Salt Lake City Estate Planning

Selecting the Right Medicare Plan

Most people fill Medicare’s coverage gaps by buying a Medicare supplement (Medigap) plan and a Part D prescription-drug plan, or they get both medical and drug coverage from a private insurer with a Medicare Advantage plan.

Kiplinger’s recent article, “8 Steps to Picking the Right Medicare Plans During Open Enrollment” explains that you have from October 15 until December 7 each year to choose a Medicare Part D prescription-drug plan or a Medicare Advantage plan for the coming year. You can move from one Part D plan to another, or from one Medicare Advantage plan to another. You can also switch into a Medicare Advantage plan.  However, if you have Medicare Advantage and want to switch to a Medigap plan plus a Part D plan, you may have limited Medigap options depending on your health.  You can go with any Part D plan during open enrollment.

Things change, including the drugs you take or the doctors you see, along with the coverage under your plan for next year. A form should arrive at the end of September that indicates any changes for 2018 to the cost and coverage of your current plan. Look at changes to drug formularies, drug tiers, and co-pays that impact the drugs you take.

Remember that the Part D plan with the lowest premiums may not be the least expensive overall, if you have high co-pays for your drugs. The average Part D premium for 2018 will be $33.50 per month—that’s actually $1.20 less than 2017’s average. This is primarily because several large insurers are offering low-premium plans (sometimes less than $20 per month) with preferred pharmacies. Co-pays can differ, based on your drugs and the pharmacy you use.

If you’re looking for a Medicare Advantage plan, analyze the plans’ coverage and co-payments for the types of medical care you usually use. The average Medicare Advantage plan has a $30 premium per month in 2018, but some plans have $0 premiums because they may have some of the smallest provider networks and generally require higher co-payments for doctor’s visits, hospital stays, and other types of care.

Be sure that your healthcare professionals are included in the Medicare Advantage networks you’re evaluating and find out what happens if you use an out-of-network doctor. Some Medicare Advantage plans are PPOs. They just charge a higher co-payment and have a higher out-of-pocket maximum for out-of-network care. Most have provider networks in a state or region, but some allow you to use networks in other states.

Medicare Advantage may also offer coverage that traditional Medicare doesn’t, like vision and dental care or hearing aids.

Note that it’s becoming more common for Part D and Medicare Advantage plans to require prior authorization for high-cost medications. Many plans also require step therapy, where you try a less-expensive drug first, if possible.

If you end up deciding to keep your current plan, you don't need to do anything. You are automatically re-enrolled if the plan continues to be offered next year. Even so, review the Annual Notice of Changes.

Reference: Kiplinger (October 20, 2017) “8 Steps to Picking the Right Medicare Plans During Open Enrollment”

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Big Changes Proposed for Medicaid

The head of the Centers for Medicare and Medicaid Services, Seema Verma, recently issued new guidance that’s designed to help states create programs to encourage "able-bodied, working-age Medicaid beneficiaries" to participate in skills training, education, job search, volunteering or care giving.

The USA Today reports in a recent article, “Trump administration opens the way for a Medicaid work requirement” that the orders would be a major paradigm shift in the manner in which the Medicaid program is administered. Medicaid is the government health care program for low-income people.

“Medicaid needs to be more flexible, so that states can best address the needs of this population," Verma said in a statement announcing an initiative that could affect millions. "Our fundamental goal is to make a positive and lasting difference in the health and wellness of our beneficiaries," she said.

Where there’s high unemployment, CMS said that beneficiaries could satisfy the requirements by caring for young children or elderly family members. States would be required to create ways to help beneficiaries meet the requirements and to help them find job training, provided they use non-Medicaid funds to do this. CMS is anticipated to begin approving state waivers promoting "community engagement activities" in coming weeks.

People are not legally required to hold a job to be on Medicaid. However, states traditionally can seek federal waivers to test new ideas for the program. CMS says 10 states have applied for waivers involving work requirements or community involvement: Arizona, Arkansas, Indiana, Kansas, Kentucky, Maine, New Hampshire, North Carolina, Utah, and Wisconsin.

The new order may see some legal challenges. Health groups and advocates for the poor claim that the Centers for Medicare and Medicaid Services doesn’t have the power to grant such requests.

