What If I Leave Debts Behind?

The way debts are handled is highly state dependent.  This advice and answer is only for the state of Arkansas.

First, your children are typically not responsible for your debts.  The cases where they may be responsible are:

1. They cosigned a promissory note with you and promised to pay if you can’t or won’t
2. They signed a contract with a promise to pay if you can’t like a nursing home contract

If you leave debts behind, payment depends on your planning.

If you don’t leave a Last Will and Testament or only a Last Will and Testament, your estate will be responsible for paying your debts.  If you don’t have an estate, then no debts will be paid.  But, almost everybody leaves behind some kind of probate estate.

A Last Will and Testament usually includes a section or clause that requires your debts be paid.  These are paid first before any money is distributed to your family.  If you don’t leave a Will, then the State laws require your debts be paid.

Also, with or without a Will, any attorney handling the estate gets paid first.  Your final expenses get paid next, then the debts.

These debts include your final medical expenses and funeral costs.  So, if you spend a few days in Intensive Care (ICU), your estate may be responsible for $10,000’s of debts.  That is money your family will not receive.

You can avoid paying your final debts by planning ahead to leave behind little if no probate estate.  The Revocable Living Trust is one of the best methods to make sure there is no probate estate left behind.  The Trust combined with a few other methods makes sure that your assets don’t go to your probate estate, but instead go straight to your spouse and children.  The Trust avoids court and saves time and a lot of money.

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4 Warning Signs Your Elderly Relative May Be the Victim of Financial Abuse

Some of the most disturbing crimes against the elderly involve financial exploitation. While physical abuse is often easy to spot, financial abuse can be more difficult to detect, as victims often have no idea they’re being swindled until their money suddenly vanishes.

Most victims are more than 70 or 80 years old, and involve crimes like fraud, embezzlement, identity theft, along with welfare and insurance scams. If you’re caring for an elderly loved one, be on the lookout for the following red flags of financial abuse:

1. Unusual financial transactions or spending

The most obvious sign an elderly family member is being exploited is if there are sudden changes to their spending, banking, and/or financial practices. At the same time, the person may start behaving secretively, confused, or otherwise atypical about money matters. A few of the most frequent actions include:

• Someone who is normally meticulous about their finances suddenly starts seeing unpaid bills, non-sufficient funds warnings, and/or unexplained credit card charges.
• The elderly person starts opening, closing, or changing banking and investment accounts, especially without regard to penalties or fees.
• Someone with consistent spending patterns starts showing a sharp increase in spending and/or investing.
• The person’s account sees a suspicious increase in ATM use, withdrawals, and/or checks made out to unfamiliar recipients.

2. The appearance of a “new” person in their life

Because they’re often alone and isolated, seniors are particularly susceptible to being “befriended” by strangers who take advantage of their loneliness to exploit them. And it may not be a stranger—relatives who haven’t been around for years can suddenly start spending lots of time with the person.

This situation is particularly dangerous when the new acquaintance, caregiver, or relative spends time in the person’s home, where they have easy access to the person’s accounts, financial statements, and personal documents.

One sign that something is amiss is if the senior acts unusual when it comes to the new caregiver or friend. They may seem nervous when that person is around, stop participating in their usual social events, or be reluctant to speak about the person with you. This is a red flag the new person may be trying to isolate or control them.

3. Unneeded goods, services, or subscriptions

Outside of loneliness, the elderly are often physically unable to handle household chores and maintenance like they used to. Given this, they’ll likely need service providers to take care of the work for them. But every new person they surround themselves with is a potential swindler.

Watch for unscrupulous door-to-door salesmen and home repair contractors, who stop by offering unsolicited products or services, especially related to home remediation issues. And they don’t have to physically present to perpetrate fraud—there are countless telemarketing and email scams that target unsuspecting seniors in order to make a quick buck or steal their identity.

One fairly common scam involves inviting the older person to a free lunch or dinner in exchange for listening to a “seminar” about a financial product or service. The elderly often feel obligated to “buy something” after getting what they thought was a free meal.

Make sure that another adult relative is present before signing any contracts, and always consult with us if you’re unfamiliar with a new investment or financial opportunity.

4. Changes to wills, trusts, titles, power of attorney, etc.

The worst cases of financial abuse of the elderly can even involve the person making changes to wills, trusts, and other estate planning documents. Other potentially harmful changes can involve deeds, refinanced mortgages, property titles, and/or adding someone to a joint account.

Pay especially close attention if the older person seeks to grant power of attorney to someone out of the ordinary, as this can open the door for massive theft of assets and potentially fatal changes in a senior’s caregiving services.

One major advantage to establishing a relationship with a lawyer during your early years is so we can get to know you while you’re young, healthy, and clear, and then monitor if anything goes awry in your later years.

One reason financial scams are so hard to detect is that the elderly—like all of us—are embarrassed to admit they’ve been swindled, or they may not want to get a new “friend” or relative in trouble by telling others about their suspicions.

However, anyone can fall prey to financial fraud.

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Suze Orman Says This Is the Age You Should Retire—Not a Month or Year Before (and Here’s What She Misses)

If you’re middle aged or older, it’s likely that one of your most pressing concerns is not having enough money for retirement. And there’s good reason. According to the National Institute on Retirement Security, a full third of Americans between 55 and 65 have nothing saved for retirement.

And even if you’ve diligently saved, it’s difficult to predict if your savings will be enough. Today, many people are living into their late-80s, 90s, and even 100s. Because most Baby Boomers have lived comparatively healthier lives and had access to better healthcare than their parents, you may live even longer.

In light of these facts, a recent article in Money by renowned financial guru Suze Orman declares that the new retirement age for the majority of us is now 70.

