00:00 ANNOUNCER: You’re listening to a podcast of Master Your Finances with me, Kurt Baker, a certified financial planner professional. Sunday mornings at 9 AM on 1077thebronc.com.
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00:09 Kurt: Another edition of Master Your Finances presented by certified wealth management investment. I am Kurt Baker, a certified financial planner professional. I’m located in Princeton, New Jersey, and I can be reached on our website which is www.cwmi.us, or you can call me directly at 609-716-4700. This week, we’re very pleased to have here with us Fiona Van Dyck who she strives to offer clients exceptional legal representation and allay any fears that they may have in hiring an attorney. She works one-on-one with her clients to provide adept legal services that are responsive, competitive, and effective. Taking the time to get to know each client and understand their personal situation and the goals they endeavor to achieve. The potential solutions in each case are so immense yet Fiona takes pride in ensuring she meets the individual needs and concerns of all her clients by personalizing the meetings and documents.
01:12 Kurt: She has been chosen by the New Jersey Attorney General’s office, to instruct their attorneys on the topics of estate planning, estate administration, and elder law as part of their continuing legal education program, and frequently represents seminars… Excuse me, present seminars concerning estate planning and elder law including Medicaid and VA Aid and Attendance benefits. She has a Juris Doctorate from Rutgers University School of Law and a Masters of Law from the University of London. She is an accredited Veterans Administration attorney and a member of the National Academy of Elder Law Attorneys Wealth Counsel and Elder Counsel. When she’s not in the office, Fiona is an avid runner and volunteers her time with noteworthy community organizations including the Princeton Senior Resource Center, a local non-profit organization dedicated to bettering the lives of seniors in the community where she is a member of the Board of Trustees.
02:12 Kurt: Fiona, I appreciate you taking time to come in and talk to us a little bit about kind of the situation. I think, one of the things I’ve noticed at least, as a planner, interestingly enough, people are having a little bit of time to think about things a little bit, and given that they’re staying at home, they have a little more time to do some of those things, maybe normally, they complain they don’t really have time to do. And I think one of the things I believe is very important is it’s just a great time to look at your estate planning documents, and look at things that maybe you need to do as far as structuring about that. I know we’ve been in the news, so there’s been a lot about the elder care facilities and things like that. So, I think a lot of this is coming to the top of people’s minds a little bit. What have you been seeing that people are kind of thinking about now and addressing while we have a little bit of time to maybe work on this stuff?
03:05 Fiona: Well, you’re absolutely right. People have been very interested in planning of late. So, what started when the crisis started with COVID, we had a lot of calls from people who didn’t have documents and a lot of people who are on the frontlines. So, emergency room physicians, nurses who were dealing with patients every day who had the coronavirus and realised that they didn’t have documents in place. So, we did a lot for people in March who were really scared for a lot of reasons, and sort of facing what was out there and realising that they hadn’t done any planning at all, or the planning that they had done was 30 years old and absolutely not applicable to their circumstances at the time. So we jumped in to make sure that we got those people their documents in place. So, after March, so this past month, April, and continuing into May, we have exactly what you’re describing. So, a lot of people who have been sitting down and thinking, who are on the frontlines necessarily right, but have been thinking, “Well, we haven’t actually done anything.” And, the crisis sort of brought up the lack of estate planning that people had done.
04:25 Fiona: And we’ve been quite busy with families, with individuals, who wanna make sure that they get the planning done, and who do have the time, they’ve been sitting and thinking about what they wanna do and have the time to do it. So, this crisis has really come to the forefront for a lot of people that they haven’t done their planning or it needs to be updated.
04:46 Kurt: Yeah, that’s kind of what I’m saying. It’s like one of those near-death experiences, you’re like, “Oh my goodness, wow. What if something really had happened? I wasn’t really as ready as I thought I was.”
04:55 Fiona: Yeah, exactly.
04:56 Kurt: And now, you’re like, “Oh wow. Maybe I better re-look at everything whether it’s the insurance on your house or whether do I have enough assets set aside, do I have all my beneficiaries set up, do I have my documents in place? There’s just so many things that… Whenever somebody goes through an experience where somebody passes, especially, I think a lot of people wake up to that fact. Now, we’re in one of these situations where, “Oh my goodness” It’s kind of a close call.
05:24 Fiona: Exactly. We often get a lot of calls from people to schedule an appointment to talk about estate planning after there has been a death in their family. They face their own mortality to a certain extent and realize that their plan is not where they want it to be, or they’ve just come from handling the estate of another family member and realized that it was actually pretty difficult because they hadn’t done the planning, as it was really where it needed to be. So we can get calls from people like that throughout the year. But this crisis has really brought people into the office because they are sitting and watching the news, and seeing what’s happening out there, becoming very concerned that their plans aren’t up to place.
