Funding for this program is made possible in part by the KET Endowment for Kentucky productions.

>> Good evening.

Welcome to Financial Planning for seniors.

Call in a Next Chapter forum.

We thank you so much for joining us this evening.

I'm Renee Shaw from Social Security and retirement benefits to maximizing tax credits and deductions and having your estate in order, financial planning and your golden years can seem a little daunting.

Tonight, we've assembled elder law attorneys and financial advisors to offer guidance for managing your money as you age.

And of course, we're taking your questions this evening.

Joining us in our Lexington studio are Amy Dougherty, attorney and member of Bluegrass Elder Law, PLLC.

Nate Littles, manager with Blue and Company, LLC.

Victoria Watson, a certified financial planner with Abri.

Mr.

Clark Vantrease partner with Kentucky Elder Law, PLLC, and Matthew Smith with Elder Law Lawyers McClellan and associates, PLLC.

Also in the studio tonight, my colleague Laura Rogers is with us, and she's also has with us Scott Weganast, communications director for AARP Kentucky.

Now you can connect with us several ways to ask your questions.

Tonight.

You can give us a call at one 800 944 4664.

You can send us an email to Public Affairs at ket.org.

Or you can post a question on X, formerly known as Twitter, at Pub Affairs KET.

Throughout the evening, you'll see those ways to connect with us at the bottom of your screen.

So stay glued there to get in contact with us.

This call in program is made possible by Ket's ongoing aging initiative, called The Next Chapter, that focuses on the rewards and challenges of growing older.

And we want to give a big shout out to our phone volunteers who are on Ket's Visitor Center at our Lexington headquarters, who are standing by right now to take your phone calls, and we appreciate them giving their time to us this evening, so keep them busy.

That phone number will be up on your screen in just a moment, and the other ways that you can connect with us.

So let's just start off real quickly as those phones start to ring.

I want to go to you first, Amy, to talk about some of the key documents in estate planning.

And we've done this program a few times from wills and trusts, power of attorneys and other advanced directives.

You start us off okay.

>> I will talk first about the health care power of attorney.

This is a document.

It has to be in writing and which you, as a principal appoint an agent.

And I always suggest having a first named person and then another trusted person and maybe another after that, so that you don't end up in a situation where you are unable to direct your own health care needs, and you don't have anybody already authorized to do so on your behalf.

If you get yourself in that situation where you haven't done appropriate advanced planning and you can't direct your health care, you're likely very likely to end up in a guardianship setting.

Rather than making your own plans.

A court will do so for you based on somebody's petition.

There are also DNR that you can set up.

Do not resuscitate.

The ideas of what you want in a living.

Will can be done with a lawyer's office so that you can say, well, if I get in a bad way, this is the treatment I do want, or this is the treatment that I do not want.

And it's always helpful to signal that to your loved ones or to your the medical people that are providing care for you so you can do health care matters, and then you can also do financial matters.

And I think.

>> Yeah, well, Misty, pick it up with the financial matters.

>> Yeah.

So I kind of break it with clients into sort of two time periods.

There's the while you're alive time period.

And then the after you pass away time period.

So while you're alive, one of the most basic documents and most important documents is the durable power of attorney.

So or a power of attorney for finances, you'll hear kind of different expressions.

But it's somebody to pay your bills, put your money in the bank, take care of things.

If you're sick, you have an accident.

There's a time period where you need that kind of assistance.

You know that's going to cover up until you pass away.

Then when you pass away, what becomes important is going to be either your last will and testament, or maybe you'll have a trust.

And we usually always get some questions about.

Trust along the way.

So I'm sure we'll talk about those more.

But that last will and testament, that's the most basic one we have.

And that is the one that you hear about probate and having to go through probate.

It is a way for you to express where you want your things to go when you pass away, who you want to be in charge of it.

So who do you want to be, your executor or your executrix?

And you know that ties in with your financial planning and your beneficiary designations and all of that as well.

But those are kind of the four basics.

Like Amy said, your medicals, your health care power of attorney, your living will, your durable power of attorney, and your last will and testament.

Then those trusts are just a little more sophisticated.

>> Yeah.

And we'll get into the weeds with those because we always get some really good questions about those.

So I want to go to our financial planners.

And Mr.

Smith, I'll start with you.

So when we were talking a lot about wills and estates, but we also want to talk about how to prepare for retirement.

Right.

So walk us through if you're 50, 60, 70, maybe 80, give us one particular thing we should be doing in each of those life stages to get us better prepared for the next leg of the journey.

>> Well, I would probably suggest when you're 50, you're probably still working and starting to begin to think about retirement.

So that's where you start looking at where you want to live.

Where are you going to live?

Close to your children?

Are you going to live or move somewhere where the cost of living is not as much?

And then as 60 as you start thinking about, when are we going to start pulling out of Social Security?

Are we going to have early Social Security retirement based off of our particular living situation, our life expectancy?

You know, whether we're married, whether we're having unexpected costs come up?

Are we going to take early Social Security retirement?

Are we going to take full Social Security retirement?

Are we going to wait until 70?

And then at 80 years old, you're just trying to enjoy those those decisions you've made up.

>> Until you've made the right decisions.

>> So at that point, hopefully you've made the right decision and you've talked with professionals who advised you appropriately, and you're just trying to enjoy that time of your life.

>> Yeah, you don't want to run out of money before you run out of life.

Isn't that right, Victoria?

What what else would you add?

>> I think a big thing in your 60s, if you're retiring before age 65, when your Medicare kicks in for insurance, if you're not covered by your company's retiree benefits on insurance, that marketplace plan, you really need to think about extra costs.

