Income Annuities Top Other Asset Classes

By mitigating risk of outliving retirement savings, according to the Wharton Financial Institutions Center at the University of Pennsylvania and New York Life Insurance Company. They identify lifetime income annuities as the most cost effective and least risky asset class for generating guaranteed retirement income for life. Income annuities can provide secure income for one’s entire lifetime for 25-40% less money than it would cost an individual to provide a similar level of secure lifetime income through traditional means. Fixed income and other investment products like mutual funds carry the risk of outliving one’s nest egg. Recent innovations in income annuities have helped elevate the products to a desirable asset class in retirement. These findings are outlined in a paper entitled “Investing Your Lump Sum at Retirement,” based on an academic study entitled “Rational Decumulation,”co-authored by Professor David F. Babbel of the Wharton School and Professor Craig B. Merrill of the Marriott School of Management at Brigham Young University. The study explores financial options for retirees and compares income annuities with other asset classes in retirement.

“Living too long is fast becoming the major financial risk of the 21st century,” said Professor Babbel. Our research shows that only lifetime income annuities can protect individuals in an efficient way from the risk of outliving their assets. This simply cannot be duplicated by mutual funds, certificates of deposit, or any number of home grown solutions. Paul Pasteris, senior vice president of New York Life states, “Today’s income annuity offerings are designed to address many of the traditional consumer concerns discussed in the Wharton research, including access to cash when needed, inflation protection, and the ability to leave a legacy for one’s heirs, all while providing welcome peace of mind in retirement.”

Professor Babbel said, “With our academic finding now defining the enormous consumer benefits of income annuties, the arguments are compelling in favor of adding these products to retirement portfolios.”

Do you know what a Ombudsman is?

In life we learn the most from our experiences.  Here is one that we don’t think about much until it happens.  When it does you may need help in a very quick way.

Example:  A Father in Law has been caring for his wife who has Alzheimers for the past 10 years in their home.  He suffers a stroke, is rushed to the hospital.  They place a pace maker in him yet he has lost the use of his entire left side of  the body.  Now your faced with two parents who quickly need  care.  What do you do and where do you start to help them both. The following information is a quick reference when you need to make decisions.

Long Term Care Information: Do you know what an OMBUDSMAN is?

If you are searching for a long term care facility for a loved one then you need to know this information.  It will save you time and energy.

The Long-Term Care Ombudsman

A LTC ombudsman is specially trained and represents people in a given geographical area who live in assisted living residences or skilled nursing facilities.  Ombudsmen make regular visits to facilities and investigate problems and complaints.  They are usually a good source of information about the differenct facilities in the area, particularly about a facility’s specific strengths and weaknesses.  Althought Ombudsmen are prohibited from recommending one facility over another, they may offer advice on what to look for when visiting and evaluating facilities.  They may also be able to supply such things as the latest state inspection reports or information about the number and types of complaints a facility may have received.

Start by explaining briefly the status of the person needing the care and ask if they can provide a list of care units based on your needs.  Take notes, ask for complaint records.

Google and search the word Ombudsman and put your state in the search.  You can then find the regional person in your area that you can call.  Call the local number.  The toll free number is the national office. Try to speak with the regional person if possible.

To get a glance at facilities in your area go to:www.medicare.gov.

Once you are at that site scroll down and go to:  Compare Nursing Homes, select your state and your city.  You will want to look at the “Over All” rating of the facility.

Click under the “What is this”? to understand how the rating is obtained.

NOTE: The Quality Measures Rating is the Nursing Facility rating itself.  Don’t depend on those.  It’s self reported.  We have seen Facilities give themselves a 4 or 5 star yet the Health Inspection and Over All rating is a 1.

5. Star system.  The more stars the better.

All nursing homes are required to do a Criminal Background Check by Federal Law.

3. visits recommended for the same facility.  1 Scheduled, 2 unannounced at any meal time and 1 in the evening.

Ask to see where they Wash and Bath.

Look at the Rehab room or ask if they are licensed for Rehab.  If they are not then they will bring in someone.  That means they won’t have much equipment if they are not licensed for Rehab.

Ask, “what is the turn over ratio of staff”?  There is a required posting of On Duty Nurses.  They can also use nurses to do paperwork so dig deeper.  If they post 10 Nurses on duty, ask how many of these are doing paperwork or skills that do not interact with the patients currently. If they say 4 then you have 6 nurses full time dealing with patients of the 10 they post.

Alzheimer’s and Dementia may require a special care facility depending on the condition and stage of the patient.

Many units today require a certain amount of Self Pay and then will transition to Medicaid. Ask if each facility can do both.  This is very important. If they don’t then they may be moving in the future as money or health diminishes.

You may need assessments of the patient from the State, the accepting facility and a doctor so be ready to line up what is required.  The ombudsman or the accepting facility can advise you on those requirements.

