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Upcoming Seminars for Lawyers and Clients

Monday, February 8th, 2010

 

I’m conducting two seminars this week on the topic of Income Only Trusts. The first one is a teleseminar for attorneys around the country who are members of the professional group ElderLawAnswers.  Entitled Using Income Only Trusts for Medicaid (and General) Asset Protection, this teleseminar is Thursday, Feb. 11, at 2pm Eastern. If you’re a member of ElderLawAnswers, you can click here to register for the Teleseminar, 

The other is a free seminar I’m teaching on Saturday morning for clients and potential clients, entitled How to Protect Your Assets from the Expenses of Probate and Long Term Care.  This will be held at the Tysons Corner Mariott, 1960-A Chain Bridge Road, McLean, VA 22012.  Please click here to register for the Saturday morning seminar. 

The answer to the question “How Can You Protect Your Assets from the Expenses of Probate and Long Term Care?” is, of course, to use the Living Trust Plus™ Asset Protection Trust, my highly-developed and proprietary income only trust that’s currently used by dozens of successful Estate Planning and Elder Law Attorneys across the country. 

 As stated by Elder Law Answers, “Income Only Trusts have been around since the 17th century, but have only recently gained in use and popularity, in large part due to the publications and educational efforts of our speaker and long-time ElderLawAnswers member, Certified Elder Law Attorney Evan Farr.”

What most Elder Law attorneys don’t understand is that income only trusts also provide clients with protection from lawsuits and other general creditors, and in the ElderLawAnswers teleseminar, I will be demystifying the income only trust, explaining how and why it works, and explaining to my fellow ElderLawAnswers Members the dos and don’ts of income only trusts so that they may properly serve clients in this exciting and growing practice area.

For middle class Americans seeking asset protection, the income only trust is the preferable form of asset protection trust because, for purposes of Medicaid eligibility, the income only trust is the only type of self-settled asset protection trust that allows a trust settlor to retain an interest in the trust while also protecting the assets from being counted by state Medicaid agencies.

 For my clients and potential clients in the Washington, DC Metro area, by coming to my FREE class on Saturday, you’ll learn what thousands of my clients already know . . .

- That a Will puts your assets through probate, and is a very poor estate planning document.
- That a regular living trust protects your assets from probate, but offers you no asset protection.
- That my proprietary Living Trust PlusTM Asset Protection Trust protects your assets from the expenses of probate PLUS lawsuits PLUS the catastrophic expenses of nursing home care.

If you answer YES to any of the questions below, you need to attend this class:

 - Is someone in your household over age 65?
- Does someone in your household have a serious medical condition?
- Has someone in your household been turned down for long-term care insurance, or found it too expensive?
- Do you want to protect your assets for your family from the devastating expenses of long-term care?
- If you need long-term care in the future, do you want to receive the best possible care?

To learn all the details and find out if the Living Trust Plus™ is right for you, please register now at http://VirginiaElderLaw.com/seminars.html 

Protect and Prosper! 

–
Evan H. Farr, Certified Elder Law Attorney
Creator of the Living Trust Plus:  http://www.LivingTrustPlus.com
ALI-ABA Co-Author, Planning and Defending Asset-Protection Trusts (2009): http://www.ali-aba.org/bk64
ALI-ABA Co-Author, Trusts for Senior Citizens (2009): http://www.ali-aba.org/bk65
Farr Law Firm, 10640 Main St., Suite 200, Fairfax, VA  22030
Tel: 703-691-1888 | Fax: 703-940-9160
www.VirginiaElderLaw.com & www.VirginiaEstatePlanning.com
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NOTICE – Unless expressly stated otherwise, this communication: (1) is not legal advice absent an existing attorney-client relationship between us; (2) does not create an attorney-client relationship; (3) does not constitute an offer, acceptance, or contract amendment; (4) may contain confidential or legally privileged information protected by the attorney-client relationship and/or work product privilege; (5) is only for the use of the individual to whom it is intended by the sender to be sent, and if you are not such recipient, disclosure, copying, distribution or reliance upon this  communication is prohibited; and (6) is not intended, and cannot be used, to avoid tax-related penalties pursuant to treasury department circular 230.

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Posted in Asset Protection, Estate Planning, Medicaid Planning, Other Elder Law Blogs, Senior Care, Senior Professionals, Tax Planning | Comments Off

Major Change in Estate Tax and Capital Gains Tax for 2010

Wednesday, January 13th, 2010

Because of a Congressional failure to act before the end of 2009, there’s good news and bad news to report on the Estate Planning and Elder Law front.  The good news is there’s no Estate Tax if you die this year.  The bad news is you may owe significant capital gains taxes if a loved one dies this year and leaves you significant appreciated assets. If you have total assets of around $1 million or more (including face value of life insurance, retirement plans, home equity, etc.) you should make sure your estate plan is up to date.

Congress has had nine years to prevent this from happening, but has failed to act. Under the provisions of a Bush-era tax-cut bill enacted in 2001, the estate tax exemption has been gradually raised over the past eight years while the tax rate on estates has been reduced. For estates of those dying in 2009, only assets worth $3.5 million or more were subject to estate taxed, at a rate of 45 percent. But now, for the year 2010, the estate tax has disappeared entirely, only to be restored in 2011 at a rate of 55 percent on estates of $1 million or more, which is exactly where things stood before the 2001 change.

Everyone — lawyers, politicians, and political commentators — has expected for the past 9 years that this law would be “fixed” before the end of 2009, but it wasn’t.  According to some commentators, the Republicans concluded that it was in their interest to let the estate tax repeal occur; and the Democrats apparently don’t agree among themselves as to what they think the estate tax law should be, as Democrates have differing opinions over what the tax rate and the exempt amount should be. Senate Democrats tried to persuade Republicans to extend the 2009 estate tax law for a couple of months until a more permanent solution could be devised, but even that effort failed.  Accordingly, there is currently no tax on the estates of those dying during 2010. Congress could reinstate the tax retroactively in 2010, perhaps as part of broader tax reform, but this is not likely according to many commentators.

