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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Income Requirements for Medicaid

Is it possible for a married couple to separate their assets so, if one of them winds up in a nursing home, the other's assets won’t be used up

nj.com’s recent article, “Married and protecting assets from Medicaid,” explains that when a single person applies for Medicaid, he or she must have no more than $2,000 in assets to meet Medicaid's eligibility requirements.  However, the rules for married couples are different.

Medicaid deems the married couple to be one unit. Therefore, it doesn’t matter which spouse owns the assets. If you need Medicaid, you can’t just transfer your assets to your spouse in order to qualify. There are certain assets that are exempt from Medicaid rules. These include the primary home (if at least one of the spouses lives in it), a car and term life insurance that doesn't have cash value. The healthy spouse can keep those. Anything else is countable.

Medicaid totals the countable assets and divides them in half. The healthy spouse (called “the community spouse”) gets to keep one half of those assets, but only up to a maximum of just under $121,000. Everything else must be spent down to become Medicaid eligible.

But what if I divorce my spouse and keep all the assets? Provided there’s a valid prenuptial agreement in place that establishes what you can keep, this may be a solution. However, if you just want to shift all the assets to the community spouse by a divorce, the state probably will challenge that when it comes time to apply for Medicaid.

Remember, there’s also a five-year look back rule, if you transfer assets that are gifts and not purchases or other legitimate expenses. These transfers don’t stop a person from applying and receiving Medicaid benefits. However, the transfers penalize the recipient by delaying the amount of time until he or she can be eligible for benefits.

Speak with an experienced elder law attorney who knows how to file Medicaid applications and understands the Medicaid laws and regulations. Your elder law attorney can help you find better strategies to protect assets for the community spouse.

Reference: nj.com (December 13, 2017) “Married and protecting assets from Medicaid”

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

Do I Need a Will and a Living Trust?

The Washington Post answered a question in a recent article, “How a will and living trust will affect your survivors’ ability to sell your home when you’re gone,” about whether you need a living trust if you already have a will.

Assume that a husband and wife are both retired and hold the house as joint tenants with rights of survivorship. If they’d like to eventually downsize, they don’t want a trust to interfere with their ability to sell the home.

It’s good to have a will in place. Why? Because when the couple owns their home in joint tenancy with rights of survivorship, no probate is required when one spouse dies. The other continues to own the home through the rights of survivorship. However, when that surviving spouse dies, then the will kicks in and probate is required.

Depending on the size of a couple’s estate, using the will to go through probate can be expensive. After the surviving spouse dies, the executor of that will would go to court and be recognized by the court as the representative of the estate. He or she would then be able to sell the home and other assets as needed. The executor of the estate would then present an accounting to the court of all distributions made by the executor to close the estate.

To avoid probate, many people place their properties in a living trust. With this approach, you would transfer the title of your real estate and other property to the trust. Upon the death of the owner of the trust, a successor trustee is appointed, avoiding probate.

A power of attorney is also a useful tool to take care of financial matters, should one or the other spouse become incapacitated. Powers of attorney for financial matters can save  stress and headaches.

Reference: Washington Post (September 18, 2017) “How a will and living trust will affect your survivors’ ability to sell your home when you’re gone”

If you would like help getting your Estate Plan set up, 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!

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. 

Small Value Items Can Cause Big Headaches in Estate Planning

Personal property is something people often forget about when drawing up wills and other estate planning documents. Not surprisingly, the biggest point of conflict among families isn’t the million-dollar horse property, it's the little yellow Tweety Bird statue that sat in mom's kitchen for 40 years.

This is according to a recent CNBC article, “7 ways that cheap Tweety Bird figurine can screw up your estate.” It lists some of the major mistakes that people make when bequeathing their personal property.

Failing to appreciate sentimental value. Fights can arise from property with little financial value but great sentimental value. That could be the Barry Manilow albums and your high school letter jacket. Ask your kids and other family for a list of sentimental items they'd want to receive. You can then decide who gets what. You should add those bequests in your will. It may be helpful to also include pictures of the items.

Oral bequests. Put any promised bequests in writing. Otherwise, you are just facilitating disagreements between members of your family.

