We plan to go on vacation.  We plan to have dinner with friends.  But when it comes to planning for how we will be taken care of as we advance in age, many of us prefer not to think about it, believing it will somehow all work out.  Unfortunately, when it comes to long term care planning, including finding the appropriate care and figuring out how to pay for it, those who fail to plan are clearly the ones who risk losing the most.

Consider the two scenarios below that contrast the different outcomes of planning early and choosing the “wait and see” approach for long term care.

The Facts
Hank is 72 and Ellen is 69.  They have been retired for several years and have started traveling a few times a year to visit their children and grandchildren who live in nearby states.  During a recent visit, their oldest child asked them whether they had made any plans in the event one of them suddenly got sick.   Hank and Ellen had not thought much about this since both of them were in good health.  However, they agreed to seek some advice upon returning home to see what their options were.

Hank and Ellen own a home that they have lived in since their marriage 45 years ago, and they have checking, savings and CD accounts that total $325,000.  They both worked most of their adult lives, carefully watching their expenses and never spending money on extravagant items they didn’t feel they needed.

Scenario #1 – Hank and Ellen planning ahead.  Hank and Ellen spoke with an elder law attorney, as they knew they should update their will and their powers of attorney.   While there, they were surprised to learn that they could actually plan now to avoid running out of money in the future should they need long term care either at home or in a facility.  With the help of their elder law attorney, they placed $200,000 and their home into an irrevocable trust, and named their children as beneficiaries of the trust.  If needed, their children would be able to take a distribution from the irrevocable trust rather than using their own money for Hank and Ellen’s needs.

The remaining $125,000 would be kept in a revocable trust that Hank and Ellen would use for their living and travel expenses.   Ellen would apply for a long term care insurance policy to provide further protection for them should her health fail (Hank had applied previously but was denied). The $200,000 placed into the irrevocable trust would not be counted against them after 5 years, should either of them need long term care and the assistance of state benefits to pay for it.

Unfortunately, six years later Hank had a severe stroke and ended up in a nursing home unable to use his right side arm or leg.  Ellen tried caring for him at home but was simply unable to.  Ellen went back to see the elder law attorney for help.  Because they had planned ahead and had set up an irrevocable trust, Ellen was able to keep all of the remaining cash assets in their revocable trust, and Hank was able to qualify immediately for state Medicaid benefits.  The irrevocable trust (which had now grown to $215,000) remained in place but did not count against Hank since more than 5 years had passed and neither Hank nor Ellen had any direct access to the trust assets. 

Ellen was incredibly relieved to know that she did not have to worry about paying for Hank’s care and could instead focus on visiting him and providing as much support as possible to him.  Although Ellen was not able to obtain long term care insurance, she has piece of mind knowing their children continue to manage the irrevocable trust and are ready to help both Ellen and Hank as needed.

Scenario #2 – Hank and Ellen without planning ahead.  Let’s assume Hank and Ellen did not plan ahead.  When Hank had a stroke at age 78, the couple had $300,000 in checking, savings and CDs.   Under the Medicaid regulations in place at the time, Ellen was able to keep $110,00 of the assets, but most of the remaining assets had to be used for Hank’s care.   While their home would be protected since Ellen was still living there, if she were to become ill the home could be subject to a lien by Medicaid.

It took nearly two years to get Hank qualified for Medicaid, and the process was incredibly stressful for Ellen and her children.  Furthermore, no planning has been done for Ellen and if her health fails, their remaining assets are at risk.

What If Hank Was Not Married?
Let’s assume Hank was not married, but had the same assets.  If Hank planned early, all of the assets he put into an irrevocable trust (including his home) would be protected.  Any assets left outside the trust could be transferred or turned into an income stream to pay for his care, should his health fail and he would need to qualify for Medicaid.  Just as above, the Medicaid application process would go smoothly and quickly.  In addition, an enhanced power of attorney would avoid the need for a guardianship in the event Hank was unable to make the transfers or sign the Medicaid application himself.

If Hank did not plan ahead, more than half of his liquid assets may have had to be used in order to protect Hank’s home, depending on the Medicaid rules in effect at the time.  This would leave only $50,000 to transfer to the children (or to an irrevocable trust).   And, if Hank did not have capacity to make any transfers or to establish an irrevocable trust, a guardianship proceeding would have to be initiated before any transfers could be made.  Furthermore, the guardianship court would have to grant permission for such transfers to be made.

Conclusion
The scenarios above have highlighted the importance of seniors and their loved ones planning early for the possibility of needing long term care.  There are not only financial benefits to doing so, but also numerous non-financial benefits, including reduced stress on the family and peace of mind knowing that the family’s needs are taken care of regardless of any health care crisis that may occur. 

