Author: AlerStallings

If you’ve read any of our previous articles, you know the importance of having an estate plan. But what happens when you’re not sure if your elderly parents have one? How should you approach the topic with them? 

Chances are estate planning isn’t your family’s preferred Sunday night family dinner topic. And let’s face it: though you may be an adult, your parents will always see you as their child. Taking advice from your kid can be a hard pill to swallow. That’s why it’s important to approach the topic with sensitivity and tact, acknowledging their lifetime of hard work and giving them a gentle nudge in the right direction. To help relieve some stress, read on for our tips.  

Respect Their Desire for Privacy 

Boomers and their children (many of which are millennials) differ in many ways, but one of the starkest contrasts is their openness about money. One study found that while 46% of millennials discuss their finances with their parents, the communication channel doesn’t go both ways. Only 24% of boomers indicated they talk to their kids about their finances.  

For much of their lives, talking about finances was (and for some boomers still is) a taboo topic. Millennials on the other hand, having come of age during the Great Recession, believe that talking about finances can be beneficial. The best advice for bridging this divide is to tread lightly. Understand that you can’t tell your parents what to do; instead, make them want to do it on their own.  

Make It Relatable 

One of the best ways to do that is to keep the conversation relatable but simple. Bring up a real-life example of someone you know—such as a family member or friend—who passed away and discuss how their affairs were handled. If they had an estate plan (or didn’t) talk about the impact of that choice and how things could have been different. It’s a good way to broach the subject without putting your parent on the spot. 

Walk in Others’ Shoes 

Considering the impact estate planning could have on other loved ones can be a powerful motivator. For instance, if something happens to mom, the burden of sorting through matters of their estate would shift to dad (or vice versa). If both pass away without an estate plan, the burden could shift to you. Their estate could be stuck in probate (yes, even with a will), racking up attorney fees, with decisions on inheritance being decided by the court. Your parents may not feel comfortable discussing their finances, but they might feel even less comfortable with the idea of leaving one spouse to go it alone or, in the latter example, leaving you in a lurch.  

Bring the Facts 

Did you know only 44% of adults 55 and older have a will? That’s unfortunate for a couple reasons. First, having an estate plan is crucial for helping you avoid some of life’s most difficult situations. Second, a will is simply not enough to avoid probate or protect you from long-term care costs. Many retirees need additional estate planning to adequately safeguard their assets. 

Estate planning is an emotional process; understanding what’s at stake can be the catalyst to forward motion. Share with your parents any of the above links to start the conversation. Let them know what thoughts it spurred for you and let them share their thoughts as well. If they’re open to estate planning, make it easy for them to follow through. Set up the appointment and let them know that you’ll go with them or drive them there if they want. 

And remember, sometimes less is more. That’s why we offer complimentary 15-minute phone consultations with our caring attorneys, so clients can dip their toe in the water and better understand the process with no obligation. If that feels like a comfortable next step for your family, schedule a time that works best for you. We’d be happy to help. 

Get the Facts on What it Will (and Will Not) Cover 

Wouldn’t it be great if Medicare were like an all-inclusive resort and whatever you needed was included? It’s probably not as fun to envision as cocktails poolside, but it’s still better than reality. In fact, what Medicare doesn’t cover may catch you by surprise, leaving you in a tough situation. 

While you can always cut back on cocktails that cost extra, you can’t forgo care you need, especially when it comes to critical services like long-term care. The best remedy is being in the know about what Medicare does and does not cover so you can plan now and be prepared. 

But First, a Clarification 

Before we dive in, it’s important to distinguish the difference between Medicare and Medicaid. While both programs involve government healthcare, they’re administered by different entities. Medicare falls under the purview of the federal government, while Medicaid is a joint program between the federal government and the states. It is possible to be eligible for both Medicare and Medicaid; this is called dual eligibility. Depending on your income, you may find Medicaid will pay your Medicare Part B premiums, or you could continue to receive full benefits. 

Speaking of Part B, let’s take a quick look at the Medicare alphabet soup. Your basic Medicare coverage, also called Original Medicare, consists of Part A and Part B. Part A provides hospital coverage. If you worked 10 years or more and paid Medicare taxes, Part A won’t cost you anything (aside from your deductible, coinsurance, and annual benefit caps).  

