Buy Young

One of the most basic ways a person can lower their LTC insurance premiums is by purchasing a policy at a younger age. For example, a policy that costs a 55-year-old $2,000 a year in premiums could cost a 65-year-old more than $3,000. Health is another fact that can affect costs. While good health can lower your monthly payments, having a preexisting medical condition can increase your costs, or you may not be able to get insurance at all.

Check Your Employer

Some employers offer LTC insurance as an employee benefit that is often 5 to 10 percent less expensive than buying a policy on your own. Or, if you or your wife is a current or retired federal employee, you can get affordable coverage through the Federal LTC Insurance Program (www.ltcfeds.com).

Tweak the Policy

The cost of LTC insurance depends greatly on the policy’s previsions. Here are some simple ways to trim your premiums:
• Reduce the benefit period: A policy that covers you for two or three years, vs. an unlimited benefit, meets the needs for most people and can cut your premiums in half.
• Lower the daily benefit: You can get a policy that pays $100, $150, $200 per day or more, but the higher the benefit, the higher your premium. To figure out how much coverage to get, check out the nursing home prices in the area you plan to be. Then figure out how much of the bill you could shoulder yourself, and choose a benefit that makes up the difference.
• Extend the waiting period: Most policies have waiting periods (30, 60, 90 days or more) that require you to pay out-of-pocket before the policy kicks in. The longer you wait the lower your premium.
• Get cheaper inflation protection: Choosing a policy that offers inflation protection linked to the consumer price index is about 20 to 40 percent cheaper than standard policies that use a 5 percent compound inflation factor.

Get State Help

Many states today have a LTC partnership program that can help you save. Under these programs, if you buy a LTC policy approved by your state Medicaid agency, you can protect an amount of assets from Medicaid equal to the benefits that your policy pays out. How does it work? Let’s say you buy a policy that provides $200,000 in benefits (multiply your daily benefit by your benefit period). If you use up all the benefits but still need care, you can shield $200,000 of your assets and still have Medicaid pay your remaining nursing home bills. With this program, you can choose a shorter benefit period, which will lower your premiums. Contact your state insurance department to see if your state offers a program or see www.dehpg.net/ltcpartnership.

Add a Supplement

Another option to consider is Uncle Sam’s soon-to-be-established LTC program known as the Community Living Assistance Services and Supports (CLASS) Act — see healthcare.gov.

Starting in 2013, this program will allow workers to set aside money from their paychecks for five years, in order to receive a cash benefit of at least $50 a day to help pay for LTC services when needed. While CLASS won’t cover all your LTC costs, it can work as a nice supplement to a LTC policy allowing you to lower your daily benefit and reduce your premiums.

By David J. Zumpano

Congress and President Obama passed a new tax bill in the last week of December 2010. So, what does it mean to you?

In 2001, President Bush, with Congress, enacted massive tax changes that were set to expire on Dec. 31, 2010.

Literally, on the eve of the 2001 law expiring, President Obama and Congress extended many of the tax laws implemented by President Bush, and in several areas, even expanded them.

If the laws had reverted back to the 2001 levels on Jan. 1, 2011, the top income tax rate would have been 39.6 percent, rather than the current 35 percent, and capital gains could have been taxed as high as 28 percent, rather than the 15 percent maximum in the new law.

Perhaps, the greatest changes in the new law, however, related to estate taxes.

The new law provides that each individual can die with $5 million in assets before they will be subject to estate tax, and if subject to tax, it is at a 35 percent rate.

If the law had expired, the limit would have been only $1 million with a 55 percent maximum tax rate. In addition, the new law increased an individual’s lifetime gift exemption from $1 million to $5 million.

Essentially, each person can now give up to $5 million away in their lifetime without any gift tax consequence.

Perhaps, the most surprising element in the new law came with the portability of the estate tax to a surviving spouse. Prior to the new law, if one spouse died, he or she would’ve needed to create trusts at death, to utilize the $5 million exemption provided by the government, or it would’ve been lost.

Under the new law, the use of trusts are no longer required after death to preserve an exemption, but rather, a surviving spouse may elect to assume the unused credit of the deceased spouse. In essence, this may permit a surviving spouse to have up to $10 million of assets at their death, without having to pay an estate tax.

