Paul Ferraresi

I find that as each new year comes, people often state, “Gee, where did the year go? It went by so quickly.” And yet, other times people bemoan that things are moving too slowly. Since we, in general, are here on this planet for 100 years and then pass away for eternity…here is a glimpse of how long eternity is….

“In the cold northern wastes there is a mountain a thousand miles long, a thousand miles high. Once each thousand years a small bird flies north. This small bird flies north to sharpen his beak on the cold hard stone of the mountain. When the mountain is thusly worn down, one second of eternity shall have passed.” –Tibetan Poem

In less than 11 months from now a new Congress will be elected. In addition, you may have the same or a new administration in the White House.

What will the economy be like? What will be the “mood” of Americans? Monetary policy has been used up, and only fiscal policy tools remain. A major fiscal tool is tax policy.

The present tax law is set to expire on December 31, 2012. Will politicians kick the can down the road again? Everyone knows that there are a few major changes that need to be done to have the U.S. economy thrust forward with dynamic vigor. One aspect that must be noted: Any tax policy change must be cemented in place for at least five years. Any prudent individual or business cannot do any worthwhile planning or changing behavior with any shorter time period.

Here are a few changes that will transpire when the extended “Bush tax cuts” expire. Remember, it was the largest tax cut in history when first implemented and got us out of the 911-tech stock implosion of 2000-2003. Consequently, if it is not extended…it will be the largest tax increase in history. Here are just a “FEW” of the changes:

• All tax rates basically go up around 5%. The 10% bracket is eliminated and will be at 15%.
• Dividend rates will go from the present 15% rate to your ordinary tax rates.
• Capital gains rates go from the present 15% rates to rates of 25%. (Gee, I wonder what this will do to your stock market investments? DUH!)
• Elimination of the tax credit for having children. (This will hurt the unwed parents and illegal immigrant parents.)
• The marriage penalty tax will go back into effect. (This will encourage married people to not stay married.)

Since it is obvious that you will be taxed more in every area of your life, doesn’t it make sense to develop a plan to place your monies into programs that will never be taxed? We are here to help at any time.

Come November 2012 it may be beneficial to heed the words of the former Mayor Daly of Chicago, “Vote early and vote often.”

A great new web site by FraudAvengers (www.fraudavengers.org) has recently started. It is a non-profit group with the goal to educate the public on how crooks use online payment options and technologies to commit fraud.

It is a Texas-based group with the slogan, “Pros preventing cons.”

The site has blog articles to inform individuals and businesses on how to reduce their risk of fraud.

Check it out and sign up. I think it will be very helpful.

The end of the year and the beginning of a new year make people reflect back on their lives and lessons learned. I received a list of “Lessons Life Taught Me” from a 90-year-old woman. Over the years I have added to this list and continue to do so.

May I suggest you sit in a quiet place with your family and add to this list and continue to do it each year. Maybe by the time we all get the list up to 1000, well…we will have gotten this “life” thing down.

Wishing you success and happiness.

1. Life isn’t fair, but it’s still good.
2. When in doubt, just take the next small step.
3. Life is too short to waste time hating anyone.
4. Your job won’t take care of you when you are sick. Your friends and parents will. Stay in touch.
5. Pay off your credit cards every month.
6. You don’t have to win every argument. Agree to disagree.
7. Cry with someone. It’s more healing than crying alone.
8. It’s okay to get angry with God. He can take it.
9. Save for retirement starting with your first paycheck.
10. When it comes to chocolate, resistance is futile.
11. Make peace with your past so it won’t screw up the present.
12. Don’t compare your life to others. You have no idea what their journey is all about.
13. If a relationship has to be a secret, you shouldn’t be in it.
14. Everything can change in the blink of an eye. But don’t worry – God never blinks.
15. Take a deep breath. It calms the mind.
16. Get rid of anything that isn’t useful, beautiful or joyful.
17. Whatever doesn’t kill you really does make you stronger.
18. It’s never too late to have a happy childhood. But the second one is up to you and no one else.
19. When it comes to going after what you love in life, don’t take no for an answer.
20. Burn the candles, use the nice sheets, wear the fancy lingerie. Don’t save it for a special occasion. Today is special.
21. Over prepare, then go with the flow.
22. Be eccentric now. Don’t wait for old age to wear purple.
23. The most important sex organ is the brain.
24. No one is in charge of your happiness but you.
25. Frame every so-called disaster with these words, “In five years, will this matter?”
26. Always choose life.
27. Forgive everyone everything.
28. What other people think of you is none of your business.
29. Time heals almost everything. Give time time.
30. However good or bad a situation is, it will change.
31. Don’t take yourself so seriously. No one else does.
32. Believe in miracles.
33. God loves you because of who God is, not because of anything you did or didn’t do.
34. Don’t audit life. Show up and make the most of it now.
35. Growing old beats the alternative — dying young.
36. All that truly matters in the end is that you loved.
37. Get outside every day. Miracles are waiting everywhere.
38. If we all threw our problems in a pile and saw everyone else’s, we’d grab ours back.
39. Envy is a waste of time. You already have all you need.
40. The best is yet to come.
41. No matter how you feel, get up, dress up, and show up.
42. Yield.
43. Life isn’t tied with a bow, but it’s still a gift.

