Improve Your Relationships Through Estate Planning

Do you have a New Year’s resolution? How about Estate Planning? Believe it or not, it can improve your relationships!

During the holidays, you’ve probably spent a lot of time with your family and friends. During these moments, you realize just how important these relationships can be. And as we grow older, you begin to realize how precious little time we have to spend with one another.

Life is short. So use this time to talk about estate planning so that you can ensure that you and your loved ones are provided and cared for no matter what happens. Though death and incapacity can be uncomfortable subjects to discuss, with a comprehensive plan in place, you’ll almost certainly experience a huge sense of relief and peace.

Planning requires you to closely consider your relationships with family and friends—past, present, and future—like never before. This process can be the ultimate forum for heartfelt communication and prioritizing what matters most in life.

Indeed, communicating clearly about what you want to happen in the event of your incapacity or death (and asking your loved ones what they want to happen) can foster a deeper bond and sense of intimacy than just about anything else you can do.

Here are just a few of the valuable ways estate planning can improve the relationships you cherish most:

1) Estate planning shows that you really care.

Taking the time and effort to carefully plan for what will happen to you in the event of your incapacity or when you die is a genuine demonstration of your love. It would be far easier to do nothing and simply let you family and friends figure it out for themselves. After all, you won’t be around to deal with any of the fallout.

But planning in advance shows that you truly care about the welfare of your loved ones, even when you’re no longer around to benefit from their love and companionship. Such selfless concern and forethought equates to nothing less than a final expression of your unconditional love.

2) Estate Planning inspires honest communication about difficult issues.

Sitting down and having an honest discussion about life’s most taboo subjects—incapacity and death—is almost certain to bring you and your loved ones closer. By forcing you to face immortality together, planning has a way of highlighting what’s really important in life—and what’s not.

In fact, our clients consistently share that after going through our estate planning process they feel more connected to the people they love the most. And they also feel more clear about the lives they want to live during the short time we have here on Earth.

Planning offers the opportunity to talk openly about matters you may not have even considered. When it comes to choices about distributing assets and naming executors and trustees, you’ll have a chance to engage in frank discussions about the reasons for your choices.

While this can be uncomfortable, clearly communicating your feelings and intentions is crucial for maintaining healthy relationships. In the end, it might just be the first step in actively addressing and healing any problems that may be lurking under the surface of your relationships.

3) Estate Planning builds a deep sense of trust and respect.

Whether it’s the individuals you name as your children’s legal guardians or those you nominate to handle your own end-of-life care, estate planning shows your loved ones just how much you trust and admire them. What greater honor can you bestow upon another than putting your own life and those of your children in their hands?

Though it’s often challenging to verbally express how much you love your family and friends, estate planning demonstrates your affection in a truly tangible way. And once these people see exactly how much you value them, it can foster a deepening of your relationship with one another.

4) Estate Planning creates a lasting legacy

While estate planning is primarily viewed as a way to pass on your financial wealth and property, it can offer your loved ones much more than just financial security. When done right, it lets you hand down the most precious assets of all—your life stories, lessons, and values.

In fact, the wisdom and experience you’ve gained during your lifetime are among the most treasured gifts you can give. Left to chance, these gifts are likely to be lost forever. In light of this, we’ve built in a process, known as Family Wealth Legacy Passages, for preserving and passing on these intangible assets.

With this service, which is included in every estate plan we create, we guide you to create a customized recording in which you share your most insightful memories and experiences with those you’re leaving behind. Family Wealth Legacy Passages can not only ensure you’re able to say everything that needs to be said, but that your legacy carries on long after you—and your money—are gone.

The heart of the matter

We can help guide and support you in having these intimate discussions with your loved ones. And as our Family Wealth Legacy Passages service shows, we offer a wide-array of customized planning options designed to enrich your family and friends with far more than just material wealth.

With our help, estate planning planning doesn’t have to be a dreary affair. When done right, it can put your life and relationships into a much clearer focus and ultimately be a tremendously uplifting experience for everyone involved.

This article is a service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents. Myrna helps you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why our firm offers a Planning Session,  during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Call our office today at (813) 514-2946 to schedule a  Planning Session and mention this article to find out how to get this $500 session for free.

New Year’s Resolution: Tackle that estate plan!

It’s that time of year when many of us are working on our New Year’s resolutions. Whether it’s to eat healthier, get organized or finally clean out the garage, many of our resolutions center around some type of self-improvement. Doesn’t it feel great when you’ve finished that dreaded item on your to do list?