One last thing that comes to mind, we have noticed a particular pattern regarding the quality of care and rating of these Long Term Care Facilities.  The pattern is, the Care facilities in the smaller towns have better ratings.  The care for your loved one is the most important thing.  Not the distance you have to drive to see them.  Be open to looking in the smaller areas that are 20 to 40 miles away from you if needed.  The public ratings bare this out as you search the website listed above.

It can be overwhelming, emotional, stressful, as you make decisions for your loved ones.

When you walk into the facility does the staff greet you?  Do they engage you from the beginning?  Do other staff members greet you as you pass them or do they acknowledge you with a smile?  Why is this so important?  If they won’t do it to you as a guest, then there is a strong possibility they may not show the interaction and care needed with the ones they are caring for daily.

Lastly, Pray for Wisdom and do this at the very start of the process.

If you need our help then call or email us.  This is just one service of many that we provide for our clients.  We are a resource when you need it the most.

Death is inevitable; taxes aren’t

Ever heard of an IRD? It and a passel of other tax avoiders can save a ton of money, whether you are the one inheriting the cash or leaving it for others.

By Barron’s

Boomers, beware: You could be on the verge of blowing a big hole in your finances. Not from poor investment or budgeting moves; you probably know how to manage those financial affairs pretty well. No, we’re talking about the danger of paying too much in taxes.

The tax pitfalls for baby boomers in coming years are likely to be steeper and more numerous than they were for previous generations at the same stage of life, advisers say. That’s because the 75 million-plus people born between 1946 and 1964 control an unprecedented amount of money — some $23 trillion — and vast amounts of it will be on the move over the next decade or so.

For example, some $3 trillion is likely to be rolled out of 401(k)s over the next decade, and an estimated $4 trillion will be cashed out of retirement accounts in general. About $11 trillion is predicted to be inherited by baby boomers, and an additional $4.6 trillion will change hands between 2006 and 2014 through the sale of businesses, mostly by boomers.

By 2020, when the last of their generation has turned 55, they will own some $30 trillion in assets and be faced with the challenge of passing them to their heirs without also passing them large tax burdens. The danger: unwittingly letting more money than necessary become fair game for Uncle Sam.
“After spending years accumulating wealth, people don’t realize how easily they can decimate their retirement assets simply by not understanding the tax consequences of how they manage their money,” says Avon, Conn., financial planner Michael Reilly.
As this year’s tax-planning season gets under way, folks in their 50s and 60s would do well to start preparing for five key financial events:

Rolling out of a 401(k)

If your 401(k) holds stock of a company you’ve been employed at, and you are approaching retirement, consider this little-known tax break: By transferring your company stock into a brokerage account instead of rolling it into an individual retirement account, it can get more favorable tax treatment.

Typically, money withdrawn from a tax-deferred account is subject to income tax rates as high as 35%. But under the tax break, you would owe income taxes only on the cost basis of the shares when they get transferred. The gains — or the “net unrealized appreciation” — will be taxed at the 15% long-term capital-gains tax rate when you ultimately sell them from your brokerage account.

Here’s how it works. Assume your shares of company stock are now valued at $200,000; they were worth $20,000 when you received them; and you are in the 35% income tax bracket. Roll the money into an IRA, and your after-tax value would be $130,000. But with the brokerage account tax break, after paying income tax on the cost-basis and capital-gains taxes on the appreciation, the after-tax value would be $166,000. “The more gains you have, and the higher your tax bracket is, the more savings you can realize,” says Mark Cortazzo of Macro Consulting Group in Parsippany, N.J.

What can boomers expect to get from pensions and Social Security, and what can they do to build their nest eggs?

You can generally use this strategy only if you have not taken any distributions from your 401(k) since turning 59½. In addition, all of your 401(k) assets must be rolled out in the same calendar year. However, you can divide your company stock by rolling some of it into an IRA and the rest into a brokerage account.

Carlo Croce, 66, of Riverdale, N.J., a retired Pfizer engineer, had about 50% of his 401(k) assets in the drug giant’s stock. Most advisers recommend holding no more than 10% of company stock. To diversify without incurring an immediate, large tax burden, Croce rolled some of his Pfizer shares into an IRA, where he could sell them without triggering an immediate tax bill. The rest he transferred into a brokerage account and, on that portion alone, saved himself a six-figure tax bill.

Receiving an inheritance

One of the biggest blunders beneficiaries make: cashing out an inherited IRA rather than preserving it and taking required minimum distributions over their lifetimes. The tax consequences of liquidating are enormous, and you miss the opportunity to get tax-deferred growth on the money.

Say you inherit a $500,000 IRA at age 50. If you cash it out immediately, you would, at the 35% tax rate, net $325,000 after income taxes. In contrast, if you take annual minimum distributions based on an Internal Revenue Service formula — starting at $14,619 and getting larger each year — by age 84, the total amount you will have pocketed will be $2.7 million, assuming an 8% average annual return, says Alan Augulis, an estate planner in Warren Township, N.J.

