Dec
08
2016
0

John Hancock Has Dropped Traditional Long Term Care Insurance – But All Is Not Lost!

Forbes Magazine has recently reported that John Hancock is the latest insurance company to drop out of the traditional long term care insurance market. John Hancock has been one of the largest providers over the years, having sold some 1.2 million traditional long term care insurance policies. It is estimated that there are now less than 20 companies that are selling these traditional “use it or lose it” style of policies. Forbes says that, “This withdrawal signals what many financial planners, government officials, and financial service firms have known for years—that the United States is nearing a long-term care planning crisis.”

The reason that so many insurance companies have dropped out of the traditional long term care insurance market is because they are losing money on this type of policy. The insurance companies set initial premiums too low and they underestimated how long people would live. They also underestimated the cost of long term care and how much the cost of that care would increase over time.

Fortunately however, there are new insurance options that you can explore to help pay for your long term care. In 2010, an amendment to the Pension Protection Act (PPA) of 2006 was passed which can be very advantageous to Americans struggling to find ways to pay for long term care. As an example, many seniors own annuity contracts. Individuals who own annuities can now exchange those annuities, on a tax free basis, for Pension Protection Act style annuities that have long term care riders. The long term care rider in the new annuity contract can create multiples of the amount in the annuity that can be used for your care. For instance, $100,000 moving from your existing annuity into a Pension Protection Act style of annuity could create $300,000 in a rider to be used for your care. If you need help with two out of the six activities of daily living, you can “go on claim,” and the amounts distributed to you from the annuity for your care are distributed tax free.

You can also transfer money from any source into a Pension Protection Act style annuity or life insurance policy that has a long term care rider. The healthier you are, the easier it is for you to qualify for these new financial instruments. However, they are easier to qualify for than traditional long term care insurance policies because you are using your own assets to fund the long term care annuity or life insurance policy.

While you are updating your estate planning documents for long term care planning and asset protection with us, and if you are interested, we can help you explore these Pension Protection Act asset protection possibilities with you.

This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com, we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help the older client and their families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

Sep
28
2016
0

Consider A Joint Checking Account With Your Parents

Many older people insist on handling their own financial affairs without assistance, for as long as as possible. This is admirable, but what if something bad happens to the older person, like a medical event which lands the older person in the hospital, and ready access to cash is needed? And, what if the older person begins to lose capacity and starts to make bad decisions with their money?

For access to immediate cash, a child or other loved one should be a joint owner on a checking account with the older person. If the older person is hospitalized and indisposed for a period of time, the child will be able to take care of finances, and pay bills for their parent. If the older person starts to make bad financial decisions, or is the subject of fraud, the child could shut the account down.

The bank and financial accounts, except for IRAs, should be transferred to the revocable living trust of the older person, with a child or other person named as successor trustee. These transfers to the revocable living trust are completed through the bank or financial institution, and these trust assets are reflected on the schedules of assets attached to the revocable living trust. The trust is set up so that if the older person loses capacity, a doctor’s note is obtained, and the child can act as the new trustee to control the assets for the benefit of the parent.

But what if the parent refuses to cooperate and do any of these things? You should try to maintain a dialogue of communication with the parent, and try to stay informed about what is happening with his daily life. If the parent becomes unusually defensive when asked about his finances, this should be a red flag. At this point, a geriatric social worker may be able to help you communicate with your parent. If the estate plan and finances aren’t properly set up, and the parent loses mental capacity, a court conservatorship may be required for you to be able to gain control of the accounts. The earlier the estate plan and joint checking account is set up, the easier it will be for all concerned.

This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

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Feb
08
2016
0

Changes Are Coming For VA A&A Qualification

New changes are in the works which may make it more difficult to qualify for the VA Aid & Attendance Pension Benefit. This benefit, for older war time veterans or their surviving spouses, has been very helpful for some of our clients, to help them pay for their long term care costs. A single veteran can receive up to $1,788 per month, and a married veteran can receive up to $2,120 per month from the VA if they qualify for the benefit.

For a number of months now, the VA has been considering new, more difficult qualification requirements for this benefit. The most notable change that is being considered is a three year look back penalty period for gifting. California’s Medi-Cal program presently has a 30 month look back penalty period for gifting.

The VA presently has no look back penalty period for gifting. As a result, under the present VA rules, an applicant with assets in excess of approximately $40,000 for a single person and approximately $80,000 for a couple, with good asset protection planning and by gifting, can then qualify for benefits, without the imposition of a gifting penalty period. A newly imposed three year look back penalty period by the VA could act as a three year waiting period for these same benefits. However, the details regarding precisely how the penalty period for gifting will work, have not been revealed.