For many folks, estate planning is at the BOTTOM of the to do list. Studies have shown that over 50% of Americans don’t have a Will. Yet 100% of folks would benefit from some type of estate planning!  With an updated, effective estate plan, you can guard against unnecessary heartache, financial hardship and family drama. For example, if your health deteriorates to the point where you’re dying and you can’t communicate your wishes, without any advance medical directives in place, your loved ones have the emotional burden of trying to figure out what medical care you do or don’t want. Moreover, who’s going to be in charge of the decisions? And without an updated Will, can you be sure that your property goes to the right people?

I understand that for many of us, estate planning is uncomfortable, emotional and overwhelming. Who wants to spend time thinking about leaving their loved ones behind? I guide my clients through the process, one step at a time. Let’s tackle this resolution together. Then you can get back to your other resolutions, like cleaning out that garage.

Dementia and Guns: A Tragedy Waiting to Happen

It’s common for families of those with Alzheimer’s and other forms of dementia to realize that at some point, their loved one shouldn’t be allowed to drive. But fewer people know that they should exercise the same level of caution when it comes to restricting their loved one’s access to firearms.

This was one of the findings of a May 2018 study published in the Annals of Internal Medicine covering firearm ownership among Alzheimer’s patients. The study noted that even though 89% of Americans support restricting access to firearms for those with mental illness, there’s been little attention focused on limiting firearm access among elderly dementia patients. Currently there are no federal gun laws prohibiting the purchase or possession of firearms by persons with dementia. And only two states—Hawaii and Texas—have laws restricting gun access for dementia patients.

A ticking time bomb

This lack of attention comes despite an increasing number of incidents involving elderly dementia patients shooting and killing family members and caregivers after confusing them for intruders. And with so many Baby Boomers now entering retirement age, this dangerous situation could get much worse.

In fact, the number of people with dementia is expected to double to around 14 million in the next 20 years, with the vast majority of those over age 65. Nearly half of people over 65 either own a gun or live with someone who does. So it’s clear that firearm safety should be a top priority for those with elderly family members—even if they don’t currently show any dementia signs.

Just talking about restricting someone’s access to guns can be highly controversial and polarizing. Many people, especially veterans and those in law enforcement, consider guns—and their right to own them—an important part of their identity. Given this, the study’s authors recommended that families should talk with their elderly loved ones early on about the fact that one day they might have to give up their guns. Physicians suggest bringing up the topic of firearms relatively soon after individual’s initial dementia diagnosis.

This discussion should be similar to those related to driving, acknowledging the emotions involved and allowing the person to maintain independence and decision control for as long as it’s safe. Even though this can be a very touchy subject, putting off this discussion can literally be life threatening.

All part of the plan

Since it relates to so many other end-of-life matters, this discussion should take place as part of the overall estate planning process. One way to handle the risk is to create a legally binding agreement laying out a “firearm retirement date” that’s similar to advance directives addressing the elderly relinquishing their driving privileges.

Such an agreement allows the gun owner to name a trusted family member or friend to take ownership of their firearms once they’re reached a certain age or stage of dementia. In this way,the process may seem more like passing on a beloved family heirloom and less like giving up their guns. Moreover, the transfer of certain types of firearms must adhere to strict state and federal regulations. Unless the new owner is in full compliance with these requirements, they could inadvertently violate the law simply by taking possession of the guns.

In light of this risk, you should consider creating a “gun trust,” an estate planning tool specially designed to deal with the ownership of firearms. With a gun trust, the firearm is legally owned by the trust, so most of the transfer requirements are avoided, making it a lot easier for family members to manage access after the original owner’s death.

Indeed, gun trusts can be a valuable planning strategy even for gun owners without dementia. Speak with us to see if a gun trust would be a suitable option for your family. A matter of life and death

If you have an elderly family member with access to guns, you should consult with us as your Personal Family Lawyer® as soon as possible. We can not only offer guidance on the the most tactful ways to discuss the matter, but also help you set up the appropriate estate planning strategies to ensure the firearms are properly secured and transferred. Given the grave risks involved, managing the elderly’s access to firearms should be taken every bit as seriously—if not more so—as managing their ability to operate motor vehicles. The safety of both your loved one and everyone who cares for them depends on it. Contact us today to learn more about your options.

This article is a service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents, she ensures you make informed and empowered decisions about life and death, for yourself and the people you love.That’s why we offer a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to learn how to get this $500 session at no charge.

