How Does Planning for a Special Needs Child Work?

Funding a Special Needs Trust is just the start of the planning process for families with a family member who has special needs. Strategically planning how to fund the trust, so the parents and child’s needs are met, is as important as the creation of the SNT, says the article “Funding Strategies for Special Needs Trusts” from Advisor Perspectives. Parents need to be mindful of the stability and security of their own financial planning, which is usually challenging.

Parents should keep careful records of their expenses for their child now and project those expenses into the future. Consider what expenses may not be covered by government programs. You should also evaluate the child’s overall health, medical conditions that may require special treatment and the possibility that government resources may not be available. This will provide a clear picture of the child’s needs and how much money will be needed for the SNT.

Ultimately, how much money can be put into the SNT, depends upon the parent’s ability to fund it.

In some cases, it may not be realistic to count on a remaining portion of the parent’s estate to fund the SNT. The parents may need the funds for their own retirement or long-term care. It is possible to fund the trust during the parent’s lifetime, but many SNTs are funded after the parents pass away. Most families care for their child with special needs while they are living. The trust is for when they are gone.

The asset mix to fund the SNT for most families is a combination of retirement assets, non-retirement assets and the family home. The parents need to understand the tax implications of the assets at the time of distribution. An estate planning attorney with experience in SNTs can help with this. The SECURE Act tax law changes no longer allow inherited IRAs to be stretched based on the child’s life expectancy, but a person with a disability may be able to stretch an inherited retirement asset.

Whole or permanent life insurance that insures the parents, allows the creation of an asset on a leveraged basis that provides tax-free death proceeds.

Since the person with a disability will typically have their assets in an SNT, a trust with the correct language—“see-through”—will be able to stretch the assets, which may be more tax efficient, depending on the individual’s income needs.

Revocable SNTs become irrevocable upon the death of both parents. Irrevocable trusts are tax-paying entities and are taxed at a higher rate. Investing assets must be managed very carefully in an irrevocable trust to achieve the maximum tax efficiency.

It takes a village to plan for the secure future of a person with a disability. An experienced elder law attorney will work closely with the parents, their financial advisor and their accountant.

Reference: Advisor Perspectives (April 29, 2020) “Funding Strategies for Special Needs Trusts”

Is Long-Term Care Insurance Really a Good Idea?

Forbes’ recent article entitled “Is Long-Term Care Insurance Right For You?” says that a big drawback for many, is the fact that LTCI is expensive. However, think about the costs of long-term care. For example, the current median annual cost for assisted living is $43,539, and for a private room in a nursing home, it’s more than $92,000.

Another issue is that there’s no way to accurately determine if in fact you’ll even need long-term care. Much of it depends on your own health and family history. However, planning for the possibility is key.

Remember that Medicare and other types of health insurance don’t cover most of the cost of long-term care—what are known as “activities of daily living,” like bathing, dressing, eating, using the bathroom and moving. Medicare will only pay for medically necessary skilled nursing and home care, such as giving shots and changing dressings and not assisted-living costs, like bathing and eating. Supplemental insurance policies generally don’t pay for this type of care.

Those with a low net worth might qualify for long-term care provided under Medicaid.

Shop around, because policies and prices are different. Check the policy terms and be sure you understand:

  • The things that are covered, such as skilled nursing, custodial care, and assisted living
  • If Alzheimer’s disease is covered as it’s a leading reason for needing long-term care
  • If there are any limitations on pre-existing conditions.
  • The maximum payouts
  • If the payments are adjusted for inflation
  • The lag time until benefits begin
  • How long benefits will last
  • If there’s a waiver of premium benefit, which suspends premiums when you are collecting long-term care benefits
  • If there’s a non-forfeiture benefit, which offers limited coverage even if you cancel the policy
  • If the current premiums are guaranteed in future years, or if there are limits on future increases
  • How many times rates have increased in the past 10 years
  • If you purchase a group policy through an employer, see if it is portable (if you can take it with you if you change jobs).