Rumors have circulated for some months that these changes would occur in February or March of 2016. As a result, for couples with assets in excess of $80,000 or a single person with assets in excess of $40,000, it may be a good idea to do your planning now before any new changes are implemented.

This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

Feb
01
2016
0

How Much Does The Surviving Spouse Receive In Social Security Benefits?

In a previous post, we discussed what you should do about Social Security benefits after someone dies. But with regard to married couples, how much will the surviving spouse receive? Generally speaking, the surviving spouse will receive 100% of the deceased spouse’s Social Security benefit, as long as that amount is greater than the surviving spouse’s benefit.  As a result, the surviving spouse will continue to receive either his or her own benefit, or the deceased spouse’s benefit, whichever is greater. But, the surviving spouse will not receive both benefits.  A one-time death benefit payment of $255 will also be paid to the surviving spouse by Social Security.

Another requirement is that the surviving spouse must be age 60 or older. The surviving spouse can also be 50 or older provided that he or she is disabled from a disability that began no later than 7 years after the deceased spouse’s death. The surviving spouse must also have been married to the deceased spouse for at least 9 months, and not be currently remarried where the marriage occurred before he/she turned age 60.

An ex-spouse may also collect survivor benefits under certain circumstances.  The ex-spouse must have been married to the deceased ex-spouse at least 10 years.  The age 60 or age 50 with a disability requirements as discussed above, are the same as the married surviving spouse.  Also, the ex-spouse must not be remarried in a marriage that occurred before age 60. Be sure to contact Social Security with regard to your specific case. An in-person meeting at the Social Security office is the best way for you to proceed.

This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

Jan
29
2016
0

Consider a Line of Credit On Your Home

The home is usually our clients’ most valuable asset. For Medi-Cal planning purposes, we have discussed in previous blogs how you can set up your Long Term Care Plan to ensure that you can transfer your home to your spouse or to you children without Medi-Cal penalty, and at the same time protect your home from a Medi-Cal lien.

But in the meantime, what if you need cash and you want to tap into the equity in your home? How will a line of credit affect your eligibility for Medi-Cal? Generally speaking, if you take a lump sum from the line of credit on your home, that lump sum may be treated as an asset which could negatively affect your eligibility for Medi-Cal. However, if you draw down on your line of credit as needed, for specific purposes, your eligibility for Medi-Cal should not be affected. So for instance, if you draw money down from your line of credit to pay for a roof repair, or to make payments for in-home-care, your line of credit would not be counted for Medi-Cal eligibility purposes should you need to go into a nursing home. As a result, it may be a good idea to check into getting a line of credit on your home. And by doing so, we should still be able to protect your home under Medi-Cal regulations.

This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

Mar
10
2015
0

Will Medi-Cal Let Me Make Gifts To My Wife Without Penalty?

Will Medi-Cal Let Me Make Gifts To My Wife Without Penalty?

YES!  For qualification for Medi-Cal, there is presently a 30 month look back period for making gifts. But this look back period does not apply between spouses. We have discussed in previous blogs how to properly transfer the home between spouses in order to avoid a state lien after the Medi-Cal recipient passes away. There is no penalty period for this transfer.

The ill spouse and the well spouse can both have any amounts of qualified funds, like IRAs, when qualifying for Medi-Cal. These are called “exempt assets.” The ill spouse can then have no more than $2,000 in regular or “non exempt” assets. The well spouse can have up to $119,220 in regular assets. So for qualification for Medi-Cal, the ill spouse will generally transfer her regular assets to the well spouse, so that the ill spouse has no more than $2,000 in regular assets.

If the well spouse then has more than $119,220 in regular assets, he can gift a portion of that amount to other individuals, to get him down to $119,220, but penalty periods can apply. Medi-Cal will ask if any assets have been gifted within 30 months prior to qualification for Medi-Cal from either spouse to other individuals. The gifts from the ill spouse to the well spouse do not create penalties. But any gifts to other individuals, like family members, can create penalty periods for qualification for Medi-Cal.

To figure out the penalty period, divide the amount of the gift by $7,628. The answer will give you the number of months of ineligibility for Medi-Cal. So, if $35,000 is gifted from mother to son within the last 30 months, that amount is divided by $7,628. The solution is 4.58 (rounded down to 4) months of ineligibility. So if the gift was made in October 2014, the Medi-Cal applicant would not be eligible for Medi-Cal until February 2015. Your elder law attorney can help you lower the months of ineligibility caused by gifting, through long term care planning. Do not attempt any transfers without the advice of your elder law attorney.

