Oct
30
2018
0

Can I Give Each Of My Children $15,000 a Year and Still Qualify For Medi-Cal?

You can give $15,000 to each of your children per year under IRS rules, but there may be penalties if you apply for Medi-Cal within 30 months of the date of the gift. Under IRS rules for the year 2018, you can give away $15,000 or less to any number of individuals, without having to report the gift to the IRS. If you give away more than $15,000 in a single year to any one individual, other than your spouse, you will be required to file a gift tax return. However, you will only have to pay a gift tax if your reportable gifts exceed $11.18 million dollars during your lifetime. I do not believe that any of my clients estates’ will be liable for a gift tax.

But beware of the Medi-Cal gifting rules and the 30 month look back penalty period. Some people are of the belief that if they give away an amount equal to the current $15,000 annual gift tax exclusion amount, that this gift will be exempted from Medi-Cal’s 30 month look back penalty period. This notion is incorrect.

The gift tax exclusion is an IRS rule, and this IRS rule has nothing to do with Medi-Cal’s asset gifting rules. While the $15,000 that you gave to your grandchild this year may be exempt from any gift tax, Medi-Cal will still count it as a transfer that could make you ineligible for nursing home benefits for a certain amount of time, should you apply for Medi-Cal within 30 months of the date of the gift.

When a person is in a nursing home and applies for Medi-Cal, the Medi-Cal application will ask whether the applicant has transferred away any non-exempt assets during the 30 months prior to the application date. Transfers or gifts between spouses are not counted. However, if a gift was made to a third party within the 30 months prior to the application date, an eligibility penalty may apply. If the gift was made more than 30 months prior to the date of the application, no penalty will apply. If the gift was made within the 30 month period, divide the sum gifted by $8,841, the penalty divisor, and that is the number of months of ineligibility for the applicant, starting at the month the gift was made. So for instance, if $15,000 was gifted in June, 2018, we divide that number by $8,841. $15,000 / $8,841 = 1.69, which would be rounded down to one month of ineligibility.  As a result, the applicant would be ineligible for June, 2018, but would be eligible for July, 2018. The devisor penalty number is revised annually.

You should also review the language in your revocable living trust and financial durable powers of attorney, to be sure that there is not a $15,000 limitation on gifting, which we commonly see. If you lose capacity, and we are limited to the $15,000 annual amount for gifting, we may not be able to utilize all of the Medi-Cal eligibility regulations, and your ineligibility period for qualification for Med-Cal could be unnecessarily extended.

This information is not to be taken as legal advice, is general in nature, and you are encouraged to see your Walnut Creek Elder Law Attorney.

Michael J. Young

Walnut Creek, CA

1931 San Miguel Dr. Ste., 220

Walnut Creek, CA 94596

925-256-0298

www.WalnutCreekElderLaw.com

Aug
06
2018
0

When To Apply For Medi-Cal

Our clients often ask us when the appropriate time would be for them to file for Medi-Cal, to help pay for a stay in skilled nursing facility (SNF). If you are actually in a SNF, you can file a Medi-Cal application. Medi-Cal requires proof that you have been admitted to a SNF, and a will not accept a Medi-Cal application before that time. Once an application is filed, it is retroactive to the first of the month that it is filed. So if you file at the end of a month, and the application is granted, it is retroactive to the first of the month the application is filed. We have been filing applications on behalf of our clients for a number of years now, and to date, all of our applications have been granted. The reason that they have all been granted is that we do not file an application unless it appears to us that our clients have met all of the requirements, and legally qualify. Of course, pre-planning at the earliest opportunity is the best way to assure that Medi-Cal will grant your application, should you need to file at a later time. Pre-planning begins with an analysis of your assets, and with updating your estate planning documents to include the appropriate asset protection, government benefits and Medi-Cal planning provisions under state and federal law. Several of these documents refer to each other, and work hand in hand for qualification and asset protection . If you have lost capacity, pre-planning is of course made more difficult, so the earlier you plan, the better. Estate planning documents typically include your revocable living trust, financial and health care durable powers of attorney, intent to return home, HIPAA statements, wills, community property agreement for couples, etc. At the time you update your estate planning documents, and we review your assets with you, we will show you what would be required for qualification, in the event you are admitted to a SNF and you need to apply for Medi-Cal. We encourage our clients to keep in contact with us over time, so that adjustments can be made to their plans for pre-qualification for Medi-Cal when necessary.

This information is not to be taken as legal advice, is general in nature, and you are encouraged to see your Walnut Creek Elder Law Attorney.

