Seniors love ‘em—and lawyers hate ‘em:  annuities.

Based on ample experience with both senior citizens and lawyers, I am always amazed at the depths of both the affection and the rage that are evoked by the subject of annuities.  Mentioning the word “annuities’ at an attorney meeting is like yelling, “Attack!”  They immediately launch into a review of the sins of annuities.  Nonetheless, annuities remains one of the most frequent investments purchased in America.  In fact, since the most recent 40%-plus stock market slump, annuities have risen in popularity.  If annuities are so bad, how can it be that the majority of seniors own at least one annuity?

What is an annuity, anyway?  Annuities are an investment contract between a buyer and an insurance company.  The word “annuity” is like the words “ice cream.”  Ice cream comes in strawberry, vanilla, chocolate-marshmallow, moose-tracks, and many more.  Well, annuities come in more “flavors” than the combined ice cream choices of Baskin-Robbins, Ben & Jerry’s, and Cold Stone Creamery.  You really cannot tell a good annuity from a bad annuity without a very careful review.

Annuities are backed by insurance companies and their reserves.  Although annuities are not federally insured, it was interesting to see that our federal government chose to prop up AIG but let Lehman Brothers brokerage fail.  AIG is the major seller and reinsurer of a large portion of the annuities sold in this country.  Evidently, the government was unwilling to allow one of our largest insurance companies fail.

Immediate annuities are a contract wherein an insurance company promises to pay monthly payments for a term of years or based on one’s lifetime.  Lifetime payments are often very attractive to retirees, because nobody wants to be out of money before they are out of breath.  Lifetime immediate annuities start paying monthly checks in the first year of the investment.  They act like pensions.  In fact, almost all employer-sponsored pension plans purchase immediate annuities to pay the monthly checks to company plan retirees.

What makes an immediate annuity attractive to a retiree?  Usually, the insurance company offers an initial interest rate above Certificate of Deposit rates.  In addition, some insurance companies offer the purchaser a ‘bump’ in the imputed value of the money invested.  Although these incentives look very attractive, please have the annuity contract reviewed by an independent professional who can interpret the true value of the investment.  It’s also important to know what will happen after the initial ‘teaser interest rate’ has ended.  What does the annuity actually guarantee as the minimum future interest rate?

A good place to compare actual returns on annuities is at www.immediateannuities.com.  You can get a fast, free annuity quote online.  Immediateannuities.com is reputedly the number one website for evaluating immediate annuities.  There are lots of other resources available at their website to acquaint you with annuity language and insurance company ratings.  Don’t buy any investment without some research and/or independent advice.

Medicare and Medicaid sound the same, but they are as different as the two beauty queens you see here. Frankly, it’s surprising how many people don’t recognize the difference between the two.

Few people realize the limitations of Medicare—which winds up costing them a substantial loss of dignity if or when they get hit with long term care expenses. Medicare is the federal health insurance program provided on behalf of persons who are over the age of 65, blind, and/or disabled. Medicare does not provide long term care benefits (nursing home care, for instance). Medicaid, which is a poverty health care program, pays for 50% of the nursing home care in America today.

Medicare only cares about short-term or “acute care” health care. Medicare only cares about your health care expenses if you can get well! Medicare does NOT provide care when a person is diagnosed with a long-term illness and needs nursing home care. Essentially, our senior citizen health care is based on a “diagnosis lottery.” If you are “lucky enough” to have a heart attack or diabetes, then you are covered by Medicare. You are out of luck if you are diagnosed with Alzheimer’s, Parkinson’s, Huntington’s disease, or anything else that lands you in a nursing home. If you need a nursing home and you are not impoverished, you are on your own dime!

So, unfortunately for seniors, the blind, and disabled persons living in 2010, the acute care model does not help them when they are afflicted with long term care costs. Medicaid is the safety net for the impoverished. Once you become sufficiently impoverished, then Medicaid is designed to provide care for you. To qualify for Medicaid nursing home benefits you must be very ill and have no more than $2,000 total assets.

