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LTC Medicaid Rejected

My LTC Policy Was Rejected By Medicaid, What Now?

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Common scenario for Cleveland estate planning attorneys. Estate planning client comes in distraught. They did the smart and sensible thing, they purchased a long-term care insurance policy years ago to help cover the cost of later-in-life medical costs. They recently applied for Medicaid thinking their LTC policy wouldn’t be counted for calculating their Medicaid eligibility. Unfortunately for them, they received rejection letter from the Ohio Department of Medicaid saying they didn’t meet the asset requirements. Now, the Medicaid benefits, that they were counting on and always thought were readily available no longer are. Now, their estate plan is seriously threatened, and they are scrambling to make sense of the situation and found out what went wrong.

As the old saying goes, the best-laid plans of mice and men often go awry. The relationship between long-term care insurance polices and Medicaid eligibility is not a simple one. As with anything involving government bureaucracy, what you don’t know can hurt you and an experienced guide is worth his weight in gold. Two lessons often taken to heart far too late to avoid tough decisions and missed opportunities.  So, what happened to the person above? The best way to illustrate what happened is to answer the two most common questions anyone in that situation would ask.

Why did my LTC policy get rejected from Medicaid?

Only certain long-term care policies that comply with the guidelines set by the Ohio Long-Term Care Insurance Partnership program count as qualified policies and therefore aren’t countable Medicaid resources. So, what polices are “qualified?”

Per the Ohio Department of Insurance, for a LTC policy to qualify, insurance companies’ policies must meet several requirements, including:

  • The policy must have been issued after Sept. 10, 2007
  • The insured must be a resident of Ohio when coverage first becomes effective
  • The policy must be a federally tax-qualified plan based on the Internal Revenue Service Code (qualified plans can lower federal taxes, but they have benefit triggers that are less flexible than those required by nonqualified plans)
  • The policy must meet strict consumer protection standards (standard fee-look period, coverage outlines, mandatory informational disclosures, etc.)
  • The policy must include certain protection against inflation (the most common inflation protection automatically increases benefits each year by 5%)

So, if you have a long-term care policy, but don’t know, or worse hope without knowing, if it is a qualified policy, you’re likely in for a rude awaking when you apply for Medicaid.

What do I do now that my LTC policy was rejected by Medicaid?

Before any definitive answer or plan can be formulated, certain information about a Medicaid applicant must be answered definitively. At the very least, the information and/or documents needed are:

  1. LTC policy documents – should be overt on whether it was sold/defined as a qualified LTC policy.
  2. Rejection notice from the department of Medicaid – reasons for reject and any explanation regarding why the submitted policy was rejected.
  3. How does the applicant know their LTC policy is a qualified one?
  4. Contacting the insurance carrier to find out the exact details of the LTC policy in dispute.
  5. Where and how did an applicant purchase the LTC policy.
  6. Did the applicant receive the required CSPA complaint disclosures and documents (if was sold non-qualified policy but received CSPA docs could an indication of potential fraud).
  7. The realities of applicant’s current financial situation and health needs.

This last point is really the starting point and is exactly why you retain the services of experienced estate planning attorneys. Every estate planning attorney starts with the same questions, what do you need, what do you have, and prove it. No intelligent planning or decisions can be made until you know exactly where you stand. Further, in this context, the realities of where you stand are even more important because now your options are limited and you are, in a way, at the mercy of the Ohio Department of Medicaid.

If you have been rejected by Medicaid you are essentially in the realm of Medicaid crisis planning, where important questions must be asked, and tough decisions must be made. If someone is applying for Medicaid, the need is now and a solution must be found. One such critical consideration is the current need for care and the potential penalty period. To illustrate, let’s say a rejected applicant has a $400,000 non-qualified LTC policy. As of right now, with current Medicaid penalty divisor of $6,570, 400K/6,570 = approximately 61 months of Medicaid ineligibility, a little more than 5 years.

With this five-year Medicaid ineligibility period on the horizon, options are limited. Namely you can either appeal the rejection or resort to Medicaid spenddown. Medicaid spenddown is a beast all its own, is never something anyone wants to do, and largely depends on how ineligible for Medicaid you are, based on your current income and assets. For most, however, the good news is this situation and Medicaid spenddown, if the proper Ohio estate planning attorneys are used, will never be a worry because they will have done things the right way and won’t be subject to any nasty surprises. Failure to surround yourself with the right advisors, regretfully, often leads to  uncomfortable discussions and decisions that will have to be made sooner rather than later.

Helping You and Your Loved Ones Plan for the Future

Special Needs Trusts

Unique Needs, Unique Solution: Supplemental Services Trusts

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As with most persons with special needs and disabilities, the name of the game is to pay it forward. Unplanned and unthought out self-sacrifice, however, are rarely the proper ways to go about anything. Unfortunately, those families with loved ones with particularly debilitating diseases or affiliations are often solely focused on the here and now in terms of providing care. When asked, was about in 10 years? Or what about when you pass or are too old or sick yourself to provide care, what then? Regularly, these questions, though critically important, are pushed aside because to answer them would require tough choices to be made. Often these families fall back on pithy and often callous responses.  Responses such as, “everything will be fine as long as my child dies before I do” or “my other, more typical children will shoulder the burden and take care of their special needs sibling.”

