I have clients, most of them elderly, who may require a long term stay in a nursing home facility due to senility, Alzheimer’s Disease, dementia, etc. Quite often this results in a spend down of all of the assets that the elderly have accumulated throughout their lifetime before a client can qualify for subsidy through Medicaid (not Medicare). There are strategies that can be used to minimize a mandatory spend down of all of the assets that the elderly may have. This article assumes no long term care insurance is available to the client and the client is bound for a nursing home or retirement home. Some very broad strategy concepts that can be applied for a single person are as follows:

1. Making gifts and/or transfers to a child who is disabled, blind, or a minor.
2. Making gifts or transfers of the principal residence to a child who has lived with the parent for two or more years and has provided care and support to the parent. Watch the income tax impact.
3. Gifts and/or transfers to children or other loved ones.
4. Prepaying funeral expenses.
5. Paying off debts.
6. Cashing in cash surrender value on life insurance policies.
7. Cashing in IRAs (although this should be a last case scenario so that earnings on deferred income taxes can continue to compound).
8. Cashing in annuities or converting assets to Medicaid type qualified annuities.

When the nursing home resident has a spouse living in the community, in addition to the above broad strategies, the following can be considered:

1. Transfers to the community spouse of the nursing home resident’s spouse’s interest in the residence.
2. Transfer the vehicle to the community spouse.
3. Converting excess resources into allowable income (but this may require a court order).

All of this planning is complicated by a 36 month look back to the period prior to the Medicaid application date, resulting in a possible penalty period. At the present time a single person can maintain $2,000 of assets and $30/month in income if they are going to qualify for Medicaid. In 2002 a married couple with one spouse qualifying for Medicaid can maintain $89,280 of assets and approximately $2,200 of income. There are some additional income and asset allowances, but by and large they are minimal. A long term nursing home stay can result in dissipation of a lifetime’s accumulation of assets. For those who fail to plan for a possible nursing home stay in the future, they do at their own peril and the peril of those to whom they wish to leave their assets. By: Anthony B. Ferraro Attorney – CPA **This document is for discussion purposes only and is not intended to be construed as legal advice. You should never attempt estate planning without the advice of competent legal counsel. Please feel free to contact our offices if we may assist you.** Copyright 2002 THE LAW OFFICES OF ANTHONY B. FERRARO, Rosemont, Il.

