May 2003 Newsletter

Issues of Aging

Over the last few years, we have been working with several clients over the age of 70 on issues that all of us need to think about.

Where to Live

Most seniors want to stay at home as long as they can. It's easier, for one thing: the enormity of packing up a house and contents after 30, 40 or even 50 years is over-whelming. Even after admitting that they should be downsizing or going to an assisted living arrangement, the search process for a new home is time-consuming.

A recent presentation by Joan Smith, Executive Director of Loaves & Fishes, pointed out some of the disadvantages of remaining at home. A major problem for many seniors is malnutrition, which can contribute to memory loss, lack of physical stamina and other health issues. With one out of three older Americans living alone, it is common for our "solo cooking habits" to decline and put our health at risk. Especially important are getting five servings of fruit and vegetables per day, sufficient fiber and some moderate physical activity.

If you are living alone without a good food support system, you might be better off in an assisted living facility that provides meals. Many times, a new resident's health improves substantially after moving in just from the better eating habits.

Another advantage of the assisted living facility is that it provides a community of social interaction, which is also important for our health and happiness. Successor Trustees Two clients recently needed to trigger the successor trustee provisions on their living trusts, because their health had declined.

Be sure your documents are up to date and that the appropriate person is named as your successor trustee. If you have trouble deciding on who to name, consult with your attorney, and then discuss the decision with all affected people, e.g. family members.

If you are a senior living alone and do not have a living trust set up, consider doing that this year.

Health Directives

Another important document to keep up to date is a Directive to Physicians, which indicates what type of medical treatment you do and do not want to have (in the event you are unable to decide for yourself).

This document appoints a family member or trusted friend to speak for you with your doctors. Consult your attorney if you have not prepared one for yourself.

Family Gifts

Our estate planner friends tell us that even with the higher federal exemption amounts, it can still make sense to give away assets during your lifetime in order to minimize Oregon inheritance taxes. Right now, Oregon's tax-free estate amount is stuck at the old $600,000 level, even though the federal amount has increased to $1,000,000. So an estate worth $1,000,001 would be tax-free for federal purposes but owe $33,200 to Oregon. Bills to correct this difference have not yet been passed.

Annual tax free gifts per person are now $11,000. Some grandparents are also taking advantage of the five-year option in 529 College Savings plans (you can give five years' worth of annual gifts all at once into these accounts).

Long Term Care Insurance

(by Mary M. Osborn, CFBS, CLTC)

About one in five Americans over age 50 will need some type of long term care service during the next 12 months. After the age of 65, the percentage increases to 50%. The cost of long term care services can be substantial. Today, a one-year stay in a nursing facility averages between $45,000 and $80,000, and this is not covered by Medicare. At- home care can be even more expensive.

Some people are able to cover these costs from their own savings and investments, but others would find it a substantial burden. To help pay for the expense, you can purchase a long term care insurance policy. There are many factors that go into the decision of which policy is best for you, so be sure to consult a specialist in this kind of insurance.

At what age should you consider purchasing a policy? The younger you are, the less expensive the premiums will be, but you will probably be paying them for many years. A 40-year old couple could purchase a meaningful long term care insurance plan for about $1,300 a year. The cost for a 50 year old couple would be $1,500; at 60, $1,900; and at 70, $4,600. (Of course, premiums will vary depending on the options and benefits that you select.) Waiting until you are older may be risky if health conditions develop that make you uninsurable.

Some insurers offer policies that are "paid up" after a certain number of years, so you can plan for the total cost in advance. Of course, since this is a policy you may not use until far in the future, be sure you purchase a policy from a reputable, financially secure company.

Other Issues

There are many other "issues of aging," some specific to you or your family , such as planning for the continued care of pets. We encourage you to initiate and continue open dialog with your family and friends to insure the best outcome for your future. It can be difficult emotionally to face and make the hard decisions about housing, health and independence. But if you don't plan for yourself, you may lose control of those decisions. Let us know if Silver Oak can be of help to you and your family.

Calendar Items

Boot Camp: The June Investment Boot Camp date has been changed to Saturday June 14th (from the 7th). After that, the next boot camp will be Saturday September 6th. Call to register 503-242-1715.

Silver Oak Giving Circle: The next meetings of the Giving Circle will be Sunday May 18th and Sunday September 14th. Call Deborah if you would like to join us.

Silver Oak at Work

You may have seen Steve Hewitt's quotes in the Julie Tripp article Sunday April 27th on "Incubating a Plan for Parenthood."

Deborah was out of town in April at the national conference for the National Association of Personal (Fee-only) Financial Advisors — held in the odd location of a casino in Reno! There were good speakers with lots of new ideas to benefit our clients.

She was also quoted in Redbook magazine in the May issue for an article on "5 Money Rules Every Woman Must Know."

Last year, in addition to serving our 100 management and retainer clients, Steve and Deborah prepared 33 financial blueprints or portfolio reviews, and provided hourly consultations to an additional 45 clients. Thanks to our clients and friends of the firm for all the referrals! We will continue to do our best to justify your confidence in our skills.

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