Those are quite expensive.

Big health care costs in retirement.

Yeah.

As far as also on the insurance tune of things 60s and early 70s at the latest, if you are one of those people who long term care is something that runs in your family, those are really the times you need to focus on starting to plan for that and incorporating that into your plan.

If that's something you want to take on.

>> So would you recommend taking out a long term care insurance policy separate, or are there other routes that you can take to help pay for that type of facility care.

>> So there's different ways you can pay for it.

Some folks choose to take on the risk of self-insuring for that, and that's where they simply pay the nursing home their cost out of their pocket and out of their accounts.

Other folks may choose to get a specific long term care policy that's in a more traditional sense.

And there's other insurance policies that can also be a more hybrid way to do your long term care insurance.

Those are becoming more common, especially if you have underlying health reasons or things you may not otherwise be insurable for.

>> Yeah.

So, Nate Littles, what would you add to the list?

>> Sure, I would add to that.

Just make sure you're also taking advantage of your catch up contributions.

As you get into your 50s and 60s, you have additional amounts you can contribute to your traditional retirement accounts, your IRAs, your 401 K's, your HSA.

That's also a good account.

Take advantage of those catch up contributions so that you're maximizing every dollar as you're getting close to the finish line.

>> And what do you mean by catch up contributions?

Explain that to us.

>> Sure, as you get older, into your 50s, there's additional contributions you can make.

So if your traditional IRA, you can contribute up to $23,500, you can make an extra $1,000 deduction based off your age.

So making sure you're taking advantage of those extra deductions while they're there and available that you weren't able to take advantage of in your 40s.

>> Yeah.

So I want to go over to my good friend Laura Rogers, who's with Scott Wegner at AARP, because I know that they have some interesting ways to help people understand all of these dynamics and help them do those kind of calculator tools.

So, Laura, over to you.

>> Yes.

Thanks, Renee.

And yes, Scott, you all have some great tools and resources to help people plan effectively.

Let's talk about, you know, ensuring as you're approaching retirement that you're able to have that clear financial roadmap sort of to chart that course, to plan for those later years.

>> Absolutely, Laura.

And one of the things that you'll find is there's a wide range of resources that are out there now and available to folks.

One of the most important starting points to your journey is what your goal.

What do you want to accomplish in retirement and make plans for how to finance that?

And how will Social Security be?

You know, that's a question that comes up all the time when to take Social Security, when to claim it.

You know, right now retirement age is somewhere between 66 and 67 for most of us, full, full Social Security benefits.

And one of the things you can do is use the AARP calculator.

Or the Social Security Administration has a calculator.

There's a lot of calculators that can help you plug in numbers to build that strategic plan that you're going to stick to and try and achieve in retirement.

>> So nice.

So you can kind of think about maybe how old that you are, what age you're thinking about retiring.

And then like you said, your goals as far as if you're wanting to travel or maybe you're wanting to pursue a new hobby or volunteer things like that, and it can help you make some plans for finances.

You need to support.

>> That in retirement, whether you're doing some consulting work or you're trying to go into some some new work.

So that's one of the things that you have to decide is set that goal.

What is it that you want to achieve in retirement, and how can you afford it so that your wealth doesn't outlast your health and your and your life?

So that's one of the things AARP has invested a lot of really important resources available online.

One of them is your questions answered is available on the AARP website for retirement planning, and you can actually submit your questions to AARP.

And they will get back to you.

And with some detailed responses.

>> Nice personalized approach there.

And then also those budgeting tools because you're probably going to save and spend differently after you absolutely no longer getting that regular income.

>> You know, how you know, are you going to be dining out less?

Are you going to be dining out more?

Are you going to be traveling?

All these factors come in to setting that goal for your long term retirement plan, right?

>> So check out those tools and resources.

Absolutely.

And we've got more to come.

Talking more, you mentioned Social Security.

We'll talk here a little bit about maximizing those benefits.

But first Renee we'll go back to you and more of your discussion.

>> Yeah.

Thank you Laura.

And to that point, you're right on cue.

We got this question from a caller when it comes to Social Security, caller is retiring at age 62.

We want to talk about that magic number and doesn't have a computer.

Is wondering how to apply for Social Security without having online access.

Who wants to take that?

And how would that person go about doing that?

And do you recommend retiring at age 62?

>> Depending on where the individual lives, you could probably the local social security office.

You can go there in person.

I always suggest calling beforehand if you have enough time to set an appointment, and unless you want to spend the entire day waiting in the Social Security office, it's always better to call in advance.

You might have to wait a little bit longer before your appointment, but then there's a better chance that you'll be seen immediately.

When you walk in, they'll give you a number.

Whether you should take it at 62 is completely an individual decision.

You know, if I always tell people kind of jokingly, if you can tell me the exact day that you're going to die, I can tell you the perfect estate plan.

It's just you can't you don't know what that is, and it's completely dependent on your living situation, what your cost of living is, whether you have a spouse or not.

Traditionally, and I like to simplify things, whether you take it 62, 66 or if you're going to wait and go until 70, kind of the traditional break even point is somewhere between 78 and 80.

So if you plan on living somewhere between 78 and 80, if you're going to live longer than that, then you could have waited until you were 70.

So you're going to take out more money, but you don't know that's the thing, right?

So whether it's better to take the 62 for one person, absolutely.

For another person, you would have been way better off waiting until 70.

>> Yeah.

Anyone else have any thoughts on that before we move on?

>> I think one addition I would make is just know that when you take that reduced benefit at age 62, it's going to be permanently reduced.