THE ISSUE IN A NUTSHELL If you have a small retirement account and all of your beneficiaries are close in age then this is not a significant issue. If however you have a sizeable retirement account and there is a great difference in the ages of your beneficiaries (i.e. beneficiaries who are ten years of age and beneficiaries who are forty years of age), then this could have a significant income tax effect for your beneficiaries. This would mean that the required minimum distribution from each account will be based on the life of the oldest beneficiary, rather than each beneficiary using his own life expectancy. RECENT LAW CREATED SEVERAL PROBLEMS IRS regulations issues in the year 2002 made required minimum distribution rules for IRAs and qualified retirement plans simpler and more favorable to taxpayers in every instance except one: When trusts are beneficiaries of retirement plans and separate account treatment is desired for each beneficiary. Problem 1. In 2003, a series of taxpayer-adverse private letter rulings made things even worse for trusts, holding that beneficiaries who receive their interests through a trust could not use the separate accounts rule. The separate accounts rules of the IRS permit a retirement account to be divided into separate accounts, one for each beneficiary after the participant’s death. Certain 2003 IRS private letter rulings held that beneficiaries who receive their interests through a trustcould not use the taxpayer friendly separate accounts rule to determine their respective distribution periods, even if the trust terminated immediately upon the death of the participant. This would mean that the required minimum distribution from each account will be based on the life of the oldest beneficiary, rather than each beneficiary using his own life expectancy. Problem 2. Before the final minimum distribution regulations (in 2002) and PLR 2002-28025 were issued, many practitioners believed that a remainder beneficiary could be ignored when applying the minimum distribution trust rules, if the trust terms required distribution of the entire trust corpus to the income beneficiary at an age that was well within that beneficiary’s life expectancy. For example, we thought we could safely ignore the contingent remainder beneficiary of a typical minor’s trust that would terminate when the minor reached age 25, 30, or 35, with all trust assets then distributed outright to him. We now know that the IRS does not share this view. Problem 3. If the participant’s estate is a beneficiary of the trust, that trust will flunk the rule that “all beneficiaries must be individuals” because an estate is not an individual. The typical trust provision requiring or permitting the trustee to make payments to the participant’s estate to cover debts, expenses or taxes can cause a trust to violate this rule. THE SOLUTIONS Solution to Problem 1. If the separate accounts treatment is desired for any group of multiple beneficiaries, then you will need to modify the retirement plan beneficiary designation forms to include certain wording. Merely leaving benefits to a funding trust (such as your revocable living trust) that splits up into separate shares or trusts will not achieve the desired result. Solution to Problem 2. If you want your retirement benefits to be payable to your trust over the life expectancy of the income beneficiary, you must be sure that the remainder beneficiary of the trust (whether vested or contingent) is younger than the income beneficiary. Solution to Problem 3. The easy way to avoid this problem is to specify in the appropriate documents that retirement benefits cannot be used for debts, expenses or taxes. WHAT TO DO In view of the significant changes discussed above, all persons would be well advised to review your trusts and your beneficiary designations. You likewise should periodically check back with the retirement plan custodian to make sure that they have not misplaced your beneficiary designation form. By: Anthony B. Ferraro Attorney – CPA *This document is for discussion purposes only and is not intended to be construed as legal advice. You should never attempt estate planning without the advice of competent legal counsel. Please feel free to contact our offices if we may assist you.** Copyright 2007 THE LAW OFFICES OF ANTHONY B. FERRARO, Rosemont, Il.

An increasing number of clients express concerns to us about long term nursing home stays. Long term nursing home stays can be a result of a failure in health, a gradual decline in the ability to live independently or both. Some client’s have lost their home and savings in a matter of several years You may be unaware of Illinois law which holds that you must “spend down” all your assets (meaning no assets are left) before any state aid is available. Until you reach spend down you are required to pay for a nursing home stay out of your own pocket. Payments can be in the range of $4,000-$7,000 per month in the Chicagoland area. This results in a loss to you of $60,000-$84,000 per year. If this continues for several years the results can be devastating. Consequently, our clients are now asking us to help them in the type of estate planning that emphasizes Medicaid planning so that they can protect their home and saving from a complete Medicaid spend down if they go into a nursing home. We are happy to provide such services to our clientele, but it must be emphasized that this planning is best done early on before any mental incapacity occurs. If you are a son or daughter that is caring for elderly parents, and your parents do not have estate planning documents that permit any sort of Medicaid planning, then such Medicaid planning and document preparation is crucial. Therefore, I encourage the children of elderly persons to come into our office and discuss their parents’ concerns and to take advantage of opportunities that prevent assets from being lost to long term nursing home stays. Remember, just because you have a will, trust, and powers of attorney, this doesnot mean that such documents were drafted with Medicaid planning in mind. Therefore, if it is your intention to have your documents protect against a long term nursing home stay, then it is our recommendation that you contact me to discuss this now. By: Anthony B. Ferraro Attorney – CPA *This document is for discussion purposes only and is not intended to be construed as legal advice. You should never attempt estate planning without the advice of competent legal counsel. Please feel free to contact our offices if we may assist you.** Copyright 2007 THE LAW OFFICES OF ANTHONY B. FERRARO, Rosemont, Il.

