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Elder Law Estate Planning

Digital Assets in Estate Planning: The Brave New World of Estate Planning

“They say that every time a Targaryen is born, the gods toss a coin and the world holds its breath.” – Varys to Jon

“The master of coin must be frugal.”Varys to Eddard Stark

Cryptocurrency is almost mainstream, despite its complexity, says Insurance News Net in the article “Westchester County Elder Law Attorney Anthony J. Enea Sheds Light on Cryptocurrency in Estate Planning.” The IRS has made it clear that as far as federal taxation is concerned, Bitcoin and other cryptocurrencies are to be treated as property. However, since cryptocurrency is not tangible property, how is it incorporated into an estate plan?

For starters, recordkeeping is extremely important for any cryptocurrency owner. Records need to be kept that are current and income taxes need to be paid on the transactions every single year. When the owner dies, the beneficiaries will receive the cryptocurrency at its current fair market value. The cost basis is stepped up to the date of death value and it is includable in the decedent’s taxable estate.

Here’s where it gets tricky. The name of the Bitcoin or cryptocurrency owner is not publicly recorded. Instead, ownership is tied to a specific Bitcoin address that can only be accessed by the person who holds two “digital keys.” These are not physical keys, but codes. One “key” is public, and the other key is private. The private key is the secret number that allows the spending of the cryptocurrency.

Both of these digital keys are stored in a “digital wallet,” which, just like the keys, is not an actual wallet but a system used to secure payment information and passwords. This is Digital Assets in Estate Planning: The Brave New World of Estate Planning.

One of the dangers of cryptocurrency is that unlike other financial assets, if that private key is somehow lost, there is no way that anyone can access the digital currency.

It should also be noted that cryptocurrency can be included as an asset in a last will and testament as well as a revocable or irrevocable trust. However, cryptocurrency is highly volatile, and its value may swing wildly.

The executor or trustee of an estate or trust must take steps to ensure that the estate or the trust is in compliance with the Prudent Investor Act. The holdings in the trust or the estate will need to be diversified with other types of investments. If this is not followed, even ownership of a small amount of cryptocurrency may lead to many issues with how the estate or trust was being managed.

Digital currency and digital assets are two relatively new areas for estate planning, although both have been in common usage for many years. As more boomers are dying, planning for these intangible assets has become more commonplace. Failing to have a plan or providing incorrect directions for how to handle digital assets, is becoming problematic for many individuals.

Speak with an estate planning attorney who has experience in digital and non-traditional assets to learn how to protect your heirs and your estate from losses associated with these new types of assets. To learn more about Digital Assets in Estate Planning: The Brave New World of Estate Planning please speak to estate planning attorney Frank Bruno, Jr.

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Estate Planning Guardianship

Creating an Estate Plan for a Child with Special Needs

“As special needs parents we don’t have the power to make life “fair,” but we do have the power to make life joyful.” Anonymous

“All kids need is a little help, a little hope, and someone who believes in them” Magic Johnson.

Parents want their children to be taken care of after they die. But children with special needs have increased financial and care needs, so ensuring their long-term welfare can be tricky. Proper planning by parents is necessary to benefit the child with a disability, including an adult child, as well as assist any siblings who may be left with the caretaking responsibility.

Special Needs Trusts

The best and most comprehensive option to protect a loved one is to set up a special needs trust (also called a supplemental needs trust). These trusts allow beneficiaries to receive inheritances, gifts, lawsuit settlements, or other funds and yet not lose their eligibility for certain government programs, such as Medicaid and Supplemental Security Income (SSI). The trusts are drafted so that the funds will not be considered to belong to the beneficiaries in determining their eligibility for public benefits.

There are three main types of special needs trusts:

A first-party trust is designed to hold a beneficiary’s own assets. While the beneficiary is living, the funds in the trust are used for the beneficiary’s benefit, and when the beneficiary dies, any assets remaining in the trust are used to reimburse the government for the cost of medical care. These trusts are especially useful for beneficiaries who are receiving Medicaid, SSI or other needs-based benefits and come into large amounts of money, because the trust allows the beneficiaries to retain their benefits while still being able to use their own funds when necessary.

The third-party special needs trust is most often used by parents and other family members to assist a person with special needs. These trusts can hold any kind of asset imaginable belonging to the family member or other individual, including a house, stocks and bonds, and other types of investments. The third-party trust functions like a first-party special needs trust in that the assets held in the trust do not affect a beneficiary’s access to benefits and the funds can be used to pay for the beneficiary’s supplemental needs beyond those covered by government benefits. The key distinction is that a third-party special needs trust does not contain the “payback” provision found in first-party trusts. This means that when the beneficiary with special needs dies, any funds remaining in the trust can pass to other family members, or to charity, without having to be used to reimburse the government.

