The End of the “File and Suspend” Social Security Strategy

Social security

The Bipartisan Budget Act of 2015 – signed into law on November 2, 2015 – will eliminate the “file and suspend” option for receiving Social Security Retirement Benefits.

Generally, delaying the receipt of benefits past “full retirement age” results in increased benefits once they start paying. The file and suspend strategy allows one spouse (Husband, or “H”, for example) to file for benefits upon reaching full retirement age, but suspend his actual receipt of benefits. By filing, this allows the other spouse (Wife, or “W”, for example) to take one-half of H’s benefit, while delaying filing on W’s own record. That way, both spouses can enjoy the increased benefit down the road – because both have delayed receipt of their own benefits – while one spouse still receives Social Security Retirement on the other’s record until that time.

The budget deal will eliminate this strategy to the detriment of potential recipients, but according to some, to the benefit of the Social Security Retirement system overall:

New Budget Deal is Cutting Your Social Security Benefits and It’s a Good Thing (Forbes.com)

Also, check out this article about where the new law leaves seniors:

The State of File and Suspend (Forbes.com)

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Medicare Open Enrollment for 2016

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Medicare’s open enrollment period lasts from October 15 through December 7.

I am no expert on the matter, and rely on insurance professionals to help clients with these issues. However, since the period is upon us, I’d like to share the following article, linked from the National Academy of Elder Law Attorneys (NAELA) newsletter, which may be helpful to those studying their options:

5 Things to Know About Open Enrollment for Medicare

Feel free to contact me for additional resources!

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When is the Right Time to Start Long-Term Care Planning?

Elderly couple purchasing life insurance

If there is a reasonable chance that long-term care is on the horizon, the time is now!

One of the services I provide is the long-term care planning consultation. Often, these are “crisis planning” situations. That is, families are suddenly and (sometimes) unexpectedly facing the need for long-term care for a spouse or parent, and are in a panic about how to pay for it.

According to Genworth’s 2015 Cost of Care Survey, the median rate for nursing home care in Georgia is $5,565 per month. The Georgia Department of Community Health has determined the state average to be around $5,900 per month, and prices in metro Atlanta tend to skew higher. Note that this is for a semi-private room (read: 2 patients per room). The median cost for Assisted Living Care in Georgia is $2,880, and can get up to $6,840 or more per month. Finally, in my experience, full-time in-home care is the most expensive, running around $20/hour, or $14,880 per month. So, clients’ anxieties about the cost of care are often justified.

Payment sources for long-term care are limited. Other than paying out-of-pocket, the three sources are long-term care insurance, VA Pension benefits, and Medicaid. Both the VA Pension and Medicaid are means-tested, so certain financial requirements must be met for eligibility.

While an elder law attorney has a number of tools that may help an individual in need obtain eligibility for the VA Pension and/or Medicaid benefits without becoming completely impoverished, advanced planning is crucial. The more years we have between the planning and the onset of long-term care, the more opportunities we have.

Don’t wait until it’s too late. If you have a loved one who may need long-term care in the next five to ten years, consider learning about planning options now.

Isn’t that a great picture of me with my clients?? Just kidding, that’s not me. Image © Gajus – Fotolia.com

Nursing Home Problems and the Nursing Home Reform Act

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Do you have a loved one in a nursing home?

In addition to the inherent stress of having a loved one in a skilled nursing facility (often called a “nursing home”), some families face the additional burden of dealing with a facility’s violations of residents’ rights.

As background, in 1987 Congress passed the Nursing Home Care Reform Act to protect the rights of nursing home residents. The purpose was to make sure that the care nursing home residents received helped them achieve or maintain their greatest potential for well-being, while protecting their individual rights. These established rights include:

  • The right to freedom from abuse, mistreatment, and neglect;
  • The right to freedom from physical restraints;
  • The right to privacy;
  • The right to accommodation of medical, physical, psychological, and social needs;
  • The right to participate in resident and family groups;
  • The right to be treated with dignity;
  • The right to exercise self-determination;
  • The right to communicate freely;
  • The right to participate in the review of one’s care plan, and to be fully informed in advance about any changes in care, treatment, or change of status in the facility; and
  • The right to voice grievances without discrimination or reprisal.

The Justice in Aging organization published The 20 Common Nursing Home Problems – and How to Resolve Them, by Eric Carlson. If you have a loved one in a nursing home, I encourage you to download and review this resource to confirm that the facility is meeting the required standards of care. If they aren’t, the publication has tips for resolution of some problems residents might face.

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The Use of Trusts in Estate Planning

While we use trusts often in our estate planning and elder law practice, I sometimes take for granted that these concepts are foreign to many. So, here is a brief primer on Trusts:

What is a Trust?

A Trust is legal arrangement where one person/persons/institution (the “Trustee”) manages assets for the benefit of another (the “Beneficiary” or “Beneficiaries”). The person(s) who created the Trust may be referred to as the “Grantor(s)”, “Settlor(s)”, or “Trustor(s)”. Of course, this a very general definition!

How does this Trust come to be?

The Grantor (a.k.a. Settlor a.k.a. Trustor) creates the trust by putting the terms of the arrangement in a signed writing. We call this the “Trust Document” or “Declaration of Trust”. Jurisdictions vary on the exact requirements. Generally, the writing must name one or more Trustee(s) and one or more Beneficiary(ies).

What’s the point?

The goal often boils down to separating the management and control of trust assets from the enjoyment of them. For example, if my husband and I both passed away, I would want our only child to enjoy the benefit of our assets. However, I would need someone else to manage these assets for his benefit, because at 15 months old, I just don’t think he’s ready. So, I’ve set up a trust in my will where a Trustee would manage our assets for him until a certain age.

Are there other reasons to use trusts?

There are many! Some types of trusts provide creditor protection for the beneficiaries and prevent them from wasting trust assets, some make the administration of a deceased person’s assets simpler, some protect the beneficiary’s eligibility for government benefits like Medicaid, some provide federal gift and estate tax savings, and some make it easier for someone to manage and protect your assets if down the road, you’re unable to do so yourself. These are just a few of the many purposes that trust planning can serve.

What parameters are given to the Trustee(s)?

Some of the Trustee’s obligations and powers are specifically set out in the Trust document; some are bestowed by state law. General Trustee duties include:

  • Duty to maintain, control and distribute trust assets as provided in the trust document
  • Duty to follow terms of trust and state law
  • Duty of loyalty and impartiality to the beneficiary
  • Duty to act in the best interest of the beneficiary and avoid conflicts of interest

What should I do if I think a Trust would be useful for me?

Contact an attorney to explore how a trust could benefit you and your loved ones.

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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.