Special Needs Trusts in a Nutshell

Special Needs Trusts are private agreements that allows a third party, a trustee, usually the family, to manage the assets that are placed inside the trust for the benefit of trust beneficiaries, the special needs person. There are many types of trusts, each with own its unique legal conventions and uses. The critical aspect of trusts in this circumstance is that the assets housed within them usually aren’t counted as a part of the trust beneficiary’s taxable estate. Thus, the resources placed within these trusts can be managed for the benefit of a person with special needs but still allow them to qualify for public benefits like supplemental security income, Medicaid, and other local and state government benefits. This allows grantors, those who create the trust, to provide much need stable and monetary support while still allowing often indispensable social assistance programs for their children, even long after the parents pass. Critically, these trusts seek to supplement income from assistance programs not to replace it, which is important in the eyes of the government because if a family, and by extension a special needs person, can provide for themselves than they don’t need assistance programs.  This theory is echoed in the needs and health-based requirements of many, if not all, assistance programs. The rules and requirements for local, state, and federal government assistance programs can be confusing, contract a local Cleveland area estate planning attorney today to make sure you’re informed enough to make the right choices.

Supplemental Services Trusts

Per O.R.C. § 5122-22-01(D), trusts for supplemental services, denotes the primary requirements of these trusts which allow special needs persons to benefit from them while also receiving government benefits:

“(D) Supplemental services. (1) Supplemental services are expenditures, items or services which meet the following criteria:

(a) The services are in addition to services an individual with a disability is eligible to receive under programs authorized by federal or state law or regulations, and the services do not supplant services which would otherwise be available without the existence of the trust;

(b) The services are in addition to basic necessities for such items as essential food, clothing, shelter, education and medical care, and the services are in addition to other items provided pursuant to an ascertainable standard; and

(c) The services are paid for with funds distributed pursuant to a trust which meets the requirements of section 5815.28 of the Revised Code or with funds distributed from the supplemental services fund created in section 5119.51 of the Revised Code, and the services would not be available without payment from the trust or fund.

The two main takeaways from this passage is that 1) the trust services do not replace government benefits and 2) a supplemental services trusts is the only way a special needs person would get these additional benefits.

In nutshell, a supplemental services trust is for individuals who are eligible to be served by the Ohio Department of Mental Retardation, a county board of mental retardation and developmental disabilities, the Ohio Department of Health, or a board of alcohol, drug addiction, and mental health services. With this trust, trust beneficiaries must be vetted and approved by the State Department of Disabilities or the County Board of Developmental Disabilities. The trust estate, i.e. stuff placed in trust, as of 2015, cannot exceed $242,00o.  Further, Ohio law is strict that the trust assets are used only for supplemental services, those services not provided by government assistance programs. Additionally, another hardpoint with these trusts is that upon the death of the beneficiary, a portion of the remaining assets, which must be at least 50 percent of the remaining balance, must be returned to the state of Ohio to be used for the benefits of others who do not have such a trust. Thus, pay it forward, at least in this circumstance, is written in the rock of Ohio law.

So why use a Supplemental Services Trust?

Again, the best way to demonstrate the value of these trusts is to go into the Ohio code. Per Per O.R.C. § 5122-22-01 (D)(2):

Supplemental services…include, but are not limited to, the following:

(a) Reimbursement for attendance at or participation in recreational or cultural events;

(b) Travel and vacations;

(c) Participation in hobbies, sports or other activities;

(d) Items beyond necessary food and clothing (e.g., funds for dining out occasionally, for special foods periodically delivered, or for an article of clothing such as a coat which is extra but which is desirable because it is newer, more stylish, etc.);

(e) Cosmetic, extraordinary, experimental or elective medical or dental care, if not available through other third party sources;

(f) Visiting friends, companionship;

(g) Exercise equipment, or special medical equipment if not available through other third party sources;

(h) The cost differential between a shared room and a private room;

(i) Equipment such as telephones, cable television, televisions, radios and other sound equipment, and cameras for private use by the individual;

(j) Membership in clubs such as book clubs, health clubs, record clubs;

(k) Subscriptions to magazines and newspapers;

(l) Small, irregular amounts of personal spending money, including reasonable funds for the occasional purchase of gifts for family and friends, or for donations to charities or churches;

(m) Advocacy;

(n) Services of a representative payee or conservator if not available through other third party sources;

(o) Guardianship or other protective service listed in paragraph (C)(9) of this rule;

(p) Someone other than mental health community support staff members to visit the individual periodically and monitor the services he receives;

(q) Intervention or respite when the person is in crisis if not available through other third party sources;

(r) Vocational rehabilitation or habilitation, if not available through other third party sources;

(s) Reimbursement for attendance at or participation in meetings, conferences, seminars or training sessions;

(t) Reimbursement for the time and expense for a companion or attendant necessary to enable the individual to access or receive supplemental services including, but not limited to, travel and vacations and attendance at meetings, conferences, seminars, or training sessions;

(u) Items which medicaid and other governmental programs do not cover or have denied payment or reimbursement for, even if those items include basic necessities such as physical or mental health care or enhanced versions of basic care or equipment (e.g., wheelchair, communication devices), and items which are not included for payment by the per diem of the facility in which the beneficiary lives; and

(v) Other expenditures used to provide dignity, purpose, optimism and joy to the beneficiary of a supplemental services trust.