A pooled trust is an alternative to the first-party special needs trust. Essentially, a charity sets up these trusts that allow beneficiaries to pool their resources with those of other trust beneficiaries for investment purposes, while still maintaining separate accounts for each beneficiary’s needs. When the beneficiary dies, the funds remaining in the account reimburse the government for care, but a portion also goes towards the non-profit organization responsible for managing the trust.

Life Insurance

Not everyone has a large chunk of money that can be left to a special needs trust, so life insurance can be an essential tool. If a special needs trust has been created, a life insurance policy can pay directly into it, and it does not have to go through probate or be subject to estate tax. Be sure to review the beneficiary designation to make sure it names the trust, not the child. You should make sure you have enough insurance to pay for your child’s care long after you are gone. Without proper funding, the burden of care may fall on siblings or other family members. Using a life insurance policy will also guarantee future funding for the trust while keeping the parents estate intact for other family members. When looking for life insurance, consider a second-to-die policy. This type of policy only pays out after the second parent dies, and it has the benefit of lower premiums than regular life insurance policies.

ABLE Account

An Achieving a Better Life Experience (ABLE) account allows people with disabilities who became disabled before they turned 26 to set aside up to $15,000 a year in tax-free savings accounts without affecting their eligibility for government benefits. This money can come from the individual with the disability or anyone else who may wish to give him money.

Created by Congress in 2014 and modeled on 529 savings plans for higher education, these accounts can be used to pay for qualifying expenses of the account beneficiary, such as the costs of treating the disability or for education, housing and health care, among other things. ABLE account programs have been rolling out on a state-by-state basis, but even if your state does not yet have its own program, many state programs allow out-of-state beneficiaries to open accounts. (For a directory of state programs, click here.)

Although it may be easy to set up an ABLE account, there are many hidden pitfalls associated with spending the funds in the accounts, both for the beneficiary and for her family members. In addition, ABLE accounts cannot hold more than $100,000 without jeopardizing government benefits like Medicaid and SSI. If there are funds remaining in an ABLE account upon the death of the account beneficiary, they must be first used to reimburse the government for Medicaid benefits received by the beneficiary, and then the remaining funds will have to pass through probate in order to be transferred to the beneficiary & heirs.

Get Help With Your desire to Create an Estate Plan for a Child with Special Needs.

Creating an Estate Plan for a Child with Special Needs takes forethought, patience and a willingness to include caregivers in your plan. you decide to provide for a child with special needs, proper planning is essential. Talk to your attorney to determine the best plan for your family.

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Elder Law Estate Planning

What the Elder Law Estate Planning Attorney Needs to Know

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.” Learned Hand

“In America, there are two tax systems: one for the informed and one for the uninformed. Both are legal.” Learned hand
If you went to a doctor’s office and did not tell the doctor what your symptoms were, it would be hard to get a good diagnosis and treatment. The same goes for a visit to the elder law estate planning attorney. Without all the necessary facts, advises the Times Herald-Record in the article “What you need to tell the elder law estate planning attorney,” the estate plan may need to be revised or created all over again, the inheritance may be given to people other than those you intended and there could be family conflicts.

Elder law is all about the issues that affect the elderly client. The planning for disability and incapacity, to include identifying the people who would make decisions for you, if you become incapacitated and protecting your hard-earned assets from the cost of nursing home care.

Estate planning is focused on transferring assets to the desired people, the way you want, when you want, with minimal court costs, taxes, or unnecessary legal fees and avoiding disputes over an inheritance. Here are some of the things your attorney will need to know, with full disclosure from you:

Family dynamics. Do you have a child out of wedlock? Are you part of a blended family or do you have a child you haven’t seen in years, you need to discuss the child. They may have a legal claim to your estate, and that must be planned for. Perhaps you want to include the child in the estate, perhaps you don’t. If you disinherit a child in a will and you die without a plan, that child becomes a necessary party to probate proceedings and has the right to contest your will.

Health issues are important to disclose. If you don’t have long-term care insurance, you need five years to protect assets in a Medicaid Asset Protection Trust (MAPT). Therefore, now may be the time to start a plan. If you have a child who is disabled and receives government benefits, you can leave them money in a Special Needs Trust (SNT).