As the law stands, a few thousand very wealthy families have great financial incentive to hope that their loved ones die this year.  On the other hand, tens of thousands of taxpayers of more modest wealth may have great incentive to keep their loved ones alive into 2011, because if their loved one dies in 2010 and they inherit an appreciated asset, they may have pay capital gains on that inherited asset, and someone acting as an executor will face additional and confusing administrative burdens.

Loss of Step-Up in Basis May Be Quite Expensive for Many Taxpayers

For most people, the main concern with the law as it now stands is not that the estate tax is repealed for 2010; a bigger problem for many is that it’s replaced with a 15 percent capital gains tax on inherited assets that are later sold.  Previously, someone inheriting an appreciated asset (for example, a house that had greatly appreciated in value over the lifetime of your parents) upon a loved one’s death got a “step-up in basis” in the property. A step-up meant that heirs could sell the inherited, appreciated asset right away without owing any capital gains taxes, because the tax “basis” in the property was “stepped-up” to the value of the property at death.

If you inherit an asset now (in 2010), only the first $1.3 million in assets gets a step-up in basis. Anything over the $1.3 million in assets (plus $3 million for assets transferred to a surviving spouse) will not get a step-up in basis.  Instead, when you sell the property you’ll have to pay capital gains taxes based on the original cost basis (typically the price paid for the asset). This raises an additional concern — having to determine what the cost basis of the asset was.  This in itself could be quite expensive, not to mention time-consuming in trying to ascertain the original price paid for assets, including any renovations or improvements made to real estate over the years.

The capital gains tax rules can be quite complicated, but let’s look at a relatively simple example:  a client called me a few days ago with a home worth approximately $1 million and 40 acres of commercial land that her father gifted to her prior to his death, now worth approximately $2 million. The home was originally purchased by my client for $8,000 in 1961 and she put a $40,000 addition on the home in 1982, so her tax basis in the home is $48,000. Her father originally purchased the 40 acres of land around 1943, for $1,000; at the time of his death in 1992, the 40 acres was worth about $600,000.  Had he left the land to his daughter upon his death, she would have taken a stepped-up basis under the old law, but because he gifted it to her prior to his death, she took over his cost basis of $1,000.  So now her two parcels have a total cost basis of $49,000.  If my client had died last year, then her heirs would have received a step-up in basis, meaning if they sold the properties for their current value of $3 million, they would pay no capital gains tax.  Under today’s law, if my client dies this year, in 2010, her heirs will inherit her cost basis of $49,000, meaning that if her heirs then sell these properties for their current value of $3 million, they will pay a 15% capital gains tax on $1,651,000 ($2,951,000 – $1,300,000), or $247,650 in tax.

The chief tax counsel for the House Ways and Means Committee estimates that continuing the estate tax at its 2009 rates would have affected about 6,000 people, but the new capital gains provisions that we now have will affect more than 70,000. And, in general, these 70,000 will be far less wealthy than the heirs who would have been affected by a continuation of the estate tax.

Couples With Credit Shelter Trusts at Risk

The new world of no estate tax places at particular risk certain couples who have built in “Credit Shelter” trust provisions (also called ”Bypass Trust” or “Family Trust” provisions), that are designed to allow both spouses to take advantage of their estate tax exemptions. These are common arrangements used in estate planning for married couples. With the estate tax gone, one possible problem is that the wording of some of these trusts could cause all assets to completely bypass the surviving spouse when the first spouse dies, meaning a surviving spouse might get nothing without the expensive process of claiming her “elective share.” For a more detailed explanation of this potential problem, click here.

Why Did This Happen?

The House passed a bill in early December permanently extending the 2009 estate tax rules, which would have brough in an estimated $25 billion for 2009 by imposing the 45 percent rate on estates over $3.5 million (or $7 million for a couple). The Senate’s Democratic leadership wanted to pass a similar bill and put it on President Obama’s desk before the estate tax expired at the end of 2009, but they were blocked by united Senate Republicans who prefer a lower tax rate of 35 percent and a higher exclusion amount of $5 million ($10 million for couples).

“Republicans who claim to have accomplished something by blocking an extension need to explain why raising taxes on the middle class while lowering them for the very rich is something to be proud of,” the Los Angeles Times editorialized.

For more on the implications of the disappearance of the estate tax, see CBS MoneyWatch’s “Estate Tax: What You Need to Know for 2010,”SmartMoney’s “The Federal Estate Tax Is Dead: Now What?,”and Kiplinger’s “FAQs on the Death of the Estate Tax.”

Everyone — Especially Married Couples — Should Have Their Estate Planning Reviewed ASAP

Because of these somewhat unexpected tax changes, a review of your existing estate planning documents is essential.  If you are a member of the Farr Law Firm’s Estate Plan Protection Program or Lifetime Protection Program, you are entitled to a free review (and, if necessary, a free modification) of your existing estate planning documents every year, and you should call us to take advantage of this annual review as soon as possible.  Most of our trusts will not need to be modified because of special language we inserted in the document, but changes to some trusts may be required.  If your estate planning was done by a different attorney, you should consider going back to that attorney for a review; alternatively, please feel free to contact our office and we will be happy to do a free review of your estate planning documents, determine if any changes are required, and quote you a fee for us to prepare the necessary revised documents.

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Posted in Asset Protection, Estate Planning, Medicaid Planning, Other Elder Law Blogs, Senior Professionals, Tax Planning | Comments Off

Important Elder Law and Estate Planning Numbers for 2010

Tuesday, January 5th, 2010

Under current law, there will be no cost-of-living adjustment (COLA) in Social Security in 2010 — the first time that has happened since automatic cost-of-living adjustments began in 1975. Several bills before Congress would grant a special increase in Social Security payments for 2010.

In addition, when no Social Security COLA is provided, Medicare Part B premiums — which are deducted from Social Security checks — are frozen for most beneficiaries so that the Social Security checks do not drop (click here for more information).

