Massachusetts Estate Planning & Asset Protection Blog

The High Cost of Seniors Living Longer

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Sep 05, 2014

 

The Cost of Living Longer | Massachusetts Eldercare Attorney

 

 planning, estate, eldercare

 

A Pachyderm of Problems

Every day, we see clients for whom long-term care is the elephant in the room. They feel they can’t afford the costs, but they also feel they can’t afford not to have it either. So their solution is to pretend they don’t see the elephant and try to ignore the problem until it goes away on its own. This unfortunately often leads to our metaphorical elephant trampling their life savings and any future inheritance they are trying to leave behind. The older you are, the more expensive a long-term care policy gets and if you get sick before you have long-term care protection in place, it’s too late. Insurance companies are looking out for their bottom line, and an already ill senior will scare them off.

The costs for these policies are rising faster than inflation too. Therein lies the conundrum for Boomers and seniors: They’re living longer than their parents did but that means they need more money to make it through “old age”. Finding long-term care is a tough and complicated process. You’ll need to find a place that cares for people with your (or your loved one’s) circumstances. You need to find a place with the right facilities and staff, a place that leaves you with a good, safe feeling. And you have to be able to afford it too. This is not any sort of one-size-fits-all situation. Everyone has their own specific services and conditions that they or their loved ones will need met. Remember, what we call “long-term care” is a broad category, with options ranging from live-in facilities to your own home.

Lurking Complications With Long Term Care

The greatest threat to the financial security of Boomers and seniors is the cost of long-term care (and Obamacare will not assist with this). Assisted-living facilities are now climbing toward the $7,500-a-month mark. Many have started bundling more services together, rather than charging for each individually. Bundling might be a good idea from the nursing home’s perspective, but just like pre-packaged cable TV you will wind up paying for a lot of services you don’t need and don’t want. A private room at a nursing home will range from $500 - $600 a day.

The cost of home healthcare is rising, too. Some people choose independent-living apartments. These facilities typically don’t require lump-sum payments, and residents can contract with home health-services independently. Medicaid may be there for those who qualify but if you ever want to learn the true meaning of “jumping through hoops” just try qualifying! The best thing, of course, is long-term care insurance, but that’s getting more expensive too as companies raise their rates while cutting back on their coverage. In addition, this insurance is getting more complicated, now encompassing aspects such as protection of the surviving spouse, caregiver issues, scams/ID theft, and making sure you have an advocate to fight for your rights in a system that’s slanted against you.

In short, we’re living longer, and unlike previous generations, people are generally not living with or even near their children. Seniors are going to need more money for this longer life and for any unforeseen medical problems that may arise.

A Magic Trick No One Wants to See

Do you know the fastest way for a Boomer or senior couple to become an impoverished Boomer or senior couple is? Simple, one of them just needs to become ill before they get long-term care insurance. We see it every day, people who’ve worked hard and saved money all their lives are forced to see it wash away in a flood of medical bills as they age. It is truly heart-breaking, because, if you’ve managed to squirrel some money away, you could probably have afforded long-term care. 

The Downside to Living Longer

Our life expectancies are going up these days and so is the cost of healthcare, the distance seniors are living from their children and families, and the financial pressures on Medicare and Medicaid. The new Affordable Care Act, in fact, stipulates $500 billion in Medicare cuts over the next decade! Where do you turn if you or your spouse gets ill? Home health care? Adult day-care? Assisted-living? A nursing facility? Respite-care services, which allow the caregiver to drop off the senior for a limited period? Who’s going to pay for it? And for how long?  These are the questions to ask now, while you still have time to plan. If you haven’t purchased long-term care before you or your spouse become ill…forget about it. No one will insure you once you’re sick! If this happens to you, you’re going to be out of time, out of options, and very quickly out of money. And if you’ve planned to leave something for your heirs, there may be nothing left to leave to them other than a pile of bills. 

 

It’s an old (but true) cliché: those who fail to plan, are planning to fail. When it comes to healthcare expenses as you age, you fail to plan at the risk of yourself and those you love.  

