Are You Responsible for Your Parents’ Debt?

The baby boomers–that big, bold generation that marched, protested, innovated and made things happen–are leaving another legacy. That of debt. The boomers, unlike their frugal parents before them, have not done a very good job of preparing for retirement. The number of senior households with debt increased from about 44% in 1989 to more than 61% in 2013, according to the Federal Reserve Board’s Survey of Consumer Finances. The median debt in households headed by people 60 or older rose from $9,038 in 1989 to $40,900 in 2013. Children of these baby boomers find themselves asking “are we responsible for our parents’ debt?”

Many seniors will die with their debts still unpaid

If you don’t have any assets, your debts will typically die with you. “In most cases, your debt belongs to you, and it isn’t passed to anybody else,” says Lisa LaMarche, president and co-founder of Milestone Wealth Advisors in Greenville, Delaware. “It doesn’t go to your children.”

If you have assets, expect creditors to be the first in line to get paid

If you have any assets at all, your creditors go to the front of the line to get paid from the proceeds of your assets during the settlement of your estate. In essence, your heirs will end up paying your debts because your creditors will be paid first—before any inheritance is transferred. If you die with credit card debt or an outstanding mortgage, they will have to be paid off if your heirs want to keep the home. If there’s additional debt, the house likely will have to be sold to pay those debts.

In community property states such as California, a spouse is responsible for debt incurred during the marriage.

Things to do if someone you love dies with debt:

If there’s no Living Trust or if there’s a Will, you will need to go through Probate.

• Get professional help. California Document Preparers can help you. Bring a Living Trust or Will if they exist. If not, you will need to go through Probate, and we can assist you. While it may sound overwhelming, it is actually a very straightforward process, and we guide you through every step.
• Cancel credit cards. If you’re handling a deceased loved one’s affairs, you should cancel credit cards immediately. This freezes the account and keeps any additional charges from being made. Creditors will need to make official claims for repayment with the estate. You will probably need multiple copies of the death certificate, and some creditors will require official copies. In California, children are not required to pay their parents’ credit-card debt.
• Inventory your loved one’s assets.You can hope that your father, mother or spouse left everything in good financial order, which will allow you to easily locate brokerage, bank and credit card accounts and mortgage documents.

There’s a good possibility, however, that this is not the case

When my own parents were getting close to the end of their lives, my brother and I stepped in. While they had a Living Trust, it hadn’t been updated in 20 years, and they had made some good investments over the course of that time. When we asked about current financial documents, my stepfather opened a cupboard and a huge mass of documents literally spilled out onto the floor We spent hours trying to get a clear financial picture. Our most immediate priority was updating their Trust while they were still able to legally sign documents.

• Determine what your loved one owes. Ask credit-card companies and other creditors for statements showing outstanding balances. This will help determine what is owed and what you’ll need to sell to pay the debt.
• Have beneficiaries file for assets that pass without Probate.Retirement accounts, life insurance and some other assets are not considered part of the estate. They pass directly to the designated beneficiaries. These beneficiaries can start filing immediately after the death.

Baby Boomers, Age Discrimination and a New Court Ruling

Older workers who feel threatened by millennials in the workplace just received more bad news. A federal law barring age discrimination in employment applies only to those currently employed–not those new applicants who may be applying for a job.

Seeking candidates with no more than seven years of experience

The plaintiff in the case, Dale Kleber, applied for a position as a senior counsel at CareFusion when he was 58 years old. The job posting said that they were seeking candidates with no more than seven years of experience, a restriction that would likely hurt the chances of older applicants. This criterion did, in fact, eliminate older, more experienced candidates. The result? CareFusion hired a 29-year-old candidate, and Kleber filed an age discrimination lawsuit in December 2014.

The ADEA has protected against age discrimination for more than 50 years

The Age Discrimination in Employment Act (ADEA), which took effect in 1968, is designed to protect workers age 40 and older from bias in the workforce. In a dissenting opinion to this ruling, Judge David Hamilton wrote that the majority was “closing its eyes to 50 years of history, context and application.”

Older workers being replaced by younger, less expensive staff

As employers look for ways to cut costs, eliminating their older, more experienced–and more expensive staff–can be easy ways to reduce budgets. Younger, less experienced workers come with a lower price tag. For many employers, it seems that experience has lost its value. But it’s not all bad news.

Looking to the UK for inspiration, olderpreneurs have found a way to thrive

In the UK, an estimated one in five people over 50 is self-employed—a higher proportion than for any other age group. They’re called olderpreneurs, and there are now nearly 1.8 million self-employed people over the age of 50, an increase of 21% since 2008.

