Divorce, Remarriage and Social Security

Many people are aware that seniors are entitled to collect Social Security benefits that are calculated based on their spouse’s work record. What’s less well-known is that this benefit applies in many cases to divorced spouses. In fact, ex-spouses may even be entitled to survivors benefits in certain circumstances.

Divorce-Remarriage-And-Social-Security-VickstromLawAs a spouse, you have the option of claiming a Social Security retirement benefit based on your own earnings record, or collecting a spousal benefit equal to one-half of your spouse’s Social Security benefit. You are automatically entitled to whichever benefit is higher, and you can collect on your spouse’s record even if you never worked yourself.

A divorced spouse can collect benefits based on an ex-spouse’s work record, whether or not the ex-spouse has remarried and whether or not the ex-spouse’s new spouse is also collecting on the same work record.

But to receive this benefit, you must meet the following requirements:

  • Your ex-spouse is currently eligible for retirement benefits.

  • Your marriage lasted at least 10 years.

  • You are at least 62 years old.

  • You are currently unmarried.

If your ex-spouse has not yet applied for retirement benefits, but is eligible for them, you can receive benefits based on his or her work record as long as you have been divorced for at least two years.

If you have reached full retirement age and are eligible for both a spouse’s benefit and your own retirement benefit, you have a choice. One option is to receive only the spouse’s benefit for now, and delay receiving your own retirement benefit until a later date. The longer you delay taking your own benefit (up to age 70), the higher the monthly payment you will ultimately receive.

If you remarry, though, you cannot receive benefits based on your former spouse’s work record unless the new marriage ends (by death, divorce, or annulment).

Survivor’s Benefits

If you’re divorced and your former spouse has passed away, you could be eligible for survivors benefits if the marriage lasted 10 years or more. Survivors benefits are equivalent to the deceased spouse’s full Social Security benefit amount.

However, if you remarry before the age of 60, you can’t collect survivors benefits (unless the later marriage ends for any reason). If you remarry after age 60, you can still receive survivors benefits based on your former spouse’s record.

It may be that your new spouse is also collecting Social Security benefits, and you would receive a higher amount based on the new spouse’s work record. If this is the case, you will receive the higher amount.

There is one circumstance in which you don’t have to meet the 10-year marriage rule – if you’re caring for a child who is under age 16 or disabled, and who is receiving benefits based on the work record of your former spouse.

To learn more about how divorce and remarriage can affect your future financial plans, contact Worcester-based elder law and estate-planning attorney Kristina Vickstrom at 508-757-3800.

Four Steps to Naming a Legal Guardian

It’s something no parent likes to think about, but according there’s no better time than the New Year to handpick legal guardians who can raise your children if something happens to you.

foster-family-with-childrenStatistics show that 69% of US parents do not have legal guardians named to care for their kids in the event of sudden death or incapacity.  If both parents should pass away at the same time a judge will have no choice but to step in and make painful custody decisions on your child’s behalf.

As someone who doesn’t know you, your wishes or the needs of your children, Attorney Vickstrom says “a judge is the last person you want making life-altering decisions for your family if a tragedy strikes.”

That is why estate planning lawyers urge parents to sit down and choose legal guardians for their minor children at the start of the New Year.  To help simplify the process and narrow down candidates, Attorney Kristina Vickstrom recommends the following 4 steps:

  1. Sit down and brainstorm all the people who could possibly raise your kids

    If you were pass in an accident. Don’t limit your choices to family either. Think outside the box and create a column where you will list out everyone who comes to mind.

  2. Determine who you would NEVER want to raise your kids in your absence

    A situation may arise where you need to somehow communicate with the courts regarding who you don’t want raising your kids in the event that individual contests your wishes and seeks custody of your kids anyway (This can be kept private and only revealed if the need arises).

  3. Weigh your values

    Weighing values is one of the most overlooked steps when naming guardians. Make a third column and write down what is important to you and/or your spouse.  Do you value education?  Religious or spiritual training? The ability to live in a certain community?  Being raised in a two-parent family?  Whatever your values may be, be honest about them, write them down, prioritize them and eventually rank the top three.
    From there, match your top guardian choices to your top values. This will give you a clear picture of who you can trust to raise your children with the values you hold near and dear to your heart.
    Finally, the most important step…

  4. Legally document their choice of guardians

    So that there’s no question as to who you want to raise your kids if the unthinkable happens.
    Naming legal guardians should not only be handled in your Will, but also in a separate legal document, that can be enacted in the event you are no longer able to care for your children due to a physical or mental incapacity. The latter document is often overlooked by unskilled attorneys, dabbling in wills and trusts.

