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April is Financial Literacy Month

Financial Literacy Month is being observed in April 2014.

This is an excellent time to recognize the important role that financial literacy plays in individual economic security and the financial health of the nation. Many Americans are not well-informed about important financial issues that affect their everyday lives. Schools, parents, government agencies and financial institutions and advisers all have a role to play in helping to increase knowledge and understanding of critical economic issues.

The overall lack of financial literacy among the general public is evident from a number of surveys. In one study conducted by the TIAA-CREF Institute, people over 50 years of age were asked three general financial questions. To be able to provide the right answer, they would need to understand the basics of inflation, interest rates and risk diversification. Only about one-third of the people answering the survey got all three questions right.

Individuals wishing to test their own financial literacy may take a similar quiz from the FINRA Investor Education Foundation here. The quiz consists of five questions, and after completion one may compare one’s own performance to the national average and the averages for each state. The quiz has been taken by 25,000 consumers, and only 14 percent were able to answer all five questions correctly.

Surveys have also found that young Americans are less likely to be financially literate than older Americans, but that is not surprising considering that 26 states have no requirements for financial literacy education, and only four states require that students take a high school personal finance class.

A lack of financial literacy has real consequences, as studies show that people with a better understanding of personal finance are more likely to plan for retirement, and people who make such plans have an average personal wealth twice as great as people who do not. People with low financial literacy tend to save less, borrow more and pay higher fees for financial products. A lack of financial literacy also corresponds to people having difficulty with debt and not understanding the terms of mortgages and other loans. Without a basic understanding of personal finance, people are more likely to end up paying higher interest rates and avoidable fees.

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This entry was posted on Tuesday, April 15th, 2014 and is filed under Elder Law, Estate Planning | no comments | Leave a comment

April 2, 2014 is World Autism Awareness Day

Landmarks around the world, including New York’s Empire State Building, will shine blue lights on Wednesday to show their support for autism awareness. Organizations large and small will host events to raise awareness of the growing public health issue of autism spectrum disorders.

World Autism Awareness Day (WAAD) follows a new report from the Centers for Disease Control and Prevention. Statistics show, According to the report, one in 68 American children have an autism diagnosis, a 30 percent increase from a CDC study conducted last year, and more than double the number of children estimated to have autism in a 2000 study.

Experts do not know whether autism is actually affecting more people or whether diagnoses have increased as awareness of the disorder grows. According to CDC estimates, approximately 1.2 million people under the age of 21 in the U.S. have some form of autism.

Autism continues to be more prevalent in boys than in girls, with boys being diagnosed at a rate that is four and a half times greater than the rate for girls. Autism is also diagnosed more commonly in white children than in Hispanic or African-American children, which researchers believe is primarily due to a difference in reporting rather than in actual prevalence of the disorder.

Autism awareness focuses on the push for earlier diagnoses. Currently, autism can be diagnosed as early as age two, but most diagnoses are made around age four and a half. Greater awareness could result in earlier diagnoses, and researchers are currently studying ways of identifying higher risks of developing autism even in infants. The earlier a risk of autism can be identified, the earlier that intensive interventions can make a positive impact on the child’s development.

The Health and Human Services Department announced that it is launching an “unprecedented” initiative to help with earlier diagnoses, including research-based screening tools that families can use to identify possible indicators of autism in their children.

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This entry was posted on Wednesday, April 2nd, 2014 and is filed under Special Needs Planning | no comments | Leave a comment

Innovative Alzheimer's "Village” May Be a Model for the U.S.

An Alzheimer’s care facility in the Netherlands is modeled after a village, allowing patients to roam freely and safely, providing a possible model for facilities in the U.S.

As in other dementia-care facilities, patients at Hogeweyk are prevented from leaving for their own safety. However, within the complex, residents may roam freely, visiting parks and shops such as a grocery store and restaurant, staffed by Hogeweyk employees in street clothes.

