Medicaid is one of the most important governmental service programs that comes into effect when a person no longer has the assets required to pay for long term care such as nursing home and other related services. How you plan for Medicaid, however, is extremely important because you could be blocking yourself from recovering these benefits when you need them the most. One of the biggest mistakes people make when approaching Medicaid planning is purchasing exempt assets prior to the date of admission.
One of the most common protections with Medicaid planning is the community spouse resource allowance, also referred to as the CSRA. You must know what your state considers as assets that are exempt from being spent down to qualify for Medicaid. A couple’s residence, their household goods, one car, medical equipment, jewelry, furnishings, and a few other items are exempted. Other assets such as their CODs, savings bonds, mutual funds, checking and savings accounts and others are considered nonexempt, meaning they could be subject to the spend down requirements.
A Medicaid applicant spouse is eligible to keep one-half as an official CSRA up to a particular maximum. Planning ahead in advance with the help of an experienced Medicaid planning lawyer and elder law attorney can assist you with determining how CSRA is calculated and the things that you can do in order to stay in compliance with the law and get the necessary Medicaid benefits should you or your spouse need long term care services immediately. You may be subject to penalties and a delay of your Medicaid benefits if you do not follow these rules to the letter.
Say the words estate planning and the typical connotation is someone approaching retirement or thinking about approaching the end of their life. However, estate planning benefits far more age categories than just baby boomers and elderly individuals. Estate planning can benefit millennials and young adults too. In fact, some of the most important estate planning documents are those that are used while you are still alive and not only after you pass away.
Having a power of attorney document that enables somebody else to step in and take care of your finances or other responsibilities if you were to become incapacitated due to an accident or disability is equally important as looking into the long range to establish how you’ll pass on assets to your loved ones. Millennials often neglect the process of doing estate planning because they assume they don’t have big enough estate or that something will not happen to them. However, given that a growing number of people need to be concerned about long term care costs and the potential for incapacitation at least once over the course of their lifetime, it makes sense to plan ahead and to think about who will step in to take care of things on your behalf if you were suddenly unable to do so.
Using documents such as a will to name a guardian for your minor child also give you peace of mind that someone will be able to step in quickly if an accident does happen. No one anticipates becoming the victim of an incapacitating event or losing their life early on but millennials and young adults can show that they have a serious consideration of the future and how they intend to protect their loved ones by scheduling a consultation with an estate planning lawyer who has extensive experience in this field.
Do not hesitate to schedule a meeting with a lawyer you can trust. With so much on the line, there are many different things that must be considered and the tools articulated by a lawyer can go a long way in giving you the peace of mind and confidence about your future and the future for your heirs.
As more baby boomers are heading into retirement on a daily basis, common questions emerge regarding estate planning. One of the most common concerns for various baby boomers approaching retirement is how to deal with their homes. This is frequently the most valuable asset for people and is fraught with complicated questions that must be addressed. You might be thinking about selling and downsizing to leave a larger amount of cash for your heirs to divide. Perhaps instead you want to leave the deed to the apartment or the house to your adult children to decrease the chances of a conflict after you pass away.
Since the value of homes is on the rise in many different locations, it is extremely important that you schedule a consultation with an experienced estate planning attorney to talk about how you could protect your most valuable assets. More adults who are reaching their elder years have a desire to age in place in their own home. They may opt to make the gift of their home to someone instead of cashing out and downsizing. There are so many options to consider as you get older that it’s well worth having a candid conversation with your spouse and using the goals you identify in your meeting with your estate planning lawyer.
Whether you intend to pass on assets directly or your home, setting up a consultation with an experienced estate planning attorney can help you identify the strategies and the tools most appropriate for protecting these assets, minimizing the tax consequences to heirs and putting you in a position to easily transfer these assets should something happen to you while also maintaining the necessary funds to support your health care costs.
