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Estate Planning For The 21st Century . Presenter’s Name Event Date. IMPORTANT SLIDE INFORMATION. NAELA Members The following slides were graciously provided by NAELA Member Rajiv Nagaich from Washington state. NAELA members have permission to reuse these slides for their own firm’s purpose.

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estate planning for the 21st century

Estate Planning For The 21st Century

Presenter’s Name

Event Date

important slide information
IMPORTANT SLIDE INFORMATION
  • NAELA Members
    • The following slides were graciously provided by NAELA Member Rajiv Nagaich from Washington state. NAELA members have permission to reuse these slides for their own firm’s purpose.
      • Use of the NAELA logo is limited to active NAELA members only.
    • The slides were created to provide a foundation for presenting information on Estate Planning and Long Term Care Planning and MAY NOT provide accurate or current information for your specific state
      • To ensure the accuracy of your presentation, you MUST review and update the contents of the slides with your state’s legal requirements
traditional notions of estate planning
Traditional Notions of Estate Planning

Who gets what when I die

Who manages my checkbook and health needs when I can no longer attend to those needs myself

Do I want to be kept alive if I am comatose and cannot communicate

assumptions
ASSUMPTIONS
  • Go to sleep and not wake up
  • My agents will know what to do
  • Biggest issues are:
    • Providing for quality of life
    • Avoiding probate
    • Avoiding estate taxes
    • Making it easy for beneficiaries
assumptions do not apply today
Assumptions do not apply today
  • We are living longer – but not necessarily living healthier
  • One out of eight Americans over 65 dependent on others for day-to-day living activities
  • One out of every two Americans over 85 dependent on others for day-to-day living activities

Source: Alzheimer’s Disease Facts and Figures, 2007, Alzheimer’s Association

issues created
Issues Created
  • Financing health care costs, many of which may not be covered by Medicare or health insurance
  • Managing Quality of Life
financing long term care
Financing Long Term Care
  • Medicare / Health Insurance
    • Cover acute care needs
    • Do not cover chronic care needs
    • Unless . . .
  • Where Medicare or Health Insurance leave off:
    • Private assets (including Long Term Care Insurance)
    • VA
    • Medicaid
limitations
Limitations

Long Term Care Insurance is NOT widely embraced

VA and Medicaid benefits are limited

va benefits
VA Benefits
  • Aid and Attendance – non-service connected disability is dependent upon your qualification* up to:
    • Veteran: $1,645 per month
    • Spouse of Veteran: $1,057 per month
    • Married Veteran: $1,945 per month

*http://www.canhr.org/factsheets/misc_fs/html/fs_aid_&_attendance.htm

medicaid benefits
Medicaid Benefits
  • Food, shelter and medicine
  • Income used as deductible towards care costs; $55.45 / $60.78 /$90.00 per month personal needs allowance [state specific, changes annually – please update with your state’s requirements]
  • All clients treated the same
    • DME
    • Semiprivate rooms
    • Limited personal care needs

What is missing?

va eligibility
VA Eligibility
  • Service Requirements
    • 90 days in active duty with 1 day in war time period
      • World War I: April 6, 1917, through November 11, 1918
      • World War II: December 7, 1941, through December 31, 1946
      • Korean War: June 27, 1950, through January 31, 1955
      • Vietnam War: August 5, 1964 (February 28, 1961, for veterans who served "in country" before August 5, 1964), through May 7, 1975
      • Persian Gulf War: August 2, 1990, through a date to be set by Presidential Proclamation or Law.
    • 24 months if enlisted after September 7, 1980
va eligibility1
VA Eligibility
  • 65 years old or permanently disabled
  • Income less unreimbursed medical expenses less than:
    • $1,945 for married veteran
    • $1,645 for single veteran
    • $1,057 for spouse of veteran
va eligibility2
VA Eligibility
  • Net Worth:
    • Unfortunately, there is no asset limit set by law, and the determination of eligibility can be made at the discretion of a VA caseworker.
    • All personal goods are exempt from the net worth and include:
      • the home in which claimant lives;
      • a vehicle used for the care of the claimant; and
      • household goods and personal effects such as clothes, jewelry and furniture.
resource test state specific changed every year please update with your state s requirements
Resource Test [state specific, changed every year – please update with your state’s requirements]
  • Single Applicant:
    • $2,000
    • House (with equity of up to $500,000 [$750,000 in some statee])
    • One automobile (any value)
    • Prepaid funeral plan (irrevocable and of reasonable value) – burial plots for family members
    • $1,500 cash value in life policy
    • Personal property (any value)
    • BUT- Assets subject to state Medicaid lien
  • Married Applicant:
    • $2,000
  • Spouse of Applicant
    • House (any value)
    • One automobile (any value)
    • Between $74,820 and $109,560
    • Prepaid funeral plan (irrevocable and of reasonable value) – burial plots for family members
    • $1,500 cash value in life policy
    • Personal property (any value)
who should worry
Who Should Worry?
  • Middle class Americans
    • Between $50,000 and $1,500,000 in assets
estate planning solutions
Estate Planning Solutions
  • Pre-crisis options
  • Crisis planning options
pre crisis planning
Pre-Crisis Planning
  • Utilize Special Needs Trusts
  • Utilize Income Only Trusts
typical estate plan married
Typical Estate Plan (married)

Decedent’s share

Surviving Spouse’s share

Surviving

spouse owns all assets

Entire estate subject to spend down to access.

way around the problem
Way Around the Problem

Decedent’s share

Surviving spouse’s share

To Testamentary Special Needs Trust for surviving spouse

Surviving spouse owns only half estate

Surviving spouse’s share subject to spend down

Special Needs Trust protected

typical estate plan unmarried
Typical Estate Plan (unmarried)

Decedent’s estate

Assets owned by testator during life

Nearly entire estate must be spent down to access VA or Medicaid benefits

way around the problem1
Way Around the Problem

Gift of some assets to irrevocable trust or trusted individual

Settlor cannot be a beneficiary of the principal

Trustee can provide funds to beneficiary, who can use funds as beneficiary sees fit.

Assets in irrevocable trust or Safe Harbor Trust protected (subject to look back period)

pre crisis planning1
Pre-Crisis Planning
  • Update Community Property Agreements (only in community property states)
    • Revocable by one party
  • Update Powers of Attorney
    • Gifting Powers
    • Care Management mandate
    • No authority to enter into arbitration agreements
  • Living Wills
    • Update Living Wills after Terry Shiavo
    • Update Health Care Proxy in states where they are separately required
pre crisis planning2
Pre-Crisis Planning

Discuss your plan with named fiduciaries

crisis planning
Crisis Planning
  • Financing the costs
    • Medicare
    • VA
    • Medicaid
  • Develop plan to address quality of life issues
  • Address Estate Planning issues