When Will Your Long-Term Care Benefits Kick In?

Presented by Mark Phillips

Long-term care refers to a broad range of medical and personal services for people with chronic disabilities who have lost the ability to function independently. Long-term care services can be divided into three levels:

·         Skilled care is continuous, around-the-clock care designed to treat a medical condition from which the patient is expected to recover. Skilled medical personnel, such as registered nurses or professional therapists, perform this type of care under a physician’s orders.

·         Intermediate care is intermittent nursing and rehabilitative care provided by registered nurses, licensed practical nurses, or nurse’s aides under the supervision of a physician.

·         Custodial care is designed to help an individual perform the activities of daily living (ADLs). It can be provided by someone without professional medical skills but is supervised by a physician.

Medicare and other forms of health insurance do not pay for custodial care, which is why your long-term care policy benefits are so important.

When will you qualify for custodial care?

If you own long-term care insurance (LTCI), you can qualify for custodial care if:

·         Your doctor certifies it is medically necessary.

·         You have a severe cognitive impairment.

·         You are unable to perform a certain number (usually two to three) of the six ADLs for 90 days or more. The ADLs are:

-          Eating

-          Bathing

-          Dressing

-          Toileting

-          Transferring (into or out of bed, a chair, or a wheelchair)

-          Continence and personal hygiene

Be sure to check the details of your LTCI policy to determine the specific medical conditions it covers.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

IRS CIRCULAR 230 DISCLOSURE:

To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

For IARs: Mark Phillips is a financial advisor located at Mark Phillips & Associates, 19712 MacArthur Boulevard, Suite 225, Irvine, CA 92612. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network^®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (949) 333-6394 or at mark@phillipswealthmanagement.com.

© 2014 Commonwealth Financial Network^®

 

Inheriting Debt from a Family Member

Presented by Eric Figarsky

When a loved one passes away, his or her outstanding debt (and how that debt will be paid) likely won’t be the first thing on your mind. Unfortunately, many people find themselves dealing with a deceased family member’s creditors as they grieve. While no one likes to think about a loved one’s passing, it makes good financial sense to consider these matters ahead of time.

Who’s responsible for outstanding debt?

Generally, the deceased person’s estate assets are used to satisfy creditor claims before assets are distributed to the beneficiaries. If the estate assets are insufficient to pay all of the outstanding debt, the estate is considered “insolvent,” and state law prioritizes the payment of the deceased person’s bills with the available assets.

In some cases, however, outstanding debts may not fall to the estate. For example:

·         Cosigned debts. If you’ve cosigned on a loan or credit card with the deceased person, you are financially responsible for that debt.

·         Guaranteed debts. Similar to cosigning, if you are the guarantor of a loan for someone who has passed away, you will owe the lender payment of any remaining debt.

·         Community property. If your spouse passes away, you may find yourself responsible for debts for which you weren’t a cosigner or coapplicant. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are considered community property or quasi-community property states, meaning that all property and debt acquired during a marriage is considered jointly owned. If you live in one of these states, you could be held responsible for debts your spouse incurred.

How are different types of debt handled?

·         Credit card debt. Again, family members are not responsible unless they cosigned on the credit card. Although debt collectors may be aggressive, they can only make a claim against the estate. If you did cosign, you will be held responsible for the debt, even if you didn’t directly incur it.

·         Medical debt. If your parent qualified for Medicaid, the state may try to recover the payments made for his or her care. The state cannot ask you to pay, but it may be able to put a lien on your parent’s home to recover the funds. If a family member dies with other unpaid medical bills (unrelated to Medicaid), those bills become an estate debt. Keep in mind that many states have “filial responsibility” statutes that, under certain circumstances, hold adult children responsible for a deceased parent’s medical debt. Be sure to understand how state law may apply in your situation.

·         Mortgage debt. If you inherit a residence with a mortgage, you generally aren’t required to pay it off immediately. If you fail to make the mortgage payments, however, or cannot sell the house for a price that will pay off the mortgage, the lender will likely foreclose (or possibly agree to a short sale). If you don’t wish to own the real estate, you may disclaim it, at which point it would transfer to the next estate beneficiary.

·         Student loan debt. Federal programs, such as Perkins and Stafford loans, usually offer cosigners forgiveness if the borrower passes away. Private loans may be another story, however. Although some lenders have started to discharge the debt if a borrower dies or becomes disabled, many demand the money owed from cosigners.

·         Taxes. The estate is responsible for paying any property, income, or estate taxes. Tax authorities are usually given top priority as creditors.

Don’t be bullied

Family members of deceased debtors—and all consumers—are protected by the federal Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices in attempting to satisfy a debt. Under the FDCPA, collectors can contact the deceased person’s spouse, guardian, executor, or administrator to discuss a debt, but you do have the right to control your interactions with these collectors. For more information, visit the Federal Trade Commission’s website at www.consumer.ftc.gov/articles/0081-debts-and-deceased-relatives.