So when you reach your full retirement age, which may be 67, it's not automatically going to bump up to that full amount that you were previously entitled.

It's always going to stick to that reduced amount.

So you're.

>> Locked in.

That's a good thing.

And thank you for mentioning that okay.

So now we want to move into the trust territory okay.

This caller is wondering if it's better to have an irrevocable trust or revocable trust.

And I want you to define the difference in order to pass it along to their children, their assets.

So do you want to take that first?

>> Yes.

So I think it's important to understand what they are and how they're different and kind of what they're trying to accomplish.

So I always tell my clients or anybody, even when I'm teaching law, students always say, I think of trust like a bucket.

So a revocable trust for I would say is like a bucket that you would put your assets into.

You're in charge of the bucket.

You can take things in and out of your bucket.

You could throw your bucket away.

It's revocable.

But what you're able to do in that trust, in that bucket, in that document, is to be able to say, the minute you pass away in that moment, this new person takes over.

So you get to name a successor trustee when you die, or if you become incapacitated and you get to avoid probate.

So that's one of the nice things, is you're going to avoid the court process.

And I think it's easier to have a little more control after you pass away over how your children will receive.

Are they going to get the money outright?

Are they going to get it in?

A trust can help you have a little more control over whether they're maybe not good with money themselves or that kind of thing, but what a revocable trust doesn't do is it doesn't protect your assets from things like long term care costs.

So that moves over to the other kind of bucket, which is called an irrevocable trust.

And it is also like a bucket.

But for that we're usually using it to protect your assets from something.

And a lot of times that's where planning ahead for long term care.

So we're going to put in there things we want to protect or shelter should we need long term care in the future.

And that might be a house might be a farm, it might be some savings, but not IRAs or 401.

But other types of accounts could go in there.

But many times you are giving up ownership, control and access, and that's the more difficult part of an irrevocable trust.

You really can't have your cake and eat it too, and the protection that you're seeking is not immediate.

It takes a five year wait.

And that's all tied to the rules for Medicaid eligibility for long term care.

So it is also going to avoid probate.

But it's real true mission and goal that irrevocable trust is to be protective from those long term care costs.

It's really a way of creating some insurance for people who didn't take those steps to get it in their 40s, 50s and 60s.

Maybe they weren't able to or they just didn't.

And now they're they're starting to worry about being able to pass things on.

So a revocable versus an irrevocable, which should you have?

Well, it depends on what you want to accomplish and where you are in life.

I think my sweet spot as an attorney for me in my practice of doing an irrevocable trust is between 65 and 75 years of age, because that's when I'm most optimistic that I've got that five year clock and that we'll be able to meet that goal.

A revocable trust could be good for anybody of any age.

If they're really just wanting to have a little more control over how their children will receive things and making sure they're avoiding that probate process.

>> Yeah, that's the big question that we always get is how do you protect those assets and mitigate the financial impact of having to go into long term care so that you don't go broke going into a nursing home?

Right.

Amy.

>> One of the issues about setting up trusts is that people often don't understand on the long haul, how to manage the assets that are in them.

I cannot tell you how many clients I've had in my office that had another attorney do a trust, and then when I asked the client what assets they've moved or retitled to be held in the trust, the answer is zero.

And so the trust is not accomplishing the goals that I think they had when they set it up.

And so that's a really big issue with trust.

So if you're interested in that, you really need to vet your particular concerns with an attorney and a financial planner.

You you can't avoid probate if you have not retitled assets to the trust.

So and actually, I always tell my clients in my Kentucky clients, the only ones I have is that probate is not that onerous.

People hear about the reason for having a trust, and often it's generated out of material produced in Florida or New York or California.

And those states do have very onerous probate processes.

But in Kentucky it's not.

So I do a lot of the irrevocable trusts to start the five year clock so that people can set aside some assets to create a legacy for their children, and then if they don't need long term care for five years, those assets aren't calculated in terms of their eligibility for Medicaid.

>> And is a will.

Is a will better or worse when it comes to asset preservation, or is a trust a more secured route to preserve assets?

>> It depends on what you mean by asset preservation.

Some people just want to know that if they die, that their assets are going to go to their friends in a particular way, that might be their rendition of asset preservation rather than their family that the.

Intestate document or intestate statute would send it to without a will.

But asset preservation usually means that you're trying to hold on to the assets and not use them yourself, but give them to like children or another entity.

>> Another thing people often want to protect assets from is taxes.

Right?

And I think it's important to know from the inheritance tax side in Kentucky we have an inheritance tax.

If you are leaving things to your spouse, to your children, your grandchildren, mother, father, sister, brother, your close relatives, those are class A heirs and there is no inheritance tax, no matter the amount.

If it's a little more distant niece or nephew, those there's some tax and then unrelated third parties is class C heirs and there is an inheritance tax on that 14 to 16% ish.

Now that's different than what might be owed on an inherited IRA or some type of financial asset like that.

And then on the federal side, if you're a single person, it's 15 million and married it's 30.

So most people who come in, they're really concerned about taxes.

And I can relieve that concern almost right away because that's not going to be an issue.

Although they do need to get with their financial planner about inheriting their children, inheriting IRAs and 401.

>> And do you have any more you want to add to that?

>> Sure.

No, just kind of to piggyback on that, right now, the lifetime exemption is 13.99 million as of January 1st.

It does jump up to 15 million.

So you can feel comfortable.

Most people.

>> Most people can feel comfortable.

>> Passing those down.

There's a shorter time frame.

