Although most of us look forward to our golden years when we can finally relax and enjoy life, many of us also worry about what will happen if our health is less than perfect. Thanks to advances in medicine and technology over the last decade, we can look forward to living longer, but that could also mean we will require long-term care at some point. Given the fact that a stay in a long-term care facility can cost upwards of $100,000 a year, and that private health insurance policies often do not cover the cost of long-term care, worrying about how you will pay for long-term care is certainly understandable. One option is to purchase long-term care insurance, or LTCI.

LTCI is intended to cover the cost of long-term care. Just as any other insurance policy, if the conditions are met for coverage to apply, then the policy should cover the costs of your care. Unfortunately, not all policies are equal. Furthermore, not all companies are reliable. The elderly are often targeted for fraud or simply taken advantage of by people looking to make a fast buck. Because of this, you must be very careful when you purchase a LTCI policy.

Pay particular attention to the history of the company offering the insurance. Look for one who has a good rating and has been in business for ten years or more if possible. Also pay close attention to the conditions that must be met before coverage will kick in. Always have your estate planning attorney review a policy before you commit to purchasing the insurance. Finally, make sure that not only can you afford the premiums now, but that you will be able to continue to pay them after you retire. If you follow these simple guidelines, you should be able to find a LTCI policy that is right for you.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

In the United States, we are conditioned to believe that we must have an insurance policy for absolutely everything possible from our homes and vehicles to our health and life. We are told that the consequences of not having insurance are severe. In some cases, this may be true. In the case of life insurance, whether or not you truly need a policy depends on a number of personalized factors; however, consider the following when contemplating life insurance:

The purpose of a life insurance policy is to provide financial support to your family in the event of your death in most cases.

If you are young, and have nothing else to leave behind to support your family, then term life insurance may be a good option.

Once you begin to acquire other assets and build an investment portfolio, you should always reconsider your life insurance policy to decide if it is still cost-efficient.

Term life insurance does not build a cash value. There are other types of life insurance that do build a cash reserve, but they are typically much more expensive.

One plus to life insurance is that it will pay out to the beneficiaries immediately after death instead of having to pass through probate first. For this reason, some people choose to retain a small life insurance policy just to cover immediate expenses.

Life insurance as an investment strategy is risky. Conventional whole life policies do not pay at a high rate of return. Variations of the traditional whole life may offer higher returns, but at a higher risk as well.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

Purchasing life insurance is often a critical part of estate planning. Although many other factors that impact your estate can change, life insurance is often purchased predominantly because the policy holder believes its value is fixed. By knowing ahead of time how much your life insurance policy is worth, and what it will cost you in premiums, you can adjust the remainder of your estate accordingly. While it is true that many forms of life insurance do provide fixed values, universal life insurance does not.

Universal life insurance is in the class of permanent life insurance along with whole life. This simply means that, unlike term insurance, the policy is guaranteed to remain in force until the maturity date of the policy, usually round age 95 to 100. Term insurance, on the other hand, only remains in effect for a specified period, such as a 10 year term. Unlike whole life, however, universal life insurance premiums are not fixed at the beginning of the contract. The policy holder of a universal life insurance policy may pay as little, or as much, as he or she wishes in premiums as long as the cost of the policy is covered. With a universal life policy, the insurer bills the policy for costs on a regular basis. The policy holder must maintain enough funds through payment of premiums to cover the costs. Additional funds paid as premiums then go toward the cash reserve and death benefit value of the policy.

With a universal life insurance policy, the death benefit and current cash value are constantly fluctuating, unlike a whole life or term life policy. With a whole life policy, the cash value growth rate is fixed at the beginning of the policy as is the death benefit value. With a term policy, there is no cash value, but the death benefit value is fixed. Because the premiums are not fixed in a universal policy, the cash value growth as well as the death benefit are subject to change

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

Upon reading the following article, I decided to write Bill McClellan. The message to Mr. McClellan appears below.

http://www.stltoday.com/news/local/columns/bill-mcclellan/article_7be7b2e2-5a78-5b4b-a56e-1141414b6b3c.html

Mr. McClellan:

I read your article entitled, “McClellan: Medicaid won’t pay bills for man whose widow had IRA”, and I wanted to pass on the following thoughts:

I am an attorney for the St. Louis County law firm, Purcell & Amen, L.L.C. We focus our practice on Estate Planning and Elder Law. A good portion of our practice these days is actually spent on helping families qualify for government benefits, such as Medicaid. Unfortunately, the story you shared is one we see many times a year.

There is no doubt in my mind that the hospital had the best interests of the family in mind when they helped her fill out the application for Medicaid. The problem with the approach is that it is not the job of that “Medicaid Specialist” to get families such as the one you described on Medicaid. Their goal, as Ms. June Fowler stated “is to assist patients who qualify to receive the help they need”. This is actually a very important distinction that she made. The patient must ALREADY QUALIFY for Medicaid, as is. This specialist will not tell you that going through this arduous application process is not a guarantee that they will be approved. In fact, they don’t give the patients any indication whether or not they will qualify. Many people in the Ward’s situation do not understand that the help they are receiving may not be much help at all.