06:13 Fiona: Especially when you think about what a state planning is, which isn’t just your will for what happens after you’re gone but also the healthcare documents, making sure that you have named somebody to make healthcare decisions for you if you can’t make them for yourself. A living will that’s going to give somebody instructions on what you would want at the end of life if really the only thing keeping you going were the machines. And then also that HIPAA authorization to let the doctors know who they can talk to. Is it just your spouse or your spouse and your kids. And with that HIPAA authorization I always tell people if they have that close family member or a friend who is a physician, that’s a great document to name that person, it’s not putting them into a position of making decisions for you but it’s allowing them to talk to your physicians.
07:07 Fiona: And Kurt, I’ve had so many doctors in my office especially of late and I asked each and every one of them to confirm that they talk to each other differently than they talk to us, we mere mortals and they have all confirmed that they do. And of course they do. They come at it from a different perspective, they have a much deeper understanding of what’s going on so making sure you have those disability documents in place and that of course that financial power of attorney to let somebody handle the business aspects of your life if you can are incredibly important.
07:39 Kurt: So are there changes maybe we should think about, some of the things you hear about, I don’t know if you’ve experienced this personally or not, I haven’t personally but if somebody is not feeling… Not doing well, they’re not actually allowing family members to even come in to see them and things like that so I would think that this really makes even more important. Because now you may not even be able to go to the hospital, you may not be able to go into the facility where your loved one resides. So you can’t even talk to people that are typically around them and at least help them or guide them on what that particular person may want and how they might wanna be cared for. I think this comes up a lot in the elder care facilities or maybe even the hospital or something like that. So what are your thoughts about some of these we’ve been hearing about as far as how this is being handled?
08:26 Fiona: In the assisted livings and in the nursing homes?
08:29 Kurt: Right, right.
08:30 Fiona: Well, we’ve been doing a lot not necessarily in the assisted livings and in the nursing homes but we don’t really have people coming into the office for meetings anymore. So everything is being really done via Zoom. So our meetings are taking place via Zoom. With people in the assisted livings and in the nursing homes, we have been in some assisted livings still working with our clients. So we meet with them via Zoom or FaceTime. And they have, if they’re well, they can come outside and we can meet them outside. We’ve been reviewing documents on Zoom too so I’m getting really, really good at Zoom and… And [chuckle] Kurt, you know me.
09:18 Kurt: How are people responding to that? I know, technology is… I’m okay with technology but I’ve never been forced to quite use it as much as I have been in the last several weeks especially. There was a kind of this transition period I think we all went through and all of a sudden we said, “Hey, we gotta start still operating,” and we all kinda locked into different ways of doing it. And then we got used to it, now we’re like, “Wow, this is not so bad but it’s different.” So every time you’re talking to somebody, what have you noticed as far as your clients go, maybe even on your personal experiences, now we have to do it, now we’re kinda getting comfortable with it a little bit, right?
09:50 Fiona: I’m much more comfortable with it than I was. So I’m still a per people person, I still like to have that meeting with somebody really coming to my conference where I can sit and have a nice cup of coffee or a nice cup of tea with them and talk about what their concerns are but I’ve had to Zoom. So I’ve gotten much better at just connecting with people through the computer which is a bit odd and a little bit different. I’m looking forward to going back to in-person meetings and not zooming quite as much but I think everybody is zooming in their world or doing Microsoft Team Meetings or something. And I don’t know, how has it been for you?
10:45 Kurt: I think it’s worked out well, now that we’ve kinda gotten used to it. It’s okay but I agree with you 100%, I still personally prefer to be one-on-one with people and you still have that… We’re still human being so I like to be around people but this is something that I’ve become more comfortable with and I think people on the other end are becoming more comfortable with it. So a lot of this is like, “I’ve never done this before, what do I do?” and once they’ve done it once, they’re like, “Oh, that wasn’t so bad.” When you’ve done it a couple of times you’re like, “Oh, this is no big deal, it’s not much different than making a phone call or sending an email.” it’s just in a different interface so once you kinda work your way around it once or twice, all of these systems are very similar so I think we’re getting used to it. But yeah, I know we’re coming up on a break here real quick but yeah, we definitely wanna talk a little bit more about how we’re managing the pandemic and things that we can do while we have a little bit of downtime as far as our overall planning goes. You’re listening to Master Your Finances, we’ll be right back.
11:48 Kurt: Welcome back, you’re listening to Master Your Finances, I’m Kurt Baker here with Fiona Van Dyck, Van Dyck Law. And we were talking right before the break, we were talking a little bit of how we’re all kinda getting used to using these video conferencing systems like Microsoft Teams and Zoom and Google Hangouts etcetera there’s a bunch of them out there and I think we’re getting more used to that. Although, you and I both agree that I still like to meet people in person, this is nice but it’s a great way to do it now and I think we’re all getting a little bit better at it which is good. So in certain circumstance, I think this works fine but I still think we’re all gonna be very excited to get back and being able to meet with our clients and meet with other of our comrades, so to speak, and get to see each other again. So how are you operating, since you’re a pretty critical business as far as people need to do their estate planning, people need to maintain their legal structure, of course, so how are you running your office in general given the change and the landscape that we have right now?