Below are figures for 2010 that are frequently used in the elder law practice, including the new Medicaid spousal impoverishment figures, the long-term care insurance deductibility limits, and Medicare premiums and co-pays, and Social Security Figures:  

Medicaid Figures for 2010 

Divestment Penalty Divisor $ 6,654.00 – Northern Virginia (Arlington, Fairfax, Loudoun and Prince William Counties and the Cities of Alexandria, Fairfax, Falls Church, Manassas and Manassas Park.)
$ 4,954.00 – All Other
Individual Resource Allowance $ 2,000.00
Monthly Personal Needs Allowance $ 40.00
Minimum Community Spouse Resource Allowance $ 21,912.00
Maximum Community Spouse Resource Allowance $ 109,560.00
Minimum Monthly Maintenance Needs Allowance $ 1,821.25
Maximum Monthly Maintenance Needs Allowance $ 2,739.00
Shelter Standard $ 546.38
Standard Utility Allowance $ 141

Estate Tax Exclusion / Exemption Equivalent Amount: 

Unlimited Exemption (Estate Tax Temporarily Repealed for 2010).  Exemption currently set to revert to $1 million in 2011.

 Annual Gift Tax Exclusion: $13,000  

Attained age before the close of the taxable year Maximum deduction
40 or less $330
More than 40 but not more than 50 $620
More than 50 but not more than 60 $1,230
More than 60 but not more than 70 $3,290
More than 70 $4,110
Beneficiaries who file an individual tax return with income: Beneficiaries who file a joint tax return with income: Income-related monthly adjustment amount Total monthly premium amount
Less than  or equal to $85,000 Less than or equal to $170,000 $0.00 $110.50
Greater than $85,000 and less than or equal to $107,000 Greater than $170,000 and less than or equal to $214,000 $44.20 $154.70
Greater than $107,000 and less than or equal to $160,000 Greater than $214,000 and less than or equal to $320,000 $110.50 $221.00
Greater than $160,000 and less than or equal to $214,000 Greater than $320,000 and less than or equal to $428,000 $176.80 $287.30
Greater than $214,000 Greater than $428,000 $243.10 $353.60
 

Social Security Figures for 2010

         (Click here for SSA Press Release)
         (Click here for SSA Fact Sheet) 

  • Cost of Living Increase: 0 percent 
  • Maximum Taxable Earnings: $106,800   

SSI Federal Payment Standard:  

  • Individual: $674/mo.
  • Couple: $1,011/mo.

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Posted in Asset Protection, Estate Planning, Medicaid Planning, Other Elder Law Blogs, Tax Planning, health care | 1 Comment »

Did you see last Sunday’s Washington Post article?

Friday, November 6th, 2009

Did you catch last Sunday’s Washington Post article by David Hilzenrath, about the October bankruptcy filing of Erickson Retirement Communities? My phone has been ringing all week with people concerned about this news, because Erickson is a major developer and manager of Continuing Care Retirement Communities (CCRCs) for senior citizens.

In the Washington area, Erickson communities include: Greenspring in Springfield, Virginia; Ashby Ponds in Ashburn, Virginia; and Riderwood in Silver Spring, Maryland. I spoke with the author prior to the article and gave him some of the information that he referenced in the article. As he explained, the recession and the real estate crisis have raised concerns for people who paid significant money — often hundreds of thousands of dollars — to enter CCRCs such as these.

It’s important to understand that the deposits that senior pay are simply for the privilege of moving in; at most CCRCs, the deposits generally do not confer any ownership in the real estate, and the deposits are in addition to the regular monthly fees for the facility, which increase as the level of care increases — from independent living up to assisted living and eventually nursing home care. Here’s a link for the article in case you missed it: http://tinyurl.com/EricksonBankruptcy.

In a companion article (http://tinyurl.com/ScrutinizeContracts), headlined Scrutinize any contract to avoid nasty surprises at continuing care community, the author points out that the entrance agreements for these facilities should always be reviewed by an attorney. “If you are considering moving to a continuing care retirement community,” the author says, “you would do well to consult a lawyer and read the fine print of any contract to determine whether the potential benefits outweigh the risks.” I have recommended this to my clients for years, and encourage everyone in the Northern Virginia area moving into a CCRC to have me review the contract.  But please note — it is very important to have me review the contract prior to signing the contract. For many of the people calling me this week who read the article and are concerned, there’s nothing I can do because they already signed their contract. These folks I referred to a real estate litigation attorney to discuss the possible results of what might happen if they fail to go through with their contract. Those results could include being sued for breach of contract by the owner of the facility, and possibly being forced to pay significant monetary damages.

One risk in connection with the entrance contract is that most CCRC contracts require you to agree not to give away any assets that would bring your net worth below a minimum requirement (in order to help assure management that you have the ability to pay their ongoing charges). The author quotes me in article, saying “Evan H. Farr, a Fairfax lawyer who specializes in issues facing the elderly, recommends putting any extra assets in an asset protection trust before you move in.” 

I’m very glad that the author included this quote in his article, because far too many people move into these types of facilities without giving asset protection a second thought. If you are considering moving into a CCRC, it behooves you to not just have me review the contract, but to also have me create the proper type of asset protection trust for you to put your extra assets in before you move in to the community.  What is the proper type of asset protection trust?  It’s my proprietary Living Trust PlusTM Asset Protection Trust — the trust that protects your assets from the expenses of probate PLUS lawsuits PLUS the catastrophic expenses of nursing home care. 

As the creator of the Living Trust PlusTM and the leading expert on this type of trust in the country, I’ve taught thousands of attorney across the country about the benefits of these trusts, and I’m actually teaching another course on this subject to attorneys tomorrow at an annual conference of the National Academy of Elder Law Attorneys.  If you want to find out more about the  Living Trust PlusTM, please come to a free class I’m teaching for members of the public on Saturday, November 14, 2009 at 10:00:00 AM, at the Tysons Corner Mariott, 1960-A Chain Bridge Road, McLean, VA 22012. 

By coming to this FREE class, you’ll learn what thousands of attorneys and clients already know . . .

- That a Will puts your assets through probate, and is a very poor estate planning document.
- That a regular living trust protects your assets from probate, but offers you no asset protection.
- That my Living Trust PlusTM Asset Protection Trust protects your assets from the expenses of probate PLUS lawsuits PLUS the catastrophic expenses of nursing home care.

To register, just go to http://evanfarr.com/seminars.html.

I hope to see you soon!

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Posted in Asset Protection, Estate Planning, Medicaid Planning, Other Elder Law Blogs, Senior Care, health care | 1 Comment »

What Does the Bible Teach us About Estate Planning?

