How-to Manage End-of-Life Financial Planning

Transcription

1 Legal & Fance Passare and Robert L. Shepard Proessional Law Corporation How-to Manage End-o-Lie Fancial Planng ebook #19

2 How-to Manage End-o-Lie Fancial Planng: ebook #19 How-to Manage End-o-Lie Fancial Planng End-o-Lie ancial planng is an important way to provide or your loved ones and preserve the assets you ve earned. It is a priceless git that gives you peace o md knowg that the your al wishes will be honored as you near End-o-Lie. TM As part o our ebook series, Passare shares resources and guidance to help you manage End-o-Lie ancial planng. Passare helps guide you through one o lie s most important passages. You Will Learn About: 1. What is End-o-Lie Fancial Planng? 2. Beneits o Fancial Planng or End-o-Lie 3. When and How to Beg 4. Key Decisions and Tasks 5. Fancial Tools and Resources 6. Dratg Your End-o-Lie Fancial Plan 7. Summary The ebook cludes: A. Frequently Asked Questions about End-o-Lie Fancial Planng B. Checklist: End-o-Lie Fancial Planng Estimated Time Required: 20 mutes 1

3 What is an End-o-Lie Fancial Plan? End-o-Lie ancial planng is a topic that most people preer to thk about later rather than sooner. Yet planng ahead is essential to help you and your loved ones manage the costs associated with this evitable lie passage. What do we mean by End-o-Lie ancial planng? End-o Lie ancial planng is a process that cludes reviewg your ancial situation, evaluatg choices and makg decisions that will ultimately become your plan or how you will und your End-o-Lie. End-o-Lie ancial planng cludes many elements and can be complex. Passare provides you with guideles and ancial planng topics to make this a more approachable, easier process. Beneits o Fancial Planng or End-o-Lie Some o the key beneits o creatg a ancial plan clude: Peace o md Planng ahead reduces the ancial burden on you and your loved ones when you near End-o-Lie or pass away Fancial savgs Planng reduces overspendg that may occur when loved ones must determe how to pay or End-o-Lie care and services under signiicant emotional stress Enables care choices End-o-Lie care and accommodations can be expensive; ancial planng helps ensure that you receive the type o care you want, where you want it Preserves your assets Fancial planng helps protect your assets and heirlooms rom probate court and reduce estate taxes ater you pass away Provides or loved ones Planng allows you to help your loved ones through lie surance, wills, estate plans or trusts 2

4 Allows personal control A pre-paid uneral plan allows you to design a service to it your budget and reeze costs at today s prices Ensures decisions are honored Organizg your ances helps your Fancial Power o Attorney (FPOA) or loved ones carry out your al wishes ater you pass away When and How to Beg Just as End-o-Lie is an evitable part o lie, so is managg the costs or your al care and services. They are important lie passages that deserve a well-considered ancial plan. Whether you are startg your career or changg jobs, startg a amily or retirg, now is a good time to start considerg your End-o-Lie ancial plan. Planng how to manage the costs or your al care and services, protectg assets and heirlooms and providg or loved ones ater you pass away is an valuable git to your amily. Gather Important Documents For optimal planng and decision-makg, you want to determe your assets (what you own) and your liabilities (what you owe). To start the process, gather and organize important documents to get a clear picture o your current ancial situation. Documents to collect clude: Deeds and titles to all property cludg homes, vehicles and other assets Busess ownership documents, cludg recent ancial statements Private surance policies cludg lie, health, long-tem care and uneral trusts Government health surance documents cludg Medicare and Medicaid Social Security documents US Military service records, cludg Veterans discharge papers Recent come tax return statements Investment statements cludg mutual unds, IRAs, 401(k) and pension accounts Recent come tax return statements Credit card statements Bank statements cludg personal savgs and checkg accounts 3

5 Monthly come statements or pay stubs Records o charitable contributions Credit reports Cemetery deed documents Funeral pre-planng documents! Store these documents an easy-to-access, secure place. Tell trusted loved ones or advisors the location. Identiy Other Valuables Locate other items o potential ancial or emotional value, cludg: Family heirlooms cludg artwork and precious jewelry Sae deposit boxes that may conta important documents or valuables Contents o personal saes and storage units Talk with amily members and other loved ones to help you identiy and locate other sources o ancial value. It is also important or you to communicate the location o all o your assets to someone you trust. Consult with Advisors To help you understand and develop an End-o-Lie ancial plan, talk with a competent advisor, such as: Your accountant, attorney, executor, banker or a certiied ancial planner Your home and vehicle surance agents Your uneral director or al services provider Ater you organize and gather your important ancial documents, identiy assets, and consult with trusted advisors and loved ones, it s time to identiy the primary End-o-Lie ancial decisions and tasks. 4

