Category: Long Term Care Insurance

protect assets and maintain Medicaid eligibility

Protect Assets and maintain Medicaid Eligibility

Medicaid is a welfare program with strict income and wealth limits to qualify, explains Kiplinger’s recent article entitled “You Can Keep Some Assets While Qualifying for Medicaid. Here’s How.” This is a different program from Medicare, the national health insurance program for people 65 and over that largely doesn’t cover long-term care. There are a few ways to protect assets and maintain Medicaid eligibility.

If you can afford your own care, you’ll have more options because all facilities don’t take Medicaid. Even so, couples with ample savings may deplete all their wealth for the other spouse to pay for a long stay in a nursing home. However, you can save some assets for a spouse and qualify for Medicaid using strategies from an Elder Law or Medicaid Planning Attorney.

You can allocate as much as $3,259.50 of your monthly income to a spouse, whose income isn’t considered, and still maintain Medicaid eligibility. Your assets must be $2,000 or less, with a spouse allowed to keep up to $130,380. However, cash, bank accounts, real estate other than a primary residence, and investments (including those in an IRA or 401(k)) count as assets. However, you can keep a personal residence, non-luxury personal belongings (like clothes and home appliances), one vehicle, engagement and wedding rings and a prepaid burial plot.

However, your spouse may not have enough to live on. You could boost a spouse’s income with a Medicaid-compliant annuity. These turn your savings into a stream of future retirement income for you and your spouse and don’t count as an asset. You can purchase an annuity at any time, but to be Medicaid compliant, the annuity payments must begin right away with the state named as the beneficiary after you and your spouse pass away.

Another option is a Miller Trust for yourself, which is an irrevocable trust that’s used exclusively to maintain Medicaid eligibility. If your income from Social Security, pensions and other sources is higher than Medicaid’s limit but not enough to pay for nursing home care, the excess income can go into a Miller Trust. This allows you to qualify for Medicaid, while keeping some extra money in the trust for your own care. The funds can be used for items that Medicare doesn’t cover.

These strategies are designed to protect assets or income for couples; leaving an asset to other heirs is more difficult. Once you and your spouse pass away, the state government must recover Medicaid costs from your estate, when possible. This may be through a lien on your home, reimbursement from a Miller Trust, or seizing assets during the probate process, before they’re distributed to your family.

Note that any assets given away within five years of a Medicaid application date still count toward eligibility. Property transferred to heirs earlier than that is okay. One strategy is to create an irrevocable trust on behalf of your children and transfer property that way. You will lose control of the trust’s assets, so your heirs should be willing to help you out financially, if you need it. Work with an estate planning attorney to craft a plan that protects assets and maintains Medicaid eligibility.

If you would like to learn more about Medicaid planning, please visit our previous posts. 

Reference: Kiplinger (May 24, 2021) “You Can Keep Some Assets While Qualifying for Medicaid. Here’s How”

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Can I be paid as a caregiver?

Can I Be Paid as a Caregiver?

AARP’s recent article entitled “Can I Get Paid to Be a Caregiver for a Family Member?” says that roughly 53 million Americans provide care without pay to an ailing or aging loved one. They do so for an average of nearly 24 hours per week. The study was done by the “Caregiving in the U.S. 2020” report by AARP and the National Alliance for Caregiving (NAC). This begs the question: Can I be paid as a caregiver?

Medicaid. All 50 states and DC have self-directed Medicaid services for long-term care. These programs let states grant waivers that allow qualified people to manage their own long-term home-care services, as an alternative to the traditional model where services are managed by an agency. In some states, that can include paying a family member as a caregiver. The benefits, coverage, eligibility, and rules differ from state to state.

Veterans have four plans for which they may qualify:

Veteran Directed Care. This plan lets qualified former service members manage their own long-term services and supports. It is available in 37 states, DC, and Puerto Rico for veterans of all ages who are enrolled in the Veterans Health Administration health care system and need the level of care a nursing facility provides but want to live at home or the home of a loved one.

