Wednesday, June 20, 2018

Fund management fees in a cooling stock market. They matter

"Although we work through financial markets, our goal is to help Main Street, not Wall Street." -- Janet Yellen, former chair of the Board of Governors of the Federal Reserve System. (1946 -   ) 


BY JULIA ANDERSON
With global stock markets treading water it’s time to pay more attention to manage fees on your tax-deferred and/or tax-free retirement accounts.


 Why? Fees can cut into your long-term investment savings results.  One adviser calls it “death by a thousand cuts.”


In a flat market, fees become even more important because while the value of your portfolio may stop growing, fees continue to siphon off revenue. (Your money!!!)


Ask yourself:


Do you know and understand the management fees that you are paying on your managed stock funds and other retirement investment products? (Both before your retirement and while living in retirement).


 What are those fees? The average annual fund fee, according to Brightscope.com, is 0.39 percent. Costs are lowest for the largest plans because those plans have “buying power” with management services.


 Are there cheaper fee options inside your fund menu while still giving you maximum revenue growth potential?


 There are two types of fees: Administrative fees related to record-keeping and investment and advisory service fees. They may be reported separately as fees and expenses.


 After the Great Recession, the U.S. Dept. of Labor implemented a new fiduciary rule requiring that advisers to 401(k) plans always act in the best interest of the plan participants. Who knew that that wasn’t always the case before?! Strict implementation of that rule is now in limbo because of Trump administration adjustments but advisers are more obligated to follow the rule for fear of class-action legal challenges and general awareness of investors.
 

The best way to compare your 401(k) management fees is with peer groups of similar size. (click here) If the information leaves you with more questions, talk to your employer. You may be surprised that your company CFO may not know any more than you do about what fees are being charged to employee accounts. However, your questions may spur deeper investigation by your employer into the outside firm providing retirement fund management services. 


 If you are unhappy with your 401(k) program, withhold just enough money from your paycheck to get the company matching money that goes with the account. Then set up your own IRA or Roth IRA where you can automatically put the rest of your long-term savings. The fees on individual accounts with online brokers are more competitive and transparent and LOWER.
 

Also, if you leave a job you may want to move your 401(k) account. An existing IRA or Roth IRA is a nice place to stash your savings and a great way to avoid paying taxes and penalties because of an early withdrawal.

 Here’s an apples and apples comparison for why fees are important from CNBC.com:


 You put $25,000 in a 401(k) that earns an average of 7 percent a year over 35 years without further contributions. Earning are reinvested. With an annual management fee of 0.5 percent, the total result after 35 years will be $227,000.


If your $25,000 in a 401(k) earns 7 percent over 35 years (reinvested) but has an annual management fee of 1.5 percent, the result will be $163,000. That’s 28 percent less!!!


 While 1 percent may not seem like much, your higher fund management fee cuts into the long-term power of reinvestment year after year. Should we call this a rip-off? Yes.


 Federal regulations require that fund managers report fees levied on 401(k) funds every quarter. But these disclosures may not be easy to understand. Having a friendly face-to-face chat with your employer’s accounting/administrative staff may encourage them to look into 401(k) management fees and then negotiate lower fees. They have as much to gain as you do.


 FOR MORE:
Brightscope.com  - “shining a light on mutual funds, 401(k) plans and financial advisors. Click here.


BrightScope is a financial information and technology company that ”brings transparency to opaque markets.” A resource of better decision-making.


 “Five Ways to Improve 401(k)s," Wall Street Journal, click here


"How a 1 percent fee could Cost Millennials $590,00 in Retirement Savings," Nerdwallet, click here.

Monday, June 11, 2018

GE caught many investors by surprise. It shouldn't have

 "The trick is not to learn to trust your gut feelings, but rather to discipline yourself to ignore them." - Peter Lynch, an American investor and mutual fund manager. (1944 -   )


BY JULIA ANDERSON

My mother thought she was buying stock in a light bulb company when she invested in General Electric Co. years ago.   Back then GE was the big name in American-made appliances and light bulbs.

Mom loved being modern.

Her GE kitchen wall refrigerator purchased in the early 1950s kept running for 50 years. She loved it and she loved GE.

Mother held on to her GE stock for 30-plus years, acquired more and reinvested the company’s rewarding dividend. By the time she died at age 98, GE held a significant position in her diverse investment portfolio.

