A widow’s money: Don’t become everyone’s wallet or purse.

AUTHORBILL BERGENPOSTED ONAUGUST 19, 2017

One of the most unfortunate financial consequences of widowhood is certain people will get the perception you now have extra money. They might think you have a lot of it (even if you don’t) and therefore think you are now a source of funds for their needs or wants. As a widow, you may be targeted to become someone else’s purse or wallet.

People often assume a widow has been left with money. Visions of life insurance policies, the deceased spouse’s pension or retirement assets, or the sale of a business or farm, all create the notion that a widow has more money than she’ll ever need.

I’ve seen this happen in wealthy families and I’ve seen it happen when it was abundantly clear the widow did not have much at all. Sadly, it doesn’t seem to matter whether a widow is well off or not. Nor does it seem to matter what the age of the widow is. Young or old, widows have the risk of becoming a purse or wallet for another person.

Of course there are the unscrupulous sorts who peruse the obituaries and target widows with sales calls. They know a certain percentage of widows will be an easy sale. This can include home repair contractors, alarm system sales people and others. News reports regularly identify cases of people and in particular widows who’ve been scammed by these con-artists.

There are others who may be well meaning in their intentions, but also have their sights set on making money off of you. The financial advisor who insists you immediately make significant changes to your investment portfolio under the guise of being more conservative is an example. The advisor may be generally correct in their proposal. However, they may also be interested in making the proposed alterations in order to generate considerable fees or commissions when it is possible to achieve the same adjustments without incurring high costs.

Similarly, making significant modifications following the death of your spouse in the areas of insurance coverage (health, life, home, auto, etc.) are ill advised. Changes may be warranted, but should be done methodically and only if the benefits truly outweigh any increased costs.

Potential suitors are another group of people who’ve been known to play on a widow’s heart to gain access to their wallet. With online dating becoming popular among people of all ages, it’s even easier to string someone along romantically via email or texting and then eventually ask for financial help. The request typically comes with a story of financial woe, followed by an urgent appeal to transfer money or mail a cheque to help the love interest out. Regrettably, there are widows who have drained retirement accounts and other substantial resources before realizing they’ve been swindled.

Perhaps the most common occurrence is being approached by your own family.

“Mom can help us out with a down payment.”

“Grandma will pay for my education.”

“She’ll never spend all the money in her lifetime. We might as well ask for help now.”

While there can be merit to helping your children financially in the present, rather than passing the money on to them after you’re gone, there’s also plenty of times where adult kids are simply just taking advantage of the widowed parent.

Be very careful about lending money, or even giving money as a gift to your children, especially in the first year of widowhood. It’s not unusual for a recent widow to feel like they have an abundance of money, regardless of whether or not they do. The absence of their partner in life makes it feel like the financial resources they shared are now more than enough for one person to live on. The sadness of the loss, can also make a widow feel like money is no longer of value to them. They may willingly give it all away because their heart is hurting from their loss.

Family can also, with no ill intentions, put pressure on you to make decisions too soon that can prove costly or unnecessary. Kids coaxing you to do a major renovation to your house (to give yourself the kitchen you always wanted) or even sell the house (to move closer to family) could be doing so for admirable reasons. But, those reasons might be more about making your kids feel better and not necessarily be about what’s best for you.

The solution to all of this goes back to a common thread in my posts — hold off on making any major decisions for at least six months and possibly even a year after the loss of your spouse. If you find yourself being pressured by family or others for money, don’t be afraid to say no. At the very least, practice saying “Not now. See me in six months.” to buy yourself time to think things over more fully and in a less emotional/vulnerable state.

I appreciate how requests from family can come across as reasonable and important, and in reality some are. This is the reason why I recommend getting a non-family member to be your “financial buddy” during the first year of widowhood. Having an objective, third party who can provide you advice when you’re unclear about what to do, will prove to be invaluable. For more on how to choose a “buddy” see my previous post on the subject.

Keep checking back for more information along this subject line. I will be writing guidelines for lending money to adult children in the future. As always, if you have any questions, comments or suggestions, please leave a comment in the section below this post. And if you’re finding this blog helpful, please forward a link to these pages to anyone you know who would also benefit.

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TAGS:BUDDY SYSTEM, DECISIONS, MANAGING $, SAFEGUARDING YOUR MONEY

Written by Bill Bergen

Bill is a contributing editor to Suddenly Single Survival Guide focusing on the financial aspects that are specific to a life event that suddenly makes you single.