Your elder law attorney will help you to increase the quality of your life, and not just figure out who-gets-what after you pass away. For additional information, you can contact your elder law attorney Michael J. Young. This information is not to be taken as legal advice, and you are advised to see your elder law attorney. At the law offices of Michael J. Young, 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA http://www.WalnutCreekElderLaw.com, 925-256-0298,lawyoung1@gmail.com, we practice elder law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with Sustainable Estate Planning TM, long term care planning, asset protection plans, special needs trusts, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order to help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension Benefit.

Mar
06
2015
0

Will Medi-Cal Take My Home?

We often receive calls in our office from people asking, “Is Medi-Cal going to take my home?” The answer to this question should be NO through proper long term care planning with your elder law attorney. To understand the issues involved, we must first look at the Medi-Cal regulations. In addition we must confirm that you have the required asset protection and government benefits planning language you will need in your revocable living trust and financial durable power of attorney. This language is required for protection of your home and other assets from a Medi-Cal lien if you lose mental capacity. We have discussed in previous blogs how the language in estate planning documents is different for the older client.

Under the Medi-Cal regulations, your home can generally be confirmed as an “exempt asset” when qualifying for Medi-Cal. The Medi-Cal applicant, or their representative, must confirm “an intent to return home” on the Medi-Cal application. Our clients also confirm “an intent to return home” in their long term care plan prepared by our office. Your home is also exempt for qualifying for Medi-Cal if a spouse, minor, blind or disabled child lives in the home. There are also other ways to confirm the home as an exempt asset.

So, you can generally qualify for Medi-Cal and keep your home. But the next issue concerns what happens if you die after you have been on Medi-Cal? After you die, Medi-Cal will want to  recoup from your estate the money they have paid to the nursing home on your behalf. They will follow a lien on your property until you die, and then pursue to collect from the equity in your home. If you have a surviving house in the home after you die however, the state will not pursue collection against the home until your spouse dies.

You should keep in mind that the state can only collect against assets, like your home, that are in your estate when you die. They will also collect against your interest in the home when your spouse dies. So, what would happen if you transfer the home out of your estate before you die? Once the home is confirmed as an exempt asset, you can transfer your title interest in the home to your spouse or to another family member, for instance. There is no transfer penalty for transfer to a spouse. There is also no transfer penalty to another family member after the home is confirmed as an exempt asset. Your elder law attorney will help you regarding this planning AND any real property transfer. He will also advise you on how to avoid capital gains tax on the transfer and ultimate sale of the home, and how to avoid a re-assessment by the county tax assessor upon transfer of the home. If you transfer your interest in your home to your spouse before you die, the state will not be able to recover against the home. If you transfer your interest in the home to another family member, the state will not be able to recover against the home when you die. You will require the services of an elder law attorney for this planning and to make these transfers.

If you have lost mental capacity, can you transfer your title interest in the home to your spouse or other family members? If you do not have a long term care plan prepared by an elder law attorney with the required language in your revocable living trust and financial durable power of attorney, the answer is probably NO. The majority of estate plans do not include the appropriate asset protection language in the trust and financial durable powers of attorney that are required to make this transfer upon incapacity. It is possible to go to court and obtain an order reforming your trust and financial durable power of attorney to make the transfer, but this process is time consuming and fairly expensive.

Your elder law attorney will help you to increase the quality of your life, and not just figure out who-gets-what after you pass away. For additional information, you can contact your elder law attorney Michael J. Young. This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the law offices of Michael J. Young, 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA http://www.WalnutCreekElderLaw.com, 925-256-0298,lawyoung1@gmail.com, we practice elder law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with Sustainable Estate Planning TM, long term care planning, asset protection plans, special needs trusts, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order to help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension Benefit.

Mar
02
2015
0

What assets can you keep when qualifying for Medi-Cal?

What assets can you keep when qualifying for Medi-Cal?

Your Home: Your home is generally exempt, or not counted, in determining eligibility for Medi-Cal. The Medi-Cal applicant, or their representative, must express an intent to return home. This is confirmed on the Medi-Cal application. It is also confirmed when you execute your estate planning documents with your elder law attorney. The home is also exempt if a spouse, minor, blind or disabled child lives in the home. You will most likely want to transfer your interest in the home to your spouse or child in order to avoid a recovery by the state against your home after you die. You will need the help of your elder law attorney regarding an transfers concerning the home.

Personal Property: Your household goods and personal effects are totally exempt for determining eligibility for Medi-Cal.

Cars: Medi-Cal will give you an exemption for one car.

Jewelry: When one spouse is in a nursing home, all jewelry is exempt. For a single person, wedding and engagement rings and heirloom jewelry are exempt.

Whole Life Insurance: You cannot have more than $1500 cash value in your policy. If there is more than $1500 cash value, it must be reduced.