Aid and Attendance (A&A) benefits. This program supplements a military pension to help cover the cost of paying for a caregiver, who may be a family member. These benefits are available to veterans who qualify for VA pensions and meet certain criteria. In addition, surviving spouses of qualifying veterans may be eligible for this benefit.

Housebound benefits. Vets who get a military pension and are substantially confined to their immediate premises because of permanent disability can apply for a monthly pension supplement.

Program of Comprehensive Assistance for Family Caregivers. This program allows for a monthly stipend to a vet’s family member to be paid as a caregiver to provide assistance with everyday activities because of a traumatic injury sustained in the line of duty on or after Sept. 11, 2001.

Other caregiver benefits through the program include the following:

  • Access to health insurance and mental health services, including counseling
  • Comprehensive training
  • Lodging and travel expenses incurred when accompanying vets going through care; and
  • Up to 30 days of respite care per year.

Payment by a family member. If the person requiring assistance is mentally sound and has sufficient financial resources, that person can pay a family member for the same services a professional home health care worker would provide.

So yes, under certain criteria, you can qualify to be paid as a caregiver. It is best to work carefully with an Elder Law attorney who has experience managing Medicaid and VA issues.

Reference: AARP (May 15, 2021) “Can I Get Paid to Be a Caregiver for a Family Member?”

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What are the early signs of dementia?

What are the Early Signs of Dementia?

Many adult children are finally seeing their parents in person for the first time since the beginning of the COVID crisis. While it is a comfort to spend time together, you might notice changes in a parent’s behavior that was not apparent on the phone or Zoom. Could this be a sign of cognitive decline? What are the early signs of dementia?

Dementia can diminish focus, the ability to pay attention, language skills, problem-solving and visual perception. It can make it hard for a senior to control his or her emotions and lead to personality changes, says AARP’s recent article entitled “7 Early Warning Signs of Dementia You Shouldn’t Ignore.”

The article provides some of the warning signs identified by dementia experts and mental health organizations:

  • Difficulty with everyday tasks. Those with dementia may find it increasingly tough to do things, like keep track of monthly bills or follow a recipe while cooking. They also may find it hard to concentrate on tasks, take much longer to do them, or have difficulty completing them.
  • Repetition. Asking a question, hearing the answer, then repeating the same question a few minutes later, or telling the same story about a recent event multiple times, are causes for concern.
  • Communication issues. See if a senior has trouble joining in conversations or following along with them, stops abruptly in the middle of a thought, or struggles to think of words or the name of objects.
  • Getting lost. Those with dementia may have difficulty with visual and spatial abilities.
  • Changes in personality. A senior who starts acting unusually anxious, confused, fearful or suspicious; becomes upset easily; or loses interest in activities and appears depressed is cause for concern.
  • Confusion about time and place. Those who forget where they are or can’t remember how they got there should raise a red flag. You should also be concerned if a person becomes disoriented about time (asking on a Friday if it is Monday or Tuesday).
  • Troubling behavior. If a senior appears to have greater poor judgment when handling money or neglects grooming and cleanliness, it’s a concern.

Here are some of the methods that doctors use to diagnose early signs of dementia:

  • Cognitive and neuropsychological tests assess language and math skills, memory, problem-solving and other kinds of mental functioning.
  • Lab tests can help rule out non-dementia causes for the symptoms.
  • Brain scans like a CT, MRI, or PET imaging can detect changes in brain structure and function. They can identify strokes, tumors and other problems that can cause dementia.
  • Psychiatric evaluation can determine if a mental health condition is causing or impacting symptoms.
  • Genetic tests are critical, especially if someone is showing symptoms before age 60. The early onset form of Alzheimer’s is strongly associated with a person’s genes.

Stay aware of these early signs of dementia and make a plan for addressing your parent’s needs as they decline. Work with an Elder Law attorney to learn what you can do to ensure your loved ones are cared for in their later years.