The new tax law virtually eliminates any worry of gift or estate taxes for 99.9 percent of Americans.

But beware: the new law passed in December 2010 is only effective until Dec. 31, 2012.

What happens after that date is anyone’s guess.

So, while you no longer have to worry about the tax law, be careful not to ignore the more relevant elements to planning, such as protection from a spouse’s remarriage, children’s creditors, divorce, and lawsuits, or even the threat of going into a nursing home.
Proper estate planning ensures all issues, including taxes, asset protection, Medicaid, and most importantly, your family, are provided for.

David J. Zumpano is an attorney and a certified public accountant (CPA). He operates Estate Planning Law Center. He can be reached at 793-3622.

By David J. Zumpano

Many of us remember the story of Terri Schivo, a woman who, in her early 20s, went into a comatose state unexpectedly. After many years of being kept alive with feeding tubes, her husband asked that the tubes be removed. Her parents disagreed, stating Terri’s wishes were to preserve her life. In the end, after a long period of court opinions and a public debate around the issue, which involved the Congress, former President George Bush and even the pope, her feeding tube was disconnected

Few people really understood that in the Terri Schivo case, the key legal question was: “Who had the right to determine Schivo’s health care status, her husband or her parents?”

The tragedy of this story is not whether you agree with the husband or the parents, but that we will really never know what Schivo actually wanted.

We are very clear what she got.

Not completing a health care directive can create trauma and tragedy with family members having to make this terrible decision. With a health care directive, commonly referred to as a health care proxy, it is absolutely essential that your health care directive provide and identify your wishes, in the event you are unable to make your own health care decisions.

Also, a properly drawn health care proxy should authorize your agent to make decisions, even if you are not in a “life or death” situation. For example, dementia or incompetency often leaves the care to a nursing home or similar facility. It is imperative your health care directive authorize your agent to make these types of medical treatment decisions, as well.

In addition to a health care directive, you should also consider creating a personal care plan.

A personal care plan provides your loved ones specific detailed instructions of the kind of care you would like to receive, if you become incapacitated. Unlike a health care proxy or living will that deals with life and death decisions, a personal care plan instructs your loved ones of your wishes related to your quality of life, such as a desire to be dressed and groomed daily, family visits, hobbies, what you like to watch on TV, eat, read and the activities you would enjoy.  A properly drafted personal care plan will enhance your quality of life if you are physically able, but lack the mental capacity to ask for it.

Life gets complicated quickly when you have to rely on the state’s rules. Stay in control. Create a health care directive and personal care plan that properly addresses your goals and objectives.

David J. Zumpano is an attorney and a certified public accountant (CPA). He operates Estate Planning Law Center. He can be reached at 793-3622.

By David J. Zumpano

In 2001, President Bush signed a major tax legislation that was implemented over a 10-year period ending January 2011. Under the law, the estate tax exemption limit was increased (from $1 million to $3.5 million) for the period between 2001 and 2009. The law, however, also provides that on Jan. 1, 2011 the estate tax law reverts back to what it was in 2001.

We are rapidly coming upon Jan. 1, 2011 — will it revert to the 2001 levels?

One thing we know for certain is what the current law states.

On Jan. 1, 2011, the estate tax reverts back to the levels it was in 2001, providing for the individual exemption amount to fall to $1 million.

Estates in excess of that amount will be subject to a confiscatory 55 percent estate tax.

Interestingly, neither Democrats nor Republicans want the law to revert — but what will they do about it?

There have been many bills in Congress over the last 10 years to make permanent the law as it provided in 2009 and not revert back to the 2001 level. Most of the bills provide for an estate tax exemption somewhere between $3.5 million and $5 million at a maximum 35 to 45 percent tax rate after 2010.

The current political scene, however, assures no action will be taken on this matter until after the 2010 elections in November.

For those of us who live in New York, we also have to be aware of the New York estate tax, which applies to individuals with estates of $1 million. Oddly, while it provides for the $1 million exemption, if an individual dies with more than $1 million, they are subject to an estate tax from the first dollar, rather than just amount over $1 million.

