Home: Where the Business Is
Today, running a business out of your home makes more sense than ever. But is it right for you?
A 2007 Census Bureau survey showed that more than half of all business owners run their company primarily out of a home.1 And today, that may be on the low side, given recent advances in mobile and wireless technology, as well as the cost-cutting realities of a low-growth economy.
If you’re considering running your business out of your home, there are a number of considerations you’ll want to take into account.
Is It Legal?
Perhaps the first issue you’ll need to address is making sure your home business meets zoning regulations and that any required licenses or permits are obtained. Many municipalities and condominiums restrict home business activities. If customers will come to your home, you may need to consider parking, disability access, and display of advertising. You may need to amend your homeowner’s insurance policy to cover commercial activities.
Technology
The significant advances in Internet technology and home office equipment in the past 10 years have made working from home realistic for a growing number of people, but there are technology issues you should consider. Find a local support person you can rely on to resolve systems issues quickly and effectively should the need arise. Save your work often, back up your files regularly, and make sure you have an alternative should your computer suddenly crash. Since high-speed access to the Web is a necessity for most home businesses, check with your local phone and cable company to see what’s available.
Taxes
If you operate a business out of your home, the IRS may allow you to deduct certain expenses — such as phone, Internet hookup, a portion of your rent or mortgage — based on the percentage of space in your home that the office occupies.2 To qualify, the home office must be used exclusively for business; a guest room or other shared space will not qualify. The key to claiming any of these deductions is to prove that they are necessary for and confined to business use.
Living Considerations
You should also consider how the work-at-home arrangement will fare from your family’s perspective. Will there be tension if you’re home all day? Will your presence cramp your family’s daily activities? How will your family interact with clients or employees? Many former work-at-homers cite family conflicts as the reason working at home didn’t work, so make sure to give this issue serious thought and discuss it with your family.
Finally, consider your daily interaction — or lack thereof — with business associates and employees. Depending on the nature of your work, you may find yourself isolated and miss frequent interaction with others. Many people need the social outlet that an office environment provides and may be uncomfortable spending long hours alone.
Source/Disclaimer:
1 Source: The Wall Street Journal, “My Home Is Not Your Home,” November 14, 2011.
2Mortgage interest and property taxes are also deductible under Schedule A and cannot be deducted twice.
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December 2011 — This column is provided through the Financial Planning Association, the membership organization for the financial planning community, and is brought to you by Dan Federman, CFP®, a local member of FPA.
Required Attribution
Because of the possibility of human or mechanical error by McGraw-Hill Financial Communications or its sources, neither McGraw-Hill Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall McGraw-Hill Financial Communications be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.
© 2011 McGraw-Hill Financial Communications. All rights reserved.
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Care Management Services For People With Disabilities and Mental Illness: A Growing Need
As the families of individuals with special needs undertake long-term financial and estate planning, they face critical challenges and require professional assistance. Attorneys, trust officers, and other estate planners, however, know that financial planning is only one part of what needs to be determined. Questions, such as, “Who will take care of my family member with special needs after I am gone?” and “Who will make sure that my family member with special needs continues to have the highest quality of life possible?” will be raised and need to be answered.
Parents, siblings and relatives who have a family member with a mental, developmental or physical disability frequently have the ongoing responsibility for their care and support, far beyond that ordinarily required. This greatly impacts the planning process. Primary concerns are the provision of a safe, secure environment and the level of support and oversight needed to assure that those with special needs have a high quality of life long after family members are able to provide it. The increase of people with disabilities who live on their own or in supported living situations has contributed to the concern of many families about the assurance of appropriate long-term care.
Trust officers and conservators/guardians, who are usually the ones with the fiduciary responsibility for a person with special needs after the parents have died, often freely admit to their understandable lack of expertise in defining and providing the complex services required by an individual with life long special needs and in the management of public benefits. Siblings may be equally bewildered by these demands, and they frequently live far away.
