The Chicago Tribune recently ran a report of a study showing that recent economic events may leave baby boomers shy of their retirement goals. Those in the lower income brackets may exhaust their assets within 10 years of retirement.

Those with higher incomes may not fare much better. Generation Xers, aged 36-44 years old, have a 44% chance of running out of money.

Experts say that workers can immediately add 5-10% of their earnings to savings to get back on track. The caveat is the they must start immediately.

To read more about the study, link to this site: http://chicagobreakingbusiness.com/2010/07/study-47-of-boomers-dont-have-enough-to-retire.html

Many of the beneficiaries and fiduciaries dealing with estates where the death occurred in 2010 are confused.  While the repeal of the federal estate tax for 2010 sounds like it would reduce taxes, in many cases, it has raised taxes.

The most common example is where the decedent held shares of stock.  The pre-2010 rule was that the beneficiary enjoyed a “stepped-up” tax basis on the stock.  That means that the cost basis was not what the decedent paid for the stock perhaps decades ago, but the value on the date of death.  So if the decedent owned a stock worth $75.00 per share at death it did not matter what the decedent paid for it.  When the beneficiary or estate sold the stock, the cost basis was $75.00.  Assuming the stock is sold sometime close to the date of death, there is little time for appreciation of the asset.  This was a significant benefit to the beneficiary where the decedent owned appreciated assets.  A stock purchased decades ago for $10.00 per share, now worth $75.00 per share meant no one paid the gain of $65.00 per share.  If the decedent owned 100 shares, then the gain to be taxed would be $6,500.00.  The “stepped-up basis” eliminated the tax.

In 2010, the stepped-up basis is replaced with “carry over” basis, meaning the estate or beneficiary adopt the cost basis of the decedent.  In other words, if the decedent paid $10.00 per share and the stock was selling for $75.00 per share on the date of death, then the estate or beneficiary faced the tax on $6,500.00.

Rather than reduce estate taxes, any estate under $3,500,000.00 now must pay the tax on the gain of stock and other appreciated assets.

New York law grants competent adults the right to decide about treatment, including the right to refuse treatment necessary to save or extend life. Adults have the right to appoint a person they trust (a health care agent) to decide about treatment if they lose the ability to decide for themselves. Adults can also leave advance instructions about treatment, such as a living will.

When patients cannot decide for themselves, and have not left advance instructions, health care professionals routinely turn to family members to consent to needed treatment.  In most states, family members can also refuse life-sustaining treatment for incapacitated patients. Under New York’s do-not-resuscitate (DNR) law, family members and others close to the patient can decide about cardiopulmonary resuscitation. However, they have no authority to refuse other life-sustaining treatments unless the patient has signed a health care proxy.

On March 16, 2010, Governor David Paterson signed into law the long awaited Family Health Care Decisions Act (“FHCDA”).  The law will now give family members and those close to a patient the right to make important medical decisions without a health care proxy. The act was first introduced 17 years ago.

The legislation establishes a protocol for health care practitioners to determine whether a patient in a hospital or nursing home has decision-making capacity. When it is determined that a patient does not have decision-making capacity, the legislation requires the selection of a surrogate from a list of individuals ranked in order of priority, including family members, domestic partners and close friends. Various safeguards are required under the FHCDA to prevent inappropriate decisions, including procedures for a patient, family member or physician to assert objections to the selection of a particular person as a surrogate or to a decision made by a surrogate.

Without a statute such as the FHCDA, the common law of New York State provides that life-sustaining treatment cannot be withdrawn or withheld from an individual who has lost the capacity to make such decisions, unless clear and convincing evidence can be produced to show that the individual would have declined treatment if competent. An advance directive, such as a living will or a health care proxy, can serve as clear and convincing evidence of a patient’s wishes, but many people do not prepare such directives while they are competent to do so.  It is estimated that, although most people think it is a good idea, only 20% of New Yorkers have a health care proxy.

New York had been one of the few states that prohibited family members from making health care decisions for incapacitated loved ones. 

Each year, about 75,000 people die in New York without a health care proxy and lack the capacity to make their own health care decisions.  It is preferable to discuss your wishes with loved ones and those you trust, and to sign a health care proxy appointing an agent to make decisions on your behalf.  Without this law, some incapacitated patients were denied appropriate palliative treatment which could have improved quality of life and reduced suffering, while others were subjected to burdensome, highly invasive treatment that potentially violated their wishes and prolonged their suffering.

