Discovering Retirement (Back to Contents)

Protecting Your Wealth & Health

"The longer I live, the more beautiful life becomes."
Frank Lloyd Wright

If you haven't already done so, now is a good time to become familiar with the documents and strategies that will enable you to maintain control over your estate — your real and personal property — and to make sure that, after you die, it's transferred according to your wishes.

You should seek professional advice in preparing these documents and be sure to make adjustments when your situation changes. If you move to another state, make sure your documents conform to the laws of that state.

Will

A will is a legal document that transfers your property after you die and names an executor to oversee your estate and carry out your wishes.

If you don't have a will, you're not alone. Two-thirds of Americans haven't prepared a will. You may think you don't need one because you want everything you own to go to your spouse. But, if you die without a will, you lose control over what happens to your personal property. Each state has a specific formula for distributing an estate.

For example, in New York, a spouse with no children inherits the total estate, and other relatives receive no assets. When a spouse and children are the survivors, the spouse inherits $50,000 plus one-half of the residue, while the children and their descendents share one-half of the residue, equally divided.

When you name an executor, you are selecting someone who will be responsible for gathering assets and protecting your estate until creditors and taxes have been paid. The executor then distributes what remains to beneficiaries and heirs. You should name someone who is capable of dealing with legal and financial issues. You can also name an alternate to act if your first choice is unable to carry out the responsibilities.

Requirements for a valid will are complex and differ by state, so you should have your will reviewed by an attorney to make sure it conforms to the laws where you live. If your situation is complex and you have sizeable assets, it makes sense to consult with an attorney who specializes in wills to be sure you achieve the distribution you want.

Trust

A trust can also be an important part of your estate planning. In a trust you name a bank, attorney, financial advisor, or other person (including yourself) as trustee. A trustee then manages the trust property for you and/or your beneficiaries. Trusts are primarily established to benefit family members and other beneficiaries. Tax issues and protecting assets if you need long-term nursing home care are also considerations.

The two major types of trusts are inter vivos trusts and testamentary trusts. An inter vivos trust is created while you are living. It can be either revocable (you can modify it) or irrevocable (you can't make changes once it's set up). A testamentary trust is created by your will and takes effect when you die.

A living trust provides various benefits for avoiding probate. Today, it is easy to purchase one of these documents preformatted, so that you can simply fill in the blanks. However, there are potential adverse consequences — which can far outweigh the intended benefits — if your living trust does not meet certain requirements. A prepackaged living trust should not be a substitute for a carefully considered estate plan.

If you believe a trust might be desirable, it is best not to attempt to set it up yourself. An attorney can help you determine whether a trust is advisable, given your objectives. If so, the attorney can help you select the appropriate trust and tailor it to meet your needs and conform to your overall estate plan.

Power of Attorney

There is an important legal tool today that will protect your interests if you are not able to do so yourself.

A power of attorney is a legal document naming a person to act as your agent. That person can be granted the right to handle a broad range of personal, financial, legal and other affairs, including acting on your behalf concerning your NYSTRS benefits.

If you don't have a power of attorney and you become incapacitated, your affairs may be managed by a court-appointed guardian under a process that can be complex and expensive.

There are different types of powers of attorney. Under a durable power of attorney, your named agent is able to act for you even if you become legally incapacitated, when you would need it most.

Using a power of attorney, you are able to decide in advance whom you want to make decisions for you in situations in which you are unable to make decisions for yourself, such as during medical procedures or absences from the country.

In New York State, a "short form" power of attorney lists 15 categories in which you may delegate authority. One category is "retirement benefit transactions," which would cover any transaction or interaction you would have with the System. In New York State, a short form power of attorney executed on or after Sept. 1, 2009 must also be accompanied by a Statutory Major Gifts Rider in order for an agent to have the power to make gifts and other transfers, including the authority to change or designate beneficiaries on retirement benefit plans.

When choosing an agent, you should select someone you trust — perhaps a family member or friend — who is willing to act in ways having far-reaching effects on your financial and personal affairs.

It's a good idea to consult with an attorney to make sure you're using the right form and to tailor it to meet your needs to protect you and your family.

An original or certified copy of your power of attorney with your signature must be on file at the System if you want your agent to act on your behalf concerning your NYSTRS benefit.