She would be surprised to know that GE is no longer a light bulb company. She would be surprised and dismayed to know that GE is in financial trouble thanks to its expansion into commercial lending and long-term care insurance businesses.
When she died, I inherited mom’s GE stock and continue to own it despite the fact the share price has dropped like a stone in the past 12 months and the company has cut its quarterly dividend by half.


This has been a shock to long-time investors who had no idea until lately that GE faces a $15-billion liability from its long-term care insurance business.
Who knew it was in the long-term care insurance business!
Neither did investors have any idea until lately the trouble GE’s finance division faces, left over from the Great Recession of eight years ago.
Why were investors like my mom and now me in the dark?


Because GE was less than honest about what was happening to its bottom line. GE Capital is now being investigated by the U.S. Justice Department because it may have violated federal lending laws in 2006 and 2007.
The company faces a shareholder class action law suit filed by a union pension fund that accuses GE of fraud for misstating the seriousness of its insurance liability.


How are investors supposed to track a company’s financial performance? How are investors supposed to determine if a company is worth investing in and/or whether it might be time sell?
The time to get out of GE stock was back in 2007 but nobody knew that until now.


It turns out GE is not the only company that may be fudging the numbers.

Misleading state of affairs

Jason Zweig, writing in the Wall Street Journal (May 2018), has looked into how U.S. corporations like GE have been and are misleading investors.
In his report, “How companies use the latest profit fad to fool you,” Zweig said that in the past to assess profits, investors have looked to net income, or earnings per share.


But, “over the past two decades or so, companies have come up with newfangled measures of profit. Chief among them: Ebitda, or earnings before interest, taxes, depreciation and amortization.” He said. “This is a modified measure of the cash generated by the business.”


Ebitda is NOT cash flow. It is not net income.


In another recent WSJ article, writer Charley Grant explains how evaluating the financial health of publicly traded health-care stocks is “getting trickier” because a new accounting rule means “companies no longer need to include an estimate of uncollectable debt on their income statements as a deduction from gross revenue.”
Neither do these companies have to mention uncollectible debt as a reduction to accounts receivable on the balance sheet. Huh?

So, what’s going on?

Should investors be worried that they are being lied to? Should we be worried that the rule of law is being eroded, that corporate accountants can muddy the waters, making it hard to make an informed stock investment based on known risk and reasonable reward?


Are financial advisers and brokerage firms going along with the smoke and mirrors? Maybe.
In my mom’s case, she got lazy with her GE stock because it was kicking off a good dividend and going up in share price every year.
By the time she was in her 90s, she did not have the capacity to evaluate the company’s performance at a deeper level. She died happy thinking she still owned a light bulb company.


There still are reliable ways to measure risk and reward when investing in stocks. Here are a few tips (some of them from my mother):
- Buy what you know. Stick with blue chip companies that have a long track record of solid revenue growth.

- Buy companies with a reasonable dividend in the 2 to 3 percent average annual range.

-  Reinvest the dividends for the long-term.
-  At least every six months review your stock holdings: look at revenue growth, stock price performance and the P/E ratio, the comparison of share price to corporate earnings. If the P/E ratio gets over 20, consider selling all or part of your holding in that company. Put the money to work elsewhere. Don’t buy into a higher flyer with a high P/E ratio.
-  Look at corporate earnings growth over several quarters. Steady but moderate increases are a good sign that corporate managers know what they are doing.
-  Stay reasonable. Do NOT make buy or sell decisions based on what happens in Washington D.C.
-  Always balance risk with reward. In stocks, bonds or anything else…the higher the REWARD, the higher the RISK.
-  Count on a free American business news press to keep everyone honest by monitoring corporations and their reports as well as the regulatory arms of federal and state governments.
-  Read the Wall Street Journal, Barron’s, Bloomberg News and other financial news outlets to stay up on the ebb and flow of corporate business news. Pay attention to creeping bad news. Don't be the frog in the pot of soon to be boiling water.
-  Never stop learning, reading and being interested in economic and business trends.

FOR MORE:
Marketwatch.com “How to get started buying stocks.”
Fidelity.com “Investing Basics FAQs”
Investopedia.com “5 tips on when to buy your stock.”
Betterment.com
Fool.com “Investing help for beginners: 10 things to knowbefore you buy your first stock."


