Part One: Where to Live?
Often, as we age, we find that keeping the home in which we have raised our families is impractical. Especially as property tax assessments rise in Fairfax County, seniors are looking for more accessible, and affordable, housing. Often this means moving into a condominium, or maybe into a retirement complex. What issues arise here?
Relocation near one or more of your children: Maybe one of your children has suggested you to move to his or her area to be closer to the child, and to grandchildren. When considering this, keep in mind that relocation to an unfamiliar area can be very difficult for retirees. Ask yourself how well you know the area? Can you find your way to doctors (and do you want to switch doctors), to the bank, to a senior center, to the post office? What will your social activities be? If you are planning on building your social life around the local child and his/ her family, historically has this child had time for you? If you will be relying on the child for transportation, this question is even more important.
Relocation to retirement community: Often the big questions here are what can I afford, and can I live comfortably in whatever space I can afford? Some retirement communities have apartments, some have cottages or small homes; some are rentals, with some you “buy” your unit and the purchase price is returned to your heirs upon your death, and with others, you buy a unit on the open market as you would any other real property. Some complexes are just housing complexes, others have different levels of care for their residents. Issues that arise here are:
a. Decide how much space you need- do you see yourself having overnight guests? Need a separate room for an office? How much of a kitchen do you need?
b. How large a community do you want? Do you want to be one person/ couple in an apartment that is one of many, or do you want to be able to get to know all of your neighbors?
c. If you choose to own, look at the community’s policy concerning reselling of property and how much of your sales price is returned to you. How much of any appreciation on your unit? Are there restrictions on real estate agents who can show/ sell the unit? How long after you vacate is your purchase price returned to you? Are there any fees subtracted? Does the monthly fee have to be paid while the unit is up for sale? Can the unit be sublet, or passed on to other family members?
d. With an owned unit, how much will the monthly fee cost? What does that include? Some plans include one meal per day. Will you be paying for goods/ services you know you won’t be using? What charges are extra? In many cases, housekeeping, parking spaces, transportation and other services increase the monthly fee. Who pays for utilities? Does you unit have a separate heating/ air conditioning control (so you can adjust the temperature to your preferences)? What is the policy on pets?
e. If you intend to cook in your own kitchen, test the appliances to be sure how well they work. Make sure storage and counter space are adequate, and be sure your dishes fit in the cabinets.
f. With a rental, what services are you actually buying? Meals, housekeeping, parking place, utilities, emergency services?
g. Does the community have differing levels of care, or do you have to move if you become unable to perform your activities of daily living?
h. In a community that offers independent living, assisted living, rehabilitation or custodial care, what are the prices for the different levels of care? Can outside care providers be brought into independent living facilities so you don’t have to move? What will the community do if the units in the level of care you need are full? Are patients who have spouses living in the retirement community given priority so the spouse can visit? Visit the nursing facility/ assisted living/ custodial care area of any communities you are visiting and ask residents what they think of the facilities, food and care they are receiving.
i. With any community you are considering, if you are paying for 1 or more meal(s) per day, eat in the dining room on a non-special event evening and see the everyday quality of the food and service. Ask who plans and who prepares the meals, and what educational credentials this person has. Is there any ability to provide for special diets or needs (such as diabetic diet, no-salt diet, or a vegetarian diet)? Look for salad bars or buffets that allow you to create or choose your own food. Ask about dining room hours for various meals and be certain you are satisfied with the schedule. What happens if you cannot come to the dining room to eat (i.e., you are ill or wheelchair bound)?
j. Look at the transportation services provided by any retirement community and be certain the services provided are within your budget and satisfactory for your needs. Consider access to groceries, banking and medical care. If trips to the grocery store mean being dropped off at 9 AM and the first pickup is at 1 PM, what will you do with the extra time and any perishable foods? If there is medical care onsite, visit the medical facilities and observe the way the residents are treated. As with hiring any other professional, ask to interview the on-site staff members and ask about their credentials. If you are interested in holistic medicine or in alternative medical care, ask about the availability of appropriate medical personnel.
k. If you become wheelchair bound, what services exist for transporting you to meals, medical appointments, community and social activities, religious services?
l. The Guide To Retirement Living (call for a free copy- 800-394-9990) compares retirement housing options in the Metro DC area.
Downsizing from a house to an apartment: When you have chosen a smaller home, how do you adjust your household to fit into the smaller space? How do you know what you will need in your smaller home? If you plan to cook, what kitchen equipment will you need? What storage does your new home have for everyday items, out-of-season clothing or holiday decorations? Will you have room for photo albums, artwork or musical instruments?
Are your children available to help with the downsizing process? Can one or more children store items that you may need? Do your children want any of the items you need to give away? If you aren’t sure what you will need or can comfortably store, consider a small self-storage area for 4-6 months after your move. That way, you have time to see what you really will need in your new home, and access to items you find you need (rather than having to replace them).
Companies exist to help you downsize, but choose them carefully. Often they are liquidators, and will run a “yard sale” to sell your items, pricing many of them very low to get the sale finished. Ask how they initially price items- what methods or guides they use to arrive at a price that is fair to you. If you have some potentially valuable items (china, silver, crystal, collectibles, tools) do they have ways of selling these items that help you to realize more of their value that just selling them in a yard sale format? Some companies have connections to antique dealers or online brokers who can sell the item(s) over a longer period of time. How does the company advertise the items, especially the unique ones, for sale? Compare the commissions between companies, and ask what happens to any items not sold? You may be responsible for donating them. Before hiring any downsizing company, ask for names of past customers and contact them to hear about their experiences.
