Elder Law Guys: It’s that time of year again, to evaluate your Medicare plan
By Julian Gray and Frank Petrich
The Medicare media blitz over the next several weeks will be intense.
We haven’t decided whether there will be more TV and radio ads and direct mail during Medicare’s Open Enrollment season or during next November’s election. We’ll just have to wait and see. In the meantime, here are some important things to consider if you’re already enrolled in or about to enroll into Medicare.
Open enrollment season for the 65 million Americans covered by Medicare started on Oct. 15 and ends Dec. 7. During that time period, you can make changes to certain aspects of your Medicare coverage. These aspects include:
• Join, drop, or switch to another Medicare Advantage Plan (or add or drop drug coverage).
• Switch from Original/Traditional Medicare to a Medicare Advantage Plan.
• Join a Medicare drug plan if you’re in Original Medicare.
• Switch from one Medicare drug plan to another if you’re in Original Medicare
Changes in coverage become effective on Jan. 1, 2024.
Many things can change each year. Your prescriptions may change and the drugs that are covered under your current plan could change in cost, so it’s wise to review your drug coverage annually.
In addition, there may be changes to hospital and physician networks, covered services and providers, so you want to make sure you are still covered for your anticipated health care needs for the next year. In 1965, there was just plain Medicare. In 2023, the average Medicare beneficiary can choose from 43 Medicare Advantage Plans offered by nine insurance companies along with Traditional Medicare and Medicare Part B supplements.
While a lot of attention is given to open enrollment, it is important to consider how one even gets into a Medicare plan in the first place and how to choose the best option. It’s a very personal decision. The initial enrollment period is three months before your 65th birthday, the month of your birthday and three months afterwards. In addition, the transition from other coverage (such as a prior employer) or after the death of a spouse are additional significant points of access to make decisions about which plan to choose.
We spoke with William McKendree, an authority on all things Medicare who is the executive director of the Pennsylvania Healthcare Benefit Solutions Program (“PHBSP”), a 501(c)(3) nonprofit organization. According to Mr. McKendree, PHBSP’s mission is “to help people navigate through the complexities of healthcare insurance and healthcare benefits.
“But, really most of what we do can be described as ‘cleaning up messes.’ And, unfortunately, most of those messes are the result of people relying on incorrect information and bad advice from entities that were supposed to be competent and trustworthy.”
Mr. McKendree’s advice when choosing health care coverage?
“Never trust anyone to care about you as much as you care about yourself. Always try to do your own research and get more than one opinion before you make a decision.”
Another thing to consider is the continuing expansion of Medicaid coverage, known as Medical Assistance in Pennsylvania. Many people who are on Medicare also have coverage through Medical Assistance for things that Medicare does not cover. People who have coverage under both plans are known as “dual eligibles.” So, it’s important to see if Medical Assistance coverage is an option as well.
In summary, health care is big business, and you need to monitor your plan annually and especially when there are life changing events.
Don’t wait until your 65th birthday to start learning about Medicare coverage. Initial enrollment is important and sets the course for your health care future.
There is a wealth of information available from the Center for Medicare Advocacy (www.medicareadvocacy.org) as well as www.kff.org, the web site for a non-partisan organization focused on health policy, in addition to the Medicare toll-free hotline, 1-800-633-4227.
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Legal Ease: Paying for nursing home care – how to apply for Medicaid
By REBECCA A HOBBS, ESQ. CELA, O’Donnell, Weiss, and Mattei, P.C.
The task of applying for Medicaid to pay for nursing home care can be overwhelming when unfamiliar with the process. The first step in the application process is to gather the required information. The Department of Human Services (DHS) requires that five years of financial records be submitted with the Medicaid application. Therefore, you must provide bank statements and tax records going back five years. Along with the financial records, you must also provide basic documents such as your birth certificate, marriage certificate/divorce decree, insurance cards, Social Security card, etc.
Once you have gathered the necessary information, the next step is the submission of a Resource Assessment Form (PA 1572), this needs to be filed where the applicant is married. The Resource Assessment documents the assets that the couple owned on the date of admission to the nursing home.
After filing the Resource Assessment, the applicant’s doctor must complete a Medical Evaluation (MA51). This Medical Evaluation provides the information on the applicant’s health and need for nursing home care. In addition to the MA51, the county Area Agency on Aging will also need to complete a Functional Eligibility Determination (FED). The FED provides information on the applicant’s requirement for care.
After you have filed the Resource Assessment and obtained the necessary medical forms and forms from the Area Agency on Aging, you can then submit the application for Medical Assistance (Medicaid) Financial Eligibility Application for Long Term Care, Supports and Services (PA Form 600L). Once you have completed and filed the application, you will be assigned a case worker at the County Assistance Office. The case worker will review the application and the information submitted. If additional information is required, the case worker will mail a notice listing out the additional information required. Once the application has been processed you will receive a Notice (Form 162) either indicating that the application was approved and the date that the applicant is eligible, or you will receive a denial. If the application has been denied, the Notice will provide the reason for the denial. If a denial is received, you will have thirty (30) days from the date of the Notice to file an appeal with the Pennsylvania Bureau of Hearings and Appeals. If the appeal is not timely filed, you will waive your right to appeal the determination.
Due to the complexities of applying for Medicaid for a nursing home it is advisable to have the assistance of an elder law attorney to assist with the process. In the event that the application is denied, the attorney can handle the appeal and the hearing that results.
The legal advice in this column is general in nature, consult your attorney for advice to fit your particular situation.
This article was originally posted at:
Rebecca A. Hobbs, Esquire is licensed to practice in the Commonwealth of Pennsylvania and is certified as an Elder Law Attorney by the National Elder Law Foundation as authorized by the Pennsylvania Supreme Court. She is a principal of the law firm of O’Donnell, Weiss & Mattei, P.C., 41 High Street, Pottstown, and 347 Bridge Street, Phoenixville,610-323-2800, www. owmlaw.com. You can reach Ms. Hobbs at email@example.com
Marielle F. Hazen, Esq., to Illuminate Legislative Updates at Stetson College of Law’s Pooled Trust Intensive Event
Harrisburg, Pennsylvania – Attorney Marielle F. Hazen, Esq., CELA, is set to share her comprehensive knowledge and insights during the highly-anticipated “Call to Action/Legislative Update” at the Stetson Pooled Trust Intensive event. The session is slated to take place on October 18, 2023, from 4:15pm-5:15pm.
In conjunction with the Stetson College of Law, the event promises to be an enlightening dialogue that will help trustees navigate the intricate legislative, regulatory, and policy landscape. The discussion will center around the importance of staying current with legislative updates and the consequences of failing to do so.
Hazen, along with fellow experts Kerry Tedford-Coles, David Goldfarb, Roxanne Chang, and Barb Helm, will review significant legislative, regulatory, and policy changes. The panel will also outline proposed alterations and spotlight areas where advocacy is vital – offering invaluable guidance for attendees.
Marielle Hazen, a certified Elder Law Attorney (CELA), founded Hazen Law Group, a firm dedicated to the practice of elder law, estate planning, and public benefits law. Her expertise and commitment to these areas make her a sought-after voice on these topics. At the upcoming event, she will extend her wealth of knowledge to help attendees better comprehend the shifting legislative terrain.
The Pooled Trust Intensive event is part of Stetson’s National Conference on Special Needs Planning and Special Needs Trusts, and its ground-breaking initiatives to engage and educate diverse professionals in the legal field. The event aims to bring together legal professionals and experts to discuss and disseminate the most recent legal updates and trends, promoting an in-depth understanding of the law.
Attendees can anticipate a richly informative session, as Hazen and the panelists delve into the complexities of legislative, regulatory, and policy updates. The dialogue is expected to not only deepen participants’ understanding but also equip them with the necessary tools to effectively advocate in the areas identified.
This event presents a prime opportunity for legal professionals to gain invaluable insights from Marielle F. Hazen, Esq., and her co-panelists, enhancing their comprehension and application of legislative updates in their respective practices. Seize the chance to join the conversation and make a meaningful impact in your professional journey.
Hazen Law Group’s elder law and estate planning attorneys are widely regarded as leaders in planning for seniors and disabled individuals. Their attorneys will take the time to listen carefully to concerns and develop solutions that address them.
Hazen Law Group
2000 Linglestown Road, Suite 202
Harrisburg, PA 17110
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Law Guys: The 30-year-old law that changed the rules for people with disabilities
Julian Gray and Frank Petrich
The Federal Omnibus Budget Reconciliation Act of 1993 was signed into law 30 years ago on Aug. 10, 1993.
This highly contested and complex piece of legislation barely passed through Congress with then Vice President Al Gore breaking the tie vote in the Senate. While this law contains many broad provisions, we are focused on reviewing the significant impact it had for people with disabilities both then and now.
First, some background. In 1993, one of us was still in law school; the other one was moving back to Pittsburgh after a 13-year hiatus. Bill Clinton was in his first year as president. Bill Cowher was in his second season as head coach of the Steelers and Sophie Masloff was Pittsburgh’s mayor. Big Ben was only 11 years old and about twice the age of Sidney Crosby.
Now, three decades later, our city has garnered Vince Lombardi and Stanley Cup trophies, and our elder law firm has participated in working with thousands of families directly affected by OBRA ‘93.
Why is this law so important?
People with disabilities across the country rely heavily on the Medicaid program to pay for a myriad of medical services and attendant care and support in both facility and home settings. Medicaid in Pennsylvania, like all states, has strict financial guidelines for eligibility.
However, as our state budget finally gets resolved this year, once again Medicaid funding is at the top of the list of expenditures ($19 billion out of a total budget of $44 billion).
As stated above, the Omnibus Budget Reconciliation Act of 1993 was a huge piece of legislation. We’re only going to focus on three significant changes to the laws affecting people with disabilities which still exist 30 years later and must be considered anytime a person with disabilities engages in estate planning.
Also known as “the Good, the Bad and the Ugly.”
