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Mother-daughter drama and the financial ties that bind

Mother-daughter drama and the financial ties that bind
An experienced estate planning attorney can help you figure out how much control parents can exert from the grave. (Getty Images)

Dear Liz: My mother is turning 92 this month. Due to a dispute, my mother amended her will last year and stated that my inheritance had to be used for a certain purpose.

My brother sent me the amendment and told me he will enforce my mother’s wishes. He also told me that I had to send a letter to him after my mother dies if I do not want anything from her trust. Is this accurate?

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I want to put it in writing before my mother dies that I do not want a penny from her trust. I want to be completely estranged from my family and their control. Do I need a lawyer to do this, and do I have to wait until her death to put this in writing?

Answer: Consider showing the email to an experienced estate planning attorney to find out how much actual control your mother will have from beyond the grave. There may be workarounds that you (and your mother) haven’t considered.

If you decide you don’t want the money after her death, you can “disclaim” it in the letter your brother described. While it may seem more satisfying to make the point while your mother is still alive, you cannot force her to disinherit you any more than she can force you to take the money if you don’t want it.

The effects of working after taking Social Security

Dear Liz: I didn't pay much into Social Security and started drawing it at age 62. As a result my check wasn't very much. If I start working now, will it increase my monthly benefit over the years?

Answer: Yes, but the effect depends on a lot of factors.

Social Security determines your benefit using your 35 highest-earning years. If you go back to work and earn more than you made in one of those previous years, your benefits will be automatically adjusted.

If you haven’t reached your full retirement age, however, working can temporarily decrease your checks. Full retirement age is currently 66. If you’re younger than full retirement age, Social Security will deduct $1 from your benefits for each $2 you earn above $17,040 in 2018.

That money isn’t gone for good. It will be added back into your benefit once you reach full retirement age.

There’s another way to boost your checks once you reach full retirement age, and that’s to suspend your benefit. Suspending your checks allows your benefit to earn delayed retirement credits. That will increase your benefit by 8% each year between your full retirement age and age 70, when your benefit maxes out. If you can afford to forgo checks for a while, suspending your benefit probably will give you the biggest increase.

Going without health insurance isn’t wise

Dear Liz: You recently wrote about early retirees going abroad for their pre-Medicare years in order to get more affordable healthcare coverage. Why did you not bother to even mention the COBRA option that is often available to workers upon retirement? And by the way, some of us prefer to self-insure in our pre-Medicare years and even opt to not buy Part B coverage once we were eligible. Self-insuring is not for the sick, only the healthy, but there is a place for this never-mentioned option and it certainly reinforces healthy lifestyle choices.

Answer: COBRA was mentioned as an option in the original column, which addressed the retirement concerns of a woman 10 years younger than her husband. COBRA allows employees to continue their healthcare coverage for up to 18 months, so someone who is 63½ could use COBRA to bridge the gap until Medicare.

The coverage isn’t cheap because the retiree will have to pay the full premium without the employer subsidy, plus a 2% administrative fee. Anyone retiring earlier than 63½, including the younger spouse in the original column, still could face years without coverage once COBRA is exhausted.

And going without health insurance isn’t wise. Regardless of how healthy you currently happen to be, you’re one serious accident or illness away from disaster. Self-insuring can make sense for the smaller ongoing expenses of primary care. At a minimum, though, people should have a high-deductible plan that protects them from catastrophically high medical bills.

The decision to forgo Part B of Medicare may be an expensive one, as well. (For those who don’t know, Part A of Medicare is free for beneficiaries and covers hospital visits. Part B covers doctor visits, preventative care and medical equipment, among other expenses, and requires paying a monthly premium. Most people pay $134 a month for Part B coverage, although singles with incomes over $85,000 and married people with incomes over $170,000 pay higher amounts.) A permanent 10% penalty is tacked on to monthly premiums for every 12 months you were eligible for Part B but didn’t sign up.

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