If any of the items you wish to dispose of could be of use to someone else, and you would be happier knowing where they are going, consider donation. You can donate a piano, for instance, to a church or school. If the recipient is a 501(c)(3) charitable organization, your donation can be tax deductible.
Part Two: Protecting your Interests- Before and After Death
We are all concerned with becoming mentally incompetent and having to give up control over our affairs. The best way to protect yourself in this event is to make sure you have an incompetency plan in place. With the use of a funded Revocable Living Trust or a Durable General Power of Attorney, you can name someone you trust to take care of your financial and business responsibilities for your benefit. With an Advance Health Care Directive, you can make some advance medical decisions, and choose a medical agent to make medical decisions for you. Here are some issues that arise:
Protecting your financial interests: Selecting your agent(s) or successor trustee(s) is the most important part of setting up a financial incompetency plan. When you choose your agent, look for someone who understands your values and respects them enough to carry out your wishes. Choosing co-agents can often be safer for you. If you choose one agent, he or she is often influenced by his or her spouse, and may make decisions that are not in your best interests because of spousal pressure. Naming co-agents who must agree on any decisions minimizes the spousal pressure, as the agent receiving the pressure can say to the spouse “That isn’t going to work- my sister has to agree with my decisions, and she knows Mom would not have wanted it that way.” When choosing co-agents, however, make sure you choose two (or three) who get along. You don’t want to be in limbo waiting for them to come to agreement.
It is generally not safe for you to have a child’s name on your assets as co-owner. You are actually giving the child a portion of the asset by adding them as a co-owner. If the child has any financial problems, a judgment against them for an auto or other accident or is involved in a divorce, your assets become reachable by the child’s creditors. Sometimes, people want to have a child’s name on a particular bank account that is designated for emergencies or for funeral expenses. If you add a child’s name to a small bank account for these purposes, make it clear in a writing delivered to all of your children or heirs that the child’s name is on the account for your benefit, NOT so the child will inherit the account. Certain types of co-ownership have “rights of survivorship,” which will entitle the named child to inherit the account.
If you intend to stay in your own home as long as possible, make sure your agent knows your intentions, and that your intentions are clearly spelled out in your power of attorney and/ or your trust. This allows your agent to deplete your estate, if necessary, to care for you if that is your wish.
If you are in a marriage where you and your spouse have different children and you have planned so that each spouse’s children inherits that spouse’s estate, DO NOT name each other as agent under a Durable General Power of Attorney without realizing that you are giving the spouse unrestricted access to your assets. Fraud with the use of Durable Powers of Attorney has been a problem, and may financial institutions and brokerage companies now require additional forms that must be filled out by the account owner before someone else can access the account using a power of attorney. Check with your financial institutions to determine if any additional paperwork is necessary; this is much easier to complete while you are still competent.
For your own protection, do not give your children (or other agents) copies of your financial documents until it is absolutely necessary. Because they are powerful documents, I do not make copies (certified or otherwise) of Durable Powers of Attorney; these copies given to children are often responsible for fraud. The reason I do not recommend giving children copies of you trust or will is that many people feel that, once they have shown the children the documents, they cannot change them. Remind your children, if necessary, that your estate is YOURS, and you can leave it all to your cat if you choose.
The question of whether or not to use a financial planner often comes up with seniors. I work with several excellent (and honest) financial planners, but there are also disreputable ones. If you want to use a financial planner, interview several, or, if possible, ask friends or relatives for recommendations. When interviewing, ask in what areas the financial planner may be able to help or answer questions. Also, gauge how easy the financial planner is to reach, and how easy to talk to. Do you understand what he/ she is saying, or are you constantly asking for clarification? Also, be aware of how the financial planner is paid. Generally financial planners operate in one of two ways: first, you can pay for a financial plan, and then choose to purchase (or not) any of the financial products or services the financial planner offers. Secondly, the financial plan is purchased as part of a larger purchase of financial products. If you just want a financial plan, be certain the financial planner you have chosen will prepare the plan for a straight fee.
Protecting your medical interests: From a strictly self-interested perspective, an Advance Health Care Directive is probably the most important document you will ever sign. This document allows you to make some advance health care decisions, and to choose an agent to make other health care decisions for you if you cannot. As with the financial power of attorney, the key to having this document work for you is to choose the right agent or combination of agents. Naming more than one agent (i.e., co-agents) means that you have a team of people making decisions for you. Often this means that more of your wishes are actually carried out, and, just as importantly, that one scared agent cannot make any rash decisions concerning your medical care.
Unlike the Durable Power of Attorney, the Advance Health Care Directive does not confer any financial power on your agent. For this reason, naming a second spouse (or someone from whom you have worked to segregate your estate) is fine.
If you do not have anyone locally to name as agent under your health care directive, consider naming an “emergency” agent. This is someone who lives locally, usually a close friend, neighbor or a relative, and who can be with you in the event of a medical emergency. While they have power to act or make decisions for you ONLY in an emergency situation, their primary function is to contact your agents, pass on whatever medical information is available about your condition, and facilitate communication between your agents and your doctor.
Funeral plans: If you know what type of funeral or cremation you want, consider arranging it in advance in order to have your wishes carried out. Whether you pre-arrange or not, make certain that your successor trustee or executor know what type of funeral service you want, and is willing to make certain you get what you want. Your funeral wishes are better delivered to your agent/ successor trustee in a letter that is independent of your will or trust, as wills and trusts are often not read (sometimes even found) until after burial. If you have chosen cremation, Virginia law requires that your “next of kin” signs off on the cremation, so make sure that your agent or successor trustee is willing to agree to cremation.