1. The Good:
Creation of statutory special needs trusts — Before this, there were different ideas on how a person with disabilities could have a trust for financial support and still maintain benefits. The issue was resolved by authorizing a special needs trust that could hold assets of any value without those being counted for government benefit eligibility programs such as Medicaid
There are specific aspects of the trust such as a payback provision to the state Medicaid agency upon the death of the disabled trust beneficiary and funding of the trust having to occur before the beneficiary turns age 65.
But the advent of the statutory special needs trusts has allowed thousands of disabled people across the country to enjoy an enhanced quality of life by using Medicaid benefits for basic support while leaning on the trust funds to fill in the many gaps not covered by government benefit programs.
2. The Bad:
Extension of the Medicaid “look back” for gifts — Many people give away assets (money, homes, investments, etc.) to family members or trusts as part of normal estate planning. These transactions can affect a person’s eligibility for certain Medicaid benefits.
Because the financial threshold for Medicaid eligibility is very low, eligibility for the program requires a critical review of an applicant’s financial records by the state. The Omnibus Budget Reconciliation Act of 1993 extended the “look back” period from 30 months to 36 months for outright gifts and to 60 months for gifts to trusts.
(Note that since the passage of OBRA ‘93, the Federal Deficit Reduction Act of 2005 — another significant piece of legislation — extended the lookback period to 60 months for ALL gifts).
3. The Ugly:
Mandatory Medicaid Estate Recovery Program — And now for the bad news. The Omnibus Budget Reconciliation Act of 1993 also mandated that states create their own estate recovery program. The premise behind this law is that states receive significant matching funds for Medicaid funding through the federal government and, frankly, they want some of their money back.
So, beginning in 1994, the Pennsylvania Department of Public Welfare (now Pennsylvania Department of Human Services) started its estate recovery program. Each state’s Medicaid recovery program is slightly different. Pennsylvania’s program is limited to recovering assets subject to probate upon the death of a Medicaid recipient aged 55 or older.
Annually, the state human services department recovers tens of millions of dollars from the estates of deceased Medicaid beneficiaries under this program.
In summary, estate planning for a person with long term disabilities of any age requires knowledge of the federal, state and local rules. Even 30 years later, the rules set forth in back in 1993 still must be considered in each case and planning in advance can mitigate many of the negative factors in this law.
Julian Gray and Frank Petrich are certified elder law attorneys who practice in the Pittsburgh area at Gray Elder Law. Send questions to firstname.lastname@example.org or visit grayelderlaw.com.
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Get Marty: When do you need an Elder Law Attorney?
There is a lot of bad information out there, this is where you find information you can trust.
Marty Griffin talks to Julian Gray about contacting an Elder Law Attorney.
When do you need to contact an Elder Law Attorney? It’s a question my friend Julian Gray gets a lot at Julian Gray. While he says it’s never too late, it’s always better to build that relationship sooner rather than later, and it could save you thousands of dollars by helping you make the right decisions.
That’s true whether you’re talking about setting up something as simple as a Power Of Attorney or something more complicated like preparing for a loved one for a nursing home. Watch the video to see Marty’s discussion with Julian Gray about the right time to reach out and how his team can go to work for your family.
Their goal at Julian Gray Associates is in their motto, “Avoid Mistakes. Protect Assets.” They achieve it by helping you make the right decisions that also help you protect your assets so that every penny counts when you need it the most.
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Julian Gray Associates provides personalized solutions in the areas of elder law, estate planning and special needs planning.
With eight Certified Elder Law Attorneys and a team of professional staff members, we handle a large variety of elder law matters throughout western Pennsylvania. We have the knowledge and resources needed to handle all types of Medicaid planning and disability planning issues, as well as estate law matters ranging from simple to complex.
Whenever possible, we favor integrated elder law solutions that draw upon multiple sources of funding, such as Medicaid, veterans benefits, long-term care insurance and personal estate planning provisions. Whatever your situation, Julian Gray Associates will carefully analyze your needs and work to achieve your goals in a way that is right for you.
PLANNING AHEAD: Outlining some common estate and Medicaid myths
By Janet Colliton
Since estate issues, one way or another, affect everyone over time (since death does) and since Medicaid planning has for many years been a topic of popular conversation — and popular misconceptions in the U.S., it is not unusual that both subjects have generated misunderstandings and, in some cases, folklore that has persisted. This continues no matter how many times we who work in the field repeat the actual state of affairs. So, I decided it might be interesting, even, in some cases, fun to review a few common misconceptions. Here they are.
• Myth No. 1 — Is there a ‘reading of the will?’ I still sometimes receive requests from believed beneficiaries of a new estate to advise when the “reading of the will” is scheduled. The “reading of the will” appears in popular commercials — one of them running currently on network television — where assumed beneficiaries gather in a room and the decedent’s cat is prominently situated in a comfortable chair. The cat, of course, is named as the beneficiary of the house and of the residuary estate. The “reading of the will” to my mind conjures images of a gentleman attorney seated behind his huge desk while a roaring fire blazes in the fireplace behind him. Believed beneficiaries would react with shock as some unlikely party would be named for the majority of the estate. This scene has been the subject of popular novels also. John Grisham comes to mind.
Anyway, there is no official requirement to read the will to the assemblage of beneficiaries and believed beneficiaries. Under Pennsylvania law there is, however, a requirement to notify such persons of the filing of a will pursuant to what is known as a 10.5 Notice and to advise the Register of Wills of the county where the will is filed that such notice has been provided (10.6). It is not necessary to provide a copy of the will as such but only to state where the will can be located, that is, which county Register of Wills’ office and the address. However, as a courtesy a copy of the will can, of course, be provided. In a strange twist, even the executor/executrix who filed the will needs to receive a 10.5 Notice telling oneself that he/she filed the will. In order not to make matters too strange where there is an attorney, the attorney can give such notice to the executor/executrix.
• Myth No. 2 — When a nursing home resident enters a Medicaid facility the government or the nursing home then takes the house. This is a myth. It is true it may, in some cases, feel this way, that is, that the government or nursing home “took” the house but the reality is somewhat more complicated. The government and nursing home do not keep an inventory of houses. However, if a nursing home resident who is unmarried qualifies for Medicaid and still owns a house in his/her own name and, on death, the house is still in his or her own name the Commonwealth of Pennsylvania generally has a claim as a creditor of the estate through its Third Party Liability (Estate Recovery) section. Also, if the house is sold during the lifetime of the Medicaid recipient this means that the house which has been an “exempt” asset under the Medicaid rules has lost its exempt status by being converted to cash which is not exempt. The rules are more complicated than this so this is just a summary but the taking idea is an oversimplification.
Finally, in line with this subject, note there are some exceptions even during lifetime. These can include (1) transfer of the Medicaid recipient’s house to his/her disabled child (2) transfer of a house to a “caretaker child” under and subject to the rules. Do not try to do any of this on your own! Get professional advice.
• Myth No. 3 — No one can give away anything during the ‘five year lookback.’ Many people have heard of the “five y• ear lookback” that applies to transfers before requesting Medicaid benefits. Again the answer is more complicated. It might make more sense to say assets cannot be transferred without following the many rules — and there are many. Also Pennsylvania exempts $500 per month total (not per person). Do not try any of this without serious professional advice!”
Janet Colliton Esq. is a Certified Elder Law Attorney (CELA) by the National Elder Law Foundation and limits her practice to elder law, retirement, life care, special needs, and estate planning and administration with offices at 790 East Market St., Ste. 250, West Chester, 610-436-6674, email@example.com. She is a member of the National Academy of Elder Law Attorneys and Pennsylvania Association of Elder Law Attorneys and, with Jeffrey Jones, CSA, co-founder of Life Transition Services LLC, a service for families with long term care needs.
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Ranking Organizations Should Consider Board Certification as a Factor When Rating Lawyers in Practice Areas
By Steven B. Lesser
For decades, established organizations such as Chambers and Partners, Best Lawyers, Super Lawyers, Martindale-Hubbell, Avvo, and others have ranked lawyers in specialty areas after performing research, soliciting peer review, interviewing with potential lawyer candidates and in some instances speaking to their clients. At the same time, other organizations provide lawyer rankings but not necessarily based on credentials but in exchange for payment. With lawyer ranking organizations participating in social media and elsewhere, all this can be confusing to the public. Consumers of legal services need to have a reliable and meaningful evaluation of a lawyer before retaining them. So, what do consumers of legal services want to know from organizations that rank lawyers?
The consumer seeks to know if the lawyer is competent in a practice area, has a reputation for professionalism, and has the experience to handle a particular matter. If the foregoing considerations serve as drivers, then board certification by state bars and ABA accredited programs should be recognized as a factor when any organization ranks and publishes these lawyer rankings. This is because state bars and organizations with ABA accredited lawyer certification programs have already performed due diligence by determining that a lawyer is substantially involved in a practice area (generally at least 40% of the time), has passed a written examination, been vetted by confidential peer review by colleagues in their geographic area of practice and have taken continuing legal education to stay current with trends in their respective practice areas. This undertaking is significant, is conducted by bar staff, and board-certified volunteers to administer these requirements. Moreover, there are enforcement mechanisms to ensure due process and established procedures to revoke or suspend board certification status. The larger state bar programs expend thousands of hours each year to administer board certification programs. Florida and Texas have the largest certification programs in the nation with 27 certification areas, followed by North Carolina with 14 and California with 11. Other states including New Jersey, Ohio, and Louisiana have several certification areas. The American Bar Association has a special standing committee which administers the accreditation process for lawyer certification programs offered by eight national organizations. These organizations have a corporate infrastructure, must demonstrate fiscal stability, and the ability to administer specialty board certification examinations. Moreover, these organizations conduct peer review and consider professionalism as a main ingredient, all in compliance with the ABA standards for accreditation of specialty certification programs for lawyers.
These are objective standards imposed by state bars and the organizations with ABA accredited lawyer certification programs. With all the diligent efforts by these entities to ensure impartial review and adherence to these lawyer certification standards through certification and recertification, generally every five years, it makes sense that credible organizations that rank lawyers should consider board certification of a lawyer as an objective standard when considering if that lawyer should be ranked. By doing so, consumers of legal services can be more confident in the selection process of lawyer ranking organizations when certification is a factor. Likewise, counsel seeking to refer a matter in a specialty area to another lawyer, may also gain confidence that rankings by national organizations are dependable when relying upon them to initiate a referral.
