One of the profound demographic realities of our time is the fact that the population of the United States is getting older. There are a number of factors that contribute to this, including lower birth rates, the “baby boomers” reaching their senior years, and the steady advances in medical technology. As a result, the field of elder law is expanding, and those who are engaged in long term retirement and estate planning must take this ever-increasing longevity into consideration.

MetLife has conducted a comprehensive survey that puts the financial impact of long-term care under the microscope. For nursing homes they analyzed the average daily costs for both private and semi-private rooms. The national average for a private room in 2010 was $229 per day, which is over $85,000 per year; this is an increase of 4.6% over 2009. The cost of a semi-private room was $205 a day or $74,825 annually, which is a 3.5% increase over 2009.

The cost of residing in an assisted living facility has also gone up significantly over the last year. Across the country the average annual rates for living in an assisted living community increased by 5.2%. In 2009 the average annual cost was $37,572; in 2010 that figure rose to $39,516.

In Connecticut, the costs are considerably higher that the national averages. Those living in a nursing home in the state can expect to pay an average of $345 per day for a semi-private room and $376 for a private room.

In an era when it is logical to expect that you may be living well beyond your 85th birthday advance planning has become all the more important. When you are analyzing your financial situation and making plans for the twilight of your life, it is a good idea to recognize the fact that you may incur nursing home, in-home care, or assisted living facility expenses at some point in time, and they are considerable and on the rise.

Nirenstein, Horowitz & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

The estate tax in 2011 is going to impact a lot of people who didn’t have to be concerned about it previously, and it is important to understand the ramifications of the tax. Many people are under the impression that the estate tax is only levied on “the rich” due to the exclusion amount, but this has never been the case and it is certainly not going to be the case in 2011.

The estate tax was repealed for 2010 due to some provisions in what are commonly called the “Bush tax cuts,” but the last year that the tax was in effect, 2009, the exclusion amount was $3.5 million. This means that if your estate was valued at less than this amount you paid no estate tax, and if it was valued at more than $3.5 million only the portion that exceeded the exclusion was subject to the tax. In 2011, that exclusion amount is going to be just $1 million.

Many would argue that a couple who have accumulated $3.5 million in total assets throughout their lives should not be compared with the Warren Buffets of the world for tax purposes. But now that the estate tax exclusion stands at $1 million, it is clearly not the domain of the wealthy. So, the solution is to reduce the value of your estate in an effort to stay under that exclusion amount.

One way to do this is through the creation of a QPRT or qualified personal residence trust. You place your home in the trust and you make your heirs, presumably your children, the beneficiaries. You can then live in the house rent-free for a term that you elucidate in the trust agreement. At this point your home is no longer a part of your estate for tax purposes unless you were to die before the term expired.

The funding of the trust with the home is subject to the gift tax, but the taxable value of the property is reduced by the donor’s retained interest in it. So, if that value is less than the lifetime gift tax exclusion of $1 million, the home will ultimately change hands free of both estate and gift tax liability.

Nirenstein, Horowitz & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

Estate planning is something that takes a good bit of forethought, and this is true whether you have a complex estate or not. Of course, the more ambitious your goals are the more things you are going to have to take into account, and it is indeed important to identify those goals as soon as possible. There are people who sit back after retirement, inventory their assets, and then begin the task of deciding how they would like to distribute them. At that point they may find that they are not in a position to do what they’d really like to do for their families due to the fact that they didn’t plan ahead.

How you want to approach your estate is a personal matter. There are those who live by the ethos that you see on those bumper stickers: “I’m busy spending my children’s inheritance.” If that’s the way you feel, so be it. But there are others who may have very specific wishes for their children, grandchildren, and even great-grandchildren and perhaps other family members. What you do with your assets throughout your life should have something to do with your estate goals. Would you rather take your tenth cruise, or earmark that money for your granddaughter’s college fund? Should you sell that classic car now and use the cash to buy new furniture, or keep it in the garage with the intention of passing it along to your son?

You have to have an idea of what you would like to achieve with your estate, because it is going to impact those types of decisions. What is realistically possible depends on your means of course, but regardless of financial status we would all like to provide certain things for our loved ones when we pass on. This is why long term financial planning and estate planning go hand in hand. The wise course of action is to sit down and consider what you would like to do for your family and then consult with an estate planning attorney who has the expertise to get you on a path toward meeting those goals.

Nirenstein, Horowitz & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

The ultimate purpose of estate planning is to prepare for the end-of-life distribution of your assets, but to put it bluntly, the exercise is only going to be necessary if you have something to distribute. Therefore, you can’t put the carriage before the horse as they say, so you really have to engage is some intelligent retirement planning as part of a holistic approach to estate planning. And the sooner you get started doing so, the better.