6 Take a ew mutes to answer these questions. 1. What personal valuables, assets or amily heirlooms do you have? 2. Where are documents and other relevant ormation or these assets stored? 3. Who among your loved ones or trusted advisors can you ask to help you organize and manage End-o-Lie ancial matters? Key Decisions and Tasks Important End-o-Lie ancial decisions and tasks clude the ollowg: Appotg personal representatives who will make decisions or you should you be unable Completg legal documents such as an Advance Heathcare Directive, trust and/or a will to provide or loved ones and protect your assets Preplanng and/or prepayg or your uneral or al services Appotg Personal Representatives As you near End-o-Lie, it s important to appot one or more people you trust to manage your medical and ancial matters i you become unable, and to ensure that your al wishes are carried out ater you pass away. Consider appotg the ollowg representatives: Healthcare Proxy or Medical Power o Attorney (MPOA) A Healthcare Proxy or MPOA gives legal power to the person you appot to make your healthcare or medical decisions i you are unable Fancial Power o Attorney (FPOA) An FPOA gives legal power to the person you appot to act on your ancial matters i you are unable Executor An executor gives legal power to the person you appot to carry out your al wishes your will ater you pass away 5

7 Digital Executor A digital executor is a person or onle service that you appot to distribute or delete your digital assets accordg to your al wishes! You may appot the same person to serve some or all o these roles. Ask a capable, trusted riend or loved one to accept responsibility or these important tasks. Completg Legal Documents To ensure that your decisions about your al care and services, ancial assets and personal heirlooms will be honored, consider preparg the ollowg legal documents: Advance Healthcare Directive (AHD) or livg will An AHD or livg will are legal documents that outle your directions or what kd o treatment you want i you become unable to make your own decisions Durable Power o Attorney (DPOA) These legal documents give the person(s) you appot to make ancial and/or medical decisions or you i you become unable to make your own decisions Will This legal document cludes your al wishes or your al services and or distributg your ancial and digital assets and other possessions ater your death Trust This legal document can assist the distribution o your assets to help avoid probate. It can also address asset management or beneiciaries who are mors. Most End-o-Lie legal documents are accessible on the Internet and ree o charge to download and complete the privacy o your home. Additional costs may apply i you consult an attorney to help you prepare these documents.! Although a will may be legally prepared without an attorney s assistance, we recommend that you consult an attorney who specializes estate planng or help. 6

8 Creatg Your Will I you have dependent loved ones or own anythg o ancial it is important to create a will, appot an executor to manage it and assign beneiciaries or recipients accordg to your al wishes. Creatg a will ensures that your assets are preserved and your End-o-Lie decisions are carried out. Passg away without a will is called dyg testate. I you do not have a will at the time you pass away, the court, known as probate court, assigns an Admistrator.! Without a will, testate succession governs distribution, and your wishes become irrelevant. Intestate succession is essentially the government deault estate plan put place or you. Your estate pays the executor every time he or she goes to court on your behal. Preplanng or Prepayg Your Funeral or Fal Services A pre-planned, pre-paid uneral service is an important vestment you can make or your amily s uture. It spares your amily rom a considerable ancial burden durg one o lie s most challengg events. Choosg ceremony, service and al restg place options and considerg prepayment plans will help ensure that your al service wishes will be honored. There are many options to consider as you plan the costs or your uneral or al services: Choose your ceremony or service You may choose rom many options cludg traditional, lie celebration, graveside, memorial, cremation, direct burial, home or green uneral services Select personalization options You may customize many elements o your uneral cludg addg music, ood, lowers, technology and other personal touches to your service Decide your al restg place You may pick rom many options cludg burial locations, or scatterg or transormg remas to works o art, jewelry or other spirg alternatives Review beneits Learn about ancial resources and beneits you may be entitled to under your uneral surance policy, uneral trust or your ederal surance plan 7

