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When Should I Update My Estate Plan?

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Estate Planning is time well spent

Preparing an estate plan can be a lot of work, both for the planner but especially for the client. And when that process is over, and the plan has been properly put in place through effective trust funding and asset titling, it is common for the client to not think about the plan again for years at a time.

Generally speaking, we recommend that clients review their planning every three to five years. But, there are very specific family and financial events that may occur during that time that make updating the estate plan crucial. Marriage or divorce, the death of a spouse, the birth (or death) of a child or grandchild, the marriage (or divorce) of a child, significant increases (or decreases) in personal wealth, receiving a substantial inheritance or gift, the sale (or acquisition) of significant business assets, moving to another state, and changes in clients’ relationships with their personal representatives, trustees, or other appointees, are just a few of the most common events that should motivate clients to review their estate planning documents.

Additionally, changes in the law, both at the state level and at the federal level (particularly with regard to the tax code), also should spur a review of the estate plan. We as planners do our best to notify existing and former clients on these types of changes, but it is not feasible to contact everyone that might be affected. For example, the significant changes to the estate tax exemption in the last decade, especially with the passage of the Tax Cuts and Jobs Act in late 2017, have made simplifying estate tax-driven plans much more common.

Overall, the best time to review is when you are worried, concerned or otherwise are wondering if things need to be changed. Most attorneys will not charge for the periodic check in unless and until changes need to be made to your plan. Thus, err on the side of caution and pick up the phone and call. Its better than regretting missed opportunities.

Ready to discuss you plan? Contact us today for a no-cost or obligation consultation.

Medicaid Eligibility Update

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Rhode Island has updated its rules to become Medicaid eligible.

If you are a Rhode Island resident and you are seeking Medicaid benefits, you should be aware of some recent changes approved by the Rhode Island Department of Human Services as to your eligibility under the program. Final rules are expected to be published and release shortly but here is a recap of the expected changes:

  1. Income cap of $9,581 meaning that if the applicant has more than $9,581 in income, then they can never become eligible for Medicaid, nor can they start the penalty period.  If they have income under $9,581 but greater than $6,700 and they want to start a penalty period, they can do so but cannot get community Medicaid benefits, like Rx copays and doctor bills.   If their income is under $6,700, then nothing changes.    This went into effect in September and is effective for applications for eligibility delivered after 10/1/18.   50-00-2.4

    Changes Are Coming

  2. Long term care insurance is not considered countable income for purposes of the above income cap.   However, once on Medicaid, it would need to be spent as part of the patient share.    50-00-6.5.2(B)
  3. Burial Funds & Irrevocable Funeral Contracts have new limits which are helpful and could affect clients.  The new cap on Irrevocable funeral contracts is $15,000 and anything over that would be considered a countable asset.   40-00-3.5.5 A(1)(f)
  4. Life insurance is now exempt up to $4,000 of cash surrender value, with anything over being countable.  40-00-3.5.5 A(1)(h)
  5. Retirement Funds now have a new definition, but as long as they are income producing and the client gets at least the RMD, then they should still be fine. 40-00-3.5.5 A(2)(g)
  6. Penalty Divisor is $9,581 since mid September.

Like any social program, the figures and rules for eligibility are constantly revisited and updated based on changes in federal law, budgets, and program changes and advances. Staying current on the latest rules is the challenge.

If you or a loved one is facing serous medical issues requiring skilled nursing care, the Medicaid program will help pay for those costs for applicants who have assets and income within program limits. Contact us to discuss your estate plan and if your estate plan should be revised so as to become eligible for these valuable benefits.