There may be another way to maximize inherited IRAs: through an Income in Respect of a Decedent, or IRD, deduction, which can be taken against withdrawals when federal estate taxes have been paid on IRA assets. The value of the deduction is based on the proportion of estate tax attributable to IRA assets. The deduction can also be used against assets in inherited tax-deferred annuities and 401(k)s.

“People often miss this because the advisers who deal with the estate and pay the estate taxes are different than the advisers who the beneficiary uses, and no one asks the right questions,” says Bob Huntley, the president of Wise$Counsel, a financial-advisory firm in Georgetown, Texas.

Linda Crow, 56, the chairwoman of the biology department at Montgomery College in Conroe, Texas, almost missed taking an IRD deduction on her inherited $700,000 IRA, even though she consulted with a tax adviser. “He never mentioned it, and this isn’t something I could have known myself,” Crow says. Fortunately, a couple of years later another financial adviser spotted the oversight. For Crow, catching the deduction was well worth it. Its value: $117,000.

Another common error to avoid: pulling assets out of an inherited irrevocable trust. By doing so, the assets become part of your estate. Without further planning, they would be subject to estate taxes upon your death, says Tim Speiss, a tax adviser at accounting firm Eisner in New York. “You could keep the trust intact and still have access to the funds without invading it.”

If you are named beneficiary of an estate that you don’t want, and your kids are named secondary beneficiaries, consider disclaiming the inheritance. That way, the estate will not be subject to estate taxes twice before it lands in your kids’ hands. Keep in mind, however, that you cannot choose who gets the assets if you disclaim them and your kids aren’t named. They will be distributed according to the will.

A basic but often overlooked estate-planning move — which can save bundles in estate taxes — is to set up a “bypass” trust, which preserves both parents’ estate-tax exclusions for the benefit of their children. The exclusion — $2 million per person for 2007 and scheduled to rise to $3.5 million in 2009 — is the amount that can be inherited exempt from estate taxes. If you don’t set up such a trust, your kids may inherit a total of only $2 million estate-tax free, rather than $4 million. With estate tax rates as high as 45% on estates worth $2 million and above, that could mean handing the IRS an unnecessary $900,000, says Andrew Pincus, owner of Regal Capital Management, a wealth-advisory firm in East Brunswick, N.J.

For example, if a husband dies first, his wife would get what’s called a spousal rollover of his assets — meaning his assets go to her free of estate taxes. When she dies, the estate would pass to the kids, who would benefit from her $2 million estate-tax exclusion. But his $2 million exclusion will have been lost.

What can boomers expect to get from pensions and Social Security, and what can they do to build their nest eggs?

A better idea: The husband and wife should each set up a trust to harbor their $2 million exclusion, naming their kids as beneficiaries. If the husband dies first, the wife would be able to access the money, if needed. Assuming she doesn’t use it, when she dies, the kids inherit the $2 million in trust estate-tax free, and also get the benefit of the $2 million exclusion on her estate.

To complete the strategy, however, you must be sure that at least $2 million is titled to each of you — you and your spouse. “If everything is jointly owned, you won’t capture the exemption of the first person to pass away,” Pincus says. “A lot of people lose the exemption because they didn’t take two hours to make sure they had assets titled in their own name.”

And stay current. As the estate-tax exclusion rises, confirm that the language in your estate-planning documents reflect that, and that you have at least that amount titled in your name and your spouse’s.

Another simple way to save big on estate taxes is to create a trust to own your life insurance policy. If a life insurance policy is owned by an individual, the benefit would be subject to estate taxes. If it is owned by an irrevocable trust, it will be paid to beneficiaries without an estate tax bite.

Don’t assume that only those with large estates make large errors. “One of the costliest and most common mistakes people make, no matter how much money they are passing on, is in their IRA beneficiary forms,” says Ed Slott, an accountant and IRA specialist in Rockville Centre, N.Y. Many people assume that if they have a will, their beneficiary form is superfluous. But an IRA’s beneficiary form actually overrides a will.

If you don’t name a beneficiary, the IRA will usually go to the estate rather than a person. When an IRA is left to an estate, it must be cashed out soon after death. In contrast, if it is left to a person, that person can take minimum distributions from the IRA and let remaining assets grow tax-deferred for his lifetime.

Second-home shuffle 
Boomers have more wealth and income than any other age group, so no wonder they’re the most avid buyers of second homes. In 2005, they accounted for 41% of second-home sales, according to the National Association of Realtors.

If you’re thinking of joining the trend, beware certain tax consequences: Many folks take out a home-equity loan against their primary residence to fund a second home. But consider that only up to $100,000 of a home-equity loan is deductible, says Gibran Nicholas, the chairman and CEO of the CMPS (Certified Mortgage Planning Specialist) Institute in Ann Arbor, Mich. If you withdraw more than that, you may get a greater benefit by taking out a mortgage on your second home. All interest on that mortgage would be deductible.