Care management services provide oversight and expertise, including the individual advocacy and oversight essential for assuring the highest quality of life for persons with special needs. The concept of care management is based on the need for an array of services that evaluates, plans, coordinates, monitors and advocates for whatever services and supports are needed. For individuals with special needs, these services differ from typical care management services, often provided for the elderly, because they are provided by those with experience and training in addressing the complicated needs of individuals with a developmental, physical or intellectual disability, or a mental illness. There is a growing need for this type of service, and the impact on professionals that provide services (financial, legal and advisory) to families that fall into these categories is undeniable:
• The number of persons over age 65 will double over the next 30 years (US Census Bureau, 2002) greatly impacting those individuals who currently receive care at home.
• The pool of family caregivers is dwindling. In 1990 there were 10 potential care givers for each person needing care. In 2050 the ratio will be 4:1.
• Nearly 27% of the adult population has provided care for a chronically ill, disabled or aged family member or friend in the past year.
• In 2002, approximately 2.79 million of the 4.56 million individuals with developmental disabilities in the United States were receiving residential care from family caregivers, and an estimated 708,000 (25%) of these caregivers were over age 60.
• Between the 1970′s and the mid-1990′s, the mean life expectancy for individuals with developmental disabilities increased from 59 to 66 years. It is anticipated that people with developmental disabilities, particularly those without the most severe impairments, will soon have a lifespan equal to that of the general population.
• In 2000, an estimated 641,000 adults age 60 and older had been diagnosed with mental retardation and other developmental disabilities; this number will double by 2030.
Families have strong preferences regarding the future care of their family members, but less than one half of these families actually develops a plan for the future. Families often do not involve siblings in planning, even though it is a sibling that most commonly takes over the responsibility for a family member with special needs. Through a single coordinated approach, care management services for people with special needs are designed to provide services such as:
• Clinical assessments and evaluations;
• Program and healthcare monitoring;
• Consultation and coordination with professional caregivers;
• Referrals to appropriate service providers and community resources (when needed);
• Regular client, caregiver and family communication;
• Assistance in managing public benefits; and
• Coordination with financial services partners, estate planners, attorneys, and others.
ElderLaw News is a weekly e-newsletter that brings you reports of legal developments and other trends of vital interest to seniors and their advocates. This newsletter is brought to you by The Estate Planning & Elder Law Firm, P.C.
If you are interested in having an Elder Law attorney from The Estate Planning & Elder Law Firm, P.C. speak at an event, then please call them at:
Maryland (301) 214-2229
Virginia (703) 243-3200
Washington DC (202) 223-0270
For a review of your financial plan and investment portfolio, contact a financial adviser at Ariba Asset Management at 1-800-808-7488
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Estate Planning for Unmarried and Same Gender Couples
For unmarried and same gender couples, there are many unique legal issues to consider during the estate planning process. While some aspects of planning for unmarried couples are similar to married couples, many others are vastly different.
Because of legal, religious, and societal issues, unmarried and same gender couples face real challenges to the execution of their wishes. Therefore, to prevent devastating results to their partners and families, it is critical for unmarried and same gender couples to execute detailed and legally enforceable instructions concerning the management of their financial affairs and their health care in the event of disability, and the disposition of their assets and remains in the event of death. These documents include:
1. General Durable Power of Attorney
One of the most important issues to consider is whether your partner will be able to handle your property and personal affairs during a period of your disability. By executing a general durable power of attorney (a “POA”), you can make your own decision as to who will be your primary and successor agent, whether that will be your partner or another person of your choice.
If you fail to execute a POA and later become incapacitated or otherwise unable to make your own decisions, then someone will have to petition a court to be appointed as your guardian and/or conservator to handle your affairs. The appointment process is lengthy and expensive, and it invites the prospect for disputes over who will be appointed as your guardian and conservator. The best way to prevent this is by executing a POA.
2. Advance Medical Directive
In addition to planning for the management of your financial affairs, you should provide a plan for your health care decision making during a period of disability. Virginia law provides, in the absence of your ability to make your own choices, an order of priority for makings these types of decisions. The order of priority includes one’s guardian, spouse, adult child, parents, adult siblings, and other blood relatives, but makes no mention of a partner. Only through the execution of the proper documents, can you ensure that your partner has visitation rights and is able to assist you during a period of disability.
An advance medical directive usually also contains a living will, allowing you to make your wishes known regarding end of life decisions, such as the providing, withholding, or withdrawal of life support.
