Estate Planning Blog Articles

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What Is Virginia Doing to Protect the Residents of Assisted Living Communities?

The eviction bill is sponsored by Virginia state senators Lionell Spruill (D) and Ghazala Hashmi (D). The legislation would amend the Virginia code to give assisted living residents the same protections as nursing home residents facing eviction, reports McKnight’s Senior Living’s recent article entitled “Assisted living providers may face new requirements before evicting residents.”

Susan Rowland, Spruill’s chief of staff, told the McKnight’s Business Daily that the legislation is meant to close a loophole in Virginia law that lets assisted living communities evict residents with no legal recourse.

If SB40 becomes law, assisted residents would be provided with certain safeguards from being involuntarily discharged. These include requiring operators to provide a description of the reasons for eviction, such as that the facility no longer can meet the resident’s care needs, behavioral issues or non-payment. Facilities would also need to make reasonable efforts to resolve any issues leading up to the eviction. Residents would need to be given 30 days’ notice before evictions and also be notified of their right to appeal the involuntary discharge.

In addition, according to the legislation, “Prior to involuntarily discharging a resident, the assisted living facility shall provide relocation assistance to the resident and the resident’s representative, including information regarding alternative placement options.”

Amy Hewett, vice president of strategy and communications for the Virginia Health Care Association / Virginia Center for Assisted Living, remarked that the association “appreciated the opportunity to work with the bill patron Sen. Lionell Spruill and advocates to take steps toward ensuring that both residents and providers have an understanding of the involuntary discharge process.”

Dana Parsons, vice president and legislative counsel for LeadingAge Virginia, said the organization “believe[s] this legislation is a positive step forward and will provide housing protections as well as stability and positive support to aging Virginians.”

Assisted living communities in the commonwealth are deemed non-medical in nature. As a result, they are not subject to the same regulations as skilled nursing facilities. Assisted living residents also are not covered by the commonwealth’s Landlord and Tenant Act. Geriatric homes are specifically excluded from eviction protections afforded other renters, “as these tenancies and occupancies are not residential tenancies under this chapter.”

Residents evicted from the state’s assisted living communities could only go to the Office of the State Long-Term Care Ombudsman, which could attempt to mediate disputes. However, there was no requirement for assisted living communities to cooperate.

Reference: McKnight’s Senior Living (March 10, 2022) “Assisted living providers may face new requirements before evicting residents”

Suggested Key Terms: Elder Law Attorney, Assisted Living

Must I Sell Parent’s Home if They Move to a Nursing Facility?

If a parent is transferring to a nursing home, you may ask if her home must be sold.

It is common in a parent’s later years to have the parent and an adult child on the deed, with a line of credit on the house. As a result, there’s very little equity.

Seniors Matter’s recent article entitled “If my mom moves to a nursing home, does her home need to be sold?” says that if your mother has assets in her name, but not enough resources to pay for an extended nursing home stay, this can add another level of complexity.

If your mother has long-term care insurance or a life insurance policy with a nursing home rider, these can help cover the costs.

However, if your mom will rely on state aid, through Medicaid, she will need to qualify for coverage based on her income and assets.

Medicaid income and asset limits are low—and vary by state. Homes are usually excluded from the asset limits for qualification purposes. That is because most states’ Medicaid programs will not count a nursing home resident’s home as an asset when calculating an applicant’s eligibility for Medicaid, provided the resident intends to return home

However, a home may come into play later on because states eventually attempt to recover their costs of providing care. If a parent stays a year-and-a-half in a nursing home—the typical stay for women— when her home is sold, the state will make a claim for a share of the home’s sales proceeds.

Many seniors use an irrevocable trust to avoid this “asset recovery.”

Trusts can be expensive to create and require the help of an experienced elder law attorney. As a result, in some cases, this may not be an option. If there’s not enough equity left after the sale, some states also pursue other assets, such as bank accounts, to satisfy their nursing home expense claims.