If you would like to learn more about dementia and other cognitive issues, please visit our previous posts. 

Reference: AARP (May 4, 2021) “7 Early Warning Signs of Dementia You Shouldn’t Ignore”

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deduct expenses for long-term care

Deduct Expenses for Long-Term Care

The skyrocketing costs of long-term care (LTC) can ruin your retirement savings. The U.S. Department of Health and Human Services found that 27% of Americans turning 65 this year will have at least $100,000 in long-term-care costs, and 18% will require care costing more than $250,000. However, you may be able to deduct expenses for long-term care.

Kiplinger’s recent article entitled “Tax Breaks may be available for Long-Term Care” says that if you need LTC, you may be able to deduct a portion of the costs on your tax return. If you purchased a long-term-care insurance (LTCI) policy to cover the costs, you may also be able to deduct some of your premium payments. Since retirement planning includes long-term care, it’s important to know how these tax deductions can help to offset overall costs.

Long-Term-Care Costs

The IRS allows you to deduct unreimbursed costs for long-term care as a medical expense, if certain requirements are met. This includes eligible expenses for in-home, assisted living and nursing-home services. The long-term care must be medically necessary and may include preventive, therapeutic, treating, rehabilitative, personal care, or other services. The cost of meals and lodging at an assisted-living facility or nursing home is also included, if the primary reason for being there is to receive qualified medical care.

The care must also be for a chronically ill person and provided under a care plan prescribed by a doctor. The IRS says that a person is “chronically ill,” if he or she can’t perform at least two activities of daily living. These are things like eating, bathing, or dressing. They must be unable to do these without help for at least 90 days. This condition must be certified in writing within the last year. A person with a severe cognitive impairment, like dementia, is also considered chronically ill, if supervision is needed to protect his or her health and safety.

To get the deduction, you have to itemize deductions on your tax return. However, itemized deductions for medical expenses are only allowed to the extent they exceed 7.5% of your adjusted gross income.

An adult child can claim a medical expense deduction on his own tax return for the cost of a parent’s care, if he can claim the parent as a dependent.

Insurance Premiums

The IRS also allows a limited deduction for certain LTCI premiums. Similar to the deduction for long-term-care services, this has to be an itemized deduction for medical expenses. Again, only premiums exceeding the 7.5% of AGI threshold are deductible. (Note that self-employed individuals may be able to deduct premiums paid for LTCI as an adjustment to income without having to itemize.)

In addition, the LTCI policy is required to satisfy certain requirements for the premiums to be deductible. The policy can only cover long-term-care services, so the deduction only applies to traditional LTCI policies, not “hybrid” policies that combine life insurance with long-term-care benefits. This deduction also has an age-related cap. For 2021, the cap is $5,640 if you’re older than 70, $4,520 if you’re 61 to 70 and $1,690 if you’re 51 to 60. (For those 41 to 50, it’s $850, and for 40 or younger, it’s $450.)

Make sure to educate yourself on what types of expenses you can deduct for long-term care. These deductions can be valuable for people in their seventies and older.

If you are interested in learning more about long-term care, please visit our previous posts.

Reference: Kiplinger (March 23, 2021) “Tax Breaks may be available for Long-Term Care”

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take care when transferring house to children

Protect Assets from Medicaid Recovery

Medicaid is a government program used by Americans to pay for nursing home and long-term care. The Medicaid Estate Recovery Program (MERP) is used to recoup costs paid toward long term care, so that the program can be more affordable for the government, says the article “What is Medicaid Estate Recovery?” from kake.com. Beneficiaries of Medicaid recipients are often surprised to learn that this impacts them directly. How do you protect assets from Medicaid recovery?

Medicare was created to help pay for healthcare costs of Americans once they reach age 65. It covers many different aspects of healthcare expenses, but not costs for long-term or nursing home care. That is the role of Medicaid.

