Elder Law Update – November 2008 (Volume II)
While long term care insurance has been policy of choice for middle income persons to transfer the risk of long term convalescent care to the insurance company, it is being suggested by some professionals that some ultra high net worth individuals are also looking to long term care policies as a means of wealth replacement. Many are purchasing policies that have a return of premium rider. The return benefit however is directed to either the children or a trust. This allows the return of premium to be included outside of their taxable estate. There are issues associated with income tax and gift tax that have to be dealt with, but this may be another wealth preservation strategy that will be expanded upon in the future.
2. Long Term Care Financing Was an Issue in This Year’s Election.
According to Market Watch 84% of baby boomers say that the presidential candidates’ position on long term care issues and funding was an important issue in the November elections.
3. How Much Did We Lose?
According the center for retirement research, the stock market as measured by the Wilshire 5000 declined 42% between its peek on Oct 9, 2007 and Oct 9, 2008. During that period of time the value of equities and pension and household portfolios fell by 7.4 trillion.
4. Medicaid Recovery Again
With regard to Medicaid recovery as indicated in a recent Elder Law Update, it is important to know that most estate recovery units in state Medicaid agencies will tell you that in order to understand estate recovery you need to read both the federal and the state provisions side by side to make sense of the estate recovery laws.
5. 4 Ways to Survive the Costs of a Long Term Nursing Home Stay:
1. Find the right nursing home. You can do this by looking at the internet or call our office for a guide that provides a number of available nursing homes and assisted living facilities.
2. Be careful before you sign any admission contracts. These contracts can be tricky and you want to get advice before you sign.
3. You need to review current Powers of Attorney Wills & Trusts to make sure that the documents don’t work against your goals in placing someone in a Medicaid funded nursing home.
4. Check into the availability of any insurance coverage that you might have to help pay the cost of care. If your savings put you in the range where long term care insurance makes sense, be careful in the purchase of long term care insurance. You’ve got to understand the risks and costs.
One way to minimize risk of paying into long term care but not ever needing the benefit is to buy policies where the premium is affordable. If the premium becomes unaffordable then the risk that you run is that all the premiums that you paid into the policy will be lost because you could end up dropping the policy and losing all that you’ve paid into it. Some insurers let you have a return of premium rider that will allow you to recoup the premiums in these cases, but that can increase the cost of your premium by 50%. Also, be aware that when the time comes to use the policy you might not qualify for the benefits unless you meet the needs specified in the policy for assistance with the activities with daily living. Finally, check the insurer’s financial health. You should go with an insurer that receives top financial ratings from at least 2 insurance rating companies such as AM Best, Moody’s, Standard & Poor’s or Weiss.
5. Assisted Living: Mixed Results
The New York Times reports that assisted living facilities have promoted themselves with the notion that they can do what most of what nursing homes can do. This often turns in to be a fallacy. Assisted living facilities are very good at various stages of our lives, however assisted living facilities may not have or be able to afford the type of staff to measure and manage issues related to health on site. Therefore, while our office is a big proponent of assisted living facilities, make sure you understand that they are not skilled care nursing facilities.
6. Watch Those Powers of Attorney
A recent Pennsylvania case appeals court ruled that even though an agent under Power of Attorney that contained gifting language the agent did not have the power to make unlimited gifts or change retirement beneficiaries. If that type of power is desired in a Power of Attorney that it needs to be set forth in more specific language. The court felt that the language authorizing the agent to make gifts is insufficient to vest in an agent the authorization to make unlimited gifts.
P.S. Also, don’t miss our free workshop: “5 Step Plan – How to Get Medicaid 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.
November 19, 2008 at 6:30 pm
December 10, 2008 at 4:00 pm
December 17, 2008 at 6:30 pm
Call (847) 292 1220 to make a reservation in our training room.
•- You don’t want to miss this workshop!
1. Can Long Term Care Insurance Act as a Wealth Building Strategy?
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, Medicaid, and Nursing Home Protection
– Post Death Years – Estate, Probate, and Trust Administration
“Educate to Motivate”Anthony B. Ferraro Attorney-CPA 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)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.