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.

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.

Am I Eligible For Social Security Disability – Part 3

In part 3 of our 5 part series, we are discussing the process you must go through to be approved for social security disability benefits.  We’ve already discussed the first two steps, which address working and the severity of your impairment.  In this series, we will discuss step 3 of the sequential evaluation process which addresses whether your medical condition meets or equals a listed impairment by the Social Security Administration.  The 5 step sequential evaluation process is noted below for reference:

  1. Are you currently working?  Does your impairment prevent you from performing substantial gainful activity?
  2. Is your condition severe?
  3. Does your medical condition meet or equal a listed impairment?
  4. Can you perform your past work?
  5. Can you do any other type of work?

Step 3

Quite simply, if your condition meets or equals a listed impairment, you will be awarded benefits.  So if your condition is not on the list, does that mean you will be denied?  Not necessarily.  If  your medical condition does not meet or equal one of the listed impairments, it means you must be evaluated under steps 4 and 5 to be awarded benefits.  Steps 4 and 5 address your prior work history and whether you could potentially transition to other types of work if applicable.

In the next series, we will discuss step 4, “Can you perform past work?”

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.

Financial Planning For Families With Special Needs

ESSENTIAL STEPS TO ACCOMPLISH YOUR GOAL

  • Start Early and Get Help –  Lack of planning may have disastrous consequences.  Planning for special needs families often involves several  financial, legal and benefits-related strategies.  Assembling a team of qualified professionals to advise you will take time.  A financial advisor, estate planning attorney, benefits coordinator, trustee/trust company, family physician/registered nurse, and of course family members may all need to be involved in the ultimate plan.
  • Establish a Special Needs Trust – If you’re receiving government sponsored benefits, a gift or inheritance may cause a disqualification of those benefits.  A frequently asked question  is how to provide for a family member with special needs without jeopardizing those government benefits.  Parents may purchase life insurance to be paid out to a special needs trust.  They may also designate the special needs trust as a beneficiary in a will, trust or retirement account.  The funds designated to the special needs trust at death may be used to supplement the special needs family member without jeopardizing their benefits.
  • Draft a Letter of Intent – How can you be assured that proper care will be given to your child? You’ve established a special needs trust  to provide financial assistance when you’re gone, but have you named  a person that will assume the role of guardian or caregiver?  Do they know the name and address of your child’s physician?  Do they know their therapies, procedure and medication schedule?  Do they know their faith and where they attend religious services?  Answers to these and many other questions should be discussed and memorialized to ensure the best possible care for your child.
  • Consider Life Insurance – Someone, most likely a family member, will have to step in to act as a guardian and raise your child.  In all likelihood, that family member will have to pay for some of the services the parents had provided when able.  If the estate was not large enough, life insurance can provide the needed funds to help defray the cost of care.
  • Review Often – Many changes will occur during the course of your life.  Reviewing your plan annually will ensure everything is up to date to give you the peace of mind your family is taken care of.

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.

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.