Michael J. Young

Walnut Creek, CA

1931 San Miguel Dr. Ste., 220

Walnut Creek, CA 94596

925-256-0298

www.WalnutCreekElderLaw.com

Feb
05
2018
0

Medi-Cal Treatment of Reverse Mortgages

Reverse mortgage loans are designed for homeowners who are 62 years of age or older, and who have a substantial amount of equity in their homes. The amount of equity is usually the difference between the fair market appraised value of your property, and the amount due on existing mortgages. As the borrower under a reverse mortgage, you can receive monthly or other periodic payments. You can also have access to the funds, like a line of credit, that you can draw on when needed. You make no payments until the loan is paid off, when you pass away and the property is sold, or when you go into a long term care facility for an extended period of time. For Medi-Cal qualification purposes, the State does not treat the amount of the loan as an asset. However, when you receive money from the reverse mortgage lender, Medi-Cal will treat that receipt of money as an asset in the month you receive it. As a result, you will need to spend that money down before the end of the month to meet the Medi-Cal qualification limits. A caveat on a reverse mortgage is that if you as the borrower go into a nursing home for an extended period of time, the loan may be called due, and the secured home will have to be sold. The proceeds of sale, which become a cash asset, could make you ineligible for Medi-Cal.

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.

Michael J. Young

Elder Law and Asset Protection Attorney

Medi-Cal Attorney Walnut Creek

1931 San Miguel Dr. Ste., 220

Walnut Creek, CA 94596

925-256-0298

Oct
17
2017
0

Prevent Financial Abuse: Financial & Estate Planning

Financial and Estate Planning:

One of the best ways to prevent financial elder abuse, is to make sure that you know what your financial assets are at all times. You should be in contact with your financial advisor on a regular basis to determine whether there have been any changes to your accounts. Do not be afraid of calling him or her to ask questions. Find out if your required minimum distributions from your qualified accounts, like IRA’s, are being made properly. Ask if you have any outstanding life insurance or long term care insurance. Have a discussion regarding your financial needs and income, and whether your accounts and investments should be reviewed or reallocated.

Check your bank balances on a regular basis. You should know what your monthly bills are, and how much money you have in your accounts at all times. You can arrange with your bank to view your accounts on line. If you need help paying your bills or managing your accounts, you can ask a trusted friend or family member. There are also professional fiduciaries who can assist you in paying your bills.

Never have your estate planning documents, such as your revocable living trust and financial durable power of attorney, updated by non-attorneys or document preparers. There is much involved in estate planning, and you may be creating more problems for yourself and your family by not having an attorney help you.

Michael J. Young

Elder Law and Asset Protection Attorney

Medi-Cal Attorney Walnut Creek

1931 San Miguel Dr. Ste., 220

Walnut Creek, CA 94596

925-256-0298

Jun
01
2016
0

The Personal Residence Exclusion

When we are doing long term care planning with our clients, we often discuss the fact that if you sell your home during your life, you may have to pay tax on the capital gain. Capital Gain is the difference between the “basis” in the property, basically what you paid for it, and its selling price. The federal tax can be up to 15% of the gain, and there is a smaller tax to the state which is determined by your tax bracket. You may exclude up to $250,000 of gain on the sale of your personal residence. If you are married, you can exclude up to $500,000.  To qualify, you or your spouse must have lived in and owned the home for at least two out of the five years prior to the sale. When doing long term care planning, we also discuss methods under the IRS regulations, which may allow us to avoid capital gains.

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.

Apr
25
2016
0

When Can The State Recover Medi-Cal Payments?

If you die after having been on Medi-Cal, the state will want to recover from your estate. They will want to recover what they paid for your nursing home care while you were on Medi-Cal. If there is nothing in your estate when you die, there will have nothing in your estate for them to recover. That it why it is important for you to see an elder law attorney in order to get your “Ducks In A Row” for Medi-Cal qualification, and to avoid state recovery. For instance, if your home is in your estate when you die, the state can recover against it. If you have transferred your home out of your estate prior to your death, there can be no recovery against your home. If you have lost capacity, your fiduciary will not be able to transfer the home out of your estate without consideration, unless you have specialized language in your revocable living trust and financial durable power of attorney which provides for such a transfer without consideration. Most revocable living trusts and financial durable powers of attorney do not have the requisite language to make real estate and asset transfers, without consideration, if you lose capacity. Most revocable living trusts and financial powers of attorney provide only that a sale of assets can be made, for adequate consideration or fair market value. This language is not helpful for Medi-Cal qualification and state recovery.

The state cannot recover against your estate, after you have been on Medi-Cal, until you die. If you are survived by a spouse, the state claim is prohibited until the surviving spouse dies. But again, if there are no assets in your name when you die, if you were a Medi-Cal recipient, the state will not be able to pursue a claim against your spouse. If you are a Medi-Cal recipient who is survived by a minor child under the age of 21, the claim is barred against the state. Also, if  you are a Medi-Cal recipient who is survived by a disabled child of any age, the claim is barred against the state.