3. Last Will and Testament/Revocable Living Trust
For unmarried and same gender couples, the default rules established in Virginia law for both the disposition of your assets and who will serve as the administrator of your estate are likely to be contrary to your wishes. Therefore, it is important that you execute a last will and testament and possibly a revocable living trust.
A last will and testament (also known as a “will”) is an instrument by which you appoint an executor to settle your estate and provide instructions for the distribution of your assets upon your death. If you die without a will, Virginia law assumes that you prefer that your heirs inherit your estate and makes no provision for your partner. If you have minor children, a will also allow you to nominate a guardian for these children.
You may instead dispose of your assets at your death by using a revocable living trust (also known as a “living trust”). A living trust serves as a will substitute, avoiding the probate process. A notable advantage of a living trust is that it is not a document of public record, and therefore it provides more privacy than a will. This may be especially useful if you prefer that your relationship to your partner remain confidential.
Other critical estate planning issues for unmarried and same gender couples to consider include:
• How do the federal gift and estate tax laws impact unmarried and same gender couples?
• Are you sure that your partner can visit you if you become hospitalized? If you pass away, can your partner make funeral and burial/cremation arrangements for you?
• Is your partner designated as the beneficiary of your life insurance policies, retirement accounts, etc.? What are the tax implications of this decision?
• How are you and your partner going to pay for your long-term care needs? Is Medicaid an option, and should you instead purchase long-term care insurance?
While having a comprehensive estate and financial plan in place is important for all individuals, it is especially important for unmarried and same gender couples. If you do not execute the proper estate planning documents, then your partner will likely have no rights in making financial or medical decisions on your behalf and will not inherit from your estate. Furthermore, the default rules that are in place may be contrary to your wishes. While most people do not like thinking about and discussing the issues raised by this process, by doing so, they can save time and money in the long run, avoid unnecessary litigation and disputes, and insure that their wishes are respected.
ElderLaw News is a weekly e-newsletter that brings you reports of legal developments and other trends of vital interest to seniors and their advocates. This newsletter is brought to you by The Estate Planning & Elder Law Firm, P.C.
If you are interested in having an Elder Law attorney from The Estate Planning & Elder Law Firm, P.C. speak at an event, then please call them at:
Maryland (301) 214-2229
Virginia (703) 243-3200
Washington DC (202) 223-0270
For a review of your financial plan and investment portfolio, contact a financial adviser at Ariba Asset Management at 1-800-808-7488
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Near-Retirees Overestimating Withdrawal Needs
Description
Many preretirees have unrealistic ideas about how much they will be able to withdraw for living expenses after entering retirement.
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Preretirees often overestimate how much they will be able to withdraw annually after entering retirement.
As retirees shift their focus from accumulating assets to creating an ongoing stream of income, many are not prepared to start planning from a new vantage point. This lack of perspective may explain why, according to a recent survey, many retirees anticipate making annual withdrawals that are too large, and run the risk of outliving their assets.
How Much to Withdraw
- Nearly one-third of respondents believed they could withdraw between 7% and 10% annually.
- Just over 10% anticipated that they could withdraw between 11% and 15%.
Many respondents also underestimated the percentage of their preretirement income they would need annually to pay for living expenses. Only 45% of respondents understood that retirees typically need between 80% and 90% of preretirement income to maintain their preretirement standard of living.
Factors Affecting Retirement Income
If your retirement assets are running short, a variety of factors are likely to influence how much you will need during your later years:
- Your retirement age. Collecting Social Security at your earliest opportunity, which for most people is age 62, results in a permanent reduction of between 20% and 30% in the amount of your monthly benefit.
- Medical expenses. It’s no secret that Medicare is experiencing financial stress and employer-sponsored health care plans for retirees are less generous than they formerly were. The Employee Benefit Research Institute has estimated that a couple retiring at age 65 with median drug expenses would need to accumulate $271,000 to ensure a 90% probability that they will have enough to pay for medical care. This amount does not include the cost of long-term care, which would make the estimate even higher.