An elder law attorney knows the ins and outs of the public benefit system and can provide the client with solutions that help to fulfill the requirements of the law and still provide a better future for themselves or their loved ones. We help clients fulfill their legal obligations and avoid unnecessary impoverishment due to long term care expenses. If you want more information regarding a specific client situation, please contact us.

Right now estate planning lawyers look like ants after the anthill has been kicked over.  We are frantically scurrying in a blind search for answers to The Big Question:  What are the estate planning rules now?

For years, Congress has known that the current rules would fall off a legal cliff on January 1, 2010.  Congress always promised to fix the “temporary” expiration of the rules before now…  But as we have seen, who can trust Congress to do what needs to be done, when it needs to be done?

All nationally known estate tax gurus have believed that the likelihood of 2010 with no estate tax was as improbable as the Cubs winning the World Series, pigs flying, etc.

Okay, so there is no estate tax this year…  What does that mean to your existing will or trust estate plan?  Answer:  You should contact a skilled estate planning attorney to schedule a review of your existing estate plan!  ALMOST ALL EXISTING HUSBAND-AND-WIFE ESTATE PLANS MUST BE REVISED TO AVOID SOME UNEXPECTED BAD RESULTS!

I am telling all of my current estate planning clients that we will make their wills/trusts convertible so as to accommodate new tax law changes.

Ignorance is not bliss!  Now is the time to schedule a review of all existing estate plans!

A gentleman whom I respect recently shared some advice about how to provide yourself with your own self-administered CPR.  The story he told happened when he was experiencing what he believed to be a heart attack. Instead of calling 911, he recruited a co-worker to drive him in rush-hour traffic to the hospital. He then started to give himself what he described as “self-help CPR”. He said, and I quote, “I had read about self-CPR and I started to use it to stay conscious.  This is important.  You cough hard every two seconds.  It massages the heart and keeps it beating while you get help.  People with heart attacks have been able to drive themselves to the hospital.  I started doing that even though it hurt my chest; at least pain told me I was still alive.”

It is important to note that when he finally did get to the hospital, it turned out that he was NOT suffering a heart-attack. But it made me wonder, can we really give ourselves “Cough-CPR” to save our lives during a heart attack?

One of the great things about modern technology is you can look up almost anything on the internet.  I went to http://urbanlegends.about.com, to check out this self-CPR idea.  They report that legend of self-help CPR began with a 1999 email that was circulated which stated that you can save your own life during a heart attack by coughing.  About.com experts checked it out with a number of sources and found out that it is NOT an advisable thing to do.  In fact, the American Heart Association specifically states that one should not attempt self-help CPR and that there is no validation of this particular method.  On the contrary, belief in self-help CPR is dangerous because it can lead you to think it is safe to drive yourself to the hospital.

Doctors say that the coughing procedure has only been used in very limited and experimental occasions with patients experiencing some sort of irregular heartbeats.  There are no known cases where a person who was alone survived a heart attack by using Cough-CPR.  In other words, if you experience intense chest pain or other symptoms of a heart attack, don’t cough!  Call 911 and allow the emergency medical system to get you the kind of help you need.

*For more information on heart attacks and how to recognize the symptoms please click on the following links:

• The American Heart Association
• Health Central
• WebMD
• The Mayo Clinic

**For more information about CPR and lifesaving techniques please visit The American Red Cross.

Robin Spang as Wonder Woman

I’d like to introduce you to Robin Spang, our intake paralegal.

Robin and I have known each other for many years.  Robin has become one of the most valuable players on our team.  That’s saying a lot, because we have a team filled with valuable players.

As an intake paralegal, Robin is our front line in receiving inquiries regarding the solutions that we provide in the area of Medicaid, estate protection, VA benefits, and disability planning.  When someone calls Robin, she is authorized to spend unlimited amounts of time assisting them in the discovery of whether or not we are an appropriate solution for the particular burden they are carrying.