An adult child selling the home right before the parent goes into a nursing home would also not avoid the state trying to recover its costs. This because Medicaid has a look-back period for asset transfers occurring within five years.

There are some exceptions. For example, if an adult child lived with their parent in the house as her caregiver prior to her being placed in a nursing home. However, there are other requirements.

Talk to elder law attorney on the best way to go, based on state law and other specific factors.

Reference: Seniors Matter (Feb. 25, 2022) “If my mom moves to a nursing home, does her home need to be sold?”

What If an Estate Owes Back Taxes?

If grandma did not finish up all of her duties as the executor of her husband’s estate before she passed away, it would be wise to speak with an experienced estate planning attorney.

An estate planning attorney can help with the issues with estate administration, says nj.com’s recent article entitled “My grandmother’s estate owes back taxes. What next?”

The fiduciary appointed to administer an estate—called an executor or personal representative—is responsible to make certain that all creditors are paid before making distribution of estate assets.

An executor of an estate is the person designated to administer the last will and testament of the decedent. His or her primary duty is to carry out the instructions to manage the affairs and wishes of the decedent.

An executor is appointed either by the testator of the will (the one who makes the will) or by a court, in situations where there is no will (also known as intestacy).

If there is a probate proceeding, the executor is required to officially notify creditors of it pursuant to the state probate statutes.

If there are not enough assets to pay all creditors, state statutes give a priority regarding how creditors are paid.

Funeral expenses and taxes are typically paid first.

Note that if the creditors are not paid, and money is distributed to beneficiaries, the creditors may seek the return of those distributions from the beneficiaries.

However, the executor’s individual assets would not be responsible for payment of estate debts. It is just the assets that are received from the decedent.

As far as taxes, the IRS is still legally entitled to the money owed by the decedent. The federal government will usually go to great lengths to collect it, even if the will instructs the remaining assets to be distributed elsewhere.

Reference: nj.com (Feb. 3, 2022) “My grandmother’s estate owes back taxes. What next?”

Am I Getting All the Social Security Benefits I Can?

Money Talks News’ recent article entitled “7 Social Security Benefits You May Be Overlooking” says that the Social Security Administration provides payments to spouses, children and those with disabilities, among others. Let’s look at this in detail.

  1. Spousal benefits via a husband or wife. Spouses can get up to half of their husband’s or wife’s monthly benefit. Even stay-at-home spouses without their own work history can claim benefits with this method. You can start claiming spousal benefits as early as age 62. However, benefits are reduced if payments begin before your full retirement age. If you are entitled to your own benefits, as well as spousal benefits, you will get an amount equal to whichever benefit level is greater.
  2. Spousal benefits via an ex-spouse. Even if you are divorced, you may be entitled to get spousal benefits. However, all of the following must apply to your situation:
  • Your ex-spouse is entitled to receive Social Security benefits;
  • You were married at least 10 years to your ex-spouse;
  • You are currently unmarried; and
  • You are at least 62 years old.

The benefit that you are entitled to get based on your own work is less than the benefit you would receive based on your ex-spouse’s work. Claiming spousal benefits as a divorced person does not impact your ex’s benefit amount. It also does not affect any benefits their current spouse can receive, if they have remarried.