Monday, October 5th, 2009

Sorry for the last minute notice, but I just found out that my church, Fairfax United Methodist Church (10300 Stratford Avenue, Fairfax, VA  22030), has space left for a course I’m teaching tomorrow evening entitled What Does the Bible Teach us About Estate Planning?This is a brand-new two part course seminar that I’ve just put together as part of my church’s Paths of Faith educational outreach program.  

 

 Did you know there are hundreds of mentions of the word “inheritance” in the Bible, but there is very little information available to families seeking to plan and protect their estates.  Every person’s estate is different, and each estate plan must be designed to meet the needs of that family’s situation, but we should look not just to the law, but also to the Bible for direction in planning our estates and protecting our wealth (and not just our material wealth).

Part 1 of this course (tomorrow evening, October 6, from 7 to 8:30) will examine and summarize the Biblical perspectives on estate planning, elder law, and asset protection and explain what the Bible teaches us about these complex and ever-changing areas of the law. 

Part 2 of this course (next Tuesday evening, October 13, from 7 to 8:30) will examine how families, through the use of traditional and not-so-traditional estate planning tools, can legally and morally take the steps they need to plan and protect themselves, their families, and their estates, while glorifying God in the process. 

I’d love for you to attend if you’re able to make it, and bring your friends and family! Tuition for both sessions is $25.  To register, please call the church at 703-591-3120 ext. 105.  I hope to see you there!

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Posted in Asset Protection, Estate Planning, Medicaid Planning, Other Elder Law Blogs, Senior Care, Tax Planning, health care | 2 Comments »

Evan Farr Teaches Course for Elder Law Attorneys Natonwide

Sunday, September 20th, 2009

~You Can Sign Up for a Similar Course for Consumers~

Last Thursday, Evan Farr conducted a national, attorney-only teleconference sponsored by the National Business Institute (NBI) on the topic of the Income Only Trust — an asset protection trust which, though very similar to a revocable living trust, when done properly protects assets transferred to it after five years in connection with Medicaid.

Here’s an article written about Evan’s seminar and about the income-only trust: http://tinyurl.com/l3qc7q.

This is the 2nd national teleseminar that Evan Farr has done for NBI on this topic. Evan has also done a similar national teleseminar for ALI-ABA (American Law Institute – American Bar Association), in connection with two recent scholarly publications for the legal profession published by ALI-ABA, with Evan Farr as the lead author, entitled Planning and Defending Asset Protection Trusts and Trusts for Senior Citizens.

If you’d like to attend a similar seminar for consumers, we still have openings for our 2 lunch seminars this week — on Tuesday and Thursday at noon. To register, please click the link to the right or call 703-691-1888 and speak to Jeannie.

For more information about the Income Only Trust, and about Evan Farr’s Living Trust Plus™ Asset Protection Trust (which is Evan’s highly-developed and perfected Income Only Trust, used by dozens of attorneys across the country), please visit http://www.livingtrustplus.com.

Every day, our firm helps clients protect significant assets through the use of the Living Trust Plus™ Asset Protection Trust and still qualify for Medicaid. Our Firm specializes in Asset Protection and Estate Planning for clients concerned about the devastating expenses of long-term care. To begin the process, please call us today at 703-691-1888.

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Posted in Asset Protection, Estate Planning, Long-Term Care Insurance, Medicaid Planning, Other Elder Law Blogs, Senior Care, Uncategorized | Comments Off

Keeping Mom and Dad Safe at Home

Thursday, September 17th, 2009

Elderly parents generally prefer to remain living in their own homes as long as possible. However, remaining in their homes becomes a concern when children see their parents slowing down or starting to have trouble with handling stairs and doing general daily activities.

This is the time to evaluate the home to make it safe and secure for your loved ones — now and in the near future — in anticipation of age-related disabilities that may occur. Help and support are available. The nation as a whole is more aware of elderly needs and services and products are becoming available at an accelerating pace.

The Bureau of Labor Statistics states:

“Employment of personal and home care aides is projected to grow by 51 percent between 2006 and 2016, which is much faster than the average for all occupations. The expected growth is due, in large part, to the projected rise in the number of elderly people, an age group that often has mounting health problems and that needs some assistance with daily activities.”

Bureau of labor Statistics – Occupational Outlook Handbook, 2008-09 Edition.

This growing need for aides and home services also includes related services such as:

• home remodeling services — making a home more serviceable to the elderly;
• safety alert systems and technology;
• motion sensors to monitor movement;
• telehealth services — using home-based computer systems to monitor vital signs;
• pill dispensers that notify when it is time to take medication.

If you have an aging parent still living at home, where do you begin to make sure your elderly family member is safe and managing well in his or her home?

Visit often and at different times of the day and night. Make note of daily activities that appear challenging and where changes might be made to add safety and convenience. Remove rugs that slide — creating a fall risk — and move furniture with sharp edges. Be sure smoke detectors and carbon monoxide detectors are in place.

Bathrooms can be a hazardous area for the elderly. Set the water heater at a lower temperature to protect skin from scalds and burns. Grab bars by the toilet and shower are a must to help prevent falls. Another important item is a shower stool or chair.

If you’re not sure what needs to be done, consider hiring a professional. There are dozens of Geriatric Care Managers in our area who can do a home safety evaluation and make recommendations. There are also home remodeling contractors that specialize in retrofitting homes to add special safety and convenience features for seniors so they can age in place. The National Association of Home Builders even bestow a CAPS designation to home remodeling companies that have met the criteria to become a Certified Aging in Place Specialist.

Home safety or medical alert companies provide GPS-based bracelets or pendants to track those who tend to wander – a common side-effect of Alzheimer’s disease. Numerous companies provide alarm devices such as pendants and bracelets that allow the elderly to alert someone if there has been a fall or a sudden health-related attack. In the event an alarm has been triggered, a 24-hour monitoring service will alert the family or medical emergency services or call a neighbor depending on previous instructions. In addition, there are companies that will install motion sensors in the home to monitor the elderly on a 24 hour basis.

