Planning for a Family Member with Special Needs

Written by Chris Cooper, CFP® | 06 August 2012

If you have a special needs family member, it’s crucial to put together a plan to ensure that your relative is taken care of, both now and in the future. Below is a list of things you should consider when developing a plan for your loved one.

1. Put together a guide for your loved one’s care. Take the time to put together some guidelines on caring for your loved one with special needs. This will be a non-legal document, but it will be a useful resource nonetheless after you pass away.
2. Choose your advisors wisely. Choose financial advisors and other advocates who you trust to work in the best interest of your loved one. Look for advisors who are fiduciaries, since they have a legal responsibility to put your loved one’s interest before their own.



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Key Facts About Long-Term-Care Insurance

Written by CHRIS COOPER, CFP® | 30 July 2012

It's no secret that long-term care (LTC) is expensive. Depending on where you live and the type of care you need, your long-term-care expenses could reach $100,000 per year or more. With costs at that level, most people simply are not able to pay for LTC out of pocket, even if they have saved diligently throughout their life. Just a few years in a nursing home or other facility would quickly exhaust a person's retirement savings, often leaving them dependent on government programs for care. Because the cost of long-term care is so high, many people eventually end up on Medicaid, the publicly funded health plan for the poor. However, qualifying for Medicaid typically only happens after you've exhausted all your other assets.

In order to manage long-term care costs, some people turn to insurance. A LTC insurance policy can help you pay for a stay in a nursing home or an assisted living facility, or for in-home care. While it may be difficult to think about the possibility of needing long-term care, it's something we all need to consider. As we live longer, it becomes more likely that a person will require long-term care following a stroke, cancer or because of a condition like Alzheimer's disease.

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Is Walking Away from Your Underwater Mortgage an Option?

Written by Chris Cooper, CFP® | 23 July 2012

Do you owe more money on your home than it's worth? If so, you're not alone. Roughly 11 million homes in the U.S. are underwater—in other words, the amount remaining on the mortgage exceeds the value of the property, sometimes by hundreds of thousands of dollars.

Underwater mortgages can be a big burden on homeowners, draining their financial resources and limiting mobility. So it's hardly surprising that some people with underwater mortgages have reached a seemingly drastic conclusion: It's better to stop paying the mortgage and walk away than to stay in the property. This process is known as strategic default, and it's more common than you might think, though it's not a decision to be made lightly.

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The Problem with Annuities

Written by Chris Cooper, CFP® | 17 July 2012

Are annuities a good vehicle for retirement planning? It depends on who you ask. While annuities offer the promise of a guaranteed income for life, they're not always all they're cracked up to be. Before you buy an annuity, you really need to work with your advisor to determine if it's a good fit for your situation.

An ethical advisor will help his or her clients objectively evaluate an annuity before making a purchase. Unfortunately, however, some people who sell complicated annuity products may not be acting in such a transparent manner. In a recent case, an independent insurance agent in California received a felony-theft conviction after he sold a complicated annuity to an elderly woman who had exhibited signs of dementia, according to prosecutors.

The product in question was an indexed an annuity, a type of insurance product that pays interest that is linked to the performance of stock- and bond-market indexes. Many insurance agents like indexed annuities because they can high commissions from them. However, indexed annuities may also come with extremely steep early withdrawal penalties, which clients may not always be aware of.

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