A s a family estate planning attorney, clients often come to me with ideas about wills & trusts that they learned from friends, neighbors, and the internet. I’ve come to realize that a lot of people think they know about wills & trusts – but they don’t. Unfortunately, most people don’t ever find out they don’t know, because by the time it comes to light, it’s simply too late.
Here are some frequently misunderstood facts about wills & trusts:
1. Many people think that if they have a will, they will avoid probate…not true. A will is, essentially, your ticket into probate court.
2. Everything that your will says is completely public. Even worse, any property that passes through a will is public record. This can be bad for those left behind, because this tells the whole world things about your loved ones you may wish to keep private – for their sake.
3. What is probate? I tell my clients the TRUTH: “Probate is a lawsuit you file against yourself, with your own money, on behalf of your creditors.” What this means is your creditors, not your family, will get first dibs on your property.
4. A will only controls what you own in your sole name when you die. If you have assets that are jointly owned, or have beneficiary designations (IRA’s, 401Ks, bank accounts) the property passes according to different rules – and they may not be the rules you intended.
5. A will is subject to what we call “the State’s rulebook.” What this means to you is that, regardless of what the will says, probate is a court process that means your property passes according to the timeframe and the rules the State has…not your rules.
6. On the other hand, a trust, if written properly, is your rulebook. It gives your family your rules for life, disability, and death.
7. Unlike a will, a trust remains private.
8. Many people believe that a revocable living trust protects them – but this is a false belief. Revocable trusts provide NO asset protection to you during your life.
9. There is such a thing as an “irrevocable trust” that also allows you complete control over the assets inside of it! This version is special purpose trust.
10. The special purpose “irrevocable trust” DOES allow you to protect assets during your life – to avoid lawsuits, but even more importantly, to avoid nursing home poverty!
Nicole Wipp is the founder and lead attorney of the Family & Aging Law Center, a family estate planning and asset protection firm. Nicole is frequently sought out for her expertise, and she has appeared on radio shows nationwide and in such publications as Forbes, Inc., and the Huffington Post.
To learn more about Nicole, visit www.miestatelawyer.com.
In 2015 I purchased two gold mining ETFs as my “hot slices” of my nest egg. They doubled, but are now trading closer to my purchase price. Should I have sold the slices when they doubled? Is gold a loser? Should I dump the gold funds now, and try for something else? Signed: It Was Fun While It Lasted.
Dear It’s Fun,
I know it feels like there is something wrong with an industry when the price falls out of favor. However, it’s actually fun to buy gold low, if you think that the price is going to explode going forward. That’s the real question here: “What’s the outlook for gold? Will it rally or sink further?” Below are a few tips to help you get to that point.
It’s the time of year when you are invited to review your employer and government health benefits through Open Enrollment, so our focus this month is on helping you make the best decisions when it comes to your health and money.
If you are still working and have benefits through your employer, you should be receiving a packet allowing you to review and make changes to your employee health benefits. This is why I’ve invited CPA and financial planner, Wayne Titus, to help you dive deeper into your options to help ensure you get the most bang for your buck, as well as well as important tax-planning steps to take before the end of the year. Be sure to check out Wayne’s interesting article on Health Savings Accounts, Flexible Spending Accounts, and Health Reimbursement Accounts so you can learn the difference and decide which best suits your needs.
If you are 65 or older, October is when you will be able to review and change your Medicare benefits. Medicare expert, Jo Murphy, will be sharing ways to save money on health care benefits, how to choose the best health care benefits that fit your needs, and where to go to get your health care benefits questions answered. Don’t miss Shari Wenokur Smith’s informative article about Medicare Open Enrollment.
Making smart choices about your life, your health, and your finances is our mission here at Smart
Women’s Empowerment, and to make sure we are addressing your concerns, we have conducted several surveys with our Smart Women community, and what we learned has been eye-opening. In fact, we have created our 2019 editorial calendar based on your responses. I’ll share the full results of the survey in next month’s Smart Women, Smart Choices, as well as what we have planned for you in coming year.
Next month, is National Caregiver’s Month, and since 73% of you told us you would be interested in a course specifically on “preparing to become a caregiver or care receiver,” we will be bringing you guests interviews and resources for this important period in your life so you aren’t caught off-guard.
In the meantime, be sure to schedule time to review your benefits, check out the two great articles in this month’s Smart Women, Smart Choices, and join the conversation on Smart Women Talk Radio this month. Remember, if you miss the live show, you can listen on our website or on your favorite podcast venue. Our shows are now available on Spotify, iTunes, iHeartRadio, and several other podcast venues!