12:57 Fiona: Yeah, there are about four of us that are coming into the office regularly and we all work in our little silos. So we have to keep, we’re keeping our appropriate social distance from each other, we work in our offices. It’s one of those things where we’ll say, “I’m going for coffee now, so I’m walking into the common space.”
13:19 Kurt: So you put up a little bat signal to indicate what you’re doing next?
13:24 Fiona: Yeah.
13:24 Kurt: A little flare something that goes up?
13:25 Fiona: Yeah. And it is hard. Because we’ll wanna look at the same document or something, and then be close together, like, “Stop, you’re encroaching on my social distance.” But, for clients, as I said, people are still calling the office regularly. We’re really quite busy. That initial meeting that we have with people, as I said, we’re doing it via Zoom. And we do have a lot of clients who are older and not as technologically savvy as of our kids. They are called tech natives or something, they’re native speakers of technology, they can do all of this without even thinking about it. But a lot of my clients are older, so we are working with them to teach them how to Zoom. So, for people who haven’t Zoomed before, somebody in my office will have a telephone call, and with their computer on, and sort of take them through it step by step so that they’re up and ready to go, to do that the day before their meeting. So, they feel really comfortable with the technology by the time I meet with them.
14:35 Fiona: And then, when we’re doing documents, and this is something I’ve actually been liking, I share my screen. So, we’ll prepare the documents, and then our second meeting will be another Zoom meeting, and I’ll share the documents on the computer so that they can see the documents. We’ll go through the documents, document by document, just like they would in the conference room if we were sitting and going through the documents together. They would be looking at the paper documents, and here we’re looking together at the computer screen. Any changes that they wanna make, I’ll take the documents back and make those changes, but we are meeting people for signings in the office, but they’re very different. So it’s like a 10-minute meeting. We’re lucky that people can come into our office without even touching a door knob.
15:30 Fiona: So, you can hit the button by the front doors to the office building, and they’ll open for you. You can walk into our office, walk into the conference room, and we’ve been laying out the documents that people have already reviewed, and then we are witnessing and notarizing them. The notary and the witnesses are watching them from our 10-foot distance with our masks on. The clients sign the documents, we step in, and they step away, and one at a time, we step in and sign as witnesses and notaries. They go back to their car, while we then gather the documents, scan them, copy them, staple them, put them in their binder, and then we walk the documents out to the car with our Clorox wipe, wipe down their binder, and put it on the hood of their car. We step away, and they get out of their car and get their documents.
16:26 Fiona: But, so, we’ve been… These documents can be really critical for people. So, we have been open to make sure that we’re there for our clients, and making sure that we are doing for them what they need, and people are so, right now, anxious generally. Everybody’s anxious. And if this is one of those things that people are feeling very anxious and concerned about, to know that they can come in, they can get it taken care of, that little voice in their head’s like, “This isn’t up to date. I don’t have this document.” That they can get it up to date, they can get it done. We’ve got a mechanism to do it, and to do it very safely, I think. If I can take that one concern away from people, that makes me feel better in this crazy world.
17:24 Fiona: One of the things that we were doing, and we’re still doing out there is free medical directives for people who are on the frontlines. And really, the people that I’m thinking about there, that my office has been thinking about, are not necessarily the people who can, who really even know what documents they need. So, the people who work in the hospitals, not necessarily the doctors and nurses, but, the orderlies, the techs, the janitors in the hospital that are still around this virus, don’t have the documents. So, we’ve been doing those without charge. Also, for people who work in the grocery stores. They’re those frontline people that need to have those documents and don’t even. I’m not really sure where they get them, so we put word out to the hospital, the first responders, the grocery stores, that we’re happy to do that for their people.
18:31 Kurt: No, I think that’s great. I actually have a nephew and a niece that both work in a grocery store, and I think they said they were like 80% above their goal last month, it’s just…
18:42 Fiona: Yeah.
18:43 Kurt: And, they’re under a lot of stress. Even if everybody was perfectly nice to them, but every once a while, they get people who are, obviously everybody’s a little bit agitated, and, so, they’re really under a lot of stress. I think sometimes we don’t appreciate the people that are delivering food to us, or doing the take out, and all these other things. And I think it’s really great that you guys are stepping up and helping them out a little bit because they’re under a lot of pressure. I just know that personally, that the public doesn’t necessarily understand. We kind of forget that there’s a lot that goes on behind the scenes for a lot of the stuff to appear on the shelves, and that we have been taking for granted for a long time. So, the medical directives…
19:27 Fiona: Absolutely.