Considering board certification as an element in ranking lawyers, enhances our profession. By doing so, the ranking organization gains greater credibility when publishing these rankings to the public. Independent research conducted by the ranking organization can confirm whether a board-certified lawyer should be recognized for excellence and confirm their reputation for professionalism, but there are more benefits that can be gained by this approach. Board certified lawyers that recognize the value of being ranked by these organizations, will initiate their own efforts to publicize those rankings when marketing legal services. These efforts will enhance the reputation of the ranking organization. In addition, lawyers that consider becoming board certified may be more inclined to do so to acquire that designation. Finally, the prestige of board certification and becoming ranked would be valuable to the lawyer’s law firm and therefore, the firm may be inclined to support lawyers to become board certified. More board-certified lawyers is good for the profession because it promotes greater competency and professionalism in the practice of law. Most importantly, the public receives credible knowledge as to the qualifications of a lawyer when considering the rankings.
Considering board certification as a factor in ranking lawyers by national ranking organizations is a positive development and makes sense. It is good for the lawyer, valuable for the ranking organization, and best for the consumer that is provided with objective, reliable information as to whether the lawyer is competent, proficient, respected by his or her peers, and can handle a legal matter for the consumer.
Steven B. Lesser of Ft. Lauderdale chairs of the American Bar Association Standing Committee on Specialization.
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Dealing with Dementia – Martha Geisler Patterson’s Newly Released Book is a Valuable Dementia-Focused Estate Planning Guide
Certified elder law attorney and estate planning specialist Martha Geisler Patterson, Esq. has now released her latest book, Dementia-Focused Estate Planning: How to Protect Your Family and Preserve Your Wealth. Her new book offers an abundance of knowledge and information for families who have loved ones dealing with dementia. With compassion and wisdom, the author assists families in managing the challenges of dementia, while protecting their family’s financial future with effective estate planning.
Dementia-Focused Estate Planning is a timely resource that offers practical tools and compassionate support for families navigating the complexities of dementia. Guiding families to lead with empathy and kindness, each comprehensive chapter of this new book helps families ensure their financial future, while reducing the emotional burden of providing end-of-life care to a loved one. In addition to tested estate planning tips that work in the best interest of all family members, the book is also a valuable educational resource that can help families detect and prevent elder abuse. The book offers a step-by-step approach for families to ensure that their elders don’t face financial exploitation. According to the author, estate planning is not just about safeguarding assets; it’s about the people behind them. The book’s important information, paired with the author’s empathetic approach, is bound to assist families navigate the journey of dementia with confidence and peace of mind.
Martha Geisler Patterson, Esq., is highly proactive about asset protection and estate planning for families impacted by dementia. As a California Certified Specialist in estate planning, trust, and probate law, and a Certified elder law attorney by the National Elder Law Foundation, she regularly helps families with expert guidance backed by years of practice. Her vast experience in the field, paired with her deep understanding of the challenges faced by dementia-impacted families, allows her to offer effective estate planning strategies.
Due to her constant efforts to educate the public, Martha has been featured on CNN, Good Morning America, NBC, ABC, CBS, Fox News and more. As an active member of the National Academy of Elder Law Attorneys (NAELA) and past president of Southern California NAELA, Martha is constantly working to help families and elders.
Dementia-Focused Estate Planning: How to Protect Your Family and Preserve Your Wealth is now available on Amazon.com.
Book Preview: https://www.amazon.com/dp/B0CD65WD45
About Martha Geisler Patterson: https://elderlawmom.com/about-elder-law-attorney
This article was originally posted at https://www.digitaljournal.com/pr/news/getnews/dealing-with-dementia-martha-geisler-patterson-s-newly-released-book-is-a-valuable-dementia-focused-estate-planning-guide
Partner with an elder-law attorney to help families preserve more of their assets.
By Tim Sechler, Esq., CELA
Sechler Law Firm, LLC
Have you ever been asked to do a prearrangement for someone in a nursing home? If so, you probably realized you were helping them preserve assets they would otherwise lose to care costs. What if there were something else you could do to help? How grateful might your clients be if you could help them save some money or a home for a healthy spouse or the kids?
An Important Partnership
Funeral directors are trusted members of their communities. In my area, family-owned funeral homes have been working with families for generations and this puts them in a place of confidence. What if you could help families preserve their nest egg and family home?
That’s the question I ask funeral directors in my area and it’s a question you should consider since you regularly stand by client families on the front lines of a financial battle. Nursing homes and Medicaid offices readily refer families to funeral homes. For a variety of reasons, though, they don’t always refer them to elder-law attorneys. But you can, and in doing so, you can play a crucial role in saving your clients’ homes and savings.
Read on to understand the things you need to know about Medicaid, elder law and how the funeral industry can further help families they serve.
What Is Elder Law?
Frankly, it’s a tough thing to define. If you asked 10 elder-law attorneys (or those purporting to be), you’d get 10 different answers. Here’s how I like to think about it: Elder law is a type of estate planning that doesn’t just focus on answering the question, “Who gets my stuff when I die?”. It also answers the question, “What happens if I get really, really sick before I die?”. Elder-law attorneys help our senior clients get the care they need without going broke in the process.
What Problems Do Elder-Law Attorneys Solve?
One of the biggest problems seniors face is a healthcare system that picks financial winners and losers based on the healthcare event they endure. When people turn 65, most turn to Medicare (or an Advantage Plan) for their primary health insurance. There’s a big problem with Medicare, however, in that doesn’t pay for the single biggest healthcare threat seniors face – custodial long-term care in a nursing home. A primary mission of most elder-law attorneys is to help people in this situation.
A Tale of Two Seniors
Fred and Barney are best friends from their days working at the rock quarry. They have identical savings of $300,000 from the company retirement plan. They’ve been retired for years and both have had significant health events in the last year. Barney had a heart attack that resulted in the need for open-heart surgery, rehabilitation and medication. His care was paid for by Medicare.
Fred, on the other hand, had a massive stroke and is likely to spend the rest of his days in a nursing home. Unfortunately, Medicare doesn’t pay for this type of care and Fred’s wife (Wilma, of course) is going broke paying for it. Is this fair? No. Does this really happen? Every day.
What Options Do Seniors Have?
You can search high and low and you’ll find just two payment sources for long-term care: private pay and government benefits. With nursing home costs exceeding $150,000 per year, paying privately is untenable for most families. There are insurance options to help with these costs, but most consumers don’t buy the coverage due to the cost.
Eventually, most nursing home residents turn to the government for help. Because Medicare doesn’t pay for long-term care, most people turn to Medicaid for help. Unfortunately, Medicaid has strict asset and income limitations that essentially require seniors to go broke before they can get care. But there are some planning options to expedite eligibility. Let’s take a closer look.
How Does a Person Become Medicaid Eligible?
First, let me give you a typical lawyer disclaimer: Medicaid eligibility is complicated and the rules vary from state to state. However, the general framework is the same across the country (except in California; its rules are different). Here’s the framework:
Medicaid treats single people differently then it treats married people, and it treats assets differently than it treats income. Let’s do a “single” example first. A single person in a nursing home is only allowed to have approximately $2,000 of available assets, plus a house, a car and prepaid funeral arrangements (this is why they come to you for preplanning). That’s it.
For married couples, generally speaking, the healthy spouse gets to keep half of the available assets. The sick spouse’s half must be spent on care until the amount falls below the $2,000 threshold. There is a major limitation, however: The half the healthy spouse is allowed to keep is capped at approximately $138,000. So, if the husband enters a nursing home and the couple have $200,000 of available assets, the healthy wife gets to keep half. If the family has $500,000, she only gets to keep $138,000.
What About Monthly Income?
Most of a Medicaid recipient’s income needs to be spent on care as “patient pay liability.” If the husband enters a nursing home, the wife will get to keep her own income and may get to keep some of the husband’s income. But some of the husband’s income will need to be spent on care, which makes things difficult for her. They’ve already lost their assets and now they lose their monthly income, too. Without the income, it becomes difficult to pay things like property tax and utilities. The family is essentially on the road to poverty. What a shame.
While most people don’t understand the nuances of Medicaid eligibility, they do know, generally, that you have to be financially broke to become eligible. So, what do they do? Many seniors attempt to transfer their home and savings to their children. But Medicaid doesn’t want people to do this; if you do, you will be penalized with a period of ineligibility and in some states, the kids could even be sued for care costs! Risky business indeed.
How Will the Attorney Help?
This is where a relationship between a funeral director and an elder-law attorney becomes key. As I mentioned, many nursing homes and Medicaid offices will refer cases to funeral homes, but they don’t necessarily refer people to an elder-law attorney. This is where you come in. You can make the referral to an attorney, and in doing so, you may just save the family home and savings.
There are dozens of strategies for attorneys to employ. In the interest of saving time and space, let’s summarize one of the best opportunities, what most attorneys call a “spousal annuity plan.”
A few paragraphs earlier, I noted that Medicaid treats assets differently than income. Remember also that the healthy spouse’s income is safe. One of the most powerful legal techniques available takes advantage of these two rules.
Let’s go back to Fred and Wilma. Fred is in the nursing home for a long-term stay and they are quickly losing their assets. They have a total of $300,000 in retirement savings. Wilma is only allowed to keep about $138,000, leaving $162,000 at risk. Rather than losing this money to care costs, Wilma can convert the assets into income in her name. In most states, this would be accomplished by purchasing a Medicaid-compliant annuity. Because the state can’t count a healthy spouse’s income, Wilma is now allowed to keep all the money!
Working With an Elder-Law Attorney
The outcome in the previous paragraph could only be accomplished with the help of a qualified attorney. One surefire way to find a qualified lawyer is to find a local certified elder-law attorney. CELAs are accredited by the National Elder Law Foundation, whose accreditation process, continuing education requirements and exam are rigorous.
