As you spend time perusing the site, you will notice a plethora of articles on a wide variety of topics. These articles are here to provide you with some basic information on each topic, and perhaps educate you on things that you may not have been previously aware of. However, it should be noted that these articles are not a substitute for professional legal or financial counsel, and should not be treated as such. They are merely a tool to help you get started on this journey.
There are a lot of pitfalls that you need to be aware of when it comes to providing sufficient care for your elderly friend or family member. There are a lot of things that can occur that many people may not even be aware of, and sometimes just trying to figure out where to look to find adequate, easy-to-understand information can be enough to make your head spin!
To help ease that feeling, the articles have been organized by category so that you will be able to find the topic you are searching for quickly and be able to have access to the information you need. We understand that, like your loved one, your time is very precious to you, and these articles have been designed with that in mind.
With that said, we hope that you find these articles to be informative and helpful, and our hope is that they will help make the decisions that lie ahead of you at least a little bit easier.
We thank you for choosing the Elder Watchdog to provide you with the information you need and for allowing us to serve you as best we can.
Life insurance can obviously be a good thing to have, but with the many options available to seniors and elderly persons, it can all be a little overwhelming. It’s also important to remember that if you don’t really need it, you shouldn’t buy it. So let’s first look at that question: Do you need life insurance? The answer to that question varies from person to person. For instance, if one does not have any dependents, that individual most likely does not need life insurance. Also, if you do not contribute a significant percentage of your family’s income you might not need life insurance.
However, if your salary is important to supporting your family, paying a mortgage or any other recurring bills, or sending children to college, then life insurance becomes important in making sure these financial obligations are still covered in case something should happen to you.
So, how much life insurance do you need exactly? That can be difficult to answer, since the amount you need is dependent on factors like other sources of income, the number of dependents, your debts, and your lifestyle. However, as a general guideline, you’re looking at between five and ten times that of what you make per year.
If you’re curious which type of policy to buy, some experts recommend a term life insurance policy if you’re under 40 and don’t have a family disposition to life threatening illnesses. This type of insurance policy offers a death benefit but no cash value. On the other hand, a whole life policy offers a death benefit and cash value but is oftentimes much more expensive. Half of all the cash value policies are surrendered in the first seven years, and this causes the coverage to be extremely expensive due to huge commissions (of thousands of dollars in the first year) and fees that limit the cash value in early years.
In the case of a whole life policy, premiums stay the same throughout the duration of the policy (until your death), even after all premiums have been paid. A reserve of cash is accumulated, but you don’t control how that cash is invested.
With variable life policies, a cash reserve is accumulated in which you can invest in any choices offered by the insurance company. The value of the reserve is dependent on how well those investments are doing.
Universal life policies will allow you to vary the amount of your premium by using a part of the earnings you’ve built up to cover part of the cost of the premium. You also have the option to vary the amount of the death benefit, but you’ll pay higher administrative fees in exchange for this flexibility.
So how much does it cost? The cheapest insurance will likely come from the group life insurance plan from your employer, and these are mostly term policies, which means you’re covered for the length of your employment with that company. Although, it’s worth noting that some policies can be converted upon termination. Costs of other insurance greatly depends on how you buy, the type of policy you choose, the underwriter’s practices, how much commission that the company pays the agent, and more.
There is much more to consider, but to wrap up, remember to educate yourself on the basics of life insurance, find a broker you trust, and then have his or her recommendations evaluated by a fee-only insurance advisor. Life insurance can be important, and it is. But you want to make sure that you’re making the right choices for both you and your family.
In a previous article, we looked at what a reverse mortgage was and some of the rules regarding them. For this article, we’ll try to answer another question you might have—when a reverse mortgage might be the right course of action for you.
As with any topic related to finances, the decision of whether or not to apply for a reverse mortgage is a big one, and one that should not be considered lightly. For example, if there is an easier, cheaper way to reach your financial goals, you should consider that route before applying for a reverse mortgage. Also, consider whether or not you should dip into your home equity now, or if you should save it for an emergency. Speaking with a financial advisor and coming up with a good financial plan can help one to avoid making split-second financial decisions in an emergency that may wind up doing more harm than good in the long run.