As an trust and estate attorney, I would like to share with you my experience in recent cases that I have handled where clients have made unfortunate decisions in selecting executors or trustees to handle their affairs. Remember, a trustee administers a trust, and an executor administers the terms of a will. Clients often ask, “Whom should I name as executor or trustee?” There is no one right answer. It depends on many factors, including what the executor or trustee is expected to accomplish, whether the trust is revocable or irrevocable, who the beneficiaries are, and other factors. I. Executor/ Trustee Responsibilities and Duties Here are some of the most important duties of a trustee:

1. Legal. Seeking counsel as needed, the trustee assumes legal responsibility for proper trust administration.
2. Bookkeeping. The trustee establishes record keeping procedures, performs ongoing accounting, submits records for review if needed, takes inventory, changes titles of assets received, and pays bills.
3. Custody of Investments. This includes both planning and administrative duties. In addition, the trustee must collect assets and related income and maintain detailed records of all transactions. Each type must be managed appropriately. The trustee:
   • Holds securities or other property in appropriate title.
   • Recommends such investments (purchases or sales) or other transactions for the estate in the best interest of the estate, subject to the powers granted under the terms of the will or trust.
4. Taxes. The trustee must manage investments with tax considerations in mind, and track asset acquisition dates, cost, and adjustments, keep records of taxable income, file annual trust tax returns, and provide information to beneficiaries for their tax records.
5. Estate Distribution. The trustee must communicate regularly with beneficiaries, distribute income and principal to them as outlined in the trust terms, and provide detailed account statements. For living trusts, the trustee must settle the estate by preparing tax returns, discharging creditor obligations, determining final distributions, and arranging final asset transfers. The trustee or executor also:
   • Ascertains extent of liabilities and payment of correct amounts.
   • Raises sufficient cash to meet all estate liquidity requirements.
   • Completes division and distribution of estate assets in accordance with plan.
   • Completes cash accounting from date of plan to date of distribution.

II. Should you consider naming an individual, a trust company, or both? You need a trustee and executor with discretion, good judgment, commitment and integrity. You likely have family members or close friends with these qualities. But the trustee’s job is complex, often involving years of detailed research and record keeping, and informed decision making. That’s why many clients choose a professional trustee alone or as co-trustee with an individual trustee. A professional trustee has the necessary experience and expertise, access to resources, and time to carry out the trust terms. So do some individuals. Individuals can obtain professional advice when needed, but a professional trust company has additional advantages over an individual trustee:

1. Continuity. An individual can be limited by health, longevity, or even a busy schedule. A trust company can ensure continuous management.
2. Impartiality. A professional trust company CAN SAY NO! and is not swayed by self-interest in the interpretation of trust provisions or management and distribution of assets. Even if family members or other individual trustees would be impartial, others may perceive their actions as self serving.

III. When you should consider naming a professional trust company as executor or trustee

• Your family or friends are more elderly or are not capable of handling the task.
• This is too great a burden for family members or friends.
• You have a long term trust that may last for many years (for example with young children).
• Trusts with behavior incentives.
• Where there is diversity or differences among the beneficiaries.
• Where the trust attempts to protect beneficiaries from themselves.
• Where beneficiaries or family members do not relate well with each other.
• Trusts funded with marketable securities or complicated assets.
• Supplemental needs trusts for disabled beneficiaries.

Choosing Wisely It is essential that you select a trustee or executor who can carry out the terms of the trust or will and also help you achieve your objectives. We would be glad to answer your questions about trustee and executor responsibilities. As an trust and estate lawyer, I can counsel you about trust and executor selections, as well as other choices you must make. Our office has a strong working relationship with many trustees including several professional trust companies and, we can guide you in the selection of a professional trust company if that is the approach you wish to take. Please call me if you have questions or call my paralegal Lori (847-563-4887) to set up an appointment so you and I can review your trustee or executor selections. You have the power to choose; use it wisely. *This document is for discussion purposes only and is not intended to be construed as legal advice. You should never attempt estate planning without the advice of competent legal counsel. Please feel free to contact our offices if we may assist you.** Copyright 2007 THE LAW OFFICES OF ANTHONY B. FERRARO, Rosemont, Il.