9 Visit and read the Passare ebook, How-to Plan Your Funeral or more ormation on planng your al services. Read the section, Fancial Tools and Resources later this ebook or more ormation to help you pay or your uneral or al services. Take a ew mutes to answer these questions. 1. Whom do you want to make decisions about your healthcare and ances i you are unable? 2. To whom will you leave personal assets like your home, ancial or digital assets or heirlooms ater you pass away? 3. In what ways will you want to personalize your al services to clude your values or personality? Fancial Tools and Resources There are several ancial resources and tools to help you create your End-o-Lie ancial plan. The three ma ancial resources that most people use to manage End-o-Lie costs clude: Personal unds Insurance policies Government programs Personal Funds You may need to use personal savgs to pay or your End-o-Lie costs. To qualiy or a government subsidy like Medicaid you may need to irst spend down most o your personal savgs or other ancial resources. Read the section, Government Programs later this ebook or more ormation on Medicaid Spend Down. We suggest that you review your ancial resources cludg your personal savgs and any come you receive rom vestments, stocks, bonds, mutual unds, 401ks, pension or other retirement unds. You also may be able to use the value o your home to help pay or End-o-Lie costs.. For stance, i you own your home, a reverse mortgage may help you raise enough money to pay or -home care. 8

10 Insurance Policies Insurance policies can help you pay or End-o-Lie care and al services. We suggest that you review all your surance coverage, cludg: Health surance Long-term care surance Lie surance Funeral surance Health Insurance Most health surance plans provide little, i any, coverage or long-term or End-o-Lie care. Oten, private health surance or HMOs ollow the same general rules as Medicare with regard to payg or long-term care services. For example, they typically cover long-term care services only or short-term, or medically necessary care under very speciic conditions. Long-Term Care Insurance Long-term care surance is private surance that you or an employer may purchase. You can purchase nursg home-only coverage or a comprehensive policy that cludes both home care and acility care. The cost o your long-term care policy is based on the type and amount o services you choose to cover, how old you are when you buy the policy and any optional beneits you choose. Lie Insurance An important reason to buy lie surance is to replace the loss o come that your loved ones would experience the event that you pass away. Lie surance beneits are oten available to your beneiciaries almost immediately upon your death.! You may also use some lie surance policies to pay or long-term care services. For ormation on usg lie surance policies to ance long-term care, visit: 9

11 Funeral Insurance Funeral surance, also called burial, al expense or pre-need surance, reers to ancial products and services to pay or al arrangements. Funeral surance reduces the ancial burden on your loved ones when you near End-o-Lie or pass away. Many amilies are unable to und the cost o a uneral the short amount o time ollowg a death and uneral services oten will not proceed until al payment is made. Government Programs Government surance programs that provide End-o-Lie ancial resources clude: Medicare Medicaid Social Security Veterans Admistration Medicare Medicare is ederal health surance or people age 65 and older and younger people with certa disabilities. For more ormation about Medicare coverage or End-o-Lie care visit: Medicaid Medicaid is a ederal and state surance program and the largest source o undg or medical and health-related services or people with limited come and resources. Medicaid provides coverage or many End-o-Lie services cludg personal care, home health care and nursg home care. Eligibility or Medicaid and which speciic End-o-Lie services are covered varies rom state to state.! Beore you qualiy or Medicaid, you may be subject to its Spend Down rules. You may have too much come to qualiy or Medicaid. This amount is called excess come. You may qualiy i you spend your excess come on healthcare. This is called Spend Down. Spend Down means reducg a person s assets until Medicaid limits are reached. However, you may qualiy or Medicaid even i your come is higher than the speciied limit. Under Medicaid Spend Down rules, a person s medical expenses are subtracted rom their come durg a speciic time period. Once their come reaches a pre-determed level, they may qualiy or beneits or the remader o the time period. 10

12 Medicaid considers all assets that could be used toward payg a person s healthcare costs. For more Medicaid Spend Down ormation visit: For more ormation about Medicaid coverage your state visit: For more ormation on Medicare and Medicaid eligibility, contact the Center or Medicare & Medicaid Services at: or the National Association o Elder Law Attorneys at: Social Security Social Security is a ederal surance program that provides beneits to retired people and those who are unemployed or disabled. For more ormation on Social Security End-o-Lie beneits consider the ollowg onle resources: For general ormation visit: or call For social security come & burial und ormation: For Special Lump Sum Social Security Death Beneit ormation: For Social Security Survivor s Beneit Fact Sheet: Veterans Admistration The US Department o Veterans Aairs provides US Military Servicemembers and Veterans and their amilies with many End-o-Lie beneits and services, cludg End-o-Lie care, pension, and lie surance and burial beneits. Call or visit: or more ormation. You may also read the Passare ebook, Understandg US Veterans Beneits and Services at guides or more ormation on End-o-Lie beneits or US Military Servicemembers and Veterans. 11