From the extensive list of available uses for trust assets for special needs persons, it is no surprise that those persons with those trusts live and much more comfortable and fulfilling life than those without. Additionally, these trusts shoulder the burden for parents and sibling for providing much need support and care while also acting as a tool for benefit preservation. There are many options available for those family members with special needs persons, talk to an experienced Ohio area estate planning attorney to find out the best options for your family.

Helping You and Your Loved Ones Plan for the Future

living trusts and estate planning

Ohio Irrevocable Trusts

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What is an Irrevocable Trust?

Irrevocable trusts cannot be changed or terminated during the grantor’s lifetime without all the beneficiaries’ permission or court approval. The grantor relinquishes control over the trust and the assets placed in the trust.

Revocable Trusts Vs. Irrevocable Trusts

Revocable trusts can be changed or terminated during the grantor’s lifetime as long as they are competent. This type of trust is attractive, compared to an irrevocable trust, because you can update your beneficiaries, change which assets are included in the trust, and update how assets will be distributed.

Learn more about the key similarities and differences of revocable and irrevocable trusts here.

Irrevocable Living Trusts Vs. Testamentary Trusts

An irrevocable living trust is created during your lifetime and goes into effect immediately (once properly funded). A testamentary trust is created within your will and goes into effect when you pass. While the living trust avoids probate, the testamentary trust does not.

Why should I set up an Irrevocable Trust?

An irrevocable trust can:

  • Protect your assets from creditors and litigation, which might be especially beneficial if you are a business owner or are in a high-profile career
  • Protect your access to government benefits and preserve your family’s wealth for future generations
  • Help you avoid or reduce estate taxes
  • Protect your assets from a nursing home or other long-term care expenses

More Specific Types of Irrevocable Trusts & How They Work

Asset Protection Trusts

The main goal of an asset protection trust is to insulate the grantor’s assets from creditors and/or litigation.

Marital Trusts

A Marital Trust, also known as an A Trust, is established to support a surviving spouse. It helps the surviving spouse to avoid estate taxes when the first spouse passes away and their assets are being transferred.

The surviving spouse is the sole beneficiary of the Marital Trust during the couple’s lifetime. He or she can do what they please with the assets, including withdrawing them, selling them or gifting them. At the second spouse’s death, the trust can be passed to other named beneficiaries such as children or grandchildren.

Most A Trusts are also Qualified Terminable Interest Property (QTIP) Trusts. In this case, the trust is required to pay all income generated by the trust to the surviving spouse annually. In addition, with a QTIP Trust, the grantor maintains control after death. This means that the surviving spouse receives income from the trust, but restrictions are placed on how much can be taken out of the trust, and what the funds are used for.

In many cases, when a spouse sets up an A Trust, they also set up a B Trust, or a Bypass Trust. When the first spouse passes, they can have assets passed to beneficiaries other than the surviving spouse without incurring estate taxes. They transfer the maximum amount of assets allowed by estate tax exemption to beneficiaries before transferring the remainder of the estate into the A Trust.
Together, the Marital Trust (A Trust) and Bypass Trust (B Trust) make up the AB Trust.

Generation-Skipping Trusts

Generation-Skipping trusts are often utilized by grandparents to transfer assets to their grandchildren, while avoiding estate taxes.

Spendthrift Trusts

Spendthrift trusts are often utilized when a beneficiary is young or has a history of being financially irresponsible. In a spendthrift trust, the beneficiaries do not have any direct access to assets. The trustee is able to give the beneficiaries assets and funds as they see fit.

Charitable Trusts

Charitable Trusts are established to benefit a charitable organization. In this type of trust, an organization is appointed trustee. As they invest funds within the trust, they can generate a regular stream of income for the organization. There are two main types of Charitable Trusts:

  • Charitable Remainder Trusts (CRT) give a set amount of income to beneficiaries, and the remainder goes to the charitable organization.
  • Charitable Lead Trusts (CLT) give a set amount of income to the charitable organization, and the remainder goes to beneficiaries or stays in the trust.

Life Insurance Trusts

The only asset within this trust is an insurance policy. This trust is utilized to avoid estate tax on money that comes out of the policy upon the grantor’s passing.

Grantor-Retained Annuity Trusts (GRAT)

This type of trust is typically utilized in estate planning to minimize taxes on large financial gifts to family members. After assets are placed in the trust, an annuity is paid out to the grantor every year. After the trust has expired and the last annuity payment has been made, the beneficiary receives the remaining assets with minimal tax liability.