You hold a position of trust with the families you help, especially those with long-term relationships. The next time one a client comes to you for Medicaid prearrangement, I hope you remember to refer them to an elder-law attorney. This simply could be the difference in preserving the family’s financial legacy. Be there for them!
Tim Sechler (JD, MBA) is a certified elder-law attorney (by the National Elder Law Foundation under authorization of the Pennsylvania Supreme Court) and owner of Sechler Law Firm in Cranberry Township, Pennsylvania, which advises families on estate planning and asset protection. For more information, visit sechlerlawfirm.com or call 724-841-1393.
Growing US Senior Population Faces Unmet Legal Needs
Issues from Ineffective or Contradictory Estate Plan
Dear Mr. Premack: I am in my second marriage. My husband’s first wife died years ago with a probated will leaving the house to him. He has grown children, all married. We remodeled the home together and after we were married two years signed and recorded a gift deed giving me an undivided 50 percent interest in the house. He also made a will that says I can live the house for my lifetime but when I die the house will transfer to his children. I see a conflict between the will and the deed. Does his will make my 50 percent interest disappear? Does the will or the gift deed govern when he dies? If the house was sold, would the whole price go into his estate? Additionally, my husband and I also signed a Revocable Transfer on Death deed. But the attorney did not file it until the day after my husband died. My probate attorney thinks the TOD deed wasn’t effective and that the will and gift deed are the key documents now. – FJ
You have already hired legal counsel (your probate attorney). You should ask these questions of your attorney and rely on the advice your attorney shares with you. I can use your situation as an example for other readers, but since your short letter cannot tell me all the details you have shared with your probate attorney you should rely on that attorney for a specific legal answer.
For my other readers: fundamentally, her husband owned his home 100% after the probate of his first wife. He then signed a gift deed transferring 50% to wife number two. When the gift deed was signed and recorded, wife number two received 50% undivided interest as her separate property.
Her husband also made a will in which he said she can live in the house for life, but it goes to his children when she dies. In a will, a person can only dispose of that which the person owns. Her husband owned (after the gift deed) his 50% undivided separate property interest in the house. In his will he can only dispose of his 50% share; he cannot direct her 50% share. Further, his statement that she can live in the house for life can be interpreted in two ways. Either 1) he was referring to her statutory homestead occupancy right, or 2) he was actually giving her a life estate in his 50% share of the house.
In any event, the will must bow to the gift deed. She owns her 50% share, and her husband’s will cannot dispose of her 50% share. The house cannot be sold without her voluntary consent. If it is sold, then she gets no less than the value of her 50%, while the value of his 50% goes into his estate to be distributed according to the terms of his will.
She mentions a Revocable Transfer of Death (TOD) deed. The Texas Estates Code was modified in 2015 to allow TOD deeds, and they have proven to be somewhat problematic. For instance, the law does not allow an Agent under a Durable Power of Attorney to sign a TOD deed for the owner. Also, a perfectly written, signed, and notarized TOD deed must, by law, be recorded before the date of the transferor’s death; if not timely recorded, the TOD deed is void. If married people sign a TOD deed and later get divorced, and the court revokes the deed as part of the divorce, the TOD deed still passes title unless the court order is recorded before the date of the transferor’s death. TOD deeds should never be used without the advice of an experienced Elder Law Attorney.
In her situation, the TOD deed was not recorded prior to her husband’s date of death and is consequently ineffective. Her probate attorney is correct that the will and gift deed are now the key documents. All other readers: if you are in a second marriage, be sure to consult with a qualified Elder Law Attorney about your legal plans, be sure you have a thorough marital property agreement, and be sure your legal rights will be honored by your spouse’s first family.
Paul Premack is a Certified Elder Law Attorney with offices in San Antonio and Seattle, handling wills and Trusts, Probate, and Business Entity issues. View past legal columns or submit free questions on legal issues via www.TexasEstateandProbate.com or www.Premack.com.
This article was originally posted at https://www.mysanantonio.com/life/life_columnists/paul_premack/article/Issues-from-ineffective-or-contradictory-estate-13181817.php
Elder Law Attorneys Offer Advice for Getting Older
SEPTEMBER 27, 2018
STATE COLLEGE, Pa. (Sept. 14, 2018) – When it comes to elder law advice, there’s plenty of misinformation. As the president of the National Elder Law Foundation, Amos Goodall has made it his mission to get the public thinking about what comes next.
In August, Goodall recently appeared on “Parents Are Hard to Raise,” an international podcast that features thought leaders in the elder care community, to talk about what the average Joe needs to know about elder law attorneys.
“Well I usually say that if you’re old, if you think you may get old someday, or if you know someone who is old, you should at least think about an elder law attorney,” Goodall said during the interview.
“We talk about we do estate planning. We do capacity planning. We do fiduciary rights. One of the things we’re best known for is a public benefits advice. And we do all these same things for families with children with special needs.”
Goodall knows a thing or two about elder law. He’s been practicing in State College, Pennsylvania, since 1976 and has been recognized by Philadelphia Magazine as a Super Lawyer in elder law every year since the category was created.
Since assuming the presidency of the National Elder Law Foundation in June, Goodall has been on a campaign to inform the public about all the problems Certified Elder Law Attorneys (CELAs) can solve.
“If you want to say what’s going to happen to your things after you die, you need to do an estate plan. And there’s so many different wrinkles that an attorney can help with,” Goodall said.
“For example, do you have a child who has special needs? If you don’t have a will and the property all goes to the child, will that impair their ability to receive benefits? Well, you know, that’s why you need to talk to a certified elder law attorney.”
“There may be good lawyers who do not have the elder law certification (CELA),” Goodall said. “But the gold standard is this elder law certification.”
Elder Law: New rules make changes to veterans’ needs-based government benefits
NOVEMBER 14, 2018
On Sept. 18, the Department of Veterans Affairs published new rules regarding needs-based, non-service related governmental benefits for veterans and their spouses. These benefits are commonly known as Aid and Attendance benefits. The new rules became effective Oct. 18.
Aid and Attendance, along with another needs-based benefit called Housebound Allowance, provide monthly cash assistance paid in addition to a monthly means-tested pension afforded needy veterans who have a discharge other than a dishonorable one and who served at least 90 days in active military duty with at least one day during wartime. This monthly cash assistance is a worthwhile benefit to many veterans who meet the eligibility criteria as it gives them cash to pay for necessary care at home or care in an assisted living center.
The new rules establish a bright-line net worth limit for pension entitlement. This is a drastic change to the prior eligibility criteria, which considered multiple factors, sometimes resulting in inconsistent outcomes among similarly situated claimants.
The net worth limit now counts the assets and annual income of the claimant according to the standard maximum Community Spouse Resource Allowance (CSRA) promulgated by Congress for Medicaid eligibility. The current CSRA rules allow $123,600 in countable assets. When calculating net worth, the VA will also consider the income and assets of others living in the primary residence, such as an adult child. Additionally, the VA considers the assets of a veteran’s spouse, even if they don’t live together. The VA also considers the veteran’s tangible personal property in calculating net worth, except to the extent such property is suitable and consistent with a reasonable mode of life, such as a vehicle and appliances.
Under the new rules, the VA now excludes from the countable assets of the claimant’s net worth calculation, the claimant’s primary residence including a residential lot of 2 acres. Marketable acreage in excess of 2 acres will be included in the asset calculation. However, the lot size may be larger than 2 acres if the excess acreage owned by the claimant is unmarketable. For example, if the property is only slightly larger than the 2-acre limit, or if the additional property is not easily accessible, or if there are zoning limitations, then the excess acreage may not be counted.
Additionally, the VA rules now impose a 36-month look-back period. This means any assets transferred within the 36-month time frame for less than fair market value, will be subject to a VA-imposed penalty period. Moreover, the purchase of annuities or transfers to trusts will be considered a transfer for less than fair market value unless the claimant retains control, then the annuity or trust will be included in the claimant’s net worth.
There are exceptions to the transfer penalty policy. One exception is that if the annuity is part of a retirement plan that required conversion of a deferred account to an immediate annuity. Then the amount transferred to the immediate annuity would not be penalized as a transfer, but the distributions from the annuity would be countable income.
Another exception to the transfer penalty rule is if a transfer was made to a trust that was created for the benefit of a veteran’s disabled child who was permanently disabled and incapable of self-support prior to the age of 18.
The VA believes the new rules will provide uniformity and consistency in decisions and ultimately result in efficiency in the claims process. It is worthy to note that this article only highlights a few of the major changes related to the new VA regulations. As always it is best to get sound legal advice tailored specifically to your situation from a competent elder law attorney before embarking on any plan seeking benefits.
This article was first published in the Houston Chronicle on October 19, 2018
Wesley E. Wright and Molly Dear Abshire are attorneys with the firm Wright Abshire, Attorneys, P.C., with offices in Bellaire, The Woodlands, and Carmine. Both Wright and Abshire are Board Certified by the Texas Board of Legal Specialization in Estate Planning and Probate Law and are certified as Elder Law Attorneys by the National Elder Law Foundation. Nothing contained in this publication should be considered as the rendering of legal advice to any person’s specific case, but should be considered general information.
PLANNING AHEAD: Second marriages might complicate long term care
OCTOBER 23, 2018
When illness strikes, you do not usually think of legal relationships. But when a spouse needs serious care and is married to a second wife or husband, family relationships can bring with them unexpected problems and conflicts — both for the second spouse and for children by a prior marriage. This is what sometimes happens.
Suppose a spouse cares for her husband as long as she can at home. How long this continues varies widely and could go on indefinitely. Frequently spouses — even spouses who themselves have medical problems — take almost heroic measures to keep their husband or wife at home. Even then there can be a time when it is no longer possible. If it takes two people to lift someone from a bed, if a spouse wanders from the home and cannot find his or her way back, these are all disturbing issues that may mean that care at home is no longer possible.
Sometimes when a parent moves to assisted living in a dementia unit or to a nursing home, adult children cannot believe their parent cannot be sustained properly and safely at home.
