Your estate planning should include a plan for long-term care.Most Americans do not know the facts surrounding their potential need for long-term care.  This was confirmed recently in a telephone survey of 1,735 Americans over the age of 40, funded by the SCAN Foundation and conducted by the Associated Press (AP) – NORC Center for Public Affairs Research.

Most People Need a Plan for Long-Term Care

According to the Genworth Cost of Care Survey of 2015, 70% of Americans over the age of 65 will eventually need long-term care.  By the year 2040, 22% of the population will be over the age of 65.  This survey showed most people over 40 don’t believe they will ever need long-term care.

Coordinated Care Best Approach

The survey defined person-centered care as “an approach to health care and supportive services that allows individuals to take control of their own care by specifying preferences and outlining goals that will improve their quality of life.” This approach points to the consideration of coordinated care.

Coordinated care involves communication among various medical providers to reduce overlap, misdiagnosis or other medical oversights.  Because many people don’t have a plan, they miss out on the benefits provided by this approach. The survey shows a lack of appreciation for the improved quality of life it can provide.

Cost of Long-Term Care

The study showed most people don’t understand the coverage for long-term care provided by Medicare, Medicaid and private health insurance.  Medicare does not pay for ongoing long-term care, although it will pay for intermittent stays at nursing facilities.  Yet, 34% surveyed thought Medicare would pay for long-term care.

Medicare doesn’t typically pay for care in the home.  However, 36% of those surveyed thought it would.

Most health insurance plans will not cover long-term services like a nursing home or ongoing care provided at home.  Yet, 18% of Americans age 40 and older believe that their insurance will cover the costs of nursing home care.  25% believe their plan will pay for care at home.

Medicaid is the largest payer of long-term care services. Medicaid is a federally and state funded needs-based benefit that covers various types of long-term care depending on the state’s regulations.  In 2013, Medicaid paid for 51% of the national long-term care bill.  However, 51% of Americans age 40 and older reported that they don’t expect to rely on Medicaid to help pay for their ongoing living assistance expenses as they age.

The actual costs for long-term care are staggering.  The Genworth Survey found that for 2013 the average bill for a nursing home was about $80,300 per year and home health care cost about $44,616.

Planning for Long-Term Care

The survey showed that two-thirds of Americans over the age of forty (40) have no plan for long-term care.  It seems likely that many Americans are reluctant to face the possible loss of independence related to aging and therefore don’t plan for this possibility.

While nearly 65% of people surveyed had planned or talked to loved ones about their funeral arrangements, only 42% had planned or discussed long term care. Just 33% had saved money for long-term care.  It seems that  how we want to be memorialized is easier to think about than how we may end up dependent on others.

Don’t Ignore the Need to Plan for Long-Term Care

Although not a popular topic among Americans over 40, a plan for long-term care is important.  If you, a loved one or a client needs help figuring out the options, please think of us.  We can help and we are always happy to hear from you.

 

We are providing this information as a public service.  We practice elder and disability law, but counseling and representing veterans in connection with VA benefits is a specialized field and we do not offer these services.  Don’t stop, read on …

This is the benefit that changes:

Vets and their spouses who are 65 or older, served during a period of war, and have trouble performing tasks of daily living (bathing, dressing, toileting, etc.) are eligible to receive up to $26,036 annually in non-service connected benefits through the VA to help pay for long-term care, including home health care and nursing home care.  The program is means-tested so there are income and countable asset limits.  Proper advance planning can help veterans qualify under these limits.

Here’s what changed:

On September 18, 2018, the Veterans Administration (VA) published new rules that make it more difficult to qualify for this important benefit. Beginning October 18, 2018, any gifts that you made in the past 36 months, either to a family member or to an irrevocable trust, will be penalized. This means you could be prohibited from qualifying for VA pension benefits for up to 5 years, depending on the amount of the gift.  But the new rules are not retroactive; transfers before October18, 2018 will not be penalized.

There are other requirements to the new rules, but the rule on transfers is the most important and the one that requires urgent action.

Here is what you need to do:

You can still plan under the old rules where there is no penalty for making gifts or transferring funds to an irrevocable trust but you have to act quickly. The new rules go into effect on October 18, 2018, and you must have all planning done by that date.

If you’ve already looked into collecting VA pension and Aid & Attendance benefits but you’ve yet to move forward with your planning, it’s time to take the final step.   And if  you are an older wartime veteran or spouse (or you care about someone who is), and this is the first time you are hearing about these benefits, it’s time to take the first step.  You need to call a VA accredited lawyer right away and get started.

