Estate Planning Blog Articles

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What Happens to My Home If I Leave It to a Medicaid Recipient in My Will?

When a beneficiary is on Medicaid and she’s set to get a bequest of the grantor’s home in her last will, the question may arise about the impact on her Medicaid benefits.

The answer will depend on the Medicaid program and what the daughter decides to do with the house, says nj.com’s recent article entitled “What happens to my daughter’s Medicaid if I leave her my home?”

Medicaid provides health coverage for some low-income people, families and children, pregnant women, the elderly, and people with disabilities.

In some states the program covers all low-income adults below a certain income level.

Medicaid programs are required to follow federal guidelines, but coverage and costs may be different from state to state.

Here, if the daughter receives Medicaid because she also receives SSI or has ABD Medicaid, the house will not be counted as a disqualifying asset if the house is the daughter’s principal place of residence.

If the daughter sells the house, the sale proceeds would be countable.

If she is getting expanded Medicaid through Obamacare, her eligibility would be based on income. So, if the daughter rented the house or sold the house, the income that would be generated could disqualify her from continuing to receive benefits, depending on the amount of income she gets.

If the daughter is disabled, consider leaving the daughter the house in a special needs trust. With a special needs trust, there’s a legal arrangement and fiduciary relationship that allows a physically or mentally disabled or chronically ill person to enjoy trust assets without jeopardizing their eligibility for Medicaid.

A Medicaid Asset Protection Trust is an irrevocable trust, and assets placed in the trust are considered completed gifts to the beneficiaries, protecting the assets from Medicaid (after the look-back period).

With a Medicaid Asset Protection Trust, even if the house is sold, the sale proceeds wouldn’t disqualify the daughter from receiving Medicaid.

Ask an experienced elder law attorney for help with this situation.

The laws regarding Medicaid and Medicaid eligibility are extremely complex and vary from state to state. Accordingly, nothing in this article should be considered legal advice.

Reference: nj.com (July 30, 2021) “What happens to my daughter’s Medicaid if I leave her my home?”

What Should a Power of Attorney Include?

The pandemic has taught us how swiftly our lives can change, and interest in having a power of attorney (POA) has increased as a result. But you need to know how this powerful document is and what it’s limits are. A recent article from Forbes titled “4 Power of Attorney Clauses You Need To Focus On” explains it all.

The agent acting under the authority of your POA only controls assets in your name. Assets in a trust are not owned by you, so your agent can’t access them. The trustee (you or a successor trustee, if you are incapacitated) appointed in your trust document would have control of the trust and its assets.

There are several different types of POAs. The Durable Power of Attorney goes into effect the moment it is signed and continues to be valid if you become incapacitated. The Springing Power of Attorney becomes valid only when you become incapacitated.

Most estate planning attorneys will advise you to use the Durable Power of Attorney, as the Springing Power of Attorney requires extra steps (perhaps even a court) to determine your capacity.

All authority under a Power of Attorney ceases to be effective when you die.

There are challenges to the POA. Deciding who will be your agent is not always easy. The agent has complete control over your financial life outside of assets held in trust. If you chose to appoint two different people to share the responsibility and they don’t get along, time-sensitive decisions could become tangled and delayed.

Determine gifting parameters. Will your agent be authorized to make gifts? Depending upon your estate, you may want your agent to be able to make gifts, which is useful if you want to reduce estate taxes or if you’ll need to apply for government benefits in the near future. You can also give directions as to who gets gifts and how much. Most people limit the size of gifts to the annual exclusion amount of $15,000.

Can the POA agent change beneficiary designations? Chances are a lot of your assets will pass to loved ones through a beneficiary designation: life insurance, investment, retirement accounts, etc. Do you want your POA agent to have the ability to change these? Most people do not, and the POA must specifically state this. Your estate planning attorney will be able to custom design your POA to protect your beneficiary designations.

Can the POA amend a trust? Depending upon your circumstances, you may or may not want your POA to have the ability to make changes to trusts. This would allow the POA to change beneficiaries and change the terms of the trust. Most folks have planned their trusts to work with their estate plan, and do not wish a POA agent to have the power to make changes.

The POA and the guardian. A POA may be used to name a guardian, who would be appointed by the court. This person is often the same person as the POA, with the idea that the same person you trust enough to be your POA would also be trusted to be your guardian.

The POA is a more powerful document than people think. Downloading a POA and hoping for the best can undo a lifetime of financial and estate planning. It’s best to have a POA created that is uniquely drafted for your family and your situation.

Reference: Forbes (July 19, 2021) “4 Power of Attorney Clauses You Need To Focus On”

Has COVID Affected Baby Boomers’ Retirement Plans?

Baby boomers, who are either in retirement or very close to it, have had COVID-19 make an especially significant effect on post-work plans. That’s according to a recent survey from the Center for a Secure Retirement and CNO Financial Group. With the coronavirus, Boomers had to help family financially, which meant less for their own retirement.