Term Life Insurance: Term life insurance is totally excluded.

Burial Plots: Burial plots are totally excluded:

Prepaid Irrevocable Final Expense Trusts: You can put any amount into an irrevocable final expense trust for your funeral and final expenses. These trusts are used for general estate planning, but are also helpful for planning for Medi-Cal eligibility. You can “spend down” a portion of your assets by transferring them to a final expense trust in order to create eligibility for Medi-Cal. You can ask your elder law attorney about this trust, and there is generally no fee for its creation and implementation.

IRAs and work-related annuities: If the IRA is in the applicant’s name, the IRA is exempt if the applicant is receiving periodic payments of interest and principal. If the IRA is in the well spouse’s name, it is totally exempt.

Community Spouse Resource Allowance: The spouse at home, called the community spouse, can have up to $119,220 in liquid assets, plus the home, IRAs and other exempt assets listed above.

For additional information, you can contact your elder law attorney Michael J. Young. This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the law offices of Michael J. Young, 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA http://www.WalnutCreekElderLaw.com, 925-256-0298,lawyoung1@gmail.com, we practice elder law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with Sustainable Estate Planning TM, long term care planning, asset protection plans, special needs trusts, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order to help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension Benefit.

Feb
17
2015
0

Estate Plans For The Older Client Are Different

The plain vanilla estate plan, which most people have, is designed for the younger client. The main purposes of this estate plan are to avoid probate court and to provide for the distribution of assets to heirs upon death. It will also minimize estate taxes.

Estate plans for the older client include all of the death planning as stated above. But they also include long term care and disability planning, and are designed for asset protection.  Your elder law attorney will help you plan ahead in the event you or your spouse face long term care needs during your lives. We have seen some families spend hundreds of thousands of dollars for their care. Skilled nursing care can be as much as $10K or $15K per month. These issues must be addressed.

The elder law attorney helps clients and their families plan for and qualify for Medi-Cal. This state program helps pay for a stay in a skilled nursing facility in the event you use all of your Medicare days.  Through proper Medi-Cal planning, it is possible to qualify for Medi-Cal and transfer your home to your loved ones without a state lien, and without a step-up in basis. You can also plan to preserve your monetary assets under the Medi-Cal regulations. Your elder law attorney can also help you plan for and qualify for the VA Aid & Attendance Benefit, which can help pay for your in home care and assisted living facility costs.

In addition, for the older client, you can review how you may be able to make a tax advantaged transfer of a portion of your savings or other assets into a financial instrument that has a long term care benefit rider. Unlike traditional long term care insurance, if you don’t use this long term care benefit rider, you still have a financial benefit to transfer to your loved ones upon death.

If you have an estate plan that is created for the younger client, please feel free to contact Elder Law Attorney Michael J. Young for further discussion.

This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

Dec
01
2014
0

More On Alternative Long Term Care Insurance Options for Baby Boomers

In our last post we discussed how many of our Baby Boomer clients have looked into buying long term care insurance, but have decided against the purchase because of various reasons. Some feel that the cost is too high, or they don’t like the idea that if you don’t use it, you lose most of it. Also, some of our clients have been denied coverage because of their age, health issues, or both. Fortunately, there are alternatives to consider for our older clients.

Many of our clients have several hundred thousand dollars in various investments, including savings accounts, mutual funds, annuities and IRAs, in addition to their home. This would appear to be a nice nest egg, but would be depleted quickly if they were in need of 24/7 care. For a single person, the cost of care could conservatively be $90,000 or more per year and twice that for a couple.

One option is to purchase a type of annuity which provides payments for long term care. The initial premium payment for the annuity could create 2 to 3 times the amount of the premium in long term care payments. For example, if you re-position $50,000 into the annuity, then $100,000 to $150,000 could be available for long term care expenses. The underwriting for this type of product is much simpler than applying for long term care insurance, but the age and health of the client is still taken into account.

In addition, under the “Pension Protection Act”, you could withdraw the $50,000 tax free from an existing annuity to purchase an annuity with the long term care payment option. You could also fund the purchase of this new product using IRA money through an income tax free “trustee to trustee transfer.”

When you visit our office, ask us to help you explore the possibility of repositioning a portion of your assets for payment of your long term care should you need it in the future. These options should be explored as part of your long term care asset protection and estate planning.

For additional information, you can contact your elder law attorney Michael J. Young. This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the law offices of Michael J. Young, 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA http://www.WalnutCreekElderLaw.com, 925-256-0298,lawyoung1@gmail.com, we practice elder law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long term care planning, asset protection plans, special needs trusts, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order to help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension Benefit.

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