What’s more, if you’re subject to the alternative minimum tax, you can’t take deductions for interest on an equity loan. But you can claim them for mortgage interest.
When it comes time to sell your second home, you may qualify to make a so-called 1031 exchange. This allows you to sell a property and buy another without paying any immediate capital-gains taxes on the original property’s appreciation. The gain is rolled over to the new property and deferred until a future sale that does not involve a 1031 exchange.

Only investment properties qualify, “but that doesn’t mean you can’t use the property,” says Stephen Kirkland, a tax adviser in Columbia, S.C. The IRS doesn’t specify the number of days that you can use a property and still consider it an investment. “But if you quantify the return you got on your investment and compare that to the value of your personal use, you can see whichever of those is greater and that may indicate your primary purpose for holding that property,” Kirkland says.

If you have a second home that you use three weeks each year, and renting a similar one would cost you $2,000 a week, the value of your personal use is $6,000 a year, Kirkland says. But if the home has appreciated $50,000 a year, “then you can take the position that you have held it as an investment.”

Selling a business 
When it comes time to sell your business, you want the best deal possible. But if you’re selling to management within your company, that doesn’t necessarily mean you want the highest valuation possible on your business.

“The biggest mistake people make is they assume a higher valuation means more dollars in their pockets, but that’s not necessarily the case,” says Loic “Luke” LeMener, a managing partner of KPLL Private Wealth in Dallas. A lower valuation will mean lower capital gains taxes for the seller. It will also mean a lower sale price, but other compensation, like consulting income, can be factored in to make up for the lower price tag. There’s only so much flexibility you have in lowering your valuation. But there is generally a range, as when analysts value stocks, LeMener says.

Employee stock ownership plans (ESOPs) also can help. Such plans let business owners defer taxes on gains from the sale of a company and allow them “to pay back the people who helped them build their businesses,” says Deborah Larrison, a managing director at Citigroup Capital Strategies. The plans also can safeguard a company’s culture.

What can boomers expect to get from pensions and Social Security, and what can they do to build their nest eggs?

Bill Muirheid, CFO of Hobbico, a distributor of hobby products in Champaign, Ill., says his company was sold using an ESOP, primarily to prevent it from being bought by another company and moved or closed. “We are one of the 10 or 15 biggest employers in the county. This was for the security of the employees.” While ESOPs account for only about 7% of exit strategies, since 2000 there’s been at least a 20% increase in the number of such plans, according to Citigroup and the National Center for Employee Stock Ownership.

To use an ESOP to sell a business, company stock is bought by a trust, usually with borrowed money. The company contributes to the ESOP each year to repay the loans. The trust shares are allocated to eligible employees, who receive shares or equivalent value when they leave or retire. They can sell them back to the company. The owners can defer taxes on any gains as long as they sell 30% of the company stock to the ESOP and meet other requirements.

Whatever big financial moves you face, it pays to be prepared for the tax man.

This article was reported and written by Karen Hube for Barron’s.

Easy changes can make a home much safer for Seniors

by Leslie Garcia

Aging at home is vitally important to seniors’ mental and physical well-being. When you can age in place, you see less decline in both physical and mental capacities. These changes make a huge difference in people’s lives. One is truly a safety issue. The other part is the independence factor: You can feel better and do more for yourself. You want an environment that fits. It shouldn’t be too stressful, but stressful enough so you feel independent. Too stressful can cause decline; not stressfull enough can also. SAFETY TIPS

  • REMOVE THROW RUGS, which are a tripping hazard. If you must have one in the bathroom, put it away after you bathe.
  • USE NIGHT LIGHTS
  • KEEP A PHONE CLOSE BY. One should be near a favorite chair or your bed and reachable from the floor in case you fall.
  • WATCH OUT FOR THRESHOLDS. They’re fall hazards. They’re raised one-fourth to one-half inch and can make a big difference. A handy man can even them out. They might not look as good, but that might save your Life.
  • IN AN EMERGENCY, you might not be able to think clearly so write the numbers 9-1-1, plus your name, address and phone number on a piece of masking tape and stick it to your phone.
  • INVEST IN DEVICES THAT ACTIVATE INDOOR LIGHTING based on how dark it is outside, rather than a certain time of day. That way, lights come on automatically when, for instance, the sky darkens before a storm.
  • HIRE AN ELECTRICIAN TO MOVE OUTLETS 36 inches from the floor so you don’t have to lean down to plug in cords.
  • MAKE SURE ROOMS ARE WELL-LIGHTED. You need three times as much light in your 70’s as you do in your 30’s.

KITCHEN:

  • Make sure the stove controls are in front of the burners. If you have loose sleeves and reach across to turn off the burner, it’s a fire hazard.
  • Use Lazy Susans to reach items stored deep in cabinets.
  • Microwave ovens should be no more than 48 inches from the floor.