Qualified Personal Residence Trusts (QPRT)

A QPRT allows the grantor to remove a personal home from their estate, reducing the amount of gift tax incurred when transferring assets to beneficiaries. The owner of the home is allowed to remain on the property for a period of time with retained interest. The value of the property during the retained interest period is calculated based on IRS applicable federal rates. Once the retained interest period is over, the remaining interest is transferred to the beneficiaries.

How To Set Up An Irrevocable Trust With An Attorney

It’s important to remember that an irrevocable trust is just one part of a comprehensive estate plan.

After it has been determined that an irrevocable trust should be part of your estate plan, an attorney can walk you through these key steps:

  1. Decide what assets will be placed in your trust. While you might already have an idea of what you’d like to include, your attorney may help you uncover some additional assets that would benefit from being placed in a trust. Assets can range from cash and investments to real estate and other property.
  2. Choose your beneficiaries. They might include your spouse, your children, grandchildren or other close family members.
  3. Establish the rules of your trust. For example, will assets be distributed with age requirements or terms for how the assets may be used?
  4. Determine who will manage the trust.

Once you are confident in these decisions, your estate planning attorney can draft the trust document and begin assisting you with funding the trust.

This blog is for educational purposes only; it is not intended to provide legal advice. If you’re planning for your estate and want to speak with an attorney, call 216-573-3723.

 

Daniel A Baron Estate Planning lawyer

What Is A Revocable Trust?

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Cleveland, Ohio estate planning lawyer, Daniel A. Baron, offers the following information as to whether or not you should have a Revocable Trust as part of your comprehensive estate planning.

When you decide it is time to do your estate planning, one decision to make is: Do I Need A Trust? If the answer is yes, then the next question is whether or not a Revocable or Irrevocable Trust is the right tool to use in your Comprehensive Estate Planning.  Although both of these are created to avoid probate, there are differences between the two.

A Revocable Trust means you can change things at any time such as;

  • Beneficiaries
  • Add items of value to the trust or remove items from the trust and so on.
  • Changing Trustees
  • Change what funds the trust
  • Eliminate the trust
  • Change amounts to be funded
  • Add Trustees

With a Revocable Trust – the Grantor or Settlor creates the trust AND can also act as the Trustee AND can be named as the beneficiary.

An Irrevocable Trust means no changes can be made (with a few exceptions) once the trust is created.

An Irrevocable Trust has three parties to the Trust; the Grantor or Settlor, the Trustee(s), and the beneficiary or beneficiaries.

  1. The Grantor or Settlor is the person who funds or establishes the Trust
  2. The Trustee is the person who oversees the trust, and
  3. The beneficiary reaps the rewards of the income generated by the investments of the trust. Although the Grantor / Settlor and the beneficiary can be the same, they cannot act as the Trustee

With a Revocable Trust you must remember if you are looking to keep investments, bank accounts, property, and any other such asset as part of the trust, the accounts must be set up in the trusts name and property must be titled to the trust.  Failure to do this while you are still living means that the assets still in your personal name at the time of your death will be subject to probate and a larger amount of estate taxes.

If you are having difficulty determining whether your situation calls for a Revocable or Irrevocable Trust, seek the advice of an experienced Estate Planning Lawyer. For more information on reviewing your goals for your Comprehensive Estate Planning, contact Daniel A. Baron of Baron Law today at 216-573-3723.

Helping You and Your Loved Ones Plan for the Future

Estate Planning Attorney - Baron Law

I Need Medicaid, How Can I Keep My Home?

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Baron Law LLC, Cleveland, Ohio, offers information for you to reflect upon while you are setting out looking for an estate planning attorney to help protect as much of your assets as you can. For more comprehensive information contact Baron Law Cleveland to draft your comprehensive estate plan to endeavor to keep more of your assets for your heirs and not hand them over to the government by way of taxes.

Caring for elderly loved ones, yourself or others, is not cheap. Assisted living facilities, nursing homes, and hospice care can easily run thousands of dollars a month and, as such, most people cannot afford to pay for it out of pocket for very long. We’ve all heard the horror stories, people stuck in dilapidated or abusive care facilities or having to spend every last cent just for a bed in a proper facility. No one expects to spend the last years of their lives in such an appalling state, but tragically, it happens more often than you think. To combat this, many resort to relying on government assistance to pay for managed care. To qualify for that assistance, however, many people must “spend down” their assets or reduce their income in order to become eligible for government programs, namely Medicaid.

The thought of having to choose between either having a fire sale and/or willingly living in a crummy facility and/or becoming a burden on your family is hardly an attractive prospect. Everyone wants to pass as much of their money and assets on to friends and family and no one wants to become a burden. Medicaid is well aware of this and imposes a five-year “look back” period for eligibility to ensure that people don’t simply transfer their money and assets away to qualify for government benefits.

There are estate planning strategies available, however, that will allow major assets to stay within the family while still maintaining Medicaid eligibility. The Caregiver Child Exemption, also known as the Adult Child Caregiving Exemption, is perhaps the one of most popular Medicaid planning tools available to preserve assets while maintaining eligibility. An estate planning attorney is in the best position to advise you on the best course of action given your particular circumstances but becoming familiar with the landscape and legal language of Medicaid will help you make the best decisions when the time comes for action.