  1. Survivor’s benefits for widows and widowers. If your spouse dies, you may still be able to receive up to 100% of their Social Security retirement benefits. Divorced spouses may also be able to get survivor’s benefits, if they were married for at least 10 years and are now unmarried. Most widows and widowers can begin claiming survivor’s benefits as early as age 60. Those who have a disability and became disabled prior to or within seven years of their spouse’s death can start benefits as early as age 50. In addition, widows and widowers of any age can get survivor’s benefits, if they are caring for a deceased worker’s child who’s younger than age 16 or disabled.
  2. Survivor’s benefits for children. Children can get payments from a deceased parent’s record as well. Survivor’s benefits are available to children up to age 18 (or 19 for if attending elementary or secondary school full-time) These benefits may extend beyond that, if a child becomes disabled and remains disabled before age 22. Depending on the circumstances, grandchildren and stepchildren may also be eligible for these benefits.
  3. Parent’s benefits. Parents who depended on their children for financial support may be eligible to get benefits from Social Security if that child dies. To be eligible , you have to meet a number of criteria, including the following:
  • The deceased worker must have sufficient work credits to qualify for Social Security benefits;
  • You must be at least age 62 and, in most cases, cannot be married after the worker’s death;
  • You must have received at least half of your support from the deceased worker at certain points in time;
  • You were the natural parent or became the legal adoptive parent or stepparent prior to the worker turning 16 years old; and
  • You are not eligible for a retirement benefit from Social Security that exceeds the parent’s benefit.
  1. Disability benefits. To get monthly benefits through the Social Security Disability Insurance program you must have a work history that makes you eligible for Social Security and be unable to work now because of a medical condition that is expected to last at least a year or end in death.
  2. Supplemental Security Income. These benefits do not come from Social Security taxes, but rather the program uses general tax dollars to provide benefits to adults and children with disabilities, blindness, or limited income and resources. The SSI program is designed to provide cash assistance for basic needs, such as food, clothing and housing. Because it is funded by general tax revenue, there is no work history requirement to receive these benefits.

Reference: Money Talks News (Feb. 8, 2022) “7 Social Security Benefits You May Be Overlooking”

How to File Tax Return When Mom Passes Away

If you are preparing a 1040 federal income tax form for a spouse or parent, you are grieving while also gathering tax records. If you are the executor for an estate, you may not know the history of the decedent’s tax situation nor have the access you need to important documents. To help alleviate the problems, AARP’s January 27th article entitled, “How to File a Tax Return for a Deceased Taxpayer,” gives some guidance on how a decedent’s tax return might be different from the usual 1040 form, as well as the pitfalls to avoid as you prepare to file.

  1. Marital filing status. A surviving spouse should file a joint return for the year of death and write in the signature area “filing as surviving spouse.” The spouse also can file jointly for the next two tax years if he or she has dependents and has not remarried. This special provision gives the surviving spouse benefit from the advantages of a joint return, such as the higher standard deduction.
  2. Get authorization to file. If there is no surviving spouse, someone must be chosen to file the tax return. This could be the estate’s executor if there was a will, the estate administrator if there is not a will, or anyone responsible for managing the decedent’s property. To prepare the return — or provide necessary information to an accountant — you will need to access the decedent’s financial records, and financial institutions usually want to see a copy of the certified death certificate before releasing information.
  3. Locate last year’s return. That is your starting point. Returns filed electronically must have the password to sign into the software program that was used. A major step in estate planning is, therefore, to give passwords to a trusted person or instructions about how to access that information after your death. However, if you cannot find last year’s return, submit Form 4506-T to the IRS to request a transcript of the previous tax return. This shows what was on the return, including filing status, taxable income, tax payments and more. The IRS also can provide source documents, such as a W-2 or a 1099-INT from a bank or a 1099-R for a pension distribution from a union — all the documents sent to the IRS on your behalf — which can help you know what documents to collect now.
  4. Update the address on the return. If you are not a surviving spouse or did not live with the decedent, be sure to update the tax return to list your address as an “in care of” address, so anything from the IRS will come directly to you.
  5. Review medical costs. The deduction for medical expenses is the amount that exceeds 7.5% of adjusted gross income. If the decedent was chronically ill, medical expenses can add up. Hospital stays, nursing homes, prescriptions and care from aides can add up and hit that threshold.
  6. Get extra time to file and/or make payments. The executor or surviving spouse can request an extension and estimate what any tax liability might be. The IRS may also give you a break on penalties for not filing because you were dealing with funeral arrangements, for example, but you have to cite a reasonable cause.
  7. Cut down the IRS’ time to assess taxes. The IRS has three years to decide if you have paid the right amount for that tax year. You can cut that to 18 months, by filing Form 4810. That is a request for a prompt assessment of tax. As you prepare the return, you may miss a 1099 or other document, unintentionally understating income. If you skip filing Form 4810, the IRS could notify you of taxes owed up to three years later, likely after you have distributed the estate’s funds.
  8. You may be filing multiple returns. If someone dies in January or February, you may be responsible for filing the tax return for last year and this year. There might be a filing obligation for that brief period of time that the person was alive in this year. The other situation is that the decedent failed to file a previous year’s return, perhaps because he or she was very ill. A notice will be sent from the IRS stating that they do not have a copy of the decedent’s return. This is another reason it is important to file Form 4810, requesting that the IRS has only 18 months to assess tax. You do not want any surprises. A tax return, or Form 1041, also may need to be filed for the estate, if it has earned more than $600. Since it can take a long time to wind down an estate and pay heirs, a Form 1041 may need to be filed the following year, too — a healthy brokerage account could generate more than $600 income for the year. It may also take a long time to distribute the estate.
  9. Estate taxes. An estate tax return, Form 706, must be filed if the gross estate of the decedent is valued at more than $12.06 million for 2022 or $11.7 million for 2021. However, that is a high threshold.
  10. Consider hiring an attorney. If all this sounds like it is too much, ask an attorney for help. A legal professional will know what information is required.