Now that we’ve taken a look at a couple reasons why you might want to wait, let’s see some of the cons of getting a reverse mortgage:
Of course, it’s not all doom and gloom when it comes to reverse mortgages, either; there are some good aspects. So let’s take a look at some now:
It is important to note that, while this article was indeed intended to provide insight on the topic of reverse mortgages, it is still not a decision to be made lightly. You should seek as much information as possible, speak with family and friends or others you trust, and consult with a financial professional if you have questions regarding reverse mortgages or any other topic related to finances. In doing so, you will be sure to have all the information and answers you seek, and you can thoughtfully weigh them against your personal situation before making any decisions that might affect you or your family or other loved ones.
If you’ve been around for a while, chances are you might have heard of a thing called a reverse mortgage. While you may have heard of it, many people do not know exactly what it is. Either way, this article is going to explain exactly what a reverse mortgage is and what it does.
A reverse mortgage is a loan given to home-owning elders that makes use of a portion of the equity of the home as collateral. In most cases, the loan does not have to be paid back until the final surviving homeowner moves out permanently or passes away. When that happens, the estate has exactly 6 months to pay off what’s left of the balance of the reverse mortgage, or they have the option to sell the home in order to pay off the balance.
Any and all equity that remains is then inherited by the estate, and the estate is not personally responsible if the home sells for less than the balance of the reverse mortgage.
In order to be eligible to receive a reverse mortgage, the Federal Housing Administration (or FHA) mandates that all homeowners be at least 62 or above. If the resident does not own the home free and clear, any existing mortgages must be paid off using proceeds from the reverse mortgage loan at closing. Also, a person must meet financial eligibility requirements as established by the HUD.
A reverse mortgage generally doesn’t become due as long as you meet the loan obligations. Such obligations include: living in the home as your primary residence, continuing to pay required property taxes, homeowners insurance and maintain the home according to requirements made by the Federal Housing Administration.
If you die or the home ceases to be your primary residence for more than a year, the estate of the homeowner can choose to either pay the reverse mortgage or put the home up for sale. If the equity in the home is more than the balance of the loan, the remaining equity then belongs to the estate. However, if the sale of the home is not enough to pay off the reverse mortgage, then the lender must take a loss and request to be reimbursed by the FHA. However, no other assets are affected by a reverse mortgage (i.e. investments, second homes, cars, and other valuable possessions cannot be used to pay off the reverse mortgage).
The amount of the loan mostly depends on a few factors, namely: age, current interest rate, appraised home value and government-imposed lending limits. You can use a calculator to get an idea of how much you might be able to receive, but you also might need to put aside additional funds from loan proceeds in order to pay for taxes and insurance.
While there is a lot more to reverse mortgages, the purpose of this article was just to give you a bit more knowledge as to what such a mortgage is, and some of the requirements and things that you or a loved one can expect if applying for a reverse mortgage is being considered.
As grown children, we always want the best for our parents, just the same as they did for us when we were growing up. That’s why choosing a financial advisor for our loved ones can be just as important as choosing a doctor or lawyer for them. The advice given by financial advisors, just like medical or legal advice, can be very important, it could even be damaging if it is poorly given. That’s why it’s also important that you take time to research and find the financial advisor that is going to help your family member get where he or she wants to be.
The first thing you need to know about working with financial advisors is that it can be a very personal relationship. Things like good communication, rapport, and trust are valuable to success for your family member (and for you as well if you will also be working with the advisor). Pick someone your relative feels comfortable with. Also, the more that the financial professional knows about your family member’s financial situation, the better off things are going to be.
As we said, communication is always a two-way street, but it falls to the advisor to get that communication line open. A good financial advisor should do the following:
In the same way, you’ll want to be sure and ask questions yourself. Some things you and your family member will want to be sure and ask about:
As you never know when you might need it, it’s important to start planning for potential long-term care needs early. Perhaps you may never need it, but there could be an unexpected accident, illness, or injury that can immediately change your needs and your situation. So it’s best to start thinking about long-term care before you actually need it.
There’s a lot that goes into long-term care planning, though, and you want to be able to make those decisions, or at least participate in making those decisions, while you’re physically and mentally able to do so. You’ll need to make:
Along with all these decisions comes a plethora of documents, and it can sprove difficult to know just exactly the type of financial documents you might need. For legal decisions in particular, there are three types of documents (or advanced directives) that it’s recommended you create. They are:
Now let’s take a look at each of these things in a little more depth.
