12/29/2011 @ 3:10:PM By Moynihan_Lyons
We have just received notice of the amount of the 2012 increase to the Aid & Attendance benefit. Starting in January, married Veterans can receive up to $2,019/mo. in reimbursement for unreimbursed medical expenses. Single Veterans can receive up to $1,703/mo. And Surviving Spouses may be eligible for up to $1,094/mo.
This is the first increase since 2009. Those who are currently receiving Aid & Attendance should see this increase reflected in their January payments.
If you think that someone might benefit from accessing this benefit, please give us a call. Too many people believe or have been told that “they can’t qualify” when that is just not true.
If you are interested in finding out more about planning for long-term disability and Safe Aging Now, please feel free to contact Terry Moynihan or Maureen Lyons, at (951) 781-1960.
Posted Under: Estate Planning, News, Veteran Benefits
Tags: , Aid & Attendance, long term care, VA, veterans benefits
Comments: 0
2/17/2011 @ 5:31:PM By maureen
Typically, I speak to my senior clients about ways they can save money on long term care. However, a recent article in the Wall Street Journal, (“Caregiver Tax Breaks” 2/13/11), addresses another important consideration – tax breaks for those who are providing the care that keeps mom or dad living at home longer. The article cites a study by the National Alliance for Caregiving & AARP that estimates that more than 43.5 million Americans look after someone age 50 or more. These caregivers spend an average of approximately $5,500 a year on care. While there is no requirement that there be a parent-child relationship between caregiver and recipients, this is certainly the most common arrangement.
So what can I share with the adult children of my clients who are looking for a bit of financial relief?
First, if you provided more than half of your parent’s financial support during the year and your parent’s gross yearly income (excluding Social Security) was less than $3,650, you be able to claim their parent as a dependent. Those meeting these and other dependency criteria may be able to reduce their taxable income by $3,650.
If you can’t claim your parent as a dependent because he or she has too much income, you may still be able to claim a dependent-care credit up to $1,050.
You might also be able to count your parent’s medical and dental expenses that you paid along with your own medical deductions if the total exceeds 7.5% of your adjusted gross income.
Finally, you may benefit from changing your filing status to head of household if you are single.
If you think you may be able to take advantage of any of these options, be sure to talk to a tax professional to get the biggest “bang” for those bucks.
Posted Under: Estate Planning, Life Care Planning, News
Tags: , caregiver, caregiving, taxes
Comments: 0
11/29/2010 @ 4:45:PM By Maureen Lyons
Most Americans have never discussed what should happen when they die. There are many decisions to make, yet they have very little help in making those decisions.
Studies show that more than 90% of Americans believe that pre-funding their funeral is a good idea, yet only 12% have done it. Studies also show that elder law and estate planning clients would prefer that this discussion take place in the context of their other planning. This creates an opportunity for the planning team to work together to fill this unique planning need.
According to a survey conducted by the National Funeral Directors Association, clients identified the following as the most appropriate times to pre-fund a funeral:
80% find it appropriate to pre-fund when afflicted with a serious illness.
71% find it appropriate to pre-fund with their trusted advisor.
61% find it appropriate to pre-fund at retirement.
58% find it appropriate to pre-fund when planning retirement.
9% find it appropriate to pre-fund when solicited by a funeral home.
Only 12% of Americans have worked with a funeral home to pre-plan, and only 9% find it appropriate to pre-fund when solicited by a funeral home. However, 71% of Americans would like to set aside funds with their trusted advisor for this purpose.
A conversation about Final Expense benefits the following individuals: clients over the age of 55; adult children worried about their parents; those who don’twant to burden their family at death; those afflicted with a serious illness; and those with a funeral home aversion.
What is a Final Expense Trust?
A final expense trust (aka a funeral trust or burial trust) is specific-purpose, guaranteed-issue insurance product that is irrevocable, un-assignable and provides dollar-for-dollar coverage that is readily available to pay the actual costs of a person’s final funeral, cremation, burial, or related expenses. Simply stated, it is a product designed to ensure the availability of funds to pay for the client’s desired final expenses when needed.
The benefits of a Final Expense Trust include:
- Death benefits are payable to the funeral home of the client’s choice; any excess funds will be returned to the client’s estate or designated beneficiaries.
- Funds are protected from all creditors, probate, nursing homes, and even Medicaid (Medi-Cal in California). Funds are immediately excluded as a resource in determining qualification for Medicaid. There is no Medicaid penalty for purchases of final expense trusts for the client and other members of the client’s family. Policy limits vary by product.