Doing all of the necessary work to put your things in order and to ensure that you have carefully considered all of the different tools and strategies that can be used to accomplish your estate planning goals is only a piece of the puzzle. It is equally important to consider the many different tools and how you will be able to share these with your loved ones. If something were to happen to you unexpectedly, would your family members know where to locate the necessary information?
For most people, the answer is no. While many people understand the value of putting together an estate plan and ensuring that it is in a safe location such as a safe deposit box, it is common for individuals to put these items in a safe place and then to forget where that safe location is. While you’re assuming that you may never do that, unfortunately, many different estate planning attorneys can share their experience of digging through old boxes and storage looking for a copy of a living will or a power of attorney for people who would have said the same thing. In a case where a client only executes one copy of a will, it should also be copied and stored in several safe locations.
Furthermore, your family members must know where to access these details if something were to happen to you unexpectedly. No one anticipates being in the position of having to put together estate planning documents, however, articulating these in a safe deposit box in a safe location within your home such as a safe that is protected from fire and in your attorney’s office gives your loved ones the necessary materials to take action as soon as possible if something were to happen to you unexpectedly.
Retirement vehicles can be especially problematic for entrepreneurs who do not have the guidance of an employer or an employer’s selected plan to assist them in the process of finding the right retirement vehicle. Although defined benefit plans were once a critical element of the retirement landscape in the United States, these have fallen out of popularity in recent years because of the financial crisis.
Many people typically associated defined benefit plans with public sector employees as well and corporate pensions are becoming less and less available. Defined benefit plans, however, can make sense for at least one type of person; a small business owner and entrepreneur.
These pension plans are an ideal retirement vehicle, giving you a broad range of benefits that can help people to keep a larger share of their wealth and run more effective businesses. Many small business owners including high net worth individuals don’t have any kind of retirement plan in place, much less a pension plan. This means no 401(k), no IRA and no investments.
Small business owners tend to be laser-focused on growing their companies and unfortunately, what often gets overlooked in that process is coming up with a way to maximize retirement savings. Any small business owner that is generating more than $200,000 a year in income should consider setting up a pension plan even if they already use retirement vehicles such an IRA or 401(k). Pension plans have some significant benefits including:
Small business owners should be aware that annual administration fees can be high, particularly for retirement plans. Consulting with an estate planning lawyer to talk about the connection between your estate planning goals and your business and retirement intentions is extremely important. A successful entrepreneur or high net worth business owner would do well to consider how a pension plan can assist them with growing things and maximizing their retirement options.
Whether you’re just entering your working years or looking towards retirement, how you save can impact your life after you’re doing working in a big way. Planning ahead can help you achieve targets that give you peace of mind later in life, even if that period is not that far away. New research shows there are major changes happening with regard to retirement savings and the U.S. workforce.
Are you one of the nearly 70% of Americans worried about their financial future? There is good reason to worry for plenty of people because research from the Economic Policy Institute indicates that half of all Americans have no retirement savings at all. Some young individuals, however, have been dubbed retirement super savers and are on their way toward increased prosperity. They’re contributing at least 90% of their annual 401(k) contribution limit. A study completed by Principle Financial Group identified what made those super savers likely to sacrifice things in their life in order to maximize their 401(k) contributions. Four habits of these super savers include:
- Driving an older car
- Living in a modest home
- Forgoing the fancy vacations
- Working a little bit harder
If you are interested in putting together a retirement plan that works in conjunction with your goals to pass on things to your loved ones in the future, consulting with an experienced New Jersey estate planning attorney is strongly recommended. Becoming a super saver is a worthwhile goal but one that requires careful prospective from many different areas. Engaging with professionals who are knowledgeable about the estate planning and retirement planning landscape can increase your chances of putting aside enough money to support you in your older years and also empowering you to leave money behind for beneficiaries or for philanthropic purposes. Consulting with an experienced estate planning attorney is one crucial component of this step.
When it comes to estate planning, it’s hard to know what documents you need versus those that are not necessary for your individual situation. The only way to know for sure is to schedule a meeting with an estate planning lawyer directly. That way you can share your interests and desires and the lawyer can help you pick the documents necessary for protecting your future and your intentions for your assets. Two of the documents you might discuss during this meeting are the healthcare power of attorney and a living will.