Reference: AARP (Jan. 27, 2022) “How to File a Tax Return for a Deceased Taxpayer”

What’s Elder Law and Do I Need It?

Yahoo News  says in its recent article entitled “What Is Elder Law?” that the growing number of elderly in the U.S. has created a need for lawyers trained to serve clients with the distinct needs of seniors.

The National Elder Law Foundation defines elder law as “the legal practice of counseling and representing older persons and persons with special needs, their representatives about the legal aspects of health and long-term care planning, public benefits, surrogate decision-making, legal capacity, the conservation, disposition and administration of estates and the implementation of their decisions concerning such matters, giving due consideration to the applicable tax consequences of the action, or the need for more sophisticated tax expertise.”

The goal of elder law is to ensure that the elderly client’s wishes are honored. It also seeks to protect an elderly client from abuse, neglect and any illegal or unethical violation of their plans and preferences.

Baby boomers, the largest generation in history, have entered retirement age in recent years.  Roughly 17% of the country is now over the age of 65. The Census estimates that about one out of every five Americans will be elderly by 2040.

Today’s asset management concerns are much sophisticated and consequential than those of the past. Medical care has not only managed to extend life and physical ability but has itself also grown more sophisticated. Let’s look at some of the most common elder law topics:

Estate Planning. This is an area of law that governs how to manage your assets after death. The term “estate” refers to all of your assets and debts, once you have passed. When a person dies, their estate is everything they own and owe. The estate’s debts are then paid from its assets and anything remaining is distributed among your heirs.

Another part of estate planning in elder law concerns powers of attorney. This may arise as a voluntary form of conservatorship. This power can be limited, such as assigning your accountant the authority to file your taxes on your behalf. It can also be very broad, such as assigning a family member the authority to make medical decisions on your behalf while you are unconscious. A power of attorney can also allow a trusted agent to purchase and sell property, sign contracts and other tasks on your behalf.

Disability and Conservatorship. As you grow older, your body or mind may fail. It is a condition known as incapacitation and legally defined as when an individual is either physically unable to express their wishes (such as being unconscious) or mentally unable to understand the nature and quality of their actions. If this happens, you need someone to help you with activities of daily living. Declaring someone mentally unfit, or mentally incapacitated, is a complicated legal and medical issue. If a physician and the court agree that a person cannot take care of themselves, a third party is placed in charge of their affairs. This is known as a conservatorship or guardianship. In most cases, the conservator will have broad authority over the adult’s financial, medical and personal life.

