Nursing Home Costs Rise Sharply in 2017

The median cost of a private nursing home room in the United States has increased to $97,455 a year, up 5.5 percent from 2016, according to Genworth's 2017 Cost of Care survey, which the insurer conducts annually. Genworth reports that the median cost of a semi-private room in a nursing home is $85,775, up 4.44 percent from 2016. The rise in prices is much larger than the 1.24 percent and 2.27 percent gains, respectively, in 2016.

The price rise was slightly less for assisted living facilities, where the median rate rose 3.36 percent, to $3,750 a month. The national median rate for the services of a home health aide was $22 an hour, up from $20 in 2016, and the cost of adult day care, which provides support services in a protective setting during part of the day, rose from $68 to $70 a day.

Alaska continues to be the costliest state for nursing home care, with the median annual cost of a private nursing home room totaling $292,000. Oklahoma again was found to be the most affordable state, with a median annual cost of a private room of $63,510.

The 2017 survey was based on responses from more than 15,000 nursing homes, assisted living facilities, adult day health facilities and home care providers. The survey was conducted by phone during May and June of 2017.

As the survey indicates, nursing home care is growing ever more expensive. Contact your elder law attorney to learn how you can protect some or all of your family's assets.

For more on Genworth’s 2017 Cost of Care Survey, including costs for your state, click here.

 

Long-Term Care Scorecard Finds States Have Room for Improvement

A new report finds that states have made incremental improvements in providing long-term care, but need to make more improvements in order to meet the needs of the growing number of people who require long-term care services. According to the 2017 Long-Term Services and Supports State Scorecard, while long-term care remains unaffordable for middle class families, there has been some progress in other areas.

The scorecard, a collaboration between the AARP, The Commonwealth Fund, and The SCAN Foundation, measures states' long-term care system performance in five areas: affordability and access, choice of setting and provider, quality of life and quality of care, support for family caregivers, and effective transitions between care settings.

The 2017 scorecard found that states showed progress since the previous scorecard in 2014 in reducing inappropriate antipsychotic drug use for nursing home residents, helping family caregivers, reducing long-term nursing home stays, increasing the number of Medicaid recipients receiving care at home or in the community rather than in an institution, and reducing potentially burdensome hospitalizations for people who die in a nursing home. However, the scorecard concludes that overall improvements are not keeping up with the demand. For example, there are not enough home care workers to meet the needs of individuals with disabilities living in the community. In addition, while states have made improvements in providing home health care, progress is moving too slowly to keep up with growing needs.

According to the scorecard, the top five states for long-term care are Washington, Minnesota, Vermont, Oregon, and Alaska. The bottom five states are Tennessee, Mississippi, Alabama, Kentucky, and Indiana. Tennessee and New York made the most progress since the previous scorecard in 2014.

To see where your state ranks, go here: http://www.longtermscorecard.org/2017-scorecard

Using a Prepaid Funeral Contract to Spend Down Assets for Medicaid

No one wants to think about his or her death, but a little preparation in the form of a prepaid funeral contract can be useful. In addition to helping your family after your death, a prepaid funeral contract can be a good way to spend down assets in order to qualify for Medicaid.

A prepaid or pre-need funeral contract allows you to purchase funeral goods and services before you die. The contract can be entered into with a funeral home or cemetery. Prepaid funeral contracts can include payments for: embalming and restoration, room for the funeral service, casket, vault or grave liner, cremation, transportation, permits, headstones, death certificates, and obituaries, among other things.

One benefit of a prepaid funeral contract is that you are paying now for a service that may increase in price—possibly saving your family money. You are also saving your family from having to make arrangements after you die, which can be difficult and time-consuming. And, if you are planning on applying for Medicaid, a prepaid funeral contract can be a way to spend down your assets.

Medicaid applicants must spend down their available assets until they reach the qualifying level (usually around $2,000, depending on the state). By purchasing a prepaid funeral contract, you can turn available assets into an exempt asset that won't affect your eligibility. In order for a prepaid funeral contract to be exempt from Medicaid asset rules, the contract must be irrevocable. That means you can't change it or cancel it once it is signed.

