Value of Hobbies to your Health

Hobbies can greatly enrich our lives as we age, improve our well-being and increase life expectancy.

As we go into Labor Day weekend, I thought it might be nice to focus on a topic that isn’t about work.  It isn’t a task or something you have to do.  Instead, I going to focus on leisure.

Specifically, studies have shown that having hobbies can improve your well-being and even extend life expectancy, which helps lead to enjoyable golden years.  So with that, here are a few hobbies that may have a powerful impact on your health according to Money Talks News’ recent article entitled “7 Hobbies That Help You Live Longer”.

  1. Reading. Stress is a big source of health problems that shorten lives, and reading can provide a ready escape into a new world.  According to a study out of the University of Sussex, reading can decrease your stress levels by 68%. Reading improves your stress after only a few minutes because your mind focuses on what you are reading. This distraction eases the tensions in muscles and the heart.  This is a personal favorite hobby of mine and I would recommend it to anyone, even people who don’t think of themselves as “readers.”
  2. Gardening. A number of studies show that the physical activity of gardening — combined with being in a lush, green atmosphere — can enhance and extend life. People in their 60s with green thumbs decrease their risk of developing dementia by 36%, according to research from Australia.  I couldn’t find the citation for this, but I’ve been told that heart rates will reduce once you are outside in a green area after only 10 minutes.
  3. Cooking. Restaurant and processed foods are no good for your health. They can contribute to life-shortening illnesses, like diabetes and cardiovascular disease. However, people who make meals from scratch are much more apt to eat a healthier diet. The more often you cook at home each week, the higher you’ll tend to score on the U.S. Department of Agriculture’s Healthy Eating Index. University of Washington researchers say: “Home-cooked dinners were associated with greater dietary guideline compliance, without significant increase in food expenditures. By contrast, frequent eating out was associated with higher expenditures and lower compliance.”
  4. Listening to music. Research shows that regularly attending concerts can add years to your life. One study found just 20 minutes of listening can increase your sense of well-being by up to 21%. In particular, concert attendance increases:
  • Feelings of self-worth by 25%
  • Feelings of closeness to others by 25%; and
  • Mental stimulation by 75%.

The study concluded that such positive feelings could increase your lifespan by up to nine years. According to Fagan, “Our research showcases the profound impact gigs have on feelings of health, happiness and well-being — with regular attendance being the key.”

     5.  Volunteering. Helping others is another great hobby to extend your life, but only if your motives are pure. A study published in the journal Health              Psychology found that volunteering extends life, but with a strange caveat, according to the American Psychological Association:

“Volunteers lived longer than people who didn’t volunteer, if they reported altruistic values or a desire for social connections as the main reasons for wanting to volunteer, according to the study. People who said they volunteered for their own personal satisfaction had the same mortality rate four years later as people who did not volunteer at all, according to the study.”

Researchers think that proper motivation is key to getting the most out of volunteering because it buffers volunteers from stressors, like impingement on the volunteer’s time and lack of pay, which are part of doing good works.  I can say anecdotally that as people age and after they retire, sometimes they lack a focus and throw themselves into volunteering.  It isn’t a healthy approach, they are basically recreating their work experiences and the stress that comes with it.

       6.  Walking. This hobby can have a profound impact on your health, and those who take brisk walks might live up to 20 years longer than couch            potatoes, according to a Mayo Clinic study. Again, it’s brisk walking — at least three miles per hour or 100 steps a minute — is required to get the life-extending benefits.

       7.  Owning a pet. A lot of research has found that pet owners enjoy many health benefits from being around their furry friends. For example, a meta-  analysis of studies published between 1950 and 2019 found that dog owners had a 24% risk reduction for death from any cause. The benefit is even more pronounced for seniors with existing heart problems. The study authors believe walking a dog — (see #6) — may play a big role in these improved health outcomes. Another study in the Journal of Vascular and Interventional Neurology found that people who own cats have a reduced risk of death from heart attack or stroke.

Hopefully this weekend you’ll spend time on your hobby, or pick one of these as a new one!  Happy Labor Day!

Reference: Money Talks News (Aug. 20, 2021) “7 Hobbies That Help You Live Longer”

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Which Powers should a Power of Attorney Include?

Most clients have at least heard of powers of attorney (POA), and I find that many people with an existing estate plan have one.  However, I find the biggest problem with powers of attorney is not the lack of one, but having one without sufficient powers or provisions to work well for the client.  For that reason, you need to know powerful this document is and identify its limits. A recent article from Forbes titled “4 Power of Attorney Clauses You Need To Focus On” addresses many key provisions to consider in the power of attorney.

First, as a primer, the POA is a document that assigns decision making to another person during your life.  People often do this for when they become incapacitated in life, but also for convenience, such as a spouse having authority to interact with a bank, signing at a remote real estate closing and so on.