Our law firm helps families plan for their long term care needs, whether it is years in advance or after a health care crisis has occurred.  We would be honored to work with you or the seniors and families you assist.

To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer’s particular circumstances.

According to a 2010 industry trends survey of estate planners conducted by WealthCounsel, nearly 70% of the respondents indicated that Americans fail to plan because they lack awareness as to why they should.  The survey also found that consumers plan for a variety of reasons, but the most common are:

• Prevent familial chaos after death
• Avoid lengthy and expensive probate
• Minimize estate taxes
• Prevent heirs from mismanaging their money
• Provide for a special needs child

At the Reuter Law Firm, we are passionate about building awareness of the importance of thoughtful planning and is committed to educating the public about the negative consequences of what can happen to one’s loved ones when the proper documents are not in place.

Estate planning is one of the most overlooked areas of personal financial management.  More than 120 million Americans do not have proper estate plans to protect themselves or their families in the event of sickness, accidents, or untimely death.  This costs many families wasted dollars and unnecessary hardship that can be minimized with proper planning.

In 2008, the National Association of Estate Planners and Councils (NAEPC) worked with Congress to pass a resolution proclaiming the third week in October as National Estate Planning Awareness Week.  The resolution noted that “Many Americans are unaware that lack of estate planning and financial illiteracy may cause their assets to be disposed of to unintended parties by default through the complex process of probate.”  Take this time to update your estate plan with us!

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It’s not always easy to recognize signs of nursing home abuse, much less actually prove that abuse has occurred.  Nursing home abuse exists in many forms and while a small sore or skin irritation may seem inconsequential, these seemingly insignificant medical issues can develop into life-threatening infections or even death.  For those with loved ones in nursing homes, it is critical that you can recognize the signs and symptoms of abuse and what steps to take.

If you suspect a loved one has been abused or neglected, report it immediately to nursing home management.  If your concern goes unaddressed in a timely manner or continues to occur, consult an attorney who specializes in nursing home abuse and neglect cases.  The attorney will ascertain whether legal action is warranted and what remedies might be available to you.

You should also immediately report any suspicions of abuse to your state’s nursing home abuse hotline.  In Missouri, contact the Department of Health and Senior Services at  (573) 751-6400.  If you are unsure  where to call, go to http://www.ncea.aoa.gov for a listing of nursing home abuse hotlines by state.

Carefully document the abuse.  If the abuse is physical, take several photographs of any bruises, rashes, sores, evident weight loss, or poor personal hygiene each day until your loved one is healed.  If the abuse is mental, make sure to make good written notes of the events, including dates, times, and names of individuals involved or witnesses.  As time passes, memory fades and notes and photographs are a good way to refresh your memory.

POSSIBLE ABUSE/NEGLECT:

• Pressure Sores (commonly known as bedsores or ulcers)
  • Possible Cause: Lack of movement from prolonged lying, sitting or reclining in the same position
• Personal hygiene deficiencies (skin rash or skin irritation)
  • Possible Cause: Lack of bathing or cleaning
• Bruises, fractures or lesions
  • Possible Cause: Resulting from a fall or physical abuse or trauma
• Significant weight loss
  • Possible Cause: Lack of sufficient nutrition and/or hydration
• Depression or disorientation
  • Possible Cause: Resulting from mental/physical trauma, over or under medication
• Unexplained mood changes, fear or anxiety
  • Possible Cause: Resulting from verbal, physical or sexual abuse

Of course, there is a catch….or many catches.  Today, I will just focus on the “income catch” for now.

After meeting all the other MO HealthNet requirements, the institutionalized spouse must pay all of his or her income to the nursing home, except for $30 a month (and other small allowances).  The community spouse can keep all of his or her own income.  However, in some situations, MO HealthNet allows the institutionalized spouse to pay all or some of  his or her income to the community spouse.  This is where MMMNA comes in – or minimum monthly maintenance needs allowance.

Because of the great concern that a community spouse will run out of money, MO HealthNet allows the community spouse to hold on to a minimum of $1,839 per month of the couple’s income ($1,839 is the MMMNA in Missouri as of July 1, 2011).  So if the community spouse only has $1,000 of his or her own income per month, he or she may be able to keep $839 of the institutionalized spouse’s income rather than paying it all to the nursing home.

While MO HealthNet does give community spouse’s some protections such as the MMMNA, an elder law attorney can help you develop a plan to maximize the use of your assets.  If you or a loved one are concerned about the need for nursing home care in the future, call our office at 314-729-0200 today to schedule an appointment.  After all, you don’t know what you don’t know.