Part B covers services deemed medically necessary (like doctor office visits, wheelchairs, x-rays, and lab work). It also covers preventative services—like your annual flu shot—and disease screenings. Your income determines how much you’ll pay in premiums and there is a small deductible as well as coinsurance. 

If you want to receive hearing, vision, and dental benefits, you’ll need to purchase a Part C plan. These are offered by private companies approved by Medicare. Some Part C plans have prescription drug coverage, but if you purchase one that does not, it’s also available through Medicare Part D. 

So, What’s Missing? 

While that might sound fairly comprehensive, there’s one important service that’s not covered: long-term care. That’s a problem because long-term care has the greatest potential to throw a wrench in your retirement finances. 

Medicare will pay for the first 20 days in a skilled nursing facility, and days 21-100 with a co-pay of $185.50 per day. After that, you’re responsible for all costs. Ideally, you’d be rehabilitated and return home. But some patients are unable to return home because their condition is not expected to improve. Instead, they’ll need to move to a long-term care facility.  

In this situation, it’s important to talk to an elder care attorney as soon as possible. You may qualify for programs that could help with the cost of care, like Medicaid, PASSPORT, and VA Aid & Attendance benefits. An experienced elder care attorney can navigate the application process and help you avoid errors that could result in delays or denials. 

Planning Ahead 

While no one can know for sure whether they’ll need long-term care, you can take actions now to protect your hard-earned savings from the possibility. An elder care or estate planning attorney can help you examine which options may best fit your situation, including legal tools like trusts. One popular trust for protecting against the cost of long-term care is aptly named the asset protection trust. It’s important to note, however, that your assets must be in the trust for at least five years to be fully protected. That’s why it’s never too early to consult a trusted attorney to develop your plan. 

Now that we’ve taken the mystery out of Medicare coverage, let’s not take away all the fun. Feel free to resume your poolside cocktail daydream. And remember, should you need help demystifying Medicare and protecting yourself from long-term care costs, our caring attorneys are here to help. Get in touch anytime to set up a complimentary phone consultation. 

Not only is home care expensive, but it can be difficult to know where to begin when you need to set it up. Thankfully, we have resources to make the process easier and less expensive. Let’s take a look at what to consider. 

In-home care can be an attractive alternative to a long-term care facility if you’re eligible. The first step in making that determination is a Level of Care Assessment, which our team at AlerStallings can help you complete. Level of Care Assessments are a requirement for benefit programs that can help you pay for care. The assessment identifies your needs for care and assistance—physically, mentally, and in terms of daily living.  

When it comes to obtaining assistance with home care support, you have a couple options: Veterans Administration Aid & Attendance (A&A) benefits and PASSPORT (Medicaid). Both will help provide the care and comfort you desire but have some key differences. In this table, we’ve made it easy to compare the details: 

While the above table lays out the major details, it’s important to note that each program has its complexities. As such, it’s not a bad idea to enlist the help of an attorney. Errors or difficulty navigating the application requirements could make it harder to get the benefits you need in a timely fashion. For example, when applying for VA A&A, an incomplete or incorrect application can be delayed for months. 

Or in the case of PASSPORT, what many people don’t realize is that there is a five-year lookback period for gifts or transfers that begins at the date of your application. That means if you gave away assets or sold them for less than fair market value during that time period, it could render you ineligible for Medicaid. This underscores why it’s important to work with an attorney who understands eligibility requirements and can help you ensure you’ve dotted every “i” and crossed every “t.” 

It’s also important to note that in some cases, home care simply isn’t enough. We understand the desire to remain in the comfort of your own home, but we also know that it’s important to have a plan for when it’s no longer an option. This too is an important step to undertake with your attorney. Doing so now will provide you and your family with a clear path forward during a difficult time.  

At AlerStallings, we’ll be with you every step of the way. We’ll help you get the care you need, when you need it, and be ready to assist should your needs change down the line. Here, you don’t just have an attorney to solve the matter at hand; you have a relationship for life.  