19:27 Kurt: I mean, the medical directive is fantastic. So, are there any other areas of focus? I’m thinking about… My most common thing that I run across, when I get a client referred to me is, as you pointed out, they either have no documents or the stuff is way out of date. So probably what people should be doing if they have a little time at home, I would think, is just go find this stuff and if it looks like maybe you need to get it updated, I think it would be a great time to just start and… Do they typically, I’m assuming they can send it to you for review and then you go over it and then you make a suggestion and… This is just a fantastic time ’cause I know you found this out ’cause I found out the same thing there’s always something that could probably be tweaked but for almost everybody it seems like because things change in our lives. And it’s amazing how the documents you did yesterday were really done 10 years ago, “Oh, we just updated those?” right?
[laughter]
20:23 Fiona: Yeah…
20:24 Kurt: I’ve done the same thing about the hospital a lot of times.
20:28 Fiona: Yeah, I was just talking to some clients yesterday via Zoom and their documents had been done literally 30 years before when their daughter was born. They wanted to make sure they had a guardian named for her and their life circumstances had completely changed. But one of the things that we often see are people that do come in with their documents that are very old and that’s fine, let’s get them updated, now is the time. And our documents need to change with us. So especially we need basic estate planning into more elder law, we wanna make sure that the documents potentially give the people that we love including our spouses the ability to do long-term care planning for us even if we don’t do it ourselves.
21:25 Fiona: So many people are concerned about long-term care because of the costs associated with it. So in this area of New Jersey, nursing homes can be as much as $16,000 a month and assisted livings once you start needing care, that’s $7500 a month to $10,000 a month. That’s a lot of money, $120,000 a year to $260,000 a year on long-term care costs. And many people are under the impression that Medicare is going to cover those costs and it doesn’t. The only government program that’s available to assist in paying with long-term care costs is Medicaid. And I don’t know if you’ve noticed, but in New Jersey we pay a lot more taxes than some other states, have you noticed that?
22:27 Kurt: Oh, oh, usually around this time of year it really comes to a point. You notice these things and you go, “Wow, yeah, we’re have a different .”
22:39 Fiona: No, I do. But I often think that this is one area where we get a bit more. So Medicaid just kind of like Medicaid 101, so one it’s the only government program that assists in paying for long-term care costs. And in New Jersey, Medicaid will pay for skilled nursing homes, that’s kind of across the board. They will also pay for assisted livings and some in-home care. So in that regard we get a bit more. Every state is different. In Pennsylvania, for example, Medicaid in Pennsylvania will not pay for Assisted Livings, it will pay for some Home Care and nursing homes but not Assisted Livings. So that’s really something that is great in New Jersey and that isn’t in all states. But you wanna make sure if you’re not doing the planning yourself, maybe protecting assets because as you know Medicaid is very asset limited, that you’re giving your spouse the ability to do that and in that regard we really wanna make sure that you have a very, very strong power of attorney, a durable power of attorney and again, that’s that document that says who can handle the business of your life.
23:58 Fiona: So as we get older we wanna make sure that that is a very strong document and that we are allowing the people that we name as our agents to potentially gift assets in a structured way and to talk to an elder law attorney before you make any of those gifts. But if it’s not in there, if the power of attorney doesn’t say that your agent can make gifts really in unlimited amounts and can allow your agent to set up potentially an irrevocable trust, then they can’t do it, they’re not allowed to do it. And that’s how we do the asset protection to allow people to protect some assets but still access Medicaid, for people who don’t have that language in the power of attorney, we can still get it done typically but it means we have to go to the court and we have to have somebody who doesn’t have capacity anymore. We have to have them declared incapacitated and we have to ask a judge for permission to do that type of planning that could be taken care of with a paragraph in a power of attorney even between spouses, right?
25:12 Kurt: Oh, absolutely, this is very important. I agree 100%. Yeah, this is a really important area. We’re coming up on a quick break here but I definitely wanna finish this out ’cause planning for this is really important, planning for long-term care and the different aspects of that I think is really critical. Well, you’re listening to Master Your Finances we’re be gonna be right back.
25:34 Kurt: Yeah, so I didn’t wanna cut you off but we were running over a little bit. Welcome back, you’re listening to Master Your Finances I’m Kurt Baker, I’m here with Fiona Van Dyck of Van Dyck Law and we’re talking about the effects of this… The pandemic is having on us all and ways you can use this time really to help yourself and help your loved ones and really part of that it comes down to planning, I know Fiona and I are both on the same page of that, we really do the same thing but a different corner of the same thing, right?
26:05 Kurt: Planning is really, really important from a legal perspective and a financial perspective, all of it together. And before the break, we were talking a little bit about Medicare, how it does not cover long-term care expenses, like some people believe it does, but Medicaid does. And if we could just kinda go through that a little bit, I know one of the main aspects of that whole scenario, especially long-term care in general, is really the earlier you start to plan for this, the more likely you’re to have a better outcome if and when a long-term care situation occurs. And as we are well aware of up in the northeast like New Jersey, this is a very expensive proposition and there are lots of options to try to help yourself out.
