WHAT IS ELDER LAW?

Elder law focuses on long-term care planning and how to pay for it.

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By Jessica L. Estes

Ever wonder what “Elder Law” is?  Most people think that if you are 65 or older, it is called Elder Law and if you are younger than 65, it is called Estate Planning.  The real difference, though, is the focus of the representation.

Generally, the focus of estate planning is to make sure you have legal documents in place that provide the following: (1) the ability to control your property while you are alive and able, (2) planning for you and your loved ones should you become disabled, and (3) after you die, making sure your assets go to the people you love without unnecessary cost or delay.  Usually, these documents include financial and health care powers of attorney, advance directives or living wills, last will and testaments and perhaps, trusts.

Elder law, on the other hand, focuses on long-term care planning and how to pay for it.  Long-term care is required when an individual is unable to perform the basic activities of daily living such as bathing, dressing, eating, toileting, walking and transferring, for a period exceeding thirty days.  Long-term care can include homecare, adult daycare, respite care and assisted living or nursing home services.  And, in this area, those types of costs can be daunting – more than $100,000 per year, and most people simply cannot afford to pay that.

Moreover, one might require long-term care, but be under the age of 65.  For example, if you have a child or a younger adult who is disabled and requires long-term care, most likely you would want to consult an Elder Law attorney to determine what, if any, benefits are available to help pay for that care even though the disabled person may not be elderly.

Not only can an Elder Law attorney advise a client about public benefits (including Medicaid and Veteran’s benefits) that may be available to help pay for long-term care, but they can also assist with the qualification and application process.  As part of this process, Elder law attorneys often engage in asset preservation to protect a client’s assets from the high costs of long-term care.  This is especially true if there is a dependent spouse or child at home, or if the individual does not have long-term care insurance to help pay those costs.

Finally, Elder Law also encompasses special needs planning.  Elder law attorneys are well-versed in the different types of special needs trust that may be available to a disabled individual and can advise which option is the best for a particular client.  So, Elder Law is not just for the elderly!

#TuesdayTips: Long-Term Care Insurance Policies

A long-term care insurance policy can be an effective tool to pay for your long-term care, while at the same time, allowing you an opportunity to preserve your assets and qualify for government needs-based benefits.

By Jessica L. Estes

 Generally, most people do not have sufficient income or assets to fund their long-term care for extended periods of time.  And, most people are not what the government deems “needs-based,” so they would not qualify immediately for any needs-based benefits.  Rather, most individuals are somewhere in the middle.

For anyone in this “middle” category, a long-term care insurance policy can be an effective tool to pay for their long-term care, while at the same time, allowing them an opportunity to preserve their assets and qualify for government needs-based benefits.  For example, if you have a policy that will supplement your income to cover your monthly long-term care costs, you could gift money to an asset protection trust and use the policy and your income to pay through any look-back period.  When the policy is exhausted, you would be eligible for benefits, as the gift would be outside the look-back period.

Moreover, having an insurance policy that will pay benefits not only for nursing home care, but for home care, adult day care, assisted living and respite care is best, as it covers all the bases.  The policy does not need to have a lifetime benefit; usually, a 3 to 5-year term, with an inflation rider of 3% to 5%, compounded if one can afford it, is ideal.  The shorter the elimination period – the time you must wait before benefits are paid, the costlier the policy.  However, a 90 to 120-day elimination period is typical.

Additionally, you may want to consider a policy that qualifies as a partnership policy under the Maryland Long-Term Care Insurance Partnership Program.  Certain policies that qualify as a partnership policy will allow individuals to preserve assets in an amount equal to the benefits that were paid out on the policy if they ever need to apply for Medicaid.  In other words, if one has a partnership policy that paid out $300,000.00 toward his/her long-term care and then he/she applies for Medicaid, he/she will be allowed to keep $302,500.00 in assets instead of the normal $2,500.00.

Even though these policies may seem costly, the annual premium likely is less than a month’s cost in a nursing home; yet, most people do not want to spend the money if there is a chance they will never use the policy.  For these individuals, companies have created policies that can act as an annuity and provide a return of premiums if they never use it or can act as life insurance and provide a death benefit.  Also, for a married couple, and if both spouses can qualify for a policy, some policies will allow a transfer of benefits to one spouse if the other spouse does not use them.

The Maryland Consumer Guide to Long Term Care provides information on the companies authorized to sell policies in Maryland, as well as detailed information regarding Maryland’s Partnership Program.  Also, there is a one-time tax credit up to $500 that you can take on your Maryland return for purchasing a long-term care insurance policy.

