The Sandwich Generation

Temps for Parents

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Financial Planning: Counsel for Seniors

These articles by Barbara Fox were published in U.S. 1 Newspaper on May 5, 1999 and had minor revisions on May 6.

All rights reserved.

Move over, AARP, here comes the National Senior Advisory

Counsel. "The American Association of Retired Persons is a wonderful

organization, but there is also room for an organization that takes

a proactive, not passive, approach to helping seniors," says Alan

Mott, founder of the Route 130-based NSAC, which operates in eight

states now and is expanding nationwide.

The for-profit NSAC offers educational seminars for seniors who anticipate needing

to pay for long-term care in nursing homes but wanting to protect

their assets. "Seeing the devastation that was out there, financial

and mental, we thought this was an area that could use some help,"

says Mott.

For attorneys, tax specialists, accountants, stock brokers, and insurance

agents, free seminars are a popular way to troll for clients. You’ve

seen advertisements for seminars for everything from estate planning

and portfolio management to Roth IRAs and tax minimization. Just last

year one brokerage firm, Merrill Lynch, staged 30 of these workshops.

Rather than being sponsored by a particular brokerage house, insurance

agency, financial planner, or law firm, NSAC presents seminars under

its own banner. The NSAC sends out flyers with an impressive red-white-and-blue

flag motif, an 800 number, and what some would consider the wrong

spelling of the last word in its name. Rather than call itself a council,

it uses the term "counsel," because, Mott says, it is offering

advice.

Attorney Paul Macchia, formerly with Wilentz Goldman & Spitzer,

has joined NSAC to handle the expansion of the legal network. Also

planned are partnerships with other organizations to offer discounts,

a newsletter, and a syndicated radio show. Ralph Saviano will

star in the show that starts Sunday, May 9, at 9 a.m., on WADP, 1310

AM in Toms River; it will expand to WOBM 1160 AM on Tuesday or Wednesday

at 7 p.m.

"Seniors often wonder what the legislation is," says Macchia.

"We are becoming an organization that does that thinking and that

review for them. We don’t serve anyone other than seniors, and that

is our `value added.’ They can go to any insurance agent, but that

guy is advising other people, not concentrating on the senior market."

The son of an insurance agent, Mott grew up in East Brunswick, and

after a stint in the Navy he earned an associate’s degree in accounting

from Middlesex County College and joined Prudential Insurance. He

has been self employed for 10 years.

Macchia grew up in Middlesex County, where his father was a dentist,

and went to Georgetown, Class of ’86, and stayed for his law degree

and MBA. After working as a corporate lawyer, he joined Wilentz Goldman

& Spitzer in 1994 and Pitney Hardin in Florham in 1997. He is a commercial

litigator.

Gary Budish, the CEO, is a former senior vice president of Prudential

Insurance and is located in Calabasas, California (818-222-8570).

Other NSAC outposts are in South Jersey, Florida, Pennsylvania, Connecticut,

Washington State, and Maryland.

"Every day we add on more services," says Macchia. Among the

services are long term care insurance, annuities, Medicare supplements,

final expense plans, life insurance for estates planning, reverse

mortgages, and home health care policies. "We integrate the services

and bring all of these disciplines to your kitchen table."

"Because of the unique niche we are in and the unique problems

seniors face, we average 150 people per seminar, where the typical

Merrill Lynch guy might get 20 people," says Mott. Seminars are

being requested by AARP chapters, church and synagogue groups, retired

employee groups, and fraternal organizations. In contrast to a stockbroker’s

seminar, the NSAC seminar will address such "hot button" issues

as probate, trusts, tax issues, increased expendable income, and long

term health care.

"We are not pretending we are a free information service,"

says Macchia, "but we are armed with that information, and if they

want to purchase something, they can. The market is so large we don’t

have to do a hard sell."

"We offer products to solve problems," says Mott, noting that

seminars are "strictly educational." Potential clients who

ask for a free consultation are referred to one of the 100 independent

contractors who will come to the client’s home. Sometimes the seminar

giver is also the insurance agent or tax planner. "We have a good

percentage that request consultations from us. If there is a need,

then that’s how we get paid. If there is a product that is sold, we

make a portion."

"We have researched companies to be sure they are top companies

with top products," says Mott. "Our independent representatives

work with the companies we have designated. Those companies pay us

and from there we pay the independent representatives, who work on

commission."

References to lawyers are arranged differently. Though it is not considered

ethical for an attorney to pay for leads, paying to join a network

is allowed. "We can’t have attorneys practicing law for our clients

as our employees," says Macchia, "but we will screen attorneys

and they will pay us to be part of our network. If that attorney gets

100 clients or one client per month, the fee he pays us is the same.

A guy who has been wasting time drumming up business, this gives him

the advantage."

The NSAC Estate Planning Network part of the business isn’t meant

as a big moneymaker but as a service, says Macchia. "A corporation

cannot practice law." The network will offer one attorney to each

client. "We don’t want our attorneys competing with each other,"

he says, "and the less interaction we have with the attorney,

the better, because of the ethics rules."