The Special Durable Power of Attorney Form is available on the Legal Publications page of our Library, or by calling our Hotline at (800) 782-0289.

Health Care Proxy and Living Will

If you become ill or are injured, you may not be able to express your wishes about your medical treatment. By completing a health care proxy, you can appoint someone you trust as your agent to ensure your wishes are carried out. Here are some considerations:

• You can give the person you select as little or as much authority as you want. Unless you say otherwise, your agent will be allowed to make all health care decisions for you. You can limit the agent's authority or give specific instructions to follow.
• Your agent will begin making decisions for you when doctors decide you are not able to make health care decisions yourself. As long as you are able to make decisions yourself, you have the right to do so.
• You can choose anyone 18 years of age or older to be your agent or alternate agent.
• You should discuss your choice of an agent with family members and your health care professionals before you sign your proxy, to make sure you understand the types of decisions that may be made for you.
• You should discuss your health care wishes and the health care proxy form with the person you have chosen as your agent. You don't need a lawyer, but two adult witnesses, 18 years of age or older, must sign your proxy.
• It is a good idea to give a signed copy of the proxy to your agent, your doctor, other family members or friends. You should also keep one with your other important papers.
• You can cancel the proxy, or change your agent or any treatment instructions, by filling out a new form. You can also specify that the proxy expire on a certain date or if a certain event occurs.

A health care proxy is not the same as a living will. A living will is a document that allows you to express your feelings about withholding or withdrawing life-sustaining treatment that prolongs the process of dying. In it, you can state in advance your objection to certain medical measures or your desire to have all available life-sustaining treatment administered. The living will should express your general wishes, but it can be as specific as you want. You can indicate your wishes concerning cardiac resuscitation, mechanical respiration and artificial nutrition and hydration. New York, unlike most states, does not have a specific statute recognizing living wills. However, the courts have upheld the rights of individuals who have declared their objections to life-sustaining treatment. There must be "clear and convincing" proof that a person made this statement while still competent. A living will satisfies this requirement.

By having both a living will and a health care proxy, you are making your feelings about your treatment known and selecting someone you trust to carry out those wishes.

Long-Term Care

Today, many of us are concerned about protecting our assets — or those of our parents or older relatives — from the spiraling cost of long-term health care not covered by traditional health insurance or Medicare. As you live longer, the chances increase that you will need long-term care, either at home or in a nursing home. In 2000, 9 million Americans needed long-term care services at almost $55,750 a year, according to the Long Term Care Council. The cost for long-term care depends on where you live and the level of care you need. In New York State, long-term care in a nursing home costs about $71,000 annually (more in and around New York City). The average length of long-term care is 2.5 years, with one in five people needing care for five or more years.

There are three ways to pay for long-term care: personal funds, Medicaid (if you're near the federal poverty level and you've exhausted your assets), or long-term care insurance.

Most people cannot afford this cost without depleting their lifetime savings. Although Medicare provides protection against acute care costs such as hospital and physician's charges, it was never meant to pay for long-term needs. Today, almost half the cost of long-term care is funded by Medicaid, the Federal/State insurance program that provides health care for low-income people with few assets. Medicaid takes over when people are unable to pay their nursing home bills.

Each state establishes its own qualifications for Medicaid assistance. In most cases, you can keep a minimum portion of assets and personal possessions. A spouse remaining at home may keep the home, a certain portion of assets and monthly income. When you've spent down your assets paying for long-term care, Medicaid pays the balance. Some have attempted to become Medicaid eligible, without spending all of their own funds, by transferring their assets to relatives or by setting up trusts. However, laws governing these strategies have become more restrictive in recent years.

Partnership for Long-term Care
A better choice today may be long-term care insurance that can help protect you from the high cost of care.

In New York State, the Partnership for Long-Term Care program is designed so residents of the State will be able to afford their own care without the need of becoming impoverished and totally dependent on Medicaid. Partnership policies which combine private insurance and Medicaid are offered by several insurers.

You can find information on the Partnership by browsing its Web site at www.nyspltc.org. You can also call, write or e-mail a request for a general information package which contains a program pamphlet, an informational brochure titled Medicaid Eligibility and the Treatment of Income and Assets Under the New York State Partnership for Long-Term Care, and a list of participating insurance companies with their toll-free numbers.