Before purchasing a contract, you should shop around and compare prices to make sure it is the right contract for you. Buyers need to be careful that they are buying from a reputable company and need to ask for a price list to make sure they are not overpaying. 

For information from the Federal Trade Commission on shopping for funeral services, click here.

 

 

Don't Let Health Care Providers Use the Improvement Standard to Deny Medicare Coverage

Have you or a loved one been denied Medicare-covered services because you’re “not improving”? Many health care providers are still not aware that Medicare is required to cover skilled nursing and home care even if a patient is not showing improvement. If you are denied coverage based on this outdated standard, you have the right to appeal.

For decades Medicare, skilled nursing facilities, and visiting nurse associations applied the so-called “improvement” standard to determine whether residents were entitled to Medicare coverage of the care. The standard, which is not in Medicare law, only permitted coverage if the skilled treatment was deemed to contribute to improving the patient's condition, which can be difficult to achieve for many ill seniors.

Three years ago in the case of Jimmo v. Sebelius the Centers for Medicare & Medicaid Services (CMS) agreed to a settlement in which it acknowledged that there's no legal basis to the “improvement” standard and that both inpatient skilled nursing care and outpatient home care and therapy may be covered under Medicare as long as the treatment helps the patient maintain her current status or simply delays or slows her decline. In other words, as long as the patient benefits from the skilled care, which can include nursing care or physical, occupational, or speech therapy, then the patient is entitled to Medicare coverage.

Medicare will cover up to 100 days of care in a skilled nursing facility following an inpatient hospital stay of at least three days and will cover home-based care indefinitely if the patient is homebound.

Unfortunately, despite the Jimmo settlement, the word hasn't gotten out entirely to the hospitals, visiting nursing associations, skilled nursing facilities, and insurance intermediaries that actually apply the rules. As a result, the Jimmo plaintiffs and CMS have now agreed to a court-ordered corrective action plan, which includes the following statement:

 

The Centers for Medicare & Medicaid Services (CMS) reminds the Medicare community of the Jimmo Settlement Agreement (January 2014), which clarified that the Medicare program covers skilled nursing care and skilled therapy services under Medicare’s skilled nursing facility, home health, and outpatient therapy benefits when a beneficiary needs skilled care in order to maintain function or to prevent or slow decline or deterioration (provided all other coverage criteria are met). Specifically, the Jimmo Settlement required manual revisions to restate a “maintenance coverage standard” for both skilled nursing and therapy services under these benefits:

Skilled nursing services would be covered where such skilled nursing services are necessary to maintain the patient's current condition or prevent or slow further deterioration so long as the beneficiary requires skilled care for the services to be safely and effectively provided.

Skilled therapy services are covered when an individualized assessment of the patient's clinical condition demonstrates that the specialized judgment, knowledge, and skills of a qualified therapist (“skilled care”) are necessary for the performance of a safe and effective maintenance program. Such a maintenance program to maintain the patient's current condition or to prevent or slow further deterioration is covered so long as the beneficiary requires skilled care for the safe and effective performance of the program.

The Jimmo Settlement may reflect a change in practice for those providers, adjudicators, and contractors who may have erroneously believed that the Medicare program covers nursing and therapy services under these benefits only when a beneficiary is expected to improve. The Settlement is consistent with the Medicare program's regulations governing maintenance nursing and therapy in skilled nursing facilities, home health services, and outpatient therapy (physical, occupational, and speech) and nursing and therapy in inpatient rehabilitation hospitals for beneficiaries who need the level of care that such hospitals provide

“The CMS Corrective Statement is intended to make it absolutely clear that Medicare coverage can be available for skilled therapy and nursing that is needed to maintain an individual’s condition or slow deterioration,” says Judith Stein, Executive Director of the Center for Medicare Advocacy and a counsel for the plaintiffs. “We are hopeful this will truly advance access to Medicare and necessary care for people with long-term and debilitating conditions.”

While this doesn't change the rights Medicare patients have always had, it should make it somewhat easier to enforce them. If you or a loved one gets denied coverage because the patient is not “improving,” then appeal.

