How Will The Coming Wealth Transfer Affect Your Family?

Whether it’s called “The Great Wealth Transfer,” “The Silver Tsunami,” or some other catchy-sounding name, it’s a fact that a tremendous amount of wealth will pass from aging Baby Boomers to younger generations in the next few decades. In fact, it’s said to be the largest transfer of inter-generational wealth in history.

Because no one knows exactly how long Boomers will live or how much money they’ll spend before they pass on, it’s impossible to accurately predict just how much wealth will be transferred. But studies suggest it’s somewhere between $30 and $50 trillion. Yes, that’s “trillion” with a “T.”

A blessing or a curse?

And while most are talking about the benefits this asset transfer might have for younger generations and the economy, few are talking about its potential negative ramifications. Yet there’s plenty of evidence suggesting that many people, especially younger generations, are woefully unprepared to handle such an inheritance.

An Ohio State University study found that one third of people who received an inheritance had a negative savings within two years of getting the money. Another study by The Williams Group found that inter-generational wealth transfers often become a source of tension and dispute among family members, and 70% of such transfers fail by the time they reach the second generation.

Whether you will be inheriting or passing on this wealth, it’s crucial to have a plan in place to reduce the potentially calamitous effects such transfers can lead to. Without proper estate planning, the money and other assets that get passed on can easily become more of a curse than a blessing.

Get proactive

There are several proactive measures you can take to help stave off the risks posed by the big wealth transfer. Beyond having a comprehensive estate plan, openly discussing your values and legacy with your loved ones can be a key way to ensure your planning strategies work exactly as you intended. Here’s what we suggest:

Create a plan

If you haven’t created your estate plan yet—and far too many people haven’t—it’s essential that you put a plan in place as soon as possible. It doesn’t matter how young you are or if you have a family yet, all adults over 18 should have some basic planning vehicles in place.

From there, be sure to regularly update your plan on an annual basis and immediately after major life events like marriage, births, deaths, inheritances, and divorce. We maintain a relationship with our clients long after your initial planning documents are signed, and our built-in systems and processes will ensure your plan is regularly reviewed and updated throughout your lifetime.

Discuss wealth with your family early and often

Don’t put off talking about wealth with your family until you’re in retirement or nearing death. Clearly communicate with your children and grandchildren what wealth means to you and how you’d like them to use the assets they inherit when you pass away.

When discussing wealth with your family members, focus on the values you want to instill, rather than what and how much they can expect to inherit. Let them know what values are most important to you, and try to mirror those values in your family life as much as possible. Whether it’s saving money, charitable giving, or community service, having your kids live your values while growing up is often the best way to ensure they carry them on once you’re gone.

Communicate your wealth’s purpose

Outside of clearly communicating your values, you should also discuss the specific purpose(s) you want your wealth to serve in your loved ones’ lives. You worked hard to build your family wealth, so you’ve more than earned the right to stipulate how it gets used and managed when you’re gone. Though you can create specific terms and conditions for your wealth’s future use in planning vehicles like a living trust, don’t make your loved ones wait until you’re dead to learn exactly what you want their inheritance used for.

If you want your wealth to be used to fund your children’s college education, provide the down payment on their first home, or invested for their retirement, tell them so. By discussing such things while you’re still around, you can ensure your loved ones know exactly why you made the planning decisions you did.

 Secure your wealth, your legacy, and your family’s future

Regardless of how much or how little wealth you plan to pass on—or stand to inherit—it’s vital that you take steps to make sure that wealth is protected and put to the best use possible.

Call our office today at (813) 902-3189 to schedule a  Planning Session and mention this article to find out how to get this $500 session at no charge.

When a Will Isn’t Enough to Avoid Conflict: Remember Your Personal Property

“When the parents are gone, there’s all kinds of unforeseen stuff they leave us with, stuff they never intended.” – Ira Glass, in This American Life, Episode 763: “Left Behind”

If you grew up with siblings, you probably remember some sibling rivalry. That rivalry can continue well into adulthood, especially after the parents are gone. In many families, parents are like the glue that keeps the family together. Once their gone, old issues can resurface, especially when it comes to dividing the parents’ personal property.  That’s why it’s important to have a plan for how you want your personal, sentimental property distributed to the people that you love. If you don’t, that can make an already tough situation so much worse.

