Be nice to your kids…. They are going to pick out your nursing home.

Selecting a nursing home for a loved one is one of the most important and difficult decisions that you may be asked to make.  This decision is usually made during a time of crisis, frequently when a family member is ready to leave the hospital after a serious illness or operation.  It would be easier on everyone if this decision could be planned for.  However this is usually not the case.  Just remember, be nice to your kids…  they are going to pick out your nursing home.

The first issue to decide is whether a nursing home is necessary.  Would some type of home services be adequate?  This issue should be discussed with your health care providers.  There are many types of services available for people who choose to remain at home, such as home health care, adult day care centers, respite care and hospice in-home care.

Once it has been determined that an individual needs care in a nursing home you should allow that person, if they are able, to be a part of the process of selecting a facility.  Ask professionals in the field, friends or acquaintances who have been in a similar situation for information.  The Connecticut State Agency on Aging has an Ombudsman program that can provide information on particular nursing homes, however you should also visit different homes to see what they are like.  Talk to staff members, other residents and their families.  You should visit each home more than once and at different times of the day.  Ask if they have activities for the residents.  Ask to see menus for daily meals.  Also, ask what the costs are at each home.  Another thing you may want to do is to just walk around the home and observe the condition of the facility and the residents.

Nursing homes have their own doctors.  You should find out about the doctors, their credentials, how often they visit and if they are willing to meet with the family to discuss plans for treatment.

Federal law requires that residents have the right to be free from restraints administered for the purpose of discipline or convenience and not required to treat medical conditions.  If you see residents in restraints, you should question the facilities staff about the nursing home’s policy on restraints.

Be sure to visit more than one nursing home before you decide.  You can be on a waiting list at many homes and then choose the home you want.  A little advanced planning can save you from having to make a quick decision when you are forced to find a nursing home in an emergency.

I Learned Most of What I needed to Know about Will Contests from Jerry Garcia and the Grateful Dead.

Since it costs a lot to win, and even more to lose,

You and me bound to spend some time wondering what to choose.

Goes to show, you don’t ever know.

Watch each card you play and play it slow.

Wait until that deal come ‘round.

Don’t you let that deal go down, no, no.

-Deal written by Robert Hunter

Sure, I learned the law behind what is involved in a Will Contest in law school but the practical, nuts and bolts end of a Will Contest can be learned just by listening to one song.  A successful Will Contest has the effect of undoing a Will or proving that one Will is valid over another Will; or that the person making the will made some sort of unnatural disposition of assets that was procured by fraud, duress or mistake, among others.

Will Contests are almost impossible to win, largely due to the fact that the person with the best evidence as to whether or not the Will was improper is deceased.  I have never really seen anyone win a Will Contest.  Even if you “win” do you really “win”- after all it’s going to cost a lot to win and even more to lose (truer words have never been spoken).   Something to keep in mind:  your worst case scenario- a battle that goes on forever, is your attorney’s best case scenario-a “billable” battle that goes on forever- or at least until the money runs out.

Most of the time a Will Contest amounts to not much more than a common street level shakedown- I bother you until you give me money to go away.  Sometimes people use Will Contests not so much as a shakedown, but as an attempt to hurt others- now this is no good for the soul.  I propose a better (non legal solution):  Avoiding Will Contests is easy- work really hard to make things right during life and not after death by initiating a Will Contest. To paraphrase:  make peace with people during their lives not war after they are gone- after all world peace starts at home!

Title 19 Tidbit #32

The topic of gifting comes up often when discussing how to qualify for Medicaid (Title 19).  It usually occurs during a larger discussion on appropriate ways to spend a person’s assets in order to receive Medicaid.  A client’s child or children will often ask about the permissibility of making gifts to children, spouses, grandchildren and others.  After all, isn’t that allowed by the Internal Revenue Service?

First things first: What are we really talking about here?  Usually what the question means is:  Can mom and dad gift us money to shrink the amount of their assets in order to qualify for Medicaid benefits?  The answer is no.

