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Estate Plan

May 12
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What is the Caretaker Child Exception?

By Uncategorized

Caretaker Child Exception

You can receive Medicaid coverage while still keeping an ownership interest in your home. However, at your death the state will have the right to recover from your probate estate—essentially your home—whatever it pays out for your care. Your home could escape this claim if it were transferred to one or more of your children. A problem with doing this is that under the general transfer penalty rule, you would be ineligible for Medicaid benefits for up to 60 months following the conveyance.

Children who care for their parents can take advantage of provisions in the Medicaid Regulations

The Caretaker Child Exception to the transfer penalty can be a valuable tool to preserve the home of parents.

However, an exception to the transfer penalty allows a Medicaid applicant to transfer his or her home to a qualified caregiver child. The law defines a caregiver-transferee as a child  of the Medicaid applicant “who was residing in the applicant’s…home for a period of at least two years immediately before the date of the applicant’s…admission to the institution, and who (as determined by the DHS) provided care to the applicant…that permitted him or her to reside at home rather than in an institution. “ In order to qualify under this exception, an applicant should be prepared to submit a certification by his or her attending physician which basically states that, but for the caregiver, the applicant would have had to move to a nursing home.

If you can get the necessary certification, and if you would feel comfortable with the property in your caretaker’s name solely, it is recommend that you transfer your interest in your home to your caretaker child. No transfer penalty would be triggered and, in addition, the unit would not be subject to any reimbursement claim by the state. Once the transfer is made, your caretaker child would be free to sell the house or simply rent it out. If you choose to transfer the house to your caretaker child, you should discuss the form of conveyance—trust, life estate, or outright ownership—and the tax consequences to each approach.

If you decide to make the transfer, you will have the option of doing so after you qualify for Medicaid, or before you submit the application. To make the transfer before you have qualified for Medicaid may prolong the application process. For that reason, it may be easier to make the transfer after you have been determined eligible for Medicaid. However, we have submitted applications where the home was transferred before and after and all were approved.

Want to discuss how to take advantage of the Caretaker Child Exception with your family? Call us to schedule a no obligation consultation.

Apr 18
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Will I Ever Live In A Nursing Home?

By Uncategorized

How Much Care Will You Need?

The duration and level of long-term care will vary from person to person and often change over time. Here are some statistics (all are “on average”) you should consider:

  • Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and supports in their remaining years
  • Women need care longer (3.7 years) than men (2.2 years)
  • One-third of today’s 65 year-olds may never need long-term care support, but 20 percent will need it for longer than 5 years

Distribution and duration of long-term care services

Type of care Average number of years people use this type of care Percent of people who use this type of care (%)
Any Services 3 years 69
 

At Home
Unpaid care only 1 year 59
Paid care Less than 1 year 42
Any care at home 2 years 65
 

In Facilities
Nursing facilities 1 year 35
Assisted living Less than 1 year 13
Any care in facilities 1 year 37

Who Pays for Long-Term Care?

The facts may surprise you.

Consumer surveys reveal common misunderstandings about which public programs pay for long-term care services. It is important to clearly understand what is and isn’t covered.

Medicare:

  • Only pays for long-term care if you require skilled services or rehabilitative care:
    • In a nursing home for a maximum of 100 days, however, the average Medicare covered stay is much shorter (22 days).
    • At home if you are also receiving skilled home health or other skilled in-home services. Generally, long-term care services are provided only for a short period of time.
  • Does not pay for non-skilled assistance with Activities of Daily Living (ADL), which make up the majority of long-term care services
  • You will have to pay for long-term care services that are not covered by a public or private insurance program

Medicaid:

  • Does pay for the largest share of long-term care services, but to qualify, your income must be below a certain level and you must meet minimum state eligibility requirements
  • Such requirements are based on the amount of assistance you need with ADL
  • Other federal programs such as the Older Americans Act and the Department of Veterans Affairs pay for long-term care services, but only for specific populations and in certain circumstances

GOOD TO KNOW

Like public programs, private sources of payment have their own rules, eligibility requirements, copayments, and premiums for the services they cover.