Don’t forget your parents’ community as a valuable resource for helping them stay in their home. Many elders are able to stay in their homes longer with the help of their local senior services.
Neighbors, local church groups, senior centers and city centers are some places to look for assistance. Most of the time there is little or no cost for these services.

For Virginians, the easiest way to find senior assistance services is the the Senior Navigator at www.seniornavigator.com. A quick search of the word “home” in my zipcode results in numerous assistance services designed to help seniors stay in their homes, including:

• Home Delivered Meals: Meals for homebound persons sometimes called “meals on wheels”
• Home Health Care: Certified skilled nursing care such as IV therapy or wound management provided in the home and coordinated with a physician’s direction. Services may also include therapy for physical, occupational or speech improvements by certified therapists
• Home Modification & Safety: Modifications and repairs done to make homes safer and more accessible
• Medical Equipment and Supplies: Equipment and supplies for medical, functional and mobility needs
• Medication Management: Assistance with taking medications properly including assessments and reminders
• Chore Services: Programs that provide assistance in performing routine household and yard activities
• Assistive Technology: Also referred to as adaptive technology it includes programs, devices and resources that help individuals with disabilities
• Household Organizing: Services that provide or coordinate the organization of households items for an individual or family
• Companion Services: Services that assist adults in the community including telephone reassurance, friendly visitors and companionship
• Personal Care: In-home assistance with activities of daily living such bathing, grooming, toileting and mobility support that is provided by paraprofessionals. Food preparation & housekeeping services may or may not be provided by personal care assistants
• Geriatric Care Management: Assessment of needs and coordination of services for seniors provided by a social worker, certified geriatric care manager or other professional

A few thoughts on hiring home care aides or live-in care givers:

The classifieds are filled with people looking for work as aides to the elderly. Many of these aides are well-qualified, honest people who will do a good job; however, there will be some not so reputable. If you are looking to directly hire an individual, be sure you interview and check references and qualifications. You will also be responsible for scheduling that person and doing payroll and taxes and insurance, including worker’s compensation insurance in case the person is injured on the job, although there are tax services that can assist you with the required tax payments and filings. Be very sure you hire someone trustworthy, as the elderly often develop trust in these helpers beyond what they should, and therefore can easily be taken advantage of.

A professional home care service will eliminate most of these concerns. Professionally-provided aides are usually insured and bonded, and substitute aides can be provided in the event that the primary aide becomes unavailable. Home care companies take care of the scheduling and payment of their employees. Home care companies cater to the elderly in their homes by offering a variety of services.

These providers represent a rapidly growing trend to allow people needing help with long term care to remain in their home or in the community instead of going to a care facility. The services offered may include:

• companionship
• grooming and dressing
• recreational activities
• incontinent care
• handyman services
• teeth brushing
• medication reminders
• bathing or showering
• light housekeeping
• meal preparation
• respite for family caregivers
• errands and shopping
• reading email or letters
• overseeing home deliveries
• dealing with vendors
• transportation services
• changing linens
• laundry and ironing
• organizing closets
• care of house plants
• 24-hour emergency response
• family counseling
• phone call checks and much more.

Unfortunately, many people fail to think about the issue of long-term until an emergency occurs, at which point there may be fewer options for care and care in a facility may be the only choice. Additionally, as I mentioned in an article in July – Putting Home Care in Perspective – lack of significant wealth and lack of pre-planning means that most people do not have the luxury of remaining in their homes when the time comes.

Fortunately, Medicaid is available to pay for nursing home care to finish out the rest of their lives. Every day, our firm helps families with loves ones needing nursing home care protect significant assets and still qualify for Medicaid. Please call us if we can assist you or your family with your long-term care planning.

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Putting Home Care in Perspective

Thursday, July 16th, 2009

The Evolution of Home Care

In the first century of our country’s history there was no such thing as nursing homes or assisted living. Society was mostly rural and people lived in their own homes. Families cared for their loved ones at home till death took them. In the latter part of the 1800’s because of an increasingly urban society, many urban families were often unable to care for loved ones because of lack of space or because all family members including children were employed six days a week for 12 hours a day. During this period many unfortunate people needing care were housed in County poor houses or in facilities for the mentally ill. Conditions were deplorable. In the early 1900’s home visiting nurses started reversing this trend of institutionalizing and allowed many care recipients to remain in their homes. Nursing homes or so-called rest homes were also being built with public donations or government funds. With the advent of Social Security in 1936, a nursing home per diem stipend was included in the Social Security retirement income and this government subsidy spurred the construction of nursing homes all across the country.

By the end of the 1950s it was apparent that Social Security beneficiaries were living longer and that the nursing home subsidy could eventually bankrupt Social Security. But in order to protect the thousands and thousands of existing nursing homes Congress had to find a way to provide a subsidy but remove it as an entitlement under Social Security. In 1965 Medicare and Medicaid were created through an amendment to the Social Security Act. Under Medicare, nursing homes were only reimbursed on behalf of Social Security beneficiaries for short-term rehabilitation. Under Medicaid, nursing homes were reimbursed for impoverished disabled Americans and impoverished aged Americans over the age of 65. It has never been the intent of Congress to pay for nursing home care for all Americans. The nursing home entitlement for all aged Americans was now gone.

Over the last 40 years, there has been a gradual change away from the use of nursing homes for long-term care towards the use of home care and community living arrangements that also provide in-house care.

With Proper Planning People Could Remain in Their Homes for the Rest of Their Lives
We are seeing a trend towards working conditions like those in urban America in the early 1900’s where both husband and wife are working and putting in longer hours. We are also seeing a return of the trend in the early part of the 20th century where outside visitor caregivers are becoming available to replace working caregiver’s and allow the elderly to receive long-term care in their homes. In addition there is a significant trend in the past few years for Medicaid and Medicare to pay for long-term care in the home instead of in nursing homes.

Given enough money for paid providers or government funding for the same, a person would never have to leave his home to receive long-term care. All services could be received in the home. Adequate long-term care planning or having substantial income can allow this to happen.

