Don’t Forget Long-Term Care Costs When Planning Your Estate

When discussing estate planning with clients or potential clients, the meeting usually begins with questions about who will receive property, who will make medical and/or financial decisions upon incapacity, and how to minimize taxes  and the costs of estate administration.  Most individuals tend to shy away from discussing how to pay for long-term care or nursing home expenses as it is not easy to talk about the unpleasant thought of needing nursing home care.  No one wants to go into a nursing home. I believe many families are sincere when they say they will not let mom or dad go into a nursing facility or they will care for them at home.  Sometimes, however, it is just not safe for someone to remain at home and skilled nursing care is the only option.

Long-term care expenses can cost six figures annually in some states, and generally speaking are not covered by Medicare or your private health insurance policy. Although there are several strategies to protect your assets in the event you require long-term medical care, we will focus on two of the more common financial and legal strategies for this article.

Long-Term Care Insurance

Long-term care insurance policies should be considered as an option to pay for long-term care in the event care is needed.  There are different options for coverage, so discussing your needs with a qualified insurance representative and elder law attorney is very important to ensure you are protected.

Irrevocable Trust

Asset protection using an irrevocable trust is another option to protecting your assets from estate recovery should you need long-term care. Because of the 5-year look-back period rules involving trusts, this type of planning must be done at least five years before the need for long-term care and the filing of a Medicaid/MassHealth application. A consultation with a qualified estate planning and elder law attorney is highly recommended if considering an irrevocable trust strategy.

As discussed above, we discussed only two strategies for purposes of this article. Each family’s situation should be discussed on a case-by-case basis to determine what strategies are appropriate.  Many different factors such as health, family dynamic, assets/income, and whether we are working with a spousal couple or single/surviving spouse are a few examples of the factors we must evaluate to determine what options our families have.  Please call our office to schedule a consultation to discuss what’s best for your family.

Estate Planning and Future Healthcare Planning in Massachusetts Law

Though many people have the notion that estate planning is only for the rich, anyone who has earned money and done a good job of investing it can benefit from careful estate planning. Without a comprehensive estate plan, all the things that you have worked so hard for can be lost or given to unintended beneficiaries. Since estate law varies from state to state, it is wise to consult with an attorney well-versed in Massachusetts law to make a solid plan for the future of your assets.

There are many ways to protect your assets for those you love by means of an effective estate plan. Your attorney can help you draft a will in which you can specify how your assets should be distributed at the time of your death.  Wills can also designate legal guardians for your children in the event they are still minors or are incompetent. Funeral and burial requests can also be included.  A Massachusetts attorney can help you draft a will that will stand even in the event that someone should contest the will in court. [Read more…]

The Importance of Appointing a Health Care Agent

It has been almost ten years since the case of Terri Schiavo was argued in Florida courts.  In 1990, Terri Schiavo collapsed in her Florida home in full cardiac arrest.  She suffered brain damage due to lack of oxygen and as a result, could not make medical decisions for herself.  According to doctors, Ms. Schiavo was diagnosed as being in a vegetative state.  Several types of therapy were attempted, hoping her condition would improve. In 1998, Michael Schiavo, Terri’s husband and guardian, petitioned the Florida state courts to have her feeding tube removed.  Michael Schiavo argued that Terri would not have wanted life-prolonging measures including a feeding tube.  Ms. Schiavo’s parents opposed this arguing that she would want have wanted to continue life-prolonging measures.  A trial to determine her end of life wishes included eighteen witnesses.  This court battle went on until 2005, including appeals in the state and federal courts.  Ms. Schiavo ultimately passed on March 31, 2015, after her feeding tube was ordered removed.

As  noted above, this legal battle spanned fifteen years.  The sole question in this case was to determine what Terri’s wishes would have been regarding life-prolonging procedures.  With a comprehensive health care proxy and living will, Ms. Schiavo would have been the one to determine what her end of life wishes were.  Although a health care proxy probably would not have prevented disagreement between Terri’s parents and husband regarding the course of treatment, maybe the legal battle could have been avoided or minimized with proper planning.