Saturday, May 5, 2018

Men often deny their mortality. That's a problem for women

"To the well-organized mind, death is but the next great adventure." - J.K. Rowling, British novelist, screenwriter, producer best known for her Harry Potter fantasy series. (1965 -    )


 BY JULIA ANDERSON

Stories about women, men and money come my way all the time. Here are a few.

A woman lives with a man for most of her adult life – more than 25 years. They never married.


First together in their youth, they broke up for a couple of years before getting back together in their 30s for the long haul.


He dies in his 60s.


The long-time live-in girlfriend knew that while she and her partner were apart in those early years, he briefly lived with another woman. What she didn’t know was that while with this other woman he named her as beneficiary of his pension, if he died. He never got around to changing that beneficiary assignment.


Now, even though that old relationship is long over, the former girlfriend collected a death benefit of more than $120,000 from his pension policy at his death.


His long-time live-in girlfriend of 25 years gets nothing!


Because they never married and because he never changed the beneficiary designation, there is no way to challenge this. The other woman’s name was on the document. The long-suffering girlfriend’s name was not.


Scenario No. 2:
A couple, long married, plans their retirement and decides that they will start collecting the full pension benefit from his 30 years of employment. That’s instead of taking only some of the monthly benefit so that the wife would continue to collect on the pension policy if she survives him.


He was in apparent good health, they wanted to enjoy an active retirement, so why not?


Within six months of retiring with the full pension benefit, he is dead from a massive heart attack.


She is left to pay her bills on her own without any long-term benefit from his lifetime of work and their shared life together. The pension payout dies with him.


Scenario No. 3: A couple had been married since their youth. A successful journalist and marketing guru, he launches a community newsletter in the 1990s during the exciting transition from paper to online news delivery. The newsletter was a money-maker.


Down the road, he is diagnosed with a blood cancer that slowly kills him.
Despite the dire illness, he persists in putting out the newsletter as if nothing is changing. He never talks with her about dying or about the details of the newsletter operation after he’s gone.


While she had been doing the business accounting, he dies without giving her training in news gathering or in technical support for its online delivery.


She struggled to learn on-the-job while grieving his loss. It was a lonely, miserable transition filled with stress and anxiety. She eventually (ala Martha Graham) prevailed and ran the publication for many more years.


There’s more: The newly widowed woman who faced massive debt left by her husband who owned a failing business. Or the woman who discovered unpaid mortgage debt left by a husband with a secret gambling problem. These men were in death denial.


A lot of men are.


In fact, Americans in general don’t talk about death, estate planning, end of life issues or even the details of retirement. Experts say it’s because few of us are ever exposed to death because we don’t live on farms anymore where the cycle of life is always present. We don’t witness death of family members because they are sheltered away in care centers rather than dying at home surrounded by loved ones, young and old.


When the topics of illness and death come up, we cringe. If pressed, men offer the pat answer, “we’ll be fine,” emphasis on the “we.”


Men, I think, more than women do not want to think about getting old or about dying. That leaves many women picking up the financial pieces after they lose their spouses. It means many women “pay” for the mistakes made by the men they live with because they ignore their mortality.


Those mistakes might be:
- Never getting around to updating beneficiaries on a pension plan or a life insurance policy or brokerage account.


- Choosing to take all the payout on a pension plan rather than preserving half for a surviving spouse after they are gone.


Whose fault?
Men are certainly at fault for failing to plan to when they are gone. But women also get blame for not being more assertive about estate planning, for not making sure that they will be financially whole, if their spouse or their live-in boyfriend dies?


Yes, if men don’t want to talk about money, it’s difficult to have the conversation.
Talking about money is stressful, causes anxiety and can create push-back. But let’s say you live with someone in HIS house. How will that shake out if he’s gone and his kids want the real estate?


Are beneficiaries up to date on his accounts and policies? Avoid the ugly surprises.


What about jointly-owned vehicles, RVs and savings accounts? Is everybody clear on what happens if one of your dies? Here’s what you can do, right now:
Make sure beneficiaries on all checking, savings, brokerage accounts are up to date.


If you marry or move in with someone after age 50, get a pre-nuptial agreement that spells out who gets what, when you each die.


On individual bank checking and savings accounts, put a POD (payable on death) name on the account. You can do it by filling out a form at the bank. The money goes to the POD beneficiary without the hassles of probate court or trusts. It can be your kids, live-in boyfriend or spouse.


If you own an account jointly, the surviving co-owner will automatically become the sole owner of the account.


Consider setting up a legal living trust to save time, money and the hassles of settling your estate in probate court when you die.


