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Asset Protection Planning

Asset Protection Planning . Uniquely designed solutions to protect our most cherished generation!. www.Eldercarelawofcky.com 859-298-2150 . What is an Elder Law Attorney?.

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Asset Protection Planning

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  1. Asset Protection Planning Uniquely designed solutions to protect our most cherished generation! www.Eldercarelawofcky.com 859-298-2150

  2. What is an Elder Law Attorney? Elder Law is simply a term used for an attorney and defined by the client to be served. In other words, the attorney who practices Elder Law may handle a range of issues but has a specific type of clients--- Seniors! Elder Law encompasses many different fields of Law. Some of these include: • Preservation/transfer of assets seeking to avoid spousal impoverishment when a spouse enters a nursing home. • Medicaid Planning, Claims, and Appeals • Social security and Disability claims and appeals. • Supplemental and long term health insurance issues. • Disability planning: Powers of Attorney, Living trusts, Living wills, Financial planning and Health care decisions. • Conservatorships and Guardianships • Estate planning • Probate

  3. Continued… • Administration and Management of trusts • Long-term-care placement • Nursing Home issues including patients’ rights and nursing home quality. • Elder abuse and fraud recovery cases • Planning and eligibility for Veterans Administration benefits • Age discrimination in employment • Retirement planning, including pension planning. • Health law/ mental health law. Most Elder Law Attorneys do not specialize in every one of these areas. When choosing an Elder Law Attorney, make sure he/she has experience in the area of Law that you need.

  4. Supporting Elder Law Facts and Figures • The number of older Americans by 2020 will be 56 million and will increase to 79.7 million in 2040. • Today, 1 in 7 people in the US is an older American (13.7%). • 28% of our Older Americans live alone. • 1 in 5 adults is caring for a relative or friend over the age of 50. • This is 44 million Americans. • 1/3 of Older American households do not have money left each month to pay all of their bills and are forced to dip into savings.

  5. Continued… • The average credit card debt among individuals over 65 years of age is $9,283. • The average net worth of Older Americans is $232,000. • National Average Costs of Long Term Care: • Private nursing home bed $248 a day or $7,440 a month and $90,520 a year. • Semi-private room is slightly lower at $239 a day or $7,170 a month and $87,235 a year. • A room at an assisted living facility is $3,550 a month or $42,600 per year. • An at home caregiver is $24 per hour. (2014 figures) • The median length of stay in an assisted living facility is 22 months. • After 22 months, 59% of residents go to skilled nursing care. • After 22 months, 33% pass away. • After 22 months, the remaining percentage relocate to a similar location.

  6. What is Medicaid Asset Protection? • Medicaid Asset Protection (MAP) is the implementation of legal strategies available pursuant to 42 USC 1396 (OBRA 1993) in order to protect hard earned assets from the “Medicaid Spend-Down”. • These strategies are custom tailored to suit the Client. • The strategies allow the Client to transfer assets to their heirs that would normally go to a nursing home or its equivalent.

  7. What is the “Medicaid Spend-Down”? • The Medicaid Spend-Down is the process of making the Client “Impoverished” so that they become financially eligible for Medicaid. • Without planning, this process involves paying for the required care out of pocket until the Client’s assets are below the Individual Resource Allowance. ($2,000 for the Client) • The Average cost in Kentucky for Nursing Facility care is $72,802.90 per year. ($6,066.90/month)

  8. Pro-Active vs. Crisis Planning • Pro-Active planning means positioning assets in such a way that protects them from the Medicaid Spend Down before the Client needs Long Term Care. • There is a five year look back on property transfers. If the transfer happened more than five years ago, you don’t have to mention it on the application. • Crisis Planning means employing advanced strategies for Clients that need Long Term Care immediately in order to protect as many assets as possible from the Medicaid Spend Down.

  9. Who are the “Crisis Clients”? • Aged – 65 and up. • Disabled - The Medicaid definition of disability is the same as for SSI and SSA. These programs define disability as: "...inability to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be expected to result in death or has lasted or can be expected to last for a continuous period of not less than 12 months.“ • Client has assets or income which prevents them from being eligible for Medicaid immediately. • Even if the Client has no heirs to leave assets to we can help them.