At a monthly rate for nursing care in this area of about $12,000 to $14,000 per month, without planning and without using the Medical Assistance rules for spouses which are referred to as the “spousal impoverishment” rules, the spouse at home could take a very serious financial hit in a relatively short time. Without obtaining specialized legal help, she or he might never recover and could need help herself.
This can be when understanding is needed. An adult child might feel the move to personal care or nursing home is needlessly squandering money that would otherwise be an inheritance. Often with second marriages, each spouse leaves his or her estate primarily to children by a prior marriage. If those funds are spent to sustain the spouse at home, children need to understand there might not be an inheritance but their parent is being cared for in the best way possible under the circumstances. It is not an easy decision to make and it demands cooperation among everyone — the second spouse and the children by a prior marriage.
If you are dealing with a Medicaid certified nursing home, the Medicaid rules require certain assets to be moved out of the name of the spouse who needs care, or that person will not receive benefits. As to the house, although it does not have to be transferred to the spouse at home, if it is not and that person should die, the jointly-owned house would be inherited by the spouse in the nursing home and the government would claim under a program known as estate recovery against his estate for the amount the government paid.
There are other oddities. Prenuptial agreements are disregarded when it comes to Medicaid. Countable income except for personal income of the spouse at home and retirement funds such as IRA’s, 401(k)’s, are included in the Medicaid calculation for the spenddown. Without additional planning, a spouse can keep the house, a car, some other exempt assets and a certain amount in assets known as the “spousal share.” That amount could be increased with some planning. The income of the spouse in the nursing home will usually go to the nursing home.
Recognizing the complexity of planning, a spouse who is confronted with long term care for a husband or wife requiring care needs to develop a strategy before funds run low. To do this she really needs to consult with an elder law attorney who is very familiar with the Medicaid rules.
It is understandable that children by a prior marriage could misunderstand the complexities of planning. If good communication has been maintained over the years, children by prior marriages might ideally be included in the planning process so that they know what is happening and why.
Understanding the risks and benefits of remarriage, both emotional and financial, is important both to the couple and to their adult children.
This article was originally published at www.pottsmerc.com
Janet Colliton, Esq. is a Certified Elder Law Attorney and limits her practice to elder law, retirement and estate planning, Medicaid, Medicare, life care and special needs at 790 East Market St., Suite 250, West Chester, Pa., 19382, 610-436-6674, firstname.lastname@example.org. She is a member of the National Academy of Elder Law Attorneys and, with Jeffrey Jones, CSA, co-founder of Life Transition Services LLC, a service for families with long term care needs. Tune in on Wednesdays at 4 p.m. to radio WCHE 1520, “50+ Planning Ahead,” with Janet Colliton, Colliton Elder Law Associates, and Phil McFadden, Home Instead Senior Care.
PLANNING AHEAD: What certification means in Elder Law
Recently, I had the opportunity to review my certification in Elder Law, a designation referred to as Certified Elder Law Attorney or CELA, and it occurred to me that many, probably most, people do not know what certification in elder law means, or how attorneys receive that designation.
There are only about 500 certified elder law attorneys in the United States according to the National Elder Law Foundation that bestows this description. One reason why, is that certification is not easy to get. My co-chair of the Elder Law Section of the Chester County Bar Association, Karyn Seace, Esq. in West Chester, is a certified Elder Law attorney as am I, and a few others in Chester County.
Most attorneys who indicate they are elder law attorneys do not have the CELA designation and, by the way, that does not mean they are not good or experienced in their practices in the elder law field, but only that they did not go through the rigors needed to qualify as a Certified Elder Law Attorney. I spent several years practicing in elder law myself before applying for certification.
So why obtain certification? Lawyers, unlike some other fields like medicine where a person could be considered “board certified” can, strictly speaking, practice in virtually any area, but are expected to read up in the field.
I could, for instance, but would not ever, handle a bankruptcy, since I do not know enough about bankruptcy. It is not my area. Instead I would refer such a case to one of many bankruptcy attorneys I know who are excellent in their field. I do, however, handle real estate for older clients since I have many years’ experience in real estate as well.
So what is certification in elder law? It is a designation issued by the National Elder Law Foundation (NELF) which foundation was established by the National Academy of Elder Law Attorneys (NAELA), the only nationally recognized group for elder law attorneys.
The CELA designation, issued by the National Elder Law Foundation, is recognized and approved by the American Bar Association, and also carries with it recognition as specialization in elder law by the Pennsylvania Supreme Court.
To become a Certified elder Law Attorney, an applicant must be licensed and continuously in good standing with the bars of every state in which they practice. The applicant must have practiced law for at least five years prior to application (most have much more) and still be practicing law. That is the easy part.
Next, the applicant must show substantial involvement in the field of elder law for the three years prior to application. This includes documenting at least 60 elder law matters or cases within the three years prior and those matters must fit certain specific categories. No identifying information of clients is given.
On renewal in five years, the attorney must again show another 60 elder law matters or cases within the three years prior.
Next, the applicant must have completed at least 45 hours of continuing legal education in elder law during the three years preceding the application.
Then, the applicant must submit names of five referring attorneys familiar with the applicant’s competence and qualifications in elder law. Three of the references must themselves have devoted a minimum number of hours to the practice of elder law.
Generally speaking, these three referral sources are also Certified Elder Law Attorneys. The referring attorneys must not be related to the applicant attorney and must not be engaged in legal practice with the applicant.
The applicant submits a short form application and a long form application. The long form application contains the information regarding the background on the 60 elder law matters handled.
Finally — and a stumbling block for most attorneys who attempt the designation — there is a 5½ hour examination in elder law, much of which is an essay which describes real life situations and asks the attorney how the matter should be handled.
The attorney applicant must sit for the exam within two years of filing the short form application and the pass rate for the exam is challenging. The exam and, specifically the essays, are judged by a panel consisting of Certified Elder Law Attorneys.
This article was originally posted at www.dailylocal.com
Janet Colliton, Esq. is a Certified Elder Law Attorney and limits her practice to elder law, retirement and estate planning, Medicaid, Medicare, life care and special needs at 790 East Market St., Suite 250, West Chester, Pa., 19382, 610-436-6674, email@example.com. She is a member of the National Academy of Elder Law Attorneys and, with Jeffrey Jones, CSA, co-founder of Life Transition Services LLC, a service for families with long term care needs. Tune in on Wednesdays at 4 p.m. to radio WCHE 1520, “50+ Planning Ahead,” with Janet Colliton, Colliton Elder Law Associates, and Phil McFadden, Home Instead Senior Care.
Why you should use an Elder Law Attorney, Kathleen Whitehead, CELA
When you look for an attorney to help you with a special needs or elder law issue, you should look first at Certified Elder Law Attorneys (CELA®) near you. Why? Because they have demonstrated that they understand your legal problems, and they can help you.
The Certified Elder Law Attorney (CELA) certification has frequently been referred to as “the gold standard” for elder law and special needs practitioners. This reflects the hard work and proof required before an attorney can proudly proclaim that he or she holds the valued designation.
Preparation for a CELA designation includes several steps and several different types of qualification, all of which are designed to assure that clients receive good legal care. Before being certified, an applicant must:
- Have practiced law for at least five years, and have focused at least half of their practice in the special needs/elder law field for at least the last three of those years.
- Demonstrate “substantial involvement” in special needs and elder law practice, by demonstrating a minimum number of individual cases, spread across a number of different categories making up the “elder law” definition.
- Study for, take and pass a rigorous, day-long written examination. Recent pass rates have been below 50% — and that is of applicants who have already met the experience requirements.
- Undergo a review by peers and colleagues, focused on the applicant’s reputation for ethical and competent representation in elder law and special needs planning matters.
There are over 500 CELAs in the country, so not every community has even one person who has been certified. Your lawyer should be a CELA — it is your surest method of independently confirming that she (or he) is more than just qualified. After all, you deserve the best legal representation available.
A Family Meeting as Part of Effective Estate Planning
Tammy Weber, CELA®
Posted March 21, 2019 on https://www.paelderlaw.com/a-family-meeting-as-part-of-effective-estate-planning/
Effective estate planning takes time and evolves over the various seasons of life. Often, a family meeting is one of the final steps in the estate planning process. There seems to be a trend among baby boomers to want to make sure there is transparency and understanding regarding their decisions so that when they pass away, their wishes are known and family conflict is minimized, if not avoided altogether. A family meeting is very helpful when there is an uneven distribution of assets (actual or perceived), a blended family, a beneficiary with substance abuse or gambling issues, or when there have been gifts that have been made during lifetime.
Why a family meeting?
The purpose of a family meeting is to share relevant information with family members. This will prevent surprises when you become incapacitated or pass away and obviate disagreements and discord. Your professional advisors are often present so that your family can become comfortable working with them. You can explain to everyone at the same time what guided your choices.
Who participates in a family meeting?
Who you invite depends upon your personal circumstances. Each family is different. Often it is your adult children, siblings and on occasion, your close friends if you have no family. Leaving specific people, such as one particular child, out of the meeting can create even more issues than the family meeting is supposed to prevent. (If you’re not ready to invite everyone, it might not be time for the meeting!) Things get trickier when you involve the spouses or significant others of the adult children. Sometimes it is good to control the message and have the “in-laws” hear everything at the same time as the children. This avoids potential misperception and the “whisper down the lane” effect if the child goes home and tells his/her spouse.
Invite the entire professional team — the attorney, financial advisor and accountant. The professionals are able to explain legal or tax concepts and consequences easily and may also serve as a stabilizing influence if any members of the family are upset. It is often easier to have the meeting at the professional’s office; a more neutral territory.
What will be discussed?
Think it through and create an agenda. Outline what you are going to discuss. Don’t include an item on the agenda if you are not ready or willing to discuss it. For example, if you know that several of your children want the vintage Corvette and you have not decided what to do with it, do not put the Corvette on the agenda. You may, or may not, want to provide a detailed financial statement. Stick to the agenda and set some ground rules. You may choose to send out the agenda prior to the meeting, allowing everyone to prepare questions.
