Safe Aging Now

10/27/2011 @ 10:38:AM By Moynihan_Lyons

Join Maureen Lyon for an informative seminar at Olive Grove Retirement Resort in Riverside,  CA.  She will be discussing the 3 components of Strategic Planning for Safe Aging.

Does your estate plan “really” address your needs when it comes to health, finance and autonomy?  Learning how a strategic plan using custom drafted trusts and powers of attorney can make a real differnce in the quality of your senior years.  Learn, too, about qualifying for the VA Aid and Attendance Benefit and other government benefits.


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Benefits of Final Expense Trusts

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
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Special Needs Planning – Part 4

11/22/2010 @ 8:01:AM By Moynihan_Lyons

In this post we will cover two additional mistakes people can make in planning for family members with special needs.

Relying on siblings to use their money for the child with special needs’ benefit.  Parents may be relying on their other children to provide for the special needs child from their own inheritances. This can be a temporary solution for a brief time such as during a brief incapacity if their other children are financially secure and have money to spare. However, it is not a solution that will protect the child with special needs after the parent/s dies or when siblings have their own expenses and financial priorities.

Here’s what can happen…

What if the inheriting sibling divorces or loses a lawsuit? His or her spouse (or a judgment creditor) may be entitled to half of it and will likely not care for the child with special needs. What if the sibling dies or becomes incapacitated while the child with special needs is still living? Will his or her heirs care for the child with special needs as thoughtfully and completely as the sibling did?

Siblings of a child with special needs often feel a great responsibility for that child and have felt so all of their lives. When parents are able to provide clear instructions and a helpful structure, they lessen the burden on all their children and support a loving and involved relationship among them.

Failing to protect the child with special needs from predators. An inheritance from parents who fund their child’s special needs trust by will rather than by a revocable living trust is in the public record. Predators are particularly attracted to vulnerable beneficiaries, such as the young and those with limited self-protective capacities. When you plan using a trust, rather than a will, the parent can decide who has access to the information about the child’s inheritance. This protects the special needs child and other family members, who may be serving as trustees, from predators.

In conclusion, planning for special needs beneficiaries requires particular care and the participation of the family’s entire “advisory team.” The estate planning and/or elder law attorney plays a pivotal role in ensuring the future well-being of a special needs child.

A properly drafted and funded Special Needs Trust can ensure that the beneficiary has sufficient assets to care for him or her, in a manner consistent with the parent’s wishes, throughout the beneficiary’s lifetime.


Posted Under: Comprehensive Estate Planning, Revocable Living Trusts, Special Needs Trusts, Trust Administration
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Special Needs Planning – Part 3

11/15/2010 @ 8:01:AM By Moynihan_Lyons

So far, we have shown five common mistakes families can make.

Here are some additional issues people are likely to encounter…

Failure to properly “fund” and maintain the plan. When planning for children with special needs, it is absolutely critical that there are sufficient assets available for the special needs beneficiary throughout his or her lifetime. In many instances, this requires utilization of a funding vehicle that can ensure liquidity when necessary. Oftentimes permanent life insurance is the perfect vehicle for this purpose, particularly if the clients are young and healthy such that insurance rates are low.

It should be noted that because this is an ever-changing area, it is imperative to revisit the plan frequently to ensure that it continues to meet the demands of the special needs beneficiary.

Some  situations may require special strategies. For example, if the client is potentially subject to estate tax, an Irrevocable Life Insurance Trust can own and be the beneficiary of the policy, naming the Special Needs Trust as the beneficiary. Alternatively, in a non-taxable situation, it is also possible to name the client’s revocable trust as the beneficiary to help equalize inheritances if that happens to be the objective.

Choosing the wrong trustee. As a parent (or grandparent) of a special needs child, you will be able to manage the trust as long as you are alive. However, when you are no longer able to serve as trustee, you can choose who will serve according to the instructions you provide. It is possible to choose a team of advisors and/or a professional trustee. It is critical that the person’s chosen be financially savvy, well-organized, and of course, ethical.

Failing to invite contributions from others to the trust. A key benefit of creating a Special Needs Trust now is that the beneficiary’s extended family and friends can make gifts to the trust or remember the trust as they plan their own estates. For example, these family members and friends can name the Special Needs Trust as the beneficiary of their own assets in their revocable trust or will. They can also name the Special Needs Trust as a beneficiary of life insurance or retirement benefits.


Posted Under: Comprehensive Estate Planning, News, Special Needs Trusts, Trust Administration
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Special Needs Planning – Part 2

11/8/2010 @ 8:00:AM By Moynihan_Lyons

In today’s  post, we continue looking at the problems typically encountered in planning for family members with special needs.

Ignoring the special needs when planning for the child’s benefit. Planning that is not designed with the child’s special needs in mind will probably render the child ineligible for essential government needs. A properly designed Special Needs Trust promotes the special needs person’s comfort and happiness without sacrificing eligibility. This Trust can be used as the vehicle to pass assets to the child. Otherwise, those assets may disqualify the child from public benefits and might become available to repay the state for the assistance provided.