"I have been approached by these types of networks as has any

estate lawyer with a good reputation in the community," says Gary

Mazart, a Morristown-based attorney who is giving a workshop for

the New Jersey Bankers Association (see story below). "The networks

charge not inconsequential membership fees, substantial amounts up

to $10,000 annually."

One big difference between AARP and NSAC is that AARP gets its names

(its leads, if you will) from membership rolls, whereas NSAC gets

its leads from seminar enrollment. AARP lends its membership list

to service providers and gets a commission on services sold. NSAC’s

independent contractors pay fees to belong to the network and cover

the cost of seminars; both NSAC and the contractors get commissions

on the products sold.

AARP is a 41-year-old nonprofit membership organization with 33 million

members in 4,000 chapters and 1,800 employees nationwide (http://www.aarp.org).

Its income consists of $139 million in dues, $106 in group health

insurance "royalties," $57 million in advertising, and $77

million from other programs and royalties. It does not have a national

lawyer referral program.

"Our members can avail themselves of a number of services, and

we work closely with the service providers to monitor price, accessibility,

and customer service," says Tom Otwell, an AARP spokesman.

"We provide them with our membership names, and, yes, we derive

revenue from those service providers — a percentage of their sales."

"With 33 million potential customers, we are very cautious about

lending our imprimatur to any product," says Otwell. "The

selection process is very rigorous and is ongoing." He does not

accept the idea that the AARP is "passive," saying that Modern

Maturity magazine is chock full of the products and services we make

available to our members."

Macchia of NSAC says his group focuses "on a particular person as

opposed to a particular product."

"We want to build a high profile," says Macchia. "We don’t

want to be the anonymous party, we want to be the gold standard of

senior services. But it costs money to get to that level, to indicate

to people that, `Here we come.’" He is counting on the radio show

to get more exposure but plans to make haste slowly, instead of emulating

People Express, the airline that expanded so quickly that, as Macchia

puts it, "They succeeded themselves into failure."

"We have been noticing that the seniors have gotten quite savvy,"

says Macchia. "They learn stuff at our seminars, but seniors today

are quite on the ball."

"We want to become a name brand, a household name," says Mott.

"That’s how trust builds."

National Senior Advisory Counsel, 1626 Route 130,

North Brunswick 08902. Alan Mott, president. 732-422-0307; fax, 732-422-3820.

Home page: http://www.nsac.net.

Top Of Page
The Sandwich Generation

One usually thinks of parents leaving money to their

children, not children leaving an estate to their parents. But in

today’s economic client, you may need to consider whether your parents

are going to be taken care of. And Edwin Leavitt-Gruberger,

a tax attorney with Alexander Park-based Jamieson Moore, Peskin &

Spicer, warns you to be careful how you pass that money on.

"I frequently advise my clients never to leave the parents the

money outright. In the event of the child’s demise, the money should

be in a trust that the child creates in a will for the benefit of

the parent."

Leavitt-Gruberger and two other speakers will give a comprehensive

overview of eldercare planning considerations for trust officers on

Thursday, May 6, at 9 a.m. at a New Jersey Bankers Association continuing

education seminar at Forsgate Country Club. A native of Queens, he

went to the University of Buffalo, Class of 1972, and has law degrees

from Brooklyn College and New York University (609-452-0808). Also

participating in the eldercare workshop are attorney Gary Mazart

of Schenck, Price, Smith, King in Morristown, and Barbara Bristow,

geriatric care manager with Senior Care Management on Route 31 in

Pennington. For $150 reservations, call 609-924-5550.

The three presenters will offer advice covering a wide range of topics

for financial and legal planning for the sandwich generation, baby

boomers who need to simultaneously raise their children, take care

of their parents, and plan for their own retirement.

About taking care of your parents: As long as you are alive it is

just a question of laying out the money for what your parents need.

But if you predecease them, the attorney notes, you need to think

about who will manage the funds. "And from an estate tax perspective,

never send assets up a generation, where they will be taxed again

in the near future," says Leavitt-Gruberger.

Gary Mazart, the other attorney on the panel, went to State University

of New York at Binghamton, Class of 1980, and to Benjamin N. Cardoza

law school. One of his topics at the seminar will be how to finance

the cost of long term care. He offers some choices:

Personal resources. "For a client with assets and

income, quite often they can restructure an investment portfolio into

taxable type issues to cover the cost of care without depleting the

principal. Sometimes they think they will have extra taxes to pay,

but what they have neglected to think about is that — if they

require custodial care — the expenditure probably qualifies as

a medical expense deduction."

Long term custodial care insurance. "I will pound

the pulpit on that one and I am not an insurance agent." A policy

that costs $750 a year when you are in your 50s will cost $5,500 when

you are in your 70s. "I am very comfortable bringing my clients

to many insurance professionals," says Mazart.