It is strongly recommended that any person have both a health care representative appointment and an advanced medical directive. These documents do not accomplish the same goals. While they may overlap in some of the responsibilities outlined in the documents, they offer different benefits. There are two primary types of advanced medical directives and these deal with end of life decisions.
Although the living will is the most common, some states do allow for the life-prolonging procedure declaration. Advanced medical directives allow you as the creator to provide clear guidance about how life decisions should be handled and what types of care should be provided to you or avoided. This allows you to tell both your doctors and your family members what kind of care you do want at the end of your life. A healthcare power of attorney, however, can be part of a representative appointment or the same goals can be included in a durable power of attorney. Both of these enable someone else to make medical decisions for you in the event that you cannot make them on your own. This includes all medical care decisions regarding end of life. Consulting with an experienced estate planning attorney is strongly recommended if you have a goal of establishing these concerns early on.
There are many different legal documents that may become an important component of your estate plan. In the event that you become incapacitated, your investments must still be managed, your bills must still be made and other financial issues must be dealt with. A durable power of attorney is a document that helps to ensure that if you were to become incapacitated, there is someone to manage your finances. This person serves as your agent and he or she will be able to deposit, write checks and withdraw money from the accounts on your behalf as well to speak with your financial advisors. Ensure that you name a financial agent as someone who you can trust who will act in your best financial interests. A power of attorney is different from a durable power of attorney.
A durable power of attorney can be problematic because many real estate title companies or financial institutions are hesitant about using them because they are not sure whether or not it is the most recent version of the power of attorney. Your general power of attorney ceases to become valid legally as soon as you become incapacitated. However, find out the criteria associated with real estate title companies and your financial institutions before putting together a power of attorney. The companies that manage your retirement accounts might have their own power of attorney forms or other requirements that you need to follow in order to comply. If they do have necessary documents, make sure you use theirs and share this information with your estate planning lawyer.
Some people identify the problems with the power of attorney documents and chose to set up a revocable living trust instead. This can act like a super power of attorney because financial institutions such as banks are legally required to comply with their terms. A revocable living trust tends to be most appropriate for estates that are worth more than $1 million. Transferring assets into the trust and designating yourself as the trustee is the typical course of action followed by people using revocable living trust for estate planning purposes. Contact a knowledgeable estate planning lawyer to learn more about how this can benefit you.
Most people know about the potential impact of costs tied to long-term care, but they haven’t taken time to protect themselves.
Long-term care costs could become overwhelming as a result of longevity. The number of individuals turning age 65 and older is set to double by 2060, by the time that today’s Millennials start to turn 65. They will also make up 24% of the population as compared with 15% today. That means that 1 in 4 individuals will be in an older age category at high risk of needing long-term care.
This is the result of data collected by a study referred to as Aging in the United States. The number of older individuals in the U.S. right now places a major burden on breadwinners in their productive years, but by 2030, there will only be approximately 2.8 adults of working age for every individual age 65 and older. This is a decrease from 5 in 2000.
Today’s working age citizens will be hit by a double whammy trying to build their own economic future and the economy. Data from aging parents shows that approximately 3 out of every 4 aging Americans will need some type of long-term care after age 65. The odds of a financial impact for any working couple with two sets of parents is extremely high if any of those parents does not have the resources for their own care. Long-term care services can be extremely expensive, costing between $100,000 or $200,000 per year, depending on the type of claim services and the location.
When multiple family members involved need long-term care, the cost can become extremely prohibitive, but these financial impacts extend beyond the cost of care. It can also lead to interrupted employment if one partner has to take time off work in order to care for an aging parent.
Baby boomers make up a significant portion of the population today, and as many of them are confronting retirement and realizing they do not have appropriate support behind them, this is redefining what it means to retire. There are approximately 76 million Baby Boomers coping with the impacts of the financial crisis as they prepare for or enter retirement.