The new guidance states that pregnant women, disabled people, and the elderly should be excluded from the new requirements and that factors, including child care or elder care burdens should be considered. Undergoing substance abuse treatment should also be considered "community engagement" for people seeking to recover from addiction.

Reference: USA Today (January 11, 2018) “Trump administration opens the way for a Medicaid work requirement”

If you would like more information, please give our office a call for a FREE consultation, 801.438.7120!

Have You Conducted Your “Dostadning?”

“Death cleaning” is the literal translation of the Swedish word dostadning, which means an uncluttering process that begins as people age. There’s even a new book called “The Gentle Art of Swedish Death Cleaning,” by Margareta Magnusson.

Santa Fe New Mexican’s recent article, “How to ‘death clean’ your finances,” says the focus should be on jettisoning junk. However, most senior’s finances could also use a good death cleaning. Simplifying and organizing our financial lives can make things easier for us while we’re alive and for our family after we’re gone.

This task becomes more pressing when we’re in our 50s. Our financial decision-making abilities generally peak around age 53, researchers say, while rates of cognitive decline and dementia start to increase at age 60. As we get older, we may become more vulnerable to fraud, scams, unethical advisers and bad judgment. Here are some steps you can take:

Consolidate financial accounts. Fewer accounts are easier to watch for suspicious transactions and overlapping investments. You also may save on account fees. See if your employer will let you transfer old 401(k) and IRA accounts into its plan or consolidate them into one IRA. Think about exchanging individual stocks and bonds for professionally managed mutual funds or exchange-traded funds (investigate prior to selling any investments held outside of retirement funds). Move scattered bank accounts into one account, but note that FDIC insurance is generally limited to $250,000 per depositor per institution.

Automate payments. Memory lapses can cause missed payments, late fees, and credit score damage. This can drive up the cost of borrowing and insurance. Set up regular recurring payments in your bank’s bill payment system, have bills charged to a credit card and set up an automatic payment, so the card balance is paid in full each month.

Scale back on credit cards. Keep just two credit cards: one for everyday purchases and another for automatic bill payments. Closing accounts may hurt credit scores, so wait until you’re sure you won’t need to apply for a loan before you start cutting down on the plastic.

Assign a watchdog. Identify the person you want to make decisions for you, if you’re incapacitated. Ask your attorney to create two durable powers of attorney — one for finances and another for health care. You don’t have to designate the same person for both, but name backups if your first choice can’t serve. Consider naming someone younger, because someone your age or older could become impaired at the same time you do. Discuss where your agent can find the information and access.

Your emergency file. Create “in case of emergency” files that your trusted agent or heirs will need. The file can include the following:

• Estate planning documents, such as your will, trust, healthcare directives, powers of attorney, and living will;
• Birth, death and marriage certificates;
• Military records;
• Social Security cards;
• Car titles, property deeds and other ownership documents;
• Insurance policies;
• A list of your financial accounts;
• Contact info for your attorney, CPA, financial adviser, and insurance agent; and
• Photocopies of passports, driver’s licenses, and credit cards.

A safe deposit box isn’t the best spot because your agent may need access outside of bank hours. A fireproof safe or a locked file cabinet may be better, but share the combination or key (or its location) with your trusted person. Scan important papers and retain an encrypted copy in the cloud to help you or someone else recreate your financial life, if the originals are lost or destroyed.

Reference: Santa Fe New Mexican (December 18, 2017) “How to ‘death clean’ your finances”

If you would like more information, please call our office for a FREE consultation 801.438.7120!

Here's How to Leave a Legacy

The Northwest Herald’s recent article, “4 Ways of Leaving a Legacy” says that after toiling hard for many years in a career to accumulate wealth, you want to make certain that, at your death, your assets are properly distributed.

You need to have a Will. It’s essential. Even if you have other estate planning strategies and documents, a Will lets you direct specific assets to a particular person or to make a general bequest. A Will names an executor to settle the estate, a guardian for minor children and instructions to distribute property, according to your instructions.

A Trust is an option preferred by many experienced estate planning professionals. You should work with a veteran trust lawyer to create one. A Revocable Living Trust is flexible and can be changed at any time. It can protect your property, if you become incapacitated. An Irrevocable Trust can’t be modified. However, it can reduce estate taxes and offer protection from potential creditors. The key advantage of using a trust is that it avoids probate and eliminates the need for a financial guardian in the event of physical or mental incapacity.

