When someone dies having received Medicaid New York asks that their estate assets be used to repay the program for costs spent. Until earlier this year the only estate recovery was against probate assets, those assets in individual name that required the full probate process through a local Surrogate's Court. With the budget law signed this past April, estate recovery has been expanded to include all assets that pass under a will OR BY INTESTACY and ANY REAL AND PERSONAL PROPERTY IN WHICH THE DECEDENT HAS ANY LEGAL TITLE OR INTEREST AT THE TIME OF DEATH.
Major changes are at hand. New emergency regulations were just published in the last two weeks, effective back to September 8, 2011, and an administrative directive was just issued by the Department of Health last week, the state agency that oversees the New York State Medicaid program. Everyone who has engaged in any kind of asset protection planning, those who have even thought about protecting assets and those who are currently on Medicaid (or their agents) should be meeting with skilled elder law attorneys to review those plans and determine what, if anything, needs to happen now. No longer will non-probate assets escape State recovery efforts; joint accounts, life estate interests in deeds (VERY common tool used by unsophisticated attorneys in the past), and annuities are all on the table now. And surviving spouses will simply receive deferred recovery until they pass away. The new regulations and directive leave much open to interpretation and are not to be treated lightly.
We will provide a Long Term Care Assurance Session for all of our clients on one of our VIP Membership Plans, but given the serious nature of these changes in the law we urge other Rochester area families to contact us for a no-obligation Long Term Care Assurance Session. Options for planning still exist, but you need to see an actual elder law attorney, not the general practitioner down the street who dabbles in whatever comes through the door. Please contact our Client Services Director at (585) 244-2170 to schedule your own Assurance Session.
Many of my clients, in fact, most, assume that adding an adult child as a joint account owner will cover a host of problems from access to funds to probate avoidance, and that action can have benefits. BUT, there are pitfalls associated with multi-generational joint accounts that need to be considered before taking action. See this excellent article from Forbes online for a great discussion.
A will is a legal instrument that tells the world who you want to get your assets. Move on to the after-life without a will in place, and a judge will decide who gets what, without regard to your wishes and without regard to the needs of your loved ones. Let’s avoid that outcome.
Laws that dictate who gets what in the event that a person dies without a will are called intestacy laws. Intestacy laws vary considerably from state to state. Generally, however, if you are survived by a spouse and children, your assets will be split between them. If you're single with no children, then a judge will allocate your estate to your blood relatives in accordance with its interpretation of the law. In some cases, that could even mean your assets will pass on directly to the state itself!
Wills for People with Children
Having a will is especially important if you have young children, since a will is the easiest way to designate a guardian for your children, in the event that one is ever needed. Choosing a guardian is certainly a choice that you should make while you can—right now—rather than letting a judge do it later, when you will have no control over the decision. (Ask us about our Kids Protection Plan® for a comprehensive package to protect your children.)
Wills can be amended at any time. In fact, it's a good idea to periodically review your estate plan. Even if nothing changes in your life, laws often do change! And it’s absolutely essential that you review your plan after any change in marital status. It would be a crying shame (at least in some instances) to pass away and leave everything to a former spouse. Sound ridiculous? It happens every day.
When you review your will, it’s also important that you review the beneficiaries you’ve designated for your 401(k), IRA, pension plan, and life insurance policy. Those policies, plans, and accounts get transferred to the named beneficiaries automatically upon your death, so make sure they are up to date. It’s the only way to be absolutely certain that your wishes are fulfilled.
Wills and Trusts Work Together
Wills and trusts are not alternatives to one another. Rather, they should be used together to formulate a comprehensive estate plan. A trust is a legal construct that lets you put conditions on how your assets are disbursed after you die, and trusts often serve to let you minimize or even completely eliminate gift, estate and probate taxes. Even if you have a revocable living trust holding and owning most of your assets, you still need what's known as a pour-over will. In addition to naming one or more guardians for your children, pour-over wills ensure that all the assets you intended to put into the trust are eventually transferred to the trust, even if you forget or otherwise fail to title some assets in the name of the trust before dying.
Any assets that are not titled in the name of the trust are subject to probate and the discretion of a judge. As a result, if you haven't specified by will who should get those assets, a court may decide to distribute them to heirs that might not have been your first choice!
Let Us Set You Up With an Estate Plan
If you’d like to learn more about estate planning, call our office today (585-244-2170) to schedule a time for us to sit down and talk. The first step is a Family Wealth Planning session - we'll make it painless, promise.
I hear this so often, "It's just a simple form. We can just download it and do it ourselves." Not so fast!
Legal forms are not simple fill in the blank papers that you can blithely fill out while watching your favorite sitcom. And a power of attorney, the legal equivalent of a blank check and the keys to your house, car and everything you own, is no mere document. With it your entire estate plan can be accomplished should you lose capacity. Most people do not realize what an important document it is.
New York General Obligations Law (where the power of attorney statute is found) and the official form of the durable power of attorney, require that certain formalities be observed. There are locations for initials to be used to signify choices and there are places for signatures that require a notary public and witnesses. A recent case from the 4th Department (the New York appellate court for the western part of the state including Buffalo and Rochester) held a power of attorney invalid where the individual who signed the power of attorney (the "principal") had merely placed an "x" in the areas where initials were required, in spite of the fact that she signed where indicated. The facts show that the principal was in the hospital at the time the power of attorney was signed; it is unclear who prepared the power of attorney and who supervised the signing, if anyone. Very often a family member downloads something off the internet or a hospital worker provides a form. The danger, of course, is that these situations happen frequently. I see invalid powers of attorney all to often in my practice.