Topics that may be covered.
You may share who you have chosen (and why) as your agent under your Financial and Health Care Powers of Attorney. The attorney could explain how the documents work and when they are used. You may discuss your philosophy regarding end of life decisions, organ donation and your health care and/or facility preferences.
Your will, beneficiary designations, views on charitable giving, and the potential tax consequences for your beneficiaries are other topics for consideration. If the executor that you have chosen does not want to serve, it is better to know that now.
If you have established a trust, a review of the trustee and beneficiary provisions is helpful. Also, what is owned by the trust? Too often we see trusts that have not been funded.
Where are your accounts located? How are they titled? Are there online user names and passwords? A good first step is to have a spreadsheet with the name of each account, account holder(s), location of account, and the account number. Is there a safe deposit box? Where is the key? What is in the safe deposit box?
As your health changes, caregivers or care managers may be needed. Share your latest doctor’s report. There are apps available to track and share health care and notes by children, such as CaringBridge.
If one of your children is providing care to you and you are paying that child, this is a good time to explain to your other children why you are doing so. Or, you may be giving more to the child caregiver in your will, because they provided care to you during your lifetime. Your out-of-state child may not understand this.
Cremation or funeral arrangements.
If you have prepaid burial or cremation arrangements made, share those with your family. If you do not, discuss what your wishes are.
Effective estate planning is different for everyone, but it should be done to have your goals achieved. As Benjamin Franklin said, “If you fail to plan, you plan to fail.”
Tammy A. Weber is a Certified Elder Law Attorney and the Managing Attorney of the law firm of Marshall, Parker & Weber, LLC with offices in Williamsport, Wilkes-Barre, Jersey Shore and Scranton. For more information visit www.paelderlaw.com or call 1-800-401-4552.
How To Plan The Legal And Financial Needs Of A Loved One With Dementia
Christopher Berry, CELA®
Forbes Council Post
If you have a loved one who has been diagnosed with Alzheimer’s or dementia, there are certain things that your family needs to plan for both legally as well as financially. Alzheimer’s disease is the sixth leading cause of death in the United States as of 2018, and currently, there is no cure.
If you care for a loved one who has Alzheimer’s or dementia, you know that it can be trying, difficult and expensive. For example, currently, the average cost of a private room in a nursing home is estimated at over $7,500 per month. The question becomes: how do we pay for long-term care if we have a loved one diagnosed with Alzheimer’s or dementia?
If you have a loved one who has recently been diagnosed with Alzheimer’s or dementia, there are three main disability documents that should be in place. First, a financial power of attorney is necessary. This is a document that appoints someone to make financial decisions if the individual is unable to make their own decisions. Next would be the medical power of attorney document that appoints someone to make medical decisions for the incapacitated individual. Last is a document that instructs the financial and medical power of attorney on how best to care for the person who needs care. This document is a personal care plan. With these three documents in place, there is now a foundation to make decisions for the person diagnosed with Alzheimer’s or dementia.
With that foundation in place, the next step is to identify how to pay for the devastating cost of long-term care. There are six main ways to pay for long-term care, so it is up the family to best determine how to use the following options.
1. A family can privately pay for long-term care. In other words, they can use their retirement accounts or savings, sell real estate, etc., to fund care. This is where most families start, but they certainly don’t want to depend on it.
2. Families rely on their children to pay for long-term care. Often, the kids do not financially pay for long-term care, but they often pay for long-term care by using their time. Everything in life is time or money, and the children typically either take time to visit the certified elder law attorney to help create a plan of care or put their life on hold to become a full-time caregiver.
3. Make use of long-term care insurance. There are now new forms of long-term care insurance that do not have the escalating premiums of pure long-term care policies and also provide a death benefit should the individual never need long-term care. The key to long-term care insurance is that it needs to be set up ahead of the Alzheimer’s or dementia diagnoses.
4. Another way to pay for long-term care is through Medicare — but to be honest, Medicare does not actually pay for long-term care. What Medicare pays for is short-term rehab when there is some type of event, such as a broken hip. Medicare also pays for hospice, also known as end-of-life care, which is important for families that have loved ones diagnosed with Alzheimer’s or dementia. For more information on what Medicare will and won’t pay for visit Medicare.gov.
5. Families of veterans can make use of the veterans benefit, more specifically the non-service-connected pension, which is sometimes called the aid and attendance benefit. This VA benefit can provide an additional $1,000-$2,000 per month to help pay for long-term care for veterans and surviving spouses of veterans.
6. Finally, Medicaid may help pay for the cost of a nursing home. However, there are certain requirements to qualify for Medicaid, including an asset test that varies by state, as well as a look-back period to see if a family has moved any money around. One of the strategies to help pay for long-term care and use Medicaid would be utilizing an asset protection trust, such as a Castle Trust, as a way to shelter assets and protect against the Medicaid or nursing home spend-down.
If you have a loved one who has been diagnosed with Alzheimer’s or dementia, it is important to set up disability documents to be able to make medical and financial decisions. Once the foundation of decision making is handled, the next step is to consider the type of care that will be necessary, including how best to pay for that care.
This article was first published on Forbes on February 25, 2019: https://www.forbes.com/sites/forbesfinancecouncil/2019/02/25/how-to-plan-the-legal-and-financial-needs-of-a-loved-one-with-dementia/#254697815090
Elder Law Guys: A way to help ease the financial pain of caregiving
JULIAN GRAY AND FRANK PETRICH|
Here you are, a hard-working career person with kids and parents. Suddenly one or both of your parents become ill or injured. Now, you may find you are being put in the role of your parents’ caregiver.
For our purposes, we’ll define a caregiver as someone who, generally, is unpaid for their services in assisting another with either or both of that person’s activities of daily living (personal care activities fundamental to being able to care for oneself such as bathing, dressing, toileting and eating) and instrumental activities of daily living (related to activities such as cooking, shopping, doing housework, driving, managing personal finances, etc.)
According to the National Alliance for Caregiving and AARP, in 2015, there were almost 43.5 million caregivers or 13.5 percent of the U.S. population providing care for an adult or child over the previous 12 months.
Obviously, the role can create many physical demands, but also financial burdens by potentially disrupting the caregiver’s ability to earn a continuous and sustainable income.
One way to help ease the financial burden is by compensating the caregiver, using a method called a caregiver agreement.
With the cost of personal care/assisted living running from $50,000 to as much as $80,000 a year and skilled nursing care averaging over $113,000 a year in Pennsylvania, a caregiver agreement becomes a legal way for the older person to “spend down” their resources in exchange for the personal care services which might allow them to “age at home.”
If the loved one simply made gifts of their resources to the caregiver and then became a resident of a skilled nursing facility, they could then be subject to a five-year “lookback” period as to those gifts which could create periods of ineligibility for Medical Assistance.
What are some of the critical items to have in a written (and, it must be in writing) care agreement?
State, in clear detail, the type and nature of the services to be provided by the caregiver.
For example, are meals being provided? Who is paying for the food? Is rent to the loved one being charged if living in the caregiver’s home? What about gas, electric, water and sewage? How much housekeeping, laundry and driving services are to be provided?
Spell out all types of additional services such as bill paying, home maintenance and repair items, shopping etc.
Look for a reasonable hourly rate for each of the specific services you’re providing such as what a home care agency might charge.
Keep a log of the time and services provided. Remember also that the money received is taxable income and needs to be reported.
Record keeping is critical.
Both the older person and the caregiver can benefit from such an arrangement.
The older person may, because of your services, be able to stay in your or their own residence, and, possibly never have to enter a long-term care facility. The caregiver can receive compensation for the services provided which could be vital if they must give up the opportunity to earn a living.
Even the state could benefit. The period for which the state, under the Medical Assistance program, might have to pay for skilled nursing care could be substantially decreased or even eliminated by having the older person being provided care under a care agreement in a home environment.
Given the increasing number of seniors in our society and the desire of most to age in place, coupled with the increased pressure on family caregivers, it’s important for the caregiver and other family members to come to a consensus on the utility of using a care agreement.
Remember, that the state County Assistance Offices may test the validity of the agreement.
While both you and your parents may feel that you are entitled to an inheritance from them and feel a little uneasy about adopting a business-like approach to your caregiving, such an agreement will help withstand such scrutiny.
Also, don’t do such an agreement yourself. It’s too important not to do it correctly by obtaining competent elder law advice both for the agreement and related tax and estate planning matters.
Julian Gray and Frank Petrich are certified elder law attorneys who practice in the Pittsburgh area at Gray Elder Law. Send questions to firstname.lastname@example.org or visit www.grayelderlaw.com. This article was originally published on August 27, 2018 at www.post-gazette.com
Golden Rules for the Golden Years
BY VICTORIA HOUGHTON, ASSISTANT MANAGING EDITOR – DERMATOLOGY WORLD
According to the U.S. Census, there were 47.8 million people over the age of 65 in the United States in 2015, and it’s expected that this figure will grow to 98.2 million by 2060. Many dermatologists are familiar with this Baby Boomer generation, as the 2017 Burden of Skin Disease Report indicates that 50% of Americans over the age of 65 have skin disease with an average of 2.2 skin diseases per person (J Am Acad Dermatol. 2017; May 76(5):958-72).
However, while dermatologists are uniquely qualified and well-versed in treating skin conditions and diseases among this particular patient population, Justin Endo, MD, MHPE, assistant professor at the University of Wisconsin’s dermatology department, contends that caring for elderly patients spans beyond dermatologists’ robust clinical acumen. “As dermatologists we play a big role
in terms of improving the quality of life for this entire patient population and recognizing issues that other physicians might not think of.”
Dermatology World talks with experts about the following issues that dermatologists may encounter when caring for elderly patients:
- Treatment Adherence
- Elder abuse and neglect
- Legal and ethical considerations
According to some estimates, up to 50% of patients with chronic conditions do not take their prescribed medications (Dtsch Med Wochenschr. 2011 Aug;136(31- 32):1616-21). Moreover, “Across the United States, up to 21% of adverse drug events in ambulatory care was associated with nonadherence. It is estimated that $1 billion per year is wasted when patients are not taking their medications the right way,” said Dr. Endo. “That’s not specific to older adults or dermatology, but treatment non-adherence is a huge problem.” Although medication adherence is a challenge for patients of all ages, there are a number of factors that physicians may want to consider if treatment adherence is a challenge with their older patients.