Special needs can include medical and dental expenses, annual independent check-ups, necessary or desirable equipment (for example, a specially equipped van), training and education, insurance, transportation, and essential dietary needs. If the trust is sufficiently funded, the disabled person can also receive spending money, electronic equipment and appliances, computers, vacations, movies, payments for a companion, and other self-esteem and quality-of-life enhancing expenses. These are the kinds of things parents may currently provide for their child or other special needs beneficiary.

Creating a “generic” special needs trust that doesn’t fit. Even some “special needs trusts” are unnecessarily inflexible and generic. Although an attorney with some knowledge of the area can protect almost any trust from invalidating the child’s public benefits, many trusts are not customized to the particular child’s needs. Thus the child fails to receive the benefits that the parent provided when they were alive.

Another frequent mistake occurs when the Special Needs Trust includes a “pay-back” provision rather than allowing the remainder of the trust to go to others upon the death of the special needs child. While these “pay-back” provisions are necessary in certain types of special needs trusts, an attorney who knows the difference can save your clients hundreds of thousands of dollars, or more.

The take home message is that you need to make sure that your attorney is well versed in special needs legal planning.


Posted Under: Comprehensive Estate Planning, Special Needs Trusts, Trust Administration
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Special Needs Planning – Part 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.


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Medi-Cal Planning – Part 3

10/25/2010 @ 2:48:PM By Maureen Lyons

Medi-Cal (or Medicaid) “crisis planning” can be precipitated in the case of a senior who has either been admitted to a nursing home or is about to be placed in a nursing home — while being told that they have too much in assets to qualify for the program.

Given the high expense of  nursing homes, (upwards of $70,000 per year) many people look for ways to defray the costs of  long term care through Medi-Cal.  Through proper crisis planning, a senior’s hard earned savings may be protected from Medi-Cal.

There’s a lot of misinformation circulating out there. It is important that you consult with a qualified elder law attorney who is familiar with the Medi-Cal process.

There are strategic approaches that can help. While transfers either outright to a family member or to an irrevocable trust can create a penalty period for the person making the gift, sometimes a planned strategy involving gifting and the use of an annuity can provide a valuable planning tool.

For example, assume Mr. Jones suffers a stroke and ends up in a nursing home, and his cost of care exceeds the couple’s existing monthly income. However, the their total assets may be over the state’s allowable limit for a married couple.

One approach is to purchase an annuity, thereby converting excess assets into an income stream. This may enable Mr. Jones to qualify for Medi-Cal. In addition, the annuity can provide Mrs. Jones with extra income to supplement the loss of her husband’s income (which must be paid to the care facility).

For a single person in crisis planning, a plan of partial gifting plus the purchase of an annuity may also be appropriate. It should be noted, however, that any time a Medi-Cal applicant makes a gift, whether it is to a person or a trust, there can be a corresponding “penalty” or waiting period based on the size of the gift. The larger the gift, the longer a Medi-Cal applicant may have to wait to obtain eligibility.

The above examples should not be attempted without consulting a qualified elder law attorney. These are just used as illustrations to demonstrate how a legal advisor can help a senior fund long-term care requirements.


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Medi-Cal Planning – Part 2

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.


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Medi-Cal Planning – Part 1

10/12/2010 @ 5:39:PM By Maureen Lyons

In previous posts, we discussed the importance of proper disability planning for seniors. This post addresses a related and often misunderstood topic, Medi-Cal planning. (It’s also known as Medicaid in other states.)

Medi-Cal is a federal government program that provides financial assistance to persons age 65 and over, or those under 65 who are disabled and who are in need of substantial medical assistance. It is a needs-based program. A person must have a medical need for assistance and must be of limited financial means before he or she may qualify.

With the rising costs of long-term care, many people cannot afford to pay privately for home health care, assisted living, or nursing home care.

According to the U.S. Department of Health and Human Services, the average costs of care in the United States (in 2009) are:

  • $198/day for a semi-private room in a nursing home
  • $219/day for a private room in a nursing home
  • $3,131/month for care in an Assisted Living Facility (for a one-bedroom unit)
  • $21/hour for a Home Health Aide
  • $19/hour for a Homemaker services
  • $67/day for care in an Adult Day Health Care Center

The care costs for the state of California can be found here.

What is Medicaid/Medi-Cal planning?

The term “Medicaid planning” involves either spending down or otherwise protecting a person’s assets so that he or she has minimal assets and can meet the financial criteria for Medicaid qualification. Although based on federal law, Medicaid rules are different from state to state, and even county to county. It is therefore advisable to consult with a legal expert who specializes in Medicaid.

Furthermore, the transfer of assets, purchase of financial products, or otherwise disposing of assets has tax implications for a transferor as well as the recipient, necessitating the advice of someone who has tax law expertise. A financial advisor can also help seniors choose the correct financial products as part of an overall Medicaid planning strategy.


Posted Under: Life Care Planning, Medi-Cal Benefits
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Basic Planning Needs to Consider Now

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
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