Encouraging stories of valuing older workforce here at home

In an earlier article, we featured a New York Times story, Reaping the Benefits of an Aging Work Force, by Kerry Hannon, that shows how U.S. employers are finding creative ways to keep their older workers on the job. These employers value their loyalty, experience and strong work ethic.

• Military shipbuilding company Huntington Ingalls Industries operates The Apprentice School in Newport News, Virginia. It takes a long time to become a master shipbuilder, and this company places a high value on experience; an estimated 39% of their workforce is made up of baby boomers.
• PKF O’Connor Davies is part of a network of independent accounting and advisory firms, and they’re looking for ways to accommodate and keep their older employees. Strategies include working shorter hours and working from home at least a few days/week.
• Silvercup Studios is a family-owned film and television production company in New York. Two workers recently celebrated their 30th anniversaries with the company. Silvercup likes people with experience–they’re more settled and loyal. The company understands that the costs of acquisition and training are high and wants to keep good employees.

What’s next for the 8-4 ruling from Chicago’s full U.S. Seventh Circuit Court of Appeals?

“We strongly disagree with the decision and find it very disheartening that the court interpreted a civil rights law so narrowly, despite the statutory language and the great weight of Supreme Court precedent,” said Dara Smith, an attorney for AARP Foundation Litigation, which represented the plaintiff. “Mr. Kleber and all older job seekers deserve all of the protections Congress intended to give them. As of now, we are considering our options for next steps.”

Many of our clients are creating Living Trusts, so office conversations frequently span a range of senior-related topics, including Trusts as an important part of life planning. Our comprehensive Trust package includes a Power of Attorney and Advance Healthcare Directive. Schedule an appointment today by contacting us at one of our three Bay Area offices. Our dedicated team is helpful, compassionate and affordable.

Leaving a Legacy: What Will We Pass On?

As we prepare our Living Trusts, many of us reflect on what we will pass on to our children. Property and other assets will be divided among our heirs, but a legacy can transcend money and material goods.

My mother passed on that which really mattered

My own parents lived well into their 90s and died within a few months of each other. As we cleaned out their home, my siblings and I found nothing that we wanted to keep as mementos. No jewelry, artwork or prized keepsakes. Yet it was my mother who left us so much of what really mattered. Smart, funny and indefatigable, my mom taught us to be critical thinkers; she instilled her love of learning, a strong work ethic, a sense of humor and creativity. That was my mom’s legacy. We weren’t a family who took pictures or recorded our lives in any way. Sadly, I have nothing with which to remember my mom now but a single treasured picture that lives on the corner of my desk.

Fortunately, other families are more sentimental, more conscious of the importance of documenting their lives and passing down traditions from one generation to the next, of keeping customs and legacies alive. They can do this in a number of ways, according to the interests of their families and cultures.

Sharing favorite recipes with her daughters

I read about one mother who was a fabulous cook. She loved to bake and made incredible breads and pastries. She made an elaborate wedding cake for each of her six daughters’ weddings. The gifts she passed on to her daughters were handcrafted cookbooks. Her daughters treasured those recipes and liked to think about how much love their mom poured into the creation of each book. They looked forward to passing these family recipes on to their own children.

Crafting personalized photo albums

Another mother of three adult children created photo albums for each of her three grandchildren. She and her husband take each grandchild on an annual trip to an exciting destination. The photos, along with mementoes, ticket stubs, descriptions and itineraries are all collected in an album. She wants her grandchildren to keep these wonderful memories, just as her children did before them.

Recording travel adventures

For seniors who can still travel, this is a wonderful way to share and record those experiences. One website recommends Elderhostel, a nonprofit that organizes travel for seniors and their families/guests. It provides a structured environment that focuses on accessibility and learning. Creating an album of photos and other mementoes of those travel adventures is a wonderful way to capture memories.

Creating unique videos

One mother of four wanted to leave her children a video of advice and stories passed down from generations. The video, carefully created and archived over a period of years, turned out to be a cherished family keepsake that has helped all the generations not only learn and respect their ancestors, but also feel tied to generations past. This is a wonderful way to understand a family’s history and journey to America.

We’re living in the fast lane

While we post Instagram stories that disappear within 24 hours, we’re now considering legacies that will transcend generations, that will be just as relevant now as they are 20 or 40 years or more. There’s room for both.

Along with documenting memories and legacies, a Living Trust is another important part of life planning. Without it, your family with need to go through Probate. Schedule an appointment today by contacting us at one of our three Bay Area offices. Our dedicated team is helpful, compassionate and affordable.

Single and Alone? Who Will Care for You?