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
22
2015
0

My Dad Has Already Done Some Gifting! Can He Still Qualify For Medi-Cal?

California does have gifting penalty rules. If the rules are not followed, you could create periods of ineligibility for Medi-Cal. If you follow the rules, Medi-Cal can pay for your stay in a skilled nursing facility, minus a share of the cost that you would pay. We have seen monthly bills of $10,000 and more from skilled nursing facilities.

You can gift any amounts of money or assets to your spouse without penalty, and she can keep up to $119,220, plus her IRAs and “exempt assets, and you can still be qualified for Medi-Cal.

If you gift your money and other non-exempt assets to someone other than your spouse, penalties may apply. The Medi-Cal application asks if you have made any gifts of non-exempt assets to someone besides your spouse, within the last 30 months. If you have, that amount is divided by $7,628. This is the amount that Medi-Cal pays monthly to nursing homes, minus the share of cost paid by the Medi-Cal recipient. It is called the Approximate Private Pay Rate, also known as the APPR.

So for instance, if you gave $40,000 to a grandchild for college tuition during January of 2014, you would not be eligible for for Medi-Cal for the next 5 months. You would not be eligible for the months January through May. You would be eligible however in June, 2014. To figure this out, divide the gifted amount of $40,000 by $7,628 and you will get 5.24, which rounded down is 5 months of ineligibility. You can also give the same amount of a gift on the same day to two children, and still only get 5 months of ineligibility. There are also other rules which can be employed which allow us to transfer monies over time, and thereby significantly reduce the number of months of ineligibility. The nice thing about these rules, as they presently exist, is that the penalty begins to run during the month that you made the gift.

When the Deficit Reduction Act (DRA) is adopted in California, which could be any time, there will be a five year look back instead of a 30 month look back penalty period for gifting. If we take the above example under the DRA rules, of the $40,000 gift to a grandchild, you would be ineligible for 5.24 months after you have entered the nursing home. If you gifted that amount to two people, you would have two periods of ineligibility of 5.24 months each. Also, under the DRA, the more liberal rules for gifting over time will be severely restricted.

As a result, you should proceed now with your long term care planning with your elder law attorney.

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.

Jan
12
2015
0

2015 CA Medi-Cal Quick Reference Guide

The State of California has changed some of the Medi-Cal qualification figures and requirements for 2015. A brief listing of these changes and requirements is set forth below:

Community Spouse Resource Allowance (CSRA)

$119,220

This is the amount that the community, or (at home) well spouse can retain in liquid assets. This amount does not include exempt assets, such as the home and qualified accounts, such as IRA’s.

Minimum Monthly Maintenance Needs Allowance (MMMNA)

$2,981

This is the minimum amount of income the well spouse can keep.

Average Private Pay Rate – Divestment Penalty Divisor – (APPR)

$7,628

This is the amount the State pays to nursing homes on the Medi-Cal program, minus a share of cost by the applicant. This figure is also used to calculate penalty periods of ineligibility for Medi-Cal.

Applicant Resource Allowance

$2,000

The applicant can keep this amount in cash, checking, etc.

Monthly Personal Needs Allowance

$35

The amount of income the ill person is allowed to keep.


Dec
31
2014
0

Mom Is Showing Some Dementia – Can we still create a long term care plan for her?

In my workshops, we talk about the Elder Care Journey. Along this journey, which I show on a chart, is an area called “Declining Senior With Memory or Mobility Issues.”  I reference this step along the Elder Care Journey as a DANGER ZONE. We know that mobility issues and falling oftentimes is the beginning of a downward slope for our older loved ones. A person with mobility issues but who still has good mental capacity can of course enter into a long term care estate plan. She can agree in the plan that if she loses capacity, her loved ones can proceed with asset preservation, possible gifting, transfer of her home for asset protection, and getting her ducks in a row for qualification for Medi-Cal, etc.

If she has lost mental capacity by the time she sees her elder law attorney, she will not be able to enter into such a plan. If there is a formal diagnosis for instance of advanced dementia, we of course will not be able to proceed. In that case, if she has the plain vanilla type of estate plan, which is more suitable for a younger person, the plan will most likely not have the powers to allow her fiduciary to complete gift transfers or to transfer the home to her spouse or her children for asset protection. In that event, we may need to go to court to obtain an order to reform her existing estate planning documents.

If Mom has some dementia, such as short term memory loss, she may still have sufficient mental capacity to enter into a long term care plan. We can usually tell through our interview and conversation with her if she understands what the plan is about. If we are not certain, we can ask her medical doctor whether he would be willing to confirm in a letter that she has sufficient mental capacity to create the estate plan.

The sooner the older client sees the elder law attorney, the better. It is never too late to do long term care planning, but it is much more expensive if we need to go to court to complete the 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 Sustainable Estate Planning, 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.

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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