We receive a substantial number of professional referrals, and attorneys are a primary source of our business.  Recently I saw that Robin had received a very complimentary e-mail from an attorney who had referred a client to us.  This attorney had sent to me a string of e-mails beginning with a request regarding a Medicaid problem.  The initial request went something like this: “I am inquiring to see if you could help me to decode Medicaid and real estate obligations that I’m dealing with.  If this is an area that you understand, please let me know and I will call and set an appointment.  I need clarity regarding what is legal and what I can do regarding my parents home, assets, and life insurance.  I just need to know what their obligations are.  Thank you.”

The initial attorney responded by telling the prospective client that this was not an area of her practice and she wanted to refer them to Law ElderLaw.  Her client then contacted our firm and spoke with Robin.  I don’t know how long Robin spent with her, but obviously she gave her the right kind of answers and in a way that made her feel that she had received some relief and peace of mind.  She later notified her attorney as follows: “I can’t thank you enough for steering us towards Law ElderLaw.  What an incredible experience to have the weight of the world lifted off my shoulders.  This firm is nothing but helpful and empathetic!  I never thought that sitting down and talking with people from a law firm could be such a pleasant experience.  I’ll be sleeping much better now.  Thanks again.”

Those of us here at Law ElderLaw are very grateful for referrals—and for Robin, who receives those initial calls.  Funny thing is, I never knew that I was working with a woman who could lift “the weight of the world.”  I’m sure glad she’s here!

Thanks, Robin!
Rick

City Slickers is one of my favorite movies.  It is a comedic and philosophical glorification of urban men trying to live out life’s meaning through the machismo of adventure travel.  If you haven’t seen this film for some time, I recommend you take a peek at it during the holidays.

In this 1991 Billy Crystal classic, three friends decide to trade their briefcases for saddle leather to fill the emptiness in their lives.  This film always inspires me to remember to keep my life balanced despite the ever present stresses of productivity, competition, and just plain constantly trying to figure out what’s the best thing to do next.  Actually life is pretty hard, because we don’t have much guidance for how to respond to the ever-changing environment around us.

Many years ago, when my oldest son Adam was about 12, I told him, “I’m sorry to have to admit this, son, but your mother and I try to make the best decisions about you—but the truth is… we’re just making this up as we go along!  You see, we’ve never been here before.”  We all just get swept along in the river of life, and sometimes it’s hard to steer, and to remember what it’s all about.

The movie shows us a midlife crisis dad and husband who is just plain worn out by his job, his life, and his tedium.  He and his wife reach a crisis point where she asks him to leave and “go and find your smile.”  So, he and his two lifelong buddies spend the next two weeks being transformed from New York city slickers into real cowboys who bring in the herd under crisis conditions.  One of the key moments in the movie is when Jack Palance, playing crusty old top hand Curly, tells Billy Crystal that there’s only one thing that’s important in life.  What they learn along the way is that the one thing that makes life worth living may be different for each of us.  For me, I try to live out the Golden Rule, and I find that I’m most satisfied when serving others—but without an occasional “recharge” I can get pretty ornery and my family starts to call me a curmudgeon.  The thing that makes me smile is when, like those city slickers, I get a chance to sit on a fine horse under a big sky—or be with my grandkids.

Nonetheless, there are times that I lose my smile, too—when I get wrapped up into misplaced thinking that my stuff and my position are my foundation in life.  So I want to recommend that you take a moment at the beginning of this New Year and think about where you need to go or what you need to do to find your smile in 2010!

Rick Law finding his smile

The photo above was taken of three ceramic wise men that we purchased about 35 years ago at our church’s Christmas craft sale.  We have always treasured these three wise men ornaments.  This is our first empty-nester Christmas, and we pause to chuckle as we recall our kids arguing over who got to hang the wise guys on the tree.  In fact our attorney daughter, Diana, has annually insisted that she is the one to inherit these wise ones after we have passed away.  Sometimes she tries to take them home with her, even though we’re still here.