Why should I care/How does this benefit me?

We are all naturally self-interested, so the first question everyone asks is, how does the Medicaid Caregiver Child Exemption benefit me?

In a nutshell, this is an exemption to the five-year lookback for Medicaid eligibility that can allow you to stay in your home instead of a nursing home or assisted living facility and still receive Medicaid assistance. Regardless of how nice a managed care facility is, everyone is more comfortable in their own home. The Medicaid Caregiver Child Exemption increases the amount of time you can spend in your own home before the realities of your own health force to into a more intensive care facility.

How does the Medicaid Caregiver Child Exemption work?

To qualify for the Exemption, the caregiving child must live in the home with their parent(s) for at least two years prior to the parent becoming eligible for Medicaid benefits. Further, the caregiving child must provide a level of care that effectively prevents the parent for needing to stay in a nursing home or assisted care facility. This at-home care saves the Medicaid program money and frees up much needed bed space in Medicaid approved facilities, hence the reason Medicaid offers the Exemption in the first place.

To effectively understand how the Exemption operates, and exploit it to the fullest extent, one must understand its constituent parts. Note, all the following criteria must be satisfied in order for the Exemption to apply.

What’s a “Child” under the Exemption?

A child under the Exemption is limited only to a biological or legally adopted child. A niece, nephew, grandchild, cousin, aunt, uncle, or stepchild does not count. Medicaid constricts eligible transfers only to direct decedents in order to prevent abuse of the Exemption and because, more often than not, our children are the ones who are going to step up and provide the needed care for parents.

To prove a qualifying family relationship, usually a birth certificate or adoption certificate is used.

What’s a “Home” under the Exemption?

The only “homes” eligible for the Exemption are those of primary residence. No vacation homes, secondary residences, or rental properties. Further, the child caregiver and the parent must reside together for the entirety of the two years. Medicaid wants to ensure the home is actually being used to provide healthcare for the parent in lieu of a managed care facility. If an adult child and parent are living together for an extended period of time, its more likely the Exemption is being used for legitimate purposes rather than a cover for an improper transfer of property.

To prove a qualifying home, evidence such as utility bills, tax returns, of government ID’s for both the parent and child caregiver for at least two years prior to Medicaid eligibility are sufficient.

What’s “Care” under the Exemption?

A child simply living with a parent, cooking meals, doing laundry, picking up medication, is not enough. The amount and manner of care must be enough to establish to Medicaid that the labors of the child caregiver is the reason why the parent isn’t in a nursing home or assisted living facility. If such labor is the difference between the parent staying at home or taking up a bed in a professional facility, then the non-disqualifying transfer of the home to the child is justified.

Establishing the proper level of care is the hardest criteria to prove. This is usually established by having the primary care physician of the parent complete and sign a Medicaid form clearly documenting the care provided by the child. Legal documentation that the care of the child prevented institutionalization of the parent during the two-year lookback is required as well. Any additional documents from family, friends, and medical professionals demonstrating the labors of the child caregiver is beneficial as well.

How to Apply

You don’t file or apply to use the Exemption in the conventional sense. When applying for Medicaid, you also submit the documentation establishing the transfer of your home to your child qualifies for the Exemption. Obtaining the required documentation to prove the applicability of the Exemption is the hardest part. Further, because the burden of proof lies with the applicant, Medicaid will show no leniency for mistakes or omissions.

This is why Medicaid planning and retaining legal counsel is so critical. The Exemption criteria should be met as soon as practical, so the two-year look back can start running as soon as possible. Further, an attorney can ensure all the documentation and forms are properly filled out, executed, and mailed to the proper government agency. Last the thing you want is to find out you have months or years of additional Medicaid ineligibility because an additional penalty period was accrued due to improperly gifting your home to your child.

What if I mess up and the Exemption doesn’t apply?

If the transfer of the home was improper, Medicaid will deny that the Exemption apples, consider the house a qualifying asset, and a penalty period will accrue in proportion to the value of the house. This means on top of the two years that the child caregiver must live with a parent before Medicaid eligibility, a period of further ineligibility is added. This period is determined based on the dollar amount of value of the house divided by either the average monthly private patient rate or daily private patient rate of nursing home care in Ohio.

The home that you lived in for years, if not decades, is one of your most valuable assets, both financially and emotionally. Old age, however, means significant money is needed to live comfortably, even more so in the event of illness or disease. Wise use of the Medicaid Child Caregiver Exemption can cut off years of Medicaid ineligibility and enable comfortable and convenient caregiving for families with ailing parents. Use of the Exemption, however, is not guaranteed and proper steps must be taken. This is why an experienced estate planning attorney can mean the difference between living in your own house receiving much-needed government assistance or waiting years for help or being forced in live in second-rate managed care facilities.

Also, should an elderly individual already be receiving Medicaid benefits, the family should contact a local Cleveland estate planning attorney and find out if the Medicaid Child Caregiver Exemption is still available.

You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings. For more information, you can contact Mike Benjamin of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Mike can also be reached at mike@baronlawcleveland.com.