Health Insurance:

  • Most employer-sponsored or private health insurance, including health insurance plans, cover only the same kinds of limited services as Medicare
  • If they do cover long-term care, it is typically only for skilled, short-term, medically necessary care

There are an increasing number of private payment options including:

PLAN BEFORE YOU HAVE A NEED

Planning for the eventuality of needing long term care is critical in reducing stress and uncertainty. Meeting with an Elder Law attorney familiar with the rules of Medicaid qualification is a step in the right direction. Contact our office for a no-obligation consultation to see if developing an estate plan with the goal of Medicaid qualification is a right fit for you.

Apr 06
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Probate & Estate Administration During COVID-19

By Uncategorized

Probate Challenges and Estate Administration Roadblocks During COVID-19 Corona virus Pandemic

Many of our clients are in the midst of settling the estate of a deceased loved one or have just had a loved one pass away and are wondering what comes next. An event such as this has both personal and legal consequences. Below are observations on issues that may immediately present themselves.

• Immediate steps may be limited by circumstance. If someone has just died and the cause of death is unknown, public health officials may limit the immediate steps one would usually take until the cause of death is determined and no known COVID-19 risk exists. Depending on circumstances, there may be some delay in physically getting access to the premises, securing them and searching for a will and other documents if they are not in possession of the family or the decedent’s attorney. It is always wiser to have one’s original estate planning documents safely secured off the premises and make sure a trusted individual has access to the storage place.

• Once access is permitted, secure the premises if they become unoccupied. Subject to the necessary steps to ensure everyone’s safety (which may include disinfecting) the nominated personal representative may take steps, such as changing locks, necessary to secure the physical contents and financial documents which may remain in the home. These steps can be taken before one’s official appointment. If additional or condominium fees must be paid to allow enough time for an orderly inspection, appraisal, or the like, this can be treated as an expense of the estate.

• The legal process of estate administration can begin and continue. While the probate courts of the states in which we conduct estate administrations have limited or closed off physical access to the public, emergency hearings (conducted telephonically) continue and many routine documents can be e-filed. Routine non-contested wills can still be allowed; while reduced staffing at courts may stretch the time frames somewhat, these processes, at least for the present, continue as before. Where that time frame may cause harm to a beneficiary or in some cases, the assets, if the court deems such circumstances an emergency, a hearing to rush the appointment of a temporary fiduciary, called a “executor” or “special personal representative,” can be requested.

• Most financial activities can be conducted. With overnight shipping, and technologies such as scanning, secure e-mail, electronic funds transfers, and electronic document signatures, most financial transactions can be conducted virtually once the identities of the parties are established in a fashion compliant with the financial institution’s practices. Thus assets can be transferred to estate or trust accounts, sold and reinvested if desired in order to properly pay estate expenses and distribute funds to beneficiaries. Notarizations still require physical presence although there is a move afoot to accept signatures performed over a videoconference.

• Once appointed, electronic communications are vital. As a fiduciary, personal representatives and trustees must take special care to maintain transparency and good chains of communication with each other and the beneficiaries. In a typical administration, one or more introductory or status meetings may occur between co-fiduciaries and the attorney, some with beneficiaries present. Since these will not occur during this unprecedented time, most communication should be in writing. Email has become the standard, often with multiple co-recipients.

Need to speak to an attorney about issues your confronted with during the Pandemic, call our office 401-274-0300 for a no cost phone consultation.

Mar 23
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Estate Planning and the Coronavirus Pandemic

By Uncategorized

Estate Planning Amidst the Coronavirus Pandemic

The Coronavirus (COVID-19) Pandemic has impacted every corner of the world at this point. As medical experts, financial advisors, and our colleagues that specialize in healthcare law, employment law, and other related areas are busy advising clients on the best course of action for the weeks and months ahead, we – as estate planners – also want to remind our clients and friends of some important considerations during these uncertain times.