Thinking about a time when you will need help taking care of yourself is not fun. That is why most people put off discussing long-term care until it can’t be ignored. But it is better to start long-term care planning early. Here are some reasons to start planning now:

•People are living longer and are more likely to need long-term care. Life expectancies keep increasing, which means you are more likely to need help at some point. At least 70 percent of people over age 65 will require some long-term care services at some point in their lives, according to the U.S. Department of Health and Human Services.

•Care expenses are high. Whether you receive care in a nursing home or at home, expenses are rising. According to the 2010 MetLife Market Survey of Long-Term Care Costs, in 2010 the average cost of a room in a nursing home was $83,585 a year and home care aides averaged $21 per hour. Those figures aren’t going to start going down.

•Family caregivers may not be available. In more and more households, both partners work. In addition, children often move far away from their parents. This means that your adult children may not be able to easily take of you when the time comes.

•The earlier you plan, the better. By planning ahead, you may be able to preserve your assets instead of using them all up paying for long-term care. In addition, if you plan early, you may have more options for care.

To start planning for long-term care, talk to your elder law attorney. Planning steps may include executing advance directives and a power of attorney, putting assets in a trust, purchasing long-term care insurance, getting a reverse mortgage, creating a caregiver contract with an adult child, or transferring a house to children. Your attorney can help you figure out the best plan for you.

http://elderlawanswers.com/resources/article.asp?id=9172

Please visit ElderLawAnswers for more great information and call our office to start your long-term care planning now!

It is often difficult to think about dying, let alone talk about it. But the only way to ensure your healthcare wishes are fulfilled is to communicate with family and physicians. Putting your wishes in writing can relieve a tremendous burden for your loved ones. Imagine the stress and sadness your family members may experience when you become injured or ill. Now imagine the added burden on them if you have not communicated your wishes. Having these important conversations now will save heartache down the road.

National Healthcare Decision Day is on April 16, 2011 this year.  On this day, national, state and community organizations will lead a massive effort to highlight the importance of of advance healthcare decision-making.  This marks the Reuter Law Firm’s 4th year participating in National Healthcare Decision Day. 

An excellent way to communicate your wishes is to complete an advance directives form. Booklets containing a Durable Power of Attorney for Healthcare and a Healthcare Directive will be available at the Reuter Law Firm from April 15-29.  Office hours are 9:00 am – 5:00 pm. Limit 2 booklets per person.

September, 2010

Erin D. Reuter passes Missouri Bar Exam

ST. LOUIS, MISSOURI – The Reuter Law Firm is pleased to announce the addition of ERIN D. REUTER, Attorney at Law, to the firm.

Erin Reuter graduated from the University of Missouri School of Law in May 2010. During law school, she worked in a law firm which concentrates on estate planning and elder law. Erin has worked for the Reuter Law Firm over the last seven years while on break from her undergraduate and law school studies. She joined the firm as a paralegal upon graduation from law school and is now a full-time associate attorney.

The Reuter Law Firm has been providing legal assistance for over thirty years to clients in the St. Louis area. Even though they focus on estate planning and elder law issues, they have experience in many other legal areas and are able to help you no matter what your needs may be.

Reuter Law Firm
12300 Old Tesson Rd.,
Suite 100-B
St. Louis, MO 63128
(314) 729-0200

Call to schedule a free ½ hour initial appointment.

Tax experts are concerned that the Federal Legislature will take no action to amend the Federal Estate Tax law before the end of the calendar year, 2010.

If no action is taken by the Federal Legislature, all estates in excess of $1 million will be subject to Federal Estate Tax effective January 1, 2011.

What this means is that anyone who dies on or after January 1, 2011 and has an estate with a value in excess of $1 million, will have tax consequences.

Over the past several years, there has been an increase in the Federal Estate Tax exemption. During the year 2010, there was no Federal Estate Tax on any estate.

Prior to that, the Federal Estate Tax equivalent was $3.5 million. Many of the experts believed that the law would be updated so that only estates in excess of $3.5 million would be subject to Federal Estate Tax.

However, our Federal Government, for whatever reason, has failed to take action to address this issue. Many clients have prepared their estate planning documents in anticipation that the estate tax exemption equivalent would be increased.

However, it is now very important for all individuals who have estates in excess of $1 million to have their documents reviewed and perhaps updated to avoid this potential tax consequence.

Please contact our office if your estate has a value in excess of $1 million. There are many options available that can help reduce the risk that your estate would be subjected to the Federal Estate Tax.

Please give this matter top priority as it will take some time to schedule an appointment, to review your existing plan, and to make appropriate recommendations.