A Beneficiary Designation is important for contractual-type property, like life insurance policies, annuities and retirement accounts. You need to make sure that you have updated primary and contingent beneficiaries. Re-evaluate your choices regularly, as circumstances change and life events occur. Beneficiaries can only be changed by signing a new beneficiary designation form. Your will or trust have no impact on them.

Joint Ownership arrangements transfer property to the co-owner, in the event of the other owner’s death. This is common with the family home and it’s appropriate for some types of property. Speak with your attorney about how to use this approach.

Although leaving a legacy can be complex, consult with a qualified estate planning attorney to guide you in the right direction.

Reference: Northwest Herald (November 28, 2017) “4 Ways of Leaving a Legacy”

If you have more questions please give our office a call for a free consultation 801.438.7120!

Work with an Elder Lawyer for a Special Needs Trust

Say that an 82-year-old was recently diagnosed with Alzheimer's. His 78-year-old wife takes care of him. They have $1 million in retirement funds and want to set up a trust fund for their children who have disabilities. If the father needs long-term care, will his wife have enough to care for herself and the children?

nj.com’s recent article, “How to help Mom when Dad has Alzheimer's,” advises that those in this or similar situations can benefit from meeting with an elder law attorney about special needs trusts and other benefits planning.

In many states, the average daily cost of nursing home care is more than $450. Money from a long-term care policy can help in stretching other available resources to privately pay for long-term care, if necessary. Medicaid might also come into play.

Medicaid is a needs-based program which has income and asset limitations that are applicable before an individual can qualify for assistance. There’s a penalty on any transfers made within five years of applying for Medicaid. The penalty is the number of months that a person will be ineligible for the program. The penalty period begins to run only after an individual enters a nursing home and would otherwise be eligible for Medicaid—not at the time of the transfer. During the penalty period, Medicaid won’t pay for the nursing home. The senior is on his or her own, and private funds must be used.

Gifts and sales, to the extent they’re less than for fair market value within five years of applying for Medicaid, are also subject to a penalty. Therefore, it’s important that seniors and their families understand the consequences of transfers made by a parent for the children within the five-year look back period and the potential imposition of a penalty period, during which Medicaid funding won’t be available after assets are spent.

Talk with an experienced elder law attorney about Medicaid and determining parents’ eligibility.

Reference: nj.com (December 7, 2017) “How to help Mom when Dad has Alzheimer's”

If you would like more information, give our office a call for a free consultation 801.438.7120!

Steely Dan Founder’s Estate Battles with Bandmate Over the Band’s Ownership

 

The estate of one of Steely Dan founders says bandmate Donald Fagen's lawsuit over ownership of the band is "riddled with half-truths and omissions." The estate of Walter Becker has responded to a lawsuit filed by Fagen over the ownership of the band, following Becker's September 3 death.

Rolling Stone’s recent article, “Walter Becker's Estate Responds to Donald Fagen's Steely Dan Lawsuit,” reports that in the lawsuit, Fagen accuses Becker's estate of reneging on a Buy/Sell Agreement that he and Becker agreed to in 1972. Under that agreement, one member of the duo would buy all shares of Steely Dan, if the other member quit or died.

"We believe the agreement to which Mr. Fagen refers in his suit—drafted 45 years ago—was not in effect at the time of Walter's death," a representative for Becker's estate said in a statement to Rolling Stone.

"Mr. Fagen's lawsuit, riddled with half-truths and omissions, misleadingly fails to state that the day after Walter died, Mr. Fagen had his lawyer send a demand letter to Walter's estate, thus beginning a legal campaign against Walter's family immediately after his death."

The lawsuit also sued the band's former business managers and tour accounting company over "secretive behaviors." Fagen said he received a letter from Becker's widow stating that, as director or officer of Steely Dan, she is entitled to 50% ownership of the band. He also accused the Becker estate of not giving up control of the Steely Dan website. But a spokesperson for the Becker estate remarked that "the misrepresentation that his widow, [Delia Becker] initiated any litigious action is simply untrue." The estate claimed that they twice have neared a compromise with Fagen's legal team, only for Fagen to fire both lawyers. A third lawyer for Fagen filed the lawsuit, they allege, without first reaching out to the Becker estate.