For more information about naming guardians for your minor kids or Estate Planning and Elder Law Attorney Kristina Vickstrom, please call 508-757-3800 or contact her online.

Are Social Security Benefits Taxable?

Social Security retirement benefits by themselves are generally not taxable – but people with even a modest amount of income in addition to their Social Security payments may end up having to pay taxes on their benefits.

social securityThe tax result is determined by something called “combined income,” which is one-half of your Social Security income plus all your additional income (including non-taxable interest).

For married couples, if your combined income is between $32,000 and $44,000, you may have to pay tax on up to 50 percent of your benefits. If your combined income is more than $44,000, up to 85 percent of your benefits may be taxable.

For single filers, Social Security may be taxable up to 50 percent if your combined income is between $25,000 and $34,000, and up to 85 percent if your combined income is above $34,000.

If you owe tax on your Social Security benefits, you can either make quarterly estimated tax payments or ask the government to withhold taxes from your Social Security checks.

You can find more information in the IRS’s Publication 554, Tax Guide for Seniors, and Publication 915, Social Security Benefits and Equivalent Railroad Retirement Benefits. These are available at www.irs.gov or by calling (800) 829-3676.

If you have further questions about your Social Security benefits, you can contact Attorney Kristina Vickstrom in Worcester at 508-757-3800 to set up a consultation.

Planning Your Estate After a Divorce

If you have just gone through the emotional and financial upheaval of a divorce, the last thing on your mind is contacting an attorney to make changes to your estate plan. Yet, it is essential that you review and update your estate documents to reflect this major life change. During the divorce process, you likely dealt with property division, and possibly child custody and spousal support. Your estate plan should reflect changes. Otherwise, your assets could be distributed in ways you neither expected nor intended.

planning your estate after divorce

1. Rewrite Your Will After the Divorce

Divorce will not revoke your will in its entirety, but it will revoke any provision in the will in favor of your former spouse, such a gift or fiduciary appointment. Regardless, it is still important to revise your will to designate who should inherit your assets and act as your personal representative in place of your former spouse. Otherwise, the court will make these decisions for you.

If you have children, you should also name a guardian in your will. Upon the death of one parent, the surviving parent will usually be granted sole guardianship of the children. However, in the event the other parent has also died, or is for some reason deemed unfit, the court will need to appoint a guardian and will look to your will for guidance.

In addition, if you change the provisions in your will to benefit your children only, you may not want your former spouse to have control over the assets left to your minor children. In this case, you may want to consider establishing a trust so that you can direct the trustee to use the assets to pay for specific items for the benefit of your children, such as school tuition and expenses.

2. Name New Beneficiaries on Life Insurance and Retirement Accounts

Assets that let you name a beneficiary, such as life insurance and retirement accounts, are not controlled by your will. The bank or insurance company will pay out benefits directly to whoever is named as the beneficiary on the account. The law will not revoke a designation naming your former spouse as a beneficiary in all circumstances. This is why it is crucial to name new beneficiaries as soon as your divorce is final.

3. Update Your Power of Attorney and Health Care Proxy

In most cases, married couples give each other the power to make financial or medical decisions for them in the event they become incapacitated. You will need to appoint new individuals act as your agent in these important roles. You can appoint a parent, sibling, close friend or adult child. These powers are usually quite broad, so take time to consider who you want to have this important decision-making authority.

Unintended consequences may result if you do not revisit your estate plan after a divorce. If you are contemplating or have recently gone through a divorce, contact us. We will review and update your estate plan in light of this major life change.

Just Say No to Nursing Home Arbitration Clauses

Moving an aging parent or loved one into a nursing home can be a difficult and stressful time. You’re likely anxious to get mom or dad finally settled. Before you get ready to sign those admissions papers, though, watch out for mandatory nursing home arbitration clauses hidden within all the fine print. Otherwise, you may not even realize it’s there and sign away your right to take the nursing home to court in the event something tragic happens.

nursing home arbitration

Nursing home arbitration clauses are becoming increasingly common in nursing home contracts, but they are almost never in a resident’s best interests. Here are some of the hidden risks of nursing home arbitration clauses:

  • You lose your right to take your case to court, even in the case of serious injury or death
  • It’s expensive – you may have to pay a share of the arbitrator’s fee on top of hiring an attorney
  • The amount you are awarded, if you’re able to recover at all, will likely be less than if your case went to trial

So what’s the law in Massachusetts? One cannot be forced to sign a nursing home arbitration clause as a condition of admission. Though they are generally enforceable, it depends on who signed the papers and whether they had the authority to do so.