On if a IRA is inherited such a beneficiary IRA, so definitely get with the professional to figure out the best way to have that those funds distributed out because they will become taxable.

>> Okay.

I want to go back to this question again.

So this caller says I'm 67 and retired with three children.

I want to leave my house to my children.

Is it recommended that I put the house in a trust to keep it safe?

>> Again, it depends on, say, from what?

If they're saying safe from taxes, then there is no tax issue.

If you're going to your children and a last will and testament in probate would work if they say safe from having to go to court.

Like Amy said, Kentucky really is not a difficult state, but some people just still want that privacy.

They don't want to have to deal with it.

A revocable trust would work if they're saying no, I want to keep it safe because I'm afraid if I go in a nursing home, I might lose my house and it might have to be sold.

And then all those proceeds spent, then an irrevocable trust is the solution.

So it's always about what is the fear?

I always tell people what is the boogeyman that you are scared of?

And then I'll help you figure out how to protect yourself from it, depending on what it is.

>> The one thing they really don't want to do is just give the property while they're still alive.

Correct.

Because that's going to that's going to do a myriad of issues.

One is you're going to have a nasty capital gains hit when the children eventually go to sell the piece of property, if it's accumulated in value.

And the other is if you deed a piece of property to your children in Kentucky, at least there's if they have their, you know, you might get along with your children.

But what about your daughter in law or your son in law?

They immediately have an interest in that piece of property.

And then what happens if, while you're still alive, you might need access to the equity that's in that home?

And when your children passes away, what is their will say?

What if they get sued?

What if they have to file for bankruptcy?

What if they get divorced?

Those are all things that now it belongs to them.

And you were hoping that would be part of your retirement plan, and you were trying to get them to save it.

That's why we use trust in those kind of planning, because trusts generally don't get divorced.

You know, they usually that we we set up this, this, this legal entity which doesn't have all those valuable things that a lot of humans have.

>> Yeah, yeah.

Good advice.

All right.

So we're going to head back over to Laura and Scott.

And I think they're going to talk a little bit more about Social Security.

>> Yeah we'll revisit Social Security here.

We know that's a cornerstone of retirement income for many Americans.

They really depend on that.

So what strategies does AARP recommend for maximizing those benefits getting the most out of them.

And then where can people find guidance on timing their claims?

>> First and most importantly, Social Security was never designed to be your retirement plan.

It's only going to cover 40% roughly of your retirement needs financially.

So what you have to do is make sure that as you're building your retirement plan, you see what your income is from your Social Security benefit.

You can look at taking it at 62, as the panel mentioned, and how that you can you can lock in at a lower rate for a longer period or wait until you're 70 and get a considerably higher amount.

And this is where you should absolutely contact a financial expert, because I am not.

But what is important about Social Security is you've earned it and it's there, and you can count on it.

And so what you want to do is make sure that you're as you're building that budget for your future retirement.

How how are you going to finance everything that you need?

Health care, long term care into your into your social security, into your budget.

So and then it gets a little bit more complicated when you look at the, the number of weeks worked and all the earning periods.

But the resources that you can find at Social Security Administration online or AARP Retirement Planning online, there's some great starting point.

One of the things we do with our local AARP Kentucky volunteers, they will host workshops locally, in person, on Social Security benefits and how to apply for them.

When to apply for what are the considerations?

There's also Senior planet that AARP is affiliated with that offers a lot of virtual online web webinar resources.

So fortunately, there's a lot of experts that you can turn to to get this information so you can make the best decisions for yourself, because retirement is a definitely not one size fits all for everybody.

>> Sure, everyone has their own individualized plan, like you said, for whatever their goal is after they retire.

And so looking for those resources to help them optimize those Social Security benefits.

>> It can be overwhelming, right?

>> But you're saying it's really meant to supplement.

>> It is.

>> Your other.

>> It is only it was only designed to be a supplement in addition to perhaps a pension or in addition to an IRA or your 401 K, social security is just sort of one leg of a, we used to say a three legged stool for your retirement.

>> Sure.

All right.

Thank you.

Scott and Renee will rejoin your panel.

>> Okay.

Thank you so much, Laura and Scott.

So since you all are talking about retirement accounts and how financially we can grow a little bit more secure in our older age, let's talk about individual retirement accounts.

So a question we we get a lot is at what age can those tax deferred retirement accounts, such as a traditional IRA or a 401 K, be tapped?

And is there a penalty for taking it out before a certain age?

And how much is that penalty?

>> I can take.

>> This one.

All right.

Victoria.

>> 59.5 years old, is when you can access those funds.

If you choose to pull the money out before that, you're going to be faced with a 10% penalty plus income tax, the plus income tax.

I think some people forget about that part, oddly enough.

>> Yeah.

And explain that a little bit more.

>> How so?

>> So when you said the plus income tax I just want to make sure I understand what you mean there.

>> Oh yeah.

So it's going to be taxable income.

So when you take out, for example $10,000 from your retirement account, that $10,000 is going to be taxable income for that year.

You're also going to pay 10% penalty on top of that.

>> Yeah.

>> So if your income tax bracket is around 18% plus your 10% penalty, all of a sudden that racks up.

>> Yeah.

Yeah.

Certainly does.

Okay.

Any other comments on that before we move on okay.

So let's get back to this is a question from a caller about the more about the executor.

So the executor lives out of state.

The caller is wondering what agency, lawyer or person who is local can be set up to handle their estate in conjunction with the executor who is out of state.

>> So any law firm could do that.

Yeah.

>> It's just a requirement that wherever the the county where the probate is set up, you have to have an address for for agent, for process of estate.