For us, Christmas is one of our two high holidays, and these ornaments have me pondering their special message of Christmas.  The dear couple who crafted these ornaments have been dear friends and mentors over the years.  But like all of us, time has passed and these gentle people are now clients of our elder law firm.  For decades they have quietly worked to care for those around them.  In a way, when you saw this couple, it was if you were looking upon the wise men—since their hands were always bearing gifts to enrich those around them.

Well, now they have moved into an assisted living center and they’re not as able to make crafts for an annual sale.  When I recall their lives of overflowing love, charity, and faith, I know that I, too, have been visited by the wise men—wise men who have brought precious gifts to me and to those around me.

May all of us who claim the Christmas Creed act in love, to bless the lives of those around us.  May we be wise men!

Rick

It is a common human paradox that we often treat money from different sources as if it had different value.  For example, money from an inheritance or the lottery is almost always spent on luxuries and frivolous things—it’s typically gone within 18 months.  Money from a bonus is blown on those extras that you feel that you “deserve.”

One source of money seems to be treated as far more valuable than any other source—IRA funds.  In our practice we talk to senior after senior who would rather die than spend their IRA and/or 401(k) money.  When we do estate planning, gift planning, and long-term care planning, we often find that our clients are willing to use almost any other source of money except spending their IRA funds.  Why is that?

The answer is that they spent a lifetime accumulating those funds through their working years.  This money means much more to them than “phony-baloney” capital gains increases in the house that they bought for $30,000 which is now valued at $300,000.  To them, that’s not “real money.”  But there is no question in their minds that the money that’s in their IRA is something that they sweated to accumulate.  Now in their retirement years they don’t want to let that money go.

Like a legendary dragon who safeguards his hoard of treasure against all attackers, our senior citizen clients hoard their IRAs.  We have had many clients tell us with anger in their voices that “they [the IRS] make me take so much money out of my IRA every year!”  They have forgotten why they saved that money in the first place.

Kathy Motley, our Executive VP of Operations, often tells people, “You forgot why you got your IRA!”  She reminds them that they accumulated that money over their working years so that they could spend the money in their retirement years.  The reason to accumulate this money in a tax-deferred manner is so that when they reach their retirement years, they are able to use that money and pay income taxes at a lower rate of taxation.  She goes on to say that they have developed a habit over the years of thinking about this money as “untouchable.”  They have developed a habit of using all other sources of money except their IRAs.

We have to ask our clients what would actually benefit the IRS more—our seniors taking the money out and using it for the things they need?—or forcing their children to take the money out at higher tax rates?  Our clients have seldom considered the fact that if they don’t spend the dollars, it will be spent by their children after paying a higher tax rate.

Of course, there’s always the argument that if the client dies with the IRA, then the child could stretch the benefits of the IRA over a lifetime.  But most of our seniors say to us, “I know my kids could save the money, but they won’t…  They’ll spend it and spend it fast!”

So the question that we have to analyze with our senior citizen clients is this:  who should pay the taxes on the IRA?  Would it be better for them to use their taxable money now, or leave it for their children?  Many of the senior clients that we talk to are people who have already begun to incur sizeable out-of-pocket medical care costs.  There is a substantial deduction for our seniors who must incur large, unreimbursed health care costs.  We try to show them that they’re often much better off using taxable IRA dollars to pay for deductable medical care expenses.  It’s always a better idea to spend tax dollars when you have an offsetting deduction.

So as you think about that IRA—don’t forget why you got it!

Rick Law and Granddaughter Lucy "ringing bells"

Recently,  I experienced that it is far more ‘profitable’ to ring bells for the Salvation Army when you partner up with an enthusiastic four-year-old granddaughter.  Let me tell you the story,  which illustrates some key principles on how to get people to say “yes.”