BATHROOM:

  • Put Shampoo and soap dispensers on the shower wall. You won’t have to bend down to reach them.
  • If you must wear powder, put it on in your bathroom. Talcum powder and tile floors make for a slippery combination.
  • Get a chair for the shower and a handheld showerhead. If you sit while showering you can avoid possible falls.
  • A grab bar makes getting in and out of the tub easier.

Clearing Up Alzheimer’s

In this interview, Eric Tangalos, M.D., a primary care physician and geriatrician affiliated with the Alzheimer’s Disease Research Center at Mayo Clinic, Rochester, Minn., explains why older people with memory problems should have a thorough diagnostic workup. If fears are confirmed, information and planning can smooth the path for the ensuing years.

Is an autopsy of the brain the only way to diagnose Alzheimer’s disease?

Many people believe that you have to have the brain at autopsy before you can diagnose Alzheimer’s, but that’s not right. We do that for research, to confirm the diagnosis, but we can also identify the disease clinically with time and other tests.

A two- to four-hour battery of neuropsychological tests is a routine part of our Alzheimer’s research at Mayo Clinic. We compare skill levels of people who may have Alzheimer’s with those of people at the same age and education level. We know that an 85-year-old is not going to function as well as a 75-year-old. These tests show us exactly what people can and cannot do based on comparisons to standard tests of people with the same sex, education and age.

Could you describe these neuropsychological tests?

These are mental tests that look at different functions in the brain. Different parts of the brain do different things. Language can be affected, or problem solving. These tests break down the functions of the brain into more basic elements. Short-term memory is different from long-term memory. Performing calculations is different from remembering words. Drawing pictures is different from working through a maze.

Figuring out what a person can and cannot do not only helps establish the right diagnosis, but also helps determine what the individual is still capable of doing either at work or at home. From these studies and knowing what support they have at home, we can tell if the person can still function independently or if he or she is really on the edge and should be looking for a safer living environment.

Does everyone have to go through a battery of tests?

It is a good idea to have a full evaluation when contemplating the diagnosis. I tell people that there’s not a better investment in time or effort. There are lots of brief tests that can be done in the office, but they can only screen for disease and may miss a problem altogether. Longer cognitive tests are more thorough and provide information that has greater accuracy.

How can people recognize the early signs of Alzheimer’s?

In the earliest stage of the disease, a diagnosis can be really difficult. What you’re looking for is something that doesn’t fit with the individual’s former level of function. That’s why family members often notice the symptoms first. The disease is more than just memory — it can involve language, problem solving or even how we draw a clock.

It’s easy to misplace your car in the parking lot. That’s happened to all of us. But most of us eventually find our cars. People with Alzheimer’s lose the capacity to adjust and solve the problem of the lost car. In fact, they might jump to the conclusion that the car has been stolen.

Alzheimer’s is a progressive disease that first manifests itself with problems usually related to memory. Over time, people have more difficulty with tasks. By the end of the disease process, Alzheimer’s is pretty easy to recognize. Our goal is to find out from family as quickly as possible when something is truly amiss in order to do something about it.

What are the warning signs of Alzheimer’s disease?

The Alzheimer’s Association’s 10 warning signs are:

  1. Memory loss
  2. Difficulty performing familiar tasks
  3. Problems with language
  4. Disorientation to time and place
  5. Poor or decreased judgment
  6. Problems with abstract thinking
  7. Misplacing things
  8. Changes in mood or behavior
  9. Changes in personality
  10. Loss of initiative

At what point in the disease are most people getting diagnosed?

There are three broad stages of Alzheimer’s. The first stage is cognitive decline, the second stage is functional decline and the third stage is behavioral decline — which usually occurs during the last three years of the person’s life.

Most people come in during the second stage, when they are having trouble balancing a checkbook or are getting lost. It’s gotten to the point that something has to be done.

Why don’t people go to their doctor sooner?

There remains a tremendous anxiety regarding Alzheimer’s. They want to blame aging even when they can tell that other people their age aren’t having the same difficulties. People hide their symptoms, or spouses cover for them. There’s a fear of losing control. They don’t want to give up their driving privileges or go in a nursing home. But just because you have a memory problem doesn’t mean you can’t drive a car. We look for what you have retained as well as what you may have lost.

Do some doctors hesitate to make an Alzheimer’s diagnosis?

Many doctors still believe that an early diagnosis of Alzheimer’s would overwhelm both families and physicians. It takes a lot of time and effort to manage the disease, both from the person’s family and from his or her physician. That’s why the Alzheimer’s Association tries to provide resources in the community.

I like to use the Alzheimer’s word sooner rather than later. I don’t want my patients or families to hide from it. We believe in diagnostic disclosure because we think there is a lot that can be done for the problem and that the sooner it is recognized, the more we have available as treatment options.