Medicaid helps pay the costs of long-term care for aging seniors. It is used when a person has not purchased long-term health care insurance or does not have enough money to pay for long-term care out of their own funds.

Medicaid is also used by individuals who have taken steps to protect their assets using trusts or other estate planning tools.

The Medicaid Estate Recovery program allows Medicaid to be reimbursed for costs that include the costs of staying in a nursing home or other long-term care facility, home and community-based services, medical services received through a hospital when the person is a long-term care patient and prescription drug services for long-term care recipients.

When the recipient passes away, Medicaid is allowed to pursue assets from the estate. That often varies by state, but for the most part it means any assets that would be subject to the probate process after the recipient passes. That may include bank accounts, real estate, vehicles, or other real property.

In some states, recovery may be made from assets that are not subject to probate: jointly owned bank accounts between spouses, payable on death bank accounts, real estate owned in joint tenancy with right of survivorship, living trusts and any assets a Medicaid recipient has an interest in.

An estate planning attorney will know what assets Medicaid can use for recovery and how to protect the family from being financially devastated.

While it is true that Medicaid can’t take your home or assets before the recipient passes, it is legal for Medicaid to place a lien on the property. Let’s say your mother needs to move into a nursing home. Medicaid could place a lien on the property. If she dies and you inherit the home, you’ll have to satisfy the lien before you can sell the home.

Heirs need to anticipate inheriting a smaller estate. Medicaid eligibility assumes that recipients are low income or have few assets to pay for long term care. However, if parents are able to leave some amount of assets to their children, the recovery program will shrink those assets.

Strategic planning can be done in advance by the individual who may need Medicaid in the future. One way to do this is to purchase long-term care insurance, which is the strategy of personal responsibility. Another is removing assets from the probate process. Married couples can make that sure all assets are owned jointly with right of survivorship, or to purchase an annuity that transfers to the surviving spouse, when the other spouse passes away. An estate planning attorney can help create a Medicaid Asset Protection Trust, which may remove assets from being counted for eligibility.

Speak with an estate planning attorney to learn how to protect assets from Medicaid recovery and secure your parent’s future needs. The earlier the planning begins, the better chances of successfully protecting the family.

If you would like to learn more about Medicaid and long term care insurance, please visit our previous posts. 

Reference: kake.com (Feb. 6, 2021) “What is Medicaid Estate Recovery?”

 

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Understanding the responsibilities of the conservator

If you have been named a conservator, or have been approached by a family member about the role, it is vital that you are understanding the responsibilities of the conservator. A conservator is appointed by a judge. This person handles the estate of an incapacitated adult, as well as their finances, their basic affairs and everyday care. Administrative matters such as Medicare, insurance, pensions, and medical coverage are all also managed by the conservator. The conservator must keep meticulous records that are subject to review by the judge.

The Advocate’s recent article entitled “Alzheimer’s Q&A: What is adult guardianship?” explains that a conservatorship typically lasts as long as the individual lives. The conservator may change because of death, relocation, or an inability to manage the conservator duties and responsibilities. A judge also has the power to replace the conservator, if he or she is repeatedly making poor decisions or neglecting required responsibilities.

A conservator can be wise in some situations because it lets family members know that someone is making the decisions. It also provides clear legal authority to deal with third parties. There is also a process in which a judge will approve any major decisions. However, appointing a conservator can be expensive. An experienced estate planning or elder law attorney must complete court paperwork and attend court hearings. A conservatorship can also be time-consuming due to the required ongoing paperwork.

A big question is when it is appropriate to seek conservatorship. If the individual has become mentally or physically incapable of making important decisions for himself or herself, then it would be smart to have a court-appointed guardian. Moreover, if the person does not already have legal documents in place, like a living will or power of attorney, then the conservatorship would benefit in covering decisions about personal and financial matters.

