Carolyn Stewart

During my first year of college, my college roommate was in a minor car accident and broke her leg.  Erin called her mom, and her mom rushed to the hospital to be by Erin’s side.  I remember thinking at the time what would have happened if Erin had not been able to call her mom. Who would have taken care of her medical decisions? Erin’s mother was in charge of making medical decisions for Erin in case Erin could not.  This was the first time I had ever heard about a Health Care Power of Attorney (HCPOA) and its importance for all adults.

What is a HCPOA, who needs one, and how do you obtain one?

What is a Health Care Power of Attorney?

A Health Care Power of Attorney (HCPOA) is a legal document that allows you to designate someone to make health care decisions on your behalf.  An HCPOA ensures that your medical wishes are respected when you are unable to communicate or make decisions due to illness, injury, or incapacitation. The following are included in the HCPOA document:

1.  Agent.  You designate a trusted person as your health care agent and authorize that person to make healthcare decisions for you.  Choose someone who knows your values and preferences regarding medical treatment and will advocate for your wishes.

2. Scope of authority.  You can specify the scope of your agent’s authority, including the types of medical decisions your agent can make or any specific instructions. Be as specific (or as general) as you like in defining their authority.

3.  Effective.  Health Care Power of Attorney usually becomes effective when a healthcare provider determines that you are unable to make your own medical decisions: a temporary situation (being under anesthesia for surgery), or a more permanent condition (coma or advanced dementia).

4.  Advanced directives.  A Health Care Power of Attorney may be part of a broader set of advanced directives, such as a living will, which outlines your preferences for life-sustaining treatment.

Who needs an HCPOA?

Accidents, sudden illness, or unexpected medical emergencies can happen. Having a designated healthcare agent ensures that you have an advocate making the best decisions for you. 

1.  Any adult, regardless of age or health status. Once children reach the age of majority in your state (usually 18 or 21) they become adults and take control of their health care decisions and medical records.  The Health Information Portability and Accountability Act (HIPAA) protects medical professionals from sharing sensitive medical information. Consequently, if a young adult is injured and seeks medical treatment, parents will not automatically be able to consult with medical providers, get information, and have input into their child’s treatment.

2.  Elderly individuals. As people age, they face a higher likelihood of experiencing health issues that could lead to loss of decision-making capacity.  An HCPOA can provide clarity and guidance for family members and healthcare providers.

3. Individuals with chronic illnesses.  If you have an illness or condition that may progressively worsen over time, having an HCPOA outlines your preferences for treatment, especially during times you cannot communicate your wishes.

4. Individuals facing surgery.  Before undergoing surgery, you may want to appoint a healthcare agent to make medical decisions if complications arise during the procedure.

5. Individuals at the end of life.  For people nearing end of life, having an HCPOA can help ensure that their preferences for end-of-life care (including decisions about life-sustaining treatment or hospice care) are followed.

How do I get an HCPOA?

Because laws governing healthcare power of attorney vary by state, it is essential to create the document in accordance with the laws of your state.  Many states provide standardized HCPOA forms that are often available online or at local government offices, such as county clerks’ offices or health departments.  In most states, HCPOA documents require the signatures of witnesses and, in some cases, notarization. Check your state’s requirements for witness and notary signatures to ensure that the document is properly executed.

While you can create an HCPOA without an attorney, it’s advisable to consult with a lawyer, especially if you have complex medical preferences or live in a state with specific legal requirements for healthcare power of attorney documents. An attorney can ensure your document is legally sound and complies with your state’s laws.

Having an HCPOA in place can save yourself and others from worry during a health emergency, or in case you become unable to make healthcare decisions for yourself. 

J. Abigail Mason

On April 23rd, the US Department of Labor released its final version of the “Retirement Security Rule,” which outlines a higher standard of care for retirement plans. What does this mean for your retirement plan?

Mike Switzer interviews Abacus advisor Jon Robertson, CFP®.

Jonathan J. Robertson

It’s amazing how creative (and treacherous) scammers have become – especially when their deceptions are aimed at older folks.