Government programs. Everyone over 65 will, most likely, interact with Medicare. This program provides no- or low-cost healthcare. Social Security is the retirement benefits program. For seniors, understanding how these programs work is critical.

Healthcare. As we get older, health care is an increasingly important part of our financial and personal life. Elder law can entail helping a senior understand their rights and responsibilities when it comes to healthcare, such as long-term care planning and transitioning to a long-term care facility.

Reference: Yahoo News (Jan. 26, 2020) “What Is Elder Law?”

What Is Elder Law?

WAGM’s recent article entitled “A Closer Look at Elder Law“ takes a look at what goes into estate planning and elder law.

Wills and estate planning may not be the most exciting things to talk about. However, in this day and age, they can be one of the most vital tools to ensure your wishes are carried out after you’re gone.

People often don’t know what they should do, or what direction they should take.

The earlier you get going and consider your senior years, the better off you’re going to be. For many, it seems to be around 55 when it comes to starting to think about long term care issues.

However, you can start your homework long before that.

Elder law attorneys focus their practice on issues that concern older people. However, it’s not exclusively for older people, since these lawyers counsel other family members of the elderly about their concerns.

A big concern for many families is how do I get started and how much planning do I have to do ahead of time?

If you’re talking about an estate plan, what’s stored just in your head is usually enough preparation to get the ball rolling and speak with an experienced estate planning or elder law attorney.

They can create an estate plan that may consists of a basic will, a financial power of attorney, a medical power of attorney and a living will.

For long term care planning, people will frequently wait too long to start their preparations, and they’re faced with a crisis. That can entail finding care for a loved one immediately, either at home or in a facility, such as an assisted living home or nursing home. Waiting until a crisis also makes it harder to find specific information about financial holdings.

Some people also have concerns about the estate or death taxes with which their families may be saddled with after they pass away. For the most part, that’s not an issue because the federal estate tax only applies if your estate is worth more than $12.06 million in 2022. However, you should know that a number of states have their own estate tax. This includes Connecticut, Hawaii, Illinois, Maine, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont and Washington, plus Washington, D.C.

Iowa, Kentucky, Nebraska, New Jersey, and Pennsylvania have only an inheritance tax, which is a tax on what you receive as the beneficiary of an estate. Maryland has both.

Therefore, the first thing to do is to recognize that we have two stages. The first is where we may need care during life, and the second is to distribute our assets after death. Make certain that you have both in place.

Reference: WAGM (Dec. 8, 2021) “A Closer Look at Elder Law“

How Do I Hire a Caregiver from an Agency?

Part One of AARP’s recent article entitled “How to Hire a Caregiver” explains that when you have a list of promising agencies, you should schedule a consultation.

It doesn’t matter if your family member is eligible for Medicare, Medicare’s Home Health Compare can be a terrific tool for finding and researching home health agencies in your area.

It provides detailed information on what services they provide and how patients rate them.

Working with an agency has its pros and cons. The pluses include the following:

  • Background checks. Caregivers must pass a background check.
  • Experienced caregivers. Agencies are likely to have a number of caregivers who cared for other seniors with the illness or condition affecting your loved one.
  • Backup care. If the primary aide is sick or doesn’t work out, an agency typically can quickly find a replacement.
  • Liability protection in the event that a caregiver is injured while at the home.
  • No paperwork. The agency takes a fee, pays the aide and does the payroll and taxes.

Here are some of the corresponding minuses of working with an agency:

  • Greater expense. You’ll pay more for an agency-provided caregiver.
  • Little choice. The agency chooses the worker, and he or she may not fit well with you or your family member.
  • Negotiation is limited, and individuals are generally more flexible about duties, hours and overtime than agencies.
  • There are agencies that don’t permit a part-time schedule.

In addition, you can contact an experienced elder law attorney and ask for recommendations.

