Glenn A. Jarrett, Esq., CFP Jonathan D. Secrest, Esq. Vermont Bar Association Young Lawyers Division Mid-Winter Thaw

Transcription

1 Glenn A. Jarrett, Esq., CFP Jonathan D. Secrest, Esq. Vermont Bar Association Young Lawyers Division Mid-Winter Thaw

2 Glenn A. Jarrett Jarrett Law Office, PLC v Attorney at Law since 1973 v Certified Elder Law Attorney (CELA) by National Elder Law Foundation v CFP Practitioner v A.B., Middlebury College, with honors v J.D., Georgetown University Law Center v Member, National Academy of Elder Law Attorneys, President-Elect, VT Chapter v Member, Vt Bar Ass n Elder Law Section

3 Jonathan D. Secrest Corum Mabie Cook Prodan Angell & Secrest Elder Law, Estate Planning, Probate, Real Estate Practicing for 11 years, in Vermont since 2003 J.D., Northwestern University School of Law, Chicago B.A., Amherst College, Amherst, MA (magna cum laude), 1990 Member, National Academy of Elder Law Attorneys (VT Founding member of chapter) Member, VT Bar Ass n Elder Law Section

4 Our Agenda The importance of planning for incapacity and death Long-Term Care Issues How does an elder maintain independence? What are the options? Medicaid Basics How to Protect the Family Home

5 Why Don t People Plan? Only about 1/3 of Americans have a written estate plan! Why? Procrastination Denial Lack of Knowledge

6 What Types of Planning are Needed? Two Basic Types: 1) INCAPACITY PLANNING 2) PLANNING TO TRANSFER ASSETS

7 Incapacity Planning 3 Important Areas

8 Incapacity Planning 1) Medical Decisions-- 2) Financial Decisions-- 3) Access to Medical Information-

9 Second Type of Planning Planning to Transfer Assets

10 Wealth Transfer Plan Two basic ways to handle this issue 1) Will 2) Living Trust

11 Long Term Care Planning

12 Why Plan for Long Term Care? May be a need for care Protect life savings Plan or lose everything

13 Catastrophic Illness and Nursing Homes Costs are rising: Average costs are $8,000 to $9,000+ per month or more! You may lose everything and be at the poverty level if you don t plan How long can you pay before your life s savings are all gone?

14 What types of care are available? How do seniors keep independent? Aging in Place Independent Senior Living & Senior Communities Care at home Private caregivers Choices for Care Medicaid at home Residential Care Homes Assisted Living Facilities Skilled Nursing Facilities PACE Program for All-Inclusive Care for Elderly

15 Average Cost of Nursing Homes in Vermont (Oct. 2011) $92,398 per year

16 Long Term Care Insurance Planning You wouldn t think of going without homeowners or car insurance Insurance transfers the risk The cost can be economical and gives peace of mind

17 What if it s too late for LTCI? Must plan to pay for long-term care expenses Can plan to qualify for Medicaid

18 Our Goal is to Design a Plan to Allow Our Clients to Stay at Home as Long as Possible and to Protect Our Clients and their Families if that is not Possible

19 Two Situations 1. Emergency (no time to plan) 2. When there is time to plan

20 What if a family member is ill or is in a nursing home already? At the current cost for nursing home care client must act quickly Consult with an elder law attorney immediately Learn about legal options including Medicaid

21 What is Medicaid? Financial assistance for nursing care Do not confuse it with Medicare Must meet certain medical, asset and income requirements

22 Share of Cost - Income Single Applicant ALL of applicant s income goes to Nursing Home Except personal needs allowance ($47.66 in Vermont) and health insurance premiums Medicaid pays the rest of the nursing home cost

23 Share of Cost - Income Married Couple Community spouse keeps ALL of his or her income Monthly Maintenance Needs Allowance (MMMNA) Minimum =$1,857 Maximum of $2,841

24 Summary of Assets For single person or spouse in nursing home $2,000 in countable assets For community spouse $113,640 in countable assets

25 Deficit Reduction Act of 2005 Most important Medicaid features: Increased lookback period from 3 years to 5 years Changed how penalties are calculated to make gifting to qualify much more difficult

26 Outright Gifting Giving money or other assets away for less than fair market value will avoid a penalty only after the passage of 5 years from the date of the gift One problem in outright gifting is that the assets are subject to being lost to creditors of the recipients or a divorce or a recipient dipping into the money

27 Medicaid Planning Trusts Irrevocable Income Only Medicaid Trust Parents retain income Children access principal Would take 5 years to avoid transfer penalty Avoids problems of outright gifting

28 Summary of Post-DRA Strategies Medicaid-compliant Annuities Irrevocable Income Only Trust Conversion to Non-Countable Assets Use of Medicaid-compliant Promissory Notes Gifting to disabled individuals Many of these may not be available for long

29 Protecting the Family Home Home is the single most important asset to most individuals Desire to preserve it for spouse and heirs

30 Protecting the Family Home Home as Exempt Asset $506,000 limit to value of home No limit to size of home or number of acres of land Must have intent to return home if in nursing home

31 Protecting the Family Home Transfer of Residence Transfer to Spouse is exempt If institutionalized spouse is not capable of executing deed, transfer may be through durable POA or guardianship proceeding

32 Protecting the Family Home Life Estate Deed with Enhanced Powers (aka, a Lady Bird Johnson Deed) Enables Transfer to beneficiaries or Revocable Living Trust, which avoids probate and estate recovery See article in VBA Journal, Winter by John Facey, John Newman and Heather Cooper Top Ten Pitfalls in Preparing Lady Bird Johnson Deeds

33 Estate Recovery What is It? Under federal law, State has duty to try to recover from estate of deceased Medicaid recipient for services provided during lifetime States may have different definitions of what is considered estate Most conservative = Probate Estate This is currently Vermont s approach

34 Estate Recovery What is It? Some states include joint tenancy property, life estates, transfer on death accounts or property This is probably the direction more states will go in order to increase the amounts the State can recover Vermont has begun to talk about these types of changes

35 Estate Recovery What is Protected? Life Estate Deed with retained powers Joint Tenancy Deeds POD Accounts Life Insurance with Beneficiary IRA with Beneficiary Annuities with Beneficiary But these protected assets are subject to attack if States determine to change the rules

36 For Further Information: Glenn Jarrett, Esq. Jonathan Secrest, Esq. Jarrett Law Office South Burlington Corum Mabie Cook Prodan Angell & Secrest Brattleboro x 5 jdsesq@sover.net