April 2009 Archives

April 24, 2009

Budget-Busting Long-Term Care: Is It Inevitable?

The high cost of long-term health care will drag down the quality of life for nearly two-thirds of today's retirees, predicts the Center for Retirement Research at Babson College, as reported by David Pitt in the recent AP story "Retirees ill prepared for the long-term costs".

The article, like many of its type, then goes on to present a mix of horror stories about at-risk seniors unable to afford the care they'll inevitably need, along with scary statistics about how expensive it is to purchase long-term care insurance.

Too bad there isn't a word about the many low-cost steps people can take to greatly decrease the likelihood that they'll need long-term care in the first place. For example, many of us fear that diseases of the brain like Alzheimer's will sentence us to spend our last years in a nursing home. Actually, it is far more likely that we will be institutionalized because of broken bones -- most commonly, hip fractures. Most of these injuries are the result of bone loss or osteoporosis.

Twenty-five million Americans, 80% of them women, suffer from osteoporosis. This horribly debilitating disease results in well over a million annual skeletal fractures of which as many as a third are hip fractures. The good news is that osteoporosis -- and the height loss, pain and high risk of bone fracture it causes -- can largely be prevented. The keys are to get enough vitamin D and calcium daily and to engage in regular weight-bearing exercise.

Type 2 diabetes is a second huge and highly preventable condition that in all its unhappy manifestations, such as increased risk of heart attack and stroke, results in millions of people needing long-term care. And as you probably know, sedentary, obese people are at much higher risk of developing Type 2 diabetes in mid- or later-life than are adults who maintain a healthy weight, exercise daily, and eat sensibly.

Finally, as anyone who has ever spent time in a care facility knows, depression is yet another reason why older people can no longer function independently. And while depression can affect anyone, health professionals have known for years that people who exercise regularly and vigorously are less likely to be depressed than are those who are sedentary. At least part of the explanation seems to be that exercise, like Prozac and other anti-depressant drugs, releases the brain chemical serotonin, a natural mood elevator.

So think about it: If frequent exercise and a good diet can greatly reduce the need for long-term care by at least 50%, doesn't it make far more sense to head for the gym than it does to turn on the T.V. and listen to yet another news item about how you're likely to spend years in a poverty-level nursing home?

Still, you might be thinking, "What about buying long-term care insurance?" I'll discuss that one in my next post.
April 8, 2009

You Never Retire from Writing Your Will

A century ago it was common for people to write their will in their forties and die before they were 60 with the same will in place. People who lived longer might add a codocil (a kind of legal P.S.) to reflect changed circumstances, but it was relatively uncommon for the average person to make multiple wills.

Today, just about everything concerning making a will is different. Many of us will live up to 50 years after we make our first will, meaning that all sorts of important life events that occur in the interim will all but require changes. And codocils, which saved 19th- and 20th-century lawyers from having to retype and reproof wills, are as dead as the typewriters that created them.

The result is that today when you need to modify your will, you'll do one of the following:
  • go to a lawyer who will feed your info into a computer and print out a nice new one for you to sign in front of witnesses, usually charging between $300-$1,000 for their services
  • adopt a self-help approach by using software such as Quicken WillMaker, or
  • go online and use one of several reliable online wills at a cost of about $70. Since this is a Nolo blog you'll probably guess that I think that Nolo's Online Will is the most legally comprehensive and easiest to use -- but hey, you don't have to take my word for it.
OK, assuming you agree that 50 years is a long time to live with one will, what are the key events that indicate you need to make a new one pronto?

Continue reading "You Never Retire from Writing Your Will" »

April 5, 2009

Do You Need a Will or a Living Trust?

Both a will and a living trust are efficient devices to leave property to loved ones. Simply identify the property and who you want to receive it and either legal device will accomplish the task.

But unlike a will, a living trust lets your property bypass probate court -- something that will save your family money, delay, and hassle. The only drawbacks to a living trust are that you must transfer your property to the name of the trust, and living trusts don't work to name guardians for children.

So why doesn't everyone opt for a living trust over a will? The main reason is that these days there are many other and usually simpler ways to avoid probate. As set out in detail in Nolo's 8 Ways to Avoid Probate, bank accounts, brokerage accounts, and retirement plans, such as IRAs and 401(k)s, can all be transferred free of probate simply by designating a beneficiary in writing. And couples who own a house or other real estate together can take title in joint tenancy (or in some states, tenancy by the entirety) and also avoid probate.

Assuming you take advantage of all these probate avoidance approaches, a simple will is your best bet to pass the rest of your miscellaneous personal property. And again, no probate is likely to be required since most states exempt small estates.

So when might a retired, or soon-to-be-retired, person want to choose a living trust? Usually when a house or other real property is involved. Even if the property is co-owned in joint tenancy or tenancy by the entirety, living trusts will avoid probate automatically and pass the property to the survivor only when the first spouse dies. If the survivor dies still owning the property, probate will be required, unless a living trust has been drafted and the property transferred to it. And, of course, the same thing is always true if the owner is single and owns the property outright.

Okay, assuming you're convinced that as an older real property owner a living trust makes the most sense to pass your property to your loved ones, how do you go about getting one? Lawyers typically charge $800-$1,200 for a trust for a single person and up to $2,000 or more for a couple. (Nolo's Lawyer Directory, complete with detailed attorney profiles, is one good place to find a quality lawyer.) Or you can do your own living trust using software like Quicken WillMaker Plus. Finally, an increasingly popular option is to do the job online. Both Nolo and Legal Zoom offer reliable online living trusts. Nolo charged $149 and Legal Zoom charges $219 and up. What's the difference? Legal Zoom uses advertising to get the word out about its products, while Nolo relies on the positive recommendations of its satisfied customers. Plus, unlike Legal Zoom, Nolo's Online Living Trust allows you to access your completed trust documents online, from anywhere, whenever you'd like.