Typically, when you are between 50 to 65 is the most cost-effective time to buy LTCI, if you’re in good health. The younger you buy, the lower the cost. However, you will be paying premiums longer. Premiums usually increase as you get older and less healthy. There’s a possibility that you’ll be denied coverage, if your health becomes poor. Therefore, while it’s not inexpensive, buying LTCI sooner rather than later may be the best move.

Reference: Forbes (April 17, 2020) “Is Long-Term Care Insurance Right For You?”

Caring for Alzheimer’s and Dementia Patients during Stay-At-Home Orders

The Havre Daily News’ recent article entitled  “Alzheimer’s Association offers tips for keeping people with dementia engaged during stay-at-home orders” reported that, to help caregivers engage their family members suffering from Alzheimer’s and other dementia, the Alzheimer’s Association has provided some ideas to assist.

Alzheimer’s disease is a progressive disorder that causes brain cells to degenerate and die. This disease is the most common cause of dementia, which is defined as a continuous decline in thinking, as well as behavioral and social skills that disrupts a person’s ability to function independently.

When considering how to help a person with dementia stay engaged during the pandemic, the release from the Alzheimer’s Association said, you can start by asking yourself these questions:

  • What do they like to do?
  • What are they able to do?
  • What are they in the mood for today?

The Alzheimer’s Association says that spending time with a family member or loved one with Alzheimer’s and other dementia can still be a meaningful and fun experience, especially if you take your cue from them. Let’s look at some ideas:

Encourage involvement in daily life activities. These types of basic activities can help the person feel like a valued part of the household. This can be things like setting the table and folding laundry. The tasks can give a dementia patient a sense of success and accomplishment.

Be ready to adjust and modify activities. Some activities that the person enjoys may need to be changed or modified, because of the stay-at-home orders in effect in most states. A few ideas are low-impact at-home workout videos; playing games like checkers, cards, or board games; or looking at photo albums.

Concentrate on individual enjoyment. Someone who’s worked in an office might enjoy activities that involve organizing, such as collating papers, putting coins in a holder, or creating a to-do list. A former farmer or gardener may like being in the fresh air and working in the yard.

Don’t be afraid to request help. Ask family members and friends for help with some non-contact chores. This might include help putting the trash out, collecting the mail, or tending to the yard. You should also look into meal and grocery delivery services.

The Alzheimer’s Association now has free expanded educational programs via telephone and online. These programs provide crucial information about Alzheimer’s and related dementias, effective communication techniques, understanding and responding to dementia-related behaviors and more.

There are also additional resources for caregivers on the association’s website at https://www.alz.org.

Reference: Havre Daily News (April 14, 2020) “Alzheimer’s Association offers tips for keeping people with dementia engaged during stay-at-home orders”

Do I Really Need a Health Care Proxy?

The Pauls Valley Democrat’s recent article entitled “Advance directives and living wills” explains that an Advance Directive has three parts:

  • A living will
  • Naming of your health care agent; and
  • Your directions for anatomical gifts.

The individual that you name as your Health Care Proxy will make decisions for your treatment and care, if you’re unable to do so. These decisions may extend to all medical issues and aren’t limited to end-stage, life determining decisions that are mentioned in your living will. This is a form of power of attorney that authorizes your agent to act in your behalf to address issues like these:

  1. Accessing your medical information
  2. Discussing your treatment options with your healthcare providers
  3. Getting second opinions on your diagnosis
  4. Selecting and authorizing various medical tests
  5. Your placement in a hospital or care facility
  6. Transferring your care to a new physician; and
  7. Communicating your wishes on life support in terminal or unconscious situations.

For end of life decisions, your health care proxy is bound by your written wishes as expressed in your living will. Life support can be terminated, only if you so authorize in writing. Your healthcare proxy can’t make that decision for you, because that is “personal” to you. You may select one or more persons to act as your proxy, although if two are selected, you should predefine what to do in the event of a conflict.

A best practice is to choose a person who’s younger than you who is geographically close, a person with time to assist you and with whom you’re willing to share in advance your wishes, likes and dislikes as to medical care. This person should be trusted to act and honor your wishes.

Because many decisions relate to your very personal concerns about religion, death and dying, these feelings should be shared with your health care proxy before any serious situation.