A growing number of Americans are unmarried and childless, and they may be facing the prospect of an uncertain, solitary old age. A New York Times article, Single? No Kids? Don’t Fret: How to Plan Care in Your Later Years, by Susan B. Garland, tells how one childless woman has strategically planned for her old age.

A multipronged retirement plan based on creating community

Sarah Peveler is 71, divorced and childless, and she’s actively orchestrating her retirement plan. She needed to find a place with a mild climate, where she could make friends and walk everywhere. She decided on Tarboro, NC—75 miles from Raleigh, a nice-sized town of 11,000 with mild weather.

Ms. Peveler paid cash for her one-story home. One of the bedrooms can be converted into an apartment if she needs a caretaker. Several mini-strokes had caused some cognitive impairment, so Ms. Peveler’s doctor monitors her regularly. A family history of dementia means that she is checking out assisted-living facilities. With no immediate family, Ms. Peveler has developed a surrogate family of friends and neighbors who keep tabs on her. She also signed up for EyeOn App, a service that signals three friends if she doesn’t reply within a half hour to scheduled cellphone alerts.

“Elder orphans” need to build their own support systems

Adult children typically help elderly parents negotiate housing, social-service and healthcare options. “Elder orphans”—aging Americans without children–need to build their own support structures. People who are aging alone need to make plans when they are still independent and functional. They need to learn about community resources and when to start using them. Services could include senior-friendly housing and the growing number of home-delivered products and services that target the aging solo market, including healthy meals and doctors who make house calls.

Creating a team that can help make important decisions

One of the first steps childless people should take is to hire an elder-law lawyer to draw up documents that will protect them if they become incapacitated. Childless people typically turn to a friend, lawyer, clergy, a niece or nephew to make medical decisions. A bank’s trust unit can take on financial tasks, with a friend, a relative or a lawyer monitoring the bank’s decisions.

One elder-law attorney suggests appointing a team that includes a lawyer, healthcare and financial agents, an accountant and a geriatric care manager. The team can step in if/when it becomes necessary. The client could assign a network of friends and neighbors to call the lawyer in an emergency or if they notice cognitive decline.

Housing options for elder orphans seeking community

One very successful housing model is one that includes its own built-in support system—a continuing-care retirement community. Residents generally start in an independent living unit. When it becomes necessary, they can move to the facility’s assisted-living unit or a skilled-nursing facility. Entrance and monthly fees for this kind of facility tend to be substantial.

Most seniors want to remain in their own homes for as long as possible

Changes in Medicare mean that seniors who qualify can now get in-home services such as help with chores and safety devices. Simple home aid not only impact patients’ wellbeing but reduce costs for taxpayers.

In Washington, D.C., clients of Iona Senior Services can arrange for a care manager to be on call as their health deteriorates. If a client is discharged from a hospital, for example, the care manager, in consultation with the designated healthcare agent, would arrange for rehabilitation or home care.

Volunteer neighborhood groups responding to the needs of their communities

Meanwhile, as the huge baby boomer population ages, a growing number of volunteer neighborhood groups is providing both social connections and practical help to those who are home alone.

In an earlier article we wrote about the Caring Collaborative, an organization that brings senior women together to help with short-term illness or disability. In places like New York City, senior single women can become anonymous and lonely. When “Eileen” broke her ankle and was laid up for several months, she called the Caring Collaborative, and they responded. One woman brought a wheelchair, another a shower chair. Some stopped by each day just to chat. Others brought lunch or dinner.

Many organizations are responding to the growing needs of an aging boomer market

• More than 200 organizations in the Village to Village Network in the New York area provide rides to medical appointments, snow removal, home repairs and computer support. Villages in 150 additional neighborhoods are in development. Tax-deductible membership fees can range from $100 to $400.
• Entrepreneurs and companies, many nationwide, are moving into the longevity market. On-demand services, accessible by a phone app or a computer, can connect people to personal assistants and food delivery.
• “The on-demand marketplace will be the best friend of elder orphans,” said Mary Furlong, a Silicon Valley consultant to companies that cater to seniors. Lyft is working with healthcare systems and retirement communities to provide rides to non-emergency medical appointments and other destinations.

For those aging solo, community is essential. It’s easy to become isolated at a time when you most need to be connected. Experts urge seniors to reach out to community organizations and find ways to get involved. Look for senior centers, libraries and other organizations that host events, lectures and other programs. They’re great ways to meet interesting new people and make friends.

Creating a Living Trust is another important part of retirement and life planning

Our Living Trust package includes a Power of Attorney and an Advance Healthcare Directive. Schedule an appointment today by contacting us at one of our three Bay Area offices. Our dedicated team is helpful, compassionate and affordable.