Helping You And Your Loved Ones Plan For The Future

About the author: Mike E. Benjamin, Esq.

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.

Disclaimer:

The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.

Baron Law Cleveland

Estate Planning – Documents I Should Provide My Attorney

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Cleveland, Ohio, estate planning lawyer, Daniel A. Baron, Ohio, offers the following information on what documents are necessary for you to provide your attorney when sitting down to establish your comprehensive estate plan.

“Be prepared.” Boy Scouts of America

A recent survey taken by the AARP found that 3 out of every 5 Americans have no estate-planning documents, not even a simple will. Thus, money and assets they’ve spent a lifetime earning and saving are at risk from creditors, litigation, and state and federal taxation. Further, none of their friends or family know how to handle their affairs or last wishes. Even though the majority of people have not taken the necessary steps to formulate a plan when the inevitable comes, all can agree that leaving friends and family to scramble to pay your debts, settle your accounts, and divide your worldly possessions is not the best way. A time of mourning should be just that, for mourning, not for calling bankers, insurance agents, or accountants.

Hopefully, you’ve decided to take the first step and enter into the minority of Americans who proactively address what is left behind when they pass. However, a familiar question exists, how do I get started? That is, what do I need to start planning my estate?

Most, if not all, lawyers are traditional, they like things they can touch and read. So, before you meet with your attorney to plan your estate, you’re going to want to bring a few things. The following list is by no means exhaustive but will give you a good start. Collecting these documents before your meeting will save everyone time, allow your attorney to better comprehend your personal estate planning needs, and prepare you mentally so you can better communicate what you want and what your family needs out of your estate plan.

A General Accounting of your Estate

The word estate is a term that denotes all of the money, property, and debts owned by person, particularly at death. Naturally in order to plan an estate, it must be known what an estate actually encompasses. Therefore, on a piece of paper or computer spreadsheet, your going to write out your estate.

List out: your taxable accounts, your retirement accounts, any life insurance policies, any annuities, your personal residence, other real estate, any highly significant personal property (cars, furniture, artwork, jewelry, etc.), business interests, and any outstanding debts, liabilities, or obligations. For each category, split them up between those owned solely by you, those owned solely by your spouse (if married or part of a civil union), and those owned jointly.

This information is critical for tax projections and allows your attorney to take the necessary steps now, or at death, to ensure that the most property and money goes to where you want and not lost via government taxation, creditors, or litigation. There is a multitude of ways your attorney ensures estate preservation, however, knowing exactly what you have and what you want to do with it is critical. Note that this list only serves as an estimate of your estate, not an exact accounting. Your attorney will be able to advise and guide you on obtaining an accurate picture of your entire estate but this list will be the foundation for future calculations.

Life Insurance Policies

Life insurance is a common tool people use to guarantee their surviving family won’t be left in an untenable financial position in the event of death. The lump sum that life insurance proceeds guarantee can fill critical gaps in an estate plan and ensure that your loved ones are taken care of and your affairs are handled in a respectable manner. This is only possible, however, if the proper beneficiaries are designated. If not, who knows how your proceeds are spent. Therefore, ensuring the proper beneficiaries are denoted and/or updated on your insurance policies is of utmost importance. Make sure to have your attorney review your beneficiaries and file any change of beneficiary forms you desire.

Of further note for seniors, some life insurance policies, such as whole life or universal, accrue cash value which may affect Medicaid eligibility. The accumulation of cash value under particular life insurance policies counts as an asset, which if exceeds $2,000 may disqualify a person from Medicaid. Again, this is something to bring to your attorney’s attention so your estate plan can be more personalized to your needs.

Additionally, life insurance policies are often part of your taxable estate. As such, proper steps during estate planning must be undertaken to lower or avoid the tax burden on the estate. Named beneficiaries of life insurance proceeds may also face significant tax consequences from a sudden influx of cash. As such, bringing your life insurance policies to your estate attorney allows him to understand the type of insurance you possess and avoid issues with regard to beneficiary designations, Medicaid eligibility, and estate tax consequences.

Investment Portfolio

You’re also going to bring your investment portfolio to your attorney. That is, anything evidencing your 401k, owned annuities, stocks, bonds, or mutual funds, and other retirement accounts such as IRAs and Roth IRAs, regardless of whether the IRS classifies them as qualified or unqualified plans. Your investment portfolio is likely a major asset that is a significant part of your taxable estate and whose constituent parts each often have their own special rules regarding contributions, distributions, transfers, and inheritance. Bringing your investment documents to your attorney will allow him to plan your estate accordingly and inform you of the special rules, privileges, and schedules applicable to the particular investment instruments you’ve chosen.

A List of Important Property with Bequests

Generally, this is what most people think of when talking estate planning, who gets the house and who gets grandma’s heirloom necklace. In order to avoid any conflict and confusion between surviving family members over who gets what when you pass, write out a list of the biggest and most important bequests of personal and real property.