While most plan to retire in their 60s, Orman believes this simply isn’t realistic anymore, not only because of increased lifespan, but also due to rising healthcare costs and the increased need to care for aging parents for longer periods.

Today’s eligibility age for full Social Security benefits is between 65 and 67. Of course, you can retire as early as 62 and receive partial benefits, but Orman says that claiming such partial benefits is “one of the biggest mistakes you’ll ever make.”

By waiting until 70, your annual benefit will be 76% higher, which will be hugely beneficial in the long run. Orman notes that for married couples it might be okay for the spouse earning less to retire at age 67, but the higher earner must wait until 70. The only exception is if one of you has a medical condition that prevents you from working or makes it unlikely you’ll live into your late-80s or 90s.

But delaying retirement doesn’t necessarily mean working full-time until 70. You might be able to work part-time or receive a reduction in your current job responsibilities. Orman says to start talking with employers about the possibility of part-time work or reduced duties at least two years before your planned downshift.

You also might consider switching jobs to something that requires less time and energy. Start looking now for educational and training opportunities to prepare for such a new position.

Another option (and one Orman misses) is to launch a freelance gig, or “side hustle,” which is probably your best bet for a secure retirement anyway.

Instead of thinking about retirement as a time to retire from life and work, start thinking about it as the time you can finally do what you’ve always wanted to do. Create a service offering around the passion project you didn’t think you could indulge during your working years.

Dreaming into—and even taking steps toward this side hustle—now is the place to start, no matter how close or far you are from retirement.

Your life experiences were given to you so you can give them back. Begin to consider who needs to hear what you’ve learned throughout your life, especially during the hard times, as that’s likely to be the source of your side hustle.

While this all may initially add to your retirement anxiety, rather than reducing it, you don’t have to go it alone. With us , we’ll be in your corner the whole way, offering guidance and support, while helping with any legal, insurance, financial, and tax issues that might arise. Schedule a Family Success Session today to see where your retirement planning currently stands.

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4 Cryptocurrency Risks and Scams and How to Navigate Them — Part 2

 

Last week, we shared the first part of our series on cryptocurrency risks and scams, and if you haven’t read it yet, you can do so here. In part two, we discuss two more common traps to be wary of when investing in digital currency.

If you are considering using cryptocurrency as an investment vehicle, talk with us first.

3. Pyramid/Ponzi Schemes That Will Trade For You

Because dealing with cryptocurrency can be a complex affair, online scammers have developed complicated cons similar to traditional pyramid and ponzi schemes. People have lost a lot of money in such scams, and unless you’re well-versed in the technology, they can be difficult to spot.

One giant red flag to watch for is giving your money to others who invest/trade for you, or if you only get paid when you recruit new members.

Also avoid buying upfront “packages” (The Gold Package) promising varying returns. And if you see the words “This isn’t a pyramid scheme” in the marketing materials, you may want to look a little more closely!

Unless you get to hold the keys to your private wallet containing your crypto directly or trade via a reputable exchange like Coinbase, you very well could be dealing with a scammer. And while plenty of people will make money in cryptocurrency pyramid/ponzi schemes, many will lose. That could include you or people you care about, if you get involved in crypto this way.

 4. Fake ICOs (Initial Coin Offerings)

While new cryptocurrency can be created without any public investment or offering, many use an Initial Coin Offering (ICO) to fund their startup initiative. ICOs are basically IPOs (Initial Public Offerings) for cryptocurrency and a highly effective way to crowdfund vast sums of money extremely quickly. In fact, recent ICOs have raised millions of dollars in mere minutes.

This speed comes from the fact that ICOs are barely regulated—a good thing if you’re looking to raise money quickly and avoid the rigorous and time-consuming regulations involved with traditional capital raising. But it can bad, too, as the lack of regulation is a big neon welcome sign to scammers.

 

The lack of legal oversight has resulted in numerous fake ICOs being created by crypto con men, who go to great lengths to convince potential investors of their fake coin’s legitimacy. If you’re just getting started with cryptocurrency, it’s probably best to avoid ICOs until you really understand what you are investing in. In fact, that’s a good rule of thumb with any crypto investment, if you don’t understand the technology beneath it, start by learning that—and understand “what this crypto actually does”—before you invest. Contact us if you’d like help with that.

Of course, not all ICOs are fake, and if you’re tech-savvy, they can be quite lucrative. In fact, many tout  ICOs as the future of venture capitalism and fundraising.

But no venture capitalist would ever fund a startup without proper vetting, and the same applies to altcoins. Check the background of the people directly involved with the project and those serving as advisors. Use Google and social media like LinkedIn to verify these are real people with stellar reputations, and their advertised skills and knowledge match those found on online resumes and CVs. And make sure you understand what the cryptocurrency proposes to do and that you believe the team behind it can accomplish that goal, as with any business investment you would make.

And as with any investment, beware of deals that promise unrealistically high returns and/or just sound way too good to be true—that’s sign they likely are.

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A Will Prevents Probate, Right?

A Last Will and Testament does NOT PREVENT PROBATE!  People often think that if they have a Will, there is not probate.  Nothing is further from the truth.

You Will is not active until you pass.  And then, court (probate) is required to admit and validate the will; take an inventory; and administrate the estate.

Probate will require about 7 to 10 trips to court to settle it out if everybody involved doesn’t waive their rights to notice, inventory, and accounting.  You can expect the entire process to take from 12 to 18 months.  During that time, your family doesn’t have access to the money or property they may desperately need to continue living the lifestyle they deserve.

Even if you have a small estate (defined in Arkansas as under $100,000 not including the homestead), you can expect the probate process to take about 5 months to complete at a minimum.

I hope this brief article helps you understand the importance of doing other things to prevent probate and the importance of avoiding probate.

 

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