Consider a hypothetical scenario where you are planning a family vacation, a road trip from Connecticut to Florida. You aren’t going to get into the car with no hotel reservations, no directions, no roadside assistance enrollment, no activity itinerary, no specific destination other than “Florida,” and with no particular budget in place. What you would do is decide exactly where you wanted to go, map out your route, make sure you were covered in case of car trouble, identify your hotel or hotels, and calculate just how much money you will need to make the trip comfortably.

This is exactly how one should approach retirement planning. You need to identify your goals, prepare for possible unknowns, estimate the financial resources you will need to reach these goals, and then work toward achieving them. The reason why we say that retirement planning should get underway as soon as possible is because the more time you give yourself to reach your goals, the more likely it is that you will reach your target.

So when you think estate planning it is wise to include retirement planning as well and discuss an overall strategy with your estate planning attorney. The key to a comfortable retirement punctuated by the ability to provide something for your family after you are gone is long term planning, and it is never too soon to get started.

Nirenstein, Horowitz & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

When you graduate from school and land your first job, you will usually spend a couple of days in orientation sessions. One of these invariably involves the benefits that your new company offers its employees, and in a very real sense this is the day that you begin to plan your estate. When they get around to addressing the company’s life insurance offerings, it may be the first time you really give your mortality any serious thought. However, it is a good introduction to the responsibilities that mature adults have to their loved ones. And the fact is that when you sign up for that first life insurance policy, you do indeed have a fledgling estate plan in place.

Life insurance policies provide cash payouts to your named beneficiary or beneficiaries at the time of your death, and though they are useful for everyone, they are especially important for people who are still working. Let’s say you have a family with children still in the home and you are enjoying a particular quality of life. You have to ask yourself where your family would be financially if you were to pass on unexpectedly. Most families would not be able to weather that storm and retain their quality of life. This is why it is important to evaluate the financial void that would exist in the event of your death and make sure that you have enough life insurance to provide for your family in any eventuality.

For those who have reached retirement age, life insurance policies can provide liquidity that can be used to cover funerary expenses and fees associated with the administration of your estate. They also provide a tax-free way to place cash inheritances directly into the hands of your loved ones.

Life insurance policies are a staple of long term estate planning, and it is advisable to review your coverage often as you enter into different stages of life.

Nirenstein, Horowitz & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

Are you ready to start investing?

If so, have you considered where your funds will come from? Investment money should be extra money you have left over after you pay your monthly bills, create a fund for emergencies, and pay off any large interest debts.

Savings Account

The rule of thumb for savings is ten percent. You should stockpile at least ten percent of your earnings into a savings account each month. As that account grows, you can decide what purposes to use it for. First you should place part into a separate account for emergencies. From there you can use the rest to begin investing. You can either use your money for a down payment on a new home, which is a great real estate investment, or you can choose monetary investments such as stocks and bonds. Initial investors should have at least $500 extra money.

Extra Hours at Work

Don’t have enough saved to start investing but you are still raring to go? Try working some extra hours at your job. Or you could get a part time job in the evening or on the weekends for extra investment capital.

Windfalls

If you get money back each year when you file your taxes, avoid spending it all on new electronics or a vacation. Instead, use some or all of the cash to begin your investment portfolio. By adding money from your tax return each year, you can grow your savings quickly.

Bonuses from work or money from inheritance are also great windfall opportunities to begin investing. Make sure you are caught up on your bills and debts. If so, using these large lump sums of money for venture capital is a great way to grow your money quickly to fund a house down payment, a new car or even your retirement.

Nirenstein, Horowitz & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

The kids are grown and out of the house; you look around and suddenly your home seems so large. A few rooms aren’t even used anymore and you begin to add up the cost of the square footage, property taxes, heating costs and general upkeep. Cleaning all those rooms is no picnic either. If you downsized your home, you’d have more money for retirement. Maybe you’d have a little extra to take a few nice vacations. You could buy two smaller homes; one for your primary residence and the other as a vacation home.

Consider the following when downsizing your residence:

1) Townhomes or condos. Maybe people choose to downsize to a townhome or condo for the convenience of paying someone else to mow the lawn or remove the snow. The drawback is that association fees can be expensive, and for large repairs shared by all occupants of the building, you will have no say-so in which contractor performs the work or when it is done.

2) Retirement communities. In warm weather states especially, many communities are age-restricted. These planned communities offer restaurants, movie theaters, fitness facilities, pools and activities geared toward those approximately 57 and over.

3) A smaller home near family. If you wish to live independently as long as possible, but would like a family member close by to check on you once in a while, you may want to look for a smaller home closer to a close friend or relative.

4) Independent Living Facility. Many long-term care facilities also offer a tiered-living arrangement. You move into their independent living apartments and later when the medical need arises, you can move into their assisted living or long-term care facility.

Whichever option you choose, downsizing your home to a smaller and better-suited living space may save you thousands of dollars in the long-run, and this money can be used to better enjoy your retirement or as part of your estate that you pass on to your heirs.

Nirenstein, Horowitz & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.