26:51 Kurt: I’ll just throw in my side of it. A lot of people think that well, as soon as you need long-term care, you may have to go into a facility, but a lot of people will age in place, and you can do lots of things to allow your expenses to be paid, have people come into your home and help take care of you, and you need the legal structure in place to do that as well as the financial structure. So do you wanna address a little bit of like when they should start to address things like long-term care and what are some of those best practices from your point of view?
27:19 Fiona: So a lot of people come in when they’re in their 50s, their 60s just to start planning for long-term care. And depending on really what their assets are, we can look at it both from a legal perspective and then also work with somebody like you on the financial perspective of it. So what we often do from a legal perspective is one, make sure that there’re estate plan. Sorry. [chuckle] Alright, that was my… Yeah, we’re in your home.
[laughter]
28:00 Fiona: So what we do is make sure from that legal perspective that we have what is necessary in place, the strong power of attorney to allow somebody to handle those assets. But from a pre-planning perspective, often what we’re doing is setting up an irrevocable trust and allowing people to move assets into that to give them protections. Right now, we have a five year look-back. So any assets that you move over to an irrevocable trust, if you make an application for Medicaid in five years, they’re not even going to be reported. So we can do that pre-planning as it were, we’re healthy, we’re not really thinking about needing Medicaid or long-term care but maybe we set up that irrevocable trust. And one asset that’s so easy typically to move in is a house because you don’t rely upon that for money coming in the door. It’s there, it’s a pretty easy asset to protect. And we also talk to people if they can get a long-term care insurance.
29:12 Fiona: And I know that’s something that you’re very involved with, and looking at not just necessarily the traditional long-term care products that people had before where there was the premium that you would pay every year and there was a chance of those premiums rising. One of the things that unfortunately I’ve seen more times than I care to think about is people who’ve left that insurance lapse because the premiums got too high and then three years later, they’re in the nursing home or in the assisted living. But there are other products that are available now where you can use your retirement account and use money that’s in the brokerage accounts to sort of pre-fund your long-term care and if you don’t use the traditional insurance, if you didn’t use it you lost it. But with these newer products that are built on insurance policies or annuities, it’s not if you don’t use it, you lose it. If you don’t use it, you have a beneficiary who’s going to then take what you didn’t use.
30:23 Kurt: Yeah, I agree, the plan…
30:23 Fiona: Are you…
30:24 Kurt: The plan is really important. I wanna point out one thing that you kinda touched on a little bit. I wanna make sure you will understand this, is if you have insurance, and then long-term care, for sure, but any insurance before you let it lapse for not being able to afford it, you always, always, always wanna have somebody review it and make sure… There are always options. You can reduce face value, oftentimes. You can adjust the cash flow of it, sometimes you can pay up the insurance, but there’s always options, that are available with most policies, especially old long-term care insurance policies, most of them are being maintained at really the insurance company’s cost, so they tend to be really, really, good deals if somebody has had them for 10 or more years. It’s probably a very inexpensive policy for the benefit. So, if you’re running into issues with paying it, you wanna have somebody review it, don’t just automatically just stop paying it, just make sure somebody reviews it, ’cause there’s a lot of options out there that might be much more beneficial for you.
31:22 Kurt: And I think you pointed this out a little bit, is a lot of this… People are afraid of it, they think it’s just way too expensive but it’s actually… You can budget for it and you can actually create whatever is applicable for your particular situation. So it is very… As you pointed out, there’s many, many options out there now, and there’s almost always a realistic solution that’s affordable for everybody. I think it’s solvable.
31:49 Fiona: Right, I think when somebody is thinking about doing the long-term care planning, if they’re healthy, it’s absolutely something that can be a great part of the plan and give them so many more options. Because the sooner you think about it and you do the planning, the more options that you have. If you wait until you’re in then, you know, your loved one is in the nursing home or is in the assisted living, your options have become much more limited. But the sooner you do the planning and think about it, the more options that you have. You know with everything, the sooner you do it, the more options you have. And this is one of those areas where it’s so important to really think about that.
32:32 Fiona: And often what we’re doing, it’s that long-term care insurance, if it works for people alongside the legal documents, alongside making sure that from a legal standpoint you have those documents in place to protect some assets alongside the insurance. A lot of people will go that route to make sure that they’re absolutely going to be covered. But for a lot of people, it will be sometimes one or the other, but I think it has to be a part of people’s estate planning especially as we get older to talk to clients about, well, if you needed to go into an assisted living, if you wanted to get the home healthcare, how are you going to afford it? And what are the costs involved?
33:15 Kurt: And I think this is one of the areas where oftentimes, it’s valuable to get kind of a multi-generational buy into this, so to speak.
33:22 Fiona: Yeah.
