Estate planning can appear to be quite simple on the surface. There is emotion involved, but from a purely analytical standpoint, you are slicing up a pie. You decide on the recipients and the sizes of each slice, and that’s the long and short of it.
There is a lot of truth in that analogy, but to take it a step further, what about the size of the pie itself?
If you do not consider certain looming threats, the value of your estate can be significantly diminished, and we will look at three of them here.
Elder Financial Abuse
It is hard to imagine how people can be so heartless, but elder financial abuse is a major problem in the United States today. For generations, it was something that took place in the shadows, but it has gotten more and more attention of the last 10 years or so.
The first major elder financial abuse study was conducted by the MetLife Mature Market Institute in 2009. They concluded that elders lost at least $2.9 billion annually, but they suggested that the actual figure could be higher. A subsequent examination of the subject placed the estimate at an $36.5 billion a year.
The majority of cases are never reported because a significant percentage of the perpetrators are family members and caregivers. They have the access, and they use it for their own gain. Meanwhile, the victims stay quiet to protect them, and in some cases, they are afraid to speak out.
In addition to this type of abuse, there are also scam artists, identity thieves, and other nefarious types of target vulnerable senior citizens.
It is important to face this phenomenon head on when you are creating a plan for aging. There are legal steps that you can take to protect yourself from certain forms of elder financial abuse.
Nursing Home Expenses
Just over a third of seniors will eventually reside in nursing homes, and the cost for a year in a nursing facility in the Los Angeles area is over $100,000. This is the figure today, but it may be considerably higher if you or someone you love is in need of nursing home care in 15 or 20 years.
Many people assume that Medicare would pay for a stay in a nursing home if you ever need it. Unfortunately, this is not the case, so nursing home costs could consume a good portion of your legacy if you have to pay them out of your own pocket.
There is a solution in the form of Medi-Cal coverage. This jointly administered federal/state government health insurance program will cover nursing home costs. Since it is a need-based benefit, you cannot qualify if you have significant assets in your own name.
With the assistance of an elder law attorney from our firm, you can position your assets intelligently with future Medi-Cal eligibility in mind.
Estate Taxes
The federal estate tax is not a factor for most families, but it can take a huge bite out of your legacy if you are exposed to it. This tax carries a 40 percent top rate, and it is applied on the portion of an estate that exceeds $11.58 million in value.
There are strategies that can be implemented to mitigate your exposure if your estate is in taxable territory.
In addition to the federal estate tax, there are state-level estate taxes as well. We do not have a state estate tax in California, but if you own valuable property in a state with an estate tax (like Hawaii), your estate would not necessarily be exempt.
Attend a Free Webinar
We are conducting a number of webinars over the coming weeks. You can obtain a great deal of useful information if you attend one of these sessions, and it couldn’t be more convenient.
There is no charge to join us, but we ask that you register in advance so we can reserve your spot. You can check out the schedule and get more detailed information if you visit our webinar page.
Need Help Now?
It’s good to build on your estate planning knowledge so that you have a better understanding of the process. This being stated, at some point, it is time to take direct action to put a plan in place.
If that time is now, we are here to help. We are doing everything possible to maintain a sparkling clean, completely safe office space, and we are also offering remote consultation options.
You can schedule an appointment right now if you give us a call at 310-337-7696. There is also a contact form on this website you can use to send us a message.
Cesar has received his Masters of Science in Integrated Design, Business and Technology from the University of Southern California.
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