So I guess you would, you would contact what I would probably suggest is an attorney that you feel comfortable with.

And then depending on where that probate is, that attorney probably knows a local probate attorney or an attorney who would be willing to act for process of service.

>> Okay.

>> And then, you know, the executor, they have broad powers to be able to hire people to help them.

You know, they're going to usually get with a realtor to sell the property.

A lot of times the lawyers, like elder law attorneys, will have a lot of resources.

People that we refer to that will help with an estate sale, which will, you know, help facilitate the process of closing things down.

And of course, they're working with their financial advisors and others, the executors getting with them to make sure that those accounts are getting cashed out and brought into the estate or brought into the estate or out to heirs, however they need to be.

But we have executors that are out of state all the time.

It's absolutely okay for it to to to happen and have that person appointed.

But, you know, it is kind of nice to think about, you know, what attorney would they work with.

Make that introduction like a lot of times my clients will be like, I'd like to introduce you to my daughter because I want her to know who you are so that she knows who to call.

And that's great to start that relationship and get that in place.

>> Okay.

Yes.

Go ahead.

>> I can sign paperwork authorizing the attorney to make appearances in court on their behalf.

And so I've handled plenty of probates where the executor has never come to Kentucky.

>> Okay, this question with an irrevocable trust, does the individual's family have to go to the same lawyer who set up the trust once the loved one has passed?

>> No, they do not.

So and the same is true with the will.

You don't have to go back to the attorney that originally wrote that will, especially if it has two witnesses and a notary, which is what's called a self-proving will.

So to be valid as a will and Kentucky it has to be signed by the testator, the person who's making the will, it has to be witnessed, but you really want it to also be notarized, which means those witnesses never have to come to court again.

The lawyer doesn't really have to ever be involved again.

That wrote the original document.

You know, that's the ideal situation.

But even if you have one that's not notarized, the executors can choose to work with whoever they want to.

Same is true for trustees.

So when it comes to what we call trust administration or the ultimate distribution, they can work with whatever lawyer they feel like is a good fit for them.

>> Any other to add to that?

Okay, this caller says, please explain how a hybrid policy works and what costs to expect for premiums versus self-insured costs for nursing home and assisted living expenses.

Victoria.

>> Yeah, okay.

A hybrid policy is a whole life policy essentially where your death benefit amount can be prepaid to you if you qualify and have a specific rider on that policy, that specific rider adheres to the long term care.

If you qualify for usually two of the 5 or 3 of the five daily activities of living, and you become in your payout status.

And so this, of course, has to be approved by a doctor and proven once you're in payout status, those policies pay out a certain percentage each month of your death benefit.

Once that is used up, you don't both get the death benefit when you pass and the money while you're still living when you're using it for care.

So that's important to note.

It's more so of a prepayment of the death benefit amount.

>> And just so you know, the risk that they're insuring against I know Amy and Matt can speak of the Lexington area, for example, in the Louisville area for skilled nursing, I would say 11 to $14,000 a month is what you would be looking at in our area.

If I go and out more into the state, I might find more of a $10,000 a month mark to 11,000, but it's very expensive assisted living, which is a lower level of care.

Even there.

We're 4 to 6 $7,000 a month, so and up and let them speak to maybe more of the Lexington market.

But that's kind of what we're looking at.

So when they're looking at those hybrid policies, even though they may fear the premiums, I always tell them, you've also got to look at the risk of if you don't have one, how very expensive it can get.

>> What what are the average premiums?

>> Those kind of depend on when you apply for it.

So it's going to be based on your age and level of health.

For example, one month of a skilled nursing, if it costs you $6,000 for one month, that could cover your whole year's worth of premiums or less.

So, you know, usually it works out.

>> So the key would be to do that younger, right?

Perhaps.

Or even if you went into your 50s or 60s.

Yes, you expect a more bloated premium.

>> Yes.

I would not go.

I wouldn't do this to young, usually 50s and 60s would be the ideal age to get your premium where you want it.

>> Okay.

All right.

Anything else you want to add there, Matt?

>> And it's it's just like with life insurance, if you're wanting it to pay more, your premium is going to be higher.

So not all of those hybrid policies and how much they're paying on a daily rate is going to be the same.

So, you know, more coverage where that that long term care insurance policy is going to pay more.

That means your premium is higher.

And it's also really important to note, like what Misty said is the long term care insurance policy quite often will pay those benefits if a doctor verifies that they need help.

With so many activities of daily living for in-home care or assisted living, and then skilled nursing, whereas long term care Medicaid is not going to pay for assisted living or independent in-home care giving most of the time, and it's only going to pay in that skilled nursing facility situation.

So a long term care insurance sometimes can be a perfect gap between someone who's staying at home and needs that care and skilled nursing.

>> Because we did have a question about how do you pay for in-home care, right.

And Medicaid doesn't do it.

And I think many people think that it.

>> Does waivers.

>> But there's.

>> A program called the waiver.

So that's Hcbs home and community based services waiver for older individuals is the one that we use most often.

And that will pay for.

But it's not 24 over seven.

It will pay for some care, adult day care.

>> 36 to 40 hours a week.

>> That's what I would say to most of ever seen was 45, because they had five hours of respite tacked on to it.

But it's a wait.

Like right now.

I think we're on a wait list for that waiver.

Last I checked, it was like six months or longer.

So it's not something that's just readily available.

You know, people, clients will say like they don't want to maybe look at long term care insurance because they're just never going to go to a nursing home, which everybody says that, you know, you insure yourself against things you don't want to happen.

I don't want my house to burn down.