Careful planning is essential to ensure you do not subject yourself to a New York estate tax unnecessarily.

It is also important to know the estate tax exemption is permitted to each individual. Married couples can double the exemption. Unfortunately, most married couples lose the exemption because of improper beneficiary-designations on the titling of their assets, to their spouse or owing them jointly. These types of accounts will act to eliminate the double exemption.

So, what will happen with the estate tax? Not certain, but this I know. It will be in a state of flux for the rest of the year and perhaps into 2011 or beyond.

It’s essential that your planning considers these laws now, and as they change, to ensure your family is not adversely impacted.

David J. Zumpano is an attorney and a certified public accountant (CPA). He operates Estate Planning Law Center. He can be reached at 793-3622.

By Gina Roberts-Grey

This holiday season, it’s going to be tempting to open a store credit card when the cashier is promising you huge savings when you sign on the dotted line. The prospect of saving 10-15 percent is always alluring — especially this year when budgets are stretched thin. So is the chance to prolong making payments on a pricey new washer and dryer that inconveniently kicked the bucket a few weeks into the holiday season.

But those instant savings, experts say, might actually work against you, putting a dent in your credit score and budget. And in some cases, they’re real motive isn’t saving you money. It’s padding the retailer’s bottom line.

Everything might not be better

Their TV ads feature the late Bob Hope in a Santa hat saying “Everything’s better at Macy’s…” But “better” might not be “best” for your holiday budget.

When she worked as a manager at Macy’s, Jennifer Krosche was offered some great employee incentives. “Macy’s would pay employees $5 in Macy’s money, which we could only use in the store, for every new Macy’s charge card application we’d get,” says Krosche, explaining that the store would run promotions by which employees could net bonuses. “Other times, it was $5 in “Macy’s Bucks” for every three to five new accounts.”

Macy’s isn’t the only retailer urging employees to sign us up. Krosche, who also worked at several other major retailers as an employee and manager, including Banana Republic, says employees there had a monthly goal of opening five new cards a month. “Any less, and you’d get a tutorial on how to open cards and a “conversation” about why you weren’t.” She says the employee who opened the most cards every month won a prize. “As a manager there, I was always coming up with incentives for employees to open new credit cards just to make our numbers.”

Costly credit points

Instant “savings” can also cost you big for months — even years to come. Jim Randel, author of The Skinny On Credit Cards (RAND Publishing, 2009) cautions every time you apply for a credit card — even the ones at the register — your credit report is checked. He says that credit inquiry has a negative impact on your FICO, or credit score because it “creates the appearance that you may be loading up on debt.” And that makes current and potential creditors nervous.

Randel says a credit inquiry for a store card can cost you “a few points.” Experts estimate one inquiry can lower your score anywhere from 2 to 5 points. “Apply for several store “brand” cards in a couple of months, and you will shave as many as 20 points off your credit score,” Randel says.

Opening a new charge card will cost you an additional 5 to 15 points. “Over time, you can get those points back, but in the short term, those lost points can cost you plenty,” Randel says.

The price of points

Residential and commercial real estate mortgage broker Todd Huettner suggests you think twice before even applying for a store credit card if you’re eyeing any other type of loans. Losing even one point off your credit score can cost you hundreds — or more in the long run. “Interest rates for mortgages, home equity loan, or even a car loans, go up every 20 points starting with scores lower than 740,” Huettner says. For instance, rates are determined at credit score breaks of 720, 700, 680, 660, 640, and so on. Huettner stresses that’s why losing even just one point to a credit inquiry can make a difference. “Having a score of 679 vs. 680 can cost you hundreds annually in interest.”

Assessing the savings

Slashing 10 percent off “instantly” at the cash register can wind up costing you twice that in the long run. That’s because store credit cards usually carry a higher interest rate than comparable non-store cards (like Visa or American Express), says Randel. “The discounts associated with opening or using these cards are only worthwhile if you pay the balance off completely before accruing any interest,” he adds.

But if you carry a balance, Randel says, this option is no bargain. For instance, getting 10 percent off a $100 pair of shoes, creates a “sale price” of $90. That, plus applicable sales taxes, is charged to your new account that comes with a 21 percent APR interest rate. “If you make the minimum monthly payment [in this case $10] those “sale” shoes will have cost about $107; $7 more than if you never opened the card and just paid the full non-promotional price,” says Randel. Now imagine that on a larger purchase amount, like $1000 or more.