Have you gotten an email from a Nigerian prince promising a generous reward if you helped him get his money out of the country? We all have. While those emails have become one of the most well-known examples of financial scams, the truth is financial abuse of the elderly has taken a far more sophisticated and subtle shape. The perpetrator may not be someone in a far-off land; instead, it could be someone much closer to home. Here’s what to know to protect yourself and your loved ones.

How Widespread is Elder Financial Abuse?

The American Bankers Association estimates that elder financial abuse cost victims nearly $3 billion last year. According to other organizations the amount could be as high as $36.5 billion annually. Why the discrepancy? Most of the crimes fly under the radar. In fact, just 1 in 44 cases gets reported. Some seniors don’t realize they’ve been scammed, while others are too ashamed to alert the authorities. Worse, some fear retaliation from their abuser, furthering the heartbreaking cycle of exploitation.

Who are the Perpetrators?

One of the reasons so many cases of financial abuse go undetected is because the perpetrator is someone close to the senior—perhaps a family member, friend or caretaker. In some cases, this is someone who has been entrusted to assist the senior with their finances and may hold a power of attorney. They’ll take advantage of their access to the senior’s accounts and siphon off money or make purchases for their own benefit.

Other times, the abuse begins as a seemingly innocent request. A family member asks to borrow money from the senior promising to pay it back, but they never do. The situation spirals to the point that the senior has lost so much money they no longer have enough to support themselves. Should the senior apply for Medicaid, especially if they need long-term care they no longer can afford, they’ll be in the difficult position of trying to convince the government the money was stolen and not given away, since the latter could be a disqualifying factor in the application process.

Sadly, 90% of abusers are family members or someone the senior trusts. In some cases, the abusers are the last people the senior would expect: pastors, doctors, nurses, and yes, even attorneys. This underscores the importance of staying vigilant.

What are the Signs and Risk Factors?

Some signs pop up and quickly raise suspicion, like:

-Notification of a sweepstakes win

-Contractors requesting to perform unsolicited repairs

-A friendship that develops quickly

Other signs may require investigation to uncover, especially if someone has Alzheimer’s or dementia. Look for:

-Large, frequent, or unusual withdrawals, wires, or transfers from bank accounts

-Unpaid bills or insufficient funds

-Change of mailing address on accounts or missing bank statements

-Altered legal documents, such as a will, a trust, or power of attorney the senior can’t explain

-New friends, caregivers, or nursing home staff suddenly accompanying the senior to the bank or ATM

-Money given as a loan or gift, or checks with a signature that appears forged or different

-Physical injury, threats, or evidence of withheld medical assistance or personal care, which may signal that a caregiver is using harm or neglect to coerce money from the senior

What Can You Do to Protect Yourself or Your Loved Ones?

When it comes to preventing financial abuse before it begins, diligence is the name of the game. Here’s how to stay safe:

-Invest in a good cross-cut shredder (the ribbon kind won’t cut it!) and shred all sensitive documents like credit card offers, bank statements, and anything with your personal identifying information that you no longer need to keep on file.

-For the documents you do need to keep on file, make sure they’re securely locked away.

-Similarly, lock up your check book, especially when you’ll have visitors in your home.

-Order an annual credit report and review it for any strange activity.

-Always check the references and credentials of those you plan to hire.

-Don’t pay money to release winnings or a sweepstakes prize. It’s likely a scam.

-Never rush into a financial transaction and if you have questions or suspicions (no matter how small), ask a trusted third party who isn’t involved to give it a second look.

Finally, there are legal tools that can help prevent financial abuse and protect you if you do become a target. From wills to various trusts, power of attorney, and more, an estate planning or elder law attorney can help you create a strategy that ensures your assets are only accessible to those you trust.

Preventing financial abuse takes a team. It’s one of the reasons we conduct our annual review meetings—to make sure you still have the right protection in place, year after year. When you work with AlerStallings, you can be confident that someone’s looking out for you. To ensure that you and your loved ones are protected, set up a complimentary consultation with one of our caring attorneys.

When it comes to monetary gifts, nearly everyone is worried about the tax man. But actually, the tax man isn’t what should concern you most. Instead, it’s whether gifting is the right strategy for what you want to achieve. Here’s what we mean. 