At this point, we would simply promote the following actions to ensure that your estate planning affairs are in order:

(1) Review your existing documents. Make sure that you have copies (either paper or electronic) of your existing estate planning documents, and review them to confirm that they still reflect your wishes. If you cannot locate your documents, consider calling or emailing your estate planning attorney to obtain copies.

(2) Pinpoint any items that require attention sooner rather than later. As you review, take note of any major changes that may have occurred in your family since you last updated your estate plan. These might include child births, deaths, marriages, divorces, etc. And also consider whether the individuals that you previously appointed to serve as your agents are still appropriate.

(3) Follow up with your loved ones and advisors.

  • Make sure that your loved ones know to contact your estate planning attorney in the event anything should happen to you. This includes your named executor (i.e. personal representative under your will, or trustee of your trust), guardian for your minor children, attorney-in-fact under your financial durable power of attorney, and patient advocate under your health care power of attorney.
  • Consider reaching out to your financial advisor, insurance advisor, etc. to ensure that your beneficiary designations are up to date and discuss any new planning opportunities relative to your current financial status.
  • If you require any medical attention in the near future, confirm that your medical provider has a copy of your patient advocate designation and is informed as to who you wish to have access to your confidential health information.

NOTE – If you do not already have an estate plan, now is as good of a time as any to consider the opportunity before you. Having a will/trust, a durable general power of attorney, and a healthcare power of attorney can certainly contribute to a healthy state of mind.

Nov 01
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Medicare and Late Sign Up Penalties

By News

Medicare Should Warn Enrollees on Steep Late Sign-up Penalties

For many Americans entering retirement, it comes as an unwelcome surprise: Medicare premiums become much more expensive if you do not sign up on time. The program tacks on a 10 percent penalty on monthly Part B premiums for each full 12-month period of late enrollment, and you keep on paying the penalties for the rest of your life.

The aim is to avoid “adverse selection,” which occurs when people sign up for coverage only when they think they will need it. That helps keep premiums lower for all Medicare enrollees.

Medicare Enrollment Form

But a heads-up would be nice. And that is the intent of the Beneficiary Enrollment Notification and Eligibility Simplification Act (BENES Act), a bill introduced with bipartisan support last week in the U.S. Senate (companion legislation was introduced in the House of Representatives earlier). It would require the government to send a notification letter in the year before your 65th birthday – the first date of Medicare eligibility.

The letter would explain the enrollment rules, and – importantly – how Medicare interacts with other insurance coverage you might have.

Roughly 750,000 Medicare beneficiaries paid late enrollment penalties in 2014, according to the Congressional Research Service (CRS). That is less than 2 percent of enrollees, but for those who do pay the penalties, the bite is painful. On average, total premiums for late enrollees were 29 percent higher, CRS reported. 

Medicare is the primary source of health insurance for seniors, and choosing the correct Medicare plan is important. However, it only provides for 100 days of skilled nursing care. Planning for those potential costs are a critical component for anybody, regardless of when you sign up for Medicare.

Want to discuss your plan for paying for your care needs today and in the future? Contact us to discuss how you can plan for future long term care needs that are not covered by Medicare.

Matt Leonard

Oct 04
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Why can’t I make gifts and still qualify for Medicaid?

By Gifting and Medicaid Eligibility, Uncategorized

I can gift up to $14,000 per year without jeopardizing my rights to Medicaid! Right?gifts wrapped in money with a red bow

Perhaps the most common-and dangerous-myth of all confuses the federal gift tax with Medicaid qualification. These are two distinct sets of rules, established for entirely different purposes. In 2016, a person may gift up to $14,000 per year, per beneficiary without having to file a gift tax return or incurring any tax liability.  But, Medicaid is concerned with any gifts of any amount if made within the 60 months preceding a Medicaid application. That period, often referred to as the “look-back period,” is inflexible, unless it can be proved that the gift was made exclusively for reasons other than hastening Medicaid eligibility.