The design of the facility improves residents’ quality of life by allowing them a degree of self-determination in their daily life. It also addresses the common problem of wandering: the residents of Hogeweyk may roam at will down the boulevard and paths while remaining safely inside the facility.

Each apartment in the facility hosts between six and eight people, including caretakers. Residents participate in cooking and cleaning, keeping to familiar routines that make them feel comfortable. Administrators say that the model provides residents with the care and safety they need, while giving them the maximum amount of freedom to make their own decisions about daily life.

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This entry was posted on Thursday, March 20th, 2014 and is filed under Elder Law, Estate Planning | no comments | Leave a comment

Review Your Living Trust: (Potential) Problems with Your Trust

Many people choose to create a revocable living trust as part of their estate plan. Living trusts may be created for different reasons, and they have several different advantages, including potentially reducing estate taxes, avoiding probate, and allowing for a trustee to manage one’s financial affairs in the event one becomes incapacitated.

A living trust should be created with the assistance of a qualified estate planning attorney, and it should also be reviewed, along with the entire estate plan, on a periodic basis. Circumstances may change, and one should review an estate plan to make sure that it accurately reflects one’s wishes.

One of the most important aspects to review is the identity of the trustee. Typically, for a married couple, the spouses will be co-trustees of each other’s trusts. However, the trust should also name a successor trustee to serve in the event the original trustee or co-trustee is not able to do so. When reviewing one’s living trust, it is important to make sure that the person named is still the person one wants as successor trustee. As one ages, there may come a point when one wishes for an adult child, who may have been named as a successor trustee, to begin serving as co-trustee. In a case in which spouses are co-trustees, an important question to consider is whether one wants a successor trustee to begin serving when just one spouse is incapacitated, or when neither can no longer serve as trustee.

Another crucial element to examine upon review is the funding of the trust. In order for a trust to accomplish its purpose, it must be properly funded. As part of a review of an estate plan, it is important to make sure that all the assets one wishes to be transferred to the trust have been transferred. The advantages of the trust will not apply to assets still titled in the individual’s name. One should review the beneficiaries of investment accounts and retirement plans to ensure that they are named in accordance with one’s wishes.

If a trust is set up in part for the purpose of protecting assets from the potentially unwise spending habits of the beneficiaries, then one should also review these provisions to make sure they are set up properly. Many trusts provide that some funds are only transferable to the beneficiary when the beneficiary reaches a certain age. In addition to reviewing these provisions, one should consider whether one wishes for beneficiaries to have the power to replace the trustee, and whether one wishes for a surviving spouse to have the power to change the terms of the trust.

A final aspect should be reviewed with the help of one’s estate planning attorney. Estate tax laws are subject to change, and it is important to review one’s entire estate plan every few years to make sure that one is taking full advantage of applicable strategies for reducing one’s estate tax burden.

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This entry was posted on Wednesday, March 19th, 2014 and is filed under Elder Law, Tax Planning | no comments | Leave a comment

MyRA Retirement Accounts: What You Should Know

Workers will soon have a new retirement savings option. In his State of the Union address, President Obama announced the establishment of the new MyRA program, retirement accounts for workers who do not have access to employer-sponsored 401(k)s.

MyRAs can be opened through employers with as little as a $25 minimum deposit and future contributions as low as $5, automatically deducted from employees’ paychecks. The money is invested in a government bond fund, rather than invested in stocks as with many 401(k)s. This means that the principal cannot be lost, but returns will be relatively small. The accounts are portable, meaning that the employee can keep the account when switching jobs.

The plan is open to households making $191,000 or less annually, and the accounts have no fees, which should make them accessible to more low-wage workers. There are no penalties for withdrawing funds at any time, and withdrawals are not considered taxable income. When a MyRA reaches $15,000, it is rolled over into a Roth IRA, so the accounts can provide a starting point for more substantial savings.