“Boomer” Retirement Planning: Legal and Financial Issues

If you are a baby boomer that is approaching 55 years of age or older, the following list contains some of the issues that are important for you to begin to consider as you approach retirement:

1. Have your estate plan reviewed. The estate tax laws have changed. Furthermore, old wills or trusts will probably not cut it for you anymore. You should review your will every two to five years, and following major life events, consider how jointly titled assets will pass. Make sure you have named beneficiaries on retirement accounts, life insurance policies, and annuity contracts, and that they don’t contradict the provisions of your will and trust.
2. You would probably benefit from the creation of Durable Powers of Attorney for financial matters and healthcare issues. It would be helpful for you to have some advice in disability planning.
3. A review of your existing financial resources, including life insurance and investments, would be beneficial, and it would be useful to obtain advice from someone who is not going to obtain a commission from selling you anything.
4. You should inquire about what it will take to provide your possibly needy parents with care. A discussion of Medicare, Medicaid, and asset protection planning for aging parents is important.
5. Discussing the benefits of long term care insurance is essential. Discussing what you should look for in a policy would again be helpful from someone who will not obtain a commission from selling you such a policy. A discussion of Medicaid spend down planning is useful for some.
6. Developing a relationship with an estate and trust lawyer who can give you advice on all of the above-referenced issues is important. Developing this kind of relationship now will assist not only you in meeting your needs, but also your aging parents and your growing children.

Yes, retirement planning consists of all of the above issues. As the baby boomers continue to mature, demand for advice regarding the above issues will grow. You should obtain advice now. Please call our offices to set your appointment, if our firm can be of assistance. By: Anthony B. Ferraro Attorney – CPA The Law Offices of Anthony B. Ferraro, LLC 5600 N River Road, Suite 764 Rosemont, IL PH(847)292-1220 **This document is for discussion purposes only and is not intended to be construed as legal advice. You should never attempt estate planning without the advice of competent legal counsel. Please feel free to contact our offices if we may assist you.** Any tax advice contained in this communication was not intended to be used, and cannot be used, by you (Or any other taxpayer) to avoid penalties under the Internal Revenue Code. Copyright 2006 THE LAW OFFICES OF ANTHONY B. FERRARO, Rosemont, Il.

Ask Our Law Firm to Identify Errors Advisors are Making: Long Term Care and Medicaid Asset Protection Solutions Still Exist But Are Now More Complex

The Deficit Reduction Act (“DRA”) severely impacts the ability of your clients to qualify for long term care Medicaid assistance. The new law was signed by President Bush on February 8, 2006. The DRA creates a number of problems for financial advisors, as well as legal counsel. The challenge is to understand where these problems lie in administering your services to your clients. The State of Illinois has not yet adopted the federal law, but may do so during 2007. The following are some errors that we see financial professionals make with clients of moderate and substantial wealth. These errors can disqualify clients from the benefits they are entitled to, thus making them and their families unhappy:

1. Recommending gifts or transfers to family members that violate the “new” onerous asset transfer rules. For example, under prior law if your client  gifted away $10,000 for college education your client created a 2 month penalty period and the penalty period would expire in two months. Now, if the same gift is made after February 8, 2006, you still create a two month penalty period, but the penalty period does not begin until after the client is in the nursing home and has otherwise spent down their assets to zero. This means that the penalty period does not begin until the client has no assets. Query: how does the client pay the nursing home during the 2 month penalty period without assets and without yet being qualified for Medicaid? Thus, advisors themselves must seek advice regarding gifting under the new law.
2. Recommending to clients non-compliant Medicaid annuities.  Under the DRA, annuities need to be actuarially structured pursuant to the DRA in order for them to qualify for Medicaid.   In some cases the State of Illinois must be primary beneficiary on the death of the annuitant or ill spouse. This may unsettle a lot of existing estate and retirement planning. Seek advice on the proper annuity contract structure.
3. Not recommending long term care insurance early enough.  A good way to finance long term care, if obtainable.