Most people list out vehicles, real estate, business interests, family heirlooms, expensive electronics, art work, etc. Pretty much anything that has high sentimental or financial value. Obviously for each item on the list write who gets what and in what way. For simple property, like jewelry, usually an individual gets a direct bequest and the item is theirs when you pass. For other property, such as real estate or business interests, usually these are split up in particular ways. For example, a business being split equally between surviving children or a house passing only to children of a first marriage. Your attorney will inform you of the multitude of ways bequests may be structured in order to satisfy your particular estate planning needs.

Thinking about and writing out your property bequests ensures your final wishes are followed and avoids familial infighting. On top of bringing this list to your attorney, bring any deeds, titles, or other ownership documents. This will expedite an estate accounting after your death for your executor and makes sure you actually own what you think you do. Far too many times families are taken by surprise by a faulty title or hidden lien or claimant on a deed. Your attorney can easily check a chain of title or confirm the validity of a deed and avoid any question of ownership down the line.

A “Managed Care Plan”

This is not to be confused with the private insurance plan you sign up for, or Ohio picks for you, when you apply and are approved for Medicaid. Managed care plans within the context of Medicaid private insurance isn’t the subject here, however, it is an important subject that should be discussed and planned for with your attorney.

Within this context, your managed care plan means a coherent idea of where and how you want to spend the last years of your life, especially in the event of deteriorating health or debilitating disease. That is, the logistics, finances, and questions surrounding issues of hospice care, managed care facilities, nursing homes, and general living as one advances in age.

For example, planning out your senior living situation will likely enable you to stay with your primary care physician and specialists longer. Often the accessibility of physicians and medical specialists are subject to geographic restriction, insurance coverage, or out-of-pocket cost. A proper estate plan can guarantee the funds exist to support continued care in the manner you’ve grown accustomed to and communicate to friends and family your medical wishes far in advance of when those questions arise. Never underestimate the value of spending the autumn of your years in clean and comfortable healthcare facilities with treatment from doctors that have an established relationship. As such, bring any contracts, agreements, or marketing materials of any health or senior living facilities you wish to go to. Every piece of information allows further personalization of your estate plan and more clearly communicates what you want to your family many years down the road.

Further, bring important legal documents such as designations for durable, health, or financial powers of attorney, any do not resuscitate orders (DNRs), and executor and administrator elections. If you don’t have any of these documents prepared, these can easily be drafted by your attorney during your estate planning.

Americans are living longer than ever before and having a plan to confront advancing age is important to ensure comfortable living and piece of mind for the family. Granted this is not an enjoyable or fun aspect of life to think about and plan out, but it is something you and your family will never regret.

Conclusion:

Bringing the listed documents and gathering up your thoughts according to the issues highlighted will give you a good head start in preparation to planning your estate with your attorney. Again, this list is not exhaustive and only touches on a fraction of the issues that addressed during estate planning. Major issues such as surviving spousal support and guardianship of minor children, among many others, must be handled too, so think about these issues as well. Estate planning is a complex process but taking a little time to gather documents and think about the future will pay big dividends to you while you’re here and make life much easier for your family when you’re not.

You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings.

For more information, you can contact Dan A. Baron of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Dan can also be reached at dan@baronlawcleveland.com.

Helping You and Your Loved Ones Plan for the Future.

About the author: Mike E. Benjamin, Esq.

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.

Disclaimer:
The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.
“He who is always his own counselor will often have a fool for his client.” Old English Proverb est. circa 1809.
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Ohio’s Right to Disposition – Who Has Final Say?

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Cleveland, Ohio, Estate Planning lawyer, Daniel A. Baron, of Cleveland, Ohio, offers the following information on the issue of your Rights to Disposition after you pass.

Imagine if you will, your Uncle Harry has passed away and although he had specific wishes on what to do with his remains, there are others in a packed courtroom (immediate family members, blended family members, extended family members, friends, and lawyers) all thinking that they know what Uncle Harry’s final wishes were.

Although we always seem to hear about this situation coming out of Hollywood or New York City, you don’t have to be a celebrity to have family, friends, and lawyers be involved with what to do with your remains. Not only can this cause undue stress between family members and friends, but this can also produce large legal fees from opposing attorneys.  Ohio has a law which went into effect October 12, 2006 to prevent legal battles such as these from occurring.

Should you have questions like these, they are better answered by a qualified Estate Planning Lawyer.

  • What criteria do the courts use in deciding whether someone should be given authority to make the funeral decisions?
  • What precautionary measures are in place if the “designated person” in charge of making such decisions is not qualified or capable of making this type of decision any longer?
  • What ae some issues pertaining to funerals that arise that tend to lead to legal battles?
  • How does Ohio address these potential issues?
  • What occurs when there has been no person designated to make these decisions?
  • Is there a provision that allows someone to name a group of people rather than an individual having the right to dispose of the remains?

For answers to these and any other estate planning questions it is prudent to contact an experienced Estate Planning Lawyer. Contact Daniel A. Baron of Baron Law today at 216-573-3723 to arrange a meeting.

Helping You and Your Loved Ones Plan for the Future

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What Is A Credit Shelter Trust?

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Cleveland, Ohio estate planning lawyer, Daniel A. Baron, of Cleveland, Ohio, offers the following information on what a Credit Shelter Trust is and should it be part of your comprehensive estate planning.