Health Care Power of Attorney
A health care power of attorney is also sometimes known as a durable power of attorney for health care. It is a legal document that will name the person you want to make medical decisions for you if you are unable to do that for yourself. The health care “agent” or “proxy” is your substitute decision-maker. Whomever you choose should both understand and respect your values and beliefs about health care. You should also talk with the person to make sure he or she is comfortable with taking on the role before naming them.
Also called a health care directive, the living will is a document that keeps track of your wishes for medical treatment near the end of life. It also clearly states what types of life-sustaining treatment you would or would not wish to receive if you are terminally ill, permanently unconscious, or going through the final stage of a fatal illness. For instance, the document can state whether or not you wish to receive artificial breathing if you can no longer breath on your own.
Do-Not-Resuscitate (DNR) Order
This order lets health care providers know not to perform cardiopulmonary resuscitation (CPR) or other life-support procedures if your heart stops or if you stop breathing. The DNR order is signed by a health care provider and put in your medical chart. Both hospitals and long-term care facilities have DNR forms a staff member can help you fill out. However, you do not have to have a DNR order.
So there’s your quick look at a few of the necessary or optional documentation you may need to consider when thinking about your future and coming to the decision of what to do if you ever find yourself in need of receiving long term care.
When it comes to the issue of finances, oftentimes people have trouble with things like financial planning and managing a budget.
Some people may also be confused as to the difference between having a financial plan and having a budget. On the surface, they can seem quite similar, so to help you understand better, here is a quick look at the differences between the two:
A budget, for all intents and purposes, is a guideline that people create to help with spending. Normally, it breaks down all expenses into various categories (such as rent, electric bills, etc.) over a certain period of time (usually weekly, monthly, or yearly).
Once every expense has been placed in the budget, they are then added together to get a total. The number of the total is then used to subtract against the total amount of income made for the same time period. The result, then, is how much money can be saved during that specific time period. For instance, if your goal is to save more money, then expenditures can either be changed or dropped from the budget altogether (if possible).
A financial plan is simply a tool that you can use to help you achieve long-term financial objectives. It is similar to a budget, in the sense that it also breaks down all of your expenses, but it is generally much more goal-oriented.
For instance, say that your goal is to save up a certain amount of money so you can retire. A financial plan would be the guideline you would use to reach that goal. Financial plans are also different from budgets since they tend to focus more on income and assets, such as: bank accounts, pensions, home equity, and the like. A financial plan will also estimate how much money you’ll make in stocks, bonds, mutual funds, 401Ks, and so on.
You can also use the BudgetMath website (www.budgetmath.com/) to create a hybrid of a “budget and a financial plan” based on your finances to give you a better idea of how exactly these two options work.
We hope that you’ve been able to find this information helpful, and hope that it has led to a better understanding of a couple of the options available to you when planning for retirement, or if you just want to better manage your finances.
The issue of money can be a very personal one, and one that we may wish to avoid at all costs in many situations. However, there may come a time when your parent may not be able to manage his or her finances properly. If you’ve started noticing they seem to be having trouble, it may be time to sit and have a discussion about where to go from here. With that said, it can be hard to know where to start, so we’ll take a look at some strategies you can use to help get started and help the topic to be a little easier to discuss.
The first thing you can do is use a story. In fact, this can be one of the best ways to get them started talking. It doesn’t even have to be a true story; you can make it up if necessary. However, tell them about someone who either did or did not have the necessary financial information for his or her parents and the implication(s) that it had on the situation at hand. For instance, you could say that the person had extreme difficulty in clearing up their parent’s business because they didn’t have the information on his or her parent’s accounts or any legal documents. Be sure to tell them you don’t want them in the same situation, and that could prompt them to share with you.
Another way you could talk with them is to share your own situation. If you share with them about how you’re managing your own financial business, that could be of some help. You could say something like you’ve met with an attorney to make a will or have created a list of all accounts and passwords to give to your spouse in case something happens to you. You could then ask your parents what they’ve done to ensure this.
Next, you could offer to help them lighten the burden they may be carrying. Ask them if there’s any area you can help with, so that they can better enjoy all the things they like doing without having to worry so much about finances. A specific area that may work best is offering to help with tax preparation, since a lot of people don’t like it much and dread doing it. Aside from helping them out, it will also give you some insight into your parent’s financial situation.
If they seem rather stagnant and intent on not sharing anything with you, you could suggest that they speak instead with an elder law attorney, a financial planner, or aging life care professional—which you can find through the Aging Life Care Association. In all likelihood, these professionals will also encourage your parents to share that important information with you.
