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Advice on Medicare and Medicaid I frequently get inquiries about arrangements for long-term care. Life expectancy continues to rise, due in part to more effective treatments for diseases previously thought to be terminal. This is great news, but with a larger elderly population, new dilemmas arise, including uncertainties related to assisted and rehab care facilities. Two of the most frequently asked questions are, "How do I pay for short-term and long-term care?" and "What is the difference between Medicare and Medicaid and what can each offer me?" Medicare and Medicaid both pay for certain aspects of rehabilitation after a hospital stay, but there are specific requirements that must be met. A knowledgeable elder lawyer can give you the exact stipulations and explain the difference between Medicare and Medicaid provisions. In general terms, Medicare provides coverage to people over the age of 65, and is similar to regular health insurance. Since Medicare is a federal program, benefits and requirements are universal for all states. An individual must have been hospitalized for at least 3 days and 3 nights before transferring to a nursing or rehabilitative facility, and the move must be made within 30 days of the hospital stay. In a sense, Medicare pays for an acute occurrence and the rehabilitation from it. Since Medicare coverage is not intended for custodial care or long-term care, the patient must demonstrate a need for skilled care, in-home or in a care facility, and show that progress is being made toward recovery. If qualified, Medicare will cover a total of 100 days, the first 20 days paid in full and the next 80 days with a co-pay of $124 per day. On the other hand, Medicaid is a state-run entity intended for those in financial need with different rules and qualifiers which vary from state to state. Certain criteria must be met to be eligible for benefits. In Ohio, a single patient would need to spend down his/her assets to around one thousand five hundred dollars, although some states exempt certain assets-- such as your house and car--up to a predetermined value. Any subsequent income the patient gets, including social security, goes first to paying for long-term care. The rules for married persons are different and more complex. Unlike Medicare, Medicaid does offer custodial care, but not all facilities are Medicaid approved. Due to the small percentage of nursing homes which offer Medicaid approved housing, and possible waiting lists, it is best to explore all options with the hospital social worker prior to the patient being discharged. Anecdotally, Medicaid approved nursing homes are crowded, so it would be wise to check out a number of facilities in person ahead of time. Investigating and understanding your options, and implementing preparations before a crisis occurs is the prudent course of action to take. We work with families every day to explore such options and also help families implement the best asset protection strategies to preserve the things they've worked so hard for without jeopardizing the ability to qualify for Medicaid. Check The Oil, Rotate the Tires, and Update Your Estate Plan If you own a car, you know it requires a regular maintenance in order to perform well and be reliable. When you purchased your car, you most likely received a recommended schedule for service. If you follow that schedule, most likely your car will continue to work well. If you don't follow that schedule, you are taking the chance that your car will let you down. Did you know that your estate plan also needs to be "serviced" on a regular basis? Your estate plan is a snapshot of your life the way it was at the time it was created. However, over time your family structure, your assets and the tax laws change so you should set a schedule to have your plan reviewed to make sure it doesn't let you down. So, when should you have your estate plan serviced? Any change in your personal, family, financial or health situation should prompt you to review your estate plan. But, in general, I recommend that you pick a date that you will remember to review the plan each year. Your cue to remember this might be a birthday or anniversary...just any date that will jog your memory and allow you time to sit and read through your plan. If you think a change is needed, do not write on your estate plan. You should contact your lawyer. Hopefully your attorney operates like us and does not charge for quick questions such as these. You should be able to pick up the phone and speak to your attorney to ask whether your plan needs a tune-up. There are some things that might impact your plan that you don't know about such as changes in federal or state laws. As a guide, I have given you a few events where you might want to review your plan: You and Your Spouse - You marry, divorce or separate