Saving What Matters: 12 Must-Have Items For Your Go-Bag

It’s the middle of the night.

The authorities just notified you that you have 20 minutes to evacuate your home before a raging wildfire cuts off the exit from your neighborhood, leaving you trapped.

The fire is advancing at the rate of a football field every second, so the actions you take in the next few moments will determine whether you and your family live or die.

While this may sound like a scene from a blockbuster disaster movie, it’s actually the very scenario Judy Shannon faced in December 2017. And it’s something we can expect to see more and more as the impact of climate change sets in.

Judy was at home with her two young children, her elderly mother, and a puppy, when an out-of-control wildfire threatened to engulf her Ventura County home in Southern California.

Fortunately, she and her family escaped without injury. But her home, her neighborhood, and hundreds of other buildings in the area were burned to the ground. Shopping for supplies in the aftermath, Judy reflected on whether or not she could have done more to ensure her family’s safety in those last moments before evacuating.

“As I look back, I wonder, ‘Did I do enough?’” Judy recalled. “I can honestly say I didn’t have much choice in those 20 minutes. I responded without much thought and felt a sense of being carried, or moved about, with each step.”

This highlights a critical aspect of facing such life-threatening emergencies: You won’t have time to think. You must be prepared to act and act fast. Your life and the lives of those in your family absolutely depend on it.

Be ready to go

With natural disasters like wildfires, floods, and hurricanes becoming more frequent and destructive with every passing year, the need for you to be ready to act is more pressing than ever. And as Judy’s story highlights, when you have mere minutes to evacuate, you won’t have time to think about what you should bring with you to survive the days—or weeks—to come.

To be optimally prepared, take a cue from the U.S. military and police agencies. These organizations require their members to always have a “go-bag” on-hand packed with the essential items needed to survive for at least three days following a disaster.

While numerous online retailers sell fully equipped go-bags for such emergencies, and both FEMA and the American Red Cross provide checklists to help you pack your own, here we offer a basic summary of the most-recommended supplies.

This list should give you some idea of what items you should have ready to go in case you need to get out of your home within minutes.

1) ID and other essential documents:
Bring copies of your passport, driver’s license, and/or state ID card and store them in a sealed ziplock bag. Other documents to consider packing include the deed to your home, vehicle titles/registration, printed maps, and a recent family photo with faces clearly visible for easy identification.

2) Cash: Carry at least $250 in relatively small bills, and keep it with your ID in a waterproof bag.

3) Shelter: A lightweight tent, along with mylar emergency blankets can help keep you warm and dry.

4) Water and a water filter: You’ll need at least one gallon of water per person per day. Bring as much bottled water as possible, but also include a water purification straw and/or purification tablets, along with a steel container to boil water in.

5) A multi-tool: These modern-day Swiss Army knives come with a wide array of essential tools, from a knife and screwdriver to tweezers and a can opener.

6) First-aid kit and prescription medications: Whether you buy one ready-made or pack your own, the likelihood of injury skyrockets in the wake disasters, so not having a first-aid kit can be deadly. And don’t forget to include prescription medications and other life-sustaining medical supplies if needed.

7) Light: Flashlights with extra batteries are great, but headlamps are even better because they’re ultra compact and leave your hands free.

8) An emergency whistle: Emergency whistles can alert rescue crews and help locate others in low-visibility conditions.

9) Solar-powered emergency radio and cellphone charger: Without power, you’ll need a way to stay in touch with the outside world. Today you can find devices that include a combination radio, cell-phone charger, and flashlight all in one, with the extra option of hand-cranked power to keep things charged even in the dark.

10) Sanitary items: Pack toilet paper, baby wipes, hand sanitizer, soap, as well as tampons and/or pads if needed.

11) Clothes: You only need enough clothes to keep you warm and comfortable for a few days, so don’t try to bring your entire wardrobe. Stick to essentials like underwear, socks, extra shoes, a jacket, a poncho, a hat, and gloves. You’ll need to tailor your clothing to the particular climate and region you live in, so colder locations may require extra outerwear.

12) Food: Focus on high-protein, high-caloric foods that will give you the energy you need to live and get from point A to point B. The most recommended options include, energy bars, MREs (Meals-Ready-to-Eat), freeze-dried survival food, and meal-replacement shakes.

Stay safe and secure

While go-bags are a critical part of helping your family survive the immediate aftermath of a natural disaster or other emergency, they’re just a start. For instance, this list doesn’t address any of your precious sentimental items, such as photos, old love letters, and treasured cards from the past. Nor does it mention estate planning documents or insurance policies.