 

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop 

 

Tags: living will, Estate Planning, Estate Planning, asset protection, Massacusetts Estate Tax, long term care, life insurance, Medicaid, MassHealth, in-home care, marriage, Estate Planning Tip, seniors, assisted living, life-care plan, hospice, Massachusetts, assets, in home, incapacity, asset, home, surviving spouse, Estate Planning Recommendations, in-home care, long term care insurance, Inheritance

Massachusetts Estate Planning Attorney | New Year Calls For Review

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Sun, Jan 13, 2013

When is the last time you have reviewed your Revocable trust, life insurance policy or other Estate Plans? With a new calender year it is a good time to remind families of the importance that revolves around estate planning. While knowing and understanding tax laws is important, taking advantage of non-tax considerations will increase likelyhood of success regardless of the tax prospective in this new year and beyond.

The first "non-tax" recommendation is not to ignore the lax laws completely. Protecting your assests from possible estate tax is the issue at hand.

According to Stuart B. Dorsett is a member of the Business, Elder Law, Nonprofit Organizations, and Trusts and Estates.  He is a North Carolina State Bar Certified Specialist in Estate Planning and Probate Law and is a Fellow of the American College of Trust and Estate Counsel.

Even though Congress has acted acts to stave off "Fiscal Cliff," uncertainty about the future of the gift and estate tax laws will continue. Despite this uncertainty, meaningful estate planning goals can be achieved. Estate planning is only partly, and only sometimes, about tax.  Optimizing your estate plan requires careful attention to the following "non tax" considerations:

1. Plan For The Possibility Of Estate Tax: Given the recent fluctuations in the estate tax exemption, it is wise to create a plan that allows future flexibility for your spouse and other beneficiaries.

2. Reassess Existing Life Insurance Policies: While most people follow the performance of their stocks, bonds, and mutual funds assiduously, they frequently ignore the economic performance of their life insurance policies. A life insurance policy with cash value is an investment and should be reviewed periodically to ensure that the policy will remain in effect through the insured's death and that it is performing competitively with the currently available insurance products.

3. Incorporate Asset Protection Planning Into Estate Plans: One of the great "missed opportunities" in estate planning is structuring a child's inheritance in a way that protects the assets from unforeseen circumstances. Often assets are left outright to an adult beneficiary, but outright ownership exposes those assets to any third-party claims against that beneficiary such as lawsuits, bankruptcy, and divorce. This exposure can be avoided.  Such a design allows the beneficiary to retain all of the "good" aspects of ownership without any of the "bad."

Click Here to Learn More About How to Avoid the Top Mistakes in Estate & Asset Protection Planning

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops. Call 800-964-4295 to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

 

 

 

 

Tags: Estate Planning, asset protection, life insurance, plans, Estate Planning Recommendations, Non-tax tips

Massachusetts Elder Law Atttoney | Beware – Medicaid Rules on Life Insurance are Tricky

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Tue, Nov 27, 2012

Beware – Massachusetts Medicaid Rules on Life Insurance are Tricky

Medicaid does not consider term life insurance policies as a resource, countable toward the appropriate resource maximum. However, Medicaid does count life insurance with cash value as a resource when the total death benefit of all cash value life insurance policies exceeds $1,500. These policies must be cashed in (or sold) and the proceeds spent down. The fair market value of a cash value policy is the amount of cash value, as opposed to the death benefit. Sometimes, the cash value is much smaller than the death benefit, leaving a large spread between the two. In that case a family member may choose to buy the policy.

Note that if the death benefit of all policies totals more than $1500 then all the cash value is countable. Don’t make the mistake of looking at the cash value, and if under $1500, then think it is exempt. It is not unless the death benefit is under $1500.

What Assets Are Exempt for Medicaid Purposes?

The following assets are not countable by MassHealth for Medicaid purposes:

  1. Home, regardless of value in case of a married couple, or up to $786,000 in equity for a single applicant. The home must be the principal place of residence. If single, the nursing home resident may be required to show some “intent to return home” even if this never takes place.

