Wednesday, October 25, 2017

The Role of the HECM in Indiana Estate Planning

At Rebecca W. Geyer & Associates, we’re dedicated to providing in-depth counseling to individuals and families to accomplish practical estate planning solutions.  That includes staying abreast of new developments in investments. tax law, and insurance. One tool that has become increasingly popular, and which is often advertised on TV) is the reverse mortgage (you may have heard the term HECM, standing for Home Equity Conversion Mortgage).

“If you are a homeowner age 62 or older and have paid off your mortgage or paid down a considerable amount,” The U.S. Dept. of Housing and Urban Development website explains, “you may participate in FHA’s Home Equity Conversion Mortgage program.”

At Geyer Law, we were particularly interested in reports of a new study published in the Journal of Financial Planning. For “house-rich” clients, the researchers learned, where the value of their home was double that of the value of their retirement savings, having those clients take a stream of income out of a reverse mortgage’s credit line substantially increased inflation-adjusted retirement income through a 30-year retirement period.
What is especially interesting about this paper is that most retirees who choose to take reverse mortgages have tended to use the reverse mortgage credit line as a backup, or “last resort” in case they were run out of money in the later years of their retirement. In this article, authors Neuwirth, Sacks, and Sacks advocate using income from a reverse mortgage as a planned component of retirement income.

At the same time, our estate planning attorneys find it important to explain to those contemplating a reverse mortgage that a HECM transaction lowers the value of their estate because they themselves are using part of their assets.

In the course of discussing all these different needs and wants with clients who are thinking about entering into a HECM but have not yet done so, we encourage them to, wherever possible, involve the younger family members (their heirs) in the discussion. Why? A reverse mortgage doesn’t need to be repaid until the last surviving borrower no longer lives in the home, or the home is sold. Both parents and adult children should consider the ramifications prior to entering into such an arrangement:

by Rebecca W. Geyer

Wednesday, October 18, 2017

Why Health Savings Accounts Can Be Significant in Retirement Planning

“While retirement planning and estate planning are linked, you need to prioritize for everyone to benefit,” firstcoastadvisors.com explains. If you don’t put retirement first, you risk becoming a burden to your children, yet at the same time you wish to secure the future of your descendants. In between the two, though, is one people of the sequence that benzinga.com calls “the pothole”, which is end-of-life medical care costs.
At Geyer Law, we absolutely agree with New England attorney Jules Martin Hass that the cost of living for those who need end of life care is extraordinarily high. With only four basic ways to pay for care, including paying out-of-pocket, long term care insurance, Medicare and Medicaid, even for those who were financially secure throughout their lifetime, medical costs can “feel like insurmountable financial challenges”.

With proper Medicaid planning by an experienced advisor, families can ensure that all of their assets are not lost to a nursing home, and much of our efforts on behalf of retired clients with children is devoted to this area of planning.

Ed Slott, writing in Financial Planning Magazine, suggests planners explore an additional, lesser known avenue of planning to help their clients arm themselves against “the pothole” between retirement and death: Health Savings Accounts.

“A large percentage of many retirees’ savings will go towards health care costs,” Slott points out, and an HSA can be a valuable tool to pay for these expenses. “Most clients with HSAs use them inefficiently,” Slott claims.  Whenever they have a qualified medical expense, their first thought is to turn to the HSA . “In the process,” he explains, “they lose out on the opportunity of tax-deferred growth and perhaps more important, they lose out on potentially larger tax-free distributons in retirement.” For clients 65 and older, HSA distributions are no longer subject to penalty.

While retirement planning and estate planning are linked, the attorneys at our Indiana estate planning firm realize the neither one of these can be secure unless clients prepare to avoid “the pothole” of end-of-life medical costs!
by Ronnie of the Rebecca W. Geyer blog team

Wednesday, October 11, 2017

Why Your Doctors Are Part of Your Estate Planning Team


“If you are to get the medical care you need,” cautions Tim Prosch in the book The Other Talk, ” you and your family will need to learn how to take control of your healthcare.”

At Geyer law, we convey the same message to our estate planning clients. Appointing someone to be your medical advocate or healthcare power of attorney is literally just the first step, because, just as Prosch warns, that representative may someday be called upon to coordinate various doctors and specialists on your behalf, find and organize medical records, deal with diagnoses, even negotiate with insurance companies.

Once you’ve determined which child or other relative would be the best candidate for your medical power of attorney (someone who is emotionally strong and a good communicator, plus has the time available to devote to the task), you must begin the task of organizing your medical history. In addition to the legal documentation, your folder must include:
  • A list of doctors and medical providers (names and contact information, medical specialty, and a brief description of what treatment plan each recommended for you)
  • A list of medications (name, strength, how often you are taking them, who prescribes the medication, where the prescription is filled).
  • Medical insurance information – policy numbers and contact information
Prosch recommends building a medical family history. “The purpose,” he says, “is to create an understanding of potential risk factors by linking family genes to predisposition for many chronic illnesses.”  Rather than creating fear, he explains, such a history allows you to be proactive for preventable diseases so you can be on the lookout for early symptoms.

Having your medical representative participate in doctor visits, possibly via conference call or Skype, would be good practice, Prosch suggests.

We agree.  The goal of our attorneys at Geyer Law, regardless of your financial status, is to help you accomplish your objectives and provide for your family in the best way possible.  We believe assembling your estate planning team, including your medical advisors, is a path to peace of mind.

- by Rebecca W. Geyer

Wednesday, October 4, 2017

How Life Partners Can Inadvertently Disinherit Each Other

“You have to be vigilant to make sure assets will pass to the other when one of you dies,” Marcia Passos Duffy writes in Bankrate.com, referring to unmarried couples living together. “When life partners don’t tie the knot,” Duffy adds, “they don’t enjoy the financial advantages that come with marriage.”
  • Name each other as beneficiaries on pensions, retirement accounts, and insurance policies. Qualified plans must now provide survivor benefits to same-sex spouses.  But some retirement and pension accounts have different rules about naming non-family beneficiaries.
  • Prepare wills. Otherwise, assets can pass, by default to a blood family member under intestacy laws of your state of residence.
  • Be careful about the titling of the home. If both partners have contributed equally, title the home in both names as joint tenants with right of survivorship; if only one partner has bought the home, use your will or possibly a revocable living trust to ensure that the surviving partner can remain in the home.
  • Name each other in durable power of attorney and healthcare power of attorney documents and visitation authorizations. A life partner could be shut out of end-of-life decisions if he or she is not designated as an agent to act on your behalf.
  • Prepare guardianship arrangements. If there are children involved and the couple wants the survivor to have full legal parental rights, guardianship language in a will is necessary.  This is especially true in a same-sex relationship if one party has no blood relationship with the child and such party has not legally adopted the child. The person listed as guardian in the parent’s will is given the first priority in determining who should be the child’s guardian under Indiana law.
  • Prepare a domestic partnership agreement. This is similar to a pre-nuptial agreement used by traditional couples, setting up a process for dividing property in the event of a separation or end to the relationship.

At Geyer Law, our attorneys often explain that estate planning “tools” generally fall into two categories: lifetime documents governing events during life, and post-life documents governing what happens after death. At our Indianapolis estate planning and elder law firm, we know that people face changing circumstances and make ongoing decisions that have legal ramifications. We serve as a resource to clients, combining clear and concise legal recommendations with responsiveness and compassion.

Given proper preparation and legal guidance, it should never happen that life partners inadvertently disinherit each other!
- by Rebecca W. Geyer