- Housing. A large mortgage or other indebtedness limits financial flexibility. If you live in spacious quarters, consider how you will be able to finance mortgage payments, taxes, maintenance, utilities, condo fees, and other expenses.
- Discretionary costs of living. It can be difficult to control expenses for necessities such as utilities and health care. But variable costs, such as restaurant meals and vacations, are a different matter. Review how you may be able to trim variable costs before you retire without leading a Spartan lifestyle. Getting used to a more efficient mode of living may help you in your transition to retirement.
Source/Disclaimer:
1 Source: MetLife, Met Life Mature Market Survey, October 2011.
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November 2011 — This column is provided through the Financial Planning Association, the membership organization for the financial planning community, and is brought to you by Dan Federman, CFP®, a local member of FPA.
Required Attribution
Because of the possibility of human or mechanical error by McGraw-Hill Financial Communications or its sources, neither McGraw-Hill Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall McGraw-Hill Financial Communications be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.
© 2011 McGraw-Hill Financial Communications. All rights reserved.
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The Caregiver’s Prison
As the baby boomers age, more of them are providing care for their elderly loved ones.
In some instances, the care is obvious, for example, assisting with daily activities such as bathing and dressing. In other instances, the care is slightly less formal and involves things such as meal preparation and medication management. Sometimes caregiving simply involves concern over the aging loved one’s well-being and checking to make sure this loved one is OK. The people who provide this care do so out of love, respect, and a sense of duty. But everyone, care providers and care recipients alike, underestimates the mental stress and physical toll that providing this care can take on the caregiver.
Most people involved in a caregiving relationship will not admit the level of stress involved; however, almost everyone who works with older adults can identify the signs of caregiver stress. For those who are in a caregiving relationship it is critical to recognize stress and burnout before they become problematic and develop strategies to combat this stress. What many caregivers do not realize is that if then they burn out, they will not be able to provide care and support to their loved ones. As a result, they will undermine all of the time, effort, and energy that they have put into their caregiving thus far.
A recent AARP study revealed a “caregiver’s wish list.” At the top of the list was tax relief in the form of a tax credit for providing care for a loved one. The next most requested item was payment for providing care such as a minimum wage. Significantly, caregivers requested respite in the form of time off or relief by having someone coordinate transportation and medical appointments. The bottom line is that caregivers are asking for financial assistance and a little time off.
If you are in a caregiving relationship, you need to recognize the importance of these items. Many assisted living facilities allow a respite stay, giving the caregiver a short break. The addition of a small amount of in-home care for your loved one can alleviate some of the burden. Often aging family members can pay their caregivers a small wage for the care they provide, as long as the pay is pursuant to a legal agreement.
If you are considering starting a caregiving arrangement, then you should come up with a plan to combat these concerns before the caregiving starts. Be aware of available resources such as support groups and web resources including www.caregiverstress.com. The Alzheimer’s Association provides fantastic resources for those caring for those with Alzheimer’s disease or dementia.
It is also important to develop a support system for the caregiver. Family members should work together and divide the responsibilities as much as possible. If there are no other individuals who are willing to help, then be prepared to request assistance through a home health care agency. You should also inform your employer that you are a caregiver. Studies show that 66% of caregivers have been late, left early, or taken time off due to care providing. Letting your employer know in advance that you may need to take time off to take care of family responsibilities will allow them to have the chance to work with you to accommodate your schedule rather than leaving your employer in a bad position when caregiving causes problems for you at work.
Please remember that caregiving does not stop if a loved one enters a facility. Family members still visit the aging person in the facility, run errands such as shopping, and coordinate and attend doctor’s appointments.
Finally, as a caregiver it is important to realize that you should “never say never.” Many caregivers want to keep their loved ones from entering facility care; however, that is not always a reasonable position. Eighty percent of all individuals need facility level care at some point in their lives. Facility care provides 24 hour a day trained medical staffing. Few caregivers have the medical training and level of knowledge of an assisted living or nursing facility. Even if caregivers have that training and level of knowledge, it is impossible for them to be rested and fresh if they are “on the job” 24 hours a day. The bottom line is that at some point it will likely be necessary for most individuals to need nursing care. Caregivers should not prevent that from happening because they made a promise that they would never put their love ones in a facility.
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