Copies of your insurance policies and estate planning documents items should be uploaded to the cloud and stored online. You should also store sentimentals, like family histories and photos online, so you don’t have to worry about packing any of that in the event of a natural disaster. Indeed, safely storing your sentimentals online is so important, we offer this as a service to our clients, so be sure to ask us about that.

Of course, to keep your family totally safe and secure, you’ll need to make sure you actually have the right insurance coverage and necessary legal documents in place to cover every possible emergency contingency. Contact us as  to learn exactly what you need and how we can support you.

This article is a service of attorney Myrna Serrano Setty. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Planning Session,  during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Planning Session and mention this article to find out how to get this $500 session at no charge.

How to Appeal a Medicare Prescription Drug Denial

If your Medicare drug plan denies coverage for a drug you need, you don’t have to simply accept it. There are several steps you can take to fight the decision.

The insurers offering Medicare drug plans choose the medicines — both brand-name and generic — that they will include in a plan’s “formulary,” the roster of drugs the plan covers and will pay for that changes year-to-year. If a drug you need is not in the plan’s formulary or has been dropped from the formulary, the plan can deny coverage. Plans may also charge more for a drug than you think you should have to pay or deny you coverage for a drug in the formulary because it doesn’t believe you need the drug. If any of these things happens, you can appeal the decision.

File An Exception Request

Before you can start the formal appeals process, you need to file an exception request with your plan. The plan should provide instructions on how to request an exception. The plan must respond within 72 hours or 24 hours if your doctor explains that waiting 72 hours would be detrimental to your health.

5 Steps Appeals Process

If your exception is denied, the plan should send you a written denial-of-coverage notice and a five-step appeals process can begin.

  1. The first step in appealing a coverage determination is to go back to the insurer and ask for a redetermination, following the instructions provided by your plan. You should submit a statement from your doctor or prescriber that explains why you need the drug you are requesting, along with any medical records to support your argument. If your doctor informs the plan that you need an expedited decision due to your health, the plan must notify you within 72 hours. For a standard redetermination, the plan must notify you within seven days.
  2. If you disagree with the drug plan’s decision, you have the right to reconsideration by an independent board. To request reconsideration, follow the instructions in the written redetermination notice you receive from the insurer. You have 60 days from the redetermination notice to request reconsideration. An independent review entity (IRE) will review the case and issue a decision either within 72 hours or seven days. If you receive a negative decision, you can keep appealing.
  3. The third level of appeal is to request a hearing with an administrative law judge (ALJ), which allows you to present your case either over the phone or in person. To request a hearing, the amount in controversy must be at least $160 (in 2018). The amount in controversy is calculated by subtracting any amount already covered under Part D, and any deductible, co-payments, and coinsurance amounts applicable to the Part D drug at issue, from the projected value of the drug benefits in dispute. Your request for a hearing must be sent in writing to the Office of Medicare Hearings and Appeals (OMHA). The ALJ is supposed to issue an expedited decision within 10 days or a standard decision within 90 days.
  4. If the ALJ does not rule in your favor, the next step is a review by the Medicare Appeals Council. The appeal form must be filed within 60 days after the ALJ’s decision. You will need a statement explaining why you disagree with the ALJ’s decision. The appeals council will issue an expedited decision in 10 days or a standard decision within 90 days.
  5. The final step is review by a federal district court. To be able to request review, the amount in controversy must be $1,600 (in 2018). Follow the directions in the letter from the appeals council and file the request in writing within 60 calendar days.This article is service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents, she guides her clients so that they can make the best decisions for themselves and their families. Contact Myrna at (813) 514-2946 to schedule your elder law consultation today.

Gifts to Grandchildren: What Do UGMA and UTMA Have to Do With Grandma?

The Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA) are sometimes called the “granddaddies” of college savings accounts.  Both allow parents to establish custodial accounts for a minor child, and a grandparent can then make gifts to the account. Because the account is in the child’s name, the tax liability is often shifted to the child. That child is usually in a lower tax bracket than the grandparent or the grandchild’s parents. Gifts to such accounts are irrevocable, but the gift-giver retains control of the money and decides how it will be invested.

UGMA and UTMA differ in the type of property they permit a person to transfer: States usually restrict UGMA investments to life insurance, cash and certificates of deposit, while UTMA allows a wider variety of investments, including mutual funds, stocks, bonds, real estate — even artwork. Banking institutions and brokerage firms offer UGMA and UTMA accounts.

