Using Estate Planning to Effectively Prepare for These Dangers

Nobody likes to discuss estate planning, but it is something for which everyone should be discussing and preparing.  If you do not make time to prepare an estate plan now, you run the risk of placing additional work, time and stress on family members who will have to make the plan for you. Learn how you can prepare for the hidden dangers of estate planning while giving yourself and your family members more peace of mind. 

The Glacier Effect

The first thing to discuss is the concept known as “The Glacier Effect.”   The Glacier Effect encompasses those hidden items underneath the surface of retirement and estate planning that most people simply do not see coming. The components typically consist of:

• Distribution of monetary gifts
• Hiring in-home care
• Responsibilities regarding spousal debt

Distributing Monetary Gifts

The first step to distributing monetary gifts is to understand the taxes surrounding gifting. Looking to gift a portion of your assets? Here are some key amounts to take into consideration.

• If you are single, you can gift up to $15,000 annually without the IRS taxing the gift. If you are married, you and your spouse can gift up to $30,000.  For 2020, the lifetime gift tax exemption is $11.58 million. This means that you can give up to $11.58 million in gifts over the course of your lifetime without ever having to pay gift tax on it. For married couples, both spouses get the $11.58 million exemption. This means that if you are married, you and your spouse can give away a total of $23.16 million before paying the gift tax.
• It is extremely critical to remember that even if you do not exceed the exemption amount of $11.58 million, you still may be required to file gift tax returns. It is recommended that you keep careful track of the gifts you make during your lifetime.

• Be sure that you have beneficiary designations on your assets such as Individual Retirements Accounts (IRA), 401(k) plans and life insurance policies.
• Seek professional advice from a Certified Public Accountant (CPA).

Hiring in Home Care

Though you may feel more comfortable with a family member as a caregiver, that isn’t always your best choice and recognizing when it’s time for help can help you and your family. 

The first step is deciding on a professional caregiver to help you at home. The next step is understanding what type of caregiver works for you and your family’s needs.

• Personal care aides (PCAs). A PCA is a care professional with training certification but no license. The training requirements vary by state, so be sure to check the requirements of your location. They can provide both care and companionship by helping around the house with meal preparation, housekeeping, dressing, and many other low-intensity needs. 
• Home health aides (HHAs). This caregiver is trained to aid in the care of individuals who are no longer able to care for themselves. HHAs often help with bathing, dressing, and other essentials. HHAs must maintain 75 hours of training according to federal law, but other certification requirements vary from state to state.
• Licensed nursing assistants (LNAs). Also known as skilled nursing providers (LPVs), these care assistants hold licenses to practice medicine and can set up medical equipment in your home, monitor and take vitals, and many other medically relevant services such as personal care. 
• Registered nurses (RNs). RNs hold either a diploma or degree in nursing and have passed the National Council Licensure Examination. These caregivers can provide direct care, advise the family on medical options, give medications, and assist doctors in medical procedures.

Responsibility for Spousal Debt

If you lose your spouse, the last thing you want to think about is wrapping up loose financial ends. That is exactly why you want to prepare now. Even though it is unlikely that you will be held responsible for your spouse’s debts, there are a few exceptions to be aware of: 

• Are you on any of your spouse’s bills or accounts? This can occur if you co-sign for your spouse’s loans and you can be held responsible for continued payment.
• If the spouse estate is subject to probate, your spouse’s debts will be considered as debts of his or her estate and thus, the responsibility of the estate.
• It important to know your rights when dealing with debt collection:      

1.     Ask the debt collector to stop calling.

2.     Ask the debt collector to verify the debt.

3.     Inaccurately reported collections can be disputed.

4.     Right to privacy regarding your debts.

5.     Debt collectors are prohibited against providing false information.

6.     You do not have to pay anything additional than what you owe.

7.     Right to choose what debts to pay.

8.     You can sue a debt collector who violates your rights.

Confident Living is a continuing care at home membership program, focused on helping you remain active and independent as you age in your own home. We serve the greater Cincinnati area. For more information, contact us online or call (513) 719-3522.