Even if the individual has a power of attorney for both health care and finances, he or she might need a conservator to make decisions about his or her personal life. This can include topics, such as living arrangements and who is allowed to visit. It is not always easy to determine if an individual can make decisions, but a judge understands that a conservator is viable for those with advanced Alzheimer’s or other forms of dementia.

Families that want to set up a conservatorship need to file formal legal papers and participate in a court hearing before a judge. Evidence of the physical and mental condition of the individual requiring conservatorship must be clearly presented. The person who is the subject of the conservatorship has the opportunity to contest it. Ask an experienced estate planning or elder law attorney who specializes in conservatorships to provide you a complete understanding of the responsibilities of the conservator.

If you would like to learn more about conservatorship and guardianship, please visit our previous posts.

Reference: The Advocate (Jan. 25, 2021) “Alzheimer’s Q&A: What is adult guardianship?”

 

Address Finances if Diagnosed with Alzheimer’s

Be an Effective Advocate for Elderly Parents

Family caregivers must also understand their loved one’s wishes for care and quality of life. They must also be sure those wishes are respected. Further, it means helping them manage financial and legal matters, and making sure they receive appropriate services and treatments when they need them. It is important to understand how to be an effective advocate for elderly parents.

AARP’s recent article entitled “How to Be an Effective Advocate for Aging Parents” says if the thought of being an advocate for others seems overwhelming, take it easy. You probably already have the skills you need to be effective. You may just need to develop and apply them in new ways. AARP gives us the five most important attributes.

  1. Observation. Caregivers can be too busy or tired, to see small changes, but even slightest shifts in a person’s abilities, health, moods, safety needs, or wants may be a sign of a much more serious medical or mental health issue. You should also monitor the services your family member is getting. You can take notes on your observations about your loved one to track any changes over time.
  2. Organization. It’s hard to keep track of every aspect of a caregiving plan, but as an advocate for your elderly parents, you must manage your loved one’s caregiving team. This includes creating task lists and organizing the paperwork associated with health, legal, and financial matters. You’ll need to have easy access to all legal documents, like powers of attorney for finances and health care. If needed, you might take an organizing course or work with a professional organizer. There are also many caregiving apps. You should also, make digital copies of key documents, such as medication lists, medical history, powers of attorney and living wills, so you can access them from anywhere.
  3. Communication. This may be the most important attribute. You need communication for building relationships with other caregivers, family members, attorneys and healthcare professionals. Be prepared for meetings with lawyers, medical professionals and other providers.
  4. Probing. Caregivers need to gather information, so don’t be shy about it. Educate yourself about your loved one’s health conditions, finances and legal affairs. Create a list of questions for conversations with doctors and other professionals.
  5. Tenacity. Facing a dysfunctional and frustrating health care system can be discouraging. You must be tenacious. Here are a few suggestions on how to do that:
  • Set clear goals and focus on the end result you want.
  • Keep company with positive and encouraging people.
  • Heed the advice of experienced caregivers’ stories, so you understand the triumphs and the challenges.
  • Be positive and be resilient.

It is a wise idea to work with an Elder Law attorney that can help you be an effective advocate for elderly parents.

If you would like to learn more about being a caregiver, please visit our previous posts. 

Reference: AARP (Sep. 24, 2020) “How to Be an Effective Advocate for Aging Parents”

 

deduct expenses for long-term care

Protect Your Estate from Nursing Home Costs

Nursing home care is expensive, costing between $12,000 to $20,000 per month, so you need to protect your estate from nursing home costs. Most seniors should do all they can to prepare for this possibility. According to a recent article from the Times Herald-Record, “Elder Law Power of Attorney can save assets that would go to nursing home costs,” this is something that can be done even when entering a nursing home is imminent.

A Power of Attorney is used to name people, referred to as “agents,” to conduct legal and financial affairs, if we are incapacitated. Having this document is an important part of an estate plan, since it reduces or completely avoids the risk of your family having to go through guardianship proceedings, where a judge names a legal guardian to take over your affairs.