The financial crisis decreased the value of their homes, and it cut into their net worth and savings. This means that the confidence carried out by baby boomers in achieving a satisfying retirement decreased significantly. Those are the results of a study commissioned by Bankers Life Center for a Secure Retirement. Less than 4 out of every 10 baby boomers are certain that they will be able to have a personally satisfying retirement. The study looks at how lack of confidence has changed the attitudes and behaviors regarding saving and investing, and how many of them are adapting to meet the new challenges.
Approximately 28% of Boomers are making more conservative investments, and 26% report that they no longer invest due to having weathered the most recent crisis. The Boomers who were surveyed also have decreased their expectations for complete financial independence in retirement. This study indicates that
-Only 19% expect to pay off their mortgage.
-34% expect to retire free of debt.
-16% believe they will have an inheritance to pass on to heirs.
-16% expect to have savings.
The percentage of Baby Boomers who expect to work part-time or full-time in retirement has increased from one-third to almost one-half since before the crisis. The new retirement often means working longer and reconsidering the amount of money they will need to support themselves in retirement.
If you have questions about how retirement planning and estate planning can work together, schedule a consultation with an experienced estate planning lawyer. A lawyer can walk you through how these issues often intersect, and the appropriate strategies and tactics you can use to protect yourself now and well into the future. With a lot on the line for your retirement, as well as your ability to pass on assets to your loved ones, taking action sooner rather than later is strongly recommended.
Your children are probably some of the most important people in your life. Parents spend a lot of time worrying about and thinking about their children’s future.
Spending time with your children over the summer holidays can reignite concerns about what will happen to them after you pass away. This is a natural inclination that may even prompt you to schedule a meeting with an estate planning attorney. Although estate planning certainly has individual benefits for the person putting together the materials, it also has many advantages associated with your children or your grandchildren. There are five primary ways that properly structuring your estate plan and consulting with a knowledgeable attorney can assist you. These include:
- Protecting benefits for a disabled child.
- Protecting the inheritance that you leave behind for children.
- Ensuring future vacations at the family vacation home.
- Assisting adult children with health care decisions.
- Providing for someone to step in and care for your minor children in the event that you pass away.
All of these crucial issues can be addressed typically in one or a series of meetings with the right estate planning lawyer. Many people put off the prospect of estate planning because they assume that they do not need it or that it is too time consuming or expensive. However, scheduling a consultation now will give you an overview of all of the different things that can be accomplished with the right lawyer.
You know you need to set up a will and perhaps a trust, too. A Google search reveals a broad range of websites that promise to help you do just that either for free or a minimal cost. Pointing and clicking, though, is a dangerous approach to take with your estate planning.
Using an online site to put together estate planning documents like a power of attorney, a trust or will is appealing if you think that you might not be able to afford to shell out a few hundred dollars for an estate planning lawyer, or in situations in which you need the paperwork settled quickly. However, there can be major risks associated with doing this, particularly if you have an issue that requires legal oversight like caring for a special needs child to protect him or her being cut off from government benefits, or if your financial situation is complex.
If you have an uncomplicated estate, it’s still a good idea to schedule a consultation with an experienced estate planning attorney because you can get further insight about how relevant laws and regulations affect you as well as further strategies that can help to protect you and carry out your wishes. With so many things that must be accomplished and even the most basic of estate planning documents, it can be a mistake to assume that a generic form is capable of capturing all of the information you will need to have your wishes carried out once you pass away.
Far too many people never even realize the negative impacts of failing to take action because their family members will be the ones sorting out conflicts and unresolved issues after the loved one passes away. Do your family a favor and schedule a consultation with an experienced estate planning attorney so that you can learn more about the benefits provided by estate planning.
Knowing your rights as it relates to Medicaid can be extremely important if you intend to qualify for this government program. Federal Medicaid regulations mandate that a state obtain reimbursement from an individual’s estate for the cost of long term nursing facility services, as it relates to Medicaid.