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• Looking for Restful Sleep After Losing a Loved OneOCTOBER 11, 2018
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It’s Open Enrollment Season: Is Your Medicare Plan Still Working For You?

Do you have the right Medicare plan? It is fall, which means it is time to think about whether your current plan is still giving you the best coverage or whether a new plan could save you money or offer better coverage. Medicare's Open Enrollment Period, during which you can freely enroll in or switch plans, runs from October 15 to December 7.

During this period you may enroll in a Medicare Part D (prescription drug) plan or, if you currently have a plan, you may change plans. In addition, during the seven-week period you can return to traditional Medicare (Parts A and B) from a Medicare Advantage (Part C, managed care) plan, enroll in a Medicare Advantage plan, or change Advantage plans. Beneficiaries can go to www.medicare.gov or call 1-800-MEDICARE (1-800-633-4227) to make changes in their Medicare prescription drug and health plan coverage.

Even beneficiaries who have been satisfied with their plans in 2018 should review their choices for 2019, as both premiums and plan coverage can fluctuate from year to year. Are the doctors you use still part of your Medicare Advantage plan’s provider network? Have any of the prescriptions you take been dropped from your prescription plan’s list of covered drugs (the “formulary”)? Could you save money with the same coverage by switching to a different plan?

For answers to questions like these, carefully look over the plan's "Annual Notice of Change" letter to you. Prescription drug plans can change their premiums, deductibles, the list of drugs they cover, and their plan rules for covered drugs, exceptions, and appeals. Medicare Advantage plans can change their benefit packages, as well as their provider networks. For information about entering and leaving Medicare Advantage plans, click here.

Remember that fraud perpetrators will inevitably use the Open Enrollment Period to try to gain access to individuals' personal financial information. Medicare beneficiaries should never give their personal information out to anyone making unsolicited phone calls selling Medicare-related products or services or showing up on their doorstep uninvited. If you think you've been a victim of fraud or identity theft, contact Medicare. 

Here are more resources for navigating the Open Enrollment Period:

• Medicare Plan Finder, which helps you find a plan to match your needs: www.medicare.gov/find-a-plan
• Medicare coverage options: https://www.medicare.gov/medicarecoverageoptions/
• The 2018 Medicare & You handbook, which all Medicare beneficiaries should have received. The handbook can also be downloaded online at: https://www.medicare.gov/medicare-and-you/medicare-and-you.html or https://www.medicare.gov/pubs/pdf/10050-Medicare-and-You.pdf
• The Medicare Rights Center: www.medicareinteractive.org
• Your State Health Insurance Assistance Program, which offers independent counseling: https://www.shiptacenter.org
• Kiplinger's "How to Compare Medicare Advantage Plans"

For First Time, Median Cost of Private Nursing Home Room Hits Six Figures in Annual Survey

The median cost of a private nursing home room in the United States increased to $100,375 a year in 2018, up 3 percent from 2017, according to Genworth's Cost of Care survey, which the insurer conducts annually

At the same time, Genworth reports that the median cost of a semi-private room in a nursing home is $89,297, up 4 percent from 2017. While significant, the rise in prices is not quite as steep as the 5.5 percent and 4.4 percent gains, respectively, in 2017.

But the median cost of assisted living facilities jumped 6.7 percent, to $4,000 a month. The national median rate for the services of a home health aide is $22 an hour, and the cost of adult day care, which provides support services in a protective setting during part of the day, rose from $70 to $72 a day.

Alaska continues to be the costliest state for nursing home care by far, with the median annual cost of a private nursing home room totaling $330,873. Oklahoma again was found to be the most affordable state, with a median annual cost of a private room of $63,510.

The 2018 survey, conducted by CareScout for the fifteenth straight year, was based on responses from more than 15,500 nursing homes, assisted living facilities, adult day health facilities and home care providers.  Survey respondents were contacted by phone during May and June 2018.

As the survey indicates, nursing home care is growing ever more expensive. Contact your elder law attorney to learn how you can protect some or all of your family's assets.

Can I Give My Kids $15,000 a Year?

If you have it to give, you certainly can, but there may be consequences should you apply for Medicaid long-term care coverage within five years after each gift.

