Estate Planning
What is an estate plan?
Estate planning is creating a plan for managing your assets while you are alive and then distributing them after your death.
What is the reason for creating an estate plan?
People commonly create an estate plan to specify how their property should be distributed after their passing. Of equal importance is the desire to structure the assets—through the use of appropriate legal instruments and forms of ownership—so as to maximize their value and minimize the amounts of legal fees, costs, and especially federal and state taxes.
What does estate planning consist of?
Typically, we will review the way assets are titled (i.e., different forms of ownership such as joint ownership, etc.). Then we write a will specifying how the different assets are to be distributed. In many cases, we also create a trust which can reduce the amount of taxes that the estate must pay, as well as advanced directives such as durable powers of attorney and living wills.
What is a living will?
The term “living will” does not refer to distribution of assets. A living will provides precise medical instructions for an agent to act under a medical power of attorney. Basically, a living will states an individual’s wish not to be kept alive by “heroic” or artificial means when recovery from physical or mental disability cannot reasonably be expected.
Medicaid
Can someone engage in Medicaid planning if he or she is already in a nursing home?
Yes, this is possible. It is never too late to begin Medicaid planning. There are legitimate avenues available to preserve part or most of the assets of a nursing home resident, even if a loved one is already in a nursing home, or nursing home care is imminent.
What happens if someone is hospitalized and unlikely to return to a residential situation?
Frequently the physician will order a stay at a nursing home for rehabilitation. If the doctor, who is monitoring the situation, decides that the patient needs skilled care, then up to 100 days of the stay can be covered by Medicare. If the patient no longer needs skilled care before the 100 days is reached, or in any case after 100 days, then the Medicare payments terminate. If your spouse or parent (or other loved one) is in such a situation, contact us immediately. We will work to obtain Medicaid coverage which can in many cases begin the day that the Medicare payments end.
Is it true that assets cannot be transferred within five years of application for Medicaid?
Not at all. The law requires that transfers made within five years must be disclosed as part of the Medicaid application process, but you may still be able to receive benefits. Depending on the amounts and timing of the transfers, it is possible to preserve a substantial portion of the assets.
Do you need to be a lawyer to help someone get Medicaid benefits?
No. In fact, anybody can call himself a Medicaid planner. Often this is a title used by people who are in actuality sales people for financial instruments such as annuities. As elder law attorneys, we normally try to minimize use of annuities because they are costly and can reduce the monthly benefits. In addition, the comprehensive asset preservation plans that we produce typically involve trusts, deeds, and wills. These require specialized legal education and licensing.
What is Medicaid?
Medicaid is a program mandated by the federal government and administered by each state for the benefit of individuals and couples that meet prescribed limitations for income and assets. Unlike Medicare, Medicaid will cover almost every expense associated with nursing home care.
What does Medicaid coverage include?
Medicaid coverage includes room and board, nursing services, drugs, durable medical equipment, medical supplies, and transportation for needed medical services. Medicaid also covers speech, physical, and occupational therapy.
What are the limits for Medicaid eligibility?
They vary by state. You are limited both as an individual and as a couple in the amount you can possess of different types of assets. These include cash, your homestead, personal property, vehicles, cash value life insurance, prepaid funeral contracts and cemetery plots, and income-producing property. There are also limitations on your income.
How difficult is the Medicaid benefits application procedure?
While the mechanics of applying are not difficult, there are challenges and pitfalls in meeting the requirements at the same time one tries to preserve the maximum assets of the person or couple involved. Mistakes can be very costly, and in some cases can have long-term consequences.
Medicare
What is Medicare?
Medicare is a health care insurance program administered by the states for people aged 65 or older. Younger individuals may also be eligible if they have certain qualified disabilities.
What is Medicare Part A?
Insurance that helps pay for inpatient hospital care, a stay in a skilled nursing facility, hospice care, and some home health care.
What is Medicare Part B?
Insurance that helps pay for medically necessary covered services and supplies including doctor services, outpatient hospital care, and some other medical services.
Does Medicare pay for nursing home care?
Medicare pays only for skilled nursing facility care following a three-day hospital stay due to accident or illness. This coverage includes a semi-private room, meals, skilled nursing, and rehabilitative services and supplies. It does not pay for long-term nursing home care.
Nursing Home Planning
What is nursing home planning?
This means creating a plan that provides for a loved one’s nursing home care while preserving his or her assets for either their spouse’s use or their estate.
What options are available to pay for nursing home care?
- Private Pay: Using one’s own assets.
- Long Term Care Insurance: Using a policy issued by certain insurance companies.
- Medicaid: A federal program administered by the states.
- Medicare: Pays for up to 100 days of skilled nursing home care with prerequisites.
When should you plan for payment of nursing home care?
It is never too late. Whether you are already in a nursing home, or expect to be, you can take steps to potentially reduce costs.
How can assets be legally preserved?
The law lets those who need nursing home care transfer their assets using a variety of legal means. The principal can be protected and can create income that can then be used to pay for the person’s care.
Power of Attorney
What is a power of attorney?
A power of attorney is a document in which you empower a person or bank to handle your affairs for you.
Are there different types of powers of attorney?
Yes. A durable power of attorney can be effective immediately or only when disability occurs. The document lists which powers it gives to the agent.
Probate and Wills
What is probate?
Probate is the process of carrying out the directives of a will or trusts following the death or incapacity of the property owner.
What is living probate?
Probate while the property owner is alive, in a situation of mental or physical disablement. This includes guardianship or conservatorship.
What is death probate?
This is when the property owner dies and assets are transferred according to the terms of a will or trust.
What costs are associated with probate?
Costs vary depending on the complexity of the estate. In New Jersey and Pennsylvania, probate is generally inexpensive for the average estate.
How long does probate take?
Anywhere from four or five months to a year, depending on complexity.
How can probate records be kept private?
They cannot; probate proceedings are public record.
If assets are owned jointly do they have to be included in probate?
Assets owned jointly by a married couple pass to the surviving spouse. They will later be subject to probate when the surviving spouse dies.
Is probate required when there is a will?
Yes, probate is the process by which the terms of a will are administered.
What is a will?
A will specifies how property will be distributed upon death. Wills can be changed or revoked anytime one is alive and capable.
What is in a will?
A will typically includes:
- A declaration that this is a will
- Naming of an executor
- Provisions for distributing assets
- Guardian for a minor child
- Trustee for a trust created by will
- Miscellaneous provisions