There are, of course, many more tips and suggestions to help get your parents started talking about finances, though these are just a few to help get you on the right track. If you’ve been struggling in this particular area, hopefully this will help to kick-start things for you.
Long term care insurance is one type of insurance coverage that is available to people who might potentially need long term care. However, there are many types of long term care insurance (or LTCi) that are available. LTC insurance covers, as a standard, the types of things that health insurance doesn’t, and it can also protect any assets you have. When you purchase a LTC insurance policy, you remove any burden from your children for having to provide care for your long term care. The polices typically cover things like nursing homes and adult day care but are also able to cover likes like home care and assisted living as well. If you have a LTC insurance policy, the benefits from it will kick in when you start to need help with activities in day-to-day living, or if you have a severe cognitive impairment.
You should know that everyone has the potential to need long-term care. We all get older, and a stroke, Alzheimer’s or even a fall can leave someone unable to properly care for themselves. If you are reading this and you’re over the age of 65, your chances of needing long-term care someday are around 68%.
However, keep in mind that it doesn’t just happen to older people, as 37% of people on long-term care are under age 65. If you require long-term care, chances are good that you’ll have to pay for it yourself, unless you’re legally impoverished, then government programs such as Medicaid might cover nursing home care.
Medicare and almost all other health insurance programs only cover LTC for a short period (normally less than 100 days) and even then, they usually only cover it partially. The bill for everything else comes straight to you.
And speaking of bills, long term care is quite expensive. Now, the average cost of a nursing home per year is over $70,000, but by 2030, it is estimated to climb to a whopping $190,600 per year!
Long term care can be a great alternative to having to pay for everything on your own, however, but it isn’t the right way to go for everyone, since each situation is unique. Those with severe health conditions may not be qualified to receive coverage, and if one is retired and has less than $70,000 in savings, he or she should probably rethink purchasing long-term care insurance.
As with any financial decision, however, it is best to consult with family or trusted friends, as well as a financial advisor to get answered any questions you might have. That way, you can be sure you’re making the best decision for yourself as well as for those you love.
Many people try to give away some or most of their assets in order to qualify for Medicaid. However, when someone gives away any property within five years of applying for Medicaid coverage for long-term care, Medicaid will presume that the gift was given in order to be able to qualify for Medicaid coverage. That five-year period is known as the “look back period.” By giving away money or property during the “look back period,” it could usher in a period of ineligibility for Medicaid’s long-term care benefits. The reasoning behind this ineligibility is that those assets that were given away could have been used to pay for their Medical care.
However, not all transfers or gifts will trigger an ineligibility period, and both Federal and state laws have numerous exceptions to the rule against making gifts within that five-year period.
Next, we’ll take a look at some of the most common exceptions.
Transferrable Assets with no penalty
The Home: The home of an applicant is subjected to very special rules that are established in both state and federal Medicaid laws. Normally, the home is exempt (it doesn’t count toward an asset limit and Medicaid doesn’t require it to be sold to pay for long-term care) if the following conditions are met:
However, in most cases the house cannot be given to someone without penalty (as the home exemption requires the applicant or his/her spouse to live in and own the house. However, there are exceptions to this rule. Under federal law, when the title of the home is transferred to another, a period of ineligibility will begin unless the transfer is to one of the following people:
Transfers for the Benefit of the Spouse
Those transfers to a spouse are not penalized by Medicaid since assets held in the name of either spouse are included in determining an applicant’s eligibility. Federal law states there is no penalty if:
Transfers to a Child
An applicant can transfer any resources (including a house, as talked about above) to a disabled child without breaking transfer rules. There will be no penalties when an asset was transferred to an asset’s child, or to a trust made solely for the child’s benefit, so long as the child is either blind or permanently and totally disabled as defined by individual state programs or as defined by Supplemental Security Income.
Undue Hardship Exception
If a Medicaid applicant made a transfer that resulted in a period of ineligibility, there’s a possibility that you could convince Medicaid that the ineligibility would result in an undue hardship. It won’t be easy, though, because undue hardship is defined as depriving a person of medical care that endangers life, according to federal law. This means that you would have to prove that you couldn’t afford a nursing home without Medicaid, and without the nursing home, you might die. Also, each state has its own rules concerning undue hardship, so if you think that you or a family member might qualify for the exception, the nursing home can file a waiver request for undue hardship with the applicant’s consent.