Katana Abbott is a CERTIFIED FINANCIAL PLANNER™ professional and Certified Senior Advisor who began her financial planning career in 1987 with Ameriprise Financial Services. Because of her personal experiences with financial abuse, death, disability, divorce, and caregiving, she teaches women how to take charge of their finances, create wealth and prepare for expected and unexpected life events. Katana is an inspirational speaker, author and the host of Smart Women Talk Radio with over a million subscribers. She is the founder of the Designated Caregiver® program and the Smart Women Companies. She has been married to DSO French hornist, Mark Abbott, for over 30 years and they have two daughters. To learn more and connect with Katana, visit her at www.KatanaAbbott.com
It’s Open Enrollment season for Medicare. This is the time to examine your benefits and make sure your plan is working for you.
Did you know that there is a free, unbiased service that can help people walk through the Medicare process?
The Centers for Medicare and Medicaid Services (CMS) helps fund and support a nationwide network of State Health Insurance Programs (SHIPs) that help beneficiaries understand their Medicare and Medicaid benefits, get answers to questions and help trouble shoot problems. These programs may go by different names in different states (Michigan’s program is called the Michigan Medicare Medicaid Assistance Program or MMAP), but they all offer a cadre of highly trained, certified, volunteer counselors that have been trained in health care benefits counseling. This includes Medicare, Medicaid and other Medicare insurance products. SHIP counselors are completely unbiased, are not connected with any insurance company and they are not licensed to sell insurance. Counselors are available year-round to guide and assist beneficiaries but are especially busy during the annual Medicare Part D Open Enrollment, which runs October 15 through December 7. Many SHIP programs offer special assistance to help people review and assess their Medicare Part D choices during this enrollment period.
Reviewing Your Plan Annually is Important
The Open Enrollment Period is the one time of year most Medicare beneficiaries can make changes to their Medicare Part D prescription benefits. During Open Enrollment you can:
• Switch Medicare Part D Prescription Drug plans.
• Change from Original Medicare to a Medicare Advantage Plan
• Switch from one Medicare Advantage Plan to another Medicare Advantage Plan
Any changes in coverage that you make will take effect on January 1, 2019.
I recommend that everyone review their plan options and choices once a year. Even if you’ve been happy with your current plan it is important to check that all your medications are still covered and that the price point is still affordable for you.
Be sure to understand that your health needs and how you like to access services are unique to you. You do not need to get the same policy as your friend or your spouse, even if they claim theirs is “the best!” Everyone is different. For example, if you only take one medication and your friend takes 5, they may have the best policy for them. You may end up spending significantly more money than necessary if you choose the same plan base on their recommendation. A SHIP counselor can compare plans with you to help make that determination.
How Much Does Medicare Cost?
Medicare can be quite expensive depending on the plans chosen. Each plan is different. Premiums, deductibles and co-pays vary; the medications you take might change from year to year, both in terms of what you take, and what is on the plan formulary; the policies and prices can change from year to year, and, if you have a Medicare Advantage (Part C) plan, the services may vary. Your local SHIP counselor can review all of this with you. And, if you are having difficulty paying for Medicare or your prescription drugs, SHIP counselors can also determine if you might qualify for assistance to help pay for any or all of your Medicare costs based on your income or assets, and they can also assist with the application process.
What Are My Medicare Options?
People who are new to Medicare can select Original Medicare, which is Part A for Hospitalization and Part B for outpatient services, or a Medicare Advantage Plan (Part C) which functions more like an HMO or PPO. Most Medicare Advantage plans cover prescription drugs. But, if you select Original Medicare you will most likely also need a Part D, prescription drug plan and a Medigap (or Supplemental Plan) to cover certain costs under Original Medicare.
When Can I Enroll?
There is a seven month period for people just turning 65 to enroll in Medicare (3 months before your 65th birthday, the month of your birthday, and 3 months after). Timely enrollment is essential as there are financial penalties for late enrollment that can follow you throughout your lifetime. For those who already have Medicare, Open Enrollment provides you with an opportunity to make changes to your plans.
If you want a Medigap policy you have a six month period starting the first day of the month you turn 65 or older and are enrolled in Part B to purchase a policy with a “guaranteed right of issue,” meaning that you cannot be medically underwritten. After that period costs may go up based on your age, health or medical conditions.
If you are still working, have a retirement health plan or are covered by your spouse’s health plan, you may not need to enroll in certain parts of Medicare. It is best to check with your employer Plan Administrator to get more specifics. This may prevent costly penalties or unnecessary duplication of coverage.