33:22 Kurt: Because when we get older, I think it’s really important for us to really… If we have children, for them to understand what we want and for the children to be able to help. So, in some cases it’s kind of a win-win scenario that could be set up to make sure that older people are getting whatever they are looking for as far as how they wanna age. Do they wanna age in place, what type of facility they wanna go into and how is it gonna be paid for. And a lot of times, the children multi-generations are involved in this process, and I think it’s really important just from state planning in general especially, kinda long-term care ’cause you don’t wanna overwhelm the children, but sometimes that’ll happen. You have a work… Oh, well, my daughter or my son’s gonna take care of me and they’ll be fine with that.
34:04 Kurt: Well, maybe they won’t be fine with that because they can’t, they have a job, they have children, and they have other obligations and often parents will forget that they have their own families, and they have their own stresses, and have they have their own things they need to work with. And to all of a sudden expect them which might be providing a dinner once a week, to all of a sudden I’m taking full care of my older… My parents, that’s a lot, that’s a lot to expect from them. And I think the sooner you kinda have these conversations about how that whole all is gonna work, and how you’re gonna fund it, if necessary, it just takes a lot of that stress away. And now that we kind of have a little bit of time to think about that, and more time to talk to our loved ones, maybe this is a good time to have some of those conversations, right?
34:46 Fiona: Yeah, and I think you’re exactly right, it’s in today’s world where so many people are working and there’s so much going on in families. Not only can you not assume that your family is able to step in and care for you, but also the medical needs might not be able to be met, but also do you want. I always tell people, “Do you want your child to be in that role as your nurse? Maybe not. Do you want your spouse to be the person who’s doing those things for you or how would you afford a home health aide?” And unfortunately, I had a client about a month ago, we were talking about long-term care insurance, and she would never be able to because of some medical issues, it wasn’t something that she could… Would then be available to her, and she told me that her… A financial advisor that she had been working with when she brought up long-term care insurance to him about 15 years before, his response to her was, “Well, why would you want that? You don’t wanna go to a nursing home, do you?” And I… My mouth fell open because…
36:02 Kurt: Oh, lord. Oh, no.
36:03 Fiona: That’s exactly why you have it. So you don’t have to go to the nursing home so that you can bring in people into your home to take care of you or afford the assisted living. And I just thought, is that his idea of it? Or I hear people… I’ve heard people say to me, and I know they’ve said it to my clients, they told me that that, “You don’t really need that insurance, you don’t really need to plan for long-term care legally or with some sort of long-term care insurance because people are only in the nursing home for two years.” Oh, that’s absolutely not the case. And yeah, when we’re thinking about skilled nursing facilities, people now go to skilled nursing facilities when they’re very, very, ill. So the time that people spend in skilled nursing is shorter, but people who now are going to assisted livings and they’ve really taken on a lot of the roles that nursing homes used to play, and unless people need really intensive medical care or invasive treatments, people are staying in the assisted livings.
37:14 Fiona: A lot of them have a very high level of care that they can provide and especially when we’re thinking about dementia diagnosis or Alzheimer’s diagnosis. People aren’t there for two years, people are there for 10 years, 15 years, and that’s expensive. So, it’s something you absolutely need to think about and when clients come in and they tell me that an advisor had told them that it’s only two years and that why would you want that type of insurance because you don’t wanna go… Do you wanna go to a nursing home? Well, no, nobody comes in and says, “You know what my goal is, I wanna go to a nursing home.” No, you don’t wanna… Nobody wants to live in a… It’s not… You’re not a… 25-year-olds don’t think, “Wow, you know what I wanna be doing when I’m 80, I wanna be in a nursing home.” I don’t think so. You wanna stay home as long as you can or you wanna live in that home-like environment, but nursing homes absolutely have a place for people who really need that level of care.
38:16 Kurt: I couldn’t agree more, and I’m embarrassed if that person is part of our industry, ’cause they shouldn’t be part of our industry. That is just the wrong advice. But yeah, we’re gonna talk more about this in just a few minutes, we’re coming up on a break, you’re listening to Master Your Finances, we’ll be right back.
38:29 Kurt: You’re listening to Master Your Finances, I’m Kurt Baker here with Fiona Van Dyck, of Van Dyck Law. And we’ve been talking really about something that’s very important that often people don’t really address early enough sometimes but it is really kind of important, which is, how are you gonna address as we age, taking care of yourself or your parents, or whatever the case may be. Often we talk about that as long-term care, but that’s really just about how do you wanna age and how are you gonna fund it whether that’s staying at home whether it’s moving into a continuing care facility and things like that. There’s lots and lots of options out there. One is, what do you want? And two, is how are you gonna plan for it? And one of the things you kinda brought up in the last sitting is that we talked a little bit about how sometimes people rely on family members and you mentioned well, would you really wanna have your son or daughter take care of you? And I’ve had some people that I’ve talked to that once we set it up so that they could fund the care, the parent that was being taken care of goes, I got my daughter back. Right, ’cause she was no longer coming over to change the sheets on the bed and cook the meals. She was coming over to see her mother.