To schedule an appointment with Jessica L. Estes, Esq., call ERA Law Group, LLC today at (410) 919-1790!

#TuesdayTips: Utilizing Asset Protection Trusts

To utilize an Asset Protection Trust you must Assess your needs; Create what is missing; and Tie in your plan.  In other words, you must ACT!

By: Jessica L. Estes, Esq.

If you read last week’s #TuesdayTips article, you learned how to protect your stuff in three easy steps: 1) know the rules; 2) know your predators; and 3) know your options.  Easy, right?  But, knowing is only half of the equation.  Now, it is time to: Assess your needs; Create what is missing; and Tie in your plan.  In other words, you must ACT!

Protecting your stuff starts with an assessment of your needs, which, in turn, requires careful consideration of your goals and values.  Typical goals of an estate plan include maintaining control and not becoming a burden to loved ones, all the while keeping it as simple as possible.  Most people would agree that protecting their stuff from future long-term care costs, is important to them.  That way, they maintain control of the assets, protecting them after they are gone for the benefit of their loved ones, while at the same time, minimizing the costs of such long-term care and the burden to their family while they are alive.

So how, exactly, does an asset protection trust work? First, there are three parties to a trust – the grantor, trustee and beneficiary.  The “grantor” is the person who is transferring his or her assets to the trust.  The “trustee” is the person who manages and administers the trust in accordance with the trust provisions.  The Trustee is responsible for making all decisions regarding the trust, including any management or investment decisions, as well as deciding whether to make distributions from the trust.  The “beneficiary” can be a single person, multiple people or an entity such as a church or charity.  There are two types of beneficiaries: “lifetime” beneficiaries and “residuary” beneficiaries.  “Lifetime” beneficiaries are those individuals named by the grantor who are entitled to receive distributions of income and/or principal during the grantor’s lifetime.  The “residuary” beneficiaries are those individuals named by the grantor who are entitled to receive distribution of the trust assets after the death of the grantor.

After the trust is established, your assets must be transferred to the trust and the trust will become the owner of the assets.  Even though you will no longer own the assets, you maintain control of them because you are the trustee.  The plan must, of necessity, though, limit direct access to the principal to ensure that creditors, predators and lawsuits do not obtain access to it.  Still, the trust can provide indirect access to the principal during the remainder of your life through your designated lifetime beneficiaries.

Finally, upon your death, and because the trust is a separate entity, any assets owned by the trust would bypass probate and could be distributed immediately to your residuary beneficiaries.  Overall, irrevocable asset protection trusts are not only a great way to protect your stuff, but also can be very flexible and easily customized to meet your individual goals.

Call ERA Law Group, LLC today at (410) 919-1790 to learn more!

 

#TuesdayTips: Effective Estate Planning

A proper estate plan should provide for the following: (1) the ability to control your property while you are alive and able, (2) planning for you and your loved ones should you become disabled, and (3) after you die, making sure your assets go to the people you love without unnecessary cost or delay. 

A proper estate plan should provide for the following: (1) the ability to control your property while you are alive and able, (2) planning for you and your loved ones should you become disabled, and (3) after you die, making sure your assets go to the people you love without unnecessary cost or delay.  Moreover, for an estate plan to be effective there needs to be proper asset ownership and control of the process.

Every person over the age of eighteen, at the very least, needs a financial power of attorney, a health care power of attorney, and a will.  The powers of attorney are for when you are alive but for whatever reason, are unable to manage your assets or make medical decisions for yourself.  Additionally, the health care power of attorney should include your wishes and instructions for life sustaining treatment should you be terminally ill, in a persistent vegetative state, or at the end-stage of a condition.  These powers of attorney terminate upon your death.  At that time, the will takes effect and your assets would be distributed in accordance with the terms of the will.

In addition to the powers of attorney and will, every estate plan should include long-term care planning.  With the advance of medicine, people are living longer; yet, most of us have not made ample provision for our future long-term care needs.  Creating an estate plan now ensures that you are in control of your future.

With that in mind, here are some questions you should consider:

  1. Do your current documents name individuals that you trust and who would be appropriate (e.g. a family member or other trustworthy person who lives nearby and who has the time and ability)? Have you named alternates?
  2. Does your financial power of attorney allow your agent to engage in asset preservation or long-term care planning?
  3. Who are the current beneficiaries under your will? Are they still alive?  Do you have alternates?
  4. Have you made provision for an underage beneficiary? Does your will provide for a disabled beneficiary?
  5. How are your assets titled and do they have beneficiary designations? If so, you need to review this information to make sure it coincides with your will.

The attorneys at ERA Law Group, LLC today are here to help.  Call today!