Money Talks News’ recent article entitled “5 Impacts the Pandemic Had on Baby Boomers’ Retirement Plans” provides five important ways the pandemic has changed baby-boomer retirement dreams. The results are based on a survey of more than 2,500 middle-income boomers — defined as Americans who were born between 1946 and 1964, and who have an annual household income between $30,000 and $100,000 and less than $1 million in investable assets.

  1. Their main ‘non-negotiable’ retirement priorities have changed. Before the pandemic, 56% of boomers said maintaining financial security and independence was their top “non-negotiable” retirement priority. However, it’s now back to the basics for more boomers. The top retirement priorities are now: spending time with grandchildren (43%); maintaining financial stability and independence (35%); staying active (34%); being able to travel (30%); and living close to family and friends (25%).
  2. They’ve supported other family members financially. Many middle-income boomers reported that they assisted family members financially during the pandemic, with 41% of those surveyed saying that was the case.
  3. They haven’t been able to save much for retirement. Among middle-income baby boomers who offered cash to support family during the pandemic, 75% say they haven’t been able to save as much for retirement as they wanted.
  4. They’ve delayed plans to move. Retiring by the beach or near the grandkids are common retirement destinations. However, the pandemic has thwarted those plans for many a baby boomer. Among middle-income baby boomers who helped support family during the pandemic, 65% say that they delayed their moving plans.
  5. They’ve re-evaluated retirement finances and expenses. Helping the kids in the pandemic has meant an adjustment for many baby boomers’ budgets. About half (51%) responded that they’ve re-evaluated finances and expenses for retirement.

Reference: Money Talks News (Aug. 2, 2021) “5 Impacts the Pandemic Had on Baby Boomers’ Retirement Plans”

This Breathing Trick may Make You More Heart-Healthy

An easy technique, called high-resistance inspiratory muscle strength training (IMST) is when a person inhales deeply through a hand-held device that provides resistance. Doctors say that to get an idea of how it works, think of “sucking hard through a tube that sucks back.”

Money Talks News’ recent article entitled “This 5-Minute Trick Could Help Your Heart More Than Exercise” reports that, as part of the study, 36 adults ages 50 to 79 with above-normal systolic blood pressure readings (120 or higher) were divided into two groups. Half of them performed high-resistance IMST for six weeks; and the other half did a placebo protocol, which involved much less resistance. (Systolic blood pressure refers to the first or top number in a blood pressure reading. For example, if your reading is 120/80, your systolic blood pressure is 120.)

After six weeks, the systolic blood pressure of the IMST group went down an average of nine points. That reduction is better than what’s normally achieved by walking 30 minutes a day, five days a week. It is also equal to the effects of some drugs that work to lower blood pressure. Moreover, those in the IMST group saw a 45% improvement in vascular endothelial function. That’s the ability of arteries to expand upon stimulation. Levels of nitric oxide — a molecule that dilates arteries and prevents plaque buildup — also increased. Lastly, markers of inflammation and oxidative stress fell drastically. Higher levels of these markers are linked to increased heart attack risk. These findings were published recently in the Journal of the American Heart Association.

IMST has been used for years to help patients with respiratory disease to strengthen their diaphragm and other breathing muscles. Researchers now say that more widespread use of IMST might help aging adults lower their risk of cardiovascular disease, the No. 1 cause of death in America.

In a press release, Daniel Craighead, lead author of the study and an assistant research professor in UC Boulder’s Department of Integrative Physiology, noted, “There are a lot of lifestyle strategies we know can help people maintain cardiovascular health as they age. But the reality is, they take a lot of time and effort and can be expensive and hard for some people to access. IMST can be done in five minutes in your own home while you watch TV.”

The researchers say that 65% of U.S. adults over age 50 have above-normal blood pressure—this raises their risk of heart attack or stroke.

It’s usually suggested that those performing IMST engage in a 30-minute-per-day regimen at low resistance. However, Craighead and others have found that a reduced regimen of 30 inhalations per day at high resistance, six days per week also offers cardiovascular, cognitive, and sports performance benefits. The researchers noted that the IMST regimen may be of particular benefit to postmenopausal women. Earlier research has found that postmenopausal women who aren’t taking supplemental estrogen don’t see as much benefit to vascular endothelial function from exercise as men do.

But IMST looks to boost vascular endothelial function in women just as much as men. Craighead says, “If aerobic exercise won’t improve this key measure of cardiovascular health for postmenopausal women, they need another lifestyle intervention that will. This could be it.”

The breathing-muscle training device used in the study is called a POWERbreathe K3, manufactured by a company in England. It costs a few hundred dollars. However, the researchers say they’re developing a smartphone app that will enable people to do the same IMST regimen at home with other devices.