Take spry, 80-year-old Evelyn. She received a phone call from someone who identified himself as a local police officer. His story: Evelyn had unpaid taxes that needed to be paid immediately – over the phone – or she would be arrested. Her response: panic. The result: After being transferred to a person claiming to be an IRS agent, she withdrew $10.000 from her bank account and purchased a prepaid debit card to cover the debt.

Evelyn’s story is all too common. The Federal Trade Commission has estimated that consumers lost $8.8 billion to scams in 2022, an increase of 30% from the previous year. This number will only grow as technology and the schemes that take advantage of the elderly become more sophisticated.

The first line of defense is knowing what’s out there.

1 Phone Scams \ Scammers call and claim the person owes back taxes or has some other tax-related issue. Don’t fall for it. The IRS initiates most contact through the mail and will never initiate contact with taxpayers by email, text, or social media regarding a bill or tax refund. Additionally, the IRS will never demand immediate payment.

2 Phishing Emails \ Scammers send fake emails that appear to be from the IRS, Social Security
Administration, or Medicare. Don’t click on anything. Any links or attachments may contain malware or lead to phishing websites designed to steal personal and financial information.

3 Grandparent Scams \ Fraudsters pretend to be a grandchild in distress, needing money urgently for an
emergency situation. Even if the scammer uses the grandchild’s real name or pretends to be the grandchild, be skeptical. A common warning sign is that the caller will not let you get off the phone or be able to verify some personal information about the “grandchild” in trouble.

4 Tech Support “Exams” \ A scammer will pretend to be a tech support agent for a well-known company such as Apple or Microsoft. They will inform the victim that their computer has a virus and instruct the victim to download malicious software. Other tricks involve the scammers obtaining remote access to the computer or demanding payment for non-existent software.

5 Fake Websites \ Scammers create fake websites (typically IRS or Social Security Administration) that
mimic the official websites. Look very closely. Make sure the website has “.gov” in the domain name.

Bottom line \ Learn about the common scams that target seniors. Stop and think before reacting to any
“urgent” request that seems unusual. Trust your instincts. Never be afraid to reach out to friends or family if something seems amiss.

Carolyn A. Stewart

When you lose someone you cherish, their fingerprints, reminders of them, don’t vanish.

Grief over the loss of a loved one is not unlike the sea: a depth and breadth unfathomable at times; waves with an intensity to knock the breath out of you; a tide that laps incessantly (gentle at times yet ferocious at others); and unpredictable. The ache that feels crippling will ease as you work through reminders of your loved one. You will learn how to be kind to, and care for, yourself as you re-visit memories from the past.

After the loss of a loved one, these events–certain days, locations, objects, sounds, smells–can crash over you like a wave you didn’t see coming, leaving you feeling attacked and disoriented. These feelings are a normal part of the grieving process. In fact, while your reaction to these reminders may feel like a setback, this is a part of the journey and a necessary step in the healing process. The following tips may help you to embrace the time instead of dreading the moment:

1 Plan for the day. For the reminders you can anticipate (your loved one’s birthday or an anniversary), consider ahead of time how you would like to spend the day. You may choose to plan a gathering to mark the event, or you may prefer to schedule some form of self-care.

2 Honor their memory. Remembrances of your loved one may feel intense but could also be an occasion to pay tribute to their character, their contributions, and how they loved well. How can you carry your loved one’s legacy forward so that you and others might continue to benefit?

3 Invite others. Grief can feel isolating, and your journey is, after all, unique to you. Nevertheless, you do not have to move through this time alone. When you are missing your loved one, connect with a family
member or a friend who may appreciate reminiscing and being with you.

4 Share your feelings. The burden of grief is heavy, and you were not meant to keep your feelings bottled up inside of you. How you share your feelings is up to you. You may prefer journaling, or talking to someone, or even writing a letter to your loved one. The important part is to get your feelings out.

While healing from loss has no predetermined timetable, if you feel stuck in your grief and unable to manage day-to-day living, seek help from a mental health professional who can assist you in processing your experience and developing healthy coping skills. Reminders of a loss do not have to inhibit your healing; they can be a catalyst for personal restoration.