I'll get homeowner's insurance, though, because if it does, I want to be ready.

And I think you have to think of long term care insurance the same way as elder law attorneys.

We do trust planning, but we're still fans of of having long term care insurance when a client comes in with it.

We're already ahead of the game, so we're already in a better position.

So I tell people, don't be afraid.

Just because you write a will doesn't mean you have to die tomorrow.

And just because you buy long term care insurance doesn't mean that you're going to have that long term stay in skilled nursing.

But you're ready.

Then you've got your plan in place.

>> So this caller says, I'm in my early 80s.

What do I need to do with my savings and assets?

So I don't go broke in a nursing home?

I have long term care insurance, but I'm sure I am not sure if it will cover all expenses.

What type of lawyer do I need to speak to.

>> An elder law attorney if they're concerned about long term care costs?

I mean, because we'll look at things and we'll say as elder law attorneys, your resources are sufficient.

You just need to talk to your financial planner.

And you're what we call self-insured.

You're able to to bear that brunt.

Or here are the options.

Let's look at an irrevocable trust early 80s.

It would depend on health.

Are we optimistic we have the five years.

But we would look at that option or we would say no, you're better.

Just kind of let things unfold.

>> So you've mentioned this a couple of times and we've talked about it a few times in that five year lookback period.

Talk about why that is significant.

>> So there was a time when we say a long, long time ago, what you could do is on Tuesday, you could take your assets and put them in that bucket in that irrevocable trust on Tuesday and get Medicaid on Wednesday to pay for your nursing facility.

Your income would still go towards the nursing facility, but Medicaid would be the medical insurance that would cover the rest of the cost.

But in 2006, there was a change in the federal law, which, of course, was then applied to the states that these irrevocable trusts can be established.

And they told us as lawyers how to write them.

But they also said, you must then wait five years before you can apply for Medicaid.

Your application will not be approved.

If you have established that trust or funded it within the five years prior.

So that's why we're always saying we want to be working ahead so that 65 to 75 years, that's my sweet spot.

Amy and Matthew hopefully agree with me.

>> That sounds right.

So the law technically says that if you have given assets away within five years of the five years previous to applying for Medicaid, that there is a presumption that you gave them away so that you would be eligible for Medicaid earlier.

Right.

And so in order to rebut that presumption, you give assets away longer than five years before your need.

>> So yeah, and that's universal.

That goes from state to state five years.

>> That's nationwide.

>> Nationwide okay.

Yeah.

Federal law okay.

This caller is a 60 year old single male who was estranged from his family.

He has no one to serve as his power of attorney.

Is there an agency or group that can help serve as power of attorney for individuals in that situation?

>> So there are there are attorneys that are willing to do it.

There are some companies that will do it.

So we call them professional powers of attorney fiduciary.

So if you Google, I guess more professional fiduciary in your area or professional power of attorney, you can locate some of those individuals.

But starting with an estate planning or an elder law attorney is a good place because we usually know who those people are that are willing to do that in your particular area.

>> Good.

This caller is a widow and has two children.

He is thinking of adding his children to the deed, but is wondering if he should add them now while he is alive or wait until he passes.

>> I think this is Matthew.

This this is what you were talking about earlier, right?

>> Yeah.

I mean, it's it depends.

Right.

I'll give the lawyer answer.

The lawyer answer is always it kind of depends on the particular situation.

And I always explain to people especially, you know, with with the five year look back, I say if we if we eliminate and we take out the potential for a nasty capital gains hit later on if they sell it, and all we're really looking for is protection from long term care.

If we put their name on the deed, or if we transfer everything out of our name and you make it the five years.

Yeah.

You technically down the road could still qualify for Medicaid, but because there are all those nasty things that could happen, one of the children could pass away, get divorced, bankrupt.

That's why we generally don't suggest that.

And then also you throw on top that later on.

If they ever decide to sell it, they're going to have to pay potentially a very nasty capital gain hit.

I probably would suggest that they talk with somebody else because in in that situation, we don't know how much the house is worth, how much they bought it for, what kind of shape it's in, how he's.

But sometimes it might be that's the only situation that's viable for that person.

So it's really a specific case by case basis.

>> It's all about sort of the basis.

So like when you buy your house, the price you pay for it is what we call basis.

And then that plus any improvements you make it what we call the basis kind of goes up a little bit.

And if you die and you leave it to your children, they get a new basis and that's your date of death value.

So when they sell it, they're only responsible on capital gains for what it's sold for, minus how much it was worth when you died.

But if you just gift it over to them in a deed, they're stuck with your basis, right?

So when you die, they don't get that step up.

So, you know, we still look at the situation though because there are times where the deed transfer works for a particular family.

But those concerns are always there for us.

It always tell people you will lose your homestead exemption off your property taxes too.

If you gift your house to your kids by deed.

Whereas with trust we can be a lot more creative and we have ways to maintain that, that you don't get when you just deed it over to them.

>> Yeah.

>> Yeah, it makes a difference.

>> Did you want to chime in there.

>> No.

That was that was perfect.

>> Yeah.

So let's talk about some some other retirement questions here.

Financially the caller is wondering how their 401 K should be handled after retirement.

Should it roll over into an IRA.

And what are other options and what are the tax considerations.

>> Sure I would for that question.

I would say, you know, you need to speak with your advisor or a financial professional to get you the best answer, to plan out how those assets will be pulled out.

I know that to kind of fast forward to age 73, you will be hit with RMDs, which are required minimum distributions where you are forced to start taking out that money based on the IRS, their IRS life expectancy factor.

So 73 that that factor is 26.5.