You must get your planning done and make any necessary transfers before October 18th to take advantage of opportunities while they still exist before the new rules go into effect.  It may be advantageous to file your application for VA benefits before October 18, 2018.

If you’re a wartime veteran or spouse and you don’t need care now, the time to plan for the care you may need in the future is still right now. You can work to appropriately arrange your finances today, so that when you apply for benefits down the road, you can qualify without a penalty.

If you don’t know where to start, call me at 301-907-4580 x104 right away.  I’ll refer you to someone who can help.

 

Most college-bound freshman are over 18.  The law says that makes them adults; parents know better. They are grown-up but new to the world of managing their money, bills and contracts.  New to the world of managing their own medical appointments and follow-ups.

If you need to talk to the bursar’s office about tuition, grants, or loan disbursements you will need your freshman’s authorization.  Ditto if your want to talk to the doctor or nurse-practioner who examined your freshmen.  Other examples abound.

So now is a good time to consider suggesting your new adult appoint you his or her agent under a durable power of attorney and medical agent under a health-care directive and HIPAA release.

Contact us  if you want to look into this off-to-college planning.

It is a lament divorce judges frequently hear.  Since alimony and child support are based on income, you can’t blame the judges for being somewhat cynical.  It is a law of the Universe.  Income decreases in the year of divorce.

But what if you make a million dollars a year?  Carol Rose, estranged spouse of former baseball star, Pete Rose, says that Pete makes at least $100,000 a month signing autographs and making personal appearances.  However, according to Carol, he has spent most of it on high stakes gambling and still owes significant amounts to the casinos and the IRS.

Carol is asking the court to compel Pete to reveal the full details of his finances in their divorce.

Will 2018 be the year you make a Will and complete your estate and disability planning?

If you kick it down the road another year it won’t matter … unless 2018 is the year you die or become incapacitated or disabled.  In that case, those you care about will wish you had planned better, especially if they are financially dependent on you.

If you don’t make a Will before you die you leave an “intestate” estate.  The state has rules governing who gets your property, who has priority for appointment as your personal representative and how any of your property received by minors will be managed.  If you are confident that you and your loved ones will be perfectly satisfied with the state’s choices about all this, you don’t need a Will.

If your beneficiary designations on life insurance, retirement accounts and other financial accounts are based on the state of your family and finances five, ten or more years ago, payment from your financial assets may be delayed or directed to the wrong people.

If you have an inadequate financial power of attorney, or none at all, a court proceeding called guardianship of property may be necessary to manage your property at a cost of thousands of dollars and many wasted hours.

If you have an inadequate advance medical directive and health care power of attorney, or none at all, health care decisions may be adversely impacted.

If you decide you are going to take care of these matters this year, contact Thyden Gross and Callahan, LLP.   We can help.

“Alice is mad at Wayne,” said my wife as we were driving to work together yesterday.

“Oh?  What did he do to make her mad?” I asked.  Alice and Wayne are friends of ours.

“He told her that it must be nice to go out with her friends for lunch while he works to pay for it all.”

“Was he serious or joking?” I said.

“Joking, but in a mean way.  He’s always making little digs at her like that.” my wife replied.

“Did he say it in front of her friends?”

“Yes.  She wrote him an email telling him how much it hurt her,” my wife responded.  “I told her to send him the article on how much it would cost to replace a stay at home mom with private services.”

“It sounds like what he is really trying to say is they need to sit down and work out a budget and agree on how their resources should be allocated,” I said in my most reasonable lawyer voice.  I was trying to find some middle ground to stand on.

“No!” said my wife.  “He calls it his money, but it is really their money.  She gave up a successful career for him.”

“Perhaps he is just using the wrong words to express himself,” I answered.  “What he means is he earns the money that belongs to both of them and he would like to share in the decision of how it is spent.”

“She doesn’t spend any money!” exclaimed my wife.

I told her, “But you just said she went out to lunch with her friends.  Maybe he would like that money  to go into their pension plan.”

‘Their pension plan is fully funded.  He makes lots of money and she spends very little of it,” my wife explained.

“Well, your view is that he’s the bad guy, but I see both sides of it.”

Readers, what do you think?

 

The Problem 

If you are disabled or elderly  you may not qualify for certain government benefits, such as Supplemental Security Income (SSI) and Medicaid , because your income or “countable assets” are too high.   Generally your home, furnishings, vehicle and certain other specific types of property are not counted, while  bank and financial accounts and the like are counted.