It was the Saturday before Thanksgiving.  My wife, Rose, my granddaughter Lucy, and I stood by the exit door of a major Chicagoland food store.  We were ringing bells for the Salvation Army, which does charitable work for the distressed and dispossessed.  To put it bluntly, we were like beggars on the street.  It was obvious to us that many people were choosing to treat us as “the invisible.”  They would intentionally avert their eyes from us!

Rose and I knew that if we could get young Lucy involved with the bell ringing, it would certainly help us to fill our bucket.  It did not take long for Lucy to become enthused about asking people for money—and the results were outstanding!

It was fascinating to watch as Lucy implemented her “give me money” strategies.  She whirled, twirled, and danced with enthusiasm while I hummed aloud a Christmas tune.  Every time the exit door opened, she would look people directly in the eye, extend an open hand, and cheerily say, “Happy Holidays!”

I had the pleasure of watching people who would have passed us by… stop.  With Lucy standing in their path and with outstretched hand and cheery greeting—they would pull out a dollar bill or their pocket change.  She would take the money and  put it in the bucket slot.  In fact, she quickly became “Queen of the Bucket.”  She would clearly express her displeasure when anyone tried to skip her hand to put the money directly in the slot.  That was her job!  The photo below shows Lucy with left hand outstretched and right hand and arm covering the top of the bucket and the money slot.  (This is a candid shot!)

Why was Lucy so successful in getting people to do what she wanted?  The answer to that question is  important to each one of us who need to get people to say “yes” to our “ask”:

1.    She was in alignment with one of the key marketing principles highlighted by Robert Cialdini, PhD in his landmark book Influence: The Psychology of Persuasion—she got people to like her.  Cialdini refers to ‘liking’ as “the friendly thief.”  We will say yes to those we like.  Lucy is a cheery little girl who presents a familiar and friendly image.  That image triggers a positive association in the eye of the beholder.  Nearly everyone knows and loves, or has been loved by, a happy child.  When they looked at  Lucy, they did not want to disappoint someone that they liked; and

2.    She placed herself in their path while clearly and unmistakably confronting people with a straightforward “ask.”  Her body position and her outstretched hand were the request, and behind her stood a red bucket and her smiling grandparents; and

3.    She never gave up, even when she experienced rejection.  When people ignored her or refused to give her money, she simply pulled herself together and got ready for the door to open again.  Isn’t that just like a child?  They will just keep on asking until they get to ‘yes’ (or your discipline boundary).

What “yeses” do you need to get this week to be more successful in your law practice, your health care community, or your professional practice?  Think about Lucy’s lessons and how they can help you fill your bucket!  Work to make yourself more likeable and to trigger positive associations within your prospect.  Be more direct in asking for what you want and/or a referral.  Finally, don’t give up!  The first ”no” sets you up for the next opportunity.

By the way, this Christmas and holiday season, please give generously to the many charities like the Salvation Army who serve the under-resourced and those who are in great need.

Thanks,
Grandpa Rick

I have to confess that I love home-cooked turkey.  I am crazy about Thanksgiving turkey and the turkey leftovers.  When my wife, Rose, generously offers to send turkey home with our kids, I bar the door.

Yep, I long for Thanksgiving Day, filled with all of the traditional foods and fellowship.  For me, Thanksgiving’s attitude of gratefulness is hard-wired together in my brain with the heavenly aroma of turkey.  Like Ralphie Parker in Jean Shepherd’s A Christmas Story, I love turkey!  Turkey sandwiches, turkey salad, turkey gravy, turkey hash, turkey a la King, and gallons of turkey soup…

– BUT –

The true importance of Thanksgiving is taking the time to tell you how thankful I am for you.  My wish for you is that you experience the Thanksgiving joys of sharing, gratitude, and thankfulness.  J. M. Barrie once said, “God gave us memories so that we might have roses in December.”  Remember your roses today!