Reference: Money Talks News (July 15, 2021) “This 5-Minute Trick Could Help Your Heart More Than Exercise”

Additional Benefits for Vets?

A decision by the U.S. Court of Appeals for the Federal Circuit late last week will give millions of veterans a chance for an additional year of education benefits.

Military Times’s recent article entitled “Millions of vets may be eligible for extra GI Bill benefits thanks to court ruling” explains that it was one vet’s GI Bill fight that now gives benefits to potentially millions of other students.

The case, Rudsill vs. McDonough, has been pending in federal courts for nearly six years. At its center is department officials’ belief that vets can use either the Post 9/11 GI Bill program or the Montgomery GI Bill program, but not both. However, the case could give an additional year of benefits to those who’ve used up their post-9/11 GI Bill but still have some eligibility left under the Montgomery GI Bill program.

Jim Rudsill, an Army veteran wounded in a roadside bomb attack in Iraq in 2005, challenged that policy, saying it was based on a misreading of the law by department officials. He’s attending seminary school using his additional education benefits, after a lower court order let him start collecting the money, even as the case was appealed.

This was the latest in a series of courts to support his case, agreeing that Rudsill shouldn’t have been forced to give up eligibility in either program and should be entitled to 48 months of education benefits (the existing cap on total government higher education payouts under federal statute.) The ruling affirms lower court decisions that say eligible vets can begin using the benefits as early as next semester.

Under the Post-9/11 GI Bill education benefits program, eligible veterans receive 36 months of tuition payouts, housing stipends and other financial help. The Montgomery GI Bill benefits program offers far less money, but still has several thousands of dollars annually to offer vets for tuition costs, if they paid into the program at the start of their military service. That program is expected to be completely phased out in the several years.

If they have a choice between the two programs, most veterans go with the more financially generous Post 9/11 GI Bill program. However, court decisions have allowed for the possibility of another year of lesser education stipend payouts for veterans who can’t complete their degrees in 36 months.

Federal officials have two months to appeal the ruling or start paying out potentially billions in new education benefits.

Reference: Military Times (July 12, 2021) “Millions of vets may be eligible for extra GI Bill benefits thanks to court ruling”

Does My Social Security Increase If I Work Past 70?

Many seniors choose to work later in life. It will have an effect on their Social Security benefits, says nj.com’s recent article entitled, “If I work past age 70, can my Social Security benefits increase?”

You must pay FICA (Federal Insurance Contribution Act) taxes, commonly called Social Security and Medicare taxes, if you have income that’s covered by Social Security.

The tax is imposed on your earnings up to a maximum amount. For 2021, that maximum amount is $142,800.

Your Social Security benefit at full retirement age (FRA) is determined by taking your highest 35 years of earnings on which Social Security tax has been levied, indexed for inflation.

The maximum amount of your benefit is capped because of the maximum amount of income on which Social Security tax is levied.

If you continue to work while collecting Social Security at any age, your benefit could increase, if your earnings are one of the 35 highest years you have earned.

The increased benefit is automatically calculated by the Social Security Administration and is paid to you in the December of the next year.

However, working while collecting Social Security benefits has other complexities you should consider.

If you’re younger than full retirement age (FRA) and you earn more than a certain amount, your benefit will be reduced.

For example, for 2021, if you’re below YOUR FRA for the whole year, your benefit will be reduced $1 for every $2 you earn over $18,960.

However, the benefit isn’t actually lost. That’s because when you reach your full retirement age, your benefit will increase to reflect the amount withheld.

If you have substantial income — any and all income that must be reported on your tax return — other than your Social Security income, up to 85% of your Social Security income will be taxable.

Reference: nj.com (July 26, 2021) “If I work past age 70, can my Social Security benefits increase?”

Does Air Pollution Cause Alzheimer’s Disease?

The air quality study was released by the Alzheimer’s Association.

Researchers monitored two groups of at-risk adults, one in Europe and the other in the U.S., over a 10-year period.

WTOP’s article entitled “Study: New evidence shows link between air pollution, Alzheimer’s disease” reports that Dr. Heather Snyder, the vice president of Medical and Scientific Relations at the association, commented that those in Europe who were in less-polluted areas saw a drop in risk by 15% for dementia and 17% for Alzheimer’s disease.

More than six million Americans are living with Alzheimer’s. By the year 2050, this number is expected to increase to nearly 13 million.

The Alzheimer’s Association reports that one in three seniors dies with Alzheimer’s or another dementia. It kills more people than breast cancer and prostate cancer combined.

Women in the U.S. who participated in the study saw a 26% decrease in risk of developing dementia.

This included a reduction in certain categories of pollution, including traffic-related pollution.

Long-term exposure to air pollution was linked to a possible biological connection to physical brain changes that result in Alzheimer’s disease.