Before accepting the cashier’s offer, ask yourself

1 – Do I have the money to pay the charge off in full with the first statement? If not, don’t open the card. You’ll probably spend more in interest than you saved at the register.

2 – Does the store already accept the credit card(s) I already carry? If so, then put on the brakes. Too much credit can damage your credit score, and lay waste to your budget, too!

3 – Will having this account fuel my urge to splurge? Those discounts and the easy access to a new line of credit may derail your budget train. Especially if you’re an impulsive shopper.

4 – Am I planning to purchase a car or house in the next six months? If so, don’t open any new credit card account (store or bank) as it is likely to take your score down a notch. This “ding” could cost you dearly in the interest you are charged for your purchase, or may even prevent your approval for any financing of your home or car.

By Nathaniel Goldman

You can’t watch TV or read a newspaper without being reminded of the uncertain times we’re in. Disappearing jobs, disturbing stock market losses — we don’t need to tell you it’s rough out there.
This has made retirement planning more complicated than ever.

From October 2007 to last December, the market lost nearly $3 trillion in retirement savings, according to Urban Institute, a Washington, D.C. nonpartisan agency that provides social and economic analysis. Many who were counting on their 401(k)s don’t even read their account statements anymore.

But other factors have muddied the waters for mapping a course toward retirement. People are living longer. An American born in 1955 was expected to live to age 69, on average. Forty years later, life expectancy was 76. This is good news —  but we need to prepare for more years of retirement.

And, if you thought Social Security would take care of you, think again. Last year, the maximum monthly benefit was $2,185 — not enough for many of you to live comfortably.

While there are no easy solutions, the purchase of a life insurance policy can guarantee the protection of your loved ones and additionally supplement your retirement savings, if the death benefit is no longer needed.

Life insurance’s primary purpose is to provide guaranteed death benefit protection, which can provide a tax-free legacy to your loved ones. But, permanent life also carries many living benefits. Cash value is money that accumulates within the policy, tax deferred. This means you do not pay taxes on any of the accumulation within the policy. In addition, you can access that money tax free through policy loans. These same funds can also be used for college expenses, as collateral for a small business loan or any other happily anticipated or unexpected event.

In addition to the death benefit protection provided by life insurance, it can also be used to supplement your retirement income. As such, it can be a vital piece of the complex puzzle of retirement planning.

Nathaniel Goldman is a Life Underwriter Training Council Fellow (LUTCF) and an agent with New York Life Insurance Company. If you have any questions about wills, contact him at (315) 449-8635.

A will is one of the most important documents you can create in your lifetime. Think of a will as the financial blueprint of the distribution of your assets after your death. Your will can clearly state who will be guardian of your minor children, who will inherit your assets, when they will inherit your assets, and any conditions that must be met for them to receive your assets.

If you die without a valid will, the court does not have your instructions to follow. Therefore, it has no way of knowing how you may have wanted to distribute your assets.

The state where you lived steps in and makes the decisions for you, according to the distribution schedule set forth in its intestacy statutes. The state’s decisions may or may not conform to your wishes or to what is best for the people closest to you. Also, your loved ones will likely have to hire an attorney and incur delays to determine who will receive your assets.

Common Misconceptions

Myth: “My assets are so small that a will is not necessary.”

Fact: Think again. You are generally worth more than you give yourself credit. Even if some possessions do not hold great monetary value, they could hold an enormous amount of sentimental value — and that’s something you can’t put a price on. Failing to indicate who receives these treasures in your will can cause friction between family members that lasts for decades.

Myth: “When I die, my spouse will get all of my assets.”

Fact: Maybe and maybe not. Any assets held jointly with right of survivorship automatically pass to the joint owner. And assets with a beneficiary designation, such as IRAs, life insurance and annuities, pass as stated on the beneficiary form. What happens when your surviving spouse dies? What happens if your beneficiary form is outdated? Will your children receive their share at too early of an age? Does your spouse have the financial skill to manage the family wealth?