The IRS does permit any individual to make gifts up to $13,000 per year to any number of people without incurring a gift tax or having to file a gift tax return- that’s the good news.  While everybody is in good health and flush with cash it is a great idea to make gifts (if you can afford to).  It is a great way to transfer wealth, tax free, as well as control the size of your estate in contemplation of estate taxes.

Usually we don’t talk about the “Good News” unless there is a little “Bad News.”  Okay, I know everybody was feeling good about hearing the IRS permits you to make these gifts.  Well, the bad news is that these gifts will not work under the Medicaid rules.  Eligibility for Medicaid is determined by the amount of assets an individual or couple has.  When assessing whether an individual is eligible for benefits, Medicaid looks back five years for transfers of assets.  If assets were transferred out of the applicant’s estate within the past five years those assets will be included to calculate eligibility- most of the time the effect of this is to disqualify the applicant from benefits for a certain amount of time (depending on the amount of the gift).

If you are contemplating making gifts, think twice, can you really afford to make the gift?  Understand the downstream consequences of that gift.  My best advice is to get in contact with a good attorney and/or a CPA to guide you through the tricky rules of making a gift.  Leave it to the IRS and Medicaid to suck all of the fun out of giving your money away.

What Grateful Dead “Heads” Need To Know About Life Insurance, Man!

“You know, the only people that are grateful when someone’s dead is the recipient of life insurance, man.”

-Phillip Morrow, Pan America Insurance, Salesman of the year

Okay, this cracked me up, but it also made me think.  “My name is Marc and I am a Dead Head who believes in the power of life insurance!”  Hi Marc!  I know many people both inside and outside of the Grateful Dead community who like to live in the moment and not think too much (or at all) about the future.  Don’t get me wrong,  it is completely alright to live in the moment.  Ram Dass put  it like this:  “Remember, Be here Now.”  While it is critical for everbody’s mental health to do a decent amount of living in the moment, it is equally important to take some mental trips into the future and to make some plans for that future.  It’s like doing future you a favor- you dig? I have seen the power of a good, properly placed life insurance policy.  The next time your taking a mental trip to the future- think about what life insurance could do for you and your family.  After all according to Mr. Morrow, after you purchase a life insurance policy “Your going to be so free man…You’re going to be like flying.”

Are you dying to GO GREEN?

I cam across this article on a clean/green energy website:  www.cleantechnica.com.  Enjoy!

Dead People Will Provide Heat to Crematorium Facilities

Written by Ariel Schwartz

If you’re dead and worried about the carbon emissions created from your cremation, relax. The Swedish town of Halmstad has a solution. After an environmental review showed that Halmstad’s crematorium was pumping too much smoke into the air, the facility’s director decided to re-use heat from the cremations to warm up the crematorium’s buildings.

The plan will both eliminate the crematorium’s heating bill and allow it to save money on cooling smoke before it is released into the air.

Locals in the town of 55,000 approve of the crematorium’s system, so it should be up and running soon. If the plan is successful, the crematorium eventually wants to pipe heat from its facilities to area homes. And while some may protest Halmstad’s plan on moral grounds, I’m sure that the potential monetary savings for the town will ultimately keep them quiet.

http://cleantechnica.com/2009/01/05/dead-people-will-provide-heat-to-crematorium-facilities/

Special Planning for Special Needs: Part Two

Planning for disabled and special needs beneficiaries:  “part two.” In “part one” I discussed programs available for disabled and special needs individuals.  This week I will focus on how people can protect and provide for special needs and disabled beneficiaries through their estate plans.

As I wrote in “part one,” although it may seem like a good idea, I strongly discourage people from establishing custodial accounts or leaving cash outright to special needs beneficiaries. The distribution of assets outright may disqualify the beneficiary from government assistance, which is means-based.