To read the court order implementing the new corrective action plan, click here

Take These Three Steps When Your Child Turns 18

If your child has reached the teenage years, you may already feel as though you are losing control of her life. This is legally true once your child reaches the age of 18 because then the state considers your child to be an adult with the legal right to govern his or her own life.

Up until your child reaches 18, you are absolutely entitled to access your child’s medical records and to make decisions regarding the course of his treatment. And, your child’s financial affairs are your financial affairs. This changes once your child reaches the age of 18 because your now-adult child is legally entitled to his privacy and you no longer have the same level of access to or authority over his financial, educational and medical information. As long as all is well, this can be fine. However, it’s important to plan for the unexpected and for your child to set up an estate plan that at least includes the following three crucial components:

1. Health Care Proxy with HIPAA Release

Under the Health Insurance Portability and Accountability Act, or HIPAA, once your child turns 18, the child's health records are now between the child and his or her health care provider. The HIPAA laws prevent you from even getting medical updates in the event your child is unable to communicate his or her wishes to have you involved. Without a HIPAA release, you may have many obstacles before receiving critically needed information, including whether your adult child has even been admitted to a particular medical facility.

Should your child suffer a medical crisis resulting in the child's inability to communicate for him or herself, doctors and other medical professionals may refuse to speak with you and allow you to make medical decisions for your child. You may be forced to hire an attorney to petition to have you appointed as your child’s legal guardian by a court. At this time of crisis, your primary concern is to ensure your child is taken care of and you do not need the additional burden of court proceedings and associated legal costs. A health care proxy with a HIPAA release would enable your child to designate you or another trusted person to make medical decisions in the event your child is unable to convey his or her wishes.

2. Durable Power of Attorney

Like medical information, your 18-year-old child’s finances are also private.  If your child becomes incapacitated, without a durable power of attorney you cannot access the child's bank accounts or credit cards to make sure bills are being paid. If you needed to access financial accounts in order to manage or resolve any problem, you may be forced to seek the court’s appointment as conservator of your child.

Absent a crisis, a power of attorney can also be helpful in issues that may arise when your child is away at college or traveling. For example, if your son is traveling and an issue comes up where he cannot access his accounts, a durable power of attorney would give you or another trusted person the authority to manage the issue. An alternative may be to encourage your child to consider a joint account with you.  However, this is rarely recommended because of the unintended consequences for taxes, financial aid applications, creditor issues, etc.

3. Will

Your child owns any funds given to him or her as a minor or that he or she may have earned. In the catastrophic event that your child predeceases you, these assets may have to be probated and will pass to your child’s heirs at law, which in most states would be the parents. If you have created an estate plan that reduces your estate for estate tax or asset protections purposes, the receipt of those assets could frustrate your estate planning goals. In addition, your child may wish to leave some tangible property and financial assets to other family members or to charity.

While a will may be less important then the health care proxy, HIPAA release or durable power of attorney, ensuring that your child has all three components of an estate plan can prevent you, as a parent, from having to go to court to obtain legal authority to make time-sensitive medical or financial decisions for your child.

If you have a child (or grandchild) who is approaching adulthood, talk to your elder law attorney about having the child execute these three crucial documents. 

Prince’s Public Estate Drama – it all goes to his sister and five half-sisters

It is a pretty sad time for fans of music with the recent deaths of Chris Cornell, David Bowie, and Prince, among others.  These are, in my opinion, some of the greatest creative minds and musical masters the world will ever see.

Prince (Prince Rogers Nelson) was 57 years old when he died last year of an accidental drug overdose.  It appears that Prince had done no estate planning whatsoever.

The Inventory filed by the Personal Representative of Prince’s estate shows $25 Million in Real Estate alone.  Click here to see the actual inventory filed in the Probate Court.  It is likely that his combined real estate holdings will not be his most valuable assets compared to the value of his intellectual property, business interests, and catalog of 50 albums. These things will continue to generate significant revenue for many years. Much of his estate has not yet been valued, but it looks like it could be hundreds of millions of dollars.  The transfer of wealth for estates of this size is usually controlled through trusts and other legal directives.  From Court records to date, which are all available to the public, it appears that Prince did not have any such planning strategies in place.