Asking heirs to distribute. Distributing the bequests is your job, not your heirs'. It's risky to assume they’ll do what you want.

Mistaking ownership with access. With a safe deposit box, you need to be clear in your will who will receive the contents. Remember that a jointly-leased safe deposit box doesn't always mean joint ownership. It also doesn’t give an heir official access to the box contents as a signatory.

Failing to designate any unusual property. Remember to include things like digital assets in any property inventory. This can include reward program balances and social media accounts. Another much-litigated issue is unused reproductive assets like embryos: your will should state ownership and rights of use.

Planning for complicated possessions. There can be situations where a bequest requires more preparation and detail than usual. There may be federal and state laws governing a gift like a firearm. Some estate planning attorneys specialize in these transfers, using “gun trusts.” Illegal contraband can also raise issues, especially with a taxable estate. An IRS rule states that even if an asset can only be sold on the black market, it’s still an asset and its fair market value must be reported.

Reference: CNBC (October 10, 2017) “7 ways that cheap Tweety Bird figurine can screw up your estate”

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

Save Some Big Bucks for You and Your Loved Ones

You may believe you've developed a well-researched and comprehensive retirement plan, but be certain that your plan hasn’t left out any of these common issues. If so, you could end up with a much smaller retirement income than you expect, as your savings gets eaten up by these unexpected expenses. Motley Fool’s recent article, “4 Retirement Issues You're Probably Not Planning For,” discusses some of those unexpected expenses.

Inflation. Inflation is the quiet retirement-killer. It is the reason why a dollar won't buy as much today as it would 20 years ago. Inflation has averaged around 3% per year since the government began tracking it in 1913.  Therefore, you can assume that your retirement savings will lose about 3% of their value every year. It is possible to beat inflation by selecting investments that will produce high enough returns to outpace the loss of your money's value. Stocks historically are the only investment to reliably beat inflation year after year: large-cap stocks produce an average return of around 10% before inflation over the past century. This is considered by many to be a good reason for retirees to keep some money in stocks, despite their volatility.

Taxes. If your retirement plan doesn't consider future taxes, your budget could be wrecked. Think about how you can minimize the amount of income you give to the government. The best way to go might be a Roth IRA. With a significant percentage of your retirement savings in a Roth, you’ll have greater control over how much income tax you pay each year. It also minimizes your required minimum distributions and allows your investments to grow tax-free, for as long as they are in the account.

Estate Planning. Without at least minimal estate planning, you place a terrific burden on your family. It could also mean that your beneficiaries will have greater expenses, like administrator's fees and other legal fees that will come out of your estate. The essentials of an estate plan are a will, naming beneficiaries for all your accounts, and a power of attorney in case you become incapacitated, along with an advance medical directive to direct the types of extreme lifesaving measures you want your physicians to undertake, if you're incapacitated. You should also ask your estate planning attorney about setting up trusts to manage probate issues and estate taxes.

Long-Term Care. The average cost of long-term care for a couple is around $130,000.  Therefore, you should add in long-term care expenses to your retirement planning. Don’t rely on Medicare to help with these expenses because it doesn’t cover long-term care expenses, unless there's a clear medical necessity, and even in that case, Medicare only covers the first 100 days. Purchase long-term care insurance to protect yourself from these expenses.  You should get it while you're relatively young and in good health to keep your premiums as low as possible. A long-term care insurance premium is predictable and easier to fit into your budget than unexpected long-term care you pay for out-of-pocket.

If you wait until you are retired to add these expenses into your budget, you may need to make some significant sacrifices to fit them in.

Reference: Motley Fool (October 1, 2017) “4 Retirement Issues You're Probably Not Planning For”

Call our office for a free consultation if you would like more information, 801-438-7120!

Iowa Senator Proposes Elder Abuse Legislation

The (Cedar Rapids IA) Gazette’s recent article, “Grassley elder abuse legislation awaits Trump's signature,” says that one of the main reasons for the legislation is the case of a Cedar Rapids couple who spent more than $40,000 buying nutrition-related supplements of dubious value. Senator Chuck Grassley of Iowa said the legislation would increase penalties and improve coordination at the Justice Department and Federal Trade Commission.