Today, I think we’re talking about Alzheimer’s as openly as we were starting to talk about cancer 30 years ago and about depression 10 to 15 years ago. It’s a real disease, long before it prevents a person from functioning, and we need to do something about it.

Can magnetic resonance imaging (MRI) or computerized tomography (CT) scans help in diagnosing Alzheimer’s?

There’s no biological marker that shows someone has the disease. The brain typically changes with Alzheimer’s, and those changes can be pretty specific and show up on imaging tests. But that’s not enough to make a diagnosis. There’s a lot of overlap in what we consider normal and abnormal, so even if some areas change on CT or MRI, the person may still function quite well.

In our research, we use brain changes on MRI to help us confirm the possibility of Alzheimer’s. In most clinical settings, brain imaging should be used only to rule out such things as hemorrhages, brain tumors or strokes.

What other diseases should be ruled out?

We’d want to check the thyroid, to rule out problems there. And, in many cases, the symptoms of depression can be mistaken for Alzheimer’s — and vice versa. We also routinely look for vitamin B-12 deficiency and always try to make sure that the person is generally healthy and doesn’t have some other serious medical problem that would complicate our diagnosis. A lot of our older patients have other medical problems that just make things worse — like heart disease, diabetes, kidney disease, lung disease or any combination of these.

Do people need to be referred to a neurologist?

Most of the doctors treating Alzheimer’s are primary care physicians. I’ve asked neurologists for help with a diagnosis, especially with younger patients. But many people, particularly frail older adults, can’t get to any medical center with specialists. It’s just too hard for them to travel.

The problems facing people with Alzheimer’s are issues of society and economy, and these are best handled by a primary care physician, as long as there are resources in the community to help and the doctor has a true interest in understanding the disease and his or her patients with it.

What’s the benefit of an early diagnosis?

There are both drug and nondrug interventions, and everything works best in the earliest stages of disease.

How much do Alzheimer’s drugs help?

Drug therapy is only modestly effective. It’s not a magic bullet, but it can delay or slow the progress of the disease. It’s not like taking an antibiotic and seeing your fever go away, or taking a diuretic and losing 10 pounds. Alzheimer’s drugs help some people more than others, but in general, you end up better on the drugs than not on them. With this disease right now, “better” is just not getting worse.

If drugs don’t help much, why get diagnosed early?

An early diagnosis isn’t just about starting drug therapy. You can change your home environment and simplify the world around you. A lot can be done to make the environment easier for a person with Alzheimer’s. I’m a big fan of motion detectors. They’re inexpensive and can be very handy in the bathroom or on the back staircase. They do the thinking for you, and when attached to a light switch, they turn on a light even before it comes to mind to do it yourself.

You might choose to have a phone with big push buttons. You can put photos of whom you’re calling on the appropriate speed-dial buttons. You can also make small adjustments to improve communication. For example, it’s difficult for people with Alzheimer’s to concentrate on what is being said if there’s noise, like a TV, in the background. The solution is simple: Turn off the TV before you talk.

What else can be done?

People with Alzheimer’s do better when they have a routine. It allows them to refresh and reinforce their pattern of behavior every day. They get to relearn their habits over and over and this is good.

When you put them in strange surroundings, they don’t do well. That’s why they may have trouble when you bring them to your house for the holidays, or if they have to be hospitalized. A change in routine is not good for people with Alzheimer’s — there are just too many problems to try and solve.

The change in routine is one of the reasons why people with Alzheimer’s often have such a swift downturn after the death of a spouse. The spouse may have been helping to both think for and protect the person.

Are there other benefits of early diagnosis?

The earlier you’re diagnosed, the more capable you are of deciding how you want the rest of your life to be structured. Predictable routines will help you succeed instead of fail.

The sooner you move into a structured environment, the more protected you’ll be. The ideal setting is probably one that includes independent housing, assisted living and nursing services on the same campus. The same philosophy is at play throughout, so there’s less to learn with each move.

I tell people to move early or late, but not in the middle stages of their disease. Each move will result in a decline in the person’s retained abilities. In the early stages, the person can adjust to it better. And in the late stages, their function is already extremely impaired. The middle stage is where we can still try to keep the patient from really losing ground, and a move at this time causes the disease to deteriorate even further.

The problem is that most people don’t get diagnosed with Alzheimer’s until they reach the middle stage. If you move them during this middle stage, their function declines and it doesn’t come back.

Is there anything people can do to reduce their risk?

There’s a close link between Alzheimer’s and vascular disease. Baby boomers who are concerned about maintaining their brains should take care of their blood vessels as well. That means exercise, which helps keep your blood pressure and weight down. There’s also emerging evidence that exercising your brain with socialization and tasks might help.

What do you hope to see in the future?

I’d like to see people come in earlier for diagnosis. The real problem is that they’re coming too late. That’s easy to understand because Alzheimer’s is such a devastating disease. But we’d like patients and families to run toward a diagnosis, rather than away from it.