  10. Who are the “Pro-Active Clients”? • Age 55 and up, including children of parents who are age 55 and up. • Has a positive net worth. • Clients with a Special Needs child or spouse.

  11. Kentucky Resource Numbers

  12. The Path to the Nursing Facility • You have had a recent prior hospital stay of at least three days • You are admitted to a Medicare-certified nursing facility within 30 days of your prior hospital stay • You need skilled care, such as skilled nursing services, physical therapy, or other types of therapy • If you meet all these conditions, Medicare will pay for some of your costs for up to 100 days. For the first 20 days, Medicare pays 100 percent of your costs. For days 21 through 100, you pay your own expenses up to $170.50 per day (as of 2019), and Medicare pays any balance. You pay 100 percent of costs for each day you stay in a skilled nursing facility after day 100.

  13. How to plan for a Client: • With a spouse living at home: • Who is single: • Who has a special needs child: • With no children: • With a small estate:

  14. Strategies: • First subtract the non excluded resources.(or don’t count them in the first place) • House (for the firs six months) • Household equipment and personal property. • First $6,000 of equity in rental property • One vehicle. • Burial space • Term and burial insurance. • Pre-paid funeral etc. • $1,500 Cash Value in Life Insurance. • Retirement plans. • Resources which are inaccessible for 30 days or more and Client is attempting to liquidate.

  15. Strategies Cont. • Take advantage of all exempt transfers. • Transfer house to the spouse.(into a MAPT) • Purchase Pre-paid funeral if not already owned. • Special Needs Child? SNT • Pay the Attorneys! • Make necessary updates and improvements to the home. • Purchase a new car for the Spouse (one car is exempted) • Advanced Strategies • Gift and Gift Back. • Give 2X to a MAPT, and have the trustee gift back X to get past the penalty period. • Gift and Annuity. • Gift X and buy an annuity with an amount necessary to get past the penalty period. • Use an annuity to transfer excess liquidity to a community spouse. • Gift plus Promissory notes • Personal Care Agreements

  16. Strategies Cont. • Purchase Income Producing Real Estate • Transfer to Pooled Trust (self settled) • Transfer Home • Pay off all debt.

  17. Estate Recovery • The Department for Medicaid Services (DMS) will recover against ALL assets held by the recipient at the time of death. (MS 3730 2019 Medicaid Manual) • MS 3720 ESTATE RECOVERY • Estate recovery results in the State filing a claim against the estate of an individual in order to recoup Medicaid (MA) expenditures paid on the individual's behalf. A. Estate recovery is made against a deceased individual's estate. This includes all assets such as cash, personal possessions, and homestead property. 1. A claim is filed against the estate for the total amount of MA expenditures accruing on and after February 2, 1994.

  18. What assets are protected from Estate Recovery? • Assets transferred to an irrevocable trust during life, or outright gifted. • These transactions have already been penalized if they fell within the 5 year lookback. • 401k’s: States have not pursued 401ks. They are protected, under IRS tax rules, from creditors. Qualified plans are not subject to general creditors, which is what Medicaid is.

  19. Which assets are not protected from Estate Recovery? • All assets owned by the Institutionalized person. • If assets were labeled as “income”, such as rental property or business property, etc., those will be available if they are still owned by the institutionalized spouse at his/her death.

  20. Sources • The Administration on Aging http://www.aoa.gov/Aging_Statistics/Profile/index.aspx • 2012 MetLife Market Survey of Long Term Care Costs https://www.metlife.com/mmi/research/2012-market-survey-long-term-care-costs.html#keyfindings • CNN Money http://money.cnn.com/tools/ • National Center for Assisted Living http://www.ahcancal.org/ncal/resources/Pages/default.aspx • Division of Family Support Operation Manual Volume IVA R. 2.29.16 • Krause Financial Services

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