For Dr. Endo, communication with patients plays
a major role in treatment adherence. “When we’re talking to older patients, we might not be using the best practices for communication.” Potential hearing loss and/or vision deterioration can interfere with communications about medicines. “Speaking in a lower tone can help patients with a hearing impairment,” Dr. Endo said. “Also, using a minimum of a 12-point font and 1.5 line spacing as well as high contrasts like black print on white paper [for printouts] can really improve people’s ability to understand,” Dr. Endo said.
Anne Lynn Chang, MD, associate professor of dermatology at Stanford University School of Medicine, tries to make her medication instructions as clear as possible, both for the older patients and their caregivers. “I will use a body map diagram and write in large font what medicine is applied where on the body. Same with prescription labels, I write down where on the body to apply a topical medication. I’m not just saying ‘Apply to the affected area,’ but ‘apply to arms’ or ‘apply to scalp.’” If adherence is a problem, Dr. Chang will also give patients a large-font printed diary with instructions to record their dates of use. “I ask them to bring their medication tubes and their diary to their next appointment so I can get an idea of how much of the medication they’re using and the frequency. Often drugs are ‘not working,’ according to the patient, but the lack of therapeutic effect is because they are not using their medication regularly and at appropriate amounts.”
In addition to patient communication, Dr. Endo contends that communication with other physicians is a critical component for ensuring treatment adherence, particularly with older patients who may be seeing multiple specialists in a number of care settings. “The more doctors or nurses that you have involved in transitions of care, the more opportunities there might be for medication reconciliation error. We need to make sure that we’re communicating to other providers — not just the patient and their families.”
This pearl applies to pharmacists as well where automatic refills are concerned. “While automatic refill reminders can be good for patients, we actually found at our institution that sometimes it can cause confusion. When a medicine is supposed to be stopped or adjusted, the pharmacy still has it in their system that there are more refills of the old prescription.” Dr. Endo says there are e orts afoot to improve communications with pharmacists so that when a physician discontinues a medication in their electronic medical records, it sends a ‘stop medication’ notification to the pharmacy. Until that happens, he said, physicians and pharmacists should be communicating about medication changes to avoid any confusion.
In addition to potential hearing loss or vision deterioration, other comorbidities can impede treatment adherence in older patients. “If you have really bad arthritis it might be hard for you to open up a really tiny tube with a little twist top,” Dr. Endo said. “Sometimes it takes some creativity and working with the pharmacist, or asking the patient to work with the pharmacist, to see if they can get their medications in easier-to-open containers.”
Similarly, patients with mobility issues may struggle with topical medications. Dr. Endo encourages physicians to get creative. “There are back-lotion applicators that you can find online that are helpful for all patients. Using assistive devices can make a huge difference.”
In addition to communication discrepancies and challenging comorbidities, another reason that older patients may not be adhering to their treatment plan is that they may be taking several medicines. “In general, older adults take more medicines compared to younger adults and children,” said Dr. Endo. According to Dr. Endo, taking multiple medications, also known as polypharmacy, can increase a patient’s likelihood of treatment non-adherence. “They have to keep track of more medications. It creates more opportunities for human error as regimens get more complicated.” Additionally, says Dr. Endo, older patients may see more specialists in various locations, and as such may have multiple care transitions. “There are all of these additional potential opportunities for medication confusion to occur.”
Recognizing these challenges, Dr. Chang will try not to give her patients too many medications if she can. “It’s easy to feel like we are addressing the patient’s problem when we give out more types of medications, but people get confused or simply don’t have the time to adhere to multiple topical medications. Multiple medications can also get expensive.” Additionally, Dr. Chang will follow up with the patient shortly after the initial appointment to check in on adherence. “Instead of seeing them in six months I’ll see them in maybe a month after the first visit. I need to see them to and out if the drug is working for them. That gives them a concrete endpoint and will hopefully motivate them to give a treatment a decent trial for efficacy. If they know it is efficacious, they may be more likely to stick to a treatment regimen long term,” said Dr. Chang.
The cost of drugs remains a critical hurdle for some patients with regard to adherence, says Dr. Endo. “The vast majority of people who are older are living on fixed incomes. Many of them are relying on government insurance.” However, the cost of health care in
general may be keeping patients from not only taking medications, but following up with their physician. “The copays for people to visit their doctors can be really expensive, especially for the younger older people who may still be working and don’t have government assistance,” Dr. Endo said.
Dr. Chang agrees. “The cost of medications is definitely a concern. When patients mention that, I try to give them different options. There are some online pharmacies that people can ask a caregiver or family member to help them navigate online. Or they can call around different pharmacies before going to a particular pharmacy. They may find that prices can vary a lot. Then of course, I try to use generics but some generics can be pricey too now,” Dr. Chang said.
While prescription adherence is a key factor
in caring for elderly patients, Dr. Chang adds that physicians should also be encouraging their patients to adhere to basic self-care practices. Dr. Chang will ask her
patients to make their skin care regimen an extension of their other hygiene-related routines. “If they brush their teeth, they should put on their sunblock or moisturizer right afterwards. I also go over non-medical issues like keeping your shower short or not using very hot water while bathing,” Dr. Chang said. “Some of the treatment adherence isn’t just medicine, but also healthy skin habits such as dry skin care.”
Elder abuse and neglect
According to the National Council on Aging, one in 10 Americans older than 60 have experienced some form of elder abuse. Additionally, about five million elders are abused each year. For Dr. Chang, there is a unique role dermatologists can play in identifying elder abuse as many indications of mistreatment are cutaneous. “We look on the skin and do comprehensive skin checks so we often see things that other doctors don’t,” Dr. Chang said.
Elder abuse — from physical and sexual abuse to neglect — can manifest on the skin through bruising, lacerations, burns, genital trauma, and malnutrition. When it comes to bruising and lacerations, Dr. Chang says that asymmetry may be a sign of abuse, as well as if the injury resembles an object such as a belt buckle. Similarly, burns that resemble an object, such as a cigarette, or have a stocking- or glove-type pattern indicating immersion could be red flags (J Am Acad Dermatol. 2015: Aug;73(2):285-93). “Certainly, the things that are typical to a rape victim with the area
of penetration are quite similar here, such as skin breakdown and ulcers that are infected or getting worse,” said Julie Schoen, JD, deputy director of the National Center on Elder Abuse. Additionally, poor hygiene and photo-sensitive dermatitis, for example, could be suggestive of pellagra from a vitamin B3 deficiency (J Am Acad Dermatol. 2015: Aug;73(2):285- 93).
If the physician notices any of these issues, Schoen recommends talking with the patient. “Often the caregiver will come in with the patient, but you’ll want that time alone with the patient to talk with them. Ask them — just like you would with any other patient — how is everything going?” While the patient is talking, keep an eye out for signs of fear and anxiety, or if they seem nervous in the presence of the caregiver, says Schoen. “The key is: What’s unusual? We all hit our shins on the coffee table but if you see something in the middle of the back or hidden from sight that can be a red ag.”
If something looks unusual, Dr. Chang recommends documenting those suspicions carefully. “I would get their permission to document with photographs. If you see them once, it may be a one-time event where they fell by accident. However, if it’s a pattern and serious, then that may be something that you want to investigate further and potentially report if the story behind the injuries does not make sense.”
In addition to photos, Schoen says the more details a physician can add about their encounter with the patient, the better. For example, “‘Patient was able to tell me what day it was and knew who I was and seemed alert and oriented.’” However, physicians should be careful about what they include in the records about the patient that can be used against the patient if a case were to go to prosecution, she warns. “Physicians should be cautious about how they write about the patient in their charts. Making judgment calls or loose statements about capacity, you have to be careful with that.”
According to Todd Whatley, JD, president of the National Elder Law Foundation, physicians are required to report suspicion of elder abuse in almost every state. However, “statistically most physicians don’t because they are concerned about violations of physician-patient confidentiality and HIPAA-related issues.” Physicians can find out what’s required of them and
how to report suspected elder abuse through their state’s adult protective services department. Additionally, if the physician suspects that the patient is receiving sub-optimal care
at a nursing home, Whatley recommends speaking with the patient’s family and/or going to adult protective services. “I would start with the health care power of attorney and family member that is most involved and let them know that there’s a problem. Most family members can then go back to the nursing home and address that. If the situation is really bad, that’s abuse and the physician should be reporting to adult protective services.”
Overall, when it comes to elder abuse, Schoen encourages physicians to be proactive. “Just know that there are resources available and there are solutions. People think that there’s not much they can do about it, but there is a lot they can do.”
Legal and ethical considerations
In addition to spotting abuse and neglect among elderly patients, physicians should also be aware of potential mental capacity issues, says Whatley. “All of us have the responsibility to meet with the client or patient and talk to them and essentially determine if they are making good decisions.” How do you do that? “I think we can all tell if a person is ‘making sense,’” says Whatley. “Are they making reasonable decisions that a person looking out after their own self-interests would? You can tell if a person is simply not making well-reasoned, self-interest-protecting decisions. I think physicians are well trained in that
and can see that fairly quickly.” Indeed, before a procedure, Dr. Chang will talk to the patient to make sure they understand the risks and benefits. “We try to document their assent and that to the best of the patient’s ability they understand the reason for what we’re doing, what the risks are, and what the possible benefits are.”
If the physician suspects that the patient no longer has the capabilities to make decisions about their health care, Whatley says the physician can then seek out others to help the patient make those decisions. “That’s where we hope that the patient has designated a health care power of attorney. This is a written document that is either witnessed and/ or notarized that designates someone to make health care decisions when that person cannot, or to assist the patient in making those decisions.” According to Whatley, the form is often submitted to the patient’s primary care physician or hospital, so a specialist like a dermatologist will need to connect with them. “Typically, with health care powers of attorney, there is no triggering event. It is effective immediately and it is up to the physician to say, ‘I’m seeking someone else’s advice here because my client is not making good decisions.’”