Here’s a suggestion from Dr. Keith Ablow, a psychiatrist, author and nationally-known mental health expert:


“If you do just three things in the next three weeks that you would do, for sure, if you knew you were going to die, you will improve your life,” he says. By taking this action, you will alter your life’s course, he suggests. You will be on the way to “truly living your life,” Ablow says.


Some women skim along on the surface of life...…. work, kids, grandkids. It’s busy-ness but not taking care of business. They are making assumptions about their financial future and what happens when the man they live with dies. Have the Money Talk!


For more:

“Why Denying Death Means Denying Life,” FoxNews.com, clickhere.

“The Psychology of Death: Facing up to our own mortality,” Psychology Today, click here.

Avoiding Probate with transfer on death accounts and registrations, click here.

Avoiding probate, www.nolo.comLiving trusts, www.nolo.com


Thursday, April 19, 2018

How much can you withdraw from your nest egg without going broke?

"3% is the new safe withdrawal rate," Wade Pfau, professor, American College of Financial Services, Mryn Mawr, Pa.


BY JULIA ANDERSON

There are TWO long-standing rules that financial advisers have been giving people planning for retirement.


 Rule No. 1 --- You can safely withdraw 4 percent of your nest egg retirement savings each year without running out of money in the long-run.


 Rule No. 2 – When investing in retirement move out of riskier assets and into safer bonds as you age.


Here’s the problem for today’s retirees: Both Stocks and Bonds are EXPENSIVE by historical standards. We’ve enjoyed a long run-up in stock values. Meanwhile, bonds are vulnerable to declines because of rising interest rates.


 THE NEW RULE --- 3 percent is the new 4 percent.


In other words, when planning for what your income will be in retirement consider withdrawing only 3 percent of your portfolio a year instead of 4 percent.
"3 percent is a safer withdrawal rate," say the experts at the American College of Financial Services. 

A lower withdrawal rate means more money stays in your portfolio and continues to earn income to be reinvested for the long-term.


 Let’s look at some numbers:
 You have $1 million in retirement savings:
A 4 percent withdrawal rate = $40,000 a year.
A 3 percent withdrawal rate = $30,000 a year.


You have $500,000 in retirement savings:
4 percent = $20,000 a year
3 percent = $15,000 a year.


 Can you live on $30,000 a year, plus your Social Security benefit? Many people are living on less. Can you live on $15,000 or $20,000 a year, plus Social Security?


 Let’s talk, now, about how your nest egg is invested.


Conventional thinking has you starting your retirement with 60 percent of your nest egg in stocks, so your money keeps growing. As you age, you shift out of stocks and into bonds to reduce risk.

But as we said earlier, with both stocks and bonds at expensive levels…with bonds vulnerable to interest rate increases, this formula might not work so well.

 What to do?


According to a report in the Wall Street Journal, the new thinking has retirees reducing stock exposure in the early years of retirement to protect against market declines, which are more likely at the end of this long bull market that we've enjoyed. Then gradually moving back into stocks as they age.


If a BEAR MARKET occurs in the early years of retirement, a stock-heavy portfolio might never recover, if you must sell stock at a depressed price during a downturn. In a bear market, bonds (even at today's higher values) will do better and offer less risk, the experts say.  


 JUST TO REVIEW:


When planning for retirement, make your income calculations based on a 3 percent withdrawal rate rather than the traditional 4 percent to allow more of your portfolio to grow and last longer.


Secondly, consider starting your retirement with more of your portfolio invested in safer bonds, rather than stocks, and gradually move into stocks as you age.
The idea is to stretch your retirement nest egg the estimated 28 years you may live in retirement.


If all of this scares, you to death, talk to a financial adviser about your retirement income options, read up on investment strategies for withdrawing from your nest egg. Make sure you understand the underlying risks of bonds in an environment that has federal-bank regulated interest raising going up.


Remember that if you are in good health at age 65, you will likely live into your mid- to late-80s. And we all know people living into their 90s.


WHAT ABOUT PEOPLE WHO HAVE A LONG WAY TO GO UNTIL RETIREMENT?


The experts at the College of Financial Services recommend:
If you have 30 years until retirement, you should be saving 16 percent of your annual income in a tax-deferred account. That account should be invested in 60 percent stocks and 40 percent bonds.
 If you have 40 years until retirement, you should be saving at least 8.8 percent a year with the same investment mix.