The agent acting under the authority of your POA only controls assets in your name. Assets in a trust are not owned by you, so your agent can’t access them. The trustee (you or a successor trustee, if you are incapacitated) appointed in your trust document would have control of the trust and its assets.  Also, POAs are for lifetime delegation of decision-making, so they cease to be effective when you die.

If you want more background on what they are, see this classic blog.  https://galligan-law.com/power-of-attorney-planning-for-incapacity/

With all of that said, here are three key provisions to consider within your POA to make it effective for your circumstances.

Determine gifting parameters. Will your agent be authorized to make gifts? Depending upon your estate, you may want your agent to be able to make gifts, which is useful if you want to reduce estate taxes or if you’ll need to apply for government benefits in the future. You can also give directions as to who gets gifts and how much.

In recent years I’ve discussed the possibility of extensive gifting quite a lot so that wealthier clients can consider making large gifts for estate tax purposes. In elder law cases this is one of the most key provisions in a POA as it provides options for long term care planning.

Can the POA agent change beneficiary designations? Chances are a lot of your assets will pass to loved ones through a beneficiary designation: life insurance, investment, retirement accounts, etc. Banks tend to build products that provide for this, which is good, but does raise issues within your estate plan.  Do you want your POA agent to have the ability to change these? In most states, Texas included, your POA needs to expressly provide for this power.  So, it is important to consider if you will need this power to adequately control assets in the future.

Can the POA create or amend a trust? Depending upon your circumstances, you may or may not want your POA to have the ability to create or make changes to trusts. This would allow the POA to change the terms of the trust, and potentially beneficiaries depending on the terms of the POA.  It is also worth considering this if you’ll need long term care in the future as these provisions assist with qualified income trusts which are helpful in Medicaid planning.

The POA is a more powerful document than people think, and that is especially true with powers crafted to fit your wishes and needs. Downloading a POA and hoping for the best can undo a lifetime of financial and estate planning. It’s best to have a POA created that is uniquely drafted for your family and your situation.

Reference: Forbes (July 19, 2021) “4 Power of Attorney Clauses You Need To Focus On”

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Role of Insurance in Estate Planning

Insurance in estate planning addresses liquidity, tax concerns and is even a vehicle for affordable long term care coverage.

I often discuss life insurance when working with a client on their estate plan and the role of insurance in estate planning in general.  Some have term life insurance policies from when they are young, others whole life policies promoted to them as money available into late retirement, and even a few solely because of the tax benefits to life insurance.  It’s possible that life insurance may play a much bigger role in your estate planning than you might have thought, says a recent article in Kiplinger titled “Other Uses for Life Insurance You May Not Know About.”

If you own a life insurance policy, you’re in good company—just over 50% of Americans own a life insurance policy and more say they are interested in buying one. When the children have grown up and it feels like your retirement nest egg is big enough, you may feel like you don’t need the policy. However, don’t do anything fast—the policy may have far more utility than you think.

Tax benefits. The tax benefits of life insurance policies are even more valuable now than when you first made your purchase. Now that the SECURE Act has eliminated the Stretch IRA, most non-spouse beneficiaries must empty tax-deferred retirement accounts within ten years of the original owner’s death unless some other exception applies. Depending on how much is in the account and the beneficiary’s tax bracket, they could face an unexpected tax burden and quick demise to the benefits of the inherited account.

Life insurance proceeds are usually income tax free, making a life insurance policy an ideal way to transfer wealth to the next generation. For business owners, life insurance can be used to pay off business debt, fund a buy-sell agreement related to a business or an estate, or fund retirement plans.

Even more, life insurance is often a very good tool to pay estate taxes.  This is true for two reasons.  First, the tax has to be paid in dollars, so an infusion of cash from a life insurance policy provides funds to pay it without selling off other assets such as real estate or business interests.  Second, life insurance is an easy asset to include an irrevocable trust.  It would be held outside of your estate (thus doesn’t make your estate tax bill go up) and for most insurance you don’t need immediate access to it.  See here for more information:  https://galligan-law.com/the-irrevocable-life-insurance-trust-why-should-you-have-one/

What about funding Long Term Care? Most Americans do not have long-term care insurance, which is potentially the most dangerous threat to their or their spouse’s retirement. The median annual cost for an assisted living facility is $51,600, and the median cost of a private room in a nursing home is more than $100,000. Long-term care insurance is not inexpensive, but long-term care is definitely expensive. Traditional LTC care insurance is not popular because of its cost, but long-term care is more costly. Some insurance companies offer life insurance with long-term care benefits. They can still provide a death benefit if the owner passes without having needed long-term care, but if the owner needs LTC, a certain amount of money or time in care is allotted.

Financial needs change over time, but the need to protect yourself and your loved ones as you age does not change. Speak with an estate planning attorney about the role of insurance in estate planning for you.

Reference: Kiplinger (July 21, 2021) “Other Uses for Life Insurance You May Not Know About”

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