Cheyenne R. Young
When will I be eligible to receive Social Security retirement benefits?
Are benefits available for divorced spouses?
What about benefits for widows and widowers?
How do you apply for Social Security?
What is Medicare?
What medical expenses are covered by Medicare?
When should I enroll in Medicare?
What is Medicaid?
What is a Durable Power of Attorney?
What can your agent do?
What about health care decisions?
How is a Designation of Health Care Surrogate different from a Living Will?
What if I become incapacitated and have not executed powers of attorney?
How is a guardian appointed?
What is probate?
Does all property have to go through probate when a person dies?
Who is responsible for handling probate?
Should I plan to avoid probate?
What is estate planning?
What does an estate plan include?
How often should I review my estate plan?
What are trusts?
Do I need a trust?
When will I be eligible to receive Social Security retirement benefits?
If you were born before 1938, you will be eligible to receive full retirement benefits at the age of 65. You may retire as early as age 62 but your benefits will be permanently reduced based on the number of months you receive checks before you reach full retirement age. A spouse who is not qualified on his or her own account will qualify for benefits equal to one-half of your full benefit if he or she begins collecting at age 65. If your spouse elects to receive payments at an earlier age (between 62 and 64), the benefit amount is reduced unless your spouse is caring for a child who is either under age 16 or disabled.
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Are benefits available for divorced spouses?
If you were married for at least 10 years to a worker who qualifies for Social Security, you may receive benefits based on the Social Security record of your former wife or husband. No payments can be made until both the worker and the divorced spouse are 62 years or older.
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What about benefits for widows and widowers?
If a widow or widower is disabled, benefits may begin at age 50. Benefits may begin at any age if the widow or widower is caring for a child who is either under age 16 or permanently disabled. If a widow or widower is neither disabled nor caring for a qualified child, he or she may begin receiving reduced benefits as early as age 60 and full benefits at age 65. In addition, most widows and widowers are eligible for a one-time payment of $255 upon the death of their spouse.
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How do you apply for Social Security?
You may sign up for benefits either by telephone (800) 772-1213 or in person at any Social Security office.
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What is Medicare?
Medicare is the health insurance program available to most people who are age 65 or older. You are eligible at age 65 if you are eligible to receive Social Security or Railroad Retirement benefits, even if you have elected to not begin receiving such benefits, but have worked long enough to be eligible for them, or if you would be entitled to Social Security benefits based on your spouse's (or divorced spouse's) work record and that spouse is at least 62, or if you worked long enough in a federal, state or local government job to be insured for Medicare. Disabled individuals may qualify for Medicare before their 65th birthday once they have been receiving Social Security disability benefits for 24 months.
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What medical expenses are covered by Medicare?
Medicare is divided into three parts. Parts A and B are each designed to pay for a different kind of health care cost. Part A, Medicare Hospital Insurance, helps pay for inpatient care in a hospital or skilled nursing facility, home health care and hospice care. Medicare Part B helps pay for doctors' services and many medical services and supplies that are not covered by the Hospital Insurance part of Medicare. Payments may be made under Part B for approved charges for physicians' services, outpatient hospital and surgery, transportation by ambulance, durable medical equipment, outpatient physical therapy and speech pathology, and other services. All persons who are 65 and older and who are eligible for Social Security or Railroad Retirement cash benefits automatically qualify for Part A. Individuals 65 or over who do not automatically qualify may individually purchase the Hospital Insurance provided by Part A. Any person who is qualified for Part A coverage will be automatically enrolled in Part B, and a monthly premium will be deducted from their monthly Social Security benefit. Persons who are not automatically covered may voluntarily enroll and make quarterly premium payments.
Part A hospital services have a deductible and co-insurance.
There is also a co-insurance for skilled nursing facility cases. There are significant coverage criteria for skilled nursing home care, and there also are limitations on the number of days covered. As a result, nursing home coverage under Medicare is extremely limited.