Prevention and Wellness Coverage
If you are new to Medicare, you are entitled to a comprehensive “Welcome to Medicare” visit during your first year and yearly preventive visits thereafter. Medicare also offers many preventive and wellness services such as vaccinations, mammograms, prostate cancer and obesity screenings, smoking cessation counseling and more. You are also entitled to a yearly “Wellness Visit” to develop or update your personal care plan. All of this is detailed the Medicare and You book that is mailed out every year to Medicare beneficiaries. Additionally, the phone number for your local SHIP will be listed on the back.
Protect Your Identity
You have probably heard that Medicare is issuing new cards this year. You may already have received yours. The new cards have removed the Social Security numbers. There is now a Unique Alpha-Numeric Medicare Number with no personal identifiers attached. Gender information and the signature line have also been removed. This is to provide protection against Identity Theft that has become all too common in our society. Medicare started issuing new cards in April of 2018 and the roll-out is set to continue until April of 2019. Don’t worry if you haven’t received your card yet. The old cards can be used until December 31, 2019. Your new cards will be mailed automatically to you, but you may not receive your card at the same time as your neighbors or friends. It is important to note that you don’t have to do anything to receive your card. Scammers are contacting people insisting that they give their Social Security numbers or other information to get their new cards. A good rule of thumb is to never give out personal information over the phone unless you are dealing with a trusted contact. And, anyone who asks you to send or do something to get your card is not a trusted contact.
How Can I Learn More?
There are many resources available to you to learn more about Medicare or to help you make decisions. As mentioned earlier, Medicare and You provides fairly comprehensive information on Medicare and the services it covers. The Centers for Medicare and Medicaid has a user-friendly web-site www.medicare.gov, which also provides good information.
And, your local SHIP program has certified volunteers who have been trained to provide personalized one-on-one counseling to Medicare beneficiaries. We can help you understand your health care options, compare or enroll in Medicare Prescription Drug Coverage, review your supplemental insurance needs, apply for additional assistance, identify and report fraud or scams, and more. To find your local SHIP, go to www.shiptacenter.org and type your state in the box or look on the back of your Medicare and You book. We are here to help.
Shari Wenokur Smith holds a Master’s in International Development from the American University in Washington, D.C., and a Master’s of Public Health from the University of Michigan. She also is a Certified Senior Advisor. She is currently the Regional Coordinator for the MMAP Program with the Area Agency on Aging 1-B in Southfield, Michigan, when she works with a team of 147 certified volunteers providing Medicare counseling throughout most of Southeast Michigan.
It’s open-enrollment season again, and at some companies, employees will need to choose whether they would like to sign up for a Health Savings Account (HSA), a Flexible Spending Account (FSA), or a Health Reimbursement Account (HRA). While it sounds like alphabet soup, it’s important to understand the differences. If you don’t, you could be leaving money on the table next year.
Here’s a quick breakdown on the three types of accounts, along with a few tips to find out whether they’re right for you:
Health Savings Account (HSA)
Health Savings Accounts, or HSAs, must be combined with a qualified high-deductible health insurance plan. This tax-advantaged account can be used to help pay your deductible, and any funds left in your savings account earn tax-deferred interest. Your contributions to your HSA are tax deductible, and withdrawals to pay for your qualified medical expenses are tax free. But here’s the best part: The money in your account is yours to keep – you don’t have to “use it or lose it” by the end of the year.
How it Works
- You decide how much to contribute, as long as the amount doesn’t exceed the maximum allowed by the government. (In 2017, for example, the limit is $3,400 for an individual and $6,750 for a family.)
- Depending on your plan, you may receive either checks or a debit card for your HSA account to use for qualified medical expenses, including your deductible, any co-pays or co-insurance, or qualified medical expenses that your plan does not cover.
- There are no deadlines for spending the money in your account.
- Your HSA rolls over each year, unlike an FSA, which we’ll discuss later. If you reach the age of 65 and are on Medicare, you can still use your account to pay for out-of-pocket medical expenses, but you’ll no longer be allowed to contribute money to your account.
- Once a year you may rollover the balance in your HSA account from your employer account to another, lower cost, better diversified HSA, and select and manage those investment options yourself.
- If you change jobs, you can take your HSA with you.
- You can also have an HSA if you are self-employed.
What to Check
- Be sure to compare the coverage and the cost of your current plan with your high-deductible plan option to see which is less. (Richard Thaler of the New York Times has a great article on how to evaluate your health plans.)