  2. Personal belongings and household goods. New Jersey does not take inventory of these items so basically ignores this category unless it is abused.

  3. One car or truck.

  4. Burial spaces and certain related items for applicant and spouse.

  5. Up to $1,500 designated as a burial fund for applicant and spouse.

  6. Irrevocable prepaid funeral contract.

  7. Value of life insurance if death benefit is $1,500 or less. If total life insurance exceeds $1,500 in total death benefit, then the cash value in these policies is countable.

For more information on Massachusetts Medicaid, download our 19-Point Trust, Estate & Asset Protection Legal Guide.

At the Estate Planning & Asset Protection Law Center of Dennis Sullivan & Associates, we help people and their families concerned with losing their homes and life savings to increasing medical and nursing home costs, taxes and the costs and time delays of probate. We also protect clients from losing control of their own health and financial decisions.

We encourage you to attend one of our free educational workshops to learn more about our process and what you can do to enhance the security of your spouse, home, life savings and legacy. To register for a seat at an upcoming workshop call (800) 964-4295 (24/7) or register online at www.SeniorWorkshop.com

workshop

Tags: life insurance, Medicaid, Massachusetts, Elder Law, Attorney, death benefit

Answers for Framingham Veteran's Benefits

Posted by Wellesley Estate Planning Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Aug 26, 2011

The Question

 My father fought in WWII and died in January 1993. My mom presently lives in an Assisted Living Community.  My mom is 92 years old and cannot live on her own anymore.  Would she qualify for a VA benefit of any kind?  How would I go about obtaining this information to help my mom. Her Assisted Living Community costs her more than $3500 a month. Mom sold her house but once the money runs out I worry what will happen and how she will be cared for?  I would appreciate any information you could give me.

 Answers for Massachusetts Veterans

The good news is as a surviving spouse your mother may be eligible for an “Aid and Attendance” benefit.  In order to qualify for this benefit your mother must have limited assets and low yearly Income for Veteran’s Administration Purposes (IVAP).  You should locate your town or region’s Veteran’s Service Officer who is critical to the filing of an application with the local VA regional office. 

Qualification:

There is a two-part test for qualification, an assets test and an income test.

I. The Asset Test

In order to qualify to receive benefits your mothers total net worth, less certain exemptions allowed by the Veteran’s Association, should be under $50,000 (home, vehicles, life insurance policies).  It may be possible to qualify for benefits if yourVeteran's Benefits Natick total net worth is greater than $50,000 but being under that number greatly increase an applicant’s chances of qualification.

II. The Income Test

The countable income for veterans’ benefits is determined by taking an individual’s gross income and subtracting from that all of their unreimbursed medical expenses to determine their IVAP, which is ultimately used to determine whether or not a person qualifies.  For your mother, a surviving spouse with no dependents, her IVAP cannot exceed $1,056 per month. 

 The cost of an assisted living facility, and even part or all of the cost of an independent living facility, can also be an allowable medical deduction to reduce a veteran’s gross income to a much lower net countable income that may qualify him or her for veterans’ benefits. It is very important to meet with a knowledgeable veteran’s service officer or an experienced elder law attorney for a pre-filing consultation to determine whether or not a veteran may qualify. It is also important to review the estate planning work to see what may be done to assist the veteran in qualifying for this particular benefit. There may be planning steps that can be implemented before applying that will help a veteran or widow to qualify and or obtain an increased benefit.

Determining what is the countable income as measured by the Veterans Administration is very confusing to many individuals in. An attorney skilled in elder law and accredited with the Veteran’s Administration can provide a veteran and the veteran’s family with appropriate pre-filing consultations to determine the appropriate steps that must be taken to be able to determine if it would be right to apply for this VA benefit. 

 If you are in Massachusetts and would like to discuss Veteran’s Benefits more extensively, please call our office at (781)-237-2815 or register to attend one of our free educational workshops.  You can also access our free Nuts & Bolts Guide to Veteran’s Benefits and learn what you can do to maximize your benefit.