Full disclosure of all your assets, income, how assets are titled, who the beneficiaries are on your IRAs, 401(k)s and life insurance policies, are all the kinds of information needed to create a comprehensive estate plan. Keeping secrets during this process could lead to a wide variety of problems for your family. Your entire estate could be consumed by taxes, or the cost of nursing home care.

There’s no doubt of the seriousness of these issues. You or your spouse may experience some strong emotions, while discussing them with your attorney. However, creating a proper estate plan, preparing for incapacity and loved ones with special challenges will provide you with peace of mind.

One last point: an estate plan is like your home, requiring maintenance and updates. Once it is done, make a note in your schedule to review it every time there is a major life event or every three or four years. Laws change, and life changes. Your estate plan may also need to change.

Reference: Times Herald-Record (May 25, 2019) “What you need to tell the elder law estate planning attorney”

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Elder Law Estate Planning

End of Life Planning for Loved Ones

It’s definitely an uncomfortable thing to do. However, making funeral arrangements for yourself eliminates a lot of stress and anxiety for the family members, who are left to guess what you may have wanted. This, says the Leesville Daily Leader in the article “Planning for the end of your life” lets you make the decisions.

When considering end-of-life care for loved ones here are some of the things to consider:

  • Do you want to be buried or cremated?
  • Do you want a funeral or a memorial service?
  • What music do you want to be played?
  • Do you want flowers, or would you prefer donations to a charity?
  • Do you want people to speak or prefer that only a religious leader speak?
  • What clothing do you want to be buried in?
  • Have you purchased a plot? A gravestone?
  • Who should be notified about your death?
  • Do you want an obituary published in the newspaper?

There are also estate matters that need to be attended to before you pass. Do you have a will, power of attorney, healthcare power of attorney, or a living will? Make sure that your family members or your executor know where these documents can be found.

If you do not have an estate plan in place, now is the time to meet with an estate planning attorney and have a plan created.

Your family will also need to be able to access information about your accounts: investment accounts, credit cards, utility bills, Social Security, pension, retirement funds and other assets and property. A list of the professionals, including your estate planning attorney, CPA and financial advisor, along with the names of your healthcare providers, will be needed.

If you are a veteran, you’ll need to have a copy of your DD-214 in your documents or let family members know where this is located. They will need it, or the funeral home will need it, when applying for burial benefits from the Department of Veterans Affairs and the National Cemetery Administration.

If you wish to be buried in a national cemetery, you’ll need VA Form 40-10007, Application for Pre-Need Determination of Eligibility for Burial in a VA National Cemetery. This must be completed and sent to the National Cemetery Scheduling Office. Include a copy of the DD-214 with the application.

End-of-life care for loved ones grieving in your family may find discussing these details difficult, but when the time comes, they will appreciate the care that you took, one last time, to take care of them.

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Elder Law Estate Planning

How to Decide Who Your Healthcare Proxy Should Be

It’s especially important to name a healthcare proxy, because the chances of having a crisis escalates dramatically as we age. That’s why so many people put off naming a healthcare proxy, says Forbes in the article “How to Select A Healthcare Proxy,” often only addressing this, when they are completing other documents for their overall estate plan.

What usually happens is that people get so stressed out about naming a healthcare proxy that they put it off or make a bad selection. Making it even worse, is neglecting to tell the person they have chosen for this important responsibility.

healthcare proxy comic

How to Decide Who Your Healthcare Proxy Should Be. It’s not guaranteed that the person you chose as your healthcare proxy will ever be called on to serve. However, if they are, you’ll want to make sure they meet certain guidelines. For one thing, they’ll need to be at least 18 years old. They cannot be your direct health care provider or any of the direct health care provider’s employees, unless that person is also your spouse. They have to be willing to speak up and adhere to your own wishes, even if those wishes are not the same as their own. You’ll want to have a very candid conversation with the person you think you want to name as your healthcare proxy.

You might want to go through this exercise to make sure they are really willing to carry out your wishes. Create a worksheet that describes in detail some of the situations they may face. There are a few sources for this kind of worksheet, including one from a group called Compassion and Choices, a nonprofit centered on helping people get what they want at the end of their lives.

If you are close with your family, it may seem obvious to select your spouse, first-born child, or a sibling for this task. However, be realistic: when push comes to shove, will they be able to stand up for your wishes? Will they be able to deal with the fallout from family members, who may not agree with what you want at the end of your life? They’ll need to be up to the challenge.