Ann J. Beckwith

Now is always the perfect time to evaluate your 401[k] with these four simple questions.

How much should I contribute to the plan?

Contributions to a 401[k] are either employee deferrals (via a paycheck) or employer contributions. Contributions of 15% of your annual salary will significantly impact your ability to comfortably retire. Your employer may match dollar-for-dollar contributions up to a certain percentage, which means your return on your contribution is an immediate 100%. How to start?

• At a minimum, contribute enough to maximize your employer contribution– free money.
• Start with 5% of your salary, and commit to a 1% increase in contributions each year.

How should I make my contributions?

Almost all 401[k]s give participants the option to make Roth or Traditional contributions. The difference between Roth and Traditional contributions?

• Roth — you pay tax on contributions today; the account grows tax-free; and no future taxes are due on the earnings for distributions after age 59.5
• Traditional — defer tax on contributions today; the account grows tax-deferred; and pay taxes on distributions after age 59.5

A traditional 401[k] contribution lowers your current taxable income today. Roth 401[k] contributions don’t lower your taxable income. If you expect to be in a higher tax bracket in the future, a Roth 401[k] may be best because your tax bracket is lower today than you anticipate in the future.

Let’s say you earn $1,000 and decide to defer $100 to your 401[k]. If you were to defer the $100 as a regular/traditional 401[k] contribution, you would be taxed on $900 of your income ($1,000 earning minus $100 contribution) and, in turn, deferring the taxes paid on your retirement account contribution. The funds in your 401[k] would grow tax deferred until you withdraw the funds, at which time your distributions from your 401[k] would be taxed as ordinary income (as a salary would be taxed). On the other hand, if you were to contribute the same 100 as a Roth 401[k] contribution, you would be taxed on $1,000 of your income because Roth accounts pay taxes today. The funds in your Roth 401[k] would grow tax-free until you withdraw the funds, at which time your distributions from your 401[k] would be withdrawn tax-free.

Everyone has a different tax situation and timeline to retirement, which may change the best tax strategy for saving to your 401[k].

How do I invest my money?

When thinking through how to invest your retirement account consider risk tolerance, diversification, and cost. Risk tolerance is your ability to tolerate a decline in the value of your investments.

Diversification is investing in a broad mix of investments to minimize the risk of any one investment performing poorly for an extended period of time. Many plans offer Target-date funds, which can be a good set-it-and-forget-it option for retirement accounts. These funds offer diversified portfolios that
automatically become more conservative over time as retirement approaches.

Low-cost investments are the ones with a lower expense ratio. The lower the expense ratio, the more you keep in your pocket.

Who inherits my 401[k] if I die?

Your will does not control the disposition of your 401[k], your beneficiary designation form does. A beneficiary is a person or entity you designate to receive these retirement funds when you die. Most retirement plans require your spouse to be listed as your beneficiary. You can name whomever you wish, but your spouse will need to provide written agreement if your beneficiary is someone other than your spouse. If no beneficiary is listed, state law determines the recipient of your retirement assets via the probate process. Be sure to keep a copy of this document with your will and other key documents.

If you have questions about your retirement plan, ask your employer for the contact information of the retirement plan advisor.

Anne Marie E. Ashworth

Who must report?
Companies that are required to register with their state Secretary of State must register with
the Financial Crimes Enforcement Network (FinCEN). These entities include LLCs, corporations
and partnerships.

What companies are exempt?
The Corporate Transparency Act includes a number of exemptions including large entities that [1] employ more than 20 full-time employees, [2] gross more than $5 million/year, and [3] have a physical presence within the US. Tax-exempt entities are also exempt.

What must companies report?
Companies must report “beneficial ownership” information. A beneficial owner is someone who
exercises substantial control over the company or owns 25% or more of the company.

Companies must report the following information for beneficial owners:

1. Legal name
2. Date of birth
3. Residential address
4. Driver’s license or passport information

Alternatively, individuals may apply for a FinCEN identifier and provide the identifier
to the reporting entity instead.