“When you actually modify or change air pollution, decrease it, there actually also seems to be a benefit on cognition in a population that are aging,” Snyder said. “I think these data demonstrate the importance of policies and action by federal, state and local governments to address reducing air pollution.”

Snyder remarked that it’s important for those with loved ones battling the disease to take advantage of community resources to see better outcomes overall.

According to the Alzheimer’s Association, more than 11 million people in the United States provide unpaid care for people with Alzheimer’s or other dementias.

in 2020, these caregivers provided an estimated 15.3 billion hours of care, valued at approximately $257 billion.

Reference: WTOP (July 26, 2021) “Study: New evidence shows link between air pollution, Alzheimer’s disease”

Disney Grandson Loses Appeal of Probate Court’s Decision

Bradford Lund, Walt Disney’s adult grandson, lost an appeal in a battle with a Los Angeles probate judge who appointed a guardian ad litem without a hearing and rejected a proposed settlement that would have given Lund a $200 million inheritance, says this recent article “Walt Disney’s Grandson Loses Appeal in Fight for $200M Inheritance” from The Hollywood Reporter. Despite its decision, the appellate court described the probate court’s behavior as “troubling.”

In 2020, Lund filed a lawsuit in California federal court arguing that his due process was violated when a County Superior Court judge rejected a settlement reached by family members and trustees. The judge appointed a guardian ad litem, even though an Arizona judge had determined that Lund was not incapacitated and another judge in California stated that Lund had the capacity to choose new trustees.

The lawsuit was later amended to include a claim under the Americans With Disabilities Act because in the 2019 settlement, Judge Cowan had stated that he would not give 200 million dollars to someone who may suffer, at some level, from Down syndrome.

Six months later, a U.S. District judge dismissed the matter. During the appeals process, the Superior Court discharged the guardian ad litem and granted Lund’s request for a new judge.

The 9th Circuit Court of Appeals affirmed the dismissal, finding that most of Lund’s claims had become moot, as a result of the judge recusing himself and removing the guardian ad litem. The panel also held that, while the judge’s statements were inappropriate and without factual basis, they were protected by judicial immunity.

It may be small comfort to Lund, but the 9th Circuit judge criticized the probate court and acknowledged his frustration with the system. The district judge no longer serves in probate court, although no connection between his departure and the Lund matter was recognized by the 9th District.

Regarding the ADA claim, the panel of 9th Circuit judges says that judges must remain completely independent, and subjecting judges to liability for grievances of litigants would compromise that.

Reference: The Hollywood Reporter (July 16, 2021) “Walt Disney’s Grandson Loses Appeal in Fight for $200M Inheritance”

Can GI Benefits Be Used to Start a Business?

A proposal in Congress aims to let some recently separated service members use their GI Bill benefits to start a new business, rather than taking college classes. The legislation would establish a three-year pilot program for up to 250 veterans to pursue “educational entrepreneurial training” and receive their education payouts in the form of start-up capital, instead of the traditional tuition payments.

However, the bill hasn’t gained much legislative traction in recent years, reports Military Times’ recent article entitled “Use your GI Bill benefits to start a business? Lawmakers push pilot program.”

“Higher education is essential for many [veterans], but some have a different calling,” said Rep Ben Cline, R-Va. and a sponsor of the measure. “Veterans are seeking more options and want the choice to use their GI Bill benefit to start their own business. It’s common sense to offer veterans a choice in accessing resources, training and support to pursue the American dream to start a small business, create jobs and generate growth in our economy.”

Roughly 1.7 million veterans have some unused GI Bill benefits, and a new court ruling could provide a pathway to accessing them for the first time. Under the current post-9/11 GI Bill education benefits program, eligible veterans get 36 months of tuition payouts, housing stipends and other financial assistance. In certain situations, service members can also transfer that benefit to a spouse or dependents for their college classes.

More than 2.5 million businesses in America are veteran-owned, making up just under 10% of all American small businesses. Supporters of the Veterans Entrepreneurship Act say that individuals interested in pursuing that path after military service should not be shut out from using their earned benefits.

“By helping veterans start businesses, we are investing in America’s best and brightest,” co-sponsor Rep. Lou Correa, D-Calif., said in a statement.

“When our service members transition into civilian life, they bring considerable skills and experiences with them. Veterans know how to manage risk on the battlefield. And that’s what a successful entrepreneur does — manage risk.”

However, the bill has faced resistance in the past partly due to the fact that they are designed to help promote veteran entrepreneurship and employment, and in part because of concerns that misuse of the college benefit could result in long-term financial disadvantages for veterans.

Versions of the idea have made some progress in both the House and Senate in recent years but have not reached final approval from both chambers. No timeline has been set for a hearing or vote on the new proposal.

Reference: Military Times (July 16, 2021) “Use your GI Bill benefits to start a business? Lawmakers push pilot program”