39:38 Fiona: Yes.
39:39 Kurt: It was more about, I’m coming over to chat with my mom about her day. Not to do all the errands around the house for eight hours. So…
39:49 Fiona: Exactly.
39:50 Kurt: The relationship actually, it significantly improved and one of the comments was, and this person ended up passing away. One of the comments was, I was so glad that we got to develop that relationship and I wasn’t her full-time caregiver near the end of her life, I could actually be her daughter. Which I thought was really powerful as far as how you need to make sure that you’re set up correctly so that you can still have a family life and still maintain all the structure you need in order to live the way you wanna live and still have that relationship with your children and so forth.
40:26 Fiona: Yeah, wow, that’s so true, that if you’re the home health aide, you’re not really the family member at that time. And you often want your family to just to be there to give you the love and comfort of a family member and not necessarily doing all of the things that need to be done if you were properly set up. If you had the funds set aside to do it, you would have a home health aide. Somebody who’s doing that in a professional category to let your family be your family.
41:00 Kurt: Yes, ’cause they’re not all stressed out, right?
41:01 Fiona: That’s really powerful.
41:02 Kurt: Can’t go from vacuuming the living room to, “Oh, let’s sit and chat now. Oh, I’m tired, I wanna go home,” right? [laughter]
41:12 Fiona: Yeah.
41:12 Kurt: I think it’s important so you’re gonna have to take a little bit of a… And that’s why I think a lot of these conversations is really you have to really think about it in a realistic way, about what it really means as far as the obligations people are setting themselves up for. Because you want that flexibility, I think. And you wanna maintain that quality of life. And that’s kinda really what it’s all about is really living the way that everybody wants to live, and just finding a way to structure it. ‘Cause usually you can find a way to structure it as long as you understand what your goals are. That’s what I’ve found at least.
41:40 Fiona: Yep.
41:41 Kurt: Yeah, so.
41:42 Fiona: Yep, I agree. That’s a good point.
41:48 Kurt: So now that we got our facilities in place. The biggy is right so we wanna make sure we’re planning for long term care, especially, nowadays where I think this is come to light a little bit where sometimes people need to go into facilities, we wanna take care of our parents. So anything else that you’re seeing going on now as far as planning goes? I know some updating their docs is really important. Obviously taking care of everybody is good making sure we’re getting ready to go whatever that may be the long-term care facilities if necessary. But aging in place I know is the most popular way people like to age, right?
42:22 Fiona: Yeah.
42:24 Kurt: So what else are you guys seeing over there as far as what people are doing?
42:28 Fiona: What people are doing in the estate planning in elder law world?
42:31 Kurt: Mmm-hmm.
42:33 Fiona: I’ll tell you something that is that I like a lot, is what I call a beneficiary protection trust. So a lot of people, I know I am, probably are concerned about your children and the inheritance that they receive from you. There are different ways that you can leave your beneficiaries their inheritance. So one is what we call an outright distribution where I pass on and my beneficiaries receive a check from my estate for their 50% share, 25% share, whatever it is they’re receiving. That’s never something that’s good for a young beneficiary because you never wanna give a 20-year old a million dollars because their frontal cortex’s are just like jelly still and they can’t think past their next meal.
43:29 Kurt: They might have a new McClaren in the front yard or in the parking lot front, right? [laughter]
43:35 Fiona: Yeah, exactly it’s right. So they’re at the Range Rover Dealership to get the vehicles that transport their friends and then they’re going heading to the Porsche dealership and 15 of their best friends are on a Caribbean Island with them. So one of the things that people often do is then what we call stagger the distribution. So if you’re 25, you’re gonna get a portion of your inheritance. At 30, you’re going to get more of your inheritance. And maybe at 35, you get it all. But until 35, it’s held in trusts. It’s available somebody else is typically in charge of the money. But at these ages, the money’s going to come out of trust. But a different way that I really like to see… And of course it all depends on the family and their views, but is to actually leave the inheritance in a lifetime trust or beneficiary.
44:31 Fiona: And often people think well that’s just saying to them that I don’t trust them. And that’s absolutely not the case. It’s not that you don’t trust them. It’s that you don’t trust the other, the rest of the world. So it’s a way of saying to them, listen I’m gonna leave you your inheritance in trust for the rest of your life. And if you think about it, the person who controls and manages that trust is called the trustee. That’s the person who sort of has the key to unlock the trust and bring the money out and determine how that money is going to be managed. But instead of saying at 35 you get all of the money in the trust, you say at 35 you become the trustee. So you’re in control of your pot of money. And it’s accessible to you but it’s not accessible to the outside world. So it’s a way of giving some protection from what I call creditors and predators. So predators are the in-laws that we used to like, but now maybe we don’t like them as much as we did. There’s a divorce or something happening. And then creditors right? So that’s the lawsuits, bankruptcies, things of that nature.