Following the publication of the Rolling Stone article, Fagen's attorney said that "Mr. Fagen reluctantly took this step in response to certain actions of Mr. Becker's estate. The main point is that the Buy/Sell agreement at the heart of the suit is as valid as the day it was signed. It's something Mr. Becker felt strongly about keeping in place and honoring, even during his years of illness. Mr. Fagen believes Mr. Becker's estate is entitled to receive all normal royalties on the songs they wrote together. But this case is about the future of the band, and we will vigorously defend the contract."

Reference: Rolling Stone (November 27, 2017) “Walter Becker's Estate Responds to Donald Fagen's Steely Dan Lawsuit”

If you would like to set up your Estate Plan, give our office a call for a free consultation 801.438.7120!

The GOP Tax Bill May Eliminate the Medical Tax Deduction

House Republicans have proposed the elimination of the medical tax deduction. That provision lets people write off qualifying medical and dental expenses that exceed 10% of their adjusted gross income (AGI). Currently, individuals can deduct their own expenses and those of their tax dependents. This includes aging parents who live with the individual and meet other criteria.

Time’s recent article, “An Important Tax Deduction for Seniors and Their Families Is on the Chopping Block,” notes that about 6% of tax filers take advantage of this deduction. They include people with expensive care needs, like seniors in nursing homes, people with chronic medical conditions and parents of disabled children.

Those who support the bill believe it would put more money into middle-class pockets because of a proposed increase in the standard deduction for individuals and married couples, rising to $12,000 and $24,000, respectively. However, that increase won’t offset the loss of the medical expense deduction for those who claim it.

Here’s an example of how the deduction works: a single senior with $40,000 AGI has medical expenses of $6,000 annually. That’s more than 10% of her income, so $2,000, wouldn’t be subject to tax. If her taxable income places her in the 15% bracket, she’d lose out on $300 of federal income tax savings.

In addition, people who use the deduction to pay for long-term care costs may forfeit much more. For example, a woman in her mid-80s who pays, on her own, the $11,000 monthly cost of her assisted living facility can afford to do this by selling highly appreciated stock and using the medical expense tax deduction to eliminate any taxes she’d otherwise owe. An increase in the standard deduction wouldn’t help her, because it wouldn’t be as much as her savings under the medical expense deduction.   She would also have a higher tax burden along with her substantial care costs. If the medical deduction went away, this lady would go through her money quickly and possibly need Medicaid. Medicaid pays the long-term care costs of people who have exhausted their income and meet other criteria.

Some believe that the elimination of the medical expense deduction, would ultimately increase costs for this government program.

If you would like more information, please call our office for a free consultation, 801-438-7120. 

Reference: Time (November 3, 2017) “An Important Tax Deduction for Seniors and Their Families Is on the Chopping Block”

What Happens to my Taxes, if I Overdo My Gifting This Year?

If you want to give your child a gift of $14,000, but it’s a gift of stock and when it’s transferred, you learn that it’s valued at more than $14,000? What are the gift tax ramifications

There are two very different sets of gifting laws that relate to estate planning, cautions nj.com in its recent article, “When you gift over the annual limit.”

One set of gift rules is straightforward. For Medicaid qualification purposes, there’s absolutely no gifting permitted for five years prior to the program application. That’s seems to create a lot of confusion for people.

The second set of gifting rules concerning estate planning comes from the IRS. In 2017, the gift and estate tax exclusion is $5.49 million. That’s the lifetime exclusion, so an individual can leave $5.49 million to his or her heirs and not owe any federal estate or gift tax. A married couple can protect almost $11 million ($10.98 million) from federal estate and gift taxes.

The $14,000 limit is the most you can gift in any one year to any one person, without having to file an IRS 709 gift tax return. That amount has been set at that level since 2013. There’s no gift tax due, assuming you haven’t already exceeded the $5.49-million-dollar exemption.

However, if you exceed the $14,000 per person/per year limit, you must file a gift tax return.

While it may defy logic or just plain common sense, that’s the way the IRS does it.

The $5.49-million-dollar limit is a lifetime limit. The only way the IRS will know that you have or haven’t exceeded the exemption, is if you file a gift tax return every time you gift more than $14,000.

