Monthly Archives: April 2013

New baby in the family? Time to do some estate planning.

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First comes love, then comes marriage, then comes a baby… and a trip to your attorney’s office?

I had the pleasure of helping throw a baby shower for my best friend this weekend, and attended another.  I must be of a certain age, because it seems like everyone around me is welcoming a little one into the family!

With the many things to do and learn during those nine months (and the aftermath), updating your estate plan is probably not on the list. However, it should be, and here’s why:

1.  You need to choose who would take care of your child(ren) if something happened to both you and your spouse or partner.  Who would raise them and who would handle the assets you left them? Few of us at this age like to contemplate this scenario, but it could happen and your children could be at risk.  So, speak openly to each other and select who you would choose to raise your child(ren).  This can prevent family battles (how well do your in-laws get along with your family? do you think they could easily agree on who should raise your children?) and allow you to select who you both think is best.

2.  You might be surprised to learn what happens if you do not have a will:  If you have a spouse and a child, and die without a will, your spouse and child would split your probate estate (your probate estate being those assets that are not joint with right of survivorship and do not have beneficiaries named).  Would you want your three-year old to inherit one-half of these assets? If not, have a will prepared to avoid this scenario.

3.  You can control access to your child’s inheritance until a certain age:  Do you want your child(ren) to have access to an inheritance at age 18? If not, you can set up a trust to hold those assets and to be managed by a Trustee for a child’s benefit until some later time, or indefinitely.  Have a special needs child? Additional planning will be necessary.

4.  You might need life insurance: Would your spouse be able to cover the household expenses without the benefit of your income, or vice versa? It may be time to take a look at buying some life insurance, too.

5.  You can make it easier on your loved ones: How are your assets titled? How easy or difficult would it be for your spouse or partner to access or transfer your financial accounts in the case of your incapacity or death?  An estate planner can make recommendations in these regards.

6.  You can make health care decisions:  What guidance do you want to give your spouse or partner in terms of making medical decisions if you are unable?  You should have an Advance Directive for Healthcare, and should communicate openly about any wishes you might have.

These are only a few of the reasons that young families need to take their estate plan seriously.  You can truly protect your loved ones by properly addressing these issues.

CAVEAT:  This web site and the information contained herein have been prepared for educational purposes only.  The information on this blog does not constitute legal advice, which would be dependent upon the specific circumstances of a particular case.  In addition, because the law can vary from state to state some information on this site may not be applicable to you.

© Mitarart – Fotolia.com

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Long Term Care: Fact v. Fiction

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I am often amazed by the amount of misinformation out there regarding estate planning, long-term care, Medicaid, and the like.  Today, I want to discuss some of the misconceptions related to Medicaid and nursing home care that I often come across.

Note that Medicaid is a federal program implemented by the states under federal guidelines.  Thus, these rules will vary somewhat from state to state.

COMMON MISCONCEPTIONS

1.    When I go on Medicaid, the state will take my home.

Medicaid for nursing home care is means-tested. This means that a patient has to meet certain income and asset requirements for Medicaid to help pay the cost of nursing home care.

Medicaid does not count all assets in determining eligibility, and the home place is one of several “exempt” resources that are not counted.  So, a patient can enter a nursing home on Medicaid and keep his or her home.

However, the state of Georgia has implemented a program called Estate Recovery, where it seeks reimbursement for the amount it paid for patient on nursing home care.  Reimbursement is only sought after the patient and his or her spouse are both deceased.  Medicaid can place a lien on the home to recover this amount.

2.    Medicaid patients are not treated as well as other patients.

Medicaid patients should receive the same care as private pay patients.

3.    I should give away my assets to my children so that I can get Medicaid for nursing home care.

Federal and state law generally prohibit the transfer of assets for the purpose of obtaining Medicaid for long-term care.  Medicaid only penalizes those transfers made in the five years before the patient’s being eligible for and applying for Medicaid.

The penalty is calculated by dividing the amount transferred by $4,988.33 (as of 2013), and the result is the number of months that the patient will not be able to get Medicaid once he or she is otherwise eligible.

4.    If I have to go to a nursing home, I will run out of money.

Several types of assets are exempt for Medicaid purposes, and do not have to be spent down for the patient to get Medicaid for long-term care.  These include a patient’s home; tax-qualified retirement plan such as an IRA, 401K, or 403b (in most cases); burial account up to $10,000; and automobile.

5.   It is always better to stay home rather than go to a nursing home.

The home place is often more dangerous for an elderly person in need of nursing home care.  It is infinitely more difficult for family caregivers, and can result in isolation for the patient.  The stigma surrounding nursing home care should not prevent caregivers from seeking the best environment for their loved ones.

6.    Medicaid covers all types of long term care.

In Georgia, for long-term care Medicaid only covers nursing home care.  It does not cover assisted living.  Assisted living is a lower level of care, appropriate when people need help with activities of daily living (e.g. eating, bathing, dressing) but do not need continuous nursing care.

 

CAVEAT:  This web site and the information contained herein have been prepared for educational purposes only.  The information on this blog does not constitute legal advice, which would be dependent upon the specific circumstances of a particular case.  In addition, because the law can vary from state to state some information on this site may not be applicable to you.

Image © Andy Dean – Fotolia.com