The Advance Directive is a very important document that pertains to your wishes, as they relate to medical care, end-of-life and death.

Parts I and II can discuss your wishes for care treatment, as well as your choice of a person to represent your wishes. These are two very important issues. Take the time to consider the advance written expression of your own wishes.

Reference: Pauls Valley Democrat (Feb. 12, 2020) “Advance directives and living wills”

What are the Restrictions on Visiting the Elderly in a Care Facility?

The restrictions in Virginia started after the American Health Care Association, the largest national trade organization representing long-term care centers, and the Centers for Disease Control and Prevention issued guidance recommending extreme measures to prevent a scenario that has played out in a Washington state nursing home, where the virus spread rapidly and took many lives.

The Richmond Times-Dispatch’s recent article entitled “Virginia nursing homes restrict visitors over coronavirus fears, families worry about separation” says, however, that some family members and advocates worry that — without loved ones allowed to visit — residents will be even more vulnerable to neglect in nursing homes that already struggle to give them basic care.

“What we have found is that experts believe that this is the most prudent step that we can take to protect the residents,” said Keith Hare, CEO of the Virginia Health Care Association, the state chapter of the AHCA. “We have to put the health and well-being of these residents first. … It really is unprecedented action.”

However, some family members who are told that they can drop off supplies for the residents at the nursing home, cannot stay for a visit. Some are worried that parents with Alzheimer’s who need help eating, won’t be fed without their regular visitors because nursing homes are understaffed.

Nursing homes in the state say it was a hard decision to cease visitation, but it was necessary to prevent any exposure in the care facilities. They’re going to do whatever we can to keep it out, official say.

Innovative Healthcare Management, a company that runs five nursing homes in Virginia with a total of 750 residents, said that it has been educating its staff and preparing for a potential outbreak, since first learning of the coronavirus outbreak in China. IHM recently began screening visitors for possible coronavirus infection before they entered the facilities. The company decided to restrict all nonessential visitors, except when a resident is believed to be dying.

Nursing homes are trying other ways for family members to connect with residents, like phone calls and video chats.

While nursing homes around the country are doing the same thing and are restricting group gatherings within the centers, they are trying to make sure residents are being entertained with in-room activities, such as movies, card games, and puzzles. The focus at the facilities is on communication and keeping residents entertained.

Reference:  Richmond Times-Dispatch (March 15, 2020) “Virginia nursing homes restrict visitors over coronavirus fears, families worry about separation”

How to Plan for Nursing Home Care for Parents

The median annual cost of care in a skilled nursing facility in South Carolina is $42,000, according to a cost of care survey by long-term care insurance company Genworth. You can’t expect Medicare to cover it. Medicaid coverage doesn’t start in, until the value of your assets is reduced to $2,000, says The Columbia Regional Business Report’s recent article entitled “Nursing home care requires advance planning.”

Many people don’t know that to qualify for Medicaid, your assets have to be spent down to almost nothing. Planning for long-term care includes both insurance and financial planning. However, the long-term care insurance options are limited. There are only a few providers remaining in the industry, but it’s worth the effort to see what they have.

Long-term care insurance is a plan that lets you pay a premium in exchange for coverage for a stay in an assisted care facility, full-scale care facility, or even at home. Without a policy, those financial costs can be catastrophic.

Because the cost of long-term care is so high, begin planning for your later years as soon as possible. It’s likely that in the next few decades, when the baby boomer generation starts requiring long-term or assisted living care, paying for it could become a crisis.

For people who are starting to save for future care needs, financial planners earmark 10% to 15% of your income. If you’re older and see that you don’t have enough money saved, put away at least 20% of your income. IRS guidelines include catch-up provisions for people older than 50 for IRAs and 401(k)s.

Some group insurance plans offer long-term care options. There are some additions for life insurance policies that could extend living benefits for elder care. You should plan on paying for three years of long-term care.

How to pay for skilled care is just one of the issues a family may face in later years. You also should have a will, advance directives, medical or health care power of attorney and durable power of attorney in place to help your family with difficult decisions. Remember to make sure the beneficiaries on your insurance plans are up-to-date.