What are the deadlines?
Companies created before 2024 have until January 1, 2025 to register.
Companies created in 2024 have 90 days to register.
Companies created after 2025 have 30 days to register.
Once a company reports, the company has 30 days to provide updated filing information
in the event of a change.

Who files this information?
Your tax advisor or your attorney may be able to assist. CT Corporation and Harbor Compliance
offer a filing service for a fee. You may also self-prepare. https://boiefiling.fincen.gov/

Jonathan J. Robertson

In this video, Cheryl Holland discusses Abacus’s tradition of planting pinwheels for Child Abuse Prevention Awareness month in support of the Children’s Trust of South Carolina.

Cheryl R. Holland

Financial advisors frequently help clients think through their estate plan prior (and in addition) to meeting with an attorney.  When parents begin working on their estate plan, the usual statement is:  “treat my children equally.”  Then the question arises:  “is treating equally actually fair?”  People often incorrectly mix fairness with equality.

Many different scenarios come into play when parents want to treat children differently as part of the estate plan. Sometimes treating children differently reaches an outcome that can be fairer than treating children equally. Differences come in many different forms:  (1) differing levels of assets going to children; (2) one child receives a specific asset; or (3) one child receives assets “outright,” while the other child receives assets in trust.

Why would parents want to leave more assets to one child than another?  A few examples are:

• One child has significant medical challenges.
• One child provides for a larger family.
• One child earns more money than the other(s).
• One child has received more financial support throughout his/her life, and the parents want to even things up after their deaths.
• One child provides more support to the parent as the parent ages, and the parent thinks it is fair to leave more money to this child as partial compensation.

Sometimes parents want to leave a specific asset to one child.  While parents may still provide the same level of assets to each child, the children still might not think of things as being equal. For example:

• If you own a family business, it may make sense to leave that business to the child who works in the business rather than to multiple children who may or may not be involved.
• Sometimes one child has a greater connection to the family vacation home (or the family home) than the others.

Another common scenario where “not being equal” arises is the manner in which your children inherit their assets.  It may make sense to use a trust structure for one child, but not for the other(s). This situation frequently arises wherein there is a significant gap in age (or skills) among the children, mental health or substance abuse challenges, or concerns about divorce and/or asset protection.

Inequality coupled with a lack of communication can cause pain.  When children lose a parent, they usually aren’t at their best emotionally, and tempers can run high.  It’s easy to assume the worst rather than the best.  Children can feel resentment towards each other and towards the financial advisor and the attorney.  It’s easy for a child to equate the amount of money parents are leaving to them with the amount of love that you feel for them.   Work beforehand to create a plan.  Fortunately, good communication can address many of these challenges and lead to successful outcomes—from a letter to meetings with children to honest conversations.

You can write a letter that goes with your estate plan. While a letter isn’t a legally binding document, it can explain your thought process as to why you chose to create your estate plan.  Children might disagree with your reasoning, but they will at least know you made your decision with both love and with thought.

Additionally, a family meeting may be helpful.  Sometimes clients choose to have these meetings as a group or one on one with each child (or as a combination of both).  A meeting allows you to answer questions and address concerns your heirs may have.

Perhaps the best plan is to have a conversation and also write the letter. People remember conversations differently, and memories change over time.  Having something in writing can go a long way to ensure that your children understand your choices when you are no longer around to tell them yourself. Talk with your legal (or financial advisor) to have help facilitating the meetings and/ or provide examples of letters to children.

While estate planning is not always an easy task, taking the initiative to ensure that your children understand your wishes and how you plan to distribute your assets will make it easier for your heirs when you are no longer alive. 

Jonathan J. Robertson

If you’ve been investing in the financial markets for a long time, you could have a portfolio that has grown significantly in value. Which could present a tax problem. However, there is a way to avoid some of these capital gains, and it involves tax planning across generations.

Mike Switzer interviews Abacus Advisor Stephen Maggard, CFP®.

Stephen E. Maggard