Individuals covered by Medicare also remain responsible for an annual medical insurance deductible under Part B. After the deductible is met, Medicare generally will pay 80 percent of the approved charges for covered services for the remainder of each year.
Medicare Part C, also called Medicare + Choice, began in 1998.
Medicare Part D covers prescription drugs.
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When should I enroll in Medicare?
Each person who already has begun receiving cash benefits from Social Security, Disability or Railroad Retirement automatically is enrolled in the Medicare program. If you are otherwise qualified but not receiving cash payments, you may enroll in Medicare through your local Social Security office at any time in the three-month period before your 65th birthday or at any time in the three-month period following your 65th birthday. Late enrollment may result in increased premiums.
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What is Medicaid?
Medicaid is a state-run program that provides health coverage to persons with low income and little or no resources. Persons who are qualified for Supplemental Security Income (SSI) automatically qualify for Medicaid. Other individuals who fall into the category of "medically needy" also may qualify. Married individuals needing long-term care services also may qualify for Medicaid under special rules designed to avoid impoverishment of their spouses. Medicaid benefits are much more comprehensive than those under Medicare, both for acute care and long-term care.
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What is a Durable Power of Attorney?
A Power of Attorney is a document you sign while competent that authorizes another person to act for you. That person is called your agent. A Durable Power of Attorney allows that person to act even if you later become incompetent. You can create a durable power that will be effective when you sign it or after some triggering event such as when two physicians state, in writing, that you are not capable of handling your affairs. This second option is called a "springing" power.
Name only someone you absolutely trust to follow your wishes and handle your finances honestly.
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What can your agent do?
Depending on what you say in the Power of Attorney document, your agent may be able to sign legal documents in your place, buy and sell real estate for you, pay your bills, and take other financial actions on your behalf.
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What about health care decisions?
State law allows you to create a Durable Power of Attorney for health care, which is called a Designation of Health Care Surrogate. Under this law, you give your agent the authority to make health care decisions for you if and when you are unable to make them.
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How is a Designation of Health Care Surrogate different from a Living Will?
A Living Will is a declaration to physicians that expresses your wishes regarding life-sustaining procedures or non-orally ingested nutrition and hydration if you have a terminal illness, an end-stage disease or if you are in a persistent vegetative state. You may direct that such life-sustaining procedures be withheld or withdrawn, or you may direct that they be used to sustain your life. A Designation of Health Care Surrogate appoints an agent to make most decisions related to your health care. If you specifically grant the power, your agent can decide to withhold or withdraw non-orally ingested nutritional support and fluid maintenance, admit you to a nursing home or community-based residential facility, and make other health care decisions.
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What if I become incapacitated and have not executed powers of attorney?
If you are no longer able to manage your property or care for yourself and you have not signed a Power of Attorney or named a health care agent, any interested individual (for example, a family member, agency, or health care provider) may petition the court to appoint a guardian to act on your behalf. The guardian will be responsible for managing your financial assets (the "guardian of the estate") and he or she also may be responsible for decisions related to your care (the "guardian of the person"). A single individual may serve as both guardian of the estate and person, or the court may appoint separate individuals.
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How is a guardian appointed?
Any relative, state official, or other person may request that the court appoint a guardian. The person who is alleged to be incompetent must be informed of the petition for appointment of a guardian and of the scheduled time for hearing. The court will appoint a guardian ad litem to interview the individual and others, investigate, and make a recommendation to the court as to whether it is the individual's best interests to have a guardian. The allegedly incompetent person also has the right to be represented by an attorney.
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What is probate?
Probate is a legal process that takes place after someone dies. It includes:
- proving in court that a deceased person's will is valid (usually a routine matter)
- identifying and inventorying the deceased person's property
- having the property appraised
- paying debts and taxes, and
- distributing the remaining property as the will (or state law, if there's no will) directs.
Typically, probate involves paperwork and court appearances by lawyers. The lawyers and court fees are paid from estate property, which would otherwise go to the people who inherit the deceased person's property.