Simple calculation.

You take your fair market value of your assets from the previous year.

And then you would divide that by that 26.5 to figure out how much is required to be taken out.

And that table accelerates as you get older.

So you want to plan for that as well.

But get with the professional early so that you can start planning out how you are going to withdraw that money and how it's going to how you're going to stretch it over your life expectancy.

>> So I want to go back over to Laura, who's with Scott Wagons with AARP, because the AARP does have a retirement planning guide when it talks about some of these financial considerations.

So, Laura, over to you.

>> Sure.

Yes, Scott, you've got some tips that are, you know, steps that people can take to really be proactive in planning for some of these expenses that can rise in retirement, like health care costs.

We know those can get more expensive.

And then also some resources, you know, for planning for that long term care as well.

>> One of the things too, we have to look at longevity increasing and how that factors in.

So if your family's medical history, you have to look at, hey, you're going to live longer, so you have to prepare for that one.

Some of these questions that we're hearing tonight and to this question, there's resources that you need to to take advantage of, because the complexity of the of the statute at the federal and state level, or significant one, it's never too early to start planning.

And I think you heard that tonight as well, because you, you know, and as Mr.

Little was talking about the catch up, are you behind?

Well, it's never too early to begin trying to catch up and build those assets for a successful retirement.

AARP has invested a lot of time and a lot of effort into building all these free websites and resources, and they're available for AARP members and the public.

And there's no there's no fees connected with that.

But one of the things that I think I want folks to take away is that you can do this.

You have had a successful life.

You've put kids through college, you've bought a home, you've gotten married.

>> You've done all the hard stuff.

>> You have done it.

Yeah, you have done a significant number of things in your life.

And I think it's just a structured approach to making this decision to either contact an expert, contact a financial planner, or take it on yourself, you know, and I don't think you want to use YouTube, but you could but, you know, find a trusted source.

An AARP can be one of those trusted sources.

Talk to friends, colleagues.

It's just never too early to really begin taking a look at this and the resources, the financial calculators they take in.

You can put in what you think you might need, and it's going to generate a number of what you will need.

>> Sure.

>> And we've got ten steps that you've shared with us that people can start taking now even before you retire, so that you can start, like you said, setting those goals.

What are you wanting to plan for?

What do you want retirement to look like?

And I love the one about evaluating your health.

Again, proactive things you can do.

Yes, things can be out of our control with that, but still you can adopt some healthy habits.

You can schedule those checkups.

You can do some things to maybe prevent some high health care costs down the road.

>> And one of the things that's overlooked frequently is how you're going to finance your health care.

Medicare may be able to to get you there, but, you know, you have to look at that longevity issue again, and also how you're going to finance your health care because it's overlooked frequently.

But you can talk to your local networks of folks that you know locally that have retired.

Your family is a good resource.

What was their experience?

What right now are you paying for that you don't need to be paying for?

>> Yeah, c cut expenses on there.

Sometimes there's some automatic payments that are coming out of that account every month that we don't even really realize.

>> Significant.

Sometimes they they are leaks in your budget.

And it's really about budgeting and building that budget based on what you want to achieve in your retirement, how you want to live, what your dream is.

If you have a dream, then you should pursue it.

And retirement is your opportunity.

But again, I just want to come back to this idea that you can do this.

There are there's professional help available.

There's resources all across online, but there are in-person resources as well.

>> Yes, the best is yet to come.

>> Absolutely.

>> Scott, with AARP, we appreciate your time.

Good being with you in this space.

Again.

Thank you.

Thank you Renee, we'll go back to you.

>> All right.

Thank you, Laura, and thank you, Scott, for being with us tonight.

So let's go back to a few questions.

These are about Social Security.

This person says 67 year old caller began drawing Social Security six months ago.

She wants to go back to work and is wondering if she can pause her Social Security.

How will it be affected if she doesn't pause?

>> Well.

So from a tax perspective, if you're now bringing in additional income above and beyond that Social Security, you're going to be looking at a looking at that Social Security becoming taxable.

So depending on how much income you're bringing in, I want to say for a solo, I believe it's $25,000, $25,000 of other income.

Your Social Security will still be tax exempt above that amount.

There's a calculation that is done.

So as you bring in more money or more income, more wages, on top of that Social Security income, you will look, you will have you'll end up paying taxes on that income.

Now there's an exemption, you know, 15%.

Also for the short time frame, 2025 through 20 through 2028, there's an additional standard deduction for eligible people.

But it's something you want to make sure you get with a professional to figure out you bring in that other income.

How much is that going to affect your Social Security.

And you might find yourself in a situation where you're collecting Social Security, but also come April 15th, you're paying back taxes.

>> Yeah, you don't want to do that.

Right.

Any other comment on that?

This person says, and we always get this question would like to donate.

This caller would like to donate large sums of money to a handful of charities by making them beneficiaries outside of his or her will.

That simple to do with people, but how simple is it for charities?

>> It's very simple.

You just name the charity as your Payable on death designee or as your beneficiary.

You'll need the charity's tax ID.

The the holder of your assets will ask for that, but that should be no problem at all to name them.

>> And if you're looking at like you have an estate and you want to have some money, go to people and some money go to charities.

A lot of times you work with your financial advisor because you may want to direct those tax deferred assets like IRAs and things like that towards the charities.

Whereas if the children inherited or nieces, nephews, whoever, they're going to have ten years to pay all the tax on that.

So, you know, kind of being strategic about who's going to inherit what when you have a mix of people and charities can be very helpful.

So a lot of times, you know, we have a lot of people in the room when we're making some decisions about that estate plan, because we have that financial advisor there.