Probably the most controversial, restructuring finances to

qualify for government benefits such as Medicaid. "I consider

this a last resort safety technique for those seniors who are too

old or too ill to purchase insurance and don’t have the finances to

pay for long term custodial cost," says Mazart. He will discuss

the public policy considerations and planning techniques.

Some think that such restructuring means you are hiding assets illegally.

"In every case where a client engages in this kind of planning,

if the client is working with an individual with integrity, there

is no hiding of resources," says Mazart. "All of these techniques

are provided for in the law and are fully disclosed on the Medicaid

application." Medicaid is entitled to look back in most cases,

three years, but with certain types of trust agreements it can review

the asset history for up to five years.

Mazart is not enthusiastic about most living trusts, whether revocable

(meaning you can change your mind and change your trust arrangement)

or irrevocable (meaning permanent). "Revocable living trusts accomplish

nothing to protect assets from long-term care costs. They also do

nothing to protect assets from New Jersey inheritance tax or federal

estate tax."

"The only type of trust that does protect assets and save taxes

is an irrevocable trust," says Mazart, "but the tradeoff is

that the seniors must give up both their access and their control

— not a decision that most seniors take very lightly. And if done

improperly, without the advice of a tax professional, an individual

could be in jeopardy of triggering unnecessary gift taxation and even

later penalties."

Thrifty amateur attorneys may try to draw up their own trust documents

using a shrink-wrapped software package. "At least review the

document with a professional," says Mazart. "Just like you

would not self diagnose and self medicate if you were seriously ill,

for sophisticated estate tax planning, protecting substantial amounts

of assets, it makes sense to see a professional. Don’t be penny wise

and pound foolish."

Any of the professionals dealing with elderly clients — whether

accountants, attorneys, or trust officers — may come to the point

where they just can’t handle the client’s demands. When a client is

starting to lose memory — calling frequently and asking questions

about their money and wanting the trust officer to come out for very

frequent visits — that may be the time to appoint a guardian,

says Barbara Bristow, a partner with Janice McCurdy in Senior

Care Management (609-737-8398).

Senior Care Management is a 10-year-old firm that provides professional

care management for older adults and their families. Formerly known

as Bristow & McCurdy, it has a certified home heath division providing

long-term services for older adults. It has four full-time and four

part-time social workers and 30 home health aides.

"At any given time we probably have a half-dozen clients for whom

we are court-appointed guardians," says Bristow. The process of

establishing a guardianship costs from $3,000 to $4,000, including

physical exams and attorney fees.

"Because the clients are upset about losing their ability to keep

track of things, this triggers lots of little notes and lots of panic

calls," says Bristow. "If somebody else can be reassuring

to them, calls to the other professionals dwindle. We then start to

organize services. Maybe we will hook them up with adult care, to

give them something purposeful to do with their day. Or bring in home

health aides so medications can be monitored."

Top Of Page
Temps for Parents

For peace of mind, says Linda Richter, hire the

help for your elderly parents that you may not have time to provide.

Richter is a "professional organizer" and proprietor of Personal

Paperwork Solutions . . . and More Inc. (609-371-1466).

Richter is a graduate of Hunter College with 20 years financial experience

at CBS television in Manhattan. In addition to helping small business

owners with Quicken and Quick Book, her three-year-old firm provides

paperwork assistance to residents of Rossmoor and Chancellor Park,

and has an exclusive contract with Presbyterian Homes and Services

Inc.

"If your time is limited and you cannot provide all the assistance

needed, hire the day to day help so you will not feel stressed when

your parents call," says Richter. "Consult the newspaper or

talk to neighbors of your family or their professional support team.

Find people who can drive them to appointments, reconcile their bank

statements, help them sift through their mail, prepare tax documents,

or go grocery shopping."

Hiring help is just one of her suggestions for the "sandwich generation,"

those caught between paying for school-age and college-bound children

and the needs of frail, elderly parents:

Cosign their assets (bank accounts and safe deposit boxes)

and hold the power of attorney. In the case of an emergency, there

would be free access without hassle.

Know the locations of their documents and keep the keys

to their safety deposit boxes and fire proof box or file cabinet.

Keep their documents up to date. These include wills,

power of attorneys, beneficiaries on insurance policies, and co-signers

on bank accounts and safety deposit boxes.

Have their securities held by a bank. All income can be

collected by the bank and deposited into the parents’ account. No

lost checks or problems with getting to the bank in inclement weather.

"In the event of a death," says Richter, "the bank will

change over the name on all the securities with just a limited involvement

by the executor of the estate. Otherwise, the executor would need

to contact each company, government, or bank with a death certificate

and whatever other documents they require to transfer ownership."

Have access to their professional support team. Have your

parents draw up a list of their lawyer, accountant, tax preparer,

doctors, insurance companies, and financial planner — as well

as their addresses and phone numbers.

Plan ahead. Talk to the professional team about protecting

your parents’ assets with trusts and or long term care insurance.

If your parents are amenable, plan to look at assisted living facilities

and retirement communities.


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