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This entry was posted on Tuesday, March 4th, 2014 and is filed under Elder Law, Estate Planning | no comments | Leave a comment

IRS Raises Lifetime Limit For Tax-Free Gifts

There are two different IRS limits that affect how much an individual can give to another without a gift tax being imposed: an annual exclusion and a lifetime exclusion. In 2014, the annual limit is not changing, while the lifetime limit is increasing.

During 2014, one may give up to $14,000 to each recipient before having to file a gift tax return, the same limit as in 2013. Spouses can double the size of a gift by combining their exclusions. This is a per-person exclusion, so a married couple could give $28,000 to an adult child, another $28,000 to the adult child’s spouse, and another $28,000 to each of their grandchildren.

One may still make a payment for someone, for instance tuition or medical expenses, without the amount counting as a gift.

Giving more than the annual limit to an individual does not necessarily mean that one will owe a gift tax. Any amount above the annual exclusion counts toward the lifetime exclusion, which has increased to $5.34 million as of 2014, from $5.25 million in 2013. Any gifts above that amount during one’s lifetime may be subject to a gift tax of up to 40 percent.

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This entry was posted on Tuesday, February 25th, 2014 and is filed under Elder Law | no comments | Leave a comment

Caregiving from a Distance? Start Planning Now

Elderly parents often need the assistance of their adult children, and this can be difficult when one lives far from them. Even if one’s parents live in an assisted living facility or a nursing home, or have regular in-home caregivers, there may be times when their adult children will need to step in to make decisions, handle financial matters or help with care-giving. If you are separated geographically from your parents, it pays to plan ahead for how you will handle these matters.

First, it may be wise to consider whether geographic separation is in fact necessary. Depending on your and your parents’ preferences, it may be beneficial for them to move closer to you or another of their adult children. There may be times when it is extremely helpful for a close family member to be on hand to attend to matters personally, and frequent air travel can be expensive and inconvenient.

If circumstances necessitate long-distance care-giving, some matters are easier to handle at a distance than others. Financial matters are one thing that adult children can easily manage from afar, and this can be helpful to ensure that elders are not falling victim to scams, particularly if Alzheimer’s or other dementia is an issue. However, convincing a parent that they need help with financial matters is not always easy. The more you and your parents have an open dialogue about money, the better. This will help immensely with budgeting for whatever type of care may be needed.

Care-giving from a distance, if not ideal, is possible with careful planning.


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This entry was posted on Tuesday, February 11th, 2014 and is filed under Elder Law, Estate Planning | no comments | Leave a comment

Gifting a 529 Plan: Ways You Can Donate Money to Someone Else's College Savings Plan

The college savings plans known as 529 plans are a way for parents to invest money for their children’s college education while taking advantage of significant tax breaks. Now there are also ways for friends and family members to more easily contribute to the savings plans, which is becoming a popular graduation or birthday gift option.

Several companies operate websites that allow you to set up a profile for the beneficiary of a 529 plan and then let friends and family know that they can give through the site. The services deduct a fee of between 2 and 5 percent before the money is made available for parents to transfer to the 529 account.

The College Savings Plans Network has raised the question of whether these companies should register under federal and state securities laws. One site, GiftofCollege.com, has taken the step of registering as a broker-dealer.

Without the use of these services, parents could see whether their 529 plan accepts contributions from third parties, and then give the account information to friends and family.

Another option is available from Upromise Investments Inc., which administers plans in 16 states, including New York. The company’s Ugift program allows parents to send friends and family a digital invitation to contribute. The invitation allows recipients to print out a coupon with a bar code and account number, which they can mail in with a check. There is no fee for the service.

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This entry was posted on Tuesday, February 4th, 2014 and is filed under Estate Planning, Special Needs Planning | no comments | Leave a comment

The Two-Midnight Rule: The Difference Between Inpatient and Outpatient Status and How it Affects Medicare Part A and B Payouts

For recipients of Medicare benefits, the cost of a hospital stay and any subsequent stay in a nursing facility may depend in large part on whether or not the patient was “admitted” to the hospital as an inpatient, or is on observation status as an outpatient. The distinction is crucial, and vexing for patients and doctors alike.

