Estate Planning For The 21st Century Presenters Name Event Date - - PowerPoint PPT Presentation

Estate Planning For The 21st Century

Presenter’s Name Event Date

IMPORTANT SLIDE INFORMATION

 NAELA Members

 The following slides were graciously provided by

NAELA Member Rajiv Nagaich from Washington

• state. NAELA members have permission to reuse

these slides for their own firm’s purpose.

 Use of the NAELA logo is limited to active NAELA

members only.

 The slides were created to provide a foundation for

presenting information on Estate Planning and Long Term Care Planning and MAY NOT provide accurate

• r current information for your specific state

 To ensure the accuracy of your presentation, you MUST

review and update the contents of the slides with your state’s legal requirements

Traditional Notions of Estate Planning

 Who gets what when I die  Who manages my checkbook and health needs

when I can no longer attend to those needs myself

 Do I want to be kept alive if I am comatose and

cannot communicate

ASSUMPTIONS

 Go to sleep and not wake up  My agents will know what to do  Biggest issues are:

 Providing for quality of life  Avoiding probate  Avoiding estate taxes  Making it easy for beneficiaries

Assumptions do not apply today

 We are living longer – but not necessarily living

healthier

 One out of eight Americans over 65 dependent

• n others for day-to-day living activities

 One out of every two Americans over 85

dependent on others for day-to-day living activities

Source: Alzheimer’s Disease Facts and Figures, 2007, Alzheimer’s Association

Issues Created

 Financing health care costs, many of which may

not be covered by Medicare or health insurance

 Managing Quality of Life

Financing Long Term Care

 Medicare / Health Insurance

 Cover acute care needs  Do not cover chronic care needs  Unless . . .

 Where Medicare or Health Insurance leave off:

 Private assets (including Long Term Care Insurance)  VA  Medicaid

Limitations

 Long Term Care Insurance is NOT widely

embraced

 VA and Medicaid benefits are limited

VA Benefits

 Aid and Attendance – non-service connected

disability is dependent upon your qualification* up to:

 Veteran: $1,645 per month  Spouse of Veteran: $1,057 per month  Married Veteran: $1,945 per month

*http://www.canhr.org/factsheets/misc_fs/html/fs_aid _&_attendance.htm

Medicaid Benefits

 Food, shelter and medicine  Income used as deductible towards care costs;

$55.45 / $60.78 /$90.00 per month personal needs allowance [state specific, changes annually – please update with your state’s requirements]

 All clients treated the same

 DME  Semiprivate rooms  Limited personal care needs

What is missing?

ESTATE PLANNING

• Eligibility is Not Automatic

VA Eligibility

 Service Requirements

 90 days in active duty with 1 day in war time period

 World War I: April 6, 1917, through November 11, 1918  World War II: December 7, 1941, through December 31, 1946  Korean War: June 27, 1950, through January 31, 1955  Vietnam War: August 5, 1964 (February 28, 1961, for

veterans who served "in country" before August 5, 1964), through May 7, 1975

 Persian Gulf War: August 2, 1990, through a date to be set by

Presidential Proclamation or Law.

 24 months if enlisted after September 7, 1980

VA Eligibility

 65 years old or permanently disabled  Income less unreimbursed medical expenses less

than:

 $1,945 for married veteran  $1,645 for single veteran  $1,057 for spouse of veteran

VA Eligibility

 Net Worth:

 Unfortunately, there is no asset limit set by law, and

the determination of eligibility can be made at the discretion of a VA caseworker.

 All personal goods are exempt from the net worth and

include:

 the home in which claimant lives;  a vehicle used for the care of the claimant; and  household goods and personal effects such as clothes, jewelry

and furniture.

Resource Test

[state specific, changed every year – please update with your state’s requirements]

 Single Applicant:

 $2,000  House (with equity of up to

$500,000 [$750,000 in some statee])

 One automobile (any value)  Prepaid funeral plan

(irrevocable and of reasonable value) – burial plots for family members

 $1,500 cash value in life policy  Personal property (any value)  BUT- Assets subject to state

Medicaid lien

 Married Applicant:

 $2,000

 Spouse of Applicant

 House (any value)  One automobile (any value)  Between $74,820 and $109,560  Prepaid funeral plan

(irrevocable and of reasonable value) – burial plots for family members

 $1,500 cash value in life policy  Personal property (any value)

Who Should Worry?

 Middle class Americans

 Between $50,000 and $1,500,000 in assets

Estate Planning Solutions

 Pre-crisis options  Crisis planning options

Pre-Crisis Planning

 Utilize Special Needs Trusts  Utilize Income Only Trusts

Decedent’s share Surviving spouse owns all assets Entire estate subject to spend down to access.

Typical Estate Plan (married)

Surviving Spouse’s share

Decedent’s share To Testamentary Special Needs Trust for surviving spouse Surviving spouse owns

• nly half estate

Special Needs Trust protected

Way Around the Problem

Surviving spouse’s share Surviving spouse’s share subject to spend down

Decedent’s estate Assets owned by testator during life Nearly entire estate must be spent down to access VA or Medicaid benefits

Typical Estate Plan (unmarried)

Gift of some assets to irrevocable trust or trusted individual Trustee can provide funds to beneficiary, who can use funds as beneficiary sees fit. Assets in irrevocable trust or Safe Harbor Trust protected (subject to look back period)

Way Around the Problem

Settlor cannot be a beneficiary of the principal

Pre-Crisis Planning



Update Community Property Agreements (only in community property states)

 Revocable by one party 

Update Powers of Attorney

 Gifting Powers  Care Management mandate  No authority to enter into arbitration agreements 

Living Wills

 Update Living Wills after Terry Shiavo  Update Health Care Proxy in states where they are separately required

Pre-Crisis Planning

 Discuss your plan with named fiduciaries

Crisis Planning



Financing the costs



Medicare



VA



Medicaid

 Develop plan to address quality of life issues  Address Estate Planning issues