How much is rich?

More people are more rich than at any time in our history. The number of 1 percenters has exploded over the last twenty years. But how much money do you need to have to be considered rich? Bloomberg News has given us an answer: $25 million. And that’s basically “welfare” rich

According to Bloomberg, the elite private banks say $25 million is just get you in the door, rich.  To most $25 million is a non-attainablke dream but to the private bankers, it’s the basic tier.

But don’t get the idea that these bankers turn up their noses at those with just a puny few million. Bloomberg quotes Brent Beardsley of Northern trust Corp. who said 505 of their new clients have assets in excess of $10 million, “but to get to the highest level companies have raised the bar.”

What makes people rich these days has changed in the last 20 plus years. In 1994 what made someone rich was $3 million and now $25 million is high net worth.

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When do you need an attorney?

The old saying goes, “Everyone hates lawyers until they need one.” This bit of wisdom was borne out in a 2013 Pew study that found only 18% of those surveyed had a favorable opinion of lawyers.

On the other hand, those who have a need for a lawyer have different opinions. 61% of those said a lawyer was a necessity and 57% said they were important. So, what if you need an attorney?

All attorneys are not created equal. By that we don’t mean that some are better than others. While this is true, what we really mean is attorneys usually specialize in various aspect of the law. But why not look online for help?

While their is a plethora of information online quite often it isn’t accurate. Laws and regulations vary from state to state and if you rely online you might not get the exact info you need.

What you need is to find a lawyer who specializes in what you need. Just as you would hire a plumber, not a roofer when your sink is stopped up, you wouldn’t hire a personal injury or criminal lawyer to deal with your will and estate.

When and if the time comes when you need to seek out the services of an attorney, make sure to do your research and try and find the most qualified attorney in your local area.

 

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Suddenly rich? What to do.

We’ve all had the fantasy. We hit the numbers big time in the lottery. Now we’re all set for life, financially. Now of course the chances of hitting it big in the lottery are infinitesimal, but what if you come into a large sum of  money through an inheritance or other means?

When we see those smiling lucky bums with their over-sized lottery checks on the television an we hate them. We think their trouble are over. They’re set for life. But, maybe appearances are deceiving. Many winners might not be used to managing large amounts of money and will winds up blowing through their windfall.

Psychologists who have studied lottery winners found that coming into money doesn’t change who that person is. If the person had trouble managing their money when they weren’t filthy rich, they will have trouble when they are rich. Now we’re not suggesting those reading this are irresponsible. Not at all. We just think if you aren’t used to handling a boatload of money, it’s different than when you are handling an average income.

We have some suggestions. When you get the money:

  • Don’t do anything. Don’t go on a spending spree and buy a mansion or things like really expensive luxury cars. Sit on that windfall for six months to a year. Let it soak.
  • Wait that same six months to a year before making any life changing decisions. Let the idea that you have this money sink in.
  • Don’t automatically quit your job. Even if your job sucks it will occupy your time and keep you away from spending that money. You might also lose the social interaction that you got from friends at work.
  • Find a trusted financial advisor. That can be a trusted friend, family member or financial professional. Just make sure thy have your interests at heart an not theirs.
  • Pay off any debt. Get out from under owing. Once you have eliminated your debt, that is a major pressure release.
  • Create an emergency fund. Take some of your money and set it aside so you will have at least a year of living expenses in case of some financial catastrophe.
  • Set up trusts to keep your money from the tax man. Contact a financial pro who can help you set up the trust(s) that are best for your financial situation

These are just a few ideas to how to manage your money if you come into unexpected riches. The best thing you can do is find a reputable financial advisor.

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Beware of arbitration clauses

In the last ten years business in the U.S. have turned to arbitration to create an alternate system of justice  where “rules tend to favor businesses, and judges and juries have been replaced by arbitrators who commonly consider the companies their clients.”

The change has been swift and virtually unnoticed, even though it has meant that tens of millions of Americans have lost a fundamental right: their day in court.”