Final Expense Trust Considerations
Here are several questions you might think about relating to this planning tool:
What is important to you about how funeral arrangements should be conducted, or how do you picture the most appropriate final arrangements?
1. Is it important to you to have a traditional funeral?
2. What are your feelings regarding burial or cremation?
3. What needs to be purchased to fulfill your final wishes?
4. What do you believe these final arrangements will cost, and how do you plan to pay for them?
5. Do you know that Medicaid requires the spend-down of all liquid assets (including cash value life insurance and CDs), but actually encourages paying for a funeral with a pre-paid funeral and burial insurance trust?
Final Expense Trusts allow seniors and their families to address one of their significant planning
concerns – what will happen when they die. By working together, the senior’s “planning team” or advisor can address this issue without affecting eligibility for Medi-Cal/Medicaid or other government benefits.
Posted Under: Comprehensive Estate Planning, Estate Planning, Trust Administration
Tags: , final expense trust, funeral trust, long term care, Planning
Comments: 1
11/3/2010 @ 11:19:AM By Moynihan_Lyons
There are unique planning requirements for families with children, grandchildren or other family members (such as parents) with special needs. However, a lot of misconceptions exist in this area that result in costly mistakes in planning for special needs beneficiaries.
In this post we will cover the three most common mistakes related to special needs planning.
Disinheriting the child. Many disabled people rely on SSI, Medicaid/Medi-Cal or other government benefits to provide food and shelter. Some parents may have ben advised to disinherit their disabled child – the child who needs their help most – to protect that child’s public benefits. However, these benefits rarely provide more than basic needs. Also, this “solution” does not allow the parent/s to help the child after the former becomes incapacitated or is gone.
When a child requires, or is likely to require, governmental assistance to meet his or her basic needs, parents, grandparents and others who love the child should consider establishing a Special Needs Trust. This tool can protect public benefits and care for the child during the client’s incapacity or after the clients’s death.
Procrastination. Because none of us knows when we may die or become incapacitated, it is important that you plan for a beneficiary with special needs early on, just as you should for other dependents such as minor children. However, unlike most other beneficiaries, a child with special needs may never be able to compensate for a failure to plan. A minor beneficiary without special needs can obtain more resources as he or she reaches adulthood and can work to meet essential needs, but a child with special needs may never have that ability.
Failure to coordinate a planning team effort. Ideally, an elder law attorney experienced in special needs planning should be a key member of the client’s planning team. Other important members of this group are: (a) a life insurance agent who can ensure that there will be enough money to maintain the benefits for the special needs child, (b) a CPA who can advise on the Specials Needs Trust’s tax return; (c) an investment advisor who can ensure that the trust’s funds resources will last for the child’s lifetime; (d) any other advisors (such as a care planning expert, if needed) that may support the goals of the trust going forward.
Posted Under: Estate Planning, Special Needs Trusts, Trust Administration
Tags: , Planning, Special Needs, Special Needs Trust
Comments: 0
10/18/2010 @ 1:16:PM By Moynihan_Lyons
Medi-cal (called Medicaid in states other than California) planning can be divided into two types based on urgency: pre-planning and crisis planning. Pre-planning is for those individuals who have not yet begun to spend their assets on private care, but may need to in the coming years.
Crisis planning is for those individuals using their life savings for long-term care (either at home or in a facility) with a substantial risk that they will run out of money.
In pre-planning cases, life insurance can provide tremendous planning benefits when implemented correctly. The purchase of a single premium life insurance policy by an irrevocable trust, or subsequent transfer to such a trust, will not only replace a couple’s net worth, but will also protect the cash value of that policy from Medicaid.
Alternatively, if not owned by an irrevocable trust, the cash value of any life insurance policy will count against the amount of assets a person can keep and still qualify for Medicaid.
For example, assume Mr. and Mrs. Jones, both age 65 and in good health, have $450,000 of assets. At their age, a single premium of $100,000 would buy a death benefit of nearly $450,000. If an irrevocable trust owns the policy and neither Mr. or Mrs. Jones have access to the trust assets, after a certain period (most likely 5 years), their entire net worth would be protected from Medicaid, and Mr. and Mrs. Jones would still have $350,000 left to live on. Mr. and Mrs. Jones could transfer more assets to the irrevocable trust, if they desire. In fact, if the couple also purchased a five-yearlong-term care policy (or a life insurance policy with a long=-term care rider), they could protect all of their assets from Medicaid, even with a 5 year look-back period.
For those who choose to plan early, the use of an irrevocable trust combined with life insurance and /or long-term care insurance can provide optimum asset protection for an aging client.