You, the Shutdown and Your Taxes

Ask tax professionals, and they’ll tell you that this year may be the most grueling tax season in memory.

1. The shutdown.The IRS is “on shaky ground after the 35-day shutdown that began in late December”, said former Internal Revenue Service Commissioner Mark Everson.
2. The Tax Cuts and Jobs Act of 2017. The new tax laws went into effect in 2019, and they’ve been a major contributor to this year’s tax difficulties. This law was hastily formulated and passed, with little thought to how the new rules would impact or merge with existing, longstanding laws.
3. System redesign. In addition to all the changes in deductions based on the new tax law, the overhaul also required a redesign of many of the IRS’ forms and systems. And it’s still reeling from several years’ worth of funding cuts that Republicans pushed through to punish the IRS for targeting conservative groups during the Obama administration.
4. Computer malfunctions. Computer issues have plagued the IRS as it tries to update systems built on 1950s-era technology. Improving security is critical to keeping our financial information secure.

Last year, the IRS extended the filing deadline by a day after its website crashed on what was supposed to be the filing deadline. I had a personal experience with the IRS’ computer problems when I received a friendly note informing me that I owed $3,000 from my 2017 taxes.

I freaked out and called my accountant. She explained that it was a computer problem that was occurring on a fairly routine basis. She prepared a letter for me to submit to the IRS, and that settled the matter. But it’s unsettling. No one wants to be receiving hate mail from the IRS.

Tax filing season officially starts on January 28

According to the IRS, taxpayers should expect to get their refunds back on time. But the nation’s longest shutdown ended just days before the official start of the tax season. In the final days of the impasse, with neither side budging, the IRS called tens of thousands of employees back to work.

Those forced back to work without pay sued the federal government

More than half of those workers didn’t show up for work. They, along with thousands of other federal employees, worked without pay throughout the shutdown–pawns in a game of political ping-pong. The National Treasury Employees Union, which represents IRS workers, sued the federal government during the standoff, saying it was unconstitutional for the agency to require so many employees to work without pay.

Longer-term implications of the shutdown

About 25 information technology staff members a week quit during the shutdown, and another two dozen IT workers retired during that period.The shutdown made it difficult for the agency to recruit and hire seasonal staff.Those who rely on IRS help are often low-income taxpayers who depend on refunds to pay for major expenses, such as health care. According to Caroline Bruckner, managing director at the American University’s Kogod Tax Policy Center, there are “serious consequences” if the refunds are delayed or smaller than anticipated.

One CPA’s prediction: Filing an unpreceded number of extensions

Ironically, tax preparers had been concerned about this tax season because of the many changes associated with the Tax Cuts and Jobs Act. Add in the shutdown, with IRS workers forced to show up for work without pay, and tax professionals knew they were in for a difficult season. According to one longtime San Francisco CPA, “I suspect I’m going to be filing an unprecedented number of extensions.”

The IRS recommends filing electronically to minimize errors and receive your refund faster

Just as paying taxes online can be faster and easier, so is creating your Living Trust. Many of our clients begin the intake process before even visiting our office, and we’re available by phone and email for questions. For those who live outside the Bay Area, we can also work remotely. Schedule an appointment today by contacting us at one of our three Bay Area offices. Our dedicated team is helpful, compassionate and affordable.

A Cautionary Tale: Nearly 20 Years Later, Titleholder Still Owns Property

A Deed can seem like an insignificant document, but without it, you can’t buy or sell a property. In the following example, the buyer hadn’t recorded the Deed, and the title remained in the owner’s name for nearly two decades.

Nearly 20 years later, an unrecorded Deed surfaces

This case study comes from a property manager colleague, Jack, who got a call from Sally, a realtor who wanted to list one of his properties for sale. One big problem—this was a property that Jack had sold way back in 2000. According to public records, that property was still in Jack’s name.

Jack checked with the county recorder, and sure enough, Sally was absolutely right. Public records showed that Jack still owned that house. The buyer had not recorded the Deed and the title was still in Jack’s name. If Jack were dishonest, he could sell that property again and skip town with the illegal second profit. Given the inventory issues of the Bay Area real estate market, this transaction would have represented a significant windfall!

Despite Jack’s efforts to contact the buyers to understand why the deed was unrecorded, he has been unable to locate them. Possible reasons may have included avoiding property tax reassessment or liens on the newly acquired property. What this means for Jack: Without a clear title, he can’t sell this property. Now that he’s re-inherited his own property, he has to assume the responsibilities of ownership, including maintenance and property taxes.