This case illustrates why you should not be engaging in "self-help" with these crucial decisions. An invalid power of attorney may not be serious if the fault is discovered and the principal still has capacity and can sign a new document. However, if the principal has lost capacity, her goals would be completely frustrated and there would be no opportunity to follow the principal's wishes unless the family had other indications of those wishes and a guardianship judge were assigned who was sympathetic. That burden is considerably higher than the task of setting up appointments with a good attorney who can explain the process and prepare a tailored power of attorney as part of your overall estate plan.
Today is the 6th Annual World Elder Abuse Awareness Day. Please educate yourself! Locally our law enforcement agencies are strained and criminal charges are not always pursued. Victims are often reluctant to talk about abuse. We have excellent local resources for education, however, and civil remedies (i.e. lawsuits) are sometimes successful against financial offenders.
Click here for Under the Radar, an in-depth report on the prevalence of abuse for individuals over 60 here in New York State. The major findings of the study include:
■ The findings of the study point to a dramatic gap between the rate of elder abuse events reported by older New Yorkers and the number of cases referred to and served in the formal elder abuse service system.
■ Overall the study found an elder abuse incidence rate in New York State that was nearly 24 times
greater than the number of cases referred to social service, law enforcement or legal authorities who
have the capacity as well as the responsibility to assist older adult victims.
■ Psychological abuse was the most common form of mistreatment reported by agencies providing data
on elder abuse victims in the Documented Case Study. This finding stands in contrast to the results of
the Self-Reported Study in which financial exploitation was the most prevalent form of mistreatment
reported by respondents as having taken place in the year preceding the survey.
■ Applying the incidence rate estimated by the study to the general population of older New Yorkers,
an estimated 260,000 older adults in the state had been victims of at least one form of elder abuse in
the preceding year (a span of 12 months between 2008-2009).
We can all do more, including being vigilant if you are a successor agent - did you know you can ask the acting agent for an accounting? Just one little thing can make a difference.
The times they are a-changin' in Florida for residents of assisted living and nursing home facilities, and not for the better. While we see many New York residents leave to escape our high state income taxes, property taxes and snowy winters, be mindful that permanently moving to a sunbelt state may not be good for your health. Read here (Foxes Move in to Guard Florida's Long-Term Care Hen House) how Florida government changes, which appear to be directly correlated to pander to nursing home and assisted living industry insiders, will drastically affect the rights of seniors in these communities.
If you are concerned with financing long term care costs - for you or a loved one - don't miss this free presentation Tuesday, May 24th at 4:30 pm at Aaron Manor. I will be presenting on strategies to cover care costs with Susan Suben, the President of Long Term Care Associates, Inc. Here is all the information you need. Please do register as we have been told space is limited.
Traveling to those exotic destinations you’ve always dreamed of…
Spending precious time with grandchildren…
Those are all the things most of us think of when we think of retirement.
But being ready to retire means more than just reaching a certain age or renewing your subscription to Travel & Leisure.
You need a plan.
And with the current economic conditions, it better be a good one.
There are three things you need to seriously consider when planning for your golden years of retirement:
1. When you stop working, how much will your annual income be?
2. What will your monthly expenses be when you retire?
3. If you don’t have enough income to pay your monthly expenses, will you have enough money saved to make up the shortfall?
Here’s how to arrive at your answers to these questions:
First, get an estimate of your Social Security benefits. Next, look at your monthly pension benefit and any income you expect to receive from annuities or other investments such as annuities. Compare what your monthly benefits would be if you retire at age 62, 65, 67 or 70. Then decide if waiting for a later retirement date would be worth the extra money each month.
You need to decide what you really (really) need to retire. That means taking a cold hard look at what is a necessity and what is a luxury. The basics would be housing, healthcare, food, transportation, personal care and insurance. Decide what you can actually afford to pay in order to maintain the essentials. Be conservative but be realistic. Don’t tell yourself you can live on macaroni and cheese and hot dogs when you know you’re not really going to do that.
Remember that anything beyond the six categories named above is a discretionary expense. While you may have dreamed of traveling to exotic locales or playing golf at Augusta National (assuming you could afford the membership), those things aren’t necessities. Traveling to see the grandchildren once a year could be seen as something of a necessity; a photo safari in Africa is not.
Making Up The Shortfall
In a perfect world, your Social Security and income from pensions or investments will pay all your expenses and give you a little extra cushion to make life comfortable. Unfortunately, that’s more likely the exception than the rule unless you’ve been exceptionally good at saving and started planning for retirement early on in your working career. You will more than likely need some extra income to provide for anything beyond the necessities.
And that’s where many people get into trouble. They convince themselves that they can live more modestly than they really can and retire too soon. When reality sets in, they start making withdrawals from their investments and retirement plans and spend entirely too much. They run out of money before they run out of time. Never put yourself in a position to have to withdraw more than 4% or 5% per year from your investment portfolio.
The Hard Choices
Once you’ve crunched the numbers (or at least made some good estimates), you may find that your retirement goals need to be modified. You may need to work longer, move to a less expensive house, or consider taking a part-time job to make up the difference in what you have and what you need. Bear in mind that everything may not go according to plan. You may develop health issues and that may mean retiring sooner than you expected to.
The best thing you can do for yourself and your family is to start planning now to handle what the future may bring. Call us at (585) 244-2170. We can help you find a solid financial professional to help you run those numbers and provide investment advice for making the most of what you have already saved as well as offering tips to increase your current savings.
And we will continue to work with them as a member of your team to make sure your legal planning is up to date as well.