13 Take a ew mutes to answer these questions. 1. What combation o savgs, pension, long-term care or lie surance will you use to pay or your End-o-Lie expenses? 2. Which part o your healthcare surance covers long-term care or nursg home care? 3. Which government health surance program(s) are you eligible or? Dratg Your End-o-Lie Fancial Plan We recommend the ollowg steps to create your End-o-Lie ancial plan: Gather documents and ventory ances This will help you get a clear view o your ancial situation, organize your assets and help your amily or FPOA manage your ancial aairs ater you pass away. Identiy assets and valuables Locate and identiy all assets o potential value, cludg personal heirlooms and contents o sae deposit boxes or storage units. Consult with loved ones or help. Consult with advisors Experienced ancial and legal proessionals can help you better understand and manage your End-o-Lie ancial matters. Appot personal representatives Appot one or more persons you trust to manage your medical and ancial matters i you become unable and to carry out your al wishes ater you pass away. Complete legal documents and tasks Preparg an AD, Durable or FPOA and/or a will ensures that your decisions about your al care and services, ancial assets and heirlooms will be honored ater you pass away and will help provide or your loved ones, protect your assets and avoid probate court and estate taxes. Research and estimate costs Learn about costs associated with al care and comort procedures, cludg long-term and nursg home care and al services. Your choices will help you determe the ancial resources you ll need. 12

14 Pre-plan and/or pre-pay your uneral or al services Consider service option preerences and whether obtag prepaid uneral surance is right or you or your amily. Review beneits Review your personal resources, health, long-term care and lie surance plans and government programs to assess values and check beneits to which you may be able entitled. Consider resources Consider all ancial resources cludg pension, dividends rom vestments, payments rom a 401(k) or IRA, personal savgs, stocks and bonds, and the value o your home. Make a budget Determe i you can pay or your End-o-Lie expenses and whether you will be able to cover the costs with your personal savgs and other resources. Consider additional surance Decide whether obtag additional health, lie, or prepaid uneral surance is right or you or your amily. Once your End-o-Lie ancial plan is place, we suggest you do the ollowg: Copy and store documents Give copies o your End-o-Lie ancial plan to your loved ones or an advisor. Store documents a secure, accessible place. Communicate your plan Your End-o-Lie ancial plan is useul only i others know about it. Let your loved ones know you have an End-o-Lie ancial plan and where it is stored. Summary There are many thgs lie and at End-o-Lie that we can t control. Yet there are some thgs we can. With orethought and planng, you can reduce End-o-Lie ancial stress or yoursel and your loved ones. You ll have peace-o md knowg that you have created a ancial plan to provide or your loved ones, protect your assets and ensure that your al wishes are honored durg this important lie passage. Please visit: or more ormation and expert resources on managg End-o-Lie ancial matters and many other End-o-Lie Management topics. 13

15 Frequently Asked Questions (FAQ) 1. What is an End-o-Lie ancial plan? End-o Lie ancial planng is a process that cludes reviewg your ancial situation, evaluatg choices and makg decisions that will comprise your plan or how you will und your End-o-Lie expenses. There is no one End-o-Lie ancial plan that its everyone s needs. Each person s plan varies accordg to age, health, ancial situation and your wishes or your al care and services, and how you want your assets distributed ater you pass away. 2. How do I start my End-o-Lie ancial plan? Beg by gatherg and organizg important ancial documents to get a clear picture o your ancial situation and to determe your assets (what you own) and your liabilities (what you owe). Review your come and debt statements, surance and vestment documents, government surance ormation and tax return statements. Next, identiy other potential sources o value like the contents o sae deposit boxes, personal saes and storage units. Then talk with loved ones and proessional advisors to help you develop your End-o-Lie ancial plan. 3. What are the ma elements o an End-o Lie ancial plan? Important End-o-Lie ancial decisions and tasks clude appotg a person you trust to manage your medical and ancial matters i you become unable; completg legal documents to provide or loved ones and protect your assets; and preplanng and/or prepayg your uneral or al services. Research and estimate costs associated with al care and services. Review your health, long-term care and lie surance plans, personal ancial resources and government programs to assess beneits to which you may be able entitled. Make a budget to determe i you can pay or End-o-Lie expenses. 14