The bottom line is, it crucial that you have an attorney review the admissions papers with you first. An attorney can help understand what you’re agreeing to and determine what’s in your best interests. If you do nothing else, politely decline to sign the nursing home arbitration clause paperwork. Contact Attorney Kristina Vickstrom at 508-757-3800 to schedule an appointment today.

[photo credit: MAShomecare.com]

How to Choose the Best Medicare Part D Drug Plan

Choosing the best drug plan under Medicare Part D isn’t always easy. Some people just pick the plan with the lowest premium, but that Medicare Part D plan might not be the best value for you, depending on your needs.

Medicare Part D

The real cost of a Medicare Part D plan depends not only on the premium, but also on the availability of the drugs you need, your additional out-of-pocket costs, and how convenient it is to obtain your medications.

Here are the key factors to consider (besides the premium) when deciding on a Medicare Part D plan:

► The Formulary. A Medicare Part D plan’s “formulary” is the list of drugs it covers and will pay for.  Does the plan you’re considering include all the drugs you need, or anticipate needing? How much will they cost?

Keep in mind that a plan’s formulary can change from time to time, but typically, once you sign up for a plan for a year, the plan can’t drop your coverage of a drug you need until the end of the year.

If you switch to a Medicare Part D plan that doesn’t cover a drug you’re currently taking, the plan might cover it anyway during a brief “transition” period. You might ask about this period. A one-month transition is fairly common (and might be all you need), but some plans have shorter or longer periods.

Also, if you’re prescribed a medically necessary drug that’s not in your plan’s formulary, the plan might in some cases make an exception. You might inquire as to your plan’s process for granting such an exception.

► The Deductible. Is the deductible the legal maximum ($325 in 2013), or something less? Some Medicare Part D plans have no deductible at all.

► Covered Pharmacies. Will you be able to continue buying drugs at your customary pharmacy? Is that pharmacy a “preferred” provider, and if not, will you have to pay more to use it? If you’re living in a long-term care facility, is the facility’s pharmacy included in the Medicare Part D plan’s network?

► Expensive Drugs. It’s worth looking into whether a plan will try to “steer” you toward using lower-cost drugs. For example, will it require that you try a cheaper medication before it will cover a more expensive one prescribed by your doctor? Also, are there different co-payments for generic and brand-name drugs?

► Quantity Limits. Is there a limit on the number of prescriptions you can receive in a month? Is there a limit on the number of pills available in a single prescription?

► Mail-Order. Are you allowed (or required) to use mail-order for the Medicare Part D plan? Is there a price difference for mail-order purchases?

► The Plan Sponsor. Is the sponsor a known, reliable entity?

► Effect of State Programs. How do the plan’s benefits coordinate with any state pharmaceutical assistance programs you might use?

If you’re currently enrolled in a Medicare Part D drug plan, the window of opportunity to change plans runs from October 15 to December 7 (2013). If you’re newly eligible for Medicare, you can enroll in a prescription drug plan during the seven-month period that starts three months before the month you turn 65.

A review of your current Medicare Part D plan is part of a comprehensive elder law planning meeting. Have more questions about which Medicare Part D plan may be right right for you? Contact us today.

Can Someone With Dementia Sign a Will?

Millions of people are affected by some form of dementia. Unfortunately, many dementia patients don’t have all their estate planning affairs in order before the symptoms begin to appear. This is another good reason to speak with an elder law attorney now, rather than putting off such a discussion.

Can a dementia patient legally sign a will

However, if someone you know has symptoms of dementia, it might not be too late to sign a will or other estate planning documents.

In order for a will to be valid, the person signing it must have “testamentary capacity,” which means that he or she must understand the implications of what’s being signed. It’s not the case that people automatically can’t sign a will if they’re affected by a disease or a mental illness like dementia. This doesn’t matter as long as the person is lucid enough at the time to know what they’re doing.

Generally, people are considered mentally competent to sign a will if they:

  • Understand the nature and extent of what they own.
  • Remember who their relatives and descendants are.
  • Are able to articulate who should inherit their property.
  • Understand what a will is, and how it disposes of their assets.
  • Understand how all these things relate to each other and come together to form a plan.