With no trust in place, Prince’s estate will go through the probate process in the Minnesota court system.  The appointed representatives of the estate will be left to figure out what Prince owned, value each piece of property, pay the income and estate taxes, and distribute the remaining assets to the beneficiaries of the estate.

Prince has one sister and five half-sisters. A Minnesota Court has declared that his estate will be distributed to these six individuals.  While we can’t speculate about how Prince would have wanted his estate distributed, stories of Prince’s charitable nature during his lifetime suggest that he would have probably wanted to leave money to support charities. Stories of his private personal nature also suggest that he would have wanted to avoid such a public display and invasion of privacy.

In any event, if no will or trust turns up, Prince’s estate will be a media drama that unfolds in public.

What if Prince had not died from that drug overdose, but was instead incapacitated and unable to manage his health and financial affairs?  Who would have made decisions for him about his medical care, businesses, and finances? A court, in a public guardianship proceeding, would have had to appoint a guardian or conservator.  This person could have been a complete stranger to Prince.

Estate planning is not just for music icons worth hundreds of millions of dollars.  It is for everyone.  No matter the size of a person’s estate, a comprehensive estate plan will establish control, address incapacity, and direct the transfer assets how, to whom, and when you want.

The Costs of Dementia: For the Patient and the Family

A recent report from the Alzheimer’s Association states that one in nine Americans age 65 or older currently have Alzheimer’s. With the baby boomer generation aging and people living longer, that number may nearly triple by 2050. Alzheimer’s, of course, is just one cause of dementia—mini-strokes (TIAs) are also to blame—so the number of those with dementia may actually be higher.

Caring for someone with dementia is more expensive—and care is often needed longer—than for someone who does not have dementia. Because the cost of care in a facility is out of reach for many families, caregivers are often family members who risk their own financial security and health to care for a loved one.

In this post, we will explore these issues and steps families can take to alleviate some of these burdens.

Cost of Care for the Patient with Dementia—And How to Pay for It

As the disease progresses, so does the level of care the person requires—and so do the costs of that care. Options range from in-home care (starting at $46,332 per year) to adult daycare (starting at $17,676 per year) to assisted living facilities ($43,536 per year) to nursing homes ($82,128 per year for a semi-private room). These are the national average costs in 2016 as provided by Genworth in its most recent study. Costs have risen steadily over the past 13 years since Genworth began tracking them.

Care for a person with dementia can last years, and there are few outside resources to help pay for this kind of care. Health insurance does not cover assisted living or nursing home facilities, or help with activities of daily living (ADL), which include eating, bathing and dressing. Medicare covers some in-home health care and a limited number of days of skilled nursing home care, but not long-term care. Medicaid, which does cover long-term care, was designed for the indigent; the person’s assets must be spent down to almost nothing to qualify. VA benefits for Aid & Attendance will help pay for some care, including assisted living and nursing home facilities, for veterans and their spouses who qualify.

Those who have significant assets can pay as they go. Home equity and retirement savings can also be a source of funds. Long-term care insurance may also be an option, but many people wait until they are not eligible or the cost is prohibitive.

However, for the most part, families are not prepared to pay these extraordinary costs, especially if they go on for years. As a result, family members are often required to provide the care for as long as possible.

Financial Costs for the Family

Women routinely serve as caregivers for spouses, parents, in-laws and friends. While some men do serve as caregivers, women spend approximately 50% more time caregiving than men.

The financial impact on women caregivers is substantial. In another Genworth study, Beyond Dollars 2015, more than 60% of the women surveyed reported they pay for care with their own savings and retirement funds. These expenses include household expenses, personal items, transportation services, informal caregivers and long-term care facilities. Almost half report having to reduce their own quality of living in order to pay for the care.

In addition, absences, reduced hours and chronic tardiness can mean a significant reduction in a caregiver’s pay. 77% of those surveyed missed time from work in order to provide care for a loved one, with an average of seven hours missed per week. About one-third of caregivers provide 30 or more hours of care per week, and half of those estimate they lost around one-third of their income. More than half had to work fewer hours, felt their career was negatively affected and had to leave their job as the result of a long-term care situation.

