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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,"
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
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
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
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 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."
North Brunswick 08902. Alan Mott, president. 732-422-0307; fax, 732-422-3820.
Home page: http://www.nsac.net.
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
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:
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."
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.
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
"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
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."
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
"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:
and hold the power of attorney. In the case of an emergency, there
would be free access without hassle.
to their safety deposit boxes and fire proof box or file cabinet.
power of attorneys, beneficiaries on insurance policies, and co-signers
on bank accounts and safety deposit boxes.
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."
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.
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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