Please keep in mind, the new law is not a replacement for need for each person to have open and honest conversations with loved ones about one’s wishes for future medical care.  Further, advanced directives are as important as ever as medical advances change the landscape of available medical treatments.  Work with your doctor, your attorney and your trusted family members to insure that not only you have the proper advanced directives but that the patient’s treating physicians have a copy in the patient’s medical record.

Here is a recent article from a Geriatrician from Western New York, which is reprinted with his permission.

Helping Your Older Parents Stay Happy and Healthy

by Robert Stall MD, Geriatrician

If you’re fortunate enough to have one or both parents still living, you may have noticed a role reversal taking place in your relationship. Remember the days when Mom shuttled you to the doctor whenever you were sick? Now, it may be you who’s driving her to her medical appointments. Perhaps you’ve become even more involved in managing her healthcare needs – serving as her healthcare proxy, moving her into your home to care for her, or even having to select a nursing home for her to live in.

Whatever the case, it’s natural to feel challenged – and, yes, intimidated – in the role you’ve undertaken. But if you stay positive and proactive, you’ll be in a great position to advocate for your parents’ optimal care. And, really, what better way is there to say “Thank You” for all they’ve done for you over the years?

The following six recommendations will help you understand what may be happening to your parents as they age – and what you can do to help.

1. Stay vigilant to sudden changes.
Typically, sudden changes arise from sudden problems. Your elderly father who becomes confused one week but was alert and oriented the week before, or becomes unsteady walking and starts falling, is likely experiencing an acute problem – an infection, medication side effect, or perhaps, a heart attack or stroke.

If you pay attention to your parent’s baseline health and behavior, you’ll be alert to sudden, and subtle, fluctuations. Being attuned to what’s “normal” for your parent is critical in advocating for his care. By informing his physician of these changes, you help ensure that he receives a proper diagnosis and timely treatment – especially important in acute conditions.

2. Investigate the source of gradual decline.
Several years ago, I met an elderly woman living in a nursing home. Her family, assuming she had dementia, had moved her there after she had gradually stopped speaking.

After performing a brief procedure on her, I asked how she was doing. “I’m OK,” she replied.

A miracle? Not exactly. I’d removed bullet-sized pieces of wax from her ears. She’d stopped speaking because her ears were too plugged to hear.

A host of conditions can cause gradual decline. Before jumping to the conclusion – as many people do – that Alzheimer’s disease is the culprit, recognize that your parent may be experiencing an altogether different problem: a vitamin B12 deficiency, an underactive thyroid, Parkinson’s disease or depression, to name a few.

When discussing your parent’s decline with her physician, make sure the two of you consider all the possibilities. To prepare for the appointment, make notes detailing how her decline has manifested itself – loss of appetite, a failing short-term memory and so forth – and how long you’ve noticed these changes. That way, you won’t leave anything out. To help you, I’ve created a free checklist that either you or your parent can complete atseniorselfassessment.com – make sure you print or email the “Test Result Details” at the bottom of the page to analyze your responses and give you advice based on your answers.

3. Know thy parent’s medicine cabinet.
Familiarize yourself with the medications your parent takes: what each one is for and how often he takes them. Make sure you notify each doctor your parent visits of all the medicine he takes, including over-the-counter products. Ask what side effects you might observe from each medication and whether it’s potentially dangerous if your parent takes them together. You also want to tell the doctor whether your parent drinks alcohol or caffeinated drinks and whether he smokes, as these substances can affect some medications’ efficacy and safety. To recognize which medications might cause the symptoms your parent experiences, check out drugscanmakeyousick.com .

4. Discourage ageist attitudes.
Simply put, ageism is prejudice against the elderly. It exists in many forms but can be particularly damaging to an older person’s self-esteem when it assumes that all of her woes are age-related. Here are a couple of ways of expressing ageism to an elderly parent:

“What do you expect at your age?”
“You’re not getting any younger.”

If you’re ever tempted to utter something similar, remind yourself that by chalking up everything that ails her to her age, you sell your parent short. If she’s depressed, it may have nothing to do with the fact that she’s 80 and everything to do with a biological predisposition to depression. And remember that right-knee pain in a 90 year-old can’t be just from age if there’s no problem with her left knee. (More about Dr. Stall and a more in-depth article on the attitude of society towards medical care for the elderly can be found athttp://www.longtermcarelink.net/eldercare/medical_care_issues.htm )

5. Address not just symptoms—but emotions, too.
There is disease and then there is “dis-ease” – that is, a lack of ease, security or well-being. “Dis-ease” can manifest itself as myriad emotions in an elderly person: fear, grief, boredom, embarrassment and sadness among them. The fact is, these emotions can be every bit as debilitating as disease.