45:43 Fiona: You’re driving on 95 and rear-end and cause an accident with the head neurosurgeon from the University of Pennsylvania and that doctor can never work again. Maybe you don’t have that umbrella policy to cover these enormous damages. So it’s a way of making sure that those outsiders, those third parties that we don’t trust as much, the assets in that type of beneficiary protection trust aren’t available to those third parties. They’re only available to your beneficiary, to your child or your loved one. And then you set the default. What’s gonna happen to the money in the trust if your child dies, 90 years old, leaves three children. Well, the default is usually if you’ve got three children, is going to go equally amongst those three kids. But you can also give that beneficiary, your child, the chance to mix that up. So you can say in the trust, “Listen, this is what I’ve put, but if you don’t like it, you can change it.” And you can say, “You can change it and leave it to anybody in the world you want, any charity, any person you want. You can leave it to your next door neighbor’s schnauzer if you want.” And that’s really when you say that, you’re saying, “Listen, I’m putting you in charge of the money, and I’m allowing you to control the money, what happens to the money after you’re gone.” So really, it’s as if you had the money in your own pocket, except it’s protected from those creditors and predators.
47:11 Kurt: How does this apply to spouses throughout their life? I mean…
47:17 Fiona: With spouses…
47:19 Kurt: Yeah, they get married and then they get divorced. They get married, they get divorced, whatever.
47:24 Fiona: Right, so for spouses what we do is something a little bit different. So some people wanna leave their spouses money outright. Absolutely fine, but if you wanna protect from a second marriage, so from Bubbles. Bubbles can be man or woman, you know. Bubbles is across the board, but if you wanna protect from Bubbles coming in, you would leave your money to the spouse who survives you in trust.
47:55 Kurt: Okay, I guess what I meant is…
47:56 Fiona: ‘Cause the money’s there. ‘Cause everybody…
47:58 Kurt: I meant the first trust you were talking about. I guess I would make sure I was clear. The lifetime trust for beneficiaries. Yeah.
48:06 Fiona: Yes, it would be the same. That’s often why I was truly talking about your children, grandchildren. But you can also leave your money to your spouse in trust to protect from second marriages and also the predators, Bubbles the predator or creditors also.
48:24 Kurt: Okay, maybe I wasn’t clear. I guess if I’m a beneficiary of this trust, I’m a young person, I’m in my 20s and I’m gonna become the trustee at 35. And let’s say I get married and I have this trust where I’m the beneficiary and now I’m the trustee. How does it impact the marital assets if I were to get married at 35 as an example? This trust, how does that fit into, is it just part of the marital assets at that point ’cause I’m the beneficiary?
48:53 Fiona: No, they’re absolutely not marital assets because that person you’re marrying is not a beneficiary of the trust. So that’s how we give them the protection because they’re never going to become marital assets.
49:03 Kurt: Right so that helps with that situation as well. That’s what I wanted to clarify. That’s what I thought about. I wanted to clarify that.
49:07 Fiona: Oh sorry.
49:08 Kurt: Yeah that’s okay.
49:10 Fiona: Yes. Yeah that’s why I said it’s a way we give the protection from the predators.
49:16 Kurt: Right, so you don’t know unfortunately, roughly whatever, I don’t know what the number is now but about half of marriages end in divorce. So if you’re leaving substantial assets and you’re concerned, you don’t even know who your child or children might get married to, you have no idea what their whole lifetime situation’s gonna end up being, and you don’t want those assets to go to somebody that you’re never gonna meet maybe, at least you wanna protect your child or children. This is one way to do that to kinda keep that off to the side a little bit right, so they can receive the benefit of it but it’s not considered an asset if they were to get married at some point ’cause it’s in a trust.
49:50 Fiona: Exactly. Exactly. Yeah. And as I said, you can say to your child or the beneficiary of the trust, “You can leave this money to whomever you want.” Or you can say, “You can only leave the money to my descendants, so the money has to go to your children or your grandchildren.” It’s going to go down the bloodline. We typically call that protecting the bloodline. So you can either say, “I wanna protect the bloodline. I want this money to stay in the family. I don’t want it to go to a spouse or anybody else,” or you can say, “Listen, I want you to use this money and leave this money to whomever you want. So you get to choose.”
[laughter]
50:28 Kurt: You get to choose. Well Fiona this has been amazing, time has just flown by. Any final thoughts about our current situation, recommendations to people out there before we wrap up?
50:41 Fiona: Stay well. Stay safe, right?
50:45 Kurt: Absolutely. Well you’ve been listening to Master Your Finances. I’m here with Fiona Van Dyck, and if you wanna listen to this podcast and all of our podcasts, you can go to masteryourfinances.us and remember, together we can master your finances so you can enjoy financial peace of mind.
