Elder Financial Planning in Maryland
While the oldest group of the Baby Boomer generation is now passing age 70, more and more retirees are requiring Social Security, Medicare, and Medicaid than ever before. Because of medical advances and other life lengthening-factors factors, the average living 70-year old today has a life expectancy of approximately 15 more years. Given that the Baby Boomer population already exceeds prior generations in number, expansion of life expectancy will contribute even more to a “top heavy” demographic. As a result, more individuals should begin to plan for long-term care and estate strategies than ever before.
In addition, the younger Baby Boomers are currently faced with managing elderly issues of their parents.
Two important elements of each situation are estate planning and long-term care costs. Elderly parents worry about becoming a burden to their children. Sons and daughters worry about whether there will be enough money to provide proper long-term care for their aging parents or whether all of the parents’ estate will be consumed by elder care.
Elder Financial Planning
Saving for retirement today can begin as soon as you start working. Contributions to Individual Retirement Accounts (IRA) and Traditional 401ks offer tax deferred investment opportunities that may accumulate throughout your working life and create a substantial savings account by the time your retire. These have become a highly desirable form of future income security as traditional company pension plans are going the way of the brontosaurus.
But financial planning continues even after retirement. It is estimated that 70% of all elderly who live past age 65 will be in need of extended care. Whether you are the elder individual or the caregiver, strategies to manage the remaining estate and preserve wealth are as important as earlier financial planning. As an elderly person approaches the need for a nursing home or other extended care, issues surrounding the home and remaining value of the estate becomes a major concern.
Reverse mortgages have become popular in recent years as an ongoing income source among retirees. In essence, home owners with significant equity in their home agree to “sell back” their home to a financial institution in exchange for a monthly income. The individuals continue to occupy the home until such time that they can no longer maintain it. Once vacated, control of the home then reverts to the financial institution. It is a good idea to seek professional advice before entering into a reverse mortgage.
Long-term care is expensive. The sources of funding are generally limited to the individual’s existing funds, long-term care insurance and Medicaid. Under normal circumstances, Medicaid, intended as a need-based program, only pays when other assets have been used up.
There are provisions of Medicaid that allow individuals and families to preserve assets while faced with long-term care costs. With proper planning, these legal options can allow Medicaid to accommodate these costs without depleting the entire estate. The strategies may include certain types of annuities, asset protection trusts, pooled income trusts and caregiver agreements. These are complex and must be handled properly to avoid penalties attached if transfers take place during the customary 5-year “look-back” period. Developing a strategy with an attorney experienced in elder affairs is the best course.
Estate Planning is important preparing for advanced age. Clearly defining your wishes in advance ensures the desired distribution of your wealth and possessions. Eliminating confusion and uncertainty as to where and how elements of your estate are handled will reduce the anxiety often experienced among family members following the passing of a loved one.
Estate planning also involves preparation for long-term care. As part of the estate planning process, consideration can be given to early distribution to heirs in order to ensure that not all assets are consumed by long-term care. But, as suggested, these strategies require advance planning and sometimes complex legal preparation to be successful.
Elder Financial Planning in Montgomery County Maryland
Whether you or a loved one need legal assistance for elder law, estate planning, Medicaid, or elder financial planning, Hammond and Associates is more than happy to help. Our attorneys have represented elder law clients throughout Montgomery County, Frederick County, Howard County, Prince George’s County, and the surrounding areas.
Our principal office is located in Bethesda, but for the convenience of our clients, we can arrange for conference rooms for client meetings elsewhere. If you live outside of the Bethesda area and would like to meet with Hammond and Associates, we can set up a meeting in the following locations: Rockville, Gaithersburg, Germantown, Fulton, Bowie, Columbia, Frederick, National Harbor, Annapolis, Pikesville, Owings Mills, Towson, and Hunt Valley.
Contact us online or call us at 301-861-4555 and we can discuss how we can assist with elder financial planning. We want to help you protect your loved ones in Maryland!