• Call the state's toll-free hotline at (888) NYSPLTC (697-7582) (in-state only), or call (518) 473-8083 from anywhere in the U.S.;
• Write to request a package:
  New York State Partnership for Long-Term Care
  NYS Department of Health
  1 Commerce Plaza, Room 726
  99 Washington Avenue
  Albany, New York 12260; or,
• E-mail pltc@health.state.ny.us

Each policy will cover you for a minimum of three years in a nursing home or six years of home care (two days of home care equal one nursing home day). You can also have a policy that is a combination of the two.

When these benefits are exhausted, you will then be eligible for Medicaid-extended coverage without having to spend down your assets. You are, however, required to contribute your income toward the cost of your care in accordance with regular Medicaid rules.

Long-Term Care Policy Checklist
You should carefully consider which long-term care policy best meets your needs. As with all insurance, coverage and cost are factors to consider when comparing policies. The following checklist will help you obtain the information to make an informed decision.

1. Financial agency ratings:	A. M. Best Company _______________ Moody's Investors Service _______________ Standard & Poor's Insurance Rating Services_______________
2. Is the policy approved under the New York State Partnership for Long-Term Care?	Yes _____ No _____
3. Does the policy cover the following levels of care and the places where care is provided?	Nursing Home Care Skilled nursing care: Yes _____ No _____ Personal (custodial) care: Yes _____No _____ Home Care Skilled nursing care: Yes _____ No _____ Personal (custodial) care: Yes _____No _____ Adult day care: Yes _____ No _____ Assisted living facilities: Yes _____ No _____
4. Does the policy pay benefits for respite care?	Yes _____ No _____ If yes: _______days/year
5. How much will the policy pay for the following benefits?	Home care $__________/day Adult day care $__________/day Assisted living facilities $__________/day Nursing home care $__________/day Respite care $__________/day
6. Does the policy pay benefits for "alternate care days" in a hospital?	Yes _____ No _____
7. How long will the policy pay benefits?	_____ 3 years _____ 5 years _____ Unlimited _____ Other__________ Benefit Amount $_______________
8. How long is the elimination or waiting period?	Nursing home care: __________days Calendar days Yes _____ No _____ Service days Yes _____ No _____ Home care: __________days Calendar days Yes _____ No _____ Service days Yes _____ No _____
9. How often do you need to satisfy the waiting period?	Once per care episode Yes _____ or No _____ Once for the life of the policy Yes ___ No ____
10. Is there a pre-existing condition exclusion?	Yes _____ No _____ If yes, how far back can the insurer look for pre-existing conditions? ____months How long are you required to have the policy before pre-existing conditions are covered? ____months
11. Is Alzheimer's disease covered if you develop it after you purchase the policy?	Yes _____ or No _____
12. Are premiums waived for:	Nursing home care? Yes _____ No _____ Home care? Yes _____ No _____
13. What criteria are used to qualify for benefits?	Medical necessity Yes _____ No _____ Activities of daily living Yes _____ No _____ Cognitive impairment Yes _____ No _____
14. What type of inflation protection is available under the policy?	Automatic annual increases Yes _____ No _____ (compounded) __________% Automatic annual increases Yes _____ No _____ (simple) __________% Periodic offer to increase Yes _____ No _____
15. Does the policy provide the following:	Information and referral services? Yes _____ No _____ Consultation services (care planning)? Yes _____ No _____ Other care management services? Yes _____ No _____
16. How much does the policy cost?	$__________/month

Organizing Your Records

After you review your estate planning, it is the perfect time to take an inventory of your important papers and property. This list will be helpful to you whenever you have to get your hands on a document in a hurry, and it will provide needed assistance to your family if you become incapacitated. Without this information, you or your family could spend valuable time or money tracking down your accounts, legal papers and special instructions about the distribution of your estate.

Update the information every two or three years, or whenever you experience a major change in your life. Make sure the telephone numbers and addresses of your advisors are current.

Keep a copy in a safe place at home and give one to a trusted friend, family member or advisor. Don't just put your copy in a safety deposit box. It may be difficult for others to access it if necessary.

Use this opportunity to evaluate your financial status and strategies to ensure a continued successful retirement.

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