We only need to look at wealthy celebrities to recognize this fact. Christopher Reeve, the movie star, was totally disabled but he had enough money to buy care services and remain in his home. President Ronald Reagan suffered from Alzheimer’s for many years but received care at his California ranch. He was also wealthy enough to pay for care when needed. Or what about Annette Funicello or Richard Pryor? Income from their movie careers allowed them to receive care with their multiple sclerosis at home. We will be willing to bet that Mohammed Ali, who is severely disabled with Parkinson’s disease, will probably never see the inside of a care facility, unless he chooses to go there to die. With the proper planning and the money it provides, most of us could remain in our homes to receive long-term care and we would never have to go to an institution or a hospital.

The Popularity of Home Care
Most of those receiving long-term care and most caregivers prefer a home environment. Out of an estimated 8 million older Americans receiving care, about 5.4 million or 67% are in their own home or the home of a family member or friend. Most older people prefer their home over the unfamiliar proposition of living in a care facility. Family or friends attempt to accommodate the wishes of loved ones even though caregiving needs might warrant a different environment. Those needing care feel comfortable and secure in familiar surroundings and a home is usually the best setting for that support.

Often the decision to stay in the home is dictated by funds available. It is much cheaper for a wife to care for her husband at home than to pay out $2,000 to $4,000 a month for care in a facility. Likewise, it’s much less costly and more loving for a daughter to have her widowed mother move in to the daughter’s home than to liquidate mom’s assets and put her in a nursing home. Besides, taking care of our parents or spouses is an obligation most of us feel very strongly about.

For many long-term care recipients the home is an ideal environment. These people may be confined to the home but continue to lead active lives engaging in church service, entertaining grandchildren, writing histories, corresponding, pursuing hobbies or doing handwork activities. Their care needs might not be that demanding and might include occasional help with house cleaning and shopping as well as help with getting out of bed, dressing and bathing. Most of the time these people don’t need the supervision of a 24/7 caregiver. There are, however, some care situations that make it difficult to provide long-term care in the home.

Please note from the first set of numbers below that a great amount of home care revolves around providing help with activities of daily living. Note from the second group of numbers that the average care recipient has need for help with multiple activities of daily living. Finally, it should be noted from the second group that well over half of home care recipients are cognitively impaired. This typically means they need supervision to make sure they are not a danger to themselves or to others. In many cases, this supervision may be required on a 24-hour basis.

The following numbers were derived from the 1999 national caregivers survey:

Percent of Elderly Home Care Recipients Needing Help With Selected Activities of Daily Living:

Bathing 42%

Dressing 37%

Transferring 32%

Doing Light House Work 22%

Toileting 21%

Medication Reminders 19%

Preparing Meals 12%

Eating 11%

Shopping 6%

Using the Phone 2%

Managing Money 1%

Functional and Cognitive Impairments of Care Recipients as Reported by Their Informal Caregivers:

0 to 2 Activities of Daily Living (ADL) Limitations = 40%

3 to 4 ADL Limitations = 30%

5 to 6 ADL Limitations = 30%

Percent of Recipients with Cognitive Impairment = 54%

It is precisely the ongoing and escalating need for help with activities of daily living or the need for extended supervision that often makes it impossible for a caregiver to provide help in the home. Either the physical demands for help with activities of daily living or the time demand for supervision can overwhelm an informal caregiver. This untenable situation usually leads to finding another care setting for the loved one. On the other hand if there are funds to hire paid providers to come into the home, there would be no need for finding another care setting.

Problems That May Prevent Home Care from Being an Option
Caregivers face many challenges providing care at home. A wife caring for her husband may risk injury trying to move him or help him bathe or use the toilet. Another situation may be the challenge of keeping constant surveillance on a spouse with advanced dementia. Or a son may live 500 miles from his disabled parents and find himself constantly traveling to and from his home, trying to manage a job and his own family as well taking care of the parents. Some caregivers simply don’t have the time to watch over loved ones and those needing care are sometimes neglected.

The problems with maintaining home care are mainly due to the inadequacies or lack of resources with informal caregivers, but they may also be caused by incompetent formal caregivers. These problems center on five issues:

• Inadequate care provided to a loved one

• Lack of training for caregivers

• Lack of social stimulation for care recipients

• Informal caregivers unable to handle the challenge

• Depression and physical ailments from caregiver burnout

In order to make sure home care is a feasible option and can be sustained for a period of time, caregivers must recognize these problems, deal with them and correct them. The responsibility for recognizing these problems and solving them is another function of the long-term care planning process and the team of specialists and advisers involved, such as the Farr Law Firm.

Adequate Funding Solves Most Problems Associated with Providing Home Care
None of the problems discussed in this article would be an obstacle if there were enough money to pay for professional services in the home. These services would be used to overcome the problems discussed in the previous section. If someone desires to remain in the home the rest of his or her life and is not extremely wealthy, adequate pre-planning can often provide the solution.

Such pre-planning involves asset protection, and should ideally be done as early as possible. One type of asset protection is to purchase a long-term care insurance policy when you are still healthy and able to afford the premiums, being sure to get a policy with a good home care benefit. There is also significant financial assistance available in the form of the Veteran’s Aid and Attendance benefit for qualified veterans. If long-term care insurance is not an option and Veteran’s Aid and Attendance is not available, another possible option is to put money aside to pay for home care in the future. If putting money aside, you should consider putting it in a special type of irrevocable asset protection trust called the Living Trust Plus™, that is designed to protect assets from probate and from the expenses of long-term care. If Medicaid assistance is needed to pay for future long-term care, whether at home or in a nursing facility, the assets in the Living Trust Plus™ Asset Protection Trust will be exempt assets for Medicaid eligibility and will not be counted against you.

Unfortunately, not enough people think about the issue of needing long-term care when they are older. This lack of planning leads to fewer options for elder care when the time comes. Lack of significant wealth and lack of pre-planning means that most people do not have the luxury of remaining in their homes when the time comes. Fortunately, Medicaid is available to pay for nursing home care to finish out the rest of their lives. Every day, the Farr Law Firm helps clients needing nursing home care protect significant assets and still qualify for Medicaid when needed.