The Basics – 8 ways to leave a mess for your heirs

Make these errors and your survivors will wonder what your last wishes were, where your financial records are and why they’re paying taxes they didn’t need to. – By Bankrate.com

If you’ve always hated your kids, your spouse and the rest of your family, it’s surprisingly easy to make sure the acrimony and hurt feelings endure long after your funeral.

However, if you actually like your friends and family, avoid these eight mistakes in planning your estate:

1. Staying ignorant about the process.

As with most things, but especially with estate planning, when you don’t know what you’re doing, mistakes practically make themselves.

Lawyers are supposed to look out for your interests, but they’re not always successful. “They bury their mistakes,” says Ron Christner, an associate professor of finance at Loyola University. “In other words, you have a will made out when you’re 40 and you die when you’re 80, and they look at your will and say, ‘Oh, this is all wrong.’ Well, that’s 40 years too late to discover that. But that’s when you find out that somebody made a mistake.”

Of course, the deceased would have to take some responsibility for not updating the will after age 40.

If you don’t want to leave a mess for your family, you need to bone up on the subject. Spend at least as much time on it as you would researching a car before buying it, says Denis Clifford, a lawyer and author for Nolo, a publisher of consumer-oriented legal books and software. It’s a huge mistake to turn everything over to a lawyer and not get any information about something on which you’re going to spend a substantial amount of money, he says.

“Someone should have an idea of what a living trust is before they go ask someone to make one for them. I would say get some information so you’re at least an intelligent consumer,” says Clifford.”

But don’t think that scanning a book or two will enable you to do it all yourself. Keep in mind that an estate plan is basically a way to distribute your money after you die, minimizing taxes and fees. Hiring a good estate-planning attorney to do this is highly recommended — and not that expensive, Christner says.

2. Being clueless about the role of wills

“Where attorneys make money is in probating the will. They might do a simple will for you for $300, but if they probate the will when you die, they get approximately 2% of your assets, depending on state law,” says Christner.

Many people think a will acts as a free pass around probate court — a common misconception.

“A will is simply a letter of instruction appointing someone to be in charge of your estate and specifying how you want your estate to be distributed or divided, but it doesn’t avoid probate,” says Benjamin Berkley, an attorney specializing in estate planning and administration.

Berkley , an author of two estate-planning books, “My Wishes” and “The Complete Executor’s Guidebook,” says another misunderstanding people have about wills is thinking they need to be notarized. “Having it notarized invalidates it. It has to be witnessed, not notarized,” he says. “It depends on your state: It could be one witness or two witnesses.”

Instead of simply writing up a will, experts recommend putting assets into a living trust — especially if you own real estate.

3. Putting your kid’s name on the deed

Adding your kid’s name to the title of your house is not a good way to pass the old homestead on to the next generation. Tax implications make it a clunky way to bequeath assets.
And yet “so many people do this to avoid having to set up a revocable living trust,” says personal-finance author and TV host Suze Orman. “Your mother or father may say to you, ‘Let me put your name on the house with joint tenancy and right of survivorship so that when I die, it’s immediately yours.'”
Several problems can emerge when someone puts another’s name on a house, Orman says.

“First, it’s a gift, and the most you can gift to somebody (without notifying the Internal Revenue Service) is $12,000 a year,” she says. “So, if the house is worth $200,000, and they put your name on it as a joint tenant with right of survivorship, they just gave you a $100,000 gift for which they have to do a gift-tax report, which then becomes a matter of public record.”

This also means you lose tremendous tax benefits that you would have received had you inherited the house. Dying without a will or a without naming a guardian often leaves a big mess for loved ones.

“When you inherit property, you get an incredible step up in basis on it,” Orman says. “So if you inherit a house and the value of it is worth $500,000 on the day you inherit it, and you then turn around and sell it for that, you don’t pay any tax because that’s your new cost basis.

“If you get that property as a gift while a parent is alive, you take over your parent’s cost basis,” Orman says. If the property has appreciated since your parent bought it, you’re on the hook for the gains, which will be taxed when you sell it.

If you live in a community-property state such as Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin, the rules for property ownership are different still.

“You have people who think that you can hold property in joint tenancy, which is not valid in community-property states,” says Christner, the Loyola associate professor. “But they think you can just own something together and it goes automatically to the other person. That’s not a good idea for estate planning. If you have a very small amount of assets and live in a state that allows joint tenancy with right of survivorship, that may work, but it’s basically not a good idea.”

4. Dawdling indefinitely

Procrastination may be forgivable for young singles with no dependents, but if you never get around to doing anything, the grief experienced by your survivors will be compounded.

Inaction all but guarantees that tensions will run high after you die.

“The biggest single mistake is avoiding the subject altogether,” author Clifford says. “There are a couple of reasons that people do that. For one, it’s not fun, and I can’t make it fun. Secondly, it’s procrastination (caused by) fear of thinking about your own mortality.”