Tags: massachusetts estate planning strategies, Nursing Home Costs, Elder Law, Metro West Estate Plan, life insurance, social security, Nursing Homes, Health Care, assisted living, veterans benefits, life-care plan

Avoid Taxes on Life Insurance

Posted by Dennis Sullivan & Associates on Thu, Apr 28, 2011

Since most of just finished filing our annual income tax return, we may not be in the mood to further discuss the topic of taxes … unless it’s all about avoiding them. Which is why now is a good time to turn to the topic of life insurance, taxes and your estate plan.

The primary purpose of life insurance, for most people, is to replace income that would be lost should you die prematurely. The good news is that life insurance death benefits are generally received by your beneficiaries free of any federal income tax (and usually free of any state income tax as well).

But what about the federal estate tax? Contrary to popular belief, the death benefit of life insurance could be subject to estate tax. If the tax rules treat you as the owner of a policy on your own life, the death benefit is included in your taxable estate – unless the money goes to your surviving spouse (they then will become part of his or her estate). If you are the owner of the policy and the death benefits go to anyone else, a child or sibling even, then money is included in your estate.

The estate tax exemption is currently set at $5 million through 2012, and although this is historically quite high, a large life insurance policy could push an otherwise non-taxable estate above the limit. And don’t forget that the current rule is in place only through 2012, and there are quite a few who believe lowering the exemption might be the answer to reducing our federal debt.

Smart Money last week laid out pretty clearly how the life insurance / estate tax scenario plays out. To quote them: “The tax rules say you own a life insurance policy if you possess so-called ‘incidents of ownership.’ You have them if you retain the power to change policy beneficiaries, change coverage amounts, cancel the policy and so forth.”

So, how do you avoid these “incidents of ownership”? You can establish an irrevocable life insurance trust (ILIT) to purchase a new policy on your life. If that’s not possible, you could consider transferring an existing policy. But there are some potential land mines in that strategy. First, if you transfer the policy and die within three years, the IRS pulls the proceeds back into your estate as if the transfer had not occurred. Second, if you transfer a policy with cash value in excess of $13,000, it could trigger adverse gift tax consequences.

You can read more about irrevocable life insurance trusts in the Estate Planning Strategies section on our website. While you’re there, be sure to sign up for our free estate planning e-newsletter to stay informed of important matters affecting your estate plan.

Tags: estate tax, estate tax savings, Massacusetts Estate Tax, life insurance

Reasons to Consider Keeping your Life Insurance

Posted by Dennis Sullivan & Associates on Mon, Mar 21, 2011

Purchasing life insurance in an amount sufficient to cover an estate tax liability has long been a staple of estate planning strategy. But with so many escaping federal estate taxes under the new tax law, families are starting to re-examine their need for life insurance obtained to help heirs pay the tax.

Faced with continuing premium payments, many are asking whether they need to keep the insurance. You should think twice, though (and get some professional advice) before giving up your policy. The Wall Street Journal recently advised readers to consider keeping life insurance.

First – realize that the “death tax” is not dead. We are seeing an unexpectedly generous exemption this year and next ($5 million per individual, $10 million for a married couple), but don’t forget that the exemption was a mere $675,000 in 2001. As government coffers continue to run dry, a “more robust” estate tax could be very tempting way to raise funds. At any rate, current law expires at the end of 2012, and we don’t know yet what happens next. If you relinquish a policy now, you may find it more expensive – or even impossible – to replace it later. Remember, life insurance is purchased with your good health, cash just pays the premiums.

Second – that life insurance policy could solve a number of other thorny problems, regardless the state of the estate tax. If you have spent more of your savings and investments, life insurance can provide the inheritance you had hoped for your heirs. Life insurance also can help equalize an estate – especially for business owners who have some children participating in the family business and some who do not.