Under the DRA, there are still plenty of opportunities to protect clients from a nursing home spend down, but you need to know where to look for the opportunities. Our office will continue to work with advisors who would like to protect their clients from an asset spend down and thus help them to keep their clients’ assets under management as the client requests. If my office can ever assist you as your clients weave through the maze of opportunities and trap doors that exist under the DRA, please do not hesitate to contact us. If you would like to chat about this, please contact me at (847)292-1220. I enjoy speaking with other professionals about the impact of these massive law changes. ABF **This document is for discussion purposes only and is not intended to be construed as legal advice. You should never attempt estate planning without the advice of competent legal counsel. Please feel free to contact our offices if we may assist you.** The Illinois rules of Professional Conduct require attorneys to identify unsolicited communications to prospective clients as Advertising Material.  If the context requires, please consider this letter and the enclosed literature to be Advertising Materials. Copyright 2006 THE LAW OFFICES OF ANTHONY B. FERRARO, Rosemont, Il.

What Happens if You Don’t Die, but Become Ill for a Long Period? Is an Asset Spend Down in the Nursing Home Inevitable? Ask Our Law Firm for Help With This.

Medicaid asset protection planning for long term skilled care can still be done – but you need to start now.  Before the Deficit Reduction Act (DRA) was signed into law on February 8^th, 2006, you and most clients would plan so that assets would avoid probate or taxation at  death.  This may no longer be the biggest issue for you and other clients.  Now, an even larger issue may be not what happens in the event of your death, but rather what happens if you don’t die, but become ill? In that case, it will become much more difficult to protect your assets.  Planning can still be done, but under DRA, you must plan further ahead (at least 5  years). Some problems to avoid are:

1. Gifts and other transfers to family members that cause ineligibility.  Under prior law you could  gift $10,000 to a child or grandchild for college, and this would not be a big problem. The penalty period would probably be gone in two months.  Now, if the same gift is made after February 8, 2006, you create not only a two month penalty period, but the penalty period does not begin until the time you enter a nursing home and have zero remaining assets. Question: how do you pay for a nursing home in such a case with no assets and no Medicaid Application Approval? Be sure to ask our advicebefore you gift or transfer.
2. Becoming ineligible for benefits because the Government’s look back period is now 5  years. The look back period used to be 36 months or 3 years. Now its 5 years or 60 months. This is quite onerous.   Keep good records of everything. The state will look at all payments and transfers for the last 5 years. Without records you may be ineligible for care. Have our office plan and prepare your Medicaid Application.
3. Owning non-compliant Annuities. In some cases the State of Illinois must, by law, be named primary beneficiary in the annuity on the death of the annuitant or the ill spouse. This may upset the existing estate and retirement plans of many people. Have us assist your advisors to get proper annuity contract structures.

We recommend planning at least  5 years ahead of any health failure or lifestyle changes or needs.  Under the old law, you could always do planning if you were in a nursing home crisis situation.  Under the new law, that may no longer be the case. Clients need to have estate documents that are flexible long in advance of health failure.   For example, a client may have Powers of Attorney for Property and wills or trusts, but these documents must be reviewed and updated for the new DRA law. This will ensure that all planning opportunities under the new DRA are going to be available in the event that illness befalls you. For example: What happens if you no longer have the capacity to make the needed changes to your documents? Take the following easy steps now: 1) talk with family members about long-term care planning; 2) update your estate documents; 3) draw up a plan for retirement; 4) look into long-term care insurance; and 5) consult with our office in order to help in any of the above since we are elder law, transaction, and estate-trust lawyers who navigate this field. You should contact me at (847)292-1220 if you have any questions regarding the new DRA.  There are many provisions in the DRA that can be used to your advantage, and some that create great disadvantages if not correctly handled. **This document is for discussion purposes only and is not intended to be construed as legal advice. You should never attempt estate planning without the advice of competent legal counsel. Please feel free to contact our offices if we may assist you.** Any tax advice contained in this communication was not intended to be used, and cannot be used, by you (or any other taxpayer) to avoid penalties under the Internal Revenue Code. Copyright 2006 THE LAW OFFICES OF ANTHONY B. FERRARO, Rosemont, Il.