If there is no health care power of attorney, Whatley says that the physician — usually the primary care — can work with the next of kin to determine next steps. “Typically, what most physicians will do is tell the family that they need to get a guardianship. I am very adamant that we should not do guardianships unless it’s absolutely the last resort because that
is taking away the rights of the older person and allowing a judge to appoint someone.”
However, many patients will be of sound mind, says Dr. Endo, and it’s important for physicians not to assume otherwise and base care decisions simply on age. “Avoid ageism. The aging process is so variable. When we’re kids, we go through developmental landmarks at roughly the same
age. As we get older, we have different life experiences and health situations which is why geriatric care is not one-size- fits-all.”
Indeed, with this particular patient population, care priorities and goals will vary and may differ between what the patient wants and what the physician recommends. As a result, Dr. Chang suggests taking the time to come to an understanding about the patient’s care goals. “I try to assess what their most important priority is. I don’t want to just roll them into a blanket treatment plan, because I believe that every patient is different. Many older patients are very high-functioning and doctors shouldn’t assume that age alone precludes them from particular treatments, especially if they have few other medical problems. Taking the time
to understand your patient’s goals might seem like it takes a lot of time, but in the long term it’s worth it as it helps you to guide the patient toward the best choices for the particular patient.”
Dr. Endo finds that often his patients will be candid about their care goals. “Some patients will say, ‘I just want to be around for my grandkids’ birthdays.’ Other people might be more concerned with quality of life. It goes back to patient-centered care and recognizing that there’s a lot of variability among older adults in terms of what they value, depending upon their psycho-social circumstances, their health, etc., and not just based upon their chronological age. What’s challenging but also rewarding about taking care of older adults is once we appreciate the big picture, we can optimize our treatment plans and not just focus on the skin.”
When it comes to treating elderly patients, Dr. Chang encourages all physicians to simply put themselves in the shoes of their patients. “The way I think about it is: How would all of us want to be treated when we’re not fully able to take care of ourselves? Hopefully, one day we’ll all be old enough to be in that situation. We should be doing what we can to help these patients age gracefully.” dw
This article was originally published by the American Academy of Dermatology, July 2018. https://www.aad.org/dw
What Makes Elder Law Attorneys Different from Other Attorneys?
BY GREGORY S. FRENCH
Elder law attorneys are very different from other attorneys. They define their practice not by the type of legal problems they handle but by the type of persons they help.
Elder law attorneys are very different from other attorneys. They define their practice not by the type of legal problems they handle but by the type of persons they help. Like Aging Life Care Professionals, they help families to maximize the independence and quality of life of older persons. Elder law attorneys can help families accomplish this while best utilizing and protecting life savings. They make sure that older persons receive whatever help or care they may need in ways that best utilize family and government resources.
Working with an Elder Law attorney offers the family and the older person several advantages. First, the Elder Law attorney is experienced with communicating with and working with older persons and their families on interrelated legal and non-legal issues. Second, the Elder Law attorney has working knowledge of the professional and community resources publicly and privately available to meet the needs of older persons. Third, the Elder Law attorney has the expertise to prevent and solve problems in the following areas:
- Paying for Health and Long-term Care: Planning for and assisting with obtaining Medicaid, Medicare, and veterans benefits for persons at home or in an assisted living or nursing
- Insurance: Counseling and representation concerning health, medigap, long-term care, prescription, disability, and life
- Planning for Disability: Advice and drafting of financial and health care powers of attorney and living
- Fiduciary Representation: Seeking the appointment of and advising guardians, conservators, trustees, executors, representative payees, and those acting under powers of
- Legal Capacity Counseling: Advising how capacity is evaluated and the level of capacity required for decision-making and representing those who are the subject of guardianship or other protective
- Elder Abuse: Preventing and remedying abuse, neglect, and financial
- Retirement Planning: Maximizing Social Security, pension, IRA, 401(k), 403(b), and retiree health
- Housing: Counseling concerning continuing care retirement communities, assisted living facilities, home equity conversion, and living with family members or
- Residents Rights Advocacy: Counseling and representation concerning admission contracts, quality of care, and transfer and discharge
- Estate Planning: Wills and trusts and minimizing estate and income taxes on IRAs, 401(k)s, and 403(b)s.
Lots of attorneys say they practice elder law. Here’s how to find the “right” elder law attorney:
- Is the attorney certified? A growing number of states permit attorneys to become certified. If your state does, ask whether the attorney is certified in elder law. Certification means that the attorney has the elder law experience and has met the continuing legal education requirements to hold him or herself out as an elder law specialist.
- Is the attorney a member of NAELA (National Academy of Elder Law Attorneys)? NAELA membership shows that the attorney has an interest in elder law, access to NAELA’s educational resources, and has committed to support NAELA’s Aspirational Standards for the Practice of Elder Law. Has the attorney been admitted to NAELA’s Council of Advanced Practitioners or selected as a NAELA Fellow?
- How much of the attorney’s practice consists of assisting persons with issues having to do with aging? Lots of attorneys list elder law as part of their practice. More than half the time of the “right” elder law attorney is spent assisting persons with issues having to do with
- In what elder law continuing legal education has the attorney participated? Ask the attorney for the transcript of his or her continuing legal education in the past 2
- Is the attorney a leader among elder law attorneys? For example, has the attorney chaired a local or state bar elder law committee? Or served as an officer of a NAELA state chapter? Or served on the board or as an officer of NAELA?
Elder Law Attorneys and Aging Life Care Professionals often collaborate to maximize the independence of quality of life of older persons. Together, they help older persons to receive and pay for their health and long-term care, obtain necessary legal documents, protect those in danger of neglect or exploitation, maximize government benefits, and locate appropriate housing and care. Elder law attorneys who work with aging life care professionals can much more holistically meet these and other needs of older persons.
By Gregory S. French, Certified Elder Law Attorney, Cincinnati, OH
This article was originally published in the Aging Life Care Association (ALCA) Newsletter
Estate Planning with IRA Trusts
BY ROBERT FLEMING | TUCSON ELDER LAW
Many folk have large retirement accounts. According to the Investment Company Institute 2016 Yearbook, in 2015, members of 60% of US households had invested $24 trillion in retirement market assets, including IRA’s, 401k’s, 403b’s, Simple IRAs, and others. This article discusses IRAs, and someone with any others should consult with knowledgeable legal and financial advisors. In fact, every single general rule stated in this article is subject to exceptions, and there may also be specific situations where these rules should be purposefully ignored. This article should be considered simply a guide for asking questions of your advisor, rather than a roadmap for do-it-yourself action.
The typical estate plan for a married couple with IRAs is naming the surviving spouse as the first (or primary) successor owner. There are special tax benefits for a surviving spouse that do not apply to any other possible successor owners. There are other options, but these should not be pursued without specialized advice.
Classically, they name their children as the contingent or remainder successor owners who will receive the accounts upon the second of their parents’ deaths. Single IRA owners may name their children as primary successor owners, and those without children typically name other family members to receive these accounts. Again, there are other options (including some charitable ones) that should be considered after appropriate advice.
Most IRA owners want to keep IRA assets invested as long as possible. Since growth is not taxed until the funds are withdrawn, they will grow faster. Thus, the longer they are invested, the greater they will be. This is called “stretching” the IRA.
One of the benefits to naming a surviving spouse as the first successor owner is that the spouse is permitted to “roll” the IRA into his or her own name as one of the available options. No one else has this option, and everyone else must begin withdrawing funds (and paying taxes) as soon as the IRA becomes theirs, called the minimum required distribution (MRD). For younger successors, the MRD is not great, an eight year old successor owner will need to withdraw a little over 1% (roughly one-seventy-fifth) as his or her MRD. In contrast, a sixty-five year old successor would have an MRD of almost 5%, and the MRD for a seventy-one year old spouse would be just over 6%.
Thus, it makes sense to name as young a beneficiary as possible so as to lengthen the process to maximize the effect of compounded tax-deferred growth. For example, if a seventy year old widow leaves an IRA with $100,000 to an eight year old great-grandchild (assuming there are no generation-skipping tax considerations), and the IRA grows at 3%, then at age 65, the great-grandchild will have withdrawn over $207,000 from the account and it will still be worth over $130,000–quite a positive result for a $100,000 IRA. (At a higher rate of growth, like 6%, that same $100,000 IRA would be worth $700,000 at age 65, and MRD withdrawals would be as high as $40,000/year).
Most IRAs don’t last this long, and it would not surprise anyone that when our eight year old turns eighteen, he or she will find a reason to withdraw much of this inherited wealth. One way to be certain that MRD withdrawals are made and to limit extra withdrawals to actual needs, is naming a trust successor owner. IRS regulations do not allow many traditional trusts to stretch. However, if the trustee is required to withdraw and pay out at least the MRD each year, the IRS will allow the trustee to use the great grandchild’s life expectancy. This is called a “conduit” trust. Another IRA trust is called an “accumulation” trust, but this are fairly complicated to set up. Describing any IRA trust as “simple” might be stating an oxymoron, but compared to an accumulation trust, a conduit trust is straightforward for knowledgeable counsel.
The trustee of a conduit trust may make larger withdrawals if necessary (like helping with medical expenses or college) but the beneficiary will need to convince the trustee that other withdrawals are truly necessary. The trustee might say “I agree you need a new car, but look for a good used Chevrolet rather than the new Tesla you want”. Several institutions offer “Trusteed IRA” plans for a fee, and this has the added benefit of having professionals invest the IRA funds (which may result closer to 6% than 3% growth, as in the example above); it also provides continuity in trust management. Other investors opt for family members as trustees, which may save money in fees but might impose a burden on family members.
With good planning, it is possible to provide a great gift to descendants; a trust makes it more likely they will receive it.
By Robert Fleming. This article was originally posted on July 17, 2016 at https://elder-law.com/estate-planning-with-individual-retirement-account-trusts/