16 4. What are some examples o End-o-Lie legal documents? An Advance Healthcare Directive or livg will provides your directions or what kd o treatment you want i you become unable to make your own decisions; a Durable and Power o Attorney (DPOA) which gives a person you appot legal authority to make ancial decisions or you i you become unable; and a will which cludes your al wishes or your al services and or distributg your ancial and digital assets ater you pass away. 5. What are the ma ancial sources to pay or End-o Lie? The three primary resources to manage End-o-Lie costs clude personal unds, surance policies and government programs like Medicare and Medicaid or Social Security. 6. What s the dierence between long-term care surance, Medicare and Medicaid? Long-term care surance is private surance that you or an employer may purchase. Medicare and Medicaid are government healthcare surance programs. Medicare is ederal health surance or people age 65 and older and or some people with disabilities. Medicaid is a ederal and state health surance program or people with limited come and resources. For more ormation visit and 7. What are some ways to pay or uneral costs? You may choose to prepay your uneral with uneral surance to reeze today s prices and protect your amily rom tomorrow s risg uneral costs. Payment plans are available. Lie surance beneits are also commonly used to cover uneral costs. 8. What ancial resources are available to US Military Servicemembers and Veterans? The US Department o Veterans Aairs provides Servicemembers and Veterans and their amilies with many End-o-Lie beneits and services, cludg End-o-Lie care, pension, and lie surance and burial beneits. Call or visit: or more ormation. 15

17 Checklist: End-o-Lie Fancial Planng We recommend the ollowg steps to create your End-o-Lie ancial plan: Gather documents and ventory ances This will help you get a clear view o your ancial situation, determe your assets (what you own) and your liabilities (what you owe), and organize your assets Identiy assets and valuables Locate and identiy all assets o potential value, cludg contents o sae deposit boxes or storage units Consult with advisors Experienced ancial and legal proessionals can help you better understand and manage your End-o-Lie plan Appot personal representatives Appot one or more persons you trust to manage your medical and ancial matters i you become unable, and to carry out your al wishes ater you pass away Complete legal documents and tasks Preparg an AHD, DPOA or FPOA, a will and/or a trust ensures that your decisions about your al care and services, ancial assets will be honored, and will help your estate avoid probate court and estate taxes ater you pass away Research and estimate costs Learn about costs associated with al care procedures, cludg long-term and nursg home care and al services. Your choices will help you determe the ancial resources you ll need 16

18 Pre-plan or pre-pay your uneral or al services Consider service option preerences and whether obtag prepaid uneral surance is right or you or your amily Review beneits Review your personal resources, health, long-term care and lie surance plans and government programs to assess values and check beneits Make a budget Determe i you can pay or your End-o-Lie expenses and whether you will be able to cover the costs with your personal savgs and other resources Consider additional surance Decide whether obtag additional health, lie, or prepaid uneral surance is right or you or your amily Copy and store documents Give copies o your End-o-Lie ancial plan to your loved ones or an advisor and store documents a secure, accessible place Communicate your plan Let your loved ones know you have an End-o-Lie ancial plan and where it is stored Visit or more ormation and expert resources on managg End-o-Lie ancial planng and other End-o-Lie Management topics. 17

19 From birth to death, lie is a series o passages. Only Passare allows you to connect and collaborate with your amily any time, anywhere to easily explore and plan or End-o-Lie. With Passare, you can engage with trusted End-o-Lie experts and relevant resources that guide you through one o lie s most important passages and ensure that the speciic needs and wishes o you and your amily are honored. Please visit or more ormation on how we can help simpliy End-o Lie Management. Robert L. Shepard graduated rom New College o Caliornia, School o Law, May 1998 and gaed an advanced degree at Golden Gate University s LLM masters program taxation. Robert L. Shepard s practice is ocused on preventative law. With a new and orward-thkg process, Shepard has helped over 1,000 clients protect and ensure their assets get passed onto the next generation with mimal government tererence. 18