You see, the IRS is keeping track.

 Let’s return to the original scenario of the inadvertent stock transfer that’s a bit over the $14,000 annual limit. That person could just file the gift tax return, since no tax will be due. Another option is to consult with a tax attorney or CPA to find out whether, in that particular situation, that gift might be divided between two people.

Reference: nj.com (October 18, 2017) “When you gift over the annual limit”

If you need more information please call our office for a free consultation 801.438.7120! 

 

Did Tom Petty Have a Healthcare Directive that Detailed His Wishes?

Tom Petty was reportedly taken off life support following the orders he had previously drafted expressing his wishes. However, most people don’t make provisions for their end-of-life care. As a result, the costs can add up.

When Tom Petty was found in cardiac arrest earlier in October, his family reportedly took him off of life support pursuant to a do-not-resuscitate (DNR) order he had drafted, reports CNBC in its recent article, “What Tom Petty's choices can teach you about end-of-life care.” Petty could have drafted the DNR due to a known health condition or out of general concern.

A do-not-resuscitate order is a form signed by a doctor and used when a person suffers from a serious advanced illness. The form instructs health-care professionals not to perform CPR. Another consideration is a do not intubate order, which instructs medical personnel not to insert a tube into the body for breathing.

Both DNR and DNI forms can serve as components of an advance directive, which is created by an attorney and takes effect, if you can’t speak for yourself.

That can be the situation of a chronic end-stage disease, terminal illness or persistent vegetative state. One type of advance directive is a living will, which stipulates the kind of medical care you want to receive, like tube feeding, dialysis and pain management.

A major part of this plan is communicating with your health-care agent or surrogate—the person whom you’ve designated to make decisions for you. This involves detailing what you’d want to happen if you lost the ability to communicate or process bodily functions like swallowing, bathing or other functions. When your health-care surrogate knows what's important to you, they’ll be able to make better decisions for you.

If proper provisions are not made in advance, the dispute can go to court. Doing the paperwork correctly means working with an experienced estate planning attorney, not merely completing a form on the Internet.

Reference: CNBC (October 17, 2017) “What Tom Petty's choices can teach you about end-of-life care”

If you would like more information or would like to draft your Healthcare Directive, give our office a call for a free consultation 801.438.7120!

Buffalo Gets New Smartphone App to Help Stop Elder Abuse

Dozens of providers and advocates recently spent a day learning how to use the new Legal Risk Detector App.

WIVB recently posted an article, “New App Aims to Prevent Elder Abuse,” that explains how the Center for Elder Law & Justice teamed up with the Erie County District Attorney’s Office and the Erie County Office of Senior Services in the Buffalo, NY metro area to introduce the app to those who work closely with elderly members of the community.

“This app is designed for Meals on Wheels people, home health aides, senior services workers and people who would be kind of the front line staff,” explained Karen Nicolson, Chief Executive Officer of the Center for Elder Law & Justice.

Those providers are sometimes the only individuals with whom home-bound seniors interact on a regular basis. Therefore, they can be the only people who recognize potential housing, consumer, financial exploitation or healthcare issues, provided they know the right questions to ask. That’s where the new app can help. The app is a comprehensive list of questions to ask elderly clients to help identify potential abuse. The questions are about everything from whether someone has been pressuring a senior to make changes to their power of attorney, to whether someone has been stopping them from accessing their money or health services.

The app also lets providers upload photos and documents, which are added to the report generated by the seniors’ responses. A report will give the referrals that the provider may need to help the senior.  It is automatically sent to the Center for Elder Law & Justice, when any legal risk red flags are identified.

The Erie County District Attorney said his office has seen a number of cases of financial and physical elder abuse this year, which he attributes to the fact that many seniors don’t have their children living nearby to monitor them. He hopes that awareness spreads about the app and its ability to help identify problems, so would-be abusers will reconsider taking advantage of elderly victims.

The app that was unveiled is only intended for use by providers and advocates who work with the elderly in the community. However, with a national grant, another risk detector app is in development that will be available to the public.

Reference: WIVB (October 30, 2017) “New App Aims to Prevent Elder Abuse”

If you want more information, please give our office a call for a free consultation, 801-438-7120.