Elder Law Update – May 2008 (Financial Advisors Edition- Volume II)
STEP #2 TO REDUCING YOUR CLIENT’S NURSING HOME COSTS
AN OPPORTUNITY TO DISTINGUISH YOURSELF FROM OTHER FINANCIAL ADVISORSWhat is step #1? First, step #1 is what we refer to as “pre-planning”. With pre-planning, there is no immediate crisis looming, and there is adequate time to take steps to plan. We discussed pre-planning in volume II of our April 2008 issue. The step #2 of Medicaid planning is what we call “crisis planning“. This arises when a client or a loved one is already in a nursing home or about to enter one. Even at this late stage, there is still plenty of planning to be done. We will discuss crisis planning in this issue. Step #2 Is Crisis Planning: Create High Level Solutions for Clients The Deficit Reduction Act of 2005 (DRA) has significantly changed the landscape of Medicaid. Since the DRA has changed the elder law area so extensively, some lawyers have actually left the field of practice. Not us. We are excited to share with you an additional paradigm shift for your practice. As of this writing Illinois has not yet adopted the DRA. We believe Illinois will do at some future point. We would be happy to update you at that time. Crisis Planning and Medicaid Crisis planning exists when a client or their spouse (or both of them) is in a nursing facility. Once a client is in need of long term care services, a different type of planning must be employed. Financial advisors can play a key role in crisis planning, as well as in the pre-planning discussed in earlier issues. In crisis planning, the issue is how to pay for the immediate monthly nursing home cost of care, while at the same time seeking a preservation of assets. In the State of Illinois at the present time, one method that is available is the monthly gifting of assets. This gifting of assets must be done carefully, because once the DRA is adopted in Illinois, monthly gifting will probably no longer be available. If we assume that monthly gifting is not available, then what other types of strategies are permissible? Another approach might consist of a strategy wherein some of available assets are transferred to children or trusts and the remaining assets are retained. We may also suggest a Medicaid compliant annuity, with the Medicaid compliant annuity structured in a way that will pay toward the cost of care. A Medicaid compliant annuity is something that a financial advisor needs to procure and do just right. There are carriers specializing in these types of annuities and they are willing to partner with other financial advisors in procuring these products for clients that need this type of solution. A Big Mistake To Avoid – Not Capitalizing On Opportunities in a Vast Market As we said before, many advisors think that if you have an asset protection plan you don’t need long term care insurance, or if you have long term care insurance then you don’t need asset protection planning. In my opinion you should haveboth. The reason that the long term care insurance is so valuable is that during the 5 year ineligibility period, the long term care insurance policy can provide either in home care or nursing home care if we need to shift from the 5 year pre-plan to a crisis situation due to a health crisis. You Don’t Want To Miss This Chance! We can, at your request, do the following for your clients (if you are not doing this now):
- Do a 15 point asset protection audit of your clients’ existing documents
- Do an Asset Protection Analysis using a 1 page trademarked tool we have
- Prepare a 5 Step Plan to legally protect your clients’ assets from nursing home costs.
- – Maturing Years
- – Senior Years
- – Post Death Years
Wednesday, June 11th 4:00 pm
Thursday, June 26th 7:00 pm
“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 firstname.lastname@example.org 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.