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Simon Says: Gain Control of Your Financial Life

click hereDear Friend,

I hope this message finds you and your family healthy and happy.

Each week I provide an e-mail communication that covers a wide variety of financial related topics. The content is educational in nature and considered "general information" which I hope you continue to find interesting and helpful.

However, your specific needs might require more detail and depth. Click on the informational brochure to the right. It "dives a little deeper," and speaks more specifically to coordinating the different pieces of your financial life.

Even in today's digital era, there is no substitute for one-on-one conversation. If/when convenient for you, I would love to schedule a time to talk, address any financial questions, issues or concerns you may have.

Please reply to this email with a few dates and times that work for you - I look forward to catching up.






Charitable Bequests: Strategies for Supporting a Charitable Cause and Your Heirs

Are there causes and charities that you would like to fund or donate to while also helping to ensure that your family is taken care of after you’re gone? Fortunately, leaving a charitable legacy doesn’t have to mean that you’d be short-changing your family. With the help of certain estate planning strategies, you can create an income stream during retirement, or provide for your heirs, while also supporting a charity of your choice.

Very simply, a charitable bequest is the giving of personal property to an organization through the provisions of a will or an estate plan, and donations can be made in many forms including cash, stocks, bonds, or real estate. Many people make charitable contributions prior to their death because, typically, they can benefit from an income tax deduction in the year that the gift was made. If you’re planning to leave a gift once you’re gone, however, there are different strategies that you may wish to consider.

One simple strategy is to bequeath the asset to the charity under the terms of your will. In this scenario, the donor’s estate may benefit from a tax deduction while the charity would benefit from the gifted assets once the donor’s estate has been settled. For those of higher net worth, or who plan on leaving a very generous bequest to charity, however, a charitable trust may offer some significant benefits.

Charitable Trusts – Some Common Types

One of the most popular types of charitable trusts is the Charitable Remainder Trust (CRT). Typically, this option enables the donor to claim a charitable income-tax deduction in the year that they contribute the assets to the trust. If the eligible deduction exceeds the donor’s income in that year, he or she can carry it forward to offset any income in future years.1

In addition to the tax deductibility benefit, CRTs allow the donor to place appreciated assets such as stock or bonds into the trust, and then sell those assets without incurring any income or capital gains taxes. Proceeds from the sale can then be invested into income producing vehicles that can provide the trust’s beneficiary - either the donor or another named individual - with annual income over the donor’s lifetime, or a specified term. Once the term is up, or upon the passing of the donor, the remaining assets would be given to the charity named in the trust.

As opposed to generating income for the trust’s beneficiary, Charitable Lead Trusts are created to generate income for the chosen charity for a specified number of years, or over the donor’s lifetime. During the period where income is being paid to the charity, the underlying assets remain invested, thereby giving them the potential to appreciate in value during that time. Once the specified term is up, the remaining funds can be passed to a non-charitable beneficiary – usually one or more family members - either partially or completely free of estate or gift taxes.2

While charitable trusts can offer significant benefits from an estate planning perspective, there are many things to consider before you call your alma mater with the good news that you are interested in supporting them financially. First of all, it may be wise to discuss your planned donation with the charity prior to making the gift. In doing so, you may discover some specific needs of the organization, or similarly, you may be able to offer insight as to specific projects or initiatives that you wish to fund.

Additionally, bear in mind that once assets are placed in a charitable trust, they are often irrevocable. As such, it’s important that you’ve carefully weighed both the pros and cons of placing assets in a trust, and that you’ve adequately planned for your heirs’ financial well-being before committing to a charitable organization.

Lastly, there are other types of charitable trusts in addition to those mentioned in this brief overview. Each is designed to help the donor achieve different estate planning objectives in addition to supporting a worthy cause, so becoming familiar with their potential benefits is essential.

Given that trusts and their related taxation can be complicated, determining whether a charitable trust would be beneficial for you, as well as the most appropriate type of trust, are decisions that should be made with the guidance of a qualified estate attorney.

As always, please contact us with questions, for additional information, or if we can provide assistance with any of your other financial planning needs.

1 www.cnbc.com/2015/07/16/donations-the-gift-that-keeps-on-giving-for-donors.html
2 www.fidelity.com

*Trusts should be drafted by an attorney familiar with such matters in order to take into account income, gift and estate tax laws (including generation skipping transfer tax). Failure to do so could result in adverse tax treatment of trust proceeds.



How to Be Aware of Long-Term Care

Each decade, American lifespans increase. Today, some 2 million people are 90 years of age and older, and that population is expected to quadruple by 2050. While most welcome the chance at longer life, fewer are ready to deal with the ailments and chronic conditions that often accompany the latter years. That’s why understanding long-term care services is an important part of planning for the future.

The majority of people 90 and older have some type of disability or chronic condition. The cost of care for these people can be staggering. A private room in a nursing home costs around $97,000 a year (national average). For those who prefer to receive care at home, the national average hourly rate for a home health aide is nearly $22 per hour, while skilled home health care rates are significantly greater, with the national average fee for a registered nurse at $79 per hour.

As eye opening as these figures can be, there are several other important factors to consider when thinking about long-term care.

Don’t Count on Medicare

Many retirees are surprised to learn that Medicare, the health insurance program for those 65 and older, doesn’t pay for nursing homes or in-home care. Medicare pays for only a few, limited services, such as:

Skilled nursing care. The program will pay for rehab in a skilled nursing care facility following a hospital stay. For example, if you fell and broke your shoulder, you would be entitled to a stay in a facility that helped you recover so that you could go back home and continue living independently. Medicare only covers up to 100 days of this type of care.

Home health care. If you need short-term care while you recover from an illness or injury, Medicare will cover the cost of having nurses or therapists come to your home. However, this is not around-the-clock care and is limited to 35 hours per week, though your doctor can help you qualify for more. It should be noted that Medicare does not cover the largest aspect of long-term care, which is custodial care, such as help with bathing or dressing.

Hospice. Medicare covers end-of-life care for a terminal illness. You are eligible if you are not being treated for your illness, and your doctor must certify that you have no more than six months left to live.

Medicaid Will Pay, But Only Sometimes

Medicaid, the government health insurance program for low-income people, does cover long-term care services. However, eligibility requirements vary from state to state, restricting access for those with income and assets above their state’s threshold. This often requires individuals to spend down their assets before qualifying, potentially impacting the standard of living of a spouse and legacy plans.

The program is careful in ensuring people aren’t sheltering money elsewhere, so there’s now a five-year “look back” period. In other words, if you transfer assets to a trust or to your children, you cannot apply for government aid for at least five years.

Additionally, only certain nursing homes accept Medicaid patients, so you might be limited in which facility you can go to.

Pay Out-of-Pocket

Paying for long-term care on an as-needed basis is how some people plan to address this expense, or in combination with the other options. However, nearly 75 percent of people significantly underestimate the costs associated with long-term care.

Long-term care can be a difficult topic to discuss. A majority of people do not believe they will have a long-term care need in their future, and the thought of aging can be unsettling. But if it’s left unaddressed, families may be left to make some very rushed and expensive decisions. Advisors estimate that clients who experience a long-term care event and do not have protection in place could draw down their retirement savings at rates two to three times faster than planned.

While it’s true that most long-term care needs begin in the home with care provided by family or friends, the number of people using nursing facilities, alternative residential care places, or home care services is projected to increase from 15 million in 2000 to 27 million in 2050.

Plan ahead for long-term care by determining where you’d like to receive care if you need it and how you would pay for the care so that you can spend your latter years enjoying life with dignity and not worrying about how you’ll get the care you need.