The $15,000 figure is the amount of the current gift tax exclusion (for 2018), meaning that any person who gives away $15,000 or less to any one individual in one particular year does not have to report the gift to the IRS, and you can give this amount to as many people as you like. If you give away more than $15,000 to any one person in a single year (other than your spouse), you will have to file a gift tax return. However, this does not necessarily mean you’ll pay a gift tax. You’ll have to pay a tax only if your reportable gifts total more than $11.18 million (2018 figure) during your lifetime.

Many people believe that if they give away an amount equal to the current $15,000 annual gift tax exclusion, this gift will be exempted from Medicaid's five-year look-back at transfers that could trigger a waiting period for benefits. Nothing could be further from the truth.

The gift tax exclusion is an IRS rule, and this IRS rule has nothing to do with Medicaid’s asset transfer rules. While the $15,000 that you gave to your grandchild this year will be exempt from any gift tax, Medicaid will still count it as a transfer that could make you ineligible for nursing home benefits for a certain amount of time should you apply for them within the next five years. You may be able to argue that the gift was not made to qualify you for Medicaid, but proving that is an uphill battle.

If you think there is a chance you will need Medicaid coverage of long-term care in the foreseeable future, see your elder law attorney before starting a gifting plan.

It's Important to Shop Around for Your Medigap Policy

Medigap premiums can vary widely depending on the insurance company, according to a new study, so be sure to shop around before choosing a policy.

When you first become eligible for Medicare, you may purchase a Medigap policy from a private insurer to supplement Medicare's coverage and plug some or virtually all of Medicare’s coverage gaps. You can currently choose one of 10 Medigap plans that are identified by letters A, B, C, D, F, G, K, L, M, and N. Each plan package offers a different combination of benefits, allowing purchasers to choose the combination that is right for them. Federal law requires that insurers must offer the same benefits for each lettered plan, so each plan C offered by one insurer must cover the same benefits as plan C offered by another insurer.

When choosing a plan, you need to take into account the different benefits each plan offers as well as the price for each plan. To make things more difficult, the premiums for a particular plan can vary widely, according to an analysis by Weiss Ratings, Inc., consumer-oriented company that assesses insurance companies' financial stability, and recently reported by the Center for Retirement Research at Boston College.

Weiss Ratings compared Medigap premiums in each zip code nationwide and found huge disparities. For example, a 65-year-old man who lives in Hartford, Connecticut, can buy a Plan F policy for anywhere between $2,900 and $7,400 annually. A 65-year-old woman in Houston can pay $5,300 a year for Medigap’s Plan C policy from one insurance company or she can buy exactly the same policy from another insurer for $1,700 a year.

When looking for a Medigap policy, make sure to get quotes from several insurance companies to find the best price. In addition, if you are going through a broker, check with two or more brokers because each broker might not represent every insurer. It can be hard work to shop around, but the price savings can be worth it.

It’s Now Harder for Veterans to Qualify for Long-Term Care Benefits

The Department of Veterans Affairs (VA) has finalized new rules that make it more difficult to qualify for long-term care benefits. The rules establish an asset limit, a look-back period, and asset transfer penalties for claimants applying for VA pension benefits that require a showing of financial need. The principal such benefit for those needing long-term care is Aid and Attendance.

The VA offers Aid and Attendance to low-income veterans (or their spouses) who are in nursing homes or who need help at home with everyday tasks like dressing or bathing. Aid and Attendance provides money to those who need assistance.

Currently, to be eligible for Aid and Attendance a veteran (or the veteran's surviving spouse) must meet certain income and asset limits. The asset limits aren't specified, but $80,000 is the amount usually used. However, unlike with the Medicaid program, there historically have been no penalties if an applicant divests him- or herself of assets before applying. That is, before now you could transfer assets over the VA’s limit before applying for benefits and the transfers would not affect eligibility.

Not so anymore. The new regulations set a net worth limit of $123,600, which is the current maximum amount of assets (in 2018) that a Medicaid applicant's spouse is allowed to retain. But in the case of the VA, this number will include both the applicant's assets and income. It will be indexed to inflation in the same way that Social Security increases. An applicant's house (up to a two-acre lot) will not count as an asset even if the applicant is currently living in a nursing home. Applicants will also be able to deduct medical expenses -- now including payments to assisted living facilities, as a result of the new rules -- from their income.