It should be noted that when gifting is used as a planning strategy, the person receiving the gift will often need investment and tax advice regarding the best way to manage the money they receive.
Posted Under: Estate Planning, Life Care Planning, Medi-Cal Benefits
Tags: , Medi-Cal, Planning, Riverside Estate Planning Council, seniors
Comments: 0
10/5/2010 @ 11:11:AM By Maureen Lyons
While disability and retirement planning, and special needs planning can be ‘top of mind’ issues for boomers or older seniors, there are two additional essential estate planning needs that are not directly tied to the economy.
These two concerns, if not addressed adequately, are responsible for a lot of family discord and discontent, not to mention the dissipation of one’s assets and life savings. Lastly, failure to address these planning categories can lead to potentially serious probate issues.
Beneficiary protection planning.
Protecting an inheritance from being lost in a divorce or to a beneficiary’s creditors is a serious concern of many individuals. Many from the older generation fear that their children and grandchildren lack strong financial discipline and decision-making skills. The potential for adverse creditor action or for beneficiary dissipation of an inheritance is greater during difficult economic times.
Also, divorce exceeds 50% nationally. Many individuals are concerned about their children and grandchildren divorcing. They do not want the assets they worked so hard to accumulate winding up in the hands of a former daughter-in-law, son-in-law, etc. Since divorce rates increase in difficult economic times, this planning is even more critical now than in better economic conditions.
Blended family planning.
A higher divorce rate also leads to more second and subsequent marriages, each with a higher statistical probability of ending in another divorce. With blended families (in other words with potentially his, her, and their kids) it is important that each parent’s planning protect his or her children in the event that parent predeceases the subsequent spouse. Failure of blended-family parents to do this type of planning practically guarantees that somebody’s kids will be disinherited or a messy probate will result.
Carefully drafted estate plans protect beneficiaries from divorce, creditors, and themselves. Such plans can also provide for children from prior marriages, which is often the only way to ensure that these beneficiaries actually receive any inheritance.
Posted Under: Comprehensive Estate Planning, Estate Administration, Estate Planning
Tags:
Comments: 0
9/28/2010 @ 4:07:PM By Maureen Lyons
These are difficult times. Consumer confidence is low, and its a long way before the economy is expected to fully recover. Many of us are concerned, wondering what planning we should do now, if any.
For the vast majority of Americans, planning is not discretionary. These individuals continue to have personal concerns that they need to address now because these concerns are unrelated to the economy. In fact, some of these issues may even be made worse by our current economic situation.
In addition, for anyone who may be subject to federal or state tax in the future, unusual circumstances have created a “perfect planning storm” that may not last long. This post addresses some of the planning needs unrelated to the economy, and discusses strategies that create the biggest planning opportunities today.
Here are the basic planning needs that are not directly related to the economy:
- Disability and retirement planning
- Special needs planning
- Beneficiary protection planning (for example, protection from divorce, creditors and/or perhaps the beneficiaries themselves)
- Second marriage and “blended family” protection
These planning needs are often more critical for those with fewer assets than for those with more wealth.
Disability Planning.
We’ve covered disability planning in a previous post. Let’s do a quick review.
According to the Family Caregiver Alliance and a recent MetLife Mature Market Study, of those Americans currently age 65 or older:
- 43% will need nursing home care
- 25% will spend more than a year in a nursing home
- 9% will spend more than 5 years in a nursing home
- the average stay in a nursing home is more than 2.5 years.
Nursing home costs are increasing much faster than the inflation rate would imply. Thus, many of us are quite appropriately worried about how we will pay for that kind of care when we need it.
Also of concern to many people is who will provide long term care and whether those caregivers will care for us in the way we desire. For many, there is a strong desire to stay at home as long as possible. For others, the companionship found in an assisted living facility makes that choice preferable. Still others need care that cannot be provided at home or only at a prohibitive cost. Not surprisingly, these goals often change over time and with changing circumstances.
In light of these challenges, it is critical that you create a trust that sets forth your current, carefully thought out “disability objectives” — to ensure that if and when the time comes you and your loved ones are prepared.
Special Needs Planning.
Special needs planning is another area unrelated to the economy. According to the 1002 U.S. census:
- 51.2 million people reported having a disability
- 13-16% of families have a child with special needs
- Autism occurs every 1 in 150 births and between 1 and 1.5 million Americans have an Autism spectrum disorder
Failure to properly plan for a person with special needs can have disastrous consequences, especially if the person is receiving government benefits. The Special Needs Trust that incorporates specific care provisions is a critical component of the planning necessary for a special needs person who needs ongoing support. Insurance on the lives of the parents or grandparents of a special needs person frequently funds the ongoing care of that special needs beneficiary.