If you’re having trouble keeping up with those premiums, there may be cost-effective options that still allow you to keep some coverage. If you have a whole or universal life policy, you can ask the insurer to reduce the death benefit to a level at which you can afford to make payments. You also may ask your heirs to cover all or a portion of the costs. As long as the policy is owned by a trust for their benefit, there are ways to do this with no gift-tax consequences.

A sale or surrender of your policy has tax consequences, so be sure to consult an advisor before making any decisions about your policy.

For more information on estate planning with life insurance, check out our website.

Tags: massachusetts estate planning strategies, estate tax, Massachusetts estate tax, New estate tax law, Massacusetts Estate Tax, life insurance

Retirement products: rising costs, fewer providers

Posted by Dennis Sullivan & Associates on Fri, Jan 28, 2011

Financial and insurance products have long been key retirement planning components – helping savers mitigate retirement risks and provide retirement income. According to a recent issue of MarketWatch, however, those types of products are getting harder to find as some of the major companies back out of the market.

Genworth last week said it will stop selling variable annuities and MetLife decided late last year to stop selling long-term care insurance policies.

Why? These are all business decisions based on current economics. But in the case of long-term care insurance, it seems some of the bigger providers got their pricing wrong. Many simply guessed wrong about how fast costs would rise and how many people would let their policies lapse.

If you can find an appropriate policy for yourself and/or your loved ones, long-term care insurance is still recommended by most experts.

“The fact that pricing is a concern suggests that you may want to purchase long-term-care insurance while you are young (when premiums are low) and in good health and while there are still choices available in the marketplace,” says Christine S. Fahlund, a vice president and senior financial planner at T. Rowe Price Investment Services Inc. “It is very difficult to self-insurance for long-term care, since your expenses could potentially be catastrophic if you or your spouse needs care around the clock for more than one or two years.”

As for the variable-annuity market, experts say that Genworth is leaving the business because it never truly penetrated the market deep enough to develop the kind of scale required to offer these products profitably.

Experts still suggest you continue to consider and buy variable annuities if such products are right for you. But do carefully consider the company that stands behind your product.

You can learn more about long-term care insurance and retirement planning on our website. And, as always, if you are considering the purchase of a retirement product – such as insurance or an annuity – don’t hesitate to ask us for an objective review to untangle the weeds of the market and help achieve your goals.

If you'd like to learn more, we offer a free consumer guide to Medicaid, Nursing Home & Asset Protection Planning, to see how you can protect your home and life savings from the rising cost of nursing home care. 

Financial and insurance products have long been key retirement planning components – helping savers mitigate retirement risks and provide retirement income. According to a recent issue of MarketWatch, however, those types of products are getting harder to find as some of the major companies back out of the market.

Genworth last week said it will stop selling variable annuities and MetLife decided late last year to stop selling long-term care insurance policies.

Why? These are all business decisions based on current economics. But in the case of long-term care insurance, it seems some of the bigger providers got their pricing wrong. Many simply guessed wrong about how fast costs would rise and how many people would let their policies lapse.

If you can find an appropriate policy for yourself and/or your loved ones, long-term care insurance is still recommended by most experts.

“The fact that pricing is a concern suggests that you may want to purchase long-term-care insurance while you are young (when premiums are low) and in good health and while there are still choices available in the marketplace,” says Christine S. Fahlund, a vice president and senior financial planner at T. Rowe Price Investment Services Inc. “It is very difficult to self-insurance for long-term care, since your expenses could potentially be catastrophic if you or your spouse needs care around the clock for more than one or two years.”

As for the variable-annuity market, experts say that Genworth is leaving the business because it never truly penetrated the market deep enough to develop the kind of scale required to offer these products profitably.

Experts still suggest you continue to consider and buy variable annuities if such products are right for you. But do carefully consider the company that stands behind your product.

You can learn more about long-term care insurance and retirement planning on our website. And, as always, if you are considering the purchase of a retirement product – such as insurance or an annuity – don’t hesitate to ask us for an objective review to untangle the weeds of the market and help achieve your goals.

Tags: Estate Planning, asset protection, long term care, annuity, life insurance, Retirement

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