“This amounts to the whole-scale privatization of the justice system,” said Myriam Gilles, a law professor at the Benjamin N. Cardozo School of Law. “Americans are actively being deprived of their rights.”

What has been happening is that companies, large and small have been adding arbitration clauses to contracts and agreements that take away people’s right to sue in a court of law should the situation arise. These simple clauses can take away a person’s right to sue for medical malpractice, sexual harassment, hate crimes, discrimination, theft, fraud, elder abuse and wrongful death.

The family of a 94-year-old woman at a nursing home in Murrysville, Pa., who died from a head wound that had been left to fester, was ordered to go to arbitration. So was a woman in Jefferson, Ala., who sued Honda over injuries she said she sustained when the brakes on her car failed. When an infant was born in Tampa, Fla., with serious deformities, a lawsuit her parents brought against the obstetrician for negligence was dismissed from court because of an arbitration clause.

Little is known about what goes on in arbitration hearings due to confidentiality provisions and the fact the cases don’t have to be reported to the federal government.

The NY Times reports this disturbing issue

Unfettered by strict judicial rules against conflicts of interest, companies can steer cases to friendly arbitrators. In turn, interviews and records show, some arbitrators cultivate close ties with companies to get business.

Arbitrators aren’t required to follow legal procedures like discovery, which enables you to request information from the defendant. Also, there is no regulation or rule that requires arbitrators to take the law and legal precedent into account in making their decisions. They’re supposed to, but aren’t legally required to do so.

And here is probably the most important aspect of arbitration, most decisions cannot be appealed.

Mandatory arbitration is a lose-lose situation. Don’t deal with anyone who requires a mandatory binding arbitration clause. If you find they do require one, walk away and explain why you are doing so.  Read every contract and look for the clause. The clause isn’t always straight forward. They can say it various ways, such as “dispute resolution mechanism.”

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Long term health care: Medicaid vs. Medicare

Many people get confused between Medicaid and Medicare. So, what’s the difference? While, both programs were federally created, they do different things

Basically Medicare is health insurance for people 65 or older and Medicaid is for people who meet certain income requirements. While Medicare will pay for some rehabilitative services in a nursing home, Medicaid will pay for long-tern care provided you financially qualify. Each state has different requirements. New York has three income limitations to get long term care using Medicaid. 

Most long term care applicants are disabled, aged 65+, or have diagnosed blindness. If you are any of these you are most likely subject to the Non-Magi (Modified Annual Gross Income) standard

  • Income Limitations: If you are single, your income (wages, Social Security benefits, pensions, veteran’s benefits, annuities, SSI payments, IRAs, etc.) must be no higher than $825.00 per month or $1,209 per household if you are a couple.
  • Asset Limitations (Exempt vs. Available) – Medicaid divides assets into two categories: Exempt and Available. Exempt assets are designated under the rules and ownership of an exempt asset by the applicant will not result in a denial of benefits. If an asset is not listed as exempt then it needs to be liquidated and applied toward the costs of nursing home care before the applicant can receive Medicaid benefits. The state has a look back period of 5 years with a penalty for people who sell assets below fair market price, transfer assets to others, or give money and property away.
Exempt Assets for an applicant in New York include:
  • $14,850 or less in cash/non-exempt assets if single. If the assets exceed the limit on the first of the month the applicant is ineligible for the entire month. If married and both spouses reside in a nursing home, the asset allowance for a couple is $21,750.00.
  • One home is exempt (equity limit $840,000) if planning to return, a spouse, a child under 21, or a disabled person resides in it. Whenever an institutionalized person sells a previously exempted residence, the money from the sale becomes a countable asset. The recipient may then lose eligibility for Medicaid until he/she has spent down the money and their countable resources are once again less than the maximum.
  • One car, no equity amount specified. An irrevocable funeral trust, no amount specified.
  • Life insurance policy if the face value of said policy is $1,500 or less. Household goods and personal effects, i.e. jewelry, furniture, heirlooms, etc.

For more information: New York Medicaid Information- New York Department of Health

Managed Long Term Care

 

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