Christner says: “The rules for probating, or, in effect, determining whether you have a valid will, are somewhat different in every state. And if it’s not valid in your state, then the intestate laws in your state determine how your property is distributed.”

Some people may put off doing anything because they don’t feel it’s the right time. But anyone with assets and a family to protect should at least have a will. “Everyone needs to do some estate planning. The only problem is when to do it,” says Christner. “The day you should do it is the day you die, because then nothing can change very much.”

Failing that, “anyone with a significant amount of assets, who has children or a spouse should make up a will probably in their 30s or 40s.”

5. Not trusting trusts

Going through probate, a necessity if you die intestate (without a will), will result in your estate paying too many fees. Though often discussed, federal estate taxes won’t even touch most estates, but court costs definitely will if not planned for. Why fritter away as much as 10% of your assets built throughout a lifetime of hard work?

“The whole purpose of having a trust is to avoid probate, because that allows your estate to pass to your loved ones without having to employ an attorney or go to the court,” Berkley says. “It just goes directly to your heirs and minimizes many of the expenses to your estate.”

Christner says: “A trust doesn’t save taxes, but it does save probate costs. Depending on the state, it probably saves between 8% and 10% of the total estate. If you leave everything you own in your estate, and it all goes by will, then maybe 10% of it will go to attorneys, appraisers and executors.”

The aim in planning is to minimize the financial exposure to your loved ones when you’re no longer here. “By having an estate plan in place, that avoids many, many, many of those expenses,” Christner says.

6. Leaving messy financial records

Pawing through someone else’s disorganized records isn’t anyone’s idea of a good time. Add in grief and the stress of trying to unearth a will or some other evidence of planning, and it’s downright chaos.

Keeping track of all of your information and organizing it in a recognizable way is vital, Christner says. “Social Security numbers, insurance policies, the name of the companies you do business with, your brokerage accounts and where they’re held, and account numbers should all be included.”
Berkley agrees. Just because a person passes away doesn’t mean that credit card companies stop billing.

“The estate is still going to owe the money,” Berkley says. “And all of a sudden children are looking at bills that are past due, and they just don’t have the information. So many of us now keep information on our computers. Passwords, screen names, stuff like that — make that stuff available to your loved ones,” he says.

You may want to include a letter designating where you want your personal property to go. “Unless it’s in your will, it doesn’t have any legal standing,” Christner says. “But if it’s written down, it can prevent fights between relatives where someone says, ‘Oh he promised me this,’ and you can see that it’s written down that no, he didn’t. He promised that particular thing to someone else because it’s in writing, and here it is.”

7. Giving your ex-spouse a parting gift

Failing to occasionally update an estate plan or make changes to beneficiaries after divorce, marriage or other life changes spells trouble.

Major changes such as having children or buying and selling property warrant changes in your will or trust. Equally important are making changes to beneficiary designations on retirement accounts and insurance policies, as those forms trump a will.

“An insurance policy that has a beneficiary on it — that is not dictated by a will or a trust,” Orman says. “A retirement account that has a designated beneficiary or a payable-on-death account at a bank — those accounts aren’t dictated by a will or a trust.”

Clifford notes: “In some states and with some types of assets, divorce doesn’t necessarily revoke the prior spouse as being a beneficiary. For instance, with any federal pension, you have to change the beneficiary. Specifically, you can’t just get divorced and assume that your spouse is no longer your beneficiary. And the same thing is true if you have a child: You should update your will or whatever you have.”

8. Letting others figure out what you want

Talking to your family about your intentions seems obvious. After all, they will one day be combing through all of your most closely guarded secrets.

“When someone passes away, you as a survivor have to put together these pieces of the puzzle, and many times these pieces don’t fit. And you have the hardest time when, if there had been communication, all of this could have been avoided,” says Berkley.

“I had one situation that was so bad,” he says. “The person died without leaving a will or any instructions, and she left three daughters. And there was such fighting between them over who would get what that it went to the court. The court decided that no one was going to get anything and appointed a public guardian to come in and take the entire inventory and sell everything and then write three checks to the daughters.
“Had the mom left some kind of instructions or indication, all of that would have been prevented. But it happens a lot.”

Dying without a will or a without naming a guardian often leaves a big mess for loved ones.

Besides easing the transition after death, leaving specific instructions about your medical care while alive — specifically, in the form of a medical directive — also comes in handy.
“We definitely recommend a health-care power of attorney if you are temporarily disabled, a financial power of attorney for someone to pay the electric bill and the gardener and the mortgage if you are disabled,” Berkley says. “There’s also a very important document known as a living will, which directs a physician. And that really came into prominence in the Terri Schiavo case. Had she had such a document, her family and her husband would not have been at odds fighting for what her wishes were.”

This article was reported and written by Sheyna Steiner for Bankrate.com.