Age is a real factor here. You want your proxy to be available in both the immediate and distant future. If you have a sibling who is only two years younger than you, she’ll be 81 when you are 83. That may not be the time for her to make hard decisions, or she may not be available—or alive. Select a few backups, and make sure the primary, secondary and even tertiary are listed on your advance directive.

Geography also matters. The person may be called upon in a crisis—if you are on the West Coast and they are in the Midwest, will they be able to get to your bedside in time? Many hospitals and skilled nursing facilities require a live human being to be physically present, if critical care decisions need to be made. Someone who lives within a 50-mile radius of you, might be a better choice.

Once you’ve made the decision, you’re almost done. Have a conversation with the person, whether they are the primary or a backup. You should also have a conversation with your estate planning attorney, to make sure that your healthcare directive and any related documents are all set for your future.

Reference: Forbes (April 10, 2019) “How to Select A Healthcare Proxy”

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Estate Planning

What Will My Social Security Benefits Be?

Your Social Security benefits in retirement are primarily dependent on the wages you get while working. The Social Security taxes deducted from your paycheck are based on that amount. If you’re still working and at retirement age, you can get benefits while earning other income. And depending on your age, you can also decrease and delay your Social Security payouts. The other important factors for determining Social Security benefits include inflation and the formula used by the Social Security Administration in its calculations.

Investopedia’s recent article asks “How Are Social Security Benefits Affected by Your Income?” The article explains how Social Security income is calculated—the more you earned while working, the higher the income benefit you get from Social Security. The government keeps track of your income from every year, and the part of your earned income subject to FICA taxes is used to determine your benefits in retirement.

What Will My Social Security Benefits Be?
If you paid into the Social Security system for more than 35 years, the Social Security Administration only uses the 35 highest earning years and won’t include any others in its formula. If you didn’t pay into the system for at least 35 years, a value of $0 is entered for all missing years. After you apply for benefits, these earnings are indexed and used to calculate a “primary insurance amount” that shows the maximum sum you’re eligible to receive after reaching full retirement age. The age when you begin getting benefits is also significant. As of 2018, the youngest age to receive benefits is 62. However, your benefits are reduced if you opt to get them that early. But if you take benefits prior to reaching full retirement age and continue to work, you may be able to delay some benefits to get higher payouts in the future. These days, many folks are working into or beyond retirement age. If you are earning an income while getting Social Security benefits, you may have some benefits withheld if you make up to a certain threshold. Until you reach full retirement age, earning more than the IRS income threshold decreases your benefits by $1 for every $2 earned in excess of the minimum. That money isn’t lost forever. Instead, your Social Security income is upped once you reach full retirement age. Under normal circumstances, your Social Security benefits aren’t taxable. But if your income while taking benefits is more than the maximum limits established by the IRS, your benefits will be partially taxable. Nonetheless, no one has to pay income taxes on more than 85% of benefits.
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Estate Planning

Why Do I Need an Estate Plan?

“Some are sad.
And some are glad.
And some are very, very bad.
Why are they Sad and glad and bad?
I do not know.
Go ask your dad.”

Dr. Seuss, One Fish, Two Fish, Red Fish, Blue Fish

Did you know that more than half of American adults—and 78% of millennials—don’t have any basic estate planning documents like a will or living trust? It may not be that much of a shock, since younger adults tend to put off thoughts of estate planning. However, even if you don’t have children or many assets yet, you can benefit from creating an estate plan now. Forbes’s recent article, “6 Reasons Why You Should Have An Estate Plan,” provided six reasons why you should have an estate plan at any point in life:  

Why Do I Need an Estate Plan?

Plan for yourself.
A big step in the estate planning process, is deciding who will make decisions on your behalf, if you’re unable to do so yourself. If you become incapacitated, a revocable trust will hold assets for your benefit, while you’re alive and name the individuals you want to receive your property when you pass. Designating an agent under a durable power of attorney to act on your behalf when it comes to financial and legal matters, if you become physically or mentally disabled, can help make certain that any decisions made, are in your best interest. If you can’t make medical decisions for yourself, you should have a healthcare proxy, agent or power of attorney, HIPAA release, and living will.

Decide How to Dispose of Your Wealth.
A will names an executor or personal representative who’s responsible for the administration of your estate after you die. He or she distributes property, as you determine in your will. If you have minor children, you can also designate a guardian to care for them in your will. Any life insurance, retirement accounts, or annuities require you to name beneficiaries, so they don’t need to be included in a will.

