ElderLaw News

ElderLaw News is a weekly e-newsletter that brings you reports of legal developments and other trends of vital interest to seniors and their advocates. This newsletter is brought to you by The Estate Planning & Elder Law Firm, P.C., William S. Fralin, Esq., President.

Expecting an Inheritance? –Not So Fast

Many luxury cars sport bumper stickers that proclaim: "I’m spending my children’s inheritance."

A recent New York Times article addressed the demands on retirees' savings and the reasons why the younger generations should not count on receiving inheritances from older relatives. People who thought they would have enough assets to pass along and those who may think that money will be coming to them are finding that there are obstacles in the way.

Here are some cold facts:

-- Those who survive to age 65 will live much longer. In 2005 men age 65 could expect to live until age 82, while women could expect to live to age 87. People who live that long will not necessarily want to scale back their standard of living.

-- Healthcare costs will continue to rise; estimates say that out-of-pocket health costs may reach seven figures for a couple. Because there will be fewer employer-sponsored retiree health insurance programs, more people will rely on Medicare. Medicare premiums are expected to continue to rise, and the program may not cover emerging procedures or may cover fewer procedures. Fidelity Investments predicts that those retiring this year at age 65 may need $225,000 to cover healthcare costs in retirement, excluding nursing home expenses, dentist's visits and non-prescription drugs. People aged 55 this year may need as much as $1,064,000 in savings to fund future healthcare expenses.

-- Social Security will probably change, taxes on these benefits may rise, and people may have to wait longer to collect these benefits. Additionally, because pensions are disappearing, people will be depending more on the markets to perform well enough to fund their retirement "needs," as well as their retirement "wants."

-- Divorced parents may have less money to pass on, not only because of the cost of divorce, but also because of the cost of maintaining separate households. Additionally, non-custodial parents may be less-inclined to leave an inheritance to their children.

-- Reverse mortgages make it easier to reduce the family home's equity, leaving less for the children. People are also using mortgages as financial planning options, instead of just to pay for rising healthcare costs and emergencies.

-- People who own term life insurance often let the policies expire without buying new ones after the children are grown, or after a spouse dies. Additionally, owners of whole life insurance policies may have the opportunity to sell their policies or cash them in.

-- Many parents and grandparents are passing on wealth during their lifetimes instead of after their deaths. They may help pay for tuition or help pay down student loan debt, provide down payments for the purchase of homes, or help out in emergencies. These can be part of an effort to reduce estate taxes, or these may be out of necessity.


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The Estate Planning & Elder Law Firm, P.C.

The Estate Planning & Elder Law Firm, P.C. is an elder law firm. We represent older persons, disabled persons, their families, and their advocates. The practice of elder law includes estate planning, estate and trust administration, powers of attorney, advance medical directives, titling of assets and designations of beneficiaries, guardianships, conservatorships, and public entitlements such as Medicaid, Medicare, Social Security, and SSI, disability planning, income tax planning and preparation, care management, and fiduciary services. For more information about The Estate Planning & Elder Law Firm, P.C., please visit our website at http://www.chroniccareadvocacy.com.

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