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Estate Planning Issues for Unmarried Couples Costello Wealth Management Diane Rodgers Costello President 222 Water Street Suite 308 Binghamton, NY 13901 607-348-1001 Fax: (607) 723 1642

Welcome to the Costello Wealth Management Monthly Newsletter. I hope you enjoy the articles. Some articles may also be of value to your relatives and/or friends so please feel free to pass it along. If you would prefer to receive the newsletter via email please contact us by phone or email. Thank you. (607) 348-1001

May 2013-New Clients Estate Planning Issues for Unmarried Couples Are You Prepared If a Natural Disaster Strikes? Questions and Answers about Social Security What is pet insurance?

According to the U.S. Census Bureau, there were 7.7 million unmarried partners living in the same households in 2010. Yet there are several laws that are potentially beneficial to married couples that are not available to unmarried partners, especially when it comes to estate planning. That's why it's important to recognize the risks faced by unmarried partners and some potential ways to help mitigate them.

examples. However, it's important to remember that generally, the beneficiaries named in these assets will receive them at your death, even if you make other provisions in your will or trust. So be sure your beneficiary designations are current and comply with your wishes.

partner's creditors.

Domestic partnership agreement

While you could simply leave your home to your partner through your will or trust, you may want other family members to ultimately receive the home after your partner dies. In this case, you could create a life estate for your partner, allowing him or her the right to remain in the home for life, while naming other beneficiaries to receive title to the property at the death of your partner.

Generally, the law does not always spell out the financial rights and responsibilities of domestic partners. To address these issues, live-in partners can use a domestic partnership agreement (if recognized in their state), which is a contract that addresses the sharing of income, expenses, and property.

Power of attorney and health-care documents

A durable power of attorney is a legal document that allows you to authorize someone to carry on your financial affairs and protect your property if you are unable to do so during a Wills or trusts period of incapacity. Without this type of All states have probate laws that provide some authorization, the courts may appoint one or protections for the surviving spouse, but more persons to act on your behalf. This generally no such protections exist for a proceeding can be expensive and time surviving domestic partner. Therefore, it's vitally consuming, and you may not have any control important for live-in partners to prepare estate over the person(s) appointed by the court. More planning documents including wills and, in importantly, your partner may not have access some cases, trusts. Through wills and trusts, to needed financial support through your you can provide for the financial support of your assets. surviving partner after your death. A health-care power of attorney or health-care Titling assets proxy is a legal document in which you give your appointed agent the right to make certain How your assets are titled can determine their health-care decisions on your behalf if you are disposition upon your death. For example, if you want your partner to receive your home at unable to do so. Without this document, doctors and hospitals often rely on family members to your death, you could title it in both names as make health-care decisions for someone who's joint tenants with rights of survivorship. incapacitated. Often state law does not However, retitling your home in this manner recognize unmarried couples as family, so if gives your partner ownership rights in the you want your partner to be able to make these property. Also, depending on the value of the decisions on your behalf, you should name your home, there may be gift tax implications, and partner as your health-care agent. the home may be exposed to claims of your

Unmarried couples face potential estate planning pitfalls. And state laws vary, so it's Beneficiary designations important to consult an attorney or advisor who Certain types of assets allow for their transfer at is familiar with state and federal laws that affect unmarried couples. death through beneficiary designations. IRAs, life insurance, annuities, and 401(k)s are some

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Are You Prepared If a Natural Disaster Strikes? It seems as though there's always a hurricane, tornado, earthquake, flood, fire, blizzard, or mudslide happening somewhere in the United States. A storm or other natural disaster could destroy your home, business, or workplace and put you in financial straits, but there are things you can do both before and after the event to help you recover quickly.


Handling a dispute with your insurance company Disagreements may arise with your insurance company about the amount the company paid on a claim, or the nonpayment of a claim. Be aware that the insurance industry is highly regulated. Your state has laws that dictate what insurance companies can and cannot do when it comes to bill collecting, settling claims, and other matters. The law may be called the Unfair Insurance Practices Act, the Unfair Claims Settlement Practices Act, or something similar. To learn about insurance laws in your state, call your state insurance department or check its website.

Create a financial emergency kit. Put together a kit that contains some cash and checks, a list of important contacts (e.g., your insurance agent), and copies of important documents, including identification cards, birth and marriage certificates, insurance policies and inventories, wills, trusts, and deeds. Make sure your kit is stored in a safe, secure place in your home, is easy to reach and carry, and is both waterproof and fireproof. You'll want to stash enough cash (or a credit card) to pay for immediate expenses such as gas, food, and lodging. Tip: While you're at it, you might also want to keep your most precious items in the kit, such as your special photos and family heirlooms. Protect your assets. Take some commonsense precautions to safeguard your home, business, car, boat, and similar assets against damage from wind, water, fire, or other risks. For example, install an emergency generator and paperless drywall, keep loose objects (e.g., grills and patio furniture) secure, cut down overhanging tree limbs, park your car in a garage, and invest in storm windows, doors, and shutters. Take inventory. Create and maintain an inventory of your valuables, including appliances, electronics, furniture, clothing, jewelry, and artwork. Record models and serial numbers, and take pictures or a video of the items. This will help when it comes time to file insurance claims and purchase replacements. Check your insurance coverage. Make sure your insurance policies (e.g., homeowners, auto) include all the coverage you need, and understand that damage caused by natural disasters may not be covered under general types of policies. You may need to consider buying separate coverage for hurricanes, floods, earthquakes, or other disasters. Consult your insurance agent to determine whether you have adequate coverage given the likelihood of such events occurring in your area.