We have even sometimes a CPA there, and then the attorney is there, you know, and the person who is themselves trying to develop that plan.

>> Yeah.

So this caller this is back to durable power of attorney.

This caller has a durable power of attorney.

And they're wondering if they can have the person they have appointed take over making their decisions before they pass away.

>> So there's two types of powers of attorney.

There's one that's called springing.

So this type of power of attorney says this document goes into effect when and it has some sort of condition, maybe one my primary physician certifies that I am not able to handle my affairs or two physicians.

It will have some condition in it.

And then there is the preferred kind, or in my opinion, the preferred kind, which is immediate.

Immediate says this is effective when I sign it.

So like I've named my husband as my power of attorney, it's an immediate document.

I just happen to be on vacation.

He needs to sign something for me.

He can do that with that document so I don't have to have lost capacity.

I don't have to be declared incompetent or anything like that by a physician, a court, or any other individuals.

So if they get that good immediate power of attorney, they can have somebody help them be acting without having to give up any of their own rights or abilities.

>> Yeah, that's a key piece.

You don't give up your own agency over your assets by appointing someone else and a power of attorney document.

>> Yeah, I understand the reasoning.

Well, sometimes people feel like they don't want to give someone that much control.

Well, I agree with Misty that immediate is the preferred one, that if that situation happens and it says you got to go get a physician to agree with this, there's I mean, if you're using it, it's more than likely in an emergency situation.

If you have to go get a doctor's note or evaluation, that's your that's time, money, energy, expenses that go into that.

The other thing that I've always kind of thought of is if you're already having that much of a hesitation appointing somebody that says that, now you're going to have to go get a doctor to get me declared.

If you already don't trust that person enough, then that's probably not the person you want to have as a POA anyway.

If you don't feel right, if someone if someone's going to take advantage of you, they're going to go find a doctor that's going to sign a note to take advantage of you anyway.

>> Yeah, yeah.

Good point.

Okay.

This caller has a revocable trust.

If it is set up and the principal person passes away, can the beneficiaries continue using the trust that has already been set up, or do they have to establish a new trust.

>> So it depends on the terms.

So if it's a traditional revocable trust I have it.

And it says at my death this goes to my descendants, my children outright free of trust.

Then it's going to be in, let's say, three shares, one for each of my children.

And then they would each need to do their own trust, their own estate plan.

But I could have set it up that says, I leave it to my three children interest.

And so each of them has their own trust.

The big trust could have three little baby trusts, you know, you can design it however you want.

And I think, Matt, maybe you mentioned or somebody about the son in law and the daughter in law, sometimes we'll have those situations where we're concerned about making sure that when our children inherit it, that should there be a divorce after we're gone, that those assets are still going to stay with our child, or if our child dies after us, that it would go on to our grandchildren.

And so we have more tools in a revocable trust to kind of deal with some of those issues.

So it's just a little more sophisticated than what you see in a simple will that you, you know, might draft.

>> And when the person originally sets it a revocable trust, everything is the IRS looks at that like they just they still own it.

It's run under their Social Security number.

Doesn't make any difference when the individual passes away.

You obviously you can't use your Social Security number anymore.

Now you have to go get a tax identification number.

And if those beneficiaries got together and decided we're going to leave it in the trust, well, now you might be paying at the trust tax rate, which is which is I don't know what the trust tax rate.

>> Now after $13,000 of income it hits the top bracket.

So 37%.

>> So it's getting tight.

So they probably any any benefit that they would have from keeping it in the trust instead of claiming it on their own.

Personal income taxes is probably offset by that high tax rate by leaving it in the trust.

>> Yeah good information.

This couple is in their mid 70s and they have several IRAs.

Their daughter is currently their beneficiary.

And they're concerned about her taxable income boost when inheriting over ten years.

They are considering naming their young grandsons as beneficiaries instead.

Thoughts about generation skipping with IRAs.

Interesting proposition.

>> Yeah, sure.

There's a lot of people in that situation where they are, you know, they've raised their kids, they've gotten off to a great start, and they're able to essentially see that their kids are established and they are looking at GST, which is generation skipping transfer to their to their grandkids.

That's definitely an option.

Again, get with the professional to plan that out.

Like we mentioned about the lifetime exemption being very high right now at 13.9 million and income in a couple of weeks, it will be at 15 million.

That GST is a part of that, that generation skipping transfer.

So that is an option they may have available, depending on the size of their assets, that they could look at setting up a trust or setting up or essentially gifting those assets down and skipping a generation.

>> Yeah.

Okay.

Final question.

I think for the evening, with a minute and some change remaining, this person says they'll turn 73 in January of 2026 and we'll have to start taking RMDs.

If I have a federal and Kentucky state income tax held for my RMD, can I invest the after tax distribution in my Roth IRA?

>> No.

Your RMD amount has to be taken out of your traditional IRA, and it cannot move to your Roth IRA at that point.

You can move it to an after tax brokerage account that's not a retirement account at all to reinvest those assets.

Or if this is something if you want to establish a Roth IRA, if you already have one and you want to add to it, these distributions, you can consider Roth conversion if it's right for your tax situation, especially if you're leaving money to beneficiaries who are people.

So two things to consider there.

But no, you cannot take your RMD from your traditional to your Roth.

>> All right.

We'll have to leave it there.

We never have enough time.

But you can go back and rewatch this program.

We'll probably do it again in a few months or a year.

And we thank you for joining us this evening.

And check us out online at ket.org.

The next chapter.

Thanks for watching and I'll see you real soon.