- Your or your spouse's health declines
- Your spouse dies
- Value of assets changes dramatically
- Change in business interests
- You buy real estate in another state
Your Family - Birth or adoption
- Marriage or divorce
- Finances change
- Parent/relative becomes dependent on you
- Minor becomes adult
- Attitude toward you changes
- Health declines
- Family member dies
Other - Federal or state tax laws change
- You plan to move to a different state
- Your successor trustee, guardian or administrator moves, becomes ill or changes mind
- You change your mind
I hope that this list gives you an idea of whether you need your plan reviewed. I welcome you to call our office for an Estate Plan Checkup and I'll be happy to review itwith you at no charge. 11/04/2010 The Distribution Of Your Inheritance CAN Hurt Your Kids If you are reading this blog right now, chances are you concerned about what would happen to your assets, investments and total inheritance when you die. I am sure like most people, you want to leave an inheritance to your children in a way that's safe, secure and free from the red-tape of probate. Yet what most well-intentioned parents fail to understand is that it is the way their inheritance gets passed down to family members that can have detrimental and life-altering consequences-which are far worse than having money tied up in the probate courts. For that reason, I want to share some of my knowledge as an estate planning lawyer and give you a brief overview of the 4 ways your inheritance can be passed down to your children and how you can ultimately protect your inheritance from impulse spending, divorce, bankruptcy or poor decision making with proper education and a bit of planning: - Outright Distribution: An outright distribution is just that, mom and dad die and the children receive their inheritance outright, in one lump sum. Simple, clean, but dangerous. Statistics show that an inheritance will be gone within 18 months of a child receiving it. And it does not matter how old the child is or how much the inheritance. If a child gets divorced or goes bankrupt, the inheritance could be lost.
- Convenience Trust: With this arrangement, the inheritance is distributed to a trust, but the child can withdraw the trust assets at any time and for any reason, just by requesting it. There may be an independent trustee managing the trust, or the child may be their own trustee or co-trustee. Since no one can force the child to withdraw the income and principal from the trust, the convenience trust offers some creditor protection, and perhaps a mental barrier to withdrawing the trust's assets, but not much else. This also can act as a separate property trust, so that the child's spouse cannot access the inheritance.
- Step-Distribution: This method is a more commonly used way of leaving money to your heirs. It's also known as the "speed-bump" approach. With this type of distribution, the inheritance flows into a trust, usually with an independent trustee, which is managed and controlled for the child. At certain intervals in the child's life, a portion of the trust's principal is released in a lump sum to the child. For example, one third of the principal is paid to the child at age 30, one third at 35 and the remainder at 40. They still have access to income and principal for health, education and other guidelines you structure, but you can leave your children a powerful message with this type of trust - "don't blow the inheritance!" The idea is that if they blow it the first time, they may not get any future distributions. This may act as an incentive to the child to manage their money well, but it still adds little asset protection, and once the principal is gone, it's out of the bloodline and gone forever.
- Lifetime Trust: This type of trust holds and manages the child's inheritance for the life of the child. An independent trustee is usually chosen to manage the trust and many times the child can serve as co-trustee. Principal and income may be distributed according to various guidelines and incentives that the parent provides in the trust document. These guidelines act as a spigot or faucet: adhere to the guidelines and philosophies of the trust and assets will flow; get into trouble and the trustee can turn the spigot off.