Caregivers who lose income also lose retirement benefits and social security benefits. They may be sacrificing their children’s college funds and their own retirement. Other family members who contribute to the costs of care may also see their standard of living and savings reduced.

Emotional and Physical Costs to Caregivers

In addition to the financial costs, caregivers report increased stress, anxiety and depression. The Genworth study found that while a high percentage of caregivers have some positive feelings about providing care for their loved one, almost half also experienced depression, mood swings and resentment, and admitted the event negatively affected their personal health and well-being. About a third reported an extremely high level of stress and said their relationships with their family and spouse were affected. More than half did not feel qualified to provide physical care and worried about the lack of time for themselves and their families.

Providing care to someone with dementia increases the levels of distress and depression higher than caring for someone without dementia. People with dementia may wander, become aggressive and often no longer recognize family members, even those caring for them. Caregivers can become exhausted physically and emotionally, and the patient may simply become too much for them to handle, especially when the caregiver is an older person providing care for his/her ill spouse. This can lead to feelings of failure and guilt. In addition, these caregivers often have high blood pressure, an increased risk of developing hypertension, spend less time on preventative care and have a higher risk of developing coronary heart disease.

What can be done?

Planning is important. Challenges that caregivers face include finding relief from the emotional stress associated with providing care for a loved one, planning to cover the responsibilities that could jeopardize the caregiver’s job or career, and easing financial pressures that strain a family’s budget. Having options—additional caregivers, alternate sources of funds, respite care for the caregiver—can help relieve many of these stresses. In addition, there are a number of legal options to help families protect hard-earned assets from the rising costs of long term care, and to access funds to help pay for that care.

The best way to have those options when they are needed is to plan ahead, but most people don’t. According to the Genworth survey, the top reasons people fail to plan are they didn’t want to admit care was needed; the timing of the long-term care need was unforeseen or unexpected; they didn’t want to talk about it; they thought they had more time; and they hoped the issue would resolve itself.

Waiting too late to plan for the need for long-term care, especially for dementia, can throw a family into confusion about what Mom or Dad would want, what options are available, what resources can help pay for care and who is best-suited to help provide hands-on care, if needed. Having the courage to discuss the possibility of incapacity and/or dementia before it happens can go a long way toward being prepared should that time come.

Watch for early signs of dementia. The Alzheimer’s Association (www.alz.org) has prepared a list of signs and symptoms that can help individuals and family members recognize the beginnings of dementia. Early diagnosis provides the best opportunities for treatment, support and planning for the future. Some medications can slow the progress of the disease, and new discoveries are being made every year.

Take good care of the caregiver. Caregivers need support and time off to take care of themselves. Arrange for relief from outside caregivers or other family members. All will benefit from joining a caregiver support group to share questions and frustrations, and learn how other caregivers are coping. Caregivers need to determine what they need to maintain their stamina, energy and positive outlook. That may include regular exercise (a yoga class, golf, walk or run), a weekly Bible study, an outing with friends, or time to read or simply watch TV.

If the main caregiver currently works outside the home, they can inquire about resources that might be available. Depending on how long they expect to be caring for the person, they may be able to work on a flex time schedule or from home. Consider whether other family members can provide compensation to the one who will be the main caregiver.

Seek assistance. Find out what resources might be available. A local Elder Law attorney can prepare necessary legal documents, help maximize income, retirement savings and long-time care insurance, and apply for VA or Medicaid benefits. He or she will also be familiar with various living communities in the area and in-home care agencies.

Conclusion

Caring for a loved one with dementia is more demanding and more expensive for a longer time than caring for a loved one without dementia. It requires the entire family to come together to discuss and explore all options so that the burden of providing care is shared by all.

We help families who may need long term care by creating an asset protection plan that will provide peace of mind to all. If we can be of assistance, please don’t hesitate to call us toll free at 866-227-3994 click on the contact link on our website.

To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer’s particular circumstances.

Veterans' Disability Benefits

The VA offers two disability programs. Disability compensation is available only for veterans with service-connected disabilities, while the disability pension benefit is available to anyone who served during wartime and has a disability. The disability does not have to be related to military service.