Either type of account should be managed by someone other than the parent. Otherwise, the parent will be responsible for taxes on the account income.

The major downside of these accounts is that custodians must turn the money over to the child when he or she reaches a certain age.  Even though the law in FL now allows the account to exist until the minor reaches age 25, in reality that child could take the money out at age 21. The child may then do as he or she wishes with the money — and it may not be what you would prefer. In addition, as with custodial accounts, the child’s sudden ownership of the account funds could jeopardize his or her eligibility for financial aid for college.

UTMA Accounts are “owned” by the minor and, as such, are subject to seizure by the minor’s creditors. There is no “spendthrift” protection for UTMA Accounts as there is in a properly drafted child’s trust.

Later in Life Parents: Estate Planning and Retirement Considerations

Older parents are becoming more common, driven in part by divorce and remarriages and fertility treatments. Comedian and author Steve Martin had his first child at age 67. Singer Billy Joel just welcomed his third daughter. Janet Jackson had a child at age 50. Later-in-life parents have some special estate planning and retirement considerations.

Update Your Plan

Make sure you have an estate plan and that the estate plan is up to date. One of the most important functions of an estate plan is to name a guardian for your children in your will. This is especially important for parents having children later in life. If you don’t name someone to act as guardian, the court will choose the guardian. Because the court doesn’t know your kids like you do, the person they choose may not be ideal.

Consider a Trust

In addition to naming a guardian, you may also want to set up a trust for your children so that your assets are set aside for them when they get older. If the child is the product of a second marriage, a trust may be particularly important. A trust can give your spouse rights, but allow someone else — the trustee — the power to manage the property and protect it for the next generation. If you have older children, a trust could provide for a younger child’s college education and then divide the remaining amount among all the children.

Retirement Savings

Another consideration is retirement savings. Financial advisors generally recommend prioritizing saving for your own retirement over saving for college because students have the ability to borrow money for college while it is tougher to borrow for retirement. One advantage of being an older parent is that you may be more financially stable, making it easier to save for both. Also, if you are retired when your children go to college, they may qualify for more financial aid. Older parents should make sure they have a high level of life insurance and extend term policies to last through the college years.

Social Security

When to take Social Security is another consideration. Children can receive benefits on a parent’s work record if the parent is receiving benefits too. To be eligible, the child must be under age 18, under age 19 but still in elementary school or high school, or over age 18 but have become mentally or physically disabled prior to age 22. Children generally receive an amount equal to one-half of the parent’s primary insurance amount (PIA), up to a “family maximum” benefit. You will need to calculate whether the child’s benefit makes it worth it to collect benefits early rather than wait to collect at your full retirement age or at age 70.

This article is a service of Myrna Serrano Setty, P.A. Myrna doesn’t just draft documents, she guides her clients and educates them about how to protect what matters most.  And that’s why Myrna offers a Planning Session, to help you get more financially organized than ever before and to make the best decisions for the people they love. Call our office at (813) 514-2946 to schedule a meeting with Myrna.

Case Study: Two Brothers Fighting Over Long-Term Care

A recent New Jersey appeals court case shows how important it is for families to come up with a long-term care plan before an emergency strikes. The case involves two brothers who got into a fight over whether to place their mother in a nursing home – a dispute that resulted in one brother filing a restraining order against the other.

Brother vs. Brother

R.G. was the primary caregiver for his parents and their agent under powers of attorney. After R.G.’s mother fell ill, R.G. wanted to place his mother in a nursing home. R.G.’s brother objected to this plan, but R.G. went ahead and had his mother admitted to a nursing home without his brother’s consent. R.G.’s brother sent angry and threatening texts and emails to R.G. as well as emails expressing his desire to find a way to care for their parents in their home. Eventually the men got into a physical altercation in which R.G.’s brother shoved R.G.

R.G. went to court to get a restraining order against his brother under the state’s Prevention of Domestic Violence Act. The trial judge ruled that R.G. had been harassed and assaulted and issued the restraining order. R.G.’s brother appealed, arguing that R.G. did not meet the definition of a victim of domestic violence.

What is Domestic Violence?

In R.G. v. R.G. (N.J. Super. Ct., App. Div., No. A-0945-15T3, March 14, 2017), a New Jersey appeals court reversed the trial court, ruling that R.G.’s brother’s actions did not amount to domestic violence. According to the court, there was insufficient evidence that R.G.’s brother purposely acted to harass R.G., ruling that “a mere expression of anger between persons in a requisite relationship is not an act of harassment.”