 BOTTOM LINE:
SAVE A LOT ($1 million at 3 percent equals $30,000 of income) and plan to spend carefully in retirement to avoid running short of money.  Meanwhile there are many strategies for how best to take money out of tax-deferred retirement funds. Study up on those strategies. 

Be sure you understand all the options and their pluses and minuses.  If you don’t understand something, ask questions until you do. Also, remember that the IRS requires that you withdraw from your tax-deferred IRA or 401(k) at age 70 1/2.

The IRS withdrawal rate on your money is about 4 percent, whether you like it or not. 

For MORE:
"Why You Should Hire a Financial Planner, even if You're Not Rich," NY Times, click here.
"Forget the 4 % Rule, WSJ click here.
"How Much Can You Withdraw in Retirement?" - The Balance, click here.
"How can I Make my Savings Last?" - Fidelity, click here. 
"How Much should you withdraw from your Retirement Savings each year? - Motley Fool, click here.





Wednesday, April 4, 2018

Divorce: Often a financial disaster for women


"You never really know a man until you have divorced him," Zsa Zsa Gabor, Actress and socialite. (1917-2016)


BY JULIA ANDERSON

At 54, she has been living apart from her husband for more than two years but has yet to initiate a divorce.


“I’ve got to get this over,” she told me with a look of distress. “It’s just so hard to take the next steps.”


For her there are a lot of next steps: With a divorce can she continue to use his health insurance coverage? How does she negotiate a fair division of retirement savings assets? If he gets the house, what does she get? Does she have enough money saved to pay for a divorce attorney? I ached for her.


Divorce is horrible in so many ways…a personal failure, a loss, an emotional nightmare. For women, it also can be financial disaster. Few women are better off financially after a divorce.


According to a report in The Atlantic, women typically see a 20 percent decline in income when their marriages end. The magazine called it “The Divorce Gap.”


Sadly, one in five women fall into poverty after divorce. Why? They likely will have less income from a job (if they have one) than their ex-spouse and they typically have custody of the children.  Meanwhile, few divorced mothers (only 25 percent) receive full child support as spelled out in their divorce agreements.


Advice for my divorcing friend:

Get off the dime and get it done. The longer you dither the more time he has to find a new girlfriend, to decide he deserves more in a settlement or to hide money and assets.


Put together a post-divorce budget for yourself. Add up your livings costs for food, utilities, mortgage/rent, insurance, transportation, retirement savings, health care. This gives you a negotiating position in a divorce settlement.


Gather all financial documents. Savings and checking accounts, retirement accounts. Get an appraisal on your home to determine how much equity is there.


Cancel joint credit cards, immediately. His debt can be your debt and another negotiating tool in the divorce.


Open accounts in your own name – bank, credit cards, savings.


Determine how you will handle health insurance coverage, get your own or stay with his coverage.


Get short-term court-ordered rehabilitation alimony, if you have been out of the work force. The alimony will help cover retraining and a job search costs. Some jobs in demand require little training. Among them, phlebotomist, paralegal, certified nurses’ assistant.


Horde your money. Do you have enough savings to get you through the cost of a divorce? Do you have money to reestablish yourself afterward? Can your family help you?


Consider hiring a divorce team: therapist/counselor, divorce attorney and a Certified Divorce Financial Analyst who can help you set up a post-divorce budget and help negotiate the divorce.


Stay married, if you’re close to 10 years. How long have you been married? If you are close to 10 years, consider waiting until you cross the 10-year mark, which makes you eligible to claim Social Security benefits on your ex-spouse’s work record with no impact on him.


Alimony and the Tax Reform Act ChangesThe Tax Reform Act passed by Congress in 2017 made big changes to alimony tax rules. 

The OLD RULE: Recipients (98 percent women) had to report alimony payments as income and pay taxes on the money. The payer gets a tax deduction.

THE NEW LAW: The spouse receiving the alimony will NOT have to pay taxes on the income. But neither will the payer get to claim a tax deduction. Result: Tax savings for women, increased expense for men. This tax change doesn’t become effective until 2019.
 If you are at the beginning stages of a divorce, take time to do some research on what critical steps you should take. There’s plenty of info on line – see my list below.

Check out WIFE.org web site where founders Ginita Wall and Candace Bahr provide financial planning resources for women, particularly those divorcing or widowed.