When the assets of an individual with special needs exceed the governmental financial resource limits, the individual may be disqualified from both Supplemental Security Income (SSI) and Medicaid.

A more appropriate way to pass an inheritance to a special needs beneficiary is to utilize a Special Needs Trust.  Special Needs Trusts can be either self-settled Trusts, or third-party Trusts.  A self-settled Trust is a Trust set up with the disabled persons own assets.  The disabled individual is the Grantor and the beneficiary.  A third-party Trust is created by one person (the Grantor) for the benefit of another, so long as the Grantor is not legally responsible for providing support for the disabled individual.

A Special Needs Trust containing certain provisions may be established to administer and distribute Trust assets to a beneficiary with special needs without otherwise disqualifying them from governmental benefits.  If drafted properly, the assets in the Trust are not counted for the purpose of determining eligibility for governmental benefits.  A properly drafted self-settled Special Needs Trust will require the Trust to pay back the government after the death of the special needs individual for governmental benefits provided to the individual.   If the assets are depleted then they do not need to be reimbursed.   Special Needs Trusts should be drafted with care.  The instrument should not direct the Trustee to make disbursements for a disabled person’s heath, maintenance or support as this will cause the Trust assets to be includable in determining eligibility for governmental benefits.  One way to accomplish this goal is to give the Trustee absolute discretion on disbursements.  When distributions are up to the Trustee’s sole and absolute discretion, the assets in the Trust are not counted when calculating eligibility for governmental benefits.

Special Needs Trusts can be a valuable tool in planning for disabled individuals.  The process requires consideration of many issues and should be approached with care by qualified professional.

Covering Your Assets

Please join George and I as we discuss cutting edge techniques that we employ to help our clients protect their assets from the ravages of the aging process. We will discuss proven methods that assist our clients in avoiding the financial devastation that often comes along with a long term illness.  Please contact my office   to reserve a seat.

Special Planning for Special Needs

This week’s post is part one of a “two-parter.” Planning for disabled and special needs beneficiaries is too important for just 500 words.

One of the more tragic situations I encounter in my work is when a person fails to adequately plan for a disabled or special needs beneficiary. Do you have a family member with special needs, or know someone who does? Parents of children with special needs face unique challenges in providing for their day-to-day needs while both parents are alive, and also face exceptional challenges in providing for them after both parents are deceased. This is true whether the children are minors or adults.

The financial costs of caring for a family member with special needs can be overwhelming. Specialized equipment and skilled professional assistance may be required for many daily tasks. Ongoing and expensive medical care is common, often without private insurance to cover the bills. Assistance is available from state and federal governments, namely the Supplemental Security Income (SSI) program, which is administered by the Social Security Administration, and Medicaid (Title 19). Both SSI and Medicaid are needs-based programs, and as such, assistance is subject to strict financial eligibility requirements.

SSI typically pays eligible beneficiaries a small monthly benefit. Often this amount is not sufficient to meet their monthly expenses. Any person receiving SSI also will also qualify for Medicaid, although you still have to apply for it. Medicaid picks up the tab for hospital visits, prescription medications, and doctor bills, as well as other healthcare costs. Medicaid (Title 19) is a means-based benefit system, meaning that how much a person has in assets figures into whether or not they are eligible for benefits under Title 19.

If there are special needs concerns in your family, the estate plans of parents and grandparents must be carefully thought out and monitored to meet objectives beyond probate avoidance and federal estate tax minimization. Parents and relatives of special needs children should have their estate plans designed to ensure adequate care throughout the lifetime of their family member, while at the same time not disqualifying them from any governmental assistance.

Although it may seem like a good idea, parents and grandparents are strongly discouraged from establishing custodial accounts or leaving cash outright to minor children with special needs. The reason for this is that once that child reaches the age of majority under state law (18 in Connecticut) the custodial account is distributed to the child. The distribution itself may have the effect of disqualifying them from government assistance, which is means-based.

Part II will focus on how people can protect disabled and special needs beneficiaries through their estate plans, stay tuned!