Disability compensation benefit

If you have an injury or disease that happened while on active duty or if active duty made an existing injury or disease worse, you may be eligible for disability compensation. The amount of compensation you get depends on how disabled you are and whether you have children or other dependents. To determine your disability rating, which is used to calculate compensation, you may use this disability calculator. Click here to see the current compensation rates. Additional funds may be available if you have severe disabilities, such as loss of limbs, or a seriously disabled spouse. 

Disability pension benefit

The VA pays a pension to disabled veterans who are not able to work. The pension is also available for surviving spouses and children. This pension is available whether or not your disability is service-connected, but to be eligible you must meet the following requirements:

  • You must not have been discharged under dishonorable conditions.
  • If you enlisted before September 7, 1980, you must have served 90 days or more of active duty with at least one day during a period of war. Anyone who enlisted after September 7, 1980, however, must serve at least 24 months or the full period for which that person was called to serve.
  • You must be permanently and totally disabled, or age 65 or older. You will need a letter from your doctor to prove that you are disabled.

In addition, your income must be below the yearly limit set by law; called the Maximum Annual Pension Rate (MAPR). The MAPR for 2016 (unchanged from 2015) are below:

 

Veteran with no dependents

$12,868

Veteran with a spouse or a child

$16,851

Housebound veteran with no dependents

$15,725

Housebound veteran with one dependent

$19,710

Additional children

$2,198 for each child

 

Your pension depends on your income. The VA pays the difference between your income and the MAPR. The pension is usually paid in 12 equal payments.

Example: John is a single veteran and has a yearly income of $7,348. His pension benefit would be $5,520 (12,868 – 7,348). Therefore, he would get $460 a month.

Your income does not include welfare benefits or Supplemental Security Income. It also does not include unreimbursed medical expenses actually paid by the veteran or a member of his or her family. This can include Medicare, Medigap, and long-term care insurance premiums; over-the-counter medications taken at a doctor’s recommendation; long-term care costs, such as nursing home fees; the cost of an in-home attendant that provides some medical or nursing services; and the cost of an assisted living facility. These expenses must be unreimbursed. This means that insurance must not pay the expenses. The expenses should also be recurring this means they should recur every month.

Aid and attendance

A veteran who needs the help of an attendant may qualify for additional help on top of the disability pension benefit. The veteran needs to show that he or she needs the help of an attendant on a regular basis. A veteran who lives in an assisted living facility is presumed to need aid and attendance.

A veteran who meets these requirements will get the difference between his or her income and the MAPR below (in 2016 figures):

 

Veteran who needs aid and attendance and has no dependents

$21,466

Veteran who needs aid and attendance and has one dependent

$25,448

 

 

How to apply

You can apply for both disability benefits by filling out VA Form 21-526, Veteran’s Application for Compensation or Pension. If available, you should attach copies of dependency records (marriage & children’s birth certificates) and current medical evidence (doctor & hospital reports). You can apply online at http://vabenefits.vba.va.gov/vonapp.

Veterans of the United States armed forces may be eligible for a broad range of programs and services provided by the U.S. Department of Veterans Affairs (VA). In addition, their dependents and survivors may also be eligible for benefits. For more information about all the benefits available from the VA, see the VA booklet Federal Benefits for Veterans, Dependents and Survivors.

 

 

Critical Retirement Decisions

2016 is the year the first baby boomers will reach age 70. It is also the year for some critical decisions that will affect your retirement years. Here are some deadlines you won’t want to miss.

Sign up for Social Security. If you have delayed taking Social Security so you can receive the maximum benefit, now is the time. There is no advantage to waiting beyond age 70.

Start taking required minimum distributions from your tax-deferred plans. Uncle Sam says you must start taking distributions from your IRAs and other tax-deferred plans after you reach age 70 ½. If you miss this deadline or you don’t take out enough, there is a 50% penalty. (Exception: If you have money in an employer plan, you continue working beyond age 70 ½ and you own less than 5% of the company, you can delay your required beginning date on that employer’s plan until your actual retirement date.)