If there’s any question about a person’s competency, an attorney might take steps to determine competency and to prove that the person is legally able to make a will. For instance, a doctor or other witness might be asked to verify that the person is lucid enough to understand what he or she is doing.

If you or someone you know has more questions about dementia and its affect on Will planning in Massachusetts, please contact Attorney Kristina Vickstrom at 508-757-3800

[photo credit: HealthyAgingCode.com]

What Happens if My Long-Term Care Insurance Fails?

People typically buy long-term care insurance years before they need it. As a result, they’re taking a gamble that the company will still be around when it’s time to pay out. What happens if the long-term care insurance company goes out of business?

long term care insurance

But in cases where an insurance company simply fails, every state has an insurance guaranty association that protects consumers. The purpose of this association is to take over the policies of an insurance company that’s experiencing financial difficulties and ensure that claims are paid. The guaranty association may provide long-term care insurance coverage directly to consumers, or it may facilitate the sale of the policies to another insurance company. It’s also possible that policyholders will be given the opportunity to cash in their long-term care insurance policies.

The downside of the state guaranty association is that it provides coverage only up to a certain limit. Each state caps the maximum amount its association will pay out, and the figure is typically between $100,000 and $500,000 per policy, with most states offering about $300,000.

If your policy is purchased by another company or is taken over by a guaranty association, be sure to continue paying your premiums, because failing to do so could result in the policy’s termination. Contact Attorney Kristina Vickstrom today at 508-757-3800 to ensure you’re covered.

[photo credit: CompleteLongTermCare.com]

Women May Soon Pay More for Long-Term Care Insurance

Long-term care insurance may soon be getting more expensive for women. That’s because two of the country’s biggest long-term care insurance providers have announced plans to introduce “gender-based” pricing.

womens long term care insurance

Genworth hasn’t said how much it will raise rates for women, but according to the American Association for Long-Term Care Insurance, women will likely end up paying 20 to 40 percent more than men.

Women not only tend to live longer than men, but they also file more insurance claims, and their claims are for longer periods. About two-thirds of all long-term care insurance payouts are made to women, according to the Association.

Genworth’s new rates won’t apply to existing policyholders or to married couples who apply for joint policy. (Insurance companies usually give married couples a discount on rates.)

Several other companies also have gender-specific pricing requests on file with state regulators, and some of them plan to charge more to a married woman who outlives her spouse.

The gender-based increases will be on top of recent rate hikes for long-term care insurance in general. Over the past five years, premiums have risen between 30 and 50 percent.

The Affordable Care Act requires gender-neutral pricing for health insurance, but it doesn’t apply to long-term care insurance. However, Colorado and Montana have specific laws requiring unisex insurance rates, so the long-term care rate changes presumably won’t take effect there.

Are you considering a policy and don’t know where to start? Contact Attorney Kristina Vickstrom today at 508-757-3800. She can start a conversation about the benefits of long-term care insurance, refer you to a reputable agent, and discuss other long-term care planning option that be of benefit to you.

Medicare Mistakes Lead to Big Penalties

Most people should sign up for Medicare when they reach 65; if they wait until later, they have to pay a significant penalty when they do sign up. There’s an exception, though, for people who are still employed at age 65 and are covered by a group health plan. These people can delay signing up for Medicare without a penalty.

medicare mistakes lead to big penalties

COBRA is a federal law that allows many workers to continue on their employer’s health plan for up to 18 months after their employment is terminated or their hours are reduced.

Many people assume that they can delay signing up for Medicare if they still have COBRA coverage when they turn 65. But that’s not true. If you’re no longer employed when you turn 65, you have to sign up for Medicare Part B or you will face a penalty, even if you still have COBRA coverage.

The penalty for delaying can be very significant – there’s a 10 percent premium penalty for each year that enrollment is delayed. For example, if you turn 65 in 2012 but wait until 2014 to enroll in Medicare, your monthly Part B premium will be 20 percent higher than the standard premium…and this will be true for the rest of your life.

The rules for signing up for Medicare Part D, which covers prescription drugs, are a little different. People who aren’t employed when they turn 65 but still have COBRA coverage can delay signing up for Part D without a penalty, but only if the prescription drug plan they have under COBRA amounts to “creditable coverage,” which means that it’s expected to pay on average as much as the standard Medicare Part D plan.

The penalty for delaying enrollment in Part D is also more complicated; it’s calculated by multiplying 1 percent of the national base premium by the number of months that you were without creditable coverage.

The Medicare enrollment period begins three months before your 65th birthday, and continues for seven months.

[photo credit: ABCCakeShop]