Probate usually works like this: After your death, the person you named in your will as personal representative -- or, if you die without a will, the person appointed by a judge -- files papers in the local probate court. The personal representative proves the validity of your will and presents the court with lists of your property, your debts, and who is to inherit what you've left. Then, relatives and creditors are officially notified of your death.
Your personal representative must find, secure and manage your assets during the probate process, which commonly takes a few months to a year. Depending on the contents of your will, and on the amount of your debts, the personal representative may have to decide whether or not to sell your real estate, securities or other property. For example, if your will makes a number of cash bequests but your estate consists mostly of valuable artwork, your collection might have to be appraised and sold to produce cash. Or, if you have many outstanding debts, your personal representative might have to sell some of your property to pay them.
In most states, immediate family members may ask the court to release short-term support funds while the probate proceedings lumber on. Eventually, the court will grant your personal representative permission to pay your debts and taxes and divide the rest among the people or organizations named in your will. Finally, your property will be transferred to its new owners.
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Does all property have to go through probate when a person dies?
No. Most states allow a certain amount of property to pass free of probate, or through a simplified probate procedure.
Additionally, property that passes outside of your will -- say, through joint tenancy or a living trust -- is not subject to probate.
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Who is responsible for handling probate?
In most circumstances, the personal representative named in the will takes this job. If there isn't any will, or the will fails to name a personal representative, the probate court names someone to handle the process. Most often, the job goes to the closest capable relative or the person who inherits the bulk of the deceased person's assets.
If no formal probate proceeding is necessary, the court does not appoint an estate administrator. Instead, a close relative or friend serves as an informal estate representative. Normally, families and friends choose this person, and it is not uncommon for several people to share the responsibilities of paying debts, filing a final income tax return and distributing property to the people who are supposed to get it.
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Should I plan to avoid probate?
Probate rarely benefits your beneficiaries, and it always costs them money and time. Probate makes sense only if your estate will have complicated problems, such as many debts that can't easily be paid from the property you leave.
Whether to spend your time and effort planning to avoid probate depends on a number of factors, most notably your age, your health and your wealth. If you're young and in good health, adopting a complex probate-avoidance plan now may mean you'll have to re-do it as your life situation changes. And if you have very little property, you might not want to spend your time planning to avoid probate. Your property may even fall under your state's probate exemption; most states allow a certain amount of property to pass free of probate, or through a simplified probate procedure.
But if you're in your 50s or older, in ill health or own a significant amount of property, you'll probably want to do some planning to avoid probate.
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What is estate planning?
Estate planning helps ensure that your assets will pass to those people you designate in a manner that will give them the maximum benefits, helps reduce or eliminate the tax burden on your estate; and allows your assets to pass to your chosen beneficiaries without the inconvenience, cost and delay of probate.
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What does an estate plan include?
A proper estate plan may include a will or trust, a written agreement concerning the status of your assets, a directive to your physician or a durable power of attorney and final instructions.
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How often should I review my estate plan?
An estate plan should not be considered permanent. Conditions, as well as your desires, may change. Barring an important life change that warrants immediate review, an estate plan should be reviewed at least every two or three years. Life changes that might warrant review include birth, death, marriage, divorce or disability of you or a beneficiary, a substantial change in your net worth or that of your beneficiary, purchase or sale of a business or moving your residence to a different state.
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What are trusts?
A trust document is an agreement between three people dealing with assets.
» The Trustor is the creator of the arrangement who appoints a
» Trustee to hold the legal title to the assets for the benefit of
» the Beneficiary.
Although there are certain legal limitations, it is possible for the Trustor and Beneficiary to be the same person and is even possible for the Trustor to serve as his own Trustee. In some situations, Trustors may wish a bank or other entity to serve as the Trustee.
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Do I need a trust?
Trusts offer a number of important benefits, including:
- Probate Avoidance
- Avoidance of conservatorship;
- Control of distribution and management of assets during life and after death
- Death tax avoidance or reduction
- Capital Gain Tax Savings
- Retention of privacy of family assets and finances
- Creditor protection for your beneficiaries;
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