The service may put a lien against a person’s personal or real property by a New Jersey Medicaid program as a way to secure reimbursement for services. In New Jersey, this Medicaid program carries out two types of Medicaid liens. The first is a pre-death lien placed on a person’s property prior to death.
An estate recovery or a post-death lien is filed after the death of the recipient. After an individual enters into the Medicaid program and is classified as permanently institutionalized, a lien is filed against a property to prevent assets from being transferred out avoid a Medicaid lien. This can have significant implications for your estate planning process and for that reason, should be discussed directly with a knowledgeable lawyer as soon as possible.
Estate planning is always important, but most people are uncomfortable looking towards a future and considering the possibility of incapacity or death.
Waiting too long to consider asset protection, estate planning or business succession planning could expose you to major risks. Although there are still steps that can be taken to minimize the outcome of these problems after a crisis has struck, it is far better to do the diligence ahead of time to plan for a potential problem. Being caught in the midst of a legal conflict or a complicated issue can generate a great deal of stress and unnecessary confusion.
Handling these issues well in advance by sitting down and talking them over with an experienced lawyer can help you identify where your estate is currently exposed to risk or jeopardy. Waiting too long to put together an estate plan or articulating how you intend for your business to be transferred to another person, for example, could make it difficult if you are suddenly incapacitated.
If you were unable to speak for yourself and these decisions had to be made, this could generate conflict within your family. It is far better to schedule time to consult with a lawyer about your own intentions so that your beneficiaries are empowered should something suddenly happen and so that you minimize the chances of confusion or conflict.
Almost everyone has some type of retirement account, whether it’s a pension, IRA, or 401(k). So, it’s important to plan ahead for your estate purposes. One of the first things to know about a retirement account is that your beneficiaries will most likely owe taxes on the retirement accounts passed down to them.
Assets like real estate, non-retirement investment accounts, vehicles and life insurance are not counted as income when they are inherited. However, retirement accounts are classified as income in respect of a decedent. The second thing to know is that not all retirement accounts are treated in a similar fashion. A beneficiary who left behind an employer sponsored plan like a pension or a 401(k) will be subjected to more requirements and limitations than IRAs.
Many people will name their spouse as their primary beneficiary, but the third thing to know about retirement accounts is that it doesn’t provide any level of protection or preservation for the inherited accounts. Make sure that your broader estate planning objectives match the beneficiary designations.
The fourth thing to know about retirement accounts is that there is an increased level of flexibility and protection afforded by passing a retirement account to your beneficiaries via a trust. However, retirement trusts have to be drafted appropriately by an experienced estate planning attorney because of the income tax treatment of inherited retirement accounts. Bear in mind that without significant planning, the funds could be subject to the claim of any beneficiary’s judgment, creditors, or bankruptcy. Consulting with an experienced estate planning attorney is one way to avoid these negative consequences.
Many people hope that they will never be disabled or poor, however, the biggest myth that many people are countering today that they will be able to pay for themselves in their old age. A majority of people are actually not able to do this. One in three individuals who turn 65 will end up in a nursing home at some point over the course of their lives and research from the Kaiser Family Foundation shows that 62% of them cannot pay the bill on their own.
When you run out of assets, Medicaid steps in to pay. The Medicaid program could have hundreds of billions of dollars less to spend, however, if the current Medicaid debate in Washington leads to significant cuts. The average annual cost of a nursing home for a semi-private room is $82,000, according to Genworth Financial. Most people cannot afford to pay that amount and certainly not for a long period of time, particularly if they have already spent a good portion of their retirement for the 10 or 20 years prior. If a spouse has already needed years of expensive care, then the other partner is even more vulnerable.
Talking to an experienced estate planning lawyer about your options for planning for Medicaid is extremely important. It is a responsibility to do your planning and it’s not unethical to look ahead towards how to qualify for Medicaid legally. Medicaid is a complicated program fraught with rules and regulations, which is why you need an estate planning or elder law attorney who knows the landscape and can help walk you through these issues up front.
