Longer lives require better planning
Last weeks column focused on caring for aging parents and prompted questions regarding other elder care issues. These days it is not unusual for people to live 20 years or more beyond normal retirement age. When seniors reach their 80s and 90s, plans that were satisfactory at age 65 may require a second look. Some areas of special concern to older seniors and individuals with aging parents or loved ones are asset management, health care and living arrangements.Managing assetsSome older seniors find themselves unable or unwilling to continue managing their assts. A variety of arrangements are possible to transfer that responsibility to others, among them:Revocable and irrevocable trusts: Seniors who wish to retain control over their property while delegating the daily management to others may want to consider a revocable trust. This arrangement would allow the senior to monitor the management of his or her assets, yet offers the flexibility to change the trust as needs and circumstances warrant. As added protection, a revocable trust may remain unfunded, as long as the senior is legally competent. A revocable trust is subject to estate taxes. Alternatively, an individual who is willing to relinquish ownership of assets altogether could establish an irrevocable trust. Durable power of attorney: This mechanism allows seniors to designate a trusted relative or friend to make legal and financial decisions for them in the event of disability or cognitive impairment. The powers granted may be limited or broad in scope, and their definition and limitation vary from state to state. Informal arrangements: Some seniors choose to transfer property to their heirs informally, in many cases free of gift taxes, in exchange for being taken care of. However, this arrangement should be approached with caution. Even well-meaning adult children may unintentionally deplete the assets through poor management, divorce or creditor claims. Once the assets are gone, the senior could become dependent on the goodwill and financial assistance of relatives.Health careWith health care costs rising and people living longer, seniors of advanced age should anticipate the probability of higher medical costs. The federal government provides some health care benefits through Medicare and Medicaid programs, but seniors need to understand the coverage those programs provide and what costs they can expect to face.Medicare Part A covers inpatient services at hospitals and other health care facilities. It is provided automatically, at no cost, for those who are age 65 and older and who are eligible for Social Security. It is also available at a substantial cost for those who enroll independently. Medicare Part B provides additional health care coverage that is optional and must be paid for separately. Eligibility for Medicaid, which covers long-term nursing home care, depends on financial need. Living ArrangementsThose retirees who are able to care for themselves and have the means to do so, may wish to remain in their own homes. In addition, public services may be available to help prolong the period of self-care. However, those who are unable to live independently have several alternatives to consider. Assisted living and residential care facilities provide a protected environment with a semblance of independent living. These facilities vary but generally some meals are provided in a communal dining room and may provide some assistance with activities of daily living such as washing, dressing or medication. Continuing care communities offer a combination of independent living and health care support. If family members work, senior daycare centers can provide opportunities for socialization and activities to relieve boredom. In some cases, seniors may have to bring in outside help for their needs and situation. Review plansIt makes sense for aging retirees and/or their family caregivers to periodically review existing financial, health care and living arrangements. In the transition to the later stages, new needs and concerns may call for revisiting plans made at an earlier age. Please consult a financial advisor, attorney and accountant to determine which course of action is most appropriate for your situation. This column is not intended as legal or tax advice.Jeffrey Apps & Tracy Tutag provide securities and investment advisory services through AXA Advisors, LLC (member NASD, SIPC), 1290 Avenue of the Americas, New York, NY 212-314-4600, as well as annuity and insurance products through an insurance brokerage affiliate, AXA Network, LLC and its subsidiaries. They can be reached at 926-0601 or email@example.com.
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