Planning for the inevitable

April 8, 2019

As a result of the problems I encountered administering the estates of my parents, I learned a few things that might be helpful in planning for the end of your life, especially if you have dependents.

Many people designate trusted relatives or friends as attorneys in fact (through a document called a power of attorney) to act in case they become disabled and cannot handle their own financial and business affairs.  The important thing to remember about such a designation is that it only exists during the lifetime of the grantor — as soon as the person designating another as attorney dies, the attorney’s authority to act on behalf of the grantor stops.

If you have a spouse, and you were the bigger earner, it is true that your surviving spouse will, in many cases, be able to receive your higher monthly social security payments after your death; however, your spouse’s own existing payments will cease, thus resulting in an immediate loss of income.  What’s worse, after Social Security finds out about your death (usually from your funeral provider), if you have received any excess payments via direct deposit, it will claw them back from the account in which they were deposited.

If you were lucky enough to have a pension, you more than likely opted for benefits to your spouse to continue after your death, but at a reduced rate.  The survivor in such situation may likely suffer a large, immediate loss in monthly income (from social security and the pension) that may not be offset by the reduced expenses of living alone.

The issue is not just whether there will be enough money for the survivor to live on long-term.  The issue also is providing for the immediate needs of the survivor when income may be reduced and accounts frozen. Life insurance pays quickly, and can be a lifesaver if the policy beneficiary is the surviving spouse. Don’t make the mistake of using a life insurance policy to provide for those who don’t need the proceeds immediately; provide for them elsewhere in your estate plan.

 

 

 

 

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Another LIRR disability scam update

July 3, 2013

Looks like 600 scammers will be giving up (and back) their federal disability pensions, according to this recent New York Times report and this AP report from the Times Union.


It’s not over yet

May 24, 2013

More fallout from the stunning LIRR pension fraud mess.

 


LIRR disability pension update

May 22, 2012

The Post reports more arrests.


It’s a start . . .

October 27, 2011

Here’s a follow-up story about the disability claims at the Long Island Railroad, about which the New York Times reported in 2008 (and which I noted below).  I imagine it took some time to build the cases, and will be watching for more.


LIRR follow-up

June 5, 2010

Here’s a follow-up by the Times on the LIRR situation. I don’t know who’s more overpaid – the featherbedded workers or the impotent, bloated management. Great situation.


Read this . . .

September 21, 2008

New York Times article.  I’ve lived in this area for over 20 years, and thought I saw it all in terms of scams and sweetheart deals, orchestrated by both unions and individuals.  The terms of the LIRR labor contract are astonishing, and cannot be excused by management’s claim that it had to give in or face strikes.  The Railroad Retirement Board appears either totally inept or crooked.   But the biggest problem the story points out may have been lost amid the more spectacular ones — the fact that public employee pensions are based on an average of the three or five highest earnings years.  Not base salary, but actual earnings, which causes employees to scramble to accrue as much overtime as they can toward the end of their careers, since they know it will be reflected in higher pension payments for the rest of their lives.  Their bosses often all too willingly comply, whether the overtime is truly necessary or not.  I haven’t seen any figures on this, but I am willing to bet that revising the pension laws so that pension amounts are calculated on the base salary only of the highest earning years would save state and local governments tens of millions of dollars in overtime and pension costs, without a discernible decrease in the level of services rendered to the public.

I recently revisited this story, and read several of the hundreds of readers’ comments.  The majority were of the tone “why are you concerning yourselves with this, given the overcompensation of corporate executives?”  Because this is the flip side of the same problem — unmitigated greed by those who can get away with it.

The best of the reader comments I came across was (to paraphrase):  “Who would have guessed that the highest paid person on the car I ride to work every day is the guy who punches our tickets?” 

I certainly support fair pay for labor, and I abhor the way many corporations treat their employees.  But labor tarnishes its nobility when it emulates the very worst of management.  And in both cases, the public pays.