This American Life, a popular podcast, recently featured a family with such a story. Eleven adult siblings needed to divide their dead parents’ stuff. But they didn’t all get along. Although their parents (who were both attorneys) had wills, they didn’t list in their will which child would get which items. They left all that to the kids, saying simply, everyone should get an equal amount. So the siblings invented a remarkably elaborate cheat-proof system to divide up the remains of their childhood. In the end, it was a system that played off the siblings’ natural suspicions towards each other and did nothing to bring them closer together after losing their parents.

Here’s a quote from the narrator:

“What they have left to them is just these things, right? And this mandate– to get along well enough one last time to split it up amongst themselves. And they don’t want to screw it up. They want to honor their parents’ last request. But they know it’s going to be tough for them, given how they are sometimes with each other.”

This is an example of incomplete planning that can lead to conflict after you’re gone. If the parents in this story had left a personal property memorandum that referred back to their Wills, that could have reduced the strain on their children, especially the estate’s executor. It would have also saved a lot of time and conflict….and their relationships with each other.

You can listen to this story (16 minute run time) here.

Or you can read the transcript here. 

 

This article is a service of the Law Firm of Myrna Serrano Setty, P.A. We don’t just draft documents, we help you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Call our office today to schedule a Planning Session. Mention this article to learn how to get this $500 session at no charge. 

Call us at (813) 902-3189.

Check out another blog post about embracing the emotional side of estate planning. Here

Can An Adult Child Be Liable for a Parent’s Nursing Home Bill?

Although a nursing home cannot require a child to be personally liable for their parent’s nursing home bill, there are circumstances in which children can end up having to pay.

This is a major reason why it is important to read any admission agreements carefully before signing.

Federal regulations prevent a nursing home from requiring a third party to be personally liable as a condition of admission. However, children of nursing home residents often sign the nursing home admission agreement as the “responsible party.” This is a confusing term and it isn’t always clear from the contract what it means.

Typically, the responsible party is agreeing to do everything in his or her power to make sure that the resident pays the nursing home from the resident’s funds.

If the resident runs out of funds, the responsible party may be required to apply for Medicaid on the resident’s behalf. If the responsible party doesn’t follow through on applying for Medicaid or provide the state with all the information needed to determine Medicaid eligibility, the nursing home may sue the responsible party for breach of contract. In addition, if a responsible party misuses a resident’s funds instead of paying the resident’s bill, the nursing home may also sue the responsible party. In both these circumstances, the responsible party may end up having to pay the nursing home out of his or her own funds.

In a case in New York, a son signed an admission agreement for his mother as the responsible party. After the mother died, the nursing home sued the son for breach of contract, arguing that he failed to apply for Medicaid or use his mother’s money to pay the nursing home and that he fraudulently transferred her money to himself. The court ruled that the son could be liable for breach of contract even though the admission agreement did not require the son to use his own funds to pay the nursing home. (Jewish Home Lifecare v. Ast, N.Y. Sup. Ct., New York Cty., No. 161001/14, July 17,2015).

Although it is against the law to require a child to sign an admission agreement as the person who guarantees payment, it is important to read the contract carefully because some nursing homes still have language in their contracts that violates the regulations. If possible, consult with your attorney before signing an admission agreement.

Another way children may be liable for a nursing home bill is through filial responsibility laws.

These laws obligate adult children to provide necessities like food, clothing, housing, and medical attention for their indigent parents. Filial responsibility laws have been rarely enforced, but as it has become more difficult to qualify for Medicaid, states are more likely to use them. Pennsylvania is one state that has used filial responsibility laws aggressively.

We recommend that your Health Care Directives explicitly lay down a financial liability shield for your agents.

This one provision can save great grief and money.

This article is a service of the Law Firm of Myrna Serrano Setty, P.A. We don’t just draft documents, we help you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Call our office today to schedule a Planning Session. Mention this article to learn how to get this $500 session at no charge. 