They also support Second Saturday workshops throughout the U.S. aimed at helping women through divorce and/or widowhood. Check for a workshop in your area by going to WIFE.org.


WIFE.org home page topics include How to Choose a Divorce Attorney, the Benefits of Being Married 10 Years, A Step-by-Step Guide to Preparing for Divorce and Life Events and Your Finances: Are You in the Know?


They also support Money Clubs for women throughout the country.


Bumper sticker at WIFE.org – “A Man is NOT a Financial Plan.”


For more:

“How to Get Through Your Breakup and Create a New Life you Love,” by Suzanne Riss and Jill Sockwell.
“Divorce: Think Financially, not Emotionally. What Women need to know about security their financial future, before, during and after a divorce,” by Jeff Landers.
Divorce advice for women at WIFE.org.
Second Saturday Divorce Workshops, find a workshop through WIFE.org.


Tuesday, March 6, 2018

Leaving a Legacy? Try a donor-advised charitable fund


“It is up to us to live up to the legacy that was left for us, and to leave a legacy that is worthy of our children and of future generations.” Christine Gregoire, former Washington state governor. (1947 -    )

By Julia Anderson
Leaving a legacy may recall images of wealthy people donating big bucks to build a new cancer wing at the hospital or fund construction of a homeless shelter.

Headline-producing check writing is part of the American way. Bill and Melinda Gates are giving away billions. So are Warren Buffett and Mark Zuckerberg. For the wealthy, charitable giving is about do-gooder big heartedness and also part of a long-term estate-planning and tax strategy.

News Flash: Charitable giving is not just for the rich. You, too, can leave a legacy.

The simplest way to be remembered is to put instructions in your will to provide an inheritance for your heirs or  to fund a favorite charity after you die.

But if you want to do good works before you fall off the tree branch, consider a donor-advised charitable fund.  

What is a DAF? These funds, offered by brokerage firms, banks and other entities, allow donors to make a charitable contribution, receive an immediate tax benefit and then recommend grants from the fund over time. In other words, you can put money inside your DAF but still control the money, let it earn more tax-free until you decide when and how to give it out.

Recent tax reform legislation passed by Congress in late 2017 has reduced the tax incentive for charitable giving by raising the standard federal income tax deduction to $12,000 for singles and $24,000 for couples. Those 65 and over can claim a $25,300 standard deduction.

Before these tax law changes, charitable contributions were part of the itemized deductions many of us used to lower our gross taxable income, along with other deductions such as mortgage payments and state and local taxes. With the increased standard deduction, fewer of us will bother to add it all up to get a deduction.

Why would a donor-advised charitable fund still make sense?

You can accumulate money inside a donor-advised fund and let it grow tax-free.
You decide when and how much money to donate to your favorite qualified charities. There could still tax benefits if you “bunch” your planned giving into a single year instead of spreading it over several years. The greater single amount could then be higher than the standard deduction in that year.

You get privacy with a donor-advised fund if you choose to anonymously have your fund manager send out your donations.

DAF managers typically offer you a menu of managed mutual funds where you can invest your money until it is distributed. These funds should match your risk tolerance and investment goals.

Checking out recipients

Fund managers will automatically vet potential recipients as IRS qualified public charities.
The idea is to make charitable giving effective and simple. Contributions can be made when they most benefit the donor while disbursements can occur on a separate timetable – next year, in five years or even later.

What to watch out for

According to an IRS warning, there are organizations out there that promote themselves as donor-advised fund managers but who are fraudulent. They are abusing the basic concepts underlying donor-advised funds by encouraging “questionable charitable deductions,” the IRS said.

They also may offer what are illegal economic benefits to donors and their families (including tax-sheltered investment income for the donors) and management fees for promoters.

If these violations are caught by the IRS, donors will have the charitable tax deduction disallowed and face fines and penalties.
Make sure you are dealing with a reputable fund manager with a long and well-documented track record.

Leaving a legacy is important to many of us. There are many ways to do it.

Certainly, how we are remembered by those whose lives we touched is part of that legacy. You can give away assets by gifting your investments, retirement savings and real estate holdings to your heirs in a well-crafted will. Or you can assign them to a trust for a bank or other trust management service to supervise.

If you want to give something back before you die, consider a donor-advised charitable fund. You don’t have to be rich.  Or you can live a life of service, love your neighbor and be generous and forgiving.