Once the child dies, any remaining assets in the trust can pass to the child's heirs or other individuals or entities. The lifetime trust provides the most flexible vehicle for values-based legacy planning. It also provides the greatest degree of asset protection, including protections against divorce, bankruptcy and lawsuits such as malpractice or personal injury. This is by far the most popular choice of trust arrangements among my clients, as it provides the greatest amount of asset protection and guidance for beneficiaries throughout their lives. So now that you have read the 4 most common ways to pass an inheritance on to family members, I encourage YOU today to get clear on how you would like your inheritance distributed when you die. Do you understand the potential consequences of turning your inheritance over to a child not ready for the responsibility? Are you concerned that your money or assets may one day be lost in a messy divorce or bankruptcy proceeding? Are you simply unsure of the best way to protect your money-and your children-when you die? If so, I would like to extend the opportunity for you to schedule a free consultation at no-charge with our office. I will help you work through such hard questions and ultimately create a rock-solid plan for distributing your assets in a way that aligns with your core values, but also meets your children's long-term financial needs. 09/28/2010 What is a Health Care Power of Attorney in Ohio? As an estate planning attorney, I'm often asked, "what is exactly is a health care power of attorney?" Basically, a health care power of attorney is a legal document that permits someone to make medical decisions on your behalf. This type of document is commonly associated with the decision of maintaining or removing life support for a critically ill loved one, but it covers far more than that. Specifically, a Health Care Power of attorney, allows someone to: - Decide if you want your life to continue on life support or if you want to have them withhold treatment. (aka "pulling the plug") - Pick a person to make health care decisions for you if you are unable to do so. - Make decisions about pain relief options. - To make any other decisions about your health care and treatment. As you can see, a health care power of attorney is essential for someone looking to have their wishes carried out in the event they become incapacitated. The person you select to make the decisions for you is called your Healthcare agent. The agent will be acting on your behalf so their role is very important. When you are selecting your agent, you should consider a few things: -He or she must be over the age of 18. -He or she must be reliable and readily available in case something happens to you. -He or she must be emotionally able to make end of life decisions for you. -You should consider adding two to three alternative agents in the event that the primary agent is unable or unwilling to make the critical decisions. -If you appoint your spouse as your agent, and your marriage is dissolved or annulled, your agent's authority is automatically revoked, unless you specify otherwise. -If you are pregnant, your health care power of attorney will not be honored. While a heath care power of attorney can give someone the right to make all healthcare decisions for you, it is also possible to limit authority by clearly defining what their scope of power includes. For example, you may decide that your healthcare agent has the authority to decide what type of pain relief you are given, but limit their ability to decide whether to "pull the plug." It is important to discuss this with an experienced estate planning attorney to make sure that you are very clear and specific in defining this scope. Once a Health Care Power of attorney is signed, dated, and notarized or witnessed by two qualified persons, the Health Care Power of attorney is valid forever, unless the individual revokes it. If the primary Agent is unable to act, the alternative Agents will be called upon to act on behalfof you, which is why it is important to name alternative Agents. One final key point to consider when choosing your agent is that the person should actually want to have this responsibility. There are people who do not feel comfortable making such important decisions - even for their own spouse. Therefore, it is critical to have a conversation with whomever you are considering to ensure that they can and will able to make the decisions that you want them to make. Setting up a Health Care Power of attorney that truly protects your wishes in the event of your incapacity starts by meeting with an estate planning lawyer. 09/20/2010 How to Preserve Your Social Media Accounts After Death Estate planning means so much more than just avoiding taxes and planning for death. Instead, it's about preserving your "whole family legacy," which includes family values, traditions and memories should something unexpectedly happen to you. To that end, your memories are priceless treasures that you've spent a lifetime trying to preserve. Years ago it was the shoe box of pictures under the bed or the trunk in the attic, but in today's tech-savvy world social media has taken their place. More and more people are using social media sites such as Twitter and Facebook to record important memories such as the birth of a baby, a child's graduation, a wedding and so much more. And what makes this option so special is that it allows the owner of the social media account, along with friends and family to post comments and other valuable insights on each post. Social media accounts serve as a cache for photos and videos - all of which are incredibly valuable to your family. Doesn't it make sense, then, that you include a plan to preserve the memories hosted on your social media accounts along with the rest of your family's legacy? Even though we are still at the dawn of what social media will become, the major social media platforms are already beginning to address the issue of how to handle social media accounts when the owner passes away. Here are a few examples: Twitter Twitter recently adopted a policy to handle ownership of a deceased user's account. Twitter requires the following information: 1. Your full name, contact information (including e-mail address), and your relationship to the deceased user.