Reference: AARP (Sep. 27, 2021) “How to Hire a Caregiver”

Can I Restructure Assets to Qualify for Medicaid?

Some people believe that Medicaid is only for poor and low-income seniors. However, with proper and thoughtful estate planning and the help of an attorney who specializes in Medicaid planning, all but the very wealthiest people can often qualify for program benefits.

Kiplinger’s recent article entitled “How to Restructure Your Assets to Qualify for Medicaid says that unlike Medicare, Medicaid isn’t a federally run program. Operating within broad federal guidelines, each state determines its own Medicaid eligibility criteria, eligible coverage groups, services covered, administrative and operating procedures and payment levels.

The Medicaid program covers long-term nursing home care costs and many home health care costs, which are not covered by Medicare. If your income exceeds your state’s Medicaid eligibility threshold, there are two commonly used trusts that can be used to divert excess income to maintain your program eligibility.

Qualified Income Trusts (QITs): Also known as a “Miller trust,” this is an irrevocable trust into which your income is placed and then controlled by a trustee. The restrictions are tight on what the income placed in the trust can be used for (e.g., both a personal and if applicable a spousal “needs allowance,” as well as any medical care costs, including the cost of private health insurance premiums). However, due to the fact that the funds are legally owned by the trust (not you individually), they no longer count against your Medicaid income eligibility.

Pooled Income Trusts: Like a QIT, these are irrevocable trusts into which your “surplus income” can be placed to maintain Medicaid eligibility. To take advantage of this type of trust, you must qualify as disabled. Your income is pooled together with the income of others and managed by a non-profit charitable organization that acts as trustee and makes monthly disbursements to pay expenses on behalf of the individuals for whom the trust was made. Any funds remaining in the trust at your death are used to help other disabled individuals in the trust.

These income trusts are designed to create a legal pathway to Medicaid eligibility for those with too much income to qualify for assistance, but not enough wealth to pay for the rising cost of much-needed care. Like income limitations, the Medicaid “asset test” is complicated and varies from state to state. Generally, your home’s value (up to a maximum amount) is exempt, provided you still live there or intend to return. Otherwise, most states require you to spend down other assets to around $2,000/person ($4,000/married couple) to qualify.

Reference: Kiplinger (Nov. 7, 2021) “How to Restructure Your Assets to Qualify for Medicaid”

Can I Claim Grandfather’s Unclaimed Insurance Policy?

What if you recently discovered some old life insurance accounts being held by the state for your grandfather, who passed away in 1977.

It looks like the funds were never disbursed because the address was spelled wrong. As a result, the insurance accounts were considered unclaimed.

None of his children—including your mom—is alive today, and there are a number of adult grandchildren besides you.

How do you get your hands on this money? How is it disbursed?

Nj.com’s recent article entitled “I found two old life insurance policies. How can we collect?” says that insurance claims can be made at any time, even years after the death of the policy holder.

The first step is to make contact with the life insurance company that issued the policy.

The National Association of Insurance Commissioners has a website to help people locate insurance policies.

Even if the policy proceeds reverted to the state, you can still claim it through the Unclaimed Property Administration.

The National Association of Unclaimed Property Administrators, which is a network of the National Association of State Treasurers, says that about one in 10 people have unclaimed cash or property waiting for them.

Unclaimed or “abandoned” property is defined as property or accounts within financial institutions or companies with no activity generated (or contact with the owner) as to the property for one year or a longer period.

After a designated period of time—known as “the dormancy period”— with no activity or contact, the property becomes “unclaimed” and—by law—must be turned over to the state.

There are billions of dollars in unclaimed property that’s held by state governments and treasuries across the country.

As far as who would get your grandfather’s insurance policy proceeds, the distribution of the life insurance proceeds are governed by the contract of the life insurance policy.

Reference: nj.com (Nov. 18, 2021) “I found two old life insurance policies. How can we collect?”