Monday, March 30, 2015

What is Medicaid Asset Protection Planning for Seniors?

Asset protection planning helps plan for how to pay for long term care. The national average cost of a nursing home is over $6,000 per month. Nursing home costs generally exceed the average person’s ability to privately pay, and approximately 60% of nursing home residents use Medicaid to pay for their care. Because of the high cost of long term care, Medicaid planning recognizes that an individual may need at some point to try to qualify for Medicaid to pay for long term care in a nursing home. Medicaid is a needs-based program with its own current and ever-changing requirements. To financially qualify for Medicaid, a person is permitted to have $2,000 in assets and may keep only $40 of income. A person may be penalized for gifts or transfers made for less than fair market value. For each approximately $6,000 gift during the five year period immediately prior to any Medicaid application, Medicaid will impose a one month penalty. There are complicated planning techniques to help put individuals in a better position to qualify when they need long term care in a nursing home. Careful planning can also help to protect the person’s estate, whether to provide for a spouse or for children.

Written by Heather W. Winter, Esquire

Monday, March 23, 2015

What is a Special Needs Trust and Why is One Important?

Sometimes referred to as a supplemental needs trust, a Special Needs Trusts (SNT) may be created to benefit a family member or close friend who has a disability.  The trust is set up for a person with special needs to supplement any benefits the person with special needs may receive from government programs. Any funds in a SNT will not be counted for purposes of qualifying and maintaining eligibility for certain governmental benefits programs. Governmental programs that require the protection of a special needs trust such as Supplemental Security Income, Medicaid, and Veterans Benefits, are needs-based programs and the person who you want to provide for may be disqualified from these programs if the person held the assets or funds directly.

Programs like SSI and Medicaid only meet basic needs such as food and housing. The SNT can give the means to provide the disabled person with an enhanced quality of life. The trust pays for supplemental and extra care over and above what the government will pay. The trust funds are disbursed to third parties who provide goods and services for use and enjoyment by the disabled person. The person who manages the trust assets, called the trustee, is able to purchase things like a phone, a computer and electronics, a television, a vehicle, cable and internet services, clothing, tuition, books, travel, entertainment, household furnishings and furniture, special accommodations for housing, and other items that allow the beneficiary a richer life.

If the trust is funded during the lifetime of the person who established the trust, it is effective immediately, and other family members, including grandparents, aunts, uncles, brothers, sisters, or friends can give money to the trust either by writing a check or by naming the trust as a beneficiary in their will. A parent of a disabled child may also choose to purchase a life insurance policy payable to the trust.

The person making the trust may attach an optional letter of intent, which is a letter expressing their wishes on how the funds should be used, along with special notes about the disabled person’s preferences.

The trust is beneficial to families and friends of disabled people receiving government benefits who want to enhance that person’s quality of life. Even if a disabled person is not currently receiving government benefits, the trust protects public benefit eligibility in the future or offers a way to assist in managing the assets of a special needs person.

Written by Heather W. Winter, Esquire

Monday, March 16, 2015

What is an Advance Medical Directive and Why Should I Have One?

An advance medical directive is a written document that names an agent or agents to make health care decisions for him or her in the event that they are incapable of making an informed decision. The document can also include what’s called a “living will,” which states what kinds of treatment you would want or would not want for life-prolonging treatment if you are diagnosed with a terminal condition and are unable to express your own wishes. Everyone should have an advance medical directive, no matter their age or health. The advance medical directive helps to plan for uncertainty in the future, such as an illness or car accident. Of course, the document does not take away your ability to act. You can still make health care decisions for yourself until it is determined you cannot make decisions. The document states your choices for health care or names someone to make those choices for you if you are unable to make decisions about your medical treatment. It is also a good idea to update who you name as agent in the event of a separation or divorce. There is no automatic revocation of the advance medical directive upon separation or divorce.

Written by Heather W. Winter, Esquire

Tuesday, March 10, 2015

What is a Power of Attorney and Why Should I Have One?

A power of attorney is a written document that allows you to appoint another person that you trust to act on your behalf in financial matters. Additionally, the power of attorney allows you to choose who your agent will be and what their powers will be. Of course, you do not lose the right to make those financial decisions for yourself. There are many reasons why a person, even if they are young and healthy, should have a power of attorney. A power of attorney appoints someone to manage your financial affairs, which is important if you ever are unable to manage your affairs or if you become temporarily or permanently incapacitated. If an emergency happens, there is someone with authority to make decisions. The future is unpredictable, and it’s a good idea to have this document in place to avoid the need to petition the court to have a guardian and/or conservator appointed for you. A power of attorney is also less expensive and less time consuming than having to go through guardianship and conservatorship proceedings. It is also a good idea to update who your agent will be in the event of a separation or divorce. The act of filing for divorce will terminate the agent’s authority if the named agent is your spouse, but it is a better idea to execute new documents and revoke the spouse’s authority as agent.

Written by Heather W. Winter, Esquire