Talk to an attorney about late-life concerns.

It’s never too soon to develop some kind of plan that can ease the financial burden for you and your family.

Reference:  Columbia Regional Business Report (March 10, 2020) “Nursing home care requires advance planning

How Can I Fund A Special Needs Trust?

TapInto’s recent article entitled “Ways to Fund Special Needs Trusts” says that when sitting down to plan a special needs trust, one of the most urgent questions is, “When it comes to funding the trust, what are my options?”

There are four main ways to build up a third-party special needs trust. One way is to contribute personal assets, which in many cases come from immediate or extended family members. Another possible way to fund a special needs trust, is with permanent life insurance. In addition, the proceeds from a settlement or lawsuit can also make up the foundation of the trust assets. Finally, an inheritance can provide the financial bulwark to start and fund the special needs trust.

Families choosing the personal asset route may put a few thousand dollars of cash or other assets into the trust to start, with the intention that the initial investment will be augmented by later contributions from grandparents, siblings, or other relatives. Those subsequent contributions can be willed to the trust, or the trust may be named as a beneficiary of a retirement or investment account. It is vital that families use the services of an elder law or special trusts lawyer. Special needs trusts are very complicated, and if set up incorrectly, it can mean the loss of government program benefits.

If a special needs trust is started with life insurance, the trustor will name the trust as the beneficiary of the policy. When the trustor passes away, the policy’s death benefit is left, tax free, to the trust. When a lump-sum settlement or inheritance is invested within the trust, this can allow for the possibility of growth and compounding. With a worthy trustee in place, there is less chance of mismanagement, and the money may come out of the trust to support the beneficiary in a wise manner that doesn’t risk threatening government benefits.

In addition, a special needs trust can be funded with tangible, non-cash assets, such as real estate, securities, art or antiques. These assets (and others like them) can be left to the trustee of the special needs trust through a revocable living trust or will. Note that the objective of the trust is to provide the trust beneficiary with non-disqualifying cash and assets owned by the trust. As a result, these tangible assets will have to be sold or liquidated to meet that goal.

As mentioned above, you need to take care in the creation and administration of a special needs trust, which will entail the use of an experienced attorney who practices in this area and a trustee well-versed in the rules and regulations governing public assistance. Consequently, the resulting trust will be a product of close collaboration.

Reference: TapInto (February 2, 2020) “Ways to Fund Special Needs Trusts”

How Can Long-Distance Caregivers Help Loved Ones?

A recent article noted that long-distance caregivers have the same concerns and pressures as local caregivers, perhaps even more. They spend about twice as much on caregiving as people caring for a loved one nearby, because they’re more likely to need to hire help, take uncompensated time off work and pay for travel. A huge challenge for this group is just staying informed and assured that the person needing care is in good hands. As a result, long-distance caregivers must have good communication and a solid team on the ground.

AARP’s recent article entitled “Long-Distance Caregiving: 5 Key Steps to Providing Care From Afar” provides us with five steps to staying informed and effective as a long-distance caregiver and thoughts for implementing the measures.