“Exploiting and defrauding seniors is cowardly, and these crimes should be addressed as the reprehensible acts they are,” the 84-year-old Grassley said. Legislation that the Senate Judiciary Committee chairman sponsored with Sen. Richard Blumenthal, D-Conn., will send a “clear signal from Congress that combating elder abuse and exploitation should be a top priority for law enforcement.”

The Elder Abuse Prevention and Prosecution Act of 2017 passed the House of Representatives and the Senate by voice vote. One of the challenges of protecting seniors from scams is that technology changes quickly and “criminals are constantly coming up with new scams,” Grassley said. “None of us are completely immune.”

Grassley explained that six million seniors are victims of abuse and exploitation each year. In 2016, Karl and the late Marlene Sibert of Cedar Rapids were among them, spending $44,000 on nutritional supplements over a period of twenty months for health and nutrition-related products, when her mother was hospitalized. Their daughter, Karla Sibert, became aware of the spending and contacted the Iowa Office of Attorney General’s Consumer Protection. She filed a formal complaint. The investigation discovered telemarketers’ handwritten notes indicating that Sibert’s mother had “memory” issues and her father had “dementia,” according to Attorney General Tom Miller. Luckily, in the Sibert’s case, the telemarketer complied with his office’s demand to repay the money the couple spent on the supplements.

Grassley called those who exploit seniors “cowardly” and said those crimes should be prosecuted “as the reprehensible acts they are.” Even though elder exploitation may not be a “prominent or popular issue,” Grassley said it’s “an important kitchen table issue for America’s seniors, families and caregivers.”

The legislation will improve the nation’s response to these crimes, Grassley said, and will help families across America by equipping law enforcement, seniors, and caregivers with better training and tools to deter crimes and hold perpetrators accountable.

Reference: The (Cedar Rapids IA) Gazette (October 5, 2017) “Grassley elder abuse legislation awaits Trump's signature”

If you need help with an Elder Law case, give our office a call for a free consultation, 801-438-7120!

Court Decision Cautions Against Net Gifting

Even with a solid estate plan, fluctuating family relationships or unexpected illness or death can hamper an estate plan and result in undesirable transfer tax consequences, reports BNA Bloomberg in its recent article “Net Gifts: When Estate Planning Goes Wrong.”

In Estate of Sommers, the decedent made lifetime gifts to his three nieces by transferring artwork to an LLC and then membership interests to the nieces over a two-year period to take advantage of valuation discounts and annual exclusion amounts. The nieces signed an agreement stating that they’d be responsible for any gift taxes on the gifts of membership interests (otherwise known as a net gift).  The decedent then remarried his ex-wife and died five months later.

Before his death, the decedent started a lawsuit against his nieces arguing that the gifts were not completed gifts. After the court held that the decedent made completed gifts, the nieces paid the gift tax liability of $274,000. Because he gifted the membership interests within three years of his death, both the value of the membership interests and the $274,000 gift tax payment was included in the value of the decedent’s gross estate. But the executor of the decedent’s estate, the surviving spouse, claimed that the gift tax payment was deductible.

The court held that the gift tax payment wasn’t deductible because “an estate is entitled to deduct a claim under §2053(a)(3) only to the extent that the amount owed exceeds any right to reimbursement to which payment of the claim would give rise.” The court found that the estate would have had an enforceable right to reimbursement from the nieces, if they hadn’t paid the gift tax. The court found that the nieces served only as conduits, and the decedent was the ultimate gift tax payer. If not for the three-year claw back, the decedent would’ve withdrawn from his potential estate, the value of the taxable gifts and the amount of tax on the gifts. The gross-up rule is necessary to prevent such excess value (the gift tax on the net gift) from escaping, and, therefore, the decedent’s estate from circumventing, the transfer tax system.

Net gifting can be a very valuable and effective estate planning tool, if done correctly. Talk with your estate planning attorney to understand the potential for risks involved in making net gifts.

Reference: BNA Bloomberg (September 14, 2017) “Net Gifts: When Estate Planning Goes Wrong”

If you need help establishing your Estate Plan, give our office a call for a free consultation, 801-438-7120!