Something that may surprise you: Unrecorded deeds are not uncommon

• There are potential liability issues for both buyer and seller. If the title remains in the seller’s name, he could be named in any lawsuit involving the property.
• If someone is injured on the premises and the buyer’s insurance policy doesn’t pay the claim, the legal title owner would likely be named in a lawsuit.

It is very unwise to become involved with a property without securing a title search and title insurance. Unfortunately, there are many people who try to save a few dollars by skipping a title search and not buying an owner’s title insurance policy.

Another cautionary note about Deeds: Remember the wild west refi market of pre-2008?

Think back to the environment of the mortgage industry before it crashed in 2008—these companies couldn’t process refi’s fast enough.  Many of us were eager to refinance to leverage lower interest rates. The lenders were eager to help people take a property out of their Trusts, but in some cases, there was little regard to whether or not it ever got transferred back into that Trust via a Trust Transfer Deed. This might be a good time to check on the whereabouts of your Deed.

Do you need to transfer a Deed?

Have you changed ownership, married or divorced and want to change the name on a property title? In many cases we can transfer a Deed in a day. Schedule an appointment today by contacting us at one of our three Bay Area offices. Our dedicated team is helpful, compassionate and affordable.

New Medicare Changes: In-Home Support Services a Win-Win

“Medicare policy has not kept up with the times.” This, according to Oregon Senator Ron Wyden, one of the authors of bipartisan legislation advocating expanded services through Medicare Advantage. California seniors who qualify will be able to get additional services such as help with chores, safety devices and respite for caregivers through private “Medicare Advantage” insurance plans.

Patients remain in their homes; costs are reduced

The change reflects the realization that simple home aid will not only impact patients’ wellbeing but will reduce costs for taxpayers. A couple of hundred dollars to install grab bars in the shower can prevent a fall that results in a broken hip, which can become a life-changing injury. For seniors who may be too old or frail to sustain hip replacement surgery, this gets complicated very quickly.

IHSS services include, but are not limited to:

• Domestic and related services: Meal preparation, cleaning, laundry and taking out the garbage.
• Personal care services/non–medical care: Bathing, feeding, dressing, grooming and toileting.
• Paramedical tasks: Assistance with medications, injections, bowel and bladder care.
• Protective supervision: Monitoring persons with cognitive or mental impairments to prevent injury.

IHSS is a statewide program administered by each county under the direction of the California Department of Social Services. It provides in-home care services to those over the age of 65 who are disabled or blind or have limited incomes. The program is designed to help these seniors remain safely in their homes.

Stepping up to address the healthcare needs of an aging baby-boomer generation

It begins to break down the wall between long-term care and Medicare–with very few exceptions, has never paid for long-term care.

• There has to be a health-related reason to qualify, and costs will vary among plans. In some plans, there’s no added cost.
• Limits do apply. For example, a plan may cover one day per week at an adult daycare center.
• Nearly 23 million Medicare beneficiaries, or more than 1 in 3, are expected to be covered by a Medicare Advantage plan in 2019.
• The private plans generally offer lower out-of-pocket costs in exchange for limits on choice of doctors and hospitals and other restrictions, such as prior authorization for services. It’s a growing business for insurers.

Insurance providers are following Medicare’s lead

Insurance providers are responding by addressing the many factors that affect the health and wellbeing of beneficiaries. Anthem offers different packages that include alternative treatments, including acupuncture, adult daycare center visits or a personal helper at home.

• According to Medicare, 12 insurers will be offering expanded supplemental benefits in 2019 through 160 plans in 20 states.
• In four other states and Puerto Rico, such benefits may be available to seniors with certain health conditions.
• Medicare estimates that some 780,000 beneficiaries will have access to the new benefits next year.
• In-home helpers and support for caregivers are the most popular.

Seniors should carefully consider if Medicare Advantage is best for them

Many people still need long-term care coverage for at least part of their lives, and it remains prohibitively expensive. Seniors trying to get long-term care through Medicaid, the program for low-income people, must spend down their life savings.

Consumer advocates recommend that seniors carefully weigh whether Medicare Advantage is best for them. If they don’t like it, they can go back to traditional Medicare, but those with preexisting conditions may not be able to buy a “Medigap” policy to help cover out-of-pocket costs. They can also switch to another Medicare Advantage plan.

Many of our Living Trust clients are either retired or thinking about it

Our clients are often baby boomers, frequently taking care of aging parents. Our office conversations span a range of senior-related topics, including Medicare, hospice, assisted living, nursing care and Alzheimer’s. Creating a Living Trust is an important part of life planning, and our comprehensive Trust package includes a Power of Attorney and Advance Healthcare Directive. Schedule an appointment today by contacting us at one of our three Bay Area offices. Our dedicated team is helpful, compassionate and affordable.