To determine the amount you must withdraw each year, divide the year-end value of your account by a life expectancy divisor found on a table provided by the IRS. (Most people will use the Uniform Lifetime Table, but if your spouse is more than 10 years younger than you, you will use a different one.) For example, the divisor for age 72 is 25.6. If your year-end account balance is $100,000, divide $100,000 by 25.6. The amount you are required to withdraw that year, then, is $3,906.25. You can withdraw more at any time, but this is the amount you must take out for that year’s required minimum distribution.

Minimum distributions are required for each tax-deferred account you own. Consolidating your accounts will make calculating and withdrawing distributions much easier.

Avoid taking two distributions in the same year. Generally, distributions must be taken by December 31 each year. However, you can delay your first required distribution until April 1 following the year in which you reach age 70 ½. But this would cause you to take two distributions in one year…April 1 for the previous year and December 31 for the current year…and that will increase your income, causing you to pay more in taxes. Remember, you have not paid income taxes on this money, so all withdrawals are taxed as ordinary income.

Review your estate plan and plan for long term care. Now is the time to review your plan with your professional advisors. You may need to revise your will or trust, beneficiary designations, powers of attorney, and healthcare documents. Be sure to plan for the possibility of long term care—consider options for how, where and by whom care would be provided, and how to pay for the costs. If you want to conserve assets for your family, consider purchasing long term care insurance to offset some of the expenses. Finally, have that difficult but absolutely critical conversation with your family about your wishes and the plans you have put in place.

10 Types of Trusts: A Quick Look

 

Considering the myriad of estate planning options available, creating an estate plan that works can seem daunting.  However, that’s what we, as estate planning attorneys, do every day. We know the laws and will design a plan which addresses your specific situation.

Here’s a look at the basics of ten common trusts to provide a general understanding. There will not be a quiz at the end. All you need to do when we meet is share your goals and insight into your family and financial situation, we’ll design a plan that incorporates the best tools for your situation.

  1. Bypass Trusts. Commonly referred to as Credit Shelter Trust, Family Trust, or B Trust, Bypass Trusts do just that: bypass the surviving spouse’s estate to take advantage of tax exclusions and provide asset protection.

 

  1. Charitable Lead Trusts. CLTs are split interest trusts which provide a stream of income to a charity of your choice for a period of years or a lifetime. Whatever’s left goes to you or your loved ones.

 

  1. Charitable Remainder Trusts. CRTs are split interest trusts which provide a stream of income to you for a period of years or a lifetime and the remainder goes to the charity of your choice.

 

  1. Special Needs Trusts. SNTs allow you to benefit someone with special needs without disqualifying them for governmental benefits. Federal laws allow special needs beneficiaries to obtain benefits from a carefully crafted trust without defeating eligibility for government benefits.

 

  1. Generation-Skipping Trusts. GST Trusts allow you to distribute your assets to your grandchildren, or even to later generations, without paying the generation-skipping tax.

 

  1. Grantor Retained Annuity Trusts. GRATs are irrevocable trusts which are used to make large financial gifts to family members while limiting estate and gift taxes.

 

  1. Irrevocable Life Insurance Trusts. ILITs are designed to exclude life insurance proceeds from the deceased’s estate for tax purposes. However, proceeds are still available to provide liquidity to pay taxes, equalize inheritances, fund buy-sell agreements, or provide an inheritance.

 

  1. Marital Trusts. Marital Trusts are designed to provide asset protection and financial benefits to a surviving spouse. Trust assets are included in his or her estate for tax purposes.

 

  1. Qualified Terminable Interest Property Trusts. QTIPs initially provide income to a surviving spouse and, upon his or her death, the remaining assets are distributed to other named beneficiaries. These are commonly used in second marriage situations and to maximize estate and generation-skipping tax exemptions and tax planning flexibility.

 

  1. Testamentary Trusts. Testamentary Trusts are created in a will. These trusts are created upon an individual’s death and are commonly used to provide for a beneficiary. They are commonly used when a beneficiary is too young, has medical or drug issues, or may be a spendthrift. Trusts also provide asset protection from lawsuits brought against the beneficiary.

 

There are many types of trusts available. We’ll help you select which of these tools, if any, are a good fit for you. Call today. We’re waiting to hear from you.