The Deficit Reduction Act 2005 (DRA), signed into law February 8, 2006, brings new rules that make it far more difficult for seniors in need of long-term care to get assistance from Medicaid. Currently, only 10% of Americans over the age of 65 own some type of long-term care protection, and only 17% of baby boomers have planned for long-term care needs. People assume their health insurance will pay LTC bills, but it won’t. Even those who qualify for Medicare benefits will only be provided with a maximum of 100 days of nursing home care, and individuals are eligible only when going to a nursing home immediately after a three-consecutive-day stay in a hospital. Then the first 20 days are covered, but a co-pay ($141.50 per day for 2011) will be required for the remaining 80 days. All benefits end after 100 days.

Currently, 49% of LTC recipients are relying on Medicaid, but keep in mind, while some in this group come from our nation’s poor, many in this group start out paying out-of-pocket then go on Medicaid after their assets are exhausted. Only 7% of people are actually paying for long-term care with private insurance coverage they have purchased. The government took a step to reduce Medicaid roles with the passage of the DRA, making Medicaid eligibility more difficult. The three-year look back is gone. Under the new law, the look-back period is five years for all transfers, and the beginning date for the penalty period is now the later of the date the person enters a nursing home or the date the person applies for Medicaid.

What this boils down to is the penalty period will not begin until the nursing home resident is virtually destitute.

Gifts made by seniors in the most innocent manner could jeopardize their eligibility for Medicaid even if it is legitimately needed. For example, a grandparent making a monetary gift to a grandchild for a wedding or college graduation could end up delaying their Medicaid eligibility.

Also, watch out for filial responsibility. Filial responsibility laws derive from England’s Elizabethan Poor Relief Act of 1601. This law required grandparents, parents and children, to the extent they were able, to support family members who could not care for themselves. Currently, 28 states have filial responsibility laws. Pennsylvania has re-enacted its law making children liable for support of their indigent parents, and other states are likely to follow suit.

The DRA of 2005 also affects the exemption of a person’s home, the use of interest-only annuities and the forgiving of loans.
• A person’s home, formerly exempt from Medicaid eligibility limits, will be counted as an asset if the equity in that home exceeds $500,000. States are allowed the option to increase that amount to $750,000.
• Some advantages in using interest-only annuities have also been eliminated. These annuities provided a small income during life and left the original investment to heirs upon the senior’s death. Under the new rules, the state must be named beneficiary of any leftover funds in the annuity for at least the amount of the medical assistance paid on behalf of the annuitant.
• A senior can no longer loan money to their children to get it out of their estate, then, forgive the loan. In order not to be considered a transfer of assets, the repayment of a loan or mortgage must be actuarially sound and cannot be forgiven or cancelled upon the death of the lender.

Projected growth in the senior population has caused states to seriously review Medicaid programs.

For a reasonable cost, life insurance with a long-term care rider can be purchased. This plan will provide funds for the insured should they need long-term care, protecting the loss of other assets they have worked so hard to accumulate. However, in the event no long-term care is ever needed, the insured has a death benefit to leave to heirs, enhancing even further the legacy they will be able to leave their loved ones.