A Shift in Elder Law and Other Planning- Planning for the Long Term “Decumulation” of Assets for Nursing Home Care and the Reason to Plan Sooner for the Protection of Assets and for Peace of Mind.

For months now our colleagues have received our suggestions regarding various opportunities and pitfalls in the Deficit Reduction Act of 2005 (ADRA@). The DRA will continue to impact our clients, many of whom are often are consumers of public benefit programs- especially with regard to qualification for MEDICAID for long term nursing home stays when long term care insurance is not an option. While many advisors are intimidated by the changes found in the new law, many other advisors are seeing the opportunities, embracing the change, and using it to the advantage of clients. With this in mind, I would like to respectfully suggest to you a new shift in thinking that is required for planning now and in the future. It goes like this: Advisors have been helping their clients for years with the arrangement of their affairs so that assets will pass in the proper manner and to the proper heirs upon the client’s death. The question that was being asked by clients at that time was, “What happens with my assets when I die?” I suggest to you that the DRA requires advisors and clients to ask a new question. That is: What happens if I don’t die, but rather I become ill and live for a very long time? The answer to this last question is substantially different. Good planning for clients must consider both scenarios: death planning certainly, but also long term care asset planning. Such long term care asset planning cannot be done exclusively in crisis mode as it used to be done. Since the DRA was passed, this planning must take place years in advance (at least five years, but preferably more than five). Advisors will now start to think about this additional perspective and the shift in approach that is going to be required in order to serve clients into the post-DRA future. Please see our website for updates in this area at abferrarolaw.com. The Illinois rules of Professional Conduct require attorneys to identify unsolicited communications to prospective clients as Advertising Material. If the context requires, please consider this letter and the enclosed literature to be Advertising Materials. Any tax advice contained in this communication was not intended to be used, and cannot be used, by you (or any other taxpayer) to avoid penalties under the Internal Revenue Code.

The Myth:  All Medicaid Planning is the Same

Pre-Planning vs. Crisis Planning

Medicaid benefits can be an important part of a long term care plan. Attorney-CPA Anthony B. Ferraro can assist you with all aspects of Medicaid, from determining whether you qualify, to applying, to protecting income and assets for spouses, or single persons, to protecting the family home. He will work hard to help you get the benefits you need for a comfortable future and peace of mind. I. Medicaid Pre-Planning: Medicaid pre-planning is the process of creating estate planning documents, such as Wills, Trusts, and Powers of Attorney, in a way that allows your assets to be protected and used for you, not just at the time of your death, but in the event that you do not die and require a long term nursing home stay. Pre-planning enables you to be proactive to take advantage of asset protection strategies that will ultimately provide you with comfort and peace of mind. Through asset protection strategies, such as asset conversion or spend down, we can help you plan to qualify for Medicaid. We sometimes incorporate trusts, such as special needs trusts or other trusts, as part of our strategies. II. Medicaid Crisis Planning: Medicaid Crisis Planning occurs when someone is already in a nursing home or is about to enter a nursing home. Since the average cost of a nursing home in the State of Illinois may be in the range of $6,500 per month, Medicaid crisis planning requires a certain level of knowledge in order to represent and advocate the position that our client is eligible for Medicaid.  The first step in the Medicaid asset protection planning process is determining whether you qualify. The guidelines to receive benefits require a certain low level of assets and income. If your assets and income currently put you outside of the guidelines, we can assist you in developing a strategy to protect your assets and income in a way that allows you to receive the benefits you need. Only after all crisis planning opportunities are exhausted do we apply for Medicaid qualification for the applicant. To find out how we can help you with Medicaid Asset Protection Planning, contact us at 847.563.4887. We are available to help clients throughout the Chicago metropolitan area, including Rosemont, Schaumburg, and Cook County, Illinois. Contact our office today for a consultation and you will receive a reservation for a complimentary 10 minute phone consultation with Mr. Ferraro. If you call, Mr. Ferraro, an Attorney-CPA, our office will be happy to discuss your issues, and help you determine whether or not you need to hire a lawyer to assist you.