Keep This From Happening in Your Family

If the brothers had sat down with their parents before they needed care to explore options and determine their parents’ wishes, this drawn-out and costly dispute might have been totally avoided. Putting a long-term care plan into place can help avoid family conflicts like this one.

To start planning for long-term care, talk to us to help you design the best plan for you.

 

Using Your IRA to Buy Long Term Care Insurance

Long-term care insurance (LTCi) is an important element of good retirement planning. That is because it offers financial protection against unexpected illness or disability that would otherwise eat into savings. But many LTCi plans are too expensive for most retirees or people nearing retirement age, and the costs just seem to be going up.

At the same time, the cost of medical care and assistance over a long period is even higher, and an unexpected illness could wipe out everything you’ve saved. You may not have enough after-tax dollars to pay for LTCi, but you can protect your retirement income by using money from your IRA to fund coverage.

Is It Possible to Avoid Taxes and Early Withdrawal Penalties?

Typically, withdrawals or non-qualified investments (including insurance purchases) made with IRA funds before the age of 59½ are subject to taxes and penalties. Certain allowances are made if you use IRA savings to pay for medical expenses that exceed 10 percent of your adjusted gross income, or if you’re unemployed and using these funds to buy medical insurance.

Although these exemptions don’t apply if you’re buying LTCi directly with your IRA savings, there are some indirect options available that allow you to avoid taxes and penalties. Here are two: fund a 20-pay life insurance plan or a qualified Health Savings Account (HSA) with part of the money saved in a traditional IRA.  Both options can be done penalty-free before age 59 ½

Option 1: Convert Your IRA into LTC Insurance with a Tax-Qualified Annuity

If you invest in a tax-qualified annuity that makes internal distributions to an insurance carrier, you can indirectly pay for long-term care coverage using IRA money without additional tax penalties. Here’s how the process works:

  • Step 1: Apply for 20-pay life insurance with LTC features

Apply for a 20-pay life insurance plan with an LTC rider, which can accelerate the death benefit to pay for long-term care.  This policy will be funded with tax-qualified annuities that make annual distributions to the insurance policy over a 20-year period. After you apply, complete the underwriting process, and receive approval, you will be given a quote for the annual premiums required for this plan. The premiums may be higher than those for term insurance, but limited-pay plans offer lifetime security.

  • Step 2: Apply for IRA-based annuity plans to fund the policy

The second step is to determine the up-front cost of an IRA-based annuity where the annual dollar amount of income is the same as the insurance premiums, over a period of 20 years. Apply for this annuity type and include instructions for the company to directly credit your 20-pay life insurance plan with the annual gains from the annuity.

  • Step 3: Use a direct transfer of IRA funds for annuity premiums

Directly transfer funds from your IRA to purchase your 20-year annuity. By paying an equal dollar amount directly into your life insurance policy, this annuity will fund your insurance coverage and keep it active for 20 years, after which the LTCi policy is paid in full.

You will receive IRS tax form 1099-R from the annuity company every year on the amount of taxable IRA money moved into the life insurance policy. While you still pay income tax on this amount, the payout and benefits from the policy will be tax-free for you and your beneficiaries. After you’ve made premium payments over a 20-year period, the death benefits will apply for your entire lifetime.

Option 2: Move IRA Funds into an HSA with LTC Benefits

You’re allowed to make a one-time tax-free transfer of IRA funds into a qualified HSA, which provides tax-advantaged savings for health care expenses in the future. Check if your HSA includes an option for long-term care, and consider this method only if you meet the eligibility rules.

The maximum transfer allowed is the same as the HSA contribution limit, which in 2017 is $3,400 for single people and $6,750 for families, with an additional $1,000 in catch-up contributions for those aged 55 and up. Remember, this limit will decrease based on how much you move from your IRA. You may also be liable for taxes and penalties if you’re no longer eligible for the HSA within 13 months from December 1st of the transfer year.

The amount saved by these strategies will vary depending on the individual’s or family’s needs, the amount transferred and the expense of the annuity applied for. But they are worth the trouble, in most cases; anytime you can use tax deferred dollars, it is a good thing.

If you want to be financially comfortable, safe and happy after you retire, it may be time to take another look at your IRA savings and investment portfolio. A self directed IRA might be your best option, since you retain full control over investments. Consult a professional advisor if you want to learn more about how it works.