Post-disaster In the immediate aftermath, proceed with caution. While the disaster may have passed, health and safety hazards still may exist. Be

aware that any building you're in, including your home, may not be structurally sound, so carefully look for any apparent damage. Also, report contamination from spills of oil, gas, chemicals, or any hazardous substance. Assess your property for damage. Take pictures of damaged areas both inside and outside your home, including trees, landscaping, and yard structures such as sheds. File insurance claims immediately. Contact your insurance agent and file claims as soon as possible. The quicker you do so, the sooner you can get back on your feet. Protect your income. If you end up out of work, take advantage of any employee assistance programs that your employer may offer. Seek unemployment compensation from your state and ask about special job considerations for disaster victims. Find out if special unemployment benefits are available through the Department of Labor. Get help from emergency sources. If you need immediate financial help, disaster relief funds and special programs (for example, housing assistance) may be available through the Federal Emergency Management Agency (FEMA) or your state and local governments, as well as the American Red Cross, United Way, Salvation Army, social services, and local churches. Consider available tax breaks. Tax law allows taxpayers to deduct certain unreimbursed casualty losses in the year in which they are incurred, subject to certain limitations. In certain presidentially declared disaster areas, individuals can claim the loss (again, subject to certain limitations) in the prior tax year by filing an amended return. Moreover, special relief (for example, bonus depreciation for business property) may be granted in the case of specific disaster events. Be sure to consult your tax professional about any tax relief that may be available to you. Get legal help, if necessary. If you experience legal difficulties, you may want to consider hiring an attorney who specializes in the complex area of natural disaster law. Don't ignore the stress. Surviving a natural disaster can be a very stressful situation. Don't hesitate to ask for help from family and friends. If you have young children, they may be upset about damage to their home and belongings. Be patient and try to explain what's happened and how you're going to try to get back to normal as soon as possible.

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Questions and Answers about Social Security Whether you're close to retirement or years away from receiving Social Security benefits, you may not know much about the intricacies of this important program. Here are some questions and answers that can help you learn more.

Will Social Security be around when you need it?

The second provision, called the windfall elimination provision (WEP), affects how your Social Security retirement or disability benefit is figured if you receive a pension from work not covered by Social Security. The formula used to figure your benefit is modified, resulting in a lower Social Security benefit.

If someone else receives benefits based You've probably heard media reports about the on your earnings record, will your worrisome financial condition of Social Security, benefit be reduced as a result? Did you know that according to the Social Security Administration, 94% of all workers are covered under Social Security?

but how heavily should you weigh this information? While it's very likely that some changes will be made to Social Security (e.g., payroll taxes may increase, benefits may be reduced by a certain percentage, or cost-of-living adjustments may be calculated differently), there's been no proposal to eliminate Social Security. Although no one knows what will happen, if you're approaching retirement, it's probable that you'll receive the benefits you've been expecting. If you're still a long way from retirement, it may be wise to consider various scenarios when planning for Social Security income.

How does the Social Security Administration know how much you've earned? If you work for an employer, your employer will deduct Social Security taxes from your paycheck and report your wages to the Social Security Administration (SSA). If you're self-employed, you pay your self-employment Social Security taxes and report your earnings to the SSA by filing your federal income tax return. To view your lifetime earnings record, you can sign up to access your Social Security Statement online at the SSA's website,

Will a retirement pension affect your Social Security benefit?

Your benefit will not be affected if other people, such as your spouse, former spouse, or dependent children, receive Social Security benefits based on your earnings record.

If you delay receiving benefits until after full retirement age, should you still sign up for Medicare at age 65? Even if you plan on waiting until full retirement age or later to take your Social Security retirement benefits, make sure to sign up for Medicare three months before you reach age 65. If you enroll late for Medicare Part B (medical insurance) your coverage may be delayed or cost more later. Visit the Medicare website, to learn more.

Do IRA withdrawals count toward the Social Security earnings limit? Prior to full retirement age, an earnings limit applies if you receive Social Security benefits. If you earn more than this amount, your benefit will be reduced. However, only wages from a job or net earnings from self-employment count toward this limit. Unearned income, such as IRA withdrawals, investment earnings, or capital gains, does not count.

