Financial Planning

Becoming a “Paradigm” of Financial Health

Published on: March 21, 2013 | by Ettinger Law Firm

Money is always at the top (or near it) of lists describing issues that most commonly bring stress into our lives. It’s cliche to say that “money is the root of all evil,” but its obvious that dealing with financial issues is a common concern for families of all shapes, sizes, and even income levels. There is so much different advice out there about what you should be doing or could be doing as it relates to money matters that it is hard to distinguish between the useful and the fluff.

One such story posted in Yahoo Finance this week offers a somewhat helpful distillation of seven basic concepts that can be used for those of all income levels and at different life stages. They are referred to as “paradigms” of financial health. The entire list is worth browsing, but a few of the items on the list include:

***If you are a couple with two incomes, you can pay for “essentials” with only one spouse’s income. Those essentials are things like the mortgage, insurance, child care , and similar items that cannot be cut easily. Essentially this is one way to check whether you may be living above your means. It is an easy shortcut to figure out if you can survive in the event of a lost job or other emergency.

Editorial Calls for Preserving Medicaid Spousal Refusal in New York

Published on: March 12, 2013 | by Ettinger Law Firm

It is not easy for many local residents to understand all of the ins and out of the Medicaid program. While Medicaid is a critical tool that provides support for local seniors who need long-term care, it can be a whirlwind of stress, anxiety, and frustration when families attempt to navigate the administrative waters and understand what they need to do to join. Making matters worse is that fact that Medicaid qualification is based on income, and so most families are forced to “spend down” assets before receiving aid. Without proper planning, this means that many families are forced to shed most of their assets just to receive the extra care they need–loosing property and savings built up over a lifetime.

This situation seems particularly damaging for certain families, including those with one healthy spouse and the other in need of care. Fortunately, in those situations the option of “spousal refusal” exists. This essentially allows a healthy spouse to divest property from the other, such that the sick spouse qualifies for care without the healthier spouse losing most everything as well.

Eliminating the Refusal?

Understanding How a Wealth Transfer Might Affect Insurance

Published on: February 27, 2013 | by Ettinger Law Firm

Advisor One shared a useful story this week that touches on an item commonly forgotten in wealth transfers, including those using trusts or other legal tools. It is critical to remember how insurance coverage might be affected by the transfer. That way, changes can be made immediately to guarantee that coverage is in good standing at all times. Sadly, as you might expect, this error is often only uncovered after some catastrophic accident, when insurance coverage is needed. The last thing anyone wants is that “oops” moment, when it is discovered that the coverage does not exist because of the previous transfer via trust or other tool (like an LLC).

The Basic Problem

Insurance policies are written to provide coverage to an owner or titleholder. This is the case for virtually all types of coverage, from home, automobile, and boats to collectibles. Problems arise, however, when a transfer is made and the insurance policy is not updated to reflect the change. For example, if a home is transferred into a trust, it is important to confirm that the proper changes are made so that the homeowners policy covers the new arrangement.

Struggling to Pay for Burial Costs After Death

Published on: February 21, 2013 | by Ettinger Law Firm

There is no getting around the fact that certain costs will be incurred near the end of life. Even if you are in great health, live at home until the very end, and require no extra caregiving of any kind, your passing will come with certain financial challenges for your family. Most obviously, there are burial and funeral details to be paid for. Yet, more frequently than many realize, local families are forced to struggle and scrape just to put together enough money for those final arrangements. The challenge can be particularly tough for elderly individuals who have very limited incomes and no means to earn more.

The struggle was highlighted in a sad case discussed this week by KOMO News. The story details an estate sale that an elderly woman is having in order to pay for the burial costs of her recently-passed husband. Her husband of 46 years recently died after living his final two years with Alzheimer’s. As families with relatives facing cognitive mental issues know, the costs associated with this care can be staggering. It doesn’t take much for middle class families to be financially wiped out in short order when dealing with the ancillary costs of Alzheimer’s care.

In this case, the 88-year old widow, Elsie, had only $9 to her name at the time of her husband’s passing. In describing the sad situation the article author explained, “Elsie is alone in this world. At 91, she has outlived all her friends. She has no children, no relatives of any kind, and she is broke.”

Don’t Underestimate Medical Costs in Retirement

Published on: January 16, 2013 | by Ettinger Law Firm

The fiscal cliff crisis dominated the last month of 2012. Even though an agreement was reached on New Years Day, the compromise is far from the end of partisan political battles and confusion. Observers are already making predictions about the possible implications of the looming “debt ceiling” fight between the White House and certain members of the Republican caucus which must be resolved in the next month or two. The outcome may have significant impacts on the nation’s long-term stability and the performance of the financial sector.

It is easy to see how New Yorkers thinking about their long-term care planning and retirement might be uneasy about the state of affairs. While some things are simply out of your hands, it is critical not to forget that there are smart ways to plan for retirement regardless of the flux in national politics. A recent Forbes article is worth a look, as it explores five of the best way to protect one’s retirement from the federal government’s “fiscal follies.”