If you are married and an investor, for example, consider establishing a Credit Shelter Trust. This can also be referred to as an A-B Trust and is an Irrevocable Trust.

The benefits of a Credit Shelter Trust is, that it allows the assets of the trust (up to a predetermined amount, i.e. $500,000) to transfer to the beneficiaries specified within the trust, typically your children, without any estate taxes being assessed.    Also, your spouse continues to have all rights to the assets of the trust and any income generated until the spouse passes away.

If you are a blended family, a Credit Shelter Trust might be the right tool for you as part of your comprehensive estate planning. If at the time of death of the first spouse the assets of the deceased spouse to immediately into the Credit Shelter Trust.  If the assets transferred are larger than the predetermined amount (we used $500,000 as the example), the excess assets go into a trust which qualifies for the Marital Deduction.  Since the Credit Shelter Trust is irrevocable, it has great estate tax liability advantages as well as making certain your assets are passed along to your beneficiaries, typically your surviving spouse and your children.  Establishing a Credit Shelter Trust insures that the worry of the step-parent now getting all the assets, your assets will now be distributed to the beneficiaries as you intended them.

In the event your spouse is still living and would need to dip into the trust’s assets that were set aside for your children, it would be up to your Trustee to assess the necessity of the transfer of funds. The step-parent would not have carte blanche to the funds.

For answers to any questions you may have on a Credit Shelter Trust and making it a part of or your Comprehensive Estate Planning, contact Daniel A. Baron of Baron Law today at 216-573-3723. Let’s work together to see what the best Trust is for your situation.

Helping You and Your Loved Ones Plan for the Future

 

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Why Do I Need A Guardianship?

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Cleveland, Ohio, Estate Planning and elder law attorney, Daniel A. Baron, offers the following information on creating a Children’s Testamentary Trust for your loved ones. Is it the best option for you when creating your estate plan?

Most people understand and realize that they should name a Legal Guardian for their minor children. However, many people don’t take the necessary step further to consider the financial aspects of guardianship after a parent passes away. Creating a testamentary trust can alleviate this worry and for the most part is inexpensive to create.

Consider Establishing a Children’s Trust. 

Establishing a Children’s Trust, aka a Testamentary Trust, in your will, now creates a way for you to take care of your minor children after you have passed away. By naming a Trustee to oversee the trust allows them to take care of your children’s financial needs for everyday living and any health issues which may arise, as well as their future education needs.

What happens to your property should you pass and have minor children?

Unless specifically noted otherwise in your will, when you pass and your children are of legal age, they will automatically inherit all your property. But what happens if your children are minors?  When a Children’s Trust is established you can appoint a Trustee, or ‘Property Manager’ to oversee the property to make certain your minor children have a place to live and are cared for.  In the absence of a Property Manager being named, the courts will appoint a Property Custodian.  Depending on your individual circumstances, you may want to consider creating a Life Estate.

Should I create a trust for each of my minor children?

Upon your passing any children of legal age will automatically inherit your assets unless otherwise specified in your will. Let’s assume you have minor children, then it would be wise to set up a trust for each child and name a trustee to oversee the trust to make certain that the funds and property are used for the child’s needs and in their best interest.

If you do not wish to establish a trust for each child, consider a revocable living Trust or  Family Trust.  The Trustee(s) would handle this single trust in the same manner as if you were to set up individual trusts for each child.

When creating your Comprehensive Estate Plan you need to speak with an experienced Estate Planning lawyer. Contact Daniel A. Baron or Baron Law today at 216-573-3723 to answer any questions you may have on a creating a Children’s Trust.  I welcome the opportunity to work with you and help recommend the best solution for your needs.

Helping You and Your Loved Ones Plan for the Future

Cleveland Elder Care Lawyer

When is a Legal Guardianship Necessary for my Parents?

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Cleveland, Ohio estate planning attorney, Daniel A. Baron, offers information on when it becomes necessary to change legal guardianship for your elderly loved one:

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Legal Guardianship is used when a person is unable to make or make sound decisions about themselves personally or their property. These same persons can likely be or already have been a victim of fraud or undue influence.  Although a guardianship may limit a person’s rights considerably, establishing a guardianship should be used after other actions have failed or are no longer available.

In the event a legal guardianship may not be totally necessary there are some alternatives you may want to consider that will still protect your loved one:

Some rights of the elderly which may be affected once a guardianship is put into place:

  • Medical treatment consent
  • Making End of Life Decisions
  • Voting
  • Enter into a contract
  • Possess a driver’s license
  • Selling Property

It is always best if the guardian consults with the individual to make any decisions that affect that person if they are still able to make sound rational decisions. However sometimes, the guardian must make the decisions themselves if your loved one is no longer able to participate.  The guardian should always take into consideration the individuals wishes if they are known.

Let’s start the conversation about when is the best time to consider establishing legal guardianship for your loved one. For more information on reviewing your goals for Long Term Care as part of your Estate Planning, contact Daniel A. Baron of Baron Law today at 216-573-3723.