One, Two, Three STRETCH!

Stretching:  Most runners would tell you that stretching before a marathon is a good thing to do, many people may say that wearing stretch pants to an all you can eat buffet is also a good thing, but the best stretch for the majority of us, is one that the government has given us; the ability to stretch your Individual Retirement Account (IRA).

The IRS has said that even though you have the ability to withdraw from your IRA, you will only pay income tax on the money when you actually do withdraw it.  So, the money that you have in your IRA continues to grow tax-deferred until you make a withdrawal, and then the tax is only on the sum withdrawn while the balance continues to grow on a tax deferred basis.

Most of the clients I consult with have IRAs and after their real estate, their IRA is usually their largest asset.  This asset is unique in that it can be passed on to a spouse or to others, and if done properly, many of the benefits can continue for decades.

One of the major problems with IRAs is that most people, and even some folks in banking or financial planning do not understand all of the highly technical rules that must be followed to get the maximum benefits out of an IRA and its stretch ability. For example, let’s assume you had an IRA that grew to $100,000 before you died.  If you didn’t provide the proper beneficiaries for your IRA (let’s assume you named your estate as your beneficiary) your heirs could lose up to 79 percent of the value (depending upon the size of your estate and your tax bracket).  That same IRA which was worth the $100,000 at your death, could pay out over One Million Dollars if stretched properly. The stretching allows the beneficiary to take a yearly payment based upon their life expectancy, (the younger the beneficiary, the more it will grow).

Another major problem associated with IRA’s is that the ability to stretch is usually up to the beneficiary.  If you give a young person the option of taking $100,000., now or taking a smaller amount each year with the possibility of getting 1 Million by the time of their death, guess which option most will choose.  AARP did a study a couple of years ago and found that over 70% of beneficiaries “took the money and ran.”  They ran to the auto dealers, to the travel agencies, and to the real estate agents.  When the IRS wanted the tax due on the distribution, those same folks wanted to run to the nearest rock and hide under it.

The IRS has recently approved a particular technique which allows the owner of an IRA to set up a unique type of trust agreement where, upon the death of the owner, the IRA goes into this trust for the benefit of the children, grandchildren, etc. of the IRA owner.  The Trustee of this trust then either distributes out all of the annual distributions to the beneficiaries (conduit trust) or distributes out, at his or her discretion, a portion of the amount received by the IRA and accumulates the remainder (accumulation trust).  These Trusts can not only “force” the stretch, but can also provide for protection for the beneficiaries from their “creditors and predators”.  These Trusts are used successfully for children with special needs, children who may have addiction problems,  as well as children who are in careers where they tend to be sued (such as Doctors), and many other similar situations.

The IRA rules are very technical and unforgiving.  A mistake made by you, the IRA custodian, your CPA, financial advisor, or attorney could cause your beneficiaries to lose thousands of dollars.  Please consult with someone who is knowledgeable in this area.

Wouldn’t it be more cost effective to skip law school and start ripping off people as soon as possible?

I mean really! Why shell out the big bucks for a law degreewhen you just plan on ripping people off. There is a name for people like this: criminals…. From Today’s New Haven Register:

Attorney accused of using dead aunt’s ATM card:

NEW BRITAIN (AP) — A Vernon attorney is facing charges of forgery, larceny and theft and other charges after police say she withdrew money from her dead aunt’s checking account and used her debit card at Kmart, Target and Toys “R” Us.

Thirty-three-year-old Heather Kaufman’ aunt died in December. According to court documents, Kaufman allegedly used her aunt’s debit card days to make cash withdrawals and shop. They say she also wrote a $1,000 check to her boyfriend.

Court documents show that Kaufman told police that the check and cash withdrawals were to help defray funeral expenses. She says the purchases were for presents for family members that the aunt would have wanted them to have.

A relative assigned by a probate judge to handle the estate told police that more then $3,000 was missing.