Elder Law Articles, Uncategorized

Elder Law Update – January 2008

1.  Medicaid and VA Benefits Workshops As a notice to our readership, please be aware of the following upcoming workshop dates: January 24, 2008 at 7:00 pm January 31, 2008 at 7:00 pm February 21, 2008 at 7:00 pm February 28, 2008 at 7:00 pm March 13, 2008 at 7:00 pm April 3, 2008 at 7:00 pm Again, the workshops will deal with Medicaid Asset Protection Planning and VA benefits.  Both of these areas of discussion will be couched in the context of estate planning essentials. * * * * * 2.     A Trust is not a trust… A Connecticut trial court found that the principal of a trust was an available asset under Connecticut Medicaid laws, even though the trustee refused to pay for nursing home care. What this means is that, as a matter of general Medicaid law, if a trustee has the ability to make assets available to a Medicaid applicant, then the Medicaid administrative agency will take the position that the trust is a general support trust, and because the beneficiary of the general support trust can compel the distribution of funds, the trust principal is an available asset. Trusts need to be drafted properly if they are to avoid being available assets in a Medicaid context. * * * * * 3.   Long Term Care Planning Redux.  There are several commentators that have indicated that long term care planning can be divided into four general areas of: 1)creating a plan and choosing a coordinator for the plan; 2) using long term care professional to structure a plan; 3) understanding the funding alternatives for long term care; and 4) understanding the settings and programs in which care is available. * * * * * 4.     Statistics indicate that in the United States that people who care for the elderly on the average suffer their own annual out of pocket expenses of about $5,500. This represents, in part, loss of their salaries. * * * * * 5.     Prepaid Funerals versus Prepaid Funeral Trusts.  Be careful of funeral trusts versus prepaid funeral plans. Irrevocable funeral trusts are irrevocable as the name implies, and are usually funded with a single premium life insurance policy with a death benefit of $10,000-$15,000. A prepaid funeral arrangementwith a local funeral home may be a better way to go, because: 1) it is preferable as a method of spend down of assets that will need to be used later on; and 2) there is no insurance that needs to be purchased, rather you only purchase services such as funeral arrangements, caskets, headstones, etc. * * * * * 6.     Financial Abuse of Elderly on the Rise.  Studies are indicating that the incidence of financial abuse against the elderly is growing in epidemic proportions. Because many elderly are frail and in poor health with cognitive disorders, they are more susceptible to becoming victims. Attorneys, CPAs and financial advisors are in a good position, as trusted advisors for families, to protect elderly clients from financial abuse. Financial abuse can be something as simple as giving a child a power of attorney who uses it to take funds and use them for the child’s own purposes. Financial abuse can also consist of inappropriate purchases made through unscrupulous telemarketer telephone calls. If a professional suspects elder abuse, they should contact the State or local community protective service agency, or the long term care omnibudsman or the local police department. * * * * * 7.     VA benefits versus Medicaid benefits.  Assets may be gifted in order to qualify for Veteran’s Administration benefits. While this may good practice for Veterans and benefits, it can be a disaster for later Medicaid benefits for which a Veteran may wish to apply. Bottom line: get help with both Veteran’s benefits and Medicaid benefits at the same time. * * * * * 8.     A recent report by former lawmakers Bob Kerry and Newt Gingrich indicates that the US needs to do more to make long term care good and affordable. Stay tuned…. * * * * * 9.     Long term care insurance is… The National Association of Insurance Commissioners (NAIC) in their shopper’s guide indicates that while long term care insurance is something that is useful, they point out some cases in which the purchase of long term care insurance is not cost effective. The NAIC suggests that one should not buy long term care insurance if the purchaser does not have at least $35,000 in financial assets, or the premiums will account for more than 7% of the purchaser’s income. If a senior is unable to purchase long term care insurancebecause of pre-existing health conditions, or is substantially concerned with leaving a financial legacy to their heirs, then these two groups of seniors need to engage in Medicaid asset protection planning. Since this type of planning has become more difficult with the passage of the Deficit Reduction Act (“DRA”) of 2005, planning should take place earlier. * * * * * 10.     Baby boomers face bleak retirement prospects.  Due to sloppy portfolio allocation, underfunded 401(k)s and retirement savings plans, and expected low rates of return, many boomers believe that they are going to have to work longer than they currently expect in order to make ends meet, according to some commentators.

“Educate to Motivate”

Anthony B. Ferraro Attorney-CPA The Law Offices of Anthony B. Ferraro, LLC 5600 N River Road, Suite 764 Rosemont, IL 60018 PH(847)292-1220 abferrarolaw@abferrarolaw.com https://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.