Call us at (813) 902-3189.

A Tax Break to Help Working Caregivers Pay for Day Care

Paying for day care is one of the biggest expenses faced by working adults with young children, a dependent parent, or a child with a disability. But there is a tax credit available to help working caregivers defray the costs of day care (for seniors it’s called “adult day care”).

In order to qualify for the tax credit, you must have a dependent who cannot be left alone and who has lived with you for more than half the year.

Qualifying dependents may be the following:

  • A child who is under age 13 when the care is provided
  • A spouse who is physically or mentally incapable of self-care
  • An individual who is physically or mentally incapable of self-care and either is your dependent or could have been your dependent except that his or her income is too high ($4,150 or more) or he or she files a joint return.

Even though you can no longer receive a deduction for claiming a parent (or child) as a dependent, you can still receive this tax credit if your parent (or other relative) qualifies as a dependent.

This means you must provide more than half of their support for the year. Support includes amounts spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. Even if you do not pay more than half your parent’s total support for the year, you may still be able to claim your parent as a dependent if you pay more than 10 percent of your parent’s support for the year, and, with others, collectively contribute to more than half of your parent’s support.

The total expenses you can use to calculate the credit is $3,000 for one child or dependent or up to $6,000 for two or more children or dependents. So if you spent $10,000 on care, you can only use $3,000 of it toward the credit. Once you know your work-related day care expenses, to calculate the credit, you need to multiply the expenses by a percentage of between 20 and 35, depending on your income. (A chart giving the percentage rates is in IRS Publication 503.)

For example, if you earn $15,000 or less and have the maximum $3,000 eligible for the credit, to figure out your credit you multiply $3,000 by 35 percent. If you earn $43,000 or more, you multiply $3,000 by 20 percent. (A tax credit is directly subtracted from the tax you owe, in contrast to a tax deduction, which decreases your taxable income.)

The care can be provided in or out of the home, by an individual or by a licensed care center, but the care provider cannot be a spouse, dependent, or the child’s parent. The main purpose of the care must be the dependent’s well-being and protection, and expenses for care should not include amounts you pay for food, lodging, clothing, education, and entertainment.

To get the credit, you must report the name, address, and either the care provider’s Social Security number or employer identification number on the tax return. To find out if you are eligible to claim the credit, click here.
For more information about the credit from the IRS, click here and here.

Are you worried about taking care of a loved one who has long-term care or special needs? We can help you put plans in place so that your family isn’t left with a mess if you become incapacitated or die.

This article is a service of the Law Firm of Myrna Serrano Setty, P.A. We don’t just draft documents, we help you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Call our office today to schedule a Planning Session. Mention this article to learn how to get this $500 session at no charge. 

Call us at (813) 902-3189.

Report Ranks States on Nursing Home Quality and Shows Families’ Conflicted Views

A new report that combines nursing home quality data with a survey of family members ranks the best and worst states for care and paints a picture of how Americans view nursing homes.

The website Care.com analyzed Medicare’s nursing home ratings to identify the states with the best and worst overall nursing home quality ratings. Using Medicare’s five-star nursing home rating system, Care.com found that Hawaii nursing homes had the highest overall average ratings (3.93), followed by the District of Columbia (3.89), Florida (3.75), and New Jersey (3.75).  The state with the lowest average rating was Texas (2.68), followed by Oklahoma (2.76), Louisiana (2.80), and Kentucky (2.98).

Care.com also surveyed 978 people who have family members in a nursing home to determine their impressions about nursing homes. The surveyors found that the family members visited their loved ones in a nursing home an average six times a month, and more than half of those surveyed felt that they did not visit enough. Those who thought they visited enough visited an average of nine times a month. In addition, a little over half felt somewhat to extremely guilty about their loved one being in a nursing home, while slightly less than one-quarter (23 percent) did not feel guilty at all.

If the tables were turned, nearly half of the respondents said they would not want their families to send them to a nursing home.