Myth: “I can create a will on my own and save the legal costs.”

Fact: “Do-it-yourself” wills often do not contain all of the necessary components as required by state law. Anyone who might benefit from an invalidation of your will can contest it, and if the courts decide in his or her favor, your estate may have to pay for all legal costs. Remember, the few dollars you save now can cost your loved ones thousands of dollars later.

Myth: “I don’t want my final wishes to be set in stone. I’ll create a will later in my life.”

Fact: The terms of a will can change as often as needed. Legal experts agree that you should reexamine your will periodically to make sure it is up-to-date. A will should receive a “checkup” whenever there is a substantial change in your life.

How Do You Create a Will?—Drafting a will is difficult and is not an endeavor you want to tackle single-handedly. It’s important that you call on the services of an estate-planning lawyer. A lawyer might help you:

• Determine what type of will you need

• Help you make the right decisions as to how your assets should pass

• Change the terms of an existing will, if appropriate

• Save on estate taxes

• Take advantage of estate planning opportunities people often overlook

Life Insurance and Wills—How does life insurance fit into the picture? Life insurance is a vehicle you can use to help make sure your estate has the cash needed to pay expenses at your death, such as funeral costs, debts and estate taxes. Without liquid assets, the estate may be “forced” to sell assets — securities may have to be sold in a down market and other assets may have to be sold at a discount. In most instances, life insurance proceeds are paid income tax-free to your beneficiaries. And if desired, life insurance can be owned by a trust or a third party and also not be subject to estate taxes.

Don’t Wait ‘til It’s Too Late—Despite the importance of an estate plan, which includes a will, 80 percent of Americans still do not have one. Why? Creating a will forces each of us to come face-to-face with our own mortality — and dealing with death is difficult. But it will be much more difficult for your loved ones if you don’t have a will. Remember, you should seek the services of a qualified attorney to draft your will.

Nathaniel Goldman is a Life Underwriter Training Council fellow (LUTCF) and an agent with New York Life Insurance Company. Contact him at (315) 449-8635.

The cautionary advice goes for seniors in particular, an AARP spokeswoman says.

“We’re not seeing a rash or increase of older people being victimized, but generally, seniors are more likely to be targeted in these scams,” says Luci deHaan, an AARP specialist in financial fraud.

Criminals tend to follow the money. That holds true for con artists, deHaan says.

“What we really find is the people who are more financially secure, those are the people being targeted by scam artists,” she says.

Some schemes center around persuading people to access their life savings for quick returns on shady investments.

Other seniors are drawing on money for everyday spending they should be saving for later in life.

“What we’re seeing is some people who are staring to take money out of 401k’s and IRAs and stop saving,” she says. “What we’re advising now is not to make rash decisions and have a plan in place and consult with financial advisers qualified to help you manage your finances.”
Get-rich-quick schemes rarely work, she adds.

DeHaan says seniors should be wary of Internet solicitations, known as “phishing.” Such scams can take the form of a communication from a supposedly legitimate financial institution requesting personal information so records can be updated. The same con can be done over the phone.

“It’s just a way to get their personal information,” deHaan says. “The first time you receive [contacts] like that, contact your bank first.”

She advises seniors to be wary of the “free lunch” seminars often advertised in newspapers and other media that lure people into situations where they are pressured to participate in questionable investment plans.
“That’s probably another area where people need to be careful to ask questions of a financial professional,”

DeHaan says. “They invite you there because they want you to buy their product. They’re pitched as a very soft-sell and when you have your lunch it becomes a very hard-sell. The key is not to make any commitments when you are there.”

DeHaan offered familiar advice: “The old saying is if it looks too good to be true, it probably is. There is no such thing as a free lunch and there is no such thing as a free dinner,” she says.

The FBI says older Americans are more likely to have a nest-egg, own their own home or have excellent credit, all financial sources a con man will try to tap into. Those who perpetrate fraud will focus their efforts “on the segment of the population most likely to be in a financial position to buy something,” according to the agency.

As they plan for retirement, seniors can fall victim to investment scams. Some of the more common are advance fee schemes, pyramid schemes, and Nigerian letter fraud schemes.