Will You Pay the Gift Tax? Only if You’re Really Generous 

The number to remember is $15,000. That’s the amount you can give annually to any number of loved ones without needing to report the gifts to the IRS. And remember, that amount is per person, so you and your spouse can each give $15,000 per recipient, for a total of $30,000. 

Now, here’s where people tend to get confused. That $15,000 figure is not the total limit on what you can give tax-free per recipient. It’s simply the limit for what you can give without disclosing it to the IRS.  

There is also a lifetime gifting limit of $11.7 million before the gift tax kicks in. The first $15,000 of each gift is exempted. So, for example, if you were to gift $16,000 to each of your 3 children this year, $3,000 would count toward your lifetime limit (that’s 3 x $1,000, which is the amount over the $15,000 limit on each gift). The $3,000 will also count toward your estate tax exemption (more on that below). As you can see, you’d have to be really generous for the gift tax to affect you. 

Now, it’s important to note that gifts to charity, your spouse, or a political organization are always exempt from the gift tax no matter the amount. So too are gifts to cover someone’s medical expenses, if paid directly to the provider. Gifts to cover someone’s tuition are also exempted so long as the funds are paid directly to the school. Room, board, and books aren’t included. 

What About Gifting After Death? 

It depends on what you’re gifting, because now you have both the estate tax and tax basis to consider. Any gifts less than $15,000 you give during your lifetime won’t count toward your estate tax exemption, which for tax year 2021, is also $11.7 million.  

But let’s say you decide to wait until your passing to distribute your wealth via your will. In that case, the entirety of what you gift after you die will count toward your exemption. However, could it cause some tax headaches for your recipients? Absolutely. This is where the kiddo’s penalty becomes a problem. That’s when your heirs—likely in their peak earning years and therefore in the highest tax bracket of their lives—end up paying taxes on their inheritance at a higher rate than the one you enjoyed during retirement. 

There can be some advantages to gifting after death, however. Take for example, leaving real estate like your home or vacation property to a loved one. This is where something called a stepped-up basis comes into play. If your loved one were to sell the inherited property at some point in the future, their tax bill would be calculated on the property’s appreciation since the date of your death, not since you purchased it. That could yield substantial savings, especially if you’d held the property for quite some time. 

Should You Get Gifting or Get a Trust? 

You might be thinking, “Oh, the kiddos tax sounds bad. I’m going to give away my money while I’m still alive.” There are a couple reasons why that might work against you. 

First, it’s hard to know whether you might need long-term care, and if you do, for how long. LongTermCare.gov estimates a 70% chance you’ll need long-term care if you’re 65 or older. If you do, you’ll want to have a decent cushion to protect you from the cost. The national average for a private room in a nursing home is $7,698 per month. 

So, if you have enough money to give freely and still have a comfortable cushion left over to self-fund long-term care if the need arises, then by all means gift away! But that’s a small percentage of the population. For most of us, large gifts aren’t the norm, and long-term care costs are a source of anxiety. 

Further, most of us (over 60%) go on Medicaid to cover the cost of long-term care. Which brings us to our second point on why gifting may not be the best strategy to reduce your wealth: because Medicaid has a five-year lookback period. If it’s found that you gave away wealth during that period to reduce the value of your estate to become Medicaid eligible, you may not qualify for coverage.  

You do, however, have one other choice to consider: an irrevocable trust. For this situation, one of the most popular is an asset protection trust. An asset protection trust is a vehicle that holds your assets (including real estate) and effectively shields them from the nursing home and other creditors. While it can help you qualify for Medicaid should you need it, it’s not something that can be hastily put together. It requires forethought. Remember, the five-year lookback period still applies.  

When an asset protection trust is formed, you appoint a trustee to manage the assets for you. Relatives and adult children are often utilized as trustees. After your passing, any assets that remain in the trust after settling debts will go to your beneficiaries. From a gifting perspective, an asset protection trust offers the advantage of helping your heirs avoid probate, saving them time and money. 

An asset protection trust may enable you to ensure that a surviving spouse