2. The username of the Twitter account, or a link to the profile page of the Twitter account.
3. A link to a public obituary or news article. Once you provide Twitter with these three things, you can either request that the deceased user's account be deleted or receive an archive of all of the deceased user's tweets offline. Facebook Facebook has a unique feature where they will memorialize the profile of a deceased account holder. When a profile is memorialized, only current "friends" will be able to see it. It is however, still active so that friends can leave messages on the wall in remembrance. To have someone's profile memorialized, just click this link and you'll be able to submit a request. You can also request that the decedent's account be deleted using this form. LinkedIn LinkedIn has a simple Verification of Death form, which is easy to complete. You can find this form and the information required to close the account on the LinkedIn Customer Support Center. You can opt to submit the form either online or via fax. You will need to know the account holder's email address used on the account. This is what is used to verify the person's identity. As with all other aspects of estate planning, it is important to discuss what you want to happen to your online profiles with your attorney and document your wishes in writing. 10/30/2009 Tax Consequences of Creating Joint Property If you are thinking about changing the ownership of your property you need to think about the tax consequences. Any time a non-spouse is added as an owner of property, it is considered to be a gift. An individual may give $13,000 per year to any one person in a year. Any gift in excess of the $13,000 limit is applied to a lifetime exemption of $1,000,000.00. For example, if a father decides to add his son as joint tenant on his personal residence, the father will be treated as giving a gift equal to half the home's value and the father will be required to file a gift tax return. The creation of a joint tenancy also may have an effect on the capital gains. If a person inherits property, he or she receives a step up in basis. When property is held as joint tenants, the surviving owner only gets a step up in basis on half of the asset. For example, if you bought the property for $10,000.00 and it is now worth $100,000.00 and you create a joint tenancy with a child, when you pass away and the property is sold your child will have to pay capital gains on $45,000.00. If you owned the property and it was transfer on death to your child then there would not be any capital gains. There are many things to think about before creating a joint tenancy, please make sure you understand all the consequences before you make any changes. Beneficiary Designations A recent United States Supreme Court case highlights the need to check your beneficiary designations for your life insurance and retirement plans. In this case husband and wife divorce and in the divorce decree the wife gave up all her rights to husband's retirement plan. However, at the time of husband's death the beneficiary designation for his retirement plan still designated his ex-wife as his beneficiary. The company paid out the retirement plan benefits to the ex-wife relying on the beneficiary designation on file. The Supreme Court agreed with this result pointing out that the husband could have changed the beneficiary designation prior to his death and that a company does not have a duty to check into other documents that may affect the payment of benefits. If you are divorced or have any other major life change you should check your beneficiary designations and make any necessary adjustments. Additionally, if you have a divorce decree that gives you an interest in a retirement plan make sure that a proper Qualified Domestic Relations Order had been completed and filed with the company. It is not enough that your divorce decree provides direction for these plans you must make sure that all the proper paperwork is completed so that the company knows how to pay out the benefits. One final point make sure you keep copies of all of your beneficiary designations and ask for confirmation that the document has been received. If the company loses your beneficiary designation benefits will not pass as you intended. Your Eighteen Year Old Do you have young adults in your household? Once a child reaches the age of eighteen (18) the law considers them an adult and you will not be able to act for them as you have in the past. Three documents can make sure that your young adult is protected and that you can still exercise some powers as their parent. A financial power of attorney will allow you to assist them with financial assets such as bank accounts or with any property they may own such as automobiles. This document may be particularly important if your young adult is away at school. While a hospital or physician may allow you to make health care decisions for your young adult as his or her parent, it would be prudent to make sure your young adult has a health care power of attorney to avoid any problems. New privacy rules make it harder to get access to health records and parents of young adults may be denied access. If you still need access to your young adults health records a HIPAA release will be necessary. Additionally, as with all adults your young adult should have a will. The transition to adulthood can be rocky but with some planning you can have the tools to assist your young adult with the transition. If you would like more information please contact me.
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