“LEGALLY AND EFFECTIVELY PROTECTING YOUR ASSETS FROM A LONG TERM NURSING HOME STAY”

Elder Law News 1.     Some experts are stating that the greatest threat to the financial security of middle-Americans is the cost of long-term nursing home care. 2.    VA Benefits Discovered.  Millions of wartime veterans (even those not wounded while serving) and their spouses may be eligible for special monthly pension benefits solely because they are over 65 years of age and are homebound, in assisted/supportive living, or in a nursing home.  Many veterans don’t know that they qualify. 3.     Long term care insurance is useful, even though recently a player in the long term care insurance industry raised its premiums for existing householders.  Many industry observers believe that there will be further industry repricing in the future.  However, make no mistake about it, long term care insurance, if you can qualify for it and afford it, is an important component in providing for asset protection for future long term nursing home care. Be sure to compare apples to apples. 4.     North Carolina has joined the long list of states that have issued another draft of rules regulating the transfer of assets provisions in the Deficit Reduction Act of 2005. 5.     With the Estate Tax set to expire in 2010 for one year and then revert back to a $1 million exemption amount in 2011, a new bipartisan bill has been introduced in the House that would increase the estate tax exemption by $250,000 every year from 2009 to 2015, and create two separate estate tax rates.  Here we go again. 6.     Certain studies have shown that pre-retirees significantly underestimatetheir life expectancy and long term care needs. 7.     Should you sign a nursing home admission agreement?  If you are putting someone into a nursing home, it can be a very stressful situation.  When signing an agreement on behalf of an incapacitated resident, you should sign only as the resident’s agent.  Do not sign the agreement as a responsible party. Nursing homes are prohibited from requiring third parties to guarantee paymenton nursing home bills.  Always have qualified counsel review this application first. 8.     More seniors are seen to have mortgage payments into retirement. 9.     The first boomer will become eligible for Social Security in 2008. Elder Law Cases 1.     A Pennsylvania court recently affirmed the denial of Medicaid benefits, finding that the full value of US Savings Bonds that the applicant owned jointly with her children were an available resource for Medicaid purposes.  The court alsorejected the resident’s argument that US Treasury regulations require thatonly 50% of the value of the bonds should be attributable to the applicant as co-owner.  It is not always as it seems for Medicaid purposes. 2.    A New York trial court found that funds transferred from a guardian to a spouse for Medicaid planning purposes created a constructive trust for the benefit of the incapacitated person.  When the guardian transferred the resident’s assets to her husband’s name, the court felt that it was with the understanding that the husband agreed to pay for the resident’s one on one care with the transferred assets.  Because the husband did not do so, the guardian petitioned the court to transfer the assets back to the resident nursing home wife.  The Supreme Court of New York held for the guardian and ordered that the assets be transferred back to the resident spouse, holding that the funds transferred to the healthy spouse created a constructive trust for the benefit of the incapacitated spouse.  Do your long term care planning and your Medicaid asset protection planning so that you don’t need a guardian. 3.     Recently the Eleventh Circuit Court found that a provision in a long term care policy is ambiguous enough so that the policy had to be construed against the insurer.  Have your policy reviewed. Mission Statement Our firm is dedicated to the legal and effective protection of our clients’ assets from taxation, as well as planning for Medicaid asset protectiondue to a long term nursing home stay.

“Educate to Motivate”

Anthony B. Ferraro Attorney-CPA 5600 N River Road, Suite 764 Rosemont, IL 60018 PH(847)292-1220 abferrarolaw@abferrarolaw.com abferrarolaw.com Note:  Pursuant to federal regulations imposed on practitioners who render tax advice (“Circular 230”), we are required to advise you that any tax advice contained herein is not intended or written to be used for the purpose of avoiding tax penalties that may be imposed by the Internal Revenue Service. This document is for discussion purposes only and is not intended to be, nor should it be, considered as legal advice. You should never attempt Medicaid planning, Estate Planning, Probate, or Estate and Trust Administration without the advice of competent legal counsel.