There are more than a few law firms in the St. Louis area who specialize, as we do, in helping these families qualify for these benefits. Many of those firms, including ours, offer free consultations where we can determine whether or not we can help them. If we see an opportunity to help the family, they would become our clients. Then our duties are to that person and not to the hospital, or nursing home, or even the state. We regularly help families, such as the Ward’s, re-position their assets so that they no longer count against them, or spend-down their assets on “exempt” assets. For example, you mentioned in your article that you can’t spend the money on the funeral, because the person is not living. Instead, they could have bought a pre-paid funeral or earmarked funds for a funeral which would not count against them in the application process.

Stories like the Ward’s are why many of us in the elder law field got started doing Medicaid eligibility. Helping those families that ‘just miss’ the cut-off without any planning. I wish we had a better way to get the word out to families that opportunities exist for planning which may help them avoid disaster in a crisis. More options exist for families that plan at least 5 years ahead of a need because of the Medicaid “look-back” period, but there are still many, many options available to families like the Ward’s when the crisis arrives.

Thanks for the article. Many people do not know about programs like Medicaid (and don’t see any need to explore plans) until a crisis hits close to home.

Paul Michael Gantner
pgantner@yourestatematters.com
Purcell & Amen, L.L.C.
www.yourestatematters.com
(314) 966-8077

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

Estate planning for small business owners is a bit more intricate than it is for other folks, but owning a share in a business can actually simplify your overall planning in some important ways. It may seem like an exercise in overstating the obvious, but having a source of fresh, ongoing income throughout your retirement years is a very good thing. When you have to plan ahead to stretch your retirement savings through the next twenty-five years or so it can be quite challenging. When your business is providing you with income throughout that time you have a bit less pressure to contend with in terms of squeezing earnings out of your accumulated assets.

This is well and good but you do have to have a succession plan in place, and this is often achieved through the execution of a buy-sell agreement. Upon your death there are going to be two primary interested parties with regard to your co-ownership of the business: your partners, and your heirs. Your partners are generally going to want to retain control, and if they were to bring anyone else in they would want to make the decision among themselves. So they are usually not going to want your heirs to be able to sell your share to the highest bidder. You of course would feel the same way if one of your partners was to predecease you.

With a buy sell-agreement the partners get together and valuate their respective ownership shares. They then draw up a contract that gives the remaining co-owners the right to purchase the share of a departing partner at an agreed upon price based on their share valuation. As this applies to estate planning, buy-sell agreements will often use life insurance policies to fund the purchase of a deceased co-owner’s share. With the cross-purchase plan each co-owner takes out a policy on every other and the proceeds are used to buy the deceased partner’s share from his or her heirs. With the entity plan the business entity itself purchases a life insurance policy on each co-owner and these proceeds would be used to buy the ownership share of the deceased from his or her estate.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

As the field of elder law broadens in scope there are a number of retirement and estate planning components that many people are learning about for the first time. Things like advance health care directives, durable powers of attorney, pay on death accounts, living trusts and other relevant legal instruments do indeed aid in effective estate planning. But some things that we are all well aware of never go out of style, and life insurance is one of them.

When you pass on there are going to be expenses involved. Aside from the funerary costs, which can be considerable depending on the specifics of your wishes, there are also costs associated with the administration of your estate. Life insurance policies can provide ready liquidity that your family can use to address these after-death expenses without reducing the value of your existing assets.

The above is true for everyone, but younger people have additional reasons to make sure that they have sufficient life insurance. If you have a family and you were to die suddenly without a plan in place, could your loved ones survive economically? Losing a parent or a spouse is traumatic in and of itself, but losing your home and suffering a diminished quality of life while you are trying to deal with the tragedy makes the situation even more devastating. It is imperative that you evaluate the financial needs of your family on an ongoing basis and make sure that the level of life insurance that you have purchased is providing sufficient coverage. Think long term when you are assessing your life insurance needs, and consider things like college expenses and the ongoing increases in the cost of living.

A well rounded estate plan can include multiple elements, but the tried and true life insurance policy is still relevant. The peace of mind that it buys in relationship to its cost makes it one of the best inheritance planning values available.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

If you are concerned about the safety of your bank deposits, it is time to get FDIC insurance coverage. The FDIC or Federal Deposit Insurance Corporation is a United States government corporation established in 1933, under the Glass-Steagall Act. It offers deposit insurance at 7,895 institutions.

Why opt for FDIC insurance and what does it cover?

The money you deposit in a bank is invested by that financial institution. However, if those investments fail, your deposits may be in danger. Through an FDIC insured account your money is safe even if the bank fails. FDIC insurance covers all types of deposits at associated institutions. These deposits include:

• Savings accounts
• Checking accounts
• Certificates of Deposit
• Money market accounts

(Note: FDIC insurance does not include money market funds.)

What is not covered under FDIC insurance?

An FDIC insurance account does not cover Trust items that are not considered deposits. Such items include:

• Investments, such as stocks or mutual funds
• Contents of a Safety Deposit Box
• Insurance products, such as annuities

FDIC insurance also does not provide protection against crimes, such as identity theft or illegal use of your bank account.

To what extent does FDIC insurance provide coverage?

There is a limit to the extent an FDIC insured account provides coverage. Currently, FDIC insurance provides safety of deposits up to $250,000 per depositor. This limit is bound to remain unchanged until at least December 31, 2013. If you have a relatively high net worth, you can avoid any coverage issues by placing accounts in multiple banks covered by FDIC.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.