For more::
5 Ways to Leave a Great Legacy by Joan Moran at HuffPost
4 Ways to Leave a Legacy by Bart Astor at Forbes.
“This is how you leave a legacy,” by Jim Rohn at Success.com.

Tuesday, February 6, 2018

Health care directives -- taking charge in our later years

"What is a fear of living? It's being preeminently afraid of dying." - Maya Angelou, (1928-2014), American poet, memoirist and activist.


 BY JULIA ANDERSON
Those of us who have watched our parents slip into old age, face multiple health challenges and then pass through death’s door, know that the end-of-life journey can be tricky.

Modern medicine has made old age more possible, even more tolerable than in generations past. The tricky part is how we plan for these last years. We can steps to make it easier for ourselves and our family.


 Legal documents called advanced health care directives -- a living will, do-not-resuscitate instructions and designation of (health care) power of attorney – can smooth the way for ourselves and our families.


 Lately, new questions have arisen about how well patients, their families, doctors and other caregivers understand advanced health care directives. The Institute of Medicine and the National Academy ofSciences are calling for improvements in both medical and social services end-of-life care.


 A massive report, “Dying in America,” cites these issues --- A lack of awareness or interest by both patients and their families in completing advance directive forms; Lack of institutional support for completing advance directives; Clinicians’ unwillingness to adhere to patients’ wishes, resistance within the medical culture and differences in families’ culture traditions for completing health care directives.
 

Despite these challenges, we can do a lot to ensure that our own end of life care is as comfortable and meaningful as possible. Here’s how:

 1. Accept that fully 70 percent of us who become critically ill at the end of our lives will be incapable of participating in decisions about our health care. Without advance health care directives, we might find ourselves in a hospital intensive care unit under the eye of an “intensivist physician” whose only job is to keep us alive at whatever cost -- physical, emotional and financial.


 2.  Write a will and create a “living will” outlining the kind of care you wish to receive if you are no longer competent or in a vegetative state. Appoint a legal health care representative to carry out your wishes.


 3. Write a Do-Not-Resuscitate directive, which tells any caregivers – doctors, emergency personnel – to not intervene if you have no pulse or are not breathing. You can wear a DNR bracelet or get a tattoo. (Even a tattoo didn’t work in one recent emergency room case.)


 4. Make it clear to all family members that there will be no heroics. Get your legal directives filed with your doctor, the fire department and all family members. If you go into a care facility, have the DNR posted in BIG TYPE in plain sight in your room. (Even that measure didn’t prevent a trip to the ER in the year before my mother died at age 98). Only post contact information for your legal health care representative at your care center door. Keep other family member numbers elsewhere, so there is no confusion over who staff should call in an emergency.


 5. Tell your "friends" at the care center to not call 911 if you have a health crisis. Remember that if 911 gets involved, all the legally signed requests go out the window. The emergency folks are bound to preserve life...no matter what. The same goes for doctors in emergency rooms. (A huge brouhaha in California not long ago created industry turmoil when a bystander called 911 after a fellow care center resident had a stroke but the nursing staff refused to provide aid).


6. Legally assign someone with durable power of attorney to manage your financial affairs when or if you become incompetent or incapacitated. Or set up a bank trust that designates you as co-trustee until you hand over management of your financial affairs to the bank.


 Make sure that the forms you use for these legal documents are state-specific. You can find them at www.smartlegalforms.com. Or for free printable advance directive forms by state, try AARP at www.aarp.org.


 Most of us wish for a peaceful death in bed at home. The reality is seven out of 10 of us will spend our last years in a care facility. My mother moved to a care facility after breaking her hip at age 95. She wanted to return home but needed 24/7 care at a cost of $12,000 a month. She chose the care facility in her home town at $4,500 a month. She met with her attorney to update her health care directives and get them in place. Her strategy mostly worked except for the time the night nurse called 911 after she tipped over and bumped her head. That turned into a three-day hospital stay, which she did not want. 


So even with good planning we likely will find weaknesses in our end-of-life initiatives. Some are outlined in “The Good Death,” by Ann Neumann where she writes about the experience of her father’s dying. 


“Part of the reason we don’t know how people die is because we no longer see it up close,” she writes. “Death has been put off and professionalized to the point where we no longer have to dirty our hands with it.”


But we should. We can help ourselves and our loved ones do better by getting our instructions on paper and by talking at length about these issues with our family and our caregivers.


FOR MORE: 

The Good Death, click here. 

Dying in America, click here.