While the survey indicates that the decision to admit a loved one to a nursing home was difficult, a majority (71.3 percent) of respondents felt satisfied with the care their loved ones were receiving. Only 18.1 percent said they were dissatisfied and about 10 percent were neutral. A little over half said that they would like to provide care at home if they could. The most common special request made on behalf of a loved one in a nursing home is for special food. Other common requests include extra attention and environmental accommodations (e.g., room temperature). Read the entire report here.

Are you worried about being able to afford quality long-term care? We can help you incorporate a variety of planning strategies to maximize your quality of life and help protect what you’ve worked so hard for.

This article is a service of the Law Firm of Myrna Serrano Setty, P.A. We don’t just draft documents, we help you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Call our office today to schedule a Planning Session. Mention this article to learn how to get this $500 session at no charge. 

Call us at (813) 902-3189.

How can you protect your family heirlooms from a family feud?

Passing your family heirlooms to your family should be a welcome and sacred tradition. But sadly, for many families it can cause a lot of  drama. Did you know that your family is more likely to fight over sentimental items instead of money?

If you don’t want that to happen in your family, here’s what you can do:

1. Add specific designations to your Will and/or Trust.

Typically, a Will or Trust will specify that all personal property goes to the “residue” and is split equally between all heirs. But you may want to get more specific with items that are already family heirlooms or that you want to become family heirlooms. All too often children will discover after Mom or Dad has passed that an item was promised to more than one person. This is why it is important to create a list of your family heirlooms, assign names to each item and share that list during a family gathering while you’re still alive and well. This list (formally called a personal property memorandum) can then be incorporated into your will or trust, so it becomes legally binding.

2. Make it fun.

Indicate in your Will and/or Trust that you want your family to make it a game and “auction off” your special items.  Each family member can be given “credits” to use to “bid” on the items they want. Or family members can choose items round-robin style with each family member making one choice before going back around for family member’s to make their second choice. Then, after all the picking is done, family members can trade amongst themselves.

3. Give it away during life.

Give away your family heirlooms during your lifetime so that you can see your loved ones enjoy it.

4. Leave a recorded legacy.

We’ve found the best way to pass on more than just your money is to record a story associated with each one of your family heirlooms. Include where the heirloom came from, who you are passing it onto and the special significance it has to you.  This recording is likely to become the most valuable asset you can leave behind.

Call our office today at (813) 902-3189 to schedule an Estate Planning Session and mention this article to find out how to get this $500 session at no charge. 

How do you talk about your estate plan with your family?

Is it time to have “the talk” with your kids about your estate planning? It can be hard to have these conversations with your family. Here are some tips to make it easier.

Preparation Is Key

1. When you choose important decision makers, make sure you match the skills of the person to the job.

For example, the Personal Representative (also known as the executor) of a will must be able to gather assets, prepare paperwork, handle finances, and deal with potential family disputes. Don’t choose a Personal Representative that isn’t up to that job.  Too often, people choose executors, trustees, guardians, and powers of attorney based on emotions or arbitrary factors, such as who is the oldest child or who might be offended if not chosen. These are difficult, demanding jobs, and you need to choose people who can handle them. It also helps to talk these issues through with an experienced attorney or confidant in advance of making your selections.

2. Prepare your paperwork.

Work with your lawyer to make the best decisions possible, and commit them to writing. This will help reduce any misunderstandings about your wishes.

3. Think about the questions that your family might ask.

For example, if you are worried that one child will be upset because you named another child executor, be ready to answer questions about why you made that decision. Your explanation will go a long way toward reducing any hard feelings and potential disputes after you’re gone.

4. Come Prepared for Business

Once you have your family together, it is important that you not only let them know what your decisions are, but also that it is important to you that they support you and each other. Have copies of your documents available so your family can ask questions about them.

If someone just can’t get onboard, remember that you are dealing with your life and your assets. The ultimate decisions as to how you handle them are yours, and you can even terminate the meeting if necessary. Also, make sure your family knows that your decisions may change as time goes on.

5. Remember that the goal is to provide your family with more than just a set of legal documents outlining your wishes.

By talking to them about your intentions you are helping them gain understanding, comfort, and even buy-in with your plan.

Call (813) 902-3189 to book your Estate Planning Session. We can help you gain peace of mind!