Lessen Transfer Taxes.
One goal of estate planning is to maximize the wealth you transfer to your beneficiaries, along with minimizing transfer taxes. The Tax Cuts and Jobs Act of 2017 expanded the amount individuals may give away at death—or during life—without any transfer taxes. The new law offers an increased exemption amount and portability. That means spouses can share one another’s exemption. You can make annual tax-free gifts up to $15,000 in 2019 (twice this amount for married couples). You can also pay medical and educational expenses for someone else without any gift tax.

Include Charitable Giving.
If you have philanthropic goals, an estate plan can help make certain that your objectives are satisfied. You can select a charity that’s important to you, choose the assets you want to donate, and decide—along with your attorney—the best way to make your gift.

Protect Family Wealth.
There can also be wealth protection benefits in estate planning through asset ownership arrangements, insurance, limited liability entities, irrevocable trusts and asset protection trusts. These are designed to protect your assets from creditors. An experienced estate planning attorney can help you decide, if one of these options is appropriate for your situation.

Ready your Family to Receive Wealth.
You can also prepare the next generation to receive wealth, which can also be helpful in preserving family wealth in the long run. Your estate plan can set out wealth planning goals, facilitate conversations about what wealth means to your family and educate your adult children about financial ideas and the ways in which they can get involved in creating and sustaining the family legacy.

Why Do I Need an Estate Plan? Estate planning can be a formidable task, especially if you’re starting from ground zero. However, you can always engage an estate planning attorney to help you develop the documents you need to give you peace of mind about your financial affairs.

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Elder Law Estate Planning

Estate Planning When A Family Member Is Disabled

This kind of mistake can wreak havoc on many lives, which is why it is so important to work with an experienced estate planning attorney who is knowledgeable about special needs planning. The article, “Crafting an estate plan to include disabled family members

 from The Ledger explains what is involved in special needs planning.

Supplemental Security Income (SSI) is a federal program that pays monthly benefits to disabled or blind adults and children. To qualify, an individual must have fewer than $2,000 of countable assets and very limited income. Medicaid is a Federal and State health insurance program that helps people with limited assets and income pay for their medical costs.

While it is common for people to name their spouse or children as beneficiaries in their estate plan, if your spouse or child is disabled and receiving government benefits, an inheritance will result in their loss of benefits, unless special planning is done.

Estate Planning When a Family Member Is Disabled. Special Needs Trust (SNT) is designed for disabled beneficiaries so that cash, real property, or any other assets are available for the person’s benefit, while still allowing the disabled person to receive their means-based government benefits.

There are several different ways to accomplish this, depending on your family’s situation. One way is to have a testamentary Special Needs Trust created within a will or trust that goes into effect, when the creator of the trust or the will dies. A SNT can also be created while you are living and can be funded, instead of waiting for it to go into effect at your death.

A third-party SNT can be named as the beneficiary of life insurance policies and retirement accounts, investment accounts or real property. The third-party SNT assets that are not used for the disabled beneficiary during their lifetime, can pass to non-disabled beneficiaries upon the death of the disabled beneficiary.

These assets will be free from Medicaid recovery liens, since the property in a third party SNT does not belong to the disabled beneficiary

Estate Planning When a Family Member Is Disabled. A first party SNT is set up and funded with assets that do belong to a disabled person, and no other funds can be contributed to this type of trust by any other donors. These are often used when a large settlement following an injury is awarded. In Florida and in other states, first-party SNTs are subject to Medicaid recovery to reimburse the state.

Special needs trusts are complicated trusts and require the knowledge of an experienced attorney who devotes most, if not all, of their practice to SNTs and trust and estate planning.

Reference: The Leadger (May 2, 2019) “Crafting an estate plan to include disabled family members

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Elder Law Estate Planning

What is an Advance Directive and Do I Need One?

“The art of medicine consists of amusing the patient while nature cures the disease.” Voltaire

“Once a patient goes brain dead and relatives sign his organ donation consent form, he will get the best medical treatment of his life. A hospital code blue may be a call for doctors to rush to the bedside of a beating heart cadaver who needs his or her heart defibrillated.” Dick Teresi, The Undead: Organ Harvesting, the Ice-Water Test, Beating Heart Cadavers–How Medicine Is Blurring the Line Between Life and Death.