Plan Ahead

Lottery Winnings, Murder, & Estate Planning

Published on: January 15, 2013 | by Ettinger Law Firm

The Daily Jeffersonian published a story recently on the bizarre details of a case involving a lottery winner’s apparent murder and the subsequent estate battle. Like the plot of a Hollywood crime drama, the tale includes a mysterious death, a series of hidden family feuds, and considerable money on the line. While quite dramatic, it is a vivid example of the difference that common sense estate planning can make in the aftermath of a death.

Money & Murder

The case centers of the estate of Urooj Khan who immigrated from India in 1989 and established several successful businesses. In 2010 he hit a jackpot and won a state lottery; his actual take-home from the winnings were about $425,000. According to reports, he planned on using the windfall to pay off his mortgage, expand his business, and donate a sizeable sum to a local children’s hospital.

Potential Heir in Huguette Clark Case Dies During Inheritance Feud

Published on: January 4, 2013 | by Ettinger Law Firm

Timing is of critical importance with estate planning matters. Obviously, a plan must be in place early enough to be of use before one falls ill or suffers from mental issues. For example, creating a will or trust may be impossible after one suffers a stroke or succumbs to serious effects of Alzheimers. This is why we continue to encourage residents to make plans early and consistently update them.

Time also factors into matters after a death. Many beneficiaries may face hardship if they are forced to wait months (or even years) to have an estate settled. One of the key benefits of an inheritance plan is to minimize the risk of a long delay between the actual passing on of assets, often focused on avoiding probate and preventing feuding.

Celebrity Example

Face Retirement: Psychology to Spur Long-Term Financial Planning

Published on: December 12, 2012 | by Ettinger Law Firm

Virtually everyone agrees that it is important to invest for retirement, take care of inheritance details, prepare for long-term care, and otherwise plan for the future. But there is a big difference between understanding the value of these tasks and actually taking the time to do it. Considering the financial and political stresses that come with caring for an aging population, figuring out how to motivate community members to do what is necessary to plan for the future is drawing more and more attention.

One new tactic stems from unique psychological research on financial motivation. In previous studies out of Stanford, experts found that one way to spur real action on long-term planning was getting individuals to visualize their future, elderly selves. Interestingly the researchers found the most benefit not when people just imagined themselves in old age but actually saw digitally enhanced images of themselves when they were older. The surprise of seeing their own face in old age was a real spur to stop putting off the necessary planning.

The lead researcher in the Stanford experiment summarized that, “People who see an age-progressed rendering of themselves are more likely to allocate resources to the future.”

First “Fiscal Cliff” Proposal Made — What It Means for Estate Planning

Published on: December 4, 2012 | by Ettinger Law Firm

You cannot turn on the TV, flip open a newspaper, or pull up a news website this month without seeing the words “fiscal cliff.” As many are aware, this refers to sweeping, mandatory federal tax and budgetary changes that are set to take effect January 1st unless the Congress and White House pass legislation with an alternative plan. Essentially the “cliff” is about $7 trillion worth of tax increases combined with significant spending cuts across the board–including everything from Medicare and Medicaid to the military.

What is interesting about the cliff is that virtually no one on either side of the aisle actually wants it to take effect. Instead, it was only put into place as a compromise over a previous debt ceiling legislative fight. The idea was that that the cliff would be so abhorant to both sides that its impending appearance would force a compromise. However, as the end of the year gets closer, more and more observers are worrying that even with the serious consequences of the cliff, no compromise is in sight.

Currently, the Obama Administration and Congressional leaders (most notably, the Republican House leaders) are trying to reach agreement on an alterantive to prevent the mandataory changes. As part of that effort, President Obama recently released his “first offer.” As summarized in a recent article, the offer is far from what the Republican leaders have proposed, so it is unlikely that it will be taken seriously. Essentially, it calls for around $1.6 trillion in tax increases over a ten year period–mostly related to expiration of the so-called “Bush tax cuts.” In addition, it calls for modest stimulus spending. The proposal would also permanently eliminate Congressional control over the debt ceiling level (which caused the current crisis to begin with).

Benefits for Children Conceived After Father’s Death to Be Decided By Court

Published on: November 28, 2012 | by Ettinger Law Firm

Medical and technological breakthroughs in recent decades have impacted virtually every facet of life–estate planning is no exception. For example, many rules in the field hinge on definitions of legal heirs. In the past, it was pretty clear who those heirs were, typically biological or legally adopted children. When an indiviual dies intestate (without a will), then each state has specific default rules regarding what to do with the individual’s assets. Often the biological or legally adopted children receive part or all of those assets.

But it doesn’t end with inheritance rules. Many state and federal programs also use these definitions to make decisions about who qualifies for certain benefits. This includes the federal Social Security program. In many cases, when a parent dies, a family eligible for Social Security assistance for the minor children that remain following their parent’s passing. In the past there as little confusion over when a child did or did not qualify for those survivor benefits.

No longer. As recent of improvements in medical research have changed reproductive technology, the line between when a child is considered an heir and when they are not is blurred. That is perhaps best evidenced by a new case that is slated to go before one state court.