The regulations also establish a three-year look-back provision. Applicants will have to disclose all financial transactions they were involved in for three years before the application. Applicants who transferred assets to put themselves below the net worth limit within three years of applying for benefits will be subject to a penalty period that can last as long as five years. This penalty is a period of time during which the person who transferred assets is not eligible for VA benefits. There are exceptions to the penalty period for fraudulent transfers and for transfers to a trust for a child who is unable to "self-support."

Under the new rules, the VA will determine a penalty period in months by dividing the amount transferred that would have put the applicant over the net worth limit by the maximum annual pension rate (MAPR) for a veteran with one dependent in need of aid and attendance. For example, assume the net worth limit is $123,600 and an applicant has a net worth of $115,000. The applicant transferred $30,000 to a friend during the look-back period. If the applicant had not transferred the $30,000, his net worth would have been $145,000, which exceeds the net worth limit by $21,400. The penalty period will be calculated based on $21,400, the amount the applicant transferred that put his assets over the net worth limit (145,000-123,600).

The new rules go into effect on October 18, 2018. The VA will disregard asset transfers made before that date. Applicants may still have time to get through the process before the rules are in place.

Veterans or their spouses who think they may be affected by the new rules should contact their attorney immediately.

Don't Wait Too Long to Purchase Long-Term Care Insurance

The older you get, the harder it is to qualify for long-term care insurance. If you are interested in buying this insurance, it is better to act sooner rather than later.

Many people put off purchasing long-term care insurance until they need it, but by then, it may be too late. Not only do premiums increase as you age, you also may not even qualify for insurance due to your health. The older you are, the more likely you are to have a pre-existing health condition that will disqualify you from getting long-term care insurance.

According to a recent study by the American Association for Long-Term Care Insurance, 44 percent of applicants who were age 70 or older had their applications denied due to health reasons. And those are the applicants who completed applications. Insurance agents frequently discourage unhealthy applicants from applying in the first place.

In contrast to older applicants, only 22 percent of applicants who are between 50 and 59 years old and 30 percent of applicants between 60 and 69 years old had their applications declined. Generally, the best (and cheapest) time to buy long-term care insurance is when you are in your 50s.

Long-term care insurance is not the best option for everyone, but if you are thinking about it, don't put off the purchase until it is too late. 

Fear of Losing Home to Medi-Cal Contributed to Elder Abuse Case

A California daughter and granddaughter's fear of losing their home to Medi-Cal may have contributed to a severe case of elder abuse. If the pair had consulted with an elder law attorney, they might have figured out a way to get their mother the care she needed and also protect their house.

Amanda Havens was sentenced to 17 years in prison for elder abuse after her grandmother, Dorothy Havens, was found neglected, with bedsores and open wounds, in the home they shared. The grandmother died the day after being discovered by authorities. Amanda's mother, Kathryn Havens, who also lived with Dorothy, is awaiting trial for second-degree murder. According to an article in the Record Searchlight, a local publication, Amanda and Kathryn knew Dorothy needed full-time care, but they did not apply for Medi-Calon her behalf due to a fear that Medi-Cal would "take" the house.

It is a common misconception that the state will immediately take a Medi-Cal recipient's home. Nursing home residents do not automatically have to sell their homes in order to qualify for Medi-Cal. In some states, the home will not be considered a countable asset for Medi-Cal eligibility purposes as long as the nursing home resident intends to return home; in other states, the nursing home resident must prove a likelihood of returning home. The state may place a lien on the home, which means that if the home is sold, the Medi-Cal recipient would have to pay back the state for the amount of the lien.

After a Medi-Cal recipient dies, the state may attempt to recover Medi-Cal payments from the recipient's estate, which means the house would likely need to be sold. But there are things Medi-Cal recipients and their families can do to protect the home.

A Medi-Calapplicant can transfer the house to the following individuals and still be eligible for Medi-Cal:

The applicant's spouse

A child who is under age 21 or who is blind or disabled

Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medi-Calapplicant, under certain circumstances)

A sibling who has lived in the home during the year preceding the applicant's institutionalization and who already holds an equity interest in the home

A "caretaker child," who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant's institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.

In addition, with a little advance planning, there are other ways to protect a house. A life estate can let a Medi-Calapplicant continue to live in the home, but allows the property to pass outside of probate to the applicant's beneficiaries. Certain trusts can also protect a house from estate recovery.

The moral is: Don't let a fear of Medi-Cal prevent you from getting your loved one the care they need. While the thought of losing a home is scary, there are things you can do to protect the house. To find out the best solution for you, consult with your attorney.