A fiduciary is someone with a moral as well as a legal obligation to put their client’s interests first. Not every adviser would consider themselves to be a fiduciary and this could leave that person open to conflicts of interest. A new fiduciary role, however, requires that all advisors who work with retirement plans or provide any type of retirement and planning advice consider themselves fiduciaries, but other financial advisors may or may not act as strictly as fiduciaries. The best way to know for sure is to ask to your advisor.
Make sure that when selecting a trustee, you choose someone with the right kind of knowledge. Your trustee will most likely have to make serious decisions about how to manage the assets within your trust and they will need to have the appropriate background to make educated decisions. Ideally, they will have both an investment and a tax background and other types of experience may be required based on the types of assets within your estate.
If you have a small business as part of your estate, for example, you will want a trustee with business management experience. Consulting with a knowledgeable attorney to discuss the various benefits of moving forward with choosing a trustee is wise. Make sure that the individual that you select is well aware of his or her responsibilities, is capable of carrying them out and is comfortable doing so.
Approaching the overwhelming cost of college is a challenge that many parents are thinking about this summer as they are preparing to send off their new graduates to college. With the cost of graduate school as well as college on the rise, many prospective students and parents are looking towards retirement accounts as an effective way to pay for school.
According to a recent study conducted by Sally May & IPSOS, up to 6% of parents withdrew from their retirement savings such as an IRA or a 401(k) to help pay for a child’s college. Since the price of college has gone up, it may the case that parents do not have enough set aside to pay for college. There are some considerations to evaluate before using an IRA to pay for school:
- Withdrawals prior to age 59 and a half can lead to a 10% penalty except in situations like putting down a payment on a first home or higher education expenses. The expenses have to be for a child, grandchild, a spouse or yourself. When withdrawing from an IRA, a student or a parent can pay for tuition, books or other qualified education expenses with no penalty.
- There are major differences between using a traditional IRA and a Roth IRA for higher education costs. The best approach is to use a Roth IRA to pull out without a 10% early withdrawal penalty.
- You can roll a 401(k) into an IRA to pay for educational expenses.
A withdrawal from an IRA can impact financial aid. Students who apply for need based financial aid have to report asset information and income on the free application for federal student aid. Money inside a retirement account such as a traditional or a Roth IRA are assets that are exempted from being evaluated on the FAFSA, but withdrawing funds from an IRA account does count as income over the following years.
Many people who have been saving for their children’s college education over the past couple of decades since the children were born will have set up a Uniform Transfer to Minor Act. Some financial aid documents may illustrate that it could be beneficial for the assets to instead be in a section 529 plan rather than in a custodial UTMA account. Student assets are assessed more heavily in the purposes of determining financial aid from the government perspective.
Many of the assets owned by the parent are sheltered on the FAFSA. For example, life insurance policies, the net worth on the principle place of residence, small businesses owned and controlled by the family and life insurance policies, all do not have to be reported on the Free Application for Federal Student Aid. An age-based asset protection allowance also allows the parents to shelter up to $50,000 in assets. Student assets, however, do not have an asset protection allowance and can be assessed at the flat rate of 20%. Each $10,000 that has been set aside in the student’s name will increase the expected family contribution by approximately $2000.
On the FAFSA, a student is responsible for reporting the custodial UTMA account. A 529 college savings plan, however, is reported as a parent’s asset on the FAFSA, even if the account has the student’s name on it and it is owned by the student. The favorable treatment of 529 college plans became effective relatively recently in 2009. You may be eligible to transfer money from a UTMA or other custodial account to a 529 savings plan.
You will need to set up a custodial 529 college savings plan account since the money will be transferred from a UTMA account to begin with. When the child reaches the age of trust termination, which is usually 18 or 21 depending on the state, he or she officially becomes the owner of the section 529 plan. Talking to an experienced estate planning lawyer is strongly recommended if you are interested in these plans.