Update to the Massachusetts Homestead Law

     Although the Massachusetts homestead law is not new, being enacted in 1851, it still causes confusion to homeowners as to what protection it affords.  An estate of homestead is a type of protection for a person’s residence from most creditors.  It allows homeowners in Massachusetts to protect their property up to five hundred thousand ($500,000) dollars.

     In December, Governor Deval Patrick signed into law St.2010, c.______ (S2406), An Act Relative to the Estate of Homestead.  This legislation, which goes into effect March 16, 2011, makes several changes to the current homestead law:

  • Automatically protects up to $125,000 in home equity without filing
  • Protects up to $500,000 for those that file for homestead protection
  • Allows spouses to both file, currently only one may file
  • Clarifies that there is no need to re-file after refinancing
  • Allows trustee to file for homestead for homes transferred into trust
     In the past, you were required to file a declaration of homestead to gain the protection from creditors. With the new legislation, every homeowner will receive an automatic $125,000, regardless of filing.  If you do file a declaration of homestead, you will still receive the $500,000 of home equity protection. Even more important, for those that have transferred their homes into trust, the Trustee may now file for homestead on behalf of the beneficiaries.

If you have recently refinanced, or transferred your home into a trust, or have any questions regarding your current homestead status, please do not hesitate to contact our office.

Alternatives To Nursing Home Care

Many seniors choose to stay in their homes, apartments or assisted living facility despite significant care needs.  This can, however, present considerable challenges to adult children who are trying to balance their own family responsibilities with coordinating care for a parent, as well as for a spouse who may be faced with being a primary caregiver around the clock for an indefinite period of time.

Unfortunately, many elders have an ongoing need for assistance in order to remain safe in their home.  Such a need for assistance can be the beginning of a difficult and frustrating journey for both the elder and their family.  Families try valiantly to meet all the care needs their loved one  may have but often they realize they can’t do everything, or caregivers may become burnt out and resentful.

Fortunately, there are a number of options for services available to families in such a situation.   These services include homemaking, laundry, food shopping, and meal preparation as well as personal care, safety checks, and meals-on-wheels.  These services can be coordinated to ensure the elder can maximize their chances of remaining safe in the community and hopefully avoid the need for placement in a long-term care facility.

A comprehensive analysis by an Elder Law Attorney is a valuable step in the process of creating a successful plan of care for a loved one in need.  Such an analysis can reveal more options for finding affordable care in the community while planning for the possibility that long-term placement in a facility may be needed.  Some individuals can qualify for Community Medicaid Benefits and then be eligible for expanded home services through their ASAP or other Medicaid subsidized home care programs such as PACE (Program for All Inclusive Care for the Elderly).

There are significant differences in eligibility for each Medicaid program, so the analysis should be done by professionals with experience in working with both Community and Long-Term Care Medicaid.   Please call our office for more detailed information on community based programs or to schedule a no-cost initial consultation.

Caregiver Contracts On The Rise

A recent study by the AARP found that nearly a quarter of the adult population are providing voluntary care for family members and friends.  As the population ages and people live longer, this number is sure to rise.  To reward these caregivers, parents often would leave an unequal inheritance to the caregiver child.  Often these unequal inheritances would lead to family feuds.

One alternative to an unequal distribution to a caregiver is to hire the caregiver and pay them for their services.  This is accomplished by drafting a “caregiver contract”.  This option allows the elder to acknowledge the time, effort, and services provided, and possibly eliminate the feud inherent in unequal distributions at death.

Caregiver contracts, by listing what duties or services the caregiver will provide, will often open the lines of communication and encourage families to discuss the arrangements to care for the elder.  If there is family communication, most times additional family members will assist the caregiver in providing certain services.  This often times will minimize family disagreements pre- and post death. 

Be sure to discuss your personal situation with a qualified elder law attorney as there may be tax consequences  or if your goal is to qualify for medicaid benefits.

Social Security Reports No Increase In Benefits for 2010

Normally, seniors receiving social security benefits see a 2-3% increase in their benefits each year.  For the first time in decades, there may not be a cost-of-living adjustment.  For some, social security checks may be lower when factoring in Medicare Part B premiums.  Most, however, are protected by a provision that ensures Medicare premiums don’t increase more than any increase in Social Security benefits. FULL ARTICLE.

