What Do We Know about Early-Onset Dementia?

There is an increase in early-onset dementia cases which presents unique issues for families. Consider early testing and long-term care insurance to help.

Rita Benezra Obeiter, 59, is a former pediatrician who was diagnosed several years ago with early-onset dementia, a rare form of the disease. When this occurs in people under age 65, the conditions cause additional and unique issues because they are so unexpected and because most of the potentially helpful programs and services are designed for and targeted to older people.

One issue is that doctors typically don’t look for the disease in younger patients. As a result, it can be months or even years before the right diagnosis is made and proper treatment can start.

WLNY’s recent article entitled “Some Health Care Facilities Say They’re Seeing More Cases Of Early-Onset Dementia Than Ever Before” reports that her husband Robert Obeiter left his job two years ago to care for her. She attends an adult day care, and aides help at home at night.

If Dementia is a generic term for diseases characterized by a decline in memory, language, and other thinking skills required to perform everyday activities, Alzheimer’s is the most common. The National Institute of Health reports that there’s approximately 200,000 Americans in their 40s, 50s, and early 60s with early onset Alzheimer’s.  These numbers have lead to the consideration of Alzheimer’s legislation.  See here.  https://galligan-law.com/elder-law-community-follows-proposed-new-alzheimers-legislation/ 

One conference discussed a rise in early dementia because of the processed foods and fertilizers or the other environmental hazards, and there are definitely some genes more associated with Alzheimer’s—more so with early onset.  There is no clear answer, and most of the treatments help to slow down the progression.

There is some research showing the Mediterranean diet can be protective, as well as doing cognitive exercises like crossword puzzles and Sudoku.

It’s true that no one can predict the future of their health, but there are ways financially that families can prepare for early-onset dementia. It can cost $150,000 a year or more. That’s why you should think about purchasing long term care insurance starting at the age of 40.  You should also have your estate plan reviewed well before memory becomes a significant issue to make sure the plan facilities long-term are planning.

Long-term health insurance can pay for an aide to come into your home, and it can pay for the cost of assisted living. And, remember that health insurance doesn’t cover long-term care, nor does Medicare.  Making sure you have a financial power of attorney prepared by an elder law attorney will provide your family with the flexibility they need to handle your financial needs, bills and so on.

If you are faced with this condition or have a family history of it, consider long-term care insurance early and make sure to review your estaet plan every few years to stay up to date.

Reference: WLNY (Feb. 12, 2020) “Some Health Care Facilities Say They’re Seeing More Cases Of Early-Onset Dementia Than Ever Before”

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Stretch IRA Alternatives under the SECURE Act

The SECURE Act reduces the amount of retirement assets left to most beneficiaries. Here are 3 stretch IRA alternatives to consider for your loved ones.

The majority of many people’s wealth is in their IRAs or retirement plans that are saved from a lifetime of work. Their goal is to leave their retirement plans to their children, says a recent article from Think Advisor titled “Three Replacements for Stretch IRAs.” The ability to distribute IRA wealth over years, and even decades, was eliminated with the passage of the SECURE Act.  This accelerates taxation and ultimately reduces wealth passed to beneficiaries.  As a result, clients are seeking stretch IRA alternatives.

Now, this blog won’t address all of the details of the SECURE Act, it is instead going to focus on what I’m calling stretch IRA alternatives as a way to pass more wealth to your beneficiaries under the new rules.  Mary Galligan from our office did an excellent webinar on the SECURE act itself as well as an overview which you can find here https://galligan-law.com/-the-secure-act-/  You can also review my past blogs on the topic here https://galligan-law.com/how-the-secure-act-impacts-your-estate-plan/.

That said, keep in mind that existing beneficiaries of stretch IRAs will not be affected by the change in the law. But for retirement plan holders who die January 1, 2020, most retirement plan beneficiaries, —with a few exceptions, including spousal beneficiaries for example—will have to take their withdrawals within a ten year period of time instead of over their life expectancy.

The estate planning legal and financial community is currently scrutinizing the law and looking for strategies will protect these large accounts from taxes. Here are three estate planning approaches that are emerging as front runners as stretch IRA alternatives.

Roth conversions. Traditional IRA owners who wished to leave their retirement assets to children may be passing on big tax burdens now that the stretch is gone, especially if beneficiaries themselves are high earners. An alternative is to convert regular IRAs to Roth IRAs and take the tax hit at the time of the conversion.