If you are already qualified, and your countable assets increase, you can lose your benefits.  For example, a parent or grandparent leaves assets to a loved one receiving government benefits and this disqualifies the loved one from receiving the benefits.  This can happen when the onset of disability is after the Will or other planning is done, or if the effect of the inheritance on government benefits is simply not addressed.  It can result in the recipient having to “spend down” the entire inheritance, i.e. pay out-of-pocket what the government benefit used to pay for.  When the entire inheritance is gone, the recipient is again eligible for benefits, but in the meantime  the entire inheritance has been wasted.

The Solution

Set up a special needs trust.  Special needs trusts, also called supplemental needs trusts, are trusts  designed to permit the beneficiary to enjoy the benefits of the assets owned by the trust without those assets being counted when qualifying for SSI or Medicaid.

A trust is an arrangement under which one person, the trustee, holds legal title to assets for the benefit of one or more other persons (the beneficiary or beneficiaries).  The trust agreement will contain  directions regarding administration, investment and distribution of trust assets.

First-Party Self-Settled Special Needs Trusts

Trusts funded with the disabled person’s own money are called first party special needs trusts.  They must meet strict requirements of federal law.  The trust must be irrevocable and established before age 65.  The trust must be for a disabled person and the trust assets can only be used for that person’s  benefit.  The trust must include a “payback” requirement.  That means any assets in the trust at termination, often at the death of the disabled person, must be paid to the state up to the amount of government benefits provided.  These trusts are often used when a disabled person comes into money, for example, upon settlement of a personal injury suit.

Third Party Supplemental Needs Trusts

Third party supplemental needs trusts are the solution to the inheritance problem.  Rather than leaving assets outright, the parent or grandparent leaves them to a trustee who receives them with the instructions to provide for the loved one’s needs – those that the government program does not cover – generally anything other than food and shelter.

It is important that the trustee has some discretion and is not required to distribute any income or principal to the beneficiary.  Also, the disabled person cannot have the right to demand payment of any income or principal of the trust from the trustee.  The trustee’s discretion and the beneficiary’s lack of a right to demand distributions are what keeps the trust assets from being countable resources under the SSI and Medicaid rules.

So long as the trust document provides trustee discretion and does not entitle the beneficiary to demand distributions, the trust can be very flexible otherwise.  These trusts are not subject to the strict federal requirements applicable to self-settled trusts.  For example, there can be other beneficiaries and their need not be a pay-back requirement.  Because the future is uncertain, every Will should contain  supplemental needs trust provisions that are triggered whenever a gift would be made under the Will directly to a person eligible for government benefits such as SSI or Medicaid.

Conclusion

Government benefits can be very important for the safety and security of the disabled and the elderly.  However, they are not very generous.  Through proper planning, a parent or other donor can ensure that their gift enhances the recipient’s quality of life and adds to  government benefits, rather than eliminating or reducing the government benefit.

 

So goodbye, goodbye
I’m gonna leave you now
And here’s the erason why
I like to sleep with the wiodwopen
And you kee0 the window closed
So goodbye
Goodbye
Gooobye

It turns out that thermostat settings are one of the biggest causes of conflict in marriages.  The wrong setting can cause one spouse to be too cold or too hot, and result in talks of divorce.

It’s not just mental either.  Scientists say that women have a lower body mass to surface area, slower resting metabolism and less muscle mass than men.  Therefore, they may feel more comfortable with warmer temperatures.

Financial considerations might come into play as well.  In the summertime, you can save between one to three percent on your air conditioning bill for each degree you set the thermostat over 72 degrees.

We found another way to raise money for your divorce.  Worthy.com is a website that has online auctions where professional jewelry buyers will bid for the diamond in your engagement ring.

Unlike mining diamonds from the earth, which can harm indigenous peoples and the environment, Worthy.com mines the largest cache of diamonds on earth – us.  After all, there is no physical difference between a new diamond and a used diamond.

Worthy.com will grade your diamond, take pictures and post it for auction.

Can’t afford a divorce lawyer?   Need new furniture for your divorce apartment?  Plumfund.com is a website where you can ask people to contribute money for your divorce.

The site describes itself as “Free online crowdfunding for the people we love.”  It has different categories, from baby to funeral, to create a registry for your life events.

You can register your wedding and honeymoon under the Honeyfund category.  I found the divorce requests under “divorce” by using the site search function.