Parents Of College-Bound Children Need To Plan Wisely

Planning your estate, whether young or old, is very important.  Sound advice from your accountant, financial advisor, insurance agent and estate planning attorney can help you plan for whatever bumps in the road you encounter during your lifetime.  Younger couples must establish a financial plan to make sure they provide for their children and can enjoy a comfortable retirement.  Older couples may want to diversify or restructure their portfolios to ensure they have enough money to last throughout retirement and minimize exposure to taxes and long-term care.  Parents of school aged children must be careful not to decrease their families eligibility for need based financial aid while developing their estate plan. Some estate planning strategies that may affect your eligibility for financial aid include:

  • Saving In Your Child’s Name – Many families establish UTMA/UGMA  accounts to save for college.  While these accounts may potentially offer tax savings, because student assets are assessed higher than a parent asset during the financial aid process, the reduction in need based financial aid can be much greater than the potential tax savings.
  • Lifetime Gifting – One strategy to minimize estate tax is taking advantage of the annual $13,000 exclusion and gifting to others.  While this may be an appropriate strategy for estate and tax planning, it may have a devastating effect on financial aid eligibility.  Be sure to discuss your plan with an estate planning professional before utilizing this strategy or receiving a gift as part of a tax plan as there may be more appropriate options available.
  • Retirement Accounts – Where your money is invested may have an impact on the amount of financial aid you may qualify for.  A review of your financial plan can determine if your investments are appropriate for your particular situation.

While there are many options in planning for retirement, minimizing tax or long-term care exposure, or developing a comprehensive estate plan, make sure your families needs are addressed in your overall plan.  Failing to plan for your childs education could frustrate your overall financial goal.

Veterans Aid and Attendance Benefit

LITTLE KNOWN PROGRAM CAN PROVIDE HELP FOR VETERANS

One often unclaimed, but very valuable program available to veterans is the VA aid and attendance benefit.  This program was created to help veterans, veterans and spouses or surviving spouses by providing financial assistance to help defray the costs and expenses with assisted living or at home care.  Generally, it is a benefit for those that need assistance with at least one of the activities of daily living .  The program provides a tax-free monetary benefit to those that qualify.  The eligibility guidelines include:

  • Wartime veteran or surviving spouse
  • Served at least 90 days of continuous active duty service during eligible dates*
  • Honorable Discharge or equivalent
  • In need of assistance with care

This benefit often goes unclaimed because some veterans are not aware of its existence, do not think that they are eligible, or may be discouraged by the complex and burdensome application process.  Because of the strict guidelines and lengthy eligibility process, those eligible should seek guidance from a professional familiar with process and accredited in the area of veterans benefits.

*WWII – Dec. 7, 1941-Dec. 31, 1946    Korea – June 27, 1950-Jan. 31, 1955    Vietnam – Aug. 5, 1964-May 7, 1975                Gulf War – Aug. 2, 1990-TBD

Protecting Assets From The Costs of Long Term Care

WHEN IS THE RIGHT TIME TO BEGIN PLANNING?

As everyones financial and medical backgrounds are different, so is the “right” time to begin planning.  The more time you have to plan before long term care is needed, the more options you may have and less stress you and your family will endure.  Anytime you have a concern about how you will pay for long term care for yourself or a loved one, it  may be time to begin the planning process.  Preemptive planning will give you peace of mind and allow you to:

  • Analyze your financial background
  • Ensure your legal documents are up to date and distribute your estate as you wish
  • Make sure the distribution of your estate will not jeopardize public benefits for others
  • Discuss options to allow loved ones to remain at home instead of a nursing home
  • Take steps to protect and preserve your assets, including your home
  • Research all community benefits programs applicable to your situation
  • Designate agents to make medical and financial decisions for you in the event you are unable to make decisions for yourself

Long term care, incapacity and death are not subjects we are comfortable discussing.  The earlier and more comprehensive we plan, the less stress our families will be faced with in the event uncomfortable decisions need to be made.