Know where you stand

Inherited debt can be a complex issue to sort out. If you find yourself in this situation, seek advice from your financial advisor and an attorney who can guide you through the probate process and work with any debt collectors. Although dealing with a loved one’s death is never easy, getting your questions answered and protecting your inherited assets may make the situation a little less stressful.

 

Medicare Enrollment, and Changes to Enrollment… When?

Presented by Mark Phillips

Recently the Journal of Financial Planning provided a run down on five of the most common windows for Medicare enrollment and for making Medicare plan election changes. The following Graphic is a helpful guide:
 

Click on above image to access larger version

The Squared Away Blog (The Center for Retirement Research at Boston College) provided the following Critical Dates:
 

·         Failing to enroll in basic Medicare (parts A and B) three months before or during the month of one’s 65^th birthday creates at least a two-month delay in coverage.

·         People can buy or switch their Medicare Advantage and Part D drug plan between Oct. 15 and Dec. 7.   But Advantage plan disenrollment dates are Jan. 1 – Feb. 14, when simultaneous Part D enrollment is also permitted.

·         To avoid underwriting rules that may restrict coverage or increase premiums for private Medigap coverage, enroll in Medigap during the six-month period that starts the month of one’s 65^th birthday.

 
Click HERE for full Squared Away Blog Article
 

How Much is Enough… Savings?

Presented by Mark Phillips

How much should we be saving for retirement (financial independence) right now?

While our Financial Planning process is designed to provide a far more precise and customized answer for each person/household I found the following on the Squared Away Blog (published by the Center for Retirement Research at Boston College).

No two people are alike, but the Center for Retirement Research estimates the typical 35 year old who hopes to retire at 65 should sock away 15 percent of his earnings, starting now.  Prefer to retire at 62?  Hike that to 24 percent.  To get the percent deducted from one’s paycheck down into the single digits, young adults should start saving in their mid-20s and think about retiring at 67.

Access the full Article and see the table

Busy States of America

Presented by Mark Phillips

Happy with how your life is working and what your time is yielding you?

Everyone you know happy with the outcomes they are getting from their time investments?

Click anywhere on this graphic and you will have access to the fully interactive version…

Notice that for an average American:
     • Education is ~29 min. per day, including Americans as young as 15,
     • Education drops below 1 min. per day for those over 54 years old (why??)
     • Television is ~2 hours and 46 min. per day for the average American,
     • Television time eclipses Education time for all age and gender groups in the study.
     • For someone over 75 less than 12 min. is devoted to helping others (family and non-family combined) per day

Perhaps we all have an opportunity to improve our results… Please share the opportunity with those you care about….

Coursera.org

Khan Academy

Mooc List  

Volunteer Guide

Great Non-Profits

Non-Profits on Yelp

 

Please note: The information is provided to you as a courtesy. When you link to any of the websites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.

Cost of Letting Fear Rule Our Investment Decisions

Presented by Mark Phillips

The average individual investor has seen (some say caused) their invested wealth suffered mightily over the past 20 years. The average investor managed to underperform even money market funds over this period. Richard Bernstein, former Merrill Lynch strategist who now heads his own eponymously named shop,  thinks this outcome is largely due to persistently poor timing – or more specifically, investors’ reaction to increased volatility. Simply put, they tend to run away when things start getting chaotic.

With stock-market volatility trending higher in recent weeks, investors are again running away, Bernstein says, citing fund-flow data that shows investors have cut U.S. equity exposure for 13 weeks in a row.

“History suggests that the best investment opportunities are in asset classes that investors shun. We strongly feel investors’ ongoing fear of U.S. equities continues to offer substantial opportunity,” Bernstein says.

Click here for the full article on MarketWatch…

 

Talking to Your Aging Parents About Their Finances

Presented by Mark Phillips

Each day between 2011 and 2030, 10,000 baby boomers will celebrate their 65th birthdays. As the boomers grow older, their middle-aged children may find themselves in a challenging situation: providing financial assistance to their parents as well as their own kids.

According to a poll by the Pew Research Center:

 

·         75 percent of adults believe that they have a responsibility to provide financial assistance to their aging parents.

·         63 percent of adults have given some type of financial support to their grown children in the past year.

Members of the Sandwich Generation—those who are taking care of aging parents while supporting their own children—often come under serious financial and emotional stress. As your parents move into retirement, it’s wise to plan ahead for any financial and legal responsibilities they may expect you to take on.

In the full version of this article we address some issues to consider including:

 

·         Starting the conversation

·         Looking into legal matters

·         Discussing their financial situation

·         Looking to the future

And remember, you don’t need to make these decisions alone. We’re here to support you and your parents with strategic planning for the next phase of their lives.