As an agent appointed by a Health Care Proxy, you will have the right to make the following types of decisions: Choices about medical care, including medical tests, medicine, or surgery. …
These are difficult questions to think about. However, they are very important, as every estate planning attorney knows. Should you ever become unable to speak for yourself, reports the Enid News & Eagle in the article “Veteran Connection: What you should know about advance directives,” there is a way to make a plan, so your wishes are known to another person or persons and by legally conveying them in advance, making sure you have a say, even when you don’t have a voice.

The advance directive helps family members and your doctors understand your wishes about medical care. The wishes you express through these two documents described below, require reflection on values, beliefs, views on medical treatments, quality of life during intense medical care and may even touch on spiritual beliefs. The goal is to prepare so your wishes are followed, when you are no longer able to express them. This can include situations like end-of-life care, the use of a respirator to breathe for you, or who you want to be in the room with you, when you are near death.

It should be noted that an advance directive also includes a mental health component, that extends to making decisions on your behalf when there are mental health issues, not just physical issues.

What is an Advance Directive and Do I Need One? There are three types of documents: a durable power of attorney for health care, a health care proxy and a living will.

The durable power of attorney for health care lets you name a person you trust to make health care decisions when you cannot make them for yourself. This person is called your health care agent and will have the legal right to make these decisions. If you don’t have this in place, your doctor will decide who should speak for you. They may rely on order of relationships: a legal guardian, spouse, adult child, parent, sibling, grandparent, grandchild or a close friend.

A living will is the document that communicates what kind of health care you want, if you become ill and cannot make decisions for yourself. This helps your named person and your doctor make decisions about your care that align with your own wishes. Another very important part of this issue: the conversation with the people who you want to be on hand when these decisions have to be made. Are they willing to serve in this capacity? Can they make the hard decisions, especially if it’s what you wanted and not what they would want? Do you want a spouse to make these decisions on your behalf? Many people do that, but you may have a trusted family member or friend you would prefer, if you feel that your spouse will be too overwhelmed to follow your wishes.

Reference: Enid News & Eagle (March 13, 2019) “Veteran Connection: What you should know about advance directives”

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Elder Law Estate Planning

Can Retirement be Recession-Proof?

Can Retirement be Recession-Proof? It was a tough time for people who had just retired, but since that time stocks have rebounded in a spectacular manner. However, says Money in the article “This is the Best Way to Recession-Proof Your Retirement, According to Experts,” it is possible that the long rally may be coming to an end.

Is there anything that can be done do to protect your retirement accounts from the next financial disaster? Those who are closest to retirement, are always the most vulnerable to drops in the stock market, and those who are retired and drawing down savings are even more at risk. However, you can build a financial buffer to help your retirement funds survive any downturns. No one knows when the next recession or stock slide will occur. There will always be one, so it’s best to be prepared. It’s simply an acknowledgement of the real risks of markets. On average, recessions last about 18 months. What can you do?

Build a cushion. Commit to building an emergency fund. That should be three to six months of expenses. And it doesn’t matter how rock solid or large your retirement investments are. If you take money out prematurely, it’s going to weaken your portfolio.

Pay down all debt, or as much as possible. That is key to feeling fiscally secure, once you leave the workforce. This is because less of your assets are tied up in long-term retirement investments. Tackle the highest interest rate debt first.

It’s far easier to adjust discretionary expenses, than it is to add cash to a stockpile. You can skip a vacation. You can’t skip a mortgage payment. Depending on how close you are to retirement, consider tweaking your investment portfolio. Portfolios can become unbalanced over time, as assets in different classes grow or fund managers change. Review your portfolio to limit your exposure to volatility. Scrub out any unnecessary risk. That may include putting some money in cash or cash equivalents, like savings accounts, CDs and short-term bond funds.

You don’t have to be very conservative on the entire portfolio. People nearing retirement age usually trim some of their stock holdings. It is not now as black and white. You’ll need stock growth to outpace inflation, so your equity allocation must be fine-tuned. Many retirees are working part time jobs to keep some cash coming in and minimize what they take from retirement accounts. If you’re earning enough to live on, you can even avoid taking any distributions, except those that are required. Be aware of how your income impacts your Social Security benefits and taxes, if you have already started to take benefits.

There are other advantages to working part time. It keeps you active and engaged with others, allows your mind to stay sharp and offers the opportunity to socialize with new people.

Finally, make sure your estate plan is in place. You should have a will, power of attorney and healthcare power of attorney. An estate planning attorney can help protect you and your family, regardless of when the next recession arrives.

Reference: Money (March 13, 2019) “This is the Best Way to Recession-Proof Your Retirement, According to Experts”

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