“People need to rid themselves of this notion of who the quintessential victim is for an investment scam. It’s often not the person living alone. It’s normally somebody who is financially savvy and considers themselves knowledgeable about their financial affairs,” deHaan says.

The fact that most people brought up in the 1930s, 1940s and 1950s “were generally raised to be polite and trusting” can work against them when up against a dishonest person, the FBI says.

“The con-man will exploit these traits knowing that it is difficult or impossible for these individuals to just say ‘no’ or hang up the phone,” according to the agency.

The FBI advises people to be aware of a range of schemes, including funeral and cemetery fraud, fraudulent “anti-aging” products, Internet fraud and telemarketing fraud.

Telemarketing scam artists often target people age 60 and older by trying to sell them bogus products or services by phone. Older women living alone are special targets of the scam artists, according to the FBI. Telemarketing scams often involve offers of prizes, low-cost vitamins and health care products and travel offers.

Warning signs include promises of “free” or “low cost” vacations or get-rich-quick schemes. Many scam artists try to pressure the person on the other end of the line to act immediately, send money or provide a bank account number in order to receive a gift, vacation or prize.

It’s difficult to get your money back if you’ve been cheated over the phone. The FBI offers the following tips to avoid telemarketing fraud.

• Don’t buy from an unfamiliar company. Legitimate businesses understand a person may want more information about their company and will readily comply.

• Always ask for written material and wait until it is received before acting on any offer or charity solicitation. If you get brochures about costly investments, ask someone whose financial advice you trust to review them. Not everything in writing is true.

• Always check out unfamiliar companies with your local consumer protection agency, the Better Business Bureau, state Attorney General, the National Fraud Information Center or other watchdog groups.

• Obtain a salesperson’s name, business identity, telephone number, street address, mailing address and business license number before making a transaction. Verify the accuracy of the information.

• Before giving money to a charity or make an investment, find out what percentage of the money is paid in commissions and what percentage actually goes to the charity or investment.

• Always take your time making a decision. Legitimate companies won’t pressure you to make a snap decision.

• Never send money or give out personal information such as credit card numbers and expiration dates, bank account numbers, birth date or social security numbers to unfamiliar companies or unknown persons.
Many people, particularly senior citizens, are reluctant to report they have been the victim of a fraud scheme.
“Very often, they are not reported,” deHaan says.

Other scams that target seniors identified by the FBI fall into the category of health insurance fraud.
Included on the list is medical equipment fraud, Medicare fraud, services that are billed but not performed and “rolling lab” schemes that involve unnecessary and sometime fake tests given to individuals at health clubs, retirement homes or shopping malls and billed to insurance companies or Medicare.

The FBI offers the following tips to avoid health insurance fraud:

• Never sign blank insurance claim forms.

• Never give blank authorization to a medical provider to bill for services rendered.

• Ask you medical providers what they will charge and what you will be expected to pay out-of-pocket.

• Carefully review your insurer’s explanation of the benefits statement. Call your insurer and provider if you have questions.

• Do not do business with door-to-door or telephone salespeople who tell you that services or medical equipment are free.

• Give your insurance/Medicare identification only to those who have provided you with medical services.

• Keep accurate records of all health care appointments.

• Know if your physician ordered equipment for you.
The FBI also advises seniors to be on guard against counterfeit prescription drugs. It asks consumers to:

• Be mindful of appearance and closely examine the packaging and lot numbers of prescription drugs. Be alert of any changes from one prescription to the next.

• Consult your pharmacist or physician if your prescription drug looks suspicious.

• Alert your pharmacist and physician immediately if you medication causes adverse side effects or if your condition does not improve.

• Use caution when purchasing drugs on the Internet. Do not purchase medications from unlicensed online distributors or those who sell medications without a prescription, Reputable online pharmacies will have a seal of approval called the Verified Internet Pharmacy Practice Site (VIPPS), provided by the Association of Boards of Pharmacy in the U.S.

The bottom line in avoiding becoming a scam victim, deHaan says, is to remain vigilant.

“We’re advising people not to make rash decisions and if they are very worried (about personal finances) put together a plan and contact an expert. Get informed, learn about your portfolio and don’t be afraid to ask for help,” she says.

By Ken Little