Take the case of a parent who’s incontinent. Too embarrassed to socialize, she cuts herself off from friends. Without companionship, she becomes lonely. Instead of allowing her to become a hermit, discuss with her doctor how to address the incontinence. Together, you can consider different solutions that will ease her embarrassment and reinvigorate her social life.

6. Strive to maximize your parent’s quality of life.
No matter our age, we all want to enjoy life to the fullest and have the capability to do the things we want to. Improving the enjoyment of life and a patient’s functional ability are the cardinal goals of geriatric care. But you don’t need a medical diploma on your wall to help your parent achieve either of those goals.

Being there to solve a problem or provide company are tremendously worthwhile services you can provide – no expertise required. Remember, as your parent gets older, his quality of life becomes more important to him than how much longer he lives. And he doesn’t necessarily need medications or surgery to ensure that he’s living the latter part of his life to the fullest.

If he enjoys books but has difficulty reading regular-sized type, check out sight-saving titles at the library. If he’s grieving the loss of his best buddy, introduce him to new acquaintances at the senior center. If he’s living in a nursing home, bring your kids there to share a meal with him.

Sometimes, it’s the small gestures that have the most profound impact. As the child of an elderly parent, you are uniquely positioned to deliver these life-changing gifts.

Dr. Robert Stall is a geriatrician practicing in Tonawanda, New York and a clinical associate professor at the University of Buffalo’s School of Medicine and Biomedical Sciences. He serves as medical director and attending physician at Beechwood Homes in Getzville and Blocher Homes in Williamsville. To learn more about senior care issues, visit his website at stallgeriatrics.com or call 716-213-4345. For information on a new program offering balance assessment and fall prevention tips, call 716-213-0772.

Read this link to an article in the Chicago Tribune regarding Pre-Need Plans which is a pre-paid funeral.  In New York, the prices are rarely fixed,.  Rather, the money placed in trust is credited toward the cost of the funeral and the money is placed in an interest bearing account, so the issue is whether the interest rate keeps up with the increase in cost of the funeral.  Generally, the higher the rate of inflation, the higher the interest rates offered by the banks.  rfemember the late 1970s and early 1980s when both the interest rates charged for loans and offered for savings accounts where between 15-19%.

The linked article is interesting in this economic time but unlikely to reduce the need for Pre-Plan in NY.

http://www.chicagotribune.com/business/chi-sun-funeral-reformmar15,0,1566307.story

While many people wait until the crisis to “plan”, it is more effective and advantageous to plan ahead.  A Medicaid Asset Protection Trust can preserve most of the assets while still qualifying for Medicaid benefits.  There are many advantages including providing assets for a family emergency or holding the nursing home bed for a loved one while that person is hospitalized.

Think ahead!

The effective date of the new power-of-attorney law has been postponed to September 1, 2009 to allow consumers, lawyers, bankers, from those drafting the document,  to those expected to honor the document, to become fully educated on the requirements of the new law.

One of the goals of the new law is to prevent abuse by the agent.

On January 27, 2009, Governor Patterson signed into law new rules for powers-of-attorney.  The goal is to reduce abuse and hold the agents more accountable for their misappropriation of the principal’s assets.

The effective date is March 1, 2009, but there is proposed legislation to move out that date so professionals have more time to understand the new requirements.  While our office will be ready with the new forms, we will follow on the efforts to move the effective date further out in 2009 or even to January 1, 2010.

Under the new law, the principal will have to sign an addendum if he or she intends to allow major gifting of assets.  This is to assure that the principal truly understands that the extent of the powers being granted his or her agent.  This allows for Medicaid Planning, and hopefully prevents the agent from accessing the principal’s money without accounting for it.

Do you think this will reduce financial abuse of the elderly?

Many people are confused and intimidated by the Medicaid application and the maze of rules and regulations involved with eligibility for Medicaid benefits.  The purpose of this blog is to engage in dialogue about Medicaid Planning and Asset Protection and remove the mystery of the process.  Although I am a practicing Elder Law attorney, I do not intend that this blog be used to give legal advice.  For that you should consult an elder Law attonrey in your area.