After a patient has spent the night in a hospital bed, been given a gown and wrist bracelet, been seen by doctors and nurses, and been fed and washed by aides, he might reasonably be perplexed by the idea that there is any question about whether he has been “admitted” to the hospital. Yet many patients do find, after the fact, that their entire hospital stay has been on “observation” status and they were never formally admitted. This can greatly increase the out-of-pocket expense for the patient, and can affect Medicare coverage for any nursing home stay after the hospital stay.

The current Medicare policy is known as the “two-midnight rule”: if a doctor expects that a patient’s stay will include two midnights, then the patient is admitted under inpatient status. This means that the stay is covered by Medicare Part A, which covers hospital stays. If the stay doesn’t include two midnights, then Medicare regards the person as an outpatient covered by Medicare Part B, which covers doctors. The distinction can make a huge difference in cost for patients, because under Part B, each procedure, visit and prescription is billed separately, and co-pays can easily mount to hundreds or even thousands of dollars.

Naturally, Medicare patients would prefer to be admitted as inpatients, and hospitals generally feel the same way, since Part A reimburses at a higher rate than Part B. However, hospitals that formally admit patients who do not end up needing two midnights’ care can face audits, payment denials and fraud accusations from Medicare.

Both doctors and patients complain that the two-midnight rule is arbitrary. A patient who arrives at the hospital at 11:55 p.m. on a Wednesday night and is discharged Friday morning may be admitted as an inpatient and covered by Medicare Part A. If he arrived 10 minutes later, he would be an outpatient under observation status and face higher co-pays under Medicare Part B. Another problem with the rule is that doctors are supposed to make the call about whether a patient is expected to stay for two midnights, and this can often be unpredictable.

A further difficulty is caused by the fact that Medicare will pay for up to 100 days of skilled nursing care only if the nursing home stay is preceded by a three-day hospital stay. If a patient is classified as under observation as an outpatient, the nursing home stay is not covered.

One bright spot for residents of New York State is the legislation recently passed and signed into law that requires that hospitals inform Medicare beneficiaries if they are on observation status and allows them to appeal that status. It is crucial for Medicare beneficiaries entering the hospital to be aware of their admission status and be prepared to appeal observation status if necessary. Congressional legislation is also pending – but stalled – to allow any hospital stay, whether inpatient or outpatient, to be applied to the three-day requirement for Medicare to cover care in a skilled nursing facility.

This article first appeared on Poughkeepsie Journal (Dec. 14, 2013)

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This entry was posted on Thursday, January 23rd, 2014 and is filed under Elder Law | no comments | Leave a comment

Senate Special Committee on Aging Launches New Hotline to Tackle Fraud, Elder Abuse

Older Americans are often the victims of fraud, whether through fake sweepstakes offers, phony investments or Social Security fraud. Scammers may target older people because they are perceived to be more trusting, or because they are more likely to be available for telephone calls during the day. Alzheimer’s patients are particularly vulnerable, as they may become confused easily. Boredom and loneliness also play a large role in increasing seniors’ vulnerability.

There is no easy antidote to fraud, but if one has elderly parents, it is important to make sure that they are aware of the danger and know the warning signs of common scams. Shaming and blaming seniors is not constructive or effective, while providing practical information can make a real difference. And, now there is one more tool available: a federal fraud hotline.

The hotline was established by the Senate Special Committee on Aging and is available between 9 a.m. and 5 p.m. Eastern time at 1-855-303-9470. Investigators will take information from callers reporting fraud and funnel those complaints to the proper state and federal authorities.

Investigators can also be contacted through the website of the committee, located at www.aging.senate.gov/fraud-hotline.

This entry was posted on Tuesday, January 14th, 2014 and is filed under Elder Law | no comments | Leave a comment