The guardian likely will be someone you have never met, who does not know you or your family. It’s always better to plan in advance, so you know who is going to be taking charge of your affairs.

Then there’s the Elder Law Power of Attorney, a stronger form of a Power of Attorney that includes unlimited gifting powers. Having this unlimited gifting power lets a single person who applies for Medicaid in a nursing home to protect their assets, by using a gift and loan strategy.

Here’s an example: Amy, who is single, can’t live on her own and even having home health care aides is not enough care anymore. She has $500,000 in assets and does not qualify for Medicaid to pay for her care. Medicaid will allow her to keep only $15,900.

One option is for Amy to spend down all of her money on nursing home costs, until all she has is $15,900. All of her savings will go to the nursing home, with very little left for her daughter, Ellen.

However, if Amy has an Elder Law Power of Attorney, a gift and loan strategy can protect her assets. Half of the money, $250,000, can go to Ellen as a gift under the unlimited gifting powers. The other half goes to Ellen as a loan, under a promissory note with a set rate of interest.

Any gifts made in the past five years, known as a “five year look back,” cause a penalty period. Amy will have to pay the nursing home costs for about twenty months. Every month during that period, Ellen will pay Amy a monthly payment that, with her income, is used to pay the nursing home bill. At the end of the 20 months, Amy qualifies for Medicaid to pay for her care for the rest of her life, and Amy may keep the $250,000. Saving half of her assets by using the gift and loan strategy is sometimes called the “half a loaf is better than none” strategy.

With a Standard Power of Attorney, there are no unlimited gifting powers.

A Medicaid Asset Protection Trust (MAPT) created five or more years before Amy needed a nursing home could have saved her entire nest egg for Ellen.

Preplanning is always the better way to go. An elder law estate planning attorney is the best resource for determining what the best tools are to protect a nest egg if and when a person needs the care of a nursing home.

Many people make the mistake of thinking that it “won’t happen to me.” However, injuries and illnesses often accompany aging, and it is far better to protect your estate from nursing home costs in advance than waiting and hoping for the best.

DISCLAIMER: Medicaid planning is complex and the case hypothetical above with “Amy and Ellen” is provided for purposes of illustration. Whether this strategy would work for you or your loved ones depends on the laws of your state of residence given your unique circumstances. Consult with an experienced elder law attorney admitted to practice law in your state of residence before engaging in any Medicaid planning!

If you would like to learn more about nursing home care and Medicaid, please visit our previous posts. 

Reference: Times Herald-Record (Jan. 8, 2021) “Elder Law Power of Attorney can save assets that would go to nursing home costs”

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protecting loved ones from elder abuse

You Must Plan for Your Spouse’s Medicaid

Medicaid eligibility is based on income. This means that there are restrictions on the resources—both income and assets—that you can have when you apply. So you must plan for your spouse’s Medicaid.

The Times Herald’s recent article entitled “Elder law planning for Medicaid” says that one of the toughest requirements for Medicaid to grasp is the financial eligibility. These rules for the cost of long-term care are tricky, especially when the Medicaid applicant is married.

To be eligible for Medicaid for long-term care, an applicant generally cannot have more than $2,400 in countable assets in their name, if their gross monthly income is $2,382 (which is the 2021 income limit) or more. An applicant may have no more than $8,000 in countable assets, if their gross monthly income is less than $2,382 (2021 income limit).

However, federal law says that certain protections are designed to prevent a spouse from becoming impoverished when their spouse goes into a nursing home and applies for Medicaid. In 2021, the spouse of a Medicaid recipient living in a nursing home—known as “the community spouse”—can keep up to $126,420 (which is the maximum Community Spouse Resource Allowance “CSRA”) and a minimum of $26,076 (the minimum CSRA) without placing the Medicaid eligibility of the spouse who is receiving long-term care in jeopardy.

