By Jill Nagy
Once the black balloons and “Over the Hill” posters have been put away, it’s time give some serious thought to the future. For people over 50, it is a critical time to review estate documents, financial plans, insurance policies and the like to be sure that they meet current needs, counsels Dale Mullin, a CPA and Certified Financial Planner with Whittemore, Dowen & Ricciardelli, LLP, in Queensbury.
As the years have crept up, children may have grown, adult relatives may have died or moved away, marriages may have been dissolved or created. At the same time, tax rules and rules regarding health records have changed; even the form for a Power of Attorney has changed – again.
The firm periodically presents workshops for clients on “Organizing Your Estate,” most recently, last May. Asked for a short summary of the workshop lessons, Mullin began by advising the update of estate documents: will, revocable trusts, power of attorney, health care proxy, living will, etc. He suggested, also, reviewing beneficiary provisions of insurance policies, brokerage accounts, retirement accounts, bank accounts, and the like.
Often, he noted, there has been a divorce, and documents were not updated to take that into account. In some cases, assets may still go to the former spouse; in others, they may go into the estate or to a new spouse. That choice should be made explicit.
When there is a beneficiary designated for a specific asset, those assets pass outside the will, he pointed out. That is, the provisions of the will do not affect their disposition. One unintended consequence may be assets going to the estate of a deceased beneficiary. While it may be possible to undo that situation, it will take time and cost money; it is best to avoid the unwanted outcome by changing the beneficiary or designating a contingent beneficiary to take, in case the named beneficiary is unable to do so.
As noted, the required language for Power of Attorney forms was recently changed and a provision was added requiring the designated attorney in fact to sign the document as well as the donor of the power. Privacy rules pertaining to health care records may prevent a designated health care proxy from getting access to medical records unless necessary language is included to allow that access; an old health care proxy probably lacks that language.
As children grow up, their needs change and the needs of one child may differ greatly from those of another. Mullin mentioned, especially, the importance of making provisions for a disabled child.
“People over 50 years of age really are – or should be – thinking about retirement,” Mullin said. He reminds them to review their retirement accounts and ask themselves: “Have you put away enough? Is there the appropriate balance between high-risk and low-risk assets? Have you taken advantage of the ‘catch-up’ provisions that allow people over age 50 to make additional contributions to tax-deferred accounts?”
The potential costs of long-term care create the need for additional planning. For some people, long-term care insurance may make sense. In any case, “it is something where you really want to take a look,” he said. Long-term care insurance is always an expensive option, he cautioned, and all that money is lost if there is no need for long-term care, so “weigh all the different options and the reason for the insurance,” he advised.
One alternative Mullin mentioned is a “hybrid” life insurance policy that can be used for nursing home fees. For other people, “Medicaid planning,” which reallocates assets to make someone eligible for Medicaid who might otherwise have too many assets and/or too much income, may be advisable. And some people, he noted, simply have enough assets and income to cover the costs of long-term care and do not need any special provisions.
Whittemore, Dowen & Ricciardelli, LLP, provide accounting,estate planning services, investment advice, and insurance, including both life insurance and long-term care insurance.
Their main office is at 333 Aviation Road in Queensbury and at 112 Spring Street in Saratoga Springs and on the web at WDRCPA.com.