In our next post we will talk about beneficiary, as well as blended family, planning…
Posted Under: Comprehensive Estate Planning, Estate Planning, Special Needs Trusts
Tags: , Disability, Estates, Planning
Comments: 0
9/6/2010 @ 2:19:PM By Maureen Lyons
In previous posts I discussed how long term care needs of seniors can be met through self (or third-party) insurance. But what if these are not possible options?
A senior can use a planning technique called a “Medicaid” trust. (Here in California, it’s called “Medi-Cal” trust). This is part of a comprehensive wealth planning process that your legal advisor can help you with.
In this kind of trust, the trust maker retains the right to all of the trust income for life. However, the senior will irrevocably give up the right to receive or benefit from the principal of the trust. By using this type of trust, a senior can preserve capital and still qualify for Medi-Cal. This will happen only after expiration of the “look-back period” for the transfer of the trust.
This means that if assets have been transferred or given away during the period before applying for Medi-Cal, coverage can be denied. This period can be as much as 5 years.
There is a specific method to calculating this “penalty period” depending on your state’s provisions. Your legal advisor can give your the specifics of this calculation. The variables that will affect the time period are: (a) nursing home cost in your state, and (b) the dollar amount of the transfer.
What are the implications of this “look back period” in terms of the senior’s need for long term care?
For the trust strategy to work, there must be sufficient funds to pay for the long term care needs of the individual during the waiting period before applying for Medi-Cal. This can be met through insurance, an income stream, or other assets.
If a Medi-Cal trust is not desired, it is still possible to make “outright” gifts of property, wait until the look-back period expires, and then apply for coverage.
If the home is the senior’s only asset, there are still certain techniques to protect the property in the context of Medi-Cal eligibility.
What is important to note is that with any of the “advanced” planning strategies available, the senior must have sufficient funds to cover long term care costs during this ‘look back” time segment.
Its critically important that seniors consult with a qualified attorney, even when they think that they are engaging in “simple Medi-cal planning.
Long term care strategy, and specifically Medi-Cal planning is a highly specialized field. Laws are constantly changing, and there are a lot of myths and anecdotal “advice” circulating out there that can lead you down the wrong path.
Posted Under: Care Coordination, Comprehensive Estate Planning, Estate Planning, Life Care Planning, Medi-Cal Benefits
Tags: , LifeCare, long term care, Medi-Cal, Planning, seniors
Comments: 0
8/30/2010 @ 7:56:PM By Maureen Lyons
In the previous post, we discussed Medicare’s limitations in covering long term care needs. There are several options available, each differing in terms of coverage and complexity. These alternatives are all part of a comprehensive life care planning and wealth management strategy.
Here are two basic options available:
Self-insurance for possible long term care expenses. This requires a close collaboration of financial planning and estate and tax professionals to ensure that there are enough assets available to cover possible costs for as long as needed. This requires a comprehensive look at the overall financial condition of the senior, as well as a thorough understanding of the person’s health and wishes regarding care in the event of incapacity. The main consideration is to create an investment strategy that will produce asset growth and income sufficient to fund the individual’s long term care expenses
When working with an advisor, detailed information will be needed for the initial analysis. This will included client assets, current and anticipated income and expenses, and other data, such as where care will occur, the level of support available from family caregivers, and any family history of incapacity. This information will provide the foundation for the planning required to maximize the value of Social Security income, fixed pensions, dividend, interest, and other income streams, as well as maximizing tax deductions for such things as medical expenses.
Long term care insurance. The majority of seniors may not be able to fully self-insure for their long term care needs. Those who cannot but are insurable and can afford the premiums should integrate a long term care policy into their comprehensive wealth plan.
There are two types of policies available: (a) cash payment, and (b) reimbursement. The former pays cash to the insured. The latter reimburses the insured for actual costs incurred.
Policy benefits to consider in a long term care policy include: nursing home and home care coverage; sufficient daily payouts; elimination periods (the number of days you must be in a nursing home before benefits begin, typically 0 to 100 days); duration of benefits; renewability; waiver of premiums (insured pays no premiums while receiving benefits); and inflation protection.
In a future post, we will discuss some of the “advanced” methods available for long term care planning, such as the “Medicaid” trust and other asset protection strategies.
Posted Under: Care Coordination, Comprehensive Estate Planning, Estate Planning, Life Care Planning
Tags: , Healthcare, LifeCare, long term care, Planning, seniors
Comments: 0