The calculation to determine the amount of the CSRA, the countable assets of both the community spouse and the spouse in the nursing home are totaled on the date of the nursing home admission. That is known as the “snapshot” date. The community spouse is entitled to retain 50% of the couple’s total countable assets up to a max. The rest must be “spent-down” to qualify for the program.

In addition to the CSRA, there are also federal rules concerning income for the spouse. In many states, the community spouse can keep all of his or her own income no matter how much it is. If the community spouse’s income is less than the amount set by the state as the minimum needed to live on (“the Minimum Monthly Maintenance Needs Allowance” or “MMMNA”), then some of the applicant spouse’s income can also be allocated to the community spouse to make up the difference (called “the Spousal Allowance”). Planning for your spouse’s Medicaid is pretty complex, so speak with an experienced elder law attorney.

If you are interested in learning more about Medicaid and nursing home planning, please visit our previous posts. 

Reference: The Times Herald (Jan. 8, 2021) “Elder law planning for Medicaid”

 

when mom refuses to get an Estate Plan

Estate Planning for a Second Marriage

It takes a certain kind of courage to embark on second, third or even fourth marriages, even when there are no children from prior marriages. Regardless of how many times you walk down the aisle, the recent article “Establishing assets, goals when planning for a blended family” from the Times Herald-Record advises couples to take care of estate planning for a second marriage before saying “I do” again.

Full disclosure of each other’s assets, overall estate planning goals and plans for protecting assets from the cost of long-term care should happen before getting married. The discussion may not be easy, but it’s necessary: are they leaving assets to each other, or to children from a prior marriage? What if one wants to leave a substantial portion of their wealth to a charitable organization?

The first step recommended in estate planning for a second marriage is a prenuptial or prenup, a contract that the couple signs before getting married, to clarify what happens if they should divorce and what happens on death. The prenup typically lists all of each spouses’ assets and often a “Waiver of the Right of Election,” meaning they willingly give up any inheritance rights.

If the couple does not wish to have a prenup in their estate planning prior to the second marriage, they can use a Postnuptial Agreement (postnup). This document has the same intent and provisions as a prenup but is signed after they are legally wed. Over time, spouses may decide to leave assets to each other through trusts, owning assets together or naming each other as beneficiaries on various assets, including life insurance or investment accounts.

Without a pre-or postnup, assets will go to the surviving spouse upon death, with little or possibly nothing going to the children.

The couple should also talk about long-term care costs, which can decimate a family’s finances. Plan A is to have long-term care insurance. If either of the spouses has not secured this insurance and cannot get a policy, an alternate is to have their estate planning attorney create a Medicaid Asset Protection Trust (MAPT). Once assets have been inside the trust for five years for nursing home costs and two-and-a-half years for home care paid by Medicaid, they are protected from long-term care costs.

When applying for Medicaid, the assets of both spouses are at risk, regardless of pre- or postnup documents.

Discuss the use of trusts with your estate planning attorney. A will conveys property, but assets must go through probate, which can be costly, time-consuming and leave your assets open to court battles between heirs. Trusts avoid probate, maintain privacy and deflect family squabbles.

Creating a trust and placing the joint home and any assets, including cash and investments, inside the trust is a common estate planning strategy. When the first spouse dies, a co-trustee who serves with the surviving spouse can prevent the surviving spouse from changing the trust and by doing so, protect the children’s inheritance. Let’s say one of the couple suffers from dementia, remarries or is influenced by others—a new will could leave the children of the deceased spouse with nothing.

Many things can very easily go wrong in second marriages. Prior planning with an experienced estate planning attorney can protect the couple and their children and provide peace of mind for all concerned.

If you would like to learn more about estate planning for large, blended families, please visit our previous posts. 

Reference: Times Herald-Record (Sep. 21, 2020) “Establishing assets, goals when planning for a blended family”

 

Information in our blogs is very general in nature and should not be acted upon without first consulting with an attorney. Please feel free to contact The Wiewel Law Firm to schedule a complimentary consultation.
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