Transfers of assets in exchange for sno giftsomething of equal value or transfers to a spouse do not affect Medicaid eligibility. Otherwise, the penalty for making gifts can be severe. The number of days that the penalty triggers may be reasonably modest (the penalty in days is calculated as the amount actually gifted divided by the average daily cost of local nursing homes). Since 2006, however, the penalty period does not begin to run until the applicant would otherwise be qualified for the program. Thus, the penalty does not begin to run at the time of the gift but much later, i.e., when the applicant has spent down all countable assets to $4,000 or less. 

Applicants can remedy imprudent gifts in two ways. They can, if possible, “cure” gifts by refunding them; in that case, the returned money must be spent down before a successful application can be made. Or, they can justify such gifts if they were made, exclusively, for purposes other than accelerating rights to Medicaid.

If making gifts is important to you there are other solutions, such as transferring assets to an Irrevocable Trust and then have the trust make distributions out to the beneficiaries, however, much care should be given to the drafting of the trust and to the distributions to ensure the distributions are not deemed disqualifying. Want to discuss further? Contact our office for a free consultation.

Source: Medicaid Myths: Clients’ Misconceptions Can Be Costly, Estate Planning Journal, Oct 2015, Estate Planning Journal (WG&L)

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Sep 26
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Retired and looking for extra income? Embrace Technology Service Opportunities!

By Uncategorized

Seniors looking for extra income are turning to current phone and computer technology and service opportunities such as UBER and Airbnb.

Many boomers approaching their retirement years are anxious about having enough income. But many are finding help by turning to the so-called “gig economy” – driving for Uber and renting out extra rooms in their homes to earn extra income.

Twenty-four percent of all Uber drivers are over age 50, and 3 percent report being formerly retired. Bloomberg reports that people age 60-plus are the fastest-growing and best-reviewed age group on Airbnb. DogVacay, which connects pet sitters with owners, reports that people over the age of 50 constitute 25 percent of sitters.

The JPMorgan Chase Institute reports that seniors earn about 25 percent of their income from working and that this share may rise in the future. It found the percent of seniors in the workforce has been increasing recently, from 20.7 percent in 2009 to 23.1 percent in 2015. The institute anticipates that much of the anticipated rise will come from the gig economy.

Of course, earning income in the gig economy has some downsides. Most of the time, workers are considered contractors and are responsible for paying their own taxes. In addition, the income can be quite unpredictable. However, these drawbacks may be an acceptable trade-off to earning additional spending money to supplement Social Security and other retirement income.

The article by CBS Money Watch explaining this trend can be found HERE.

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Sep 26
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145 Year Old Man is Longest Living Human

By Uncategorized

Longest Living Human Says He Is Ready For Death At 145

An Indonesian man who claims to be the longest living human in recorded history has described how he “just wants to die”. Mbah Gotho, from Sragen in central Java, was born on December 31, 1870, according to the date of birth on his identity card. Now officials at the local Oldest Living Manrecord office say they have finally been able to confirm that remarkable date as genuine. If independently co
nfirmed, the findings would make Mr. Gotho a staggering 145 years old – and the longest lived human in recorded history.

But despite his incredible longevity, Mr. Gotho says he has little wish to remain on this earth much longer. Mr. Gotho has outlived all 10 of his siblings, four wives, and even his children. His nearest living relatives are grand children, great grand children, and great-great grandchildren. One of Mr. Gotho’s grandsons said his grandfather has been preparing for his death ever since he was 122.

The full article published on August 16, 2016 by The Telegraph News on Mr. Gotho can be found HERE.

Longest Living Human and long-term care

Though no one could predict a life expectancy of 145 years (assuming it is verified), the point being you never know what life with bring you! What would you do if you were blessed with longevity? How would you live? Who would care for you? Do you have a plan?

Few would ever plan for 145 however a proper plan that addresses needs for today, tomorrow and your 145th birthday can be created and should be discussed with your advisers.

Want to discuss your plan? Contact our office for a no-cost consultation.

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