  1. Be sure you have access to information. Having a means of receiving good information and possessing legal authority to make financial and health-care decisions is critical for all primary caregivers, but it’s even greater for ones caring from a distance. Arrange as much as you can during an in-person visit.
  • Start the discussion on finances and map out with your loved one how to pay for health care and everyday expenses.
  • Ask whether your parent or other senior is able to sign the forms or make the calls necessary to give doctors, hospitals and insurers permission to share information with you or another trusted family member. This should include banks and utilities.
  • Be sure the senior has designated a durable power of attorney for health care and financial decisions.
  • Know what to do in an emergency, as far as access to the home by a neighbor, if needed.
  1. Create your on-the-ground support team. Don’t try to do it all, especially if your loved one has more serious or complicated health issues. In addition to healthcare professionals, ask friends, family and community groups to join a network of caregiving helpmates. Remember to add your loved one as part of the team.
  • Assign roles and tasks, that the members of the team are willing and able to do.
  • Create a list with contact info for everyone and keep it up to date.
  1. Consider hiring a reputable caregiving professional. They’re often called a geriatric care manager, aging life care manager, or eldercare navigator or coordinator. These professionals are frequently licensed nurses or social workers who can also be valuable mediators or sounding boards, when family members disagree on care decisions.
  • Verify the person’s professional certifications, see how long the person has been in the field and request references.
  • Care managers can charge $50 to $200 an hour. Medicare doesn’t cover this service, nor do most health insurance plans. However, if you can handle it financially, an experienced manager may be able to save your family time, money and stress with even a short call.
  1. Find ways to communicate regularly with your local support group and loved one. You should leverage technology. With permission, place video monitors, wearable activity trackers, remote door locks to prevent wandering (if the care recipient has dementia) and even electronic pill dispensers that can tell you if someone has taken the prescribed medications.
  2. Leverage your visits. Nothing’s better than an in-person visit. When you can manage one, come with a list of things you need to know or discuss.
  • Interview possible home aides or house cleaners or meet with social workers or other professionals involved in your loved one’s care to discuss any concerns.
  • Look for signs of abuse, which means monitoring your senior’s checking account and see if there are any irregularities and look for red flags of physical or emotional mistreatment, like bruises, unexplained injuries, or a sudden change in personality. Note if your family member talks about a person you’ve never met who visits often and has been “very helpful.”

Although you may have several practical tasks to tick off your list, it’s important to spend quality time with your loved one. And seek the advice of a qualified elder law attorney, if you have any questions.

Reference: AARP (Oct. 30, 2019) “Long-Distance Caregiving: 5 Key Steps to Providing Care From Afar”

When Do I Need an Elder Law Attorney?

Elder law is different from estate law, but they frequently address many of the same issues. Estate planning contemplates your finances and property to best provide for you and your family while you’re still alive but incapacitated. It also concerns itself with the estate you leave to your loved ones when you die, minimizing probate complications and potential estate tax bills. Elder law contemplates these same issues but also the scenario when you may need some form of long-term care, even your eligibility for Medicaid should you need it.

A recent article from The Balance’s asks “Do You or a Family Member Need to Hire an Elder Law Attorney?” According to the article there are a variety of options to adjust as economically and efficiently as possible to plan for all eventualities. An elder law attorney can discuss these options with you.

Medicaid is a complicated subject, and really requires the assistance of an expert. The program has rigid eligibility guidelines in the event you require long-term care. The program’s benefits are income- and asset-based. However, you can’t simply give everything away to qualify, if you think you might need this type of care in the near future. There are strategies that should be implemented because the “spend down” rules and five-year “look back” period reverts assets or money to your ownership for qualifying purposes, if you try to transfer them to others. An elder law attorney will know these rules well and can guide you.

You’ll need the help and advice of an experienced elder law attorney to assist with your future plans, if one or more of these situations apply to you:

  • You’re in a second (or later) marriage;
  • You’re recently divorced;
  • You’ve recently lost a spouse or another family member;
  • Your spouse is incapacitated and requires long-term care;
  • You own one or more businesses;
  • You have real estate in more than one state;
  • You have a disabled family member;
  • You’re disabled;
  • You have minor children or an adult “problem” child;
  • You don’t have children;
  • You’d like to give a portion of your estate to charity;
  • You have significant assets in 401(k)s and/or IRAs; or
  • You have a taxable estate for estate tax purposes.

If you have any of these situations, you should seek the help of an elder law attorney.

If you fail to do so, you’ll most likely give a sizeable percentage of your estate to the state, an ex-spouse, or the IRS.

State probate laws are very detailed as to what can and can’t be included in a will, trust, advance medical directive, or financial power of attorney. These laws control who can and can’t serve as a personal representative, trustee, health care surrogate, or attorney-in-fact under a power of attorney.

Hiring an experienced elder law attorney can help you and your family avoid simple but expensive mistakes, if you or your family attempt this on your own.

Reference: The Balance (Jan. 21, 2020) “Do You or a Family Member Need to Hire an Elder Law Attorney?”