- Since you can invest your HSA funds in mutual funds, stocks, or other types of investments, make sure your HSA offers low-cost funds that are reputable. Some companies require you to have a minimum balance in your account before you can invest (to ensure you’ll have the funds you need for a qualified medical expense). However, if you don’t anticipate needing the funds right away, it could be beneficial to look for an HSA that will let you invest right away, without a minimum.
- Some employers contribute to their workers’ HSA accounts, so if yours does, a high-deductible insurance plan with an HSA could make better sense than a regular insurance plan.
Flexible Spending Account (FSA)
Also known as a Flexible Spending Arrangement, Flexible Spending Accounts may be offered by an employer in lieu of, or in addition to, a health insurance policy. As with an HSA, FSAs are funded pre-tax, by payroll deduction, which can lower the employee’s taxable income for the year. Employers set the contribution limits for FSAs, while the specified limit for dependent care accounts is $5,000 per year. Unlike HSAs, however, FSA funds need to be used by the end of their run-out period, which is usually three months after the end of the year. Prior to the Affordable Care Act, employees who didn’t use the funds in their account wound up forfeiting those funds to their employers. Be sure to review your plan’s specific carry over allowance.
How It Works
- Employers fund the entire amount of an employee’s contribution at the beginning of the year, so the individual has funds to use for medical expenses. The employee then pays back the amount through payroll deductions.
- At the end of the year, you may lose any remaining funds you haven’t spent.
- As with an HSA, you may receive a debit card to pay for small medical expenses, such as co-pays, prescriptions and other fees.
- FSAs can be used to purchase certain non-prescription drugs, unlike other types of plans.
- FSAs stay with the employer. They cannot move with you to another job.
- Stand-alone FSAs (those without a major medical insurance plan) can only provide limited dental and vision benefits, and in certain cases may be used in conjunction with an HSA.
What to Check
- If you choose to use FSA funds to pay for childcare, you could lose your child tax credit when you file your taxes. Check with your tax preparer before making your decision.
- Be sure you understand how your company’s FSA may be integrated with its HSA plan.
Health Reimbursement Account (HRA)
Many types of Health Reimbursement Accounts (also called Health Reimbursement Arrangements) exist, but we’ll focus on those that are linked with high-deductible health insurance plans. Employers may offer an HRA to employees and their families who enroll in the company’s group health insurance plan. An HRA differs from an HSA and FSA in that the employer is the only one who contributes, and, like an FSA, the employer owns the account.
How It Works
- An employer determines how much to contribute to an HRA per employee.
- The funds could be used to cover co-pays, deductibles, or insurance premiums.
- Funds are available from the first day of coverage.
- Unlike FSAs and HSAs, HRA funds do not accrue in a separate account. Employers reimburse employees after they have incurred an expense. Some HRAs are set up to pay only after an employee reaches his or her deductible. Reimbursements are tax deductible.
- Once the employer’s contribution is used up, employees must pay the balance of any expenses they incur. Depending on how the employer sets up the plan, someone who doesn’t spend the entire benefit may be able to roll the funds over to the next year.
- HRAs stay with the employer.
- Business owners are usually not eligible to participate in HRAs; however, employees (including spouses who are legitimate employees) can participate as long as they are receiving regular paychecks.
What to Check
- Since HRAs can vary by employer, talk to your human resources department to learn more details about your company’s plan.
During this open enrollment period, take the time to study all of your options. In addition to protecting your health, you may also be able to improve your tax position and take advantage of funds contributed by your employer.
Before Wayne Titus founded AMDG Financial and AMDG Tax and Accounting in 2002, he spent fifteen years at two large accounting firms, working with Fortune 50 clients. He dove into entrepreneurship to make a bigger impact on people’s lives. Titus is a fee-only fiduciary adviser, meaning he owes loyalty to his clients and places their interests ahead of his own or those of his firms. With assets of more than $150 million, AMDG Financial integrates tax, financial and investment strategies to help clients make financial and life transitions successful on purpose. The company’s credo is, “From financial wisdom, better stewardship.”
To learn more about Wayne Titus, visit www.amdgservices.com/
On August 7, 2018 Tesla’s stock soared on a great earnings report, followed by a Tweet from Elon Musk reading that he was considering taking the company private at $420 a share. There were many 420 jokes that circulated, casting a shadow of doubt on the veracity of the Tweet, before Elon followed up his Tweet with an internal email that outlined his rationale and confirmed that the funding had already been secured. On August 9, 2018 Tesla was trading at $350/share, offering a return on investment of 20% if the proposed LBO (Leveraged Buy Out) is ultimately approved by shareholders and goes through. Musk is also proposing that existing shareholders could stay invested when the company goes private, potentially offering an even bigger upside. So, should you take Musk’s bait? (more…)