create a more stable world for your child’s future challenges. The letter may outline a child’s current needs and routines and any aspirations the parents have of their future employment, relationships, and independence of living under the oversight of a named guardian in the parents’ wills. It is crucial to have an estate planning attorney review any LOI in the circumstances of minor children to ensure it echoes the same structure and sentiments of your will.

Drafting a letter of intent is also for more general purposes, guiding your family to understand your intentions after you are gone. For instance, you may want to include funeral and burial arrangement information in your LOI. Outline whatever plans you have regarding the type of viewing and funeral service you prefer, if any. Include whether you desire cremation or burial. Your letter of intent may include who you want to officiate your funeral service and include special touches like seating arrangements for family, specific religious passages, and music selections. You can also request your family members inform people of your passing by providing their names and contact information in a list.

What Does a Letter of Intent Include?

A letter of intent is ideal for leaving information about bank accounts, personal assets, and any hidden stashes of cash or precious metals. For bank accounts and the like, please list the names and contact information of the professionals familiar with your accounts to help your family locate them. Remember to include the physical location of all relevant documents such as your will, trust documents, titles, deeds, insurance cards, driver’s license, birth certificate, marriage license, divorce documents, military paperwork, social security card, passport, mortgages, and outstanding debt. It is better to include too much information rather than too little. Your family needs as much data as possible to piece together the details of your estate.

Do not forget to include relevant digital information in your LOI. Much of our lives now reside online; therefore, leaving access information to your digital assets is very important. Include login URLs for digital accounts such as cryptocurrency, email, social media, income-producing storefronts, or influencer accounts, and the devices themselves such as smartphones, tablets, and laptops or PCs. Provide user names and passwords, PINS, and account numbers for each account. Make plans to gift these devices if you desire and list which individual receives which device.

Your personal items, particularly sentimental ones, may become a source of contention among your loved ones. Whether jewelry, artwork, fine china, or other valuable collectibles, it is best to sort out to whom these items will go and include that list in your letter of intent. You may also include wishes for the care of any surviving pets you might leave behind. Your letter is your final opportunity to include personal statements about your property division and your hopes and wishes for the future to individual family members.

Conclusion

Make sure that your letter of intent does not contradict your existing estate plan. Your LOI may be changed whenever you prefer throughout your lifetime, and it is good to revisit its contents as you accumulate more assets and should your feelings change as to who shall receive what. It is helpful to provide the most current copy of your LOI to your executor and your attorney. A thoughtful LOI can be an authentic source of comfort and peace to your family during their time of grief. If there is a disparity in your bequests, a letter of intent can help your family come to terms with your decision-making process and help loved ones move forward.

If you would like to discuss creating your estate plan or LOI, please contact our Ruston, LA office by calling us at (318) 255-1760 We would be honored to assist you!

Inheritances can be Provided through Charitable Trusts

Inheritances Provided through Charitable Trusts

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Inheritances Provided through Charitable Trusts

An irrevocable trust that provides income to heirs while benefiting you or a charity is a charitable trust. If you are philanthropically minded with nonessential assets like stocks or real estate, inheritances provided through charitable trusts can offer many financial advantages for all those involved. Once in place, a charitable trust is irrevocable even if you experience a personal or business financial loss. There are two primary charitable trust types:

Different Forms of Trusts

Charitable Lead Trust (CLT) – This trust is designed to distribute a portion of its proceeds to charity for which you receive a tax deduction equal to the payments. The remainder of the principal is distributed among your beneficiaries.

Charitable Remainder Trust (CRT) – This trust grants income to a designated individual by distributing non-income-producing assets first placed in the trust. A charitable donations tax deduction applies to the remaining assets earmarked for the charity. The chosen charity receives the remaining assets at the end of the trust’s term or upon your death.

Providing Different Options

Each trust type comes with many options to consider and strategies for maximizing its benefits. Both trust types do not require you to choose your charity beneficiary. Instead, you create a donor-advised fund that directs payments from either trust type to your chosen charities. This tactic allows flexibility to change your mind about an existing charity or add a new one.

For income-producing purposes to heirs, a charitable remainder trust provides options from the sale of your non-income-producing assets. For example, purchasing a life insurance policy can have premiums paid by the charitable remainder trust while using residual funds to support philanthropic intentions.

Charitable Remainder Trusts are also known as a split-interest trust, making payments from income first to the beneficiary or beneficiaries in a set amount with the remaining income supporting the organization, which is the opposite of a Charitable Lead Trust. The two ways to receive trust payments in a Charitable Remainder Trust are either a fixed annuity or a percent of trust assets known as a unitrust.

In a Charitable Remainder Annuity Trust, it is not permissible to change the annuity amount once the trust is created, so it is best to over-fund rather than not have enough. An annuity trust provides a fixed dollar amount each year even if the trust’s income is less than anticipated.

A Charitable Remainder Unitrust allows receipt of a fixed percentage of the trust’s assets each year. The trust’s value receives an annual appraisal which determines the dollar amount of the set percentage for distribution. This funding method ties income to the trust’s success, providing more in good years and less in years when assets are underperforming. If trust payments are not a significant source of income to beneficiaries, this can be a good option. The IRS requires a minimum five percent distribution of the trust valuation annually.

Working with your Attorney

Work with an estate attorney to design a charitable trust. They can help you determine which charitable trust type is best for you. And what assets to place in the trust. An estate planning attorney will help you identify beneficiaries and payment strategies. As well as the value of your tax deduction. Once you draw up the trust document, the assets will be moved to fund the charitable trust unless you create the trust as part of your will.

The charity you seek to benefit may have preferences about how and when to donate. Speak with the organization before creating an irrevocable charitable trust. This trust type can lessen your income, estate, and capital gains taxes by making 501(c)(3) donations to a charity and providing a steady income to heirs. Creating a charitable trust is a practical, multi-pronged approach to leaving your legacy. Permitting the allocation of money for both a charity and your beneficiaries while realizing specific tax advantages.

For assistance, please contact our Ruston, LA office by calling us at (318) 255-1760.