Posted in Medicaid Planning, Other Elder Law Blogs, Senior Care | 1 Comment »

Update on Virginia Life Estate Law

Wednesday, July 8th, 2009

In June of last year, I wrote that “in the near future, life estates will no longer be considered exempt assets when applying for Medicaid.” This was due to the fact that the Virginia General Assembly had recently passed legislation instructing DMAS (the Department of Medical Assistance Services, the agency that oversees the Virginia Medicaid program) to amend the State Medicaid Plan to consider all life estates as countable resources in the determination of Medicaid eligibility. After my column, the new change in Medicaid policy did indeed go into effect. However, since then, the policy has been changed yet again. This article will summarize the changes in the life estate law and explain the current Virginia Medicaid policy.

Life Estate Rule Made More Restrictive
Prior to August 2008, the Virginia Medicaid State Plan treated life estates in real property as exempt resources, meaning that the ownership of a life estate did not affect Medicaid eligibility. Effective August 28, 2008, the aforementioned change in Medicaid policy made life estates created after that date countable resources under most situations, though subject to the same exclusions that apply to other residential real estate (e.g. the home subject to the life estate would be exempt if the Medicaid Applicant, or a spouse or dependent child, was living in the home or the Medicaid Applicant was using “reasonable efforts” to sell the property interest, or during the first 6 months of institutionalization provided the Medicaid Applicant intended to return home).

The American Recovery and Reinvestment Act of 2009 (Recovery Act) that President Obama signed into law on February 17, 2009 provided increased federal funding for state Medicaid programs. To be eligible for the enhanced federal financing, states may not have eligibility standards, methods or procedures in place that are more restrictive than those effective on July 1, 2008. States that implemented more restrictive policies after July 1, 2008 had until July 1, 2009 to reverse these restrictions to receive the increased funding.

More Restrictive Life Estate Rule Rescinded
The August 28, 2008 change in Virginia Medicaid policy regarding life estates created a more restrictive eligibility standard than was in existence in Virginia on July 1, 2008. Therefore, in order for Virginia to qualify for the increased federal funding, the more restrictive life estate policy needed to be reversed. As of May 15, 2009, the more restrictive life estate policy was rescinded. Accordingly, we now have two diferrent Medicaid rules for life estates, depending on the date that the life estate was created:

* As a general rule, life estates created prior to August 28, 2008, or on or after February 24, 2009, are considered exempt assets.
* Life estates created on or after August 28, 2008, but before February 24, 2009, are treated in the same manner as other real property, subject to any applicable residential real property exclusions as mentioned above.

How Can Life Estates Now Be Used in Medicaid Asset Protection Planning?
Life estates have been used throughout Virginia history for many different purposes – Medicaid asset protection planning, estate planning, probate avoidance, and tax planning.

One asset protection strategy involves a parent purchasing a life estate in the home of a child. This strategy is specifically allowed by Medicaid under current law so long as the parent actually resides in the home for at least a year after the purchase of the life estate.

Another planning strategy involves the sale of real estate to a child, coupled with the retention of a life estate. This allows the parent to effectively sell the home for a discounted value, retain the lifetime right to live in the home, and avoid probate, while also preserving a step-up in basis for capital gains purposes on the death of the parent.

A third planning strategy involves the gift of real estate to a child, coupled with a retained life estate. Although this gift will trigger a period of Medicaid ineligibility if application for Medicaid is made within five years of the transfer, because the value of the remainder interest is lower than the full value of the entire piece of real estate, a gift of a remainder interest results in a shorter Medicaid penalty period than a transfer of the entire house.

A parent retaining a life estate in a home that is being sold or gifted to a child has several advantages:

1) The parent continues to qualify for any property tax exemptions such as senior citizens exemptions that were available prior to the transfer.
2) The parent retains the legal right to live in the property.
3) The parent retains the legal ability to obtain a reverse mortgage (with the agreement of the remainder beneficiary).
4) The child receives a stepped-up basis for capital gains tax purposes.

Life Estate transactions, and the financial and life expectency calculations that must be made in connection with these transactions, are extremely complicated and must be done pursuant to the applicable Medicaid regulations. It is essential that these types of transactions be done under the direct supervision of an experienced Elder Law firm such as the Farr Law Firm.

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Posted in Asset Protection, Estate Planning, Medicaid Planning, Other Elder Law Blogs, Tax Planning, Uncategorized | 1 Comment »

Medicaid Asset Protection

Friday, August 22nd, 2008

What is Medicaid Asset Protection?
Medicaid Asset Protection is the process of protecting assets from having to be completely spent to pay for the devastating expenses of long-term care, while helping to ensure that you (or your loved one) get the best possible long-term care and maintain the highest possible quality of life, whether at home, in an assisted living facility, or in a nursing home. This process is also called Life Care Planning because it is designed to be an ongoing, life-long process.

When Should You Start This Type of Planning?
Medicaid Asset Protection can be started any time after a person enters the “long-term care continuum,” meaning that a person is starting to need assistance with Activities of Daily Living (eating, dressing, bathing, toileting, transferring, and walking) or Instrumental Activities of Daily Living (such as cooking, cleaning, caring for pets, paying bills and managing finances). This type of planning can be started while you are still able to make legal and financial decisions, or can be initiated by an adult child acting as agent under a properly-drafted Power of Attorney, even if you are already in a nursing home or receiving other long-term care assistance. In fact, the majority of our Medicaid Asset Protection clients come to us when nursing home care is already in place or is imminent.

If you are still healthy and not yet on the “long-term care continuum,” then instead of Medicaid Asset Protection Planning you should consider our Living Trust PlusTM Asset Protection Trust, which is a simpler and less expensive method of asset protection for clients who will most likely not need any long-term care for at least five years.

What are the Objectives of Medicaid Asset Protection Planning?
With proper planning, families can obtain Medicaid assistance for a loved one without having to first deplete their life savings.

Protecting The Spouse:

With proper planning, a spouse who is able to stay at home can keep all of the couple’s assets and much or all income while Medicaid pays for the nursing home. The most important goal is typically to ensure that the spouse remaining at home is able to live the remaining years of his or her life in utmost dignity and not have to suffer a catastrophic reduction in his or her standard of living.

