Think You Don’t Need Long Term Care Planning?
1. Alzheimer’s Projections. Recently during a Senate Special Committee on Aging hearing, a couple of prominent politicians noted that there is no single effort that would do more to lower the cost of entitlement than preventing the onset of Alzheimer’s disease. They noted that Alzheimer’s will cost Medicare and Medicaid a projected $19 trillion between the years 2010 and 2050. It was noted that a five year delay of onset would save approximately $8.5 trillion over that same period. It was further noted that the human pain and financial burden of Alzheimer’s is so great and the potential breakthroughs in science are so encouraging, that a Manhattan type project approach to Alzheimer’s is justified.
2. More Coming. A respected report says that 5.3 million people in the U.S. have Alzheimer’s. An estimated 5.3 million Americans have Alzheimer’s and each patient on average costs Medicare three times more than patients without the disease.
3. Kin Using Elders’ Funds in Downturn. Recent studies show that family members are often inappropriately using an elder’s funds in economic down turn. It has been noted recently by some long term care ombudsman that children don’t have the legal authority to make some decisions for parents. Worse yet, some of the decisions that are made by children on behalf of their parents are purely economically motivated. One case was noted where a nursing home resident was blocked from receiving antibiotics because her daughter cited a “do not resuscitate” clause in her mother’s Living Will. The suspicion is that the daughter was trying to hasten her inheritance. Seniors are advised to be cautious because sometimes the power of attorney given to a family member can give an unscrupulous person license to exploit. This is not a reason not to have a power of attorney but rather should signal that caution and counseling are required in providing such power.
4. Impact of Long Term Care. A recent report indicates that nearly two-thirds of U.S. households are at risk of being unable to maintain their standards of living due to long term care costs.
5. Avoid a Crisis…Talk to Mom & Dad. It is recommended that children sit down and have a heart to heart talk with mom and dad as their capabilities for maintaining independence in their household begin to dwindle. Joint accounts are dangerous. Adding a loved one to a bank account can affect Medicaid planning, as well as expose your account to the loved one’s creditors. When a person applies for Medicaid for long term care coverage, the state looks at the applicant’s assets to see if the applicant qualifies for assistance. If your name is on a joint account and you enter a nursing home, the state will assume the assets in the account belong to you unless you can prove that you did not contribute to the account. Furthermore, if you are a joint owner of a bank account and you or the other owner transfers assets out of the account, this can be considered an improper transfer of assets for Medicaid purposes. Another problem with joint accounts is that the account can become vulnerable to the joint account owner’s creditors. Finally, be sure you can trust your joint account holder because he or she will have full access to the account. In our opinion, there are better ways to conduct estate planning and planning for disability. The power of attorney is a better approach and will provide your agent access under power of attorney to your finances in case of your disability. If you are trying to avoid probate, a trust may be better than a joint tenancy account as well. You need to discuss these issues with an elder law attorney.
6. Ways To Pay For Long Term Care. Remember the possibilities of covering the cost of long term care. The most common ways are:
- Paying out of pocket
- Carrying long term care insurance
- Qualifying for Medicaid by obtaining legal guidance and a legal spend down of your assets. Strict compliance with state laws is necessary.
- Lastly, getting a reverse mortgage.
Note: for Veterans who qualify for nursing home care in a Vet Nursing Home, the closest facility of which we are aware is in Manteno, Illinois.
7. Is It Time to Update Estate Plans? Because of the uncertainty regarding estate plans and laws that may shift treatment, formula clauses in Wills and Trusts can become problematic. The current Federal Estate Tax exemption amount of $3,500,000 creates this situation, but there are a number of solutions to this problem. One is to put the full exemption amount into a family trust while making sure that your spouse is a major beneficiary of that trust and can receive distributions liberally and for broad purposes.
8. Watch Your CDs. Not all Certificates of Deposit are the same. Recently, the SEC accused a former Texas financier of fraud. The allegations are that the scheme revolved, in large part, around the sale of suspicious high yielding CDs. The CDs were not insured by the FDIC, resulting in a lot of people being unable to protect their life savings. Some CDs are covered by the FDIC, which currently offers insurance of up to $250,000 per person, per bank. Additional coverage can be obtained depending on how you hold the CD.
9. What you Need to Know About Estate Planning. You need to have a Will and maybe a Trust. You also need either a standard, enhanced, or comprehensive Power of Attorney for Property for Long Term Care Planning. You need to have Living Wills and advanced medical directives to avoid a situation like Terry Schiavo. Special Needs Trusts are often essential when there are family members who are physically or mentally challenged. The estate tax right now is as favorable as it has been in a long while. Each U.S. citizen is entitled to up to $3.5 million of assets before they have to pay estate tax. For a couple, that adds up to $7 million,if planned properly. Please remember that the federal exemption amount under current law is scheduled to go back to $1 million in 2011.
10. Housing Bubble Impacts Elderly. Because of the recent housing slump, many elderly are not obtaining the needed support and care which they would be afforded by moving into retirement communities or assisted living facilities. Many are effectively stranded in their own homes. Without the ability to sell their houses or condominiums, many cannot afford to buy into retirement homes that require substantial down payments just to move in. So they are taking themselves off of waiting lists and staying at home. The inability to sell their home or condo is isolating a lot of the elderly. At present count, there are 4.2 million unsold homes in the United States, but it is unknown how many of those are occupied by people 65 years or older.
P.S. Also, don’t miss our workshop: “The Elder Care Journey – How to Get Benefits Coverage for your Nursing Home Care…Without Selling your Home or Leaving your Family Without a Dime” set for the following dates. Please contact our office at (847) 563-4887 to register.
April 23, 2009 at 6:30 PM
May 7, 2009 at 4:00 PM
May 18, 2009 at 6:30 PM
Call (847) 292 1220 to make a reservation in our training room.
– You don’t want to miss this workshop!
Long Term Care Planning Attorneys
The “3 Phase” Lawyers
Legal Counsel Assisting You in the 3 Phases of Your Life:
– Maturing Years – Will, Trust, Taxes, and Asset Protection
– Senior Years – Long Term Care and Nursing Home Protection
– Post Death Years – Estate, Probate, and Trust Administration
“Educate to Motivate”
Anthony B. Ferraro
The Law Offices of Anthony B. Ferraro, LLC
The Estate & Trust, Elder and Asset Protection Law Firm
Columbia Centre I
5600 N. River Road, Suite 764
Rosemont, IL 60018
PH (847) 563-4887
FAX (847) 292-1221
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.
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 Trust Administration without the advice of competent legal counsel.