What if you change your mind about when to begin Social Security benefits?

You have a limited opportunity to change your mind after you've applied for benefits. You can If your pension is from a job where you paid complete Form SSA-521, Request for Social Security taxes, it won't affect your Social Withdrawal of Application, and reapply at a later Security benefit. However, if your pension is date. But if you're already receiving benefits, from a job where you did not pay Social you can withdraw your claim only if it has been Security taxes (such as certain government less than 12 months since you first became jobs) two special provisions may apply. entitled to benefits, and you're limited to one withdrawal per lifetime. In addition, there are The first provision, called the government financial consequences--you must repay all pension offset (GPO), may apply if you're benefits already paid to you or your family entitled to receive a government pension as members based on your application, as well as well as Social Security spousal retirement or any money withheld from your checks, survivor's benefits based on your spouse's (or former spouse's) earnings. Under this provision, including Medicare premiums or income taxes. your spousal or survivor's benefit may be reduced by two-thirds of your government pension (some exceptions apply).

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Costello Wealth Management Diane Rodgers Costello President 222 Water Street Suite 308 Binghamton, NY 13901 607-348-1001 Fax: (607) 723 1642 The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. The tax information provided is not intended to be a substitute for specific individualized tax planning advice. We suggest that you consult with a qualified tax advisor. Diane Costello is a Registered Representative with and, securities are offered through LPL Financial, Member FINRA/SIPC

What is pet insurance? For many, a pet is a full-fledged member of the family. And just as health-care costs for human family members have risen over the years, so has the cost of veterinary care. It's probably not surprising, then, that pet insurance has gone in a fairly short period of time from relative obscurity to something that more and more people are considering.

"wellness" care (e.g., regular office visits and vaccinations) generally aren't covered. Pre-existing conditions are also generally excluded. Some providers also exclude certain hereditary or common conditions--for example, many pet insurance providers exclude coverage for hip dysplasia, a disease often associated with larger dog breeds.

In addition to comparing coverages, make sure that you understand your out-of-pocket With pet insurance, you pay premiums to a pet responsibilities. You may be responsible for a insurance provider; in return, the provider co-payment. You're probably also responsible agrees to pay for some of your pet's medical for a specified deductible amount before a costs, according to the specific terms and limits policy will make any payment. And once you've detailed in the policy agreement. How much satisfied any deductible, a policy is likely to pay you pay in premiums and the coverage you only a certain percentage of covered costs. So, receive vary widely by provider, and depend on for example, you might have a policy that pays factors that include breed and age. 80% of covered costs after you satisfy the policy deductible. Some providers also cap If you are considering pet insurance, it's benefits on a per-illness, annual, or lifetime important to request quotes from several basis. providers (a list of 12 pet insurance providers, along with some helpful information, is available One final note--with your health insurance, your at, the website of the American provider probably bills your insurance directly. Veterinary Medical Association). After obtaining That's generally not the case with pet quotes from multiple providers, look carefully at insurance. Typically, you pay all costs up front, the coverage details offered by each company. and then you submit claims to the pet insurance provider for reimbursement. With pet insurance, costs associated with

Is pet insurance worth the cost? The last thing you want is to have to forgo lifesaving treatment for your pet sometime down the road because you simply don't have the money to pay for it. But that's a situation many pet owners eventually face. Pet insurance can provide some peace of mind, but is it worth the cost? That's a tough question to answer.

80% of the remaining $3,750, or $3,000. Consider this: If, instead of purchasing the pet insurance policy, you set aside $40 each month into an account earning 3%, you would have a little over $3,000--the same amount you would receive from the insurance policy--saved by the time the operation was needed. Of course, this example assumes that you have the discipline to set money aside each month. And, of course, if the great sock catastrophe happened in year Let's say that you have a two-year-old Labrador two instead of year six, the insurance might retriever. You get quotes from all the major pet seem like a wise purchase. insurance providers, and after carefully The bottom line is that pet insurance comparing coverages and details, you decide companies are in business to make a profit, on a policy that will pay 80% of covered costs and that is how they set their rates. By after you satisfy an annual $250 deductible. purchasing a pet insurance policy, you're Your cost for the policy is $40 each month. In shifting some of the potential financial risk from most years, you don't have any reimbursable you to the insurance provider, and you are claims--just routine visits or claims that don't paying for that as part of your premiums. That exceed the deductible. After six years, your doesn't mean purchasing pet insurance is a bad lovable Lab swallows a sock, things go horribly decision; you just have to consider the numbers wrong, and he needs surgery at a cost of carefully. At the same time, you have to factor $4,000. Good thing you purchased the in that it's not all about the numbers--you may insurance, right? believe now that there's a limit to what you will spend to treat a pet, but if and when that time Remember, you have a $250 deductible, so comes, emotions often have a tendency to you will have to cover that yourself. And, the trump logic. insurance policy will only reimburse you for

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