Protecting Quality of Life:

If you are single or widowed, the most important reason for you to engage in Medicaid Asset Protection Planning is for you to be able to enjoy the highest quality of life possible in the event you are forced to enter a nursing home. For instance, money that we protect for you in the process of getting you qualified for Medicaid can be used, once you are receiving Medicaid benefits, to provide you with an enhanced level of care and a better quality of life while you are in a nursing home. For instance, we will often encourage the families of our clients to use the protected assets to hire a private “sitter” or “helper” – someone to keep you company, help you with meals, etc., somewhat like a “surrogate daughter.” Money that we protect for you in the process of getting you qualified for Medicaid can also be used to purchase services or items for you that are not covered by Medicaid, such as dental work, vision aids, hearing aids, incontinence supplies, personal clothing and toiletries, and haircuts.

Protecting Children:

Some parents have saved and sacrificed their entire lives and have a strong desire to leave a financial legacy for their children. With proper Medicaid Asset Protection planning, this goal can be achieved while still qualifying for Medicaid.

Protecting Disabled Persons:

There are asset protection strategies that will allow you to protect your home and an unlimited amount of assets for the benefit of a disabled child or other disabled family member.

What Happens at the Initial Consultation?
During the initial consultation we will typically:

- Assist you in identifying your goals and objectives;
- Review the strategies that are available to help you achieve these goals; and
- Explain how we can help you achieve your goals by preparing a specially-designed Asset Protection Plan tailored to your assets and your goals and objectives.

After the Initial Consultation.

After the initial meeting, Mr. Farr will spend a great deal of time analyzing your situation, applying his specialized knowledge and experience, and performing the dozens of calculations necessary in order to come up with the best asset protection strategies for your situation, customized to achieve your specific goals on the basis of your income, assets, expenses, and medical condition. All of this information is then put into a written Asset Protection Plan, which will set out all of the strategies in detail, along with any options and alternatives that need your consideration. After your review, you will meet again with Mr. Farr or another attorney in the firm to go through and finalize the Asset Protection Plan so that it can then be implemented.

What is an Asset Protection Plan?
The Asset Protection Plan is broken down into a number of sections:

Background:

In this section, we confirm what you’ve told us about your health, income, assets, and expenses. This is important because the entire plan is based on this information. If your information is different, the plan will be different. We want to be sure that we understand your situation completely.

Objectives:

Why do we do asset protection planning? As mentioned above, most of our clients are interested in protecting their assets (a) for themselves, to be able to enjoy the highest quality of life possible within the confines of a nursing home; (b) for their spouse, if married, who will be remaining in the community, and (c) possibly for the benefit of their children. Some people also have specific goals relating to disabled beneficiaries, or related to their home or to federal and state income taxes, or federal and estate gift taxes. Every plan must be customized to achieve your specific goals on the basis of your specific income, assets, expenses, and health conditions.

Applicable Law:

We discuss the Medicaid law, tax law, and, where appropriate, the laws relating to Veteran’s Aid and Attendance.

Strategy:

There are dozens of different strategies that can be employed to protect assets. We walk you through each of these strategies that apply to your situation and discuss them with you to determine which ones appeal to you and would work for you and which ones are inappropriate. Whenever possible, we compare strategies and give alternatives.

Assumptions:

Our clients are often unable to give us all of the information which we would need to make a perfect plan. For example, many people do not know what day they will enter a nursing home, what nursing home they will enter, how much it will cost, when and how often the nursing home will raise its rates, how much will be covered by Medicare, and how much private pay money is required by the nursing home as a condition of admission. The plan is based on assumptions and is usually very accurate. However, as these variables become known, the plan is revised from time-to-time. In addition, the law changes frequently and the plan may need to be revised periodically to be sure that it complies with current law.

Additional Considerations:

This section is an attempt to answer the common questions which people have and avoid the ordinary pitfalls.

Action Plan:

This is a summary of the exact steps that need to be taken to implement the plan.

Implementation:

Our office assists you to the extent possible in seeing that this is done. For example:

- If real estate needs to be transferred to a spouse or child, our office will prepare the deed and record it for you.
- If you need to deal with financial institutions or insurance companies, our office will obtain all the necessary forms for your signature.
- If the plan calls for the purchase of an annuity, our office will assist you in dealing with the insurance company to be sure that a policy is furnished that will meet the ever-changing Medicaid requirements.
- Filing the Medicaid Application: The final phase of the process for the Medicaid long-term care assistance. Every item on the application must be documented and explained. We will do everything needed to prepare and file the application for you, and we will also be the ones to answer questions that the Department of Social Services may have about the application.

Our general rule is that if you can do it or we can do it, we will do it for you. We have people who do this every day, and it is easier for them to do it than it is for you to do it. Public benefits’ planning is extremely complex. Even our finest judges are often baffled — click here to see what the top Judges in our land say about Medicaid. Our job is to guide you through the Medicaid maze so that you can protect the maximum amount of assets with the least amount of effort on your part.

How Much Can You Protect?
This varies from client-to-client, but as a general rule, for a married couple we can protect one-hundred percent (100%) of your assets. For an unmarried client, we can typically protect anywhere from forty percent (40%) to seventy percent (70%) of your assets, though sometimes we can protect all of your assets, depending on the specifics of your situation. Remember that we are talking here about asset protection planning at or near the time that the long-term care will be needed — often when nursing home care is already in place or is imminent.

Many people have heard that you must do Asset Protection planning three or five years prior to entering a nursing home. This is simply not true. There is a Medicaid rule known as the “lookback period,” which is currently 5 years. However, this does not mean you have to do this type of planning 5 years prior to the nursing home; rather, it means there are penalties, in the form of periods of ineligibility for Medicaid, for certain types of planning done within five years prior to applying for Medicaid. We are of course fully aware of these rules and penalties and all other Medicaid requirements, and very careful to comply completely with the law. Having to deal with the 5-year lookback period is why for unmarried clients we are typically able to protect only forty to seventy percent of your assets.

Remember, if you are still healthy and not yet on the “long-term care continuum,” then instead of Life Care Planning and Medicaid Asset Protection Planning you should consider our Living Trust PlusTM Asset Protection Trust, which is a simpler and less expensive method of asset protection for clients who will most likely not need any long-term care for at least five years.

Posted in Asset Protection, Medicaid Planning, Other Elder Law Blogs | Comments Off

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