There is no guarantee that the Roth IRA will never be taxed, but tax rates right now are relatively low. If tax rates go up, it might make converting the Roth IRAs too expensive.

Life insurance. This is being widely touted as the answer to the loss of the stretch, but like all other methods, it needs to be viewed as part of the entire estate plan. Using distributions from an IRA to pay for a life insurance policy is not a new strategy.  It also assumes the retirement plan holder is insurable, which might not be true given their health and age.  Life insurance also works well with all variety of beneficiaries, including trusts for your loved ones.

Charitable Remainder Trusts (CRT). The IRA could be used to fund a charitable remainder trust.  A Charitable Remainder Trust allows the benefactor to establish an income stream for heirs with part of the IRA assets, with the remainder going to a named charity. The trust can grow assets tax free. There are two different ways to do this: a charitable remainder annuity trust, which distributes a fixed annual annuity and does not allow continued contributions, or a charitable remainder unitrust, which distributes a fixed percentage of the initial assets and does allow continued contributions.  This also also a potentially much longer stream of income to beneficiaries compared to a 10 year payout.

If you plan to leave retirement assets to your loved ones and want to maximize their legacy, please contact of office to schedule an appointment and discuss with your financial advisor about what options may work best in your unique situation.

Reference: Think Advisor (Jan. 24, 2020) “Three Replacements for Stretch IRAs”

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How do I Help my Parents with Money Problems

Today many people are taking care of parents. Having a discussion and boundaries between parent and child, as well as seeking professional advice, can help.

According to a 2019 study by the Transamerica Center for Retirement Studies, 8% of Gen Xers and 3% of Boomers say supporting their parents is a top financial priority in their lives.  Similarly, a study from TD Ameritrade found that 13% of Americans are supporting a parent, including 19% of millennials.  With so many individuals taking care of parents, it is important both everyone to be prudent

Next Avenue’s recent article entitled “When Your Parents Need Financial Help” says that if this is a financial priority for you, try a respectful approach to see the extent of your parents’ money issues and what you might be able to do to help.

There is one financial issue that your parents may have. They may have failed to set aside money for long-term care, because of their debts.  Ideally they would start planning well before they are dependent, but there is no time like the present to address a problem.  For long-term care assistance, ask an elder law attorney for help. We can investigate your parents’ eligibility for Medicaid or other benefits to help pay for care.  This article has a much fuller overview on those issues.  https://galligan-law.com/long-term-care-whats-it-all-about/

However, before you jump in with both feet, consider your own money situation. Remember your own finances come first, because it you don’t, you risk your own finances by overcommitting. Therefore, if you can afford to help them, you have to establish boundaries. If you have siblings, bring them into the discussion and ask about sharing the responsibility. After you figure out to what extent you can afford to help financially, reach out to your parents — with care. You don’t want to come off as criticizing or judging them for making financial mistakes or bad financial decisions.

It’s important to begin the conversation early when taking care of parents, especially financially. You also may want to refer your parents to a financial planner or to a credit counselor. If housing is a major expense, it may be time for your parents to downsize to a more affordable home. You can also look into having them move in with you.  If not a topic of discussion, perhaps you’re able to review their expenses to see what they can cut and help them find ways to improve their financial situation. You should also look into federal, state, and local resources, like benefits for which your parents may be eligible.

It may be an issue of diminishing capacity and worth discussing with your parents’ doctors.  I once had a client who almost overnight spent thousands of dollars on QVC.  She spent because it was on TV and had no concept of how much she purchased or how much she spent.  Having family involved before hand may help eliminate or reduce those issues.

After you’ve delved into all the resources, and you’re also ready to help your parents financially, make sure you incorporate all of this into your own financial plan. Instead of handing your parents cash or a check to pay outstanding bills, pay the bills yourself. This will allow you to be certain that the money is actually used for the bill, rather than something else.  You can best accomplish this as the agent for your parents under a power of attorney or as trustee of their living trust.

Many people taking care of parents also choose to provide for their parents in their estate plans. It is very common to do so, but if you do, consider leaving assets to your parents in a trust, such as a supplemental needs trust.  That way, they receive the benefit of the money while protecting assets, preserving Medicaid eligibility and avoiding many of the problems this article is addressing.

Ensure that your parents know that you have their best interests at heart, when assisting them with long-term care. Be respectful of your parents and tell them you’re not trying to take over.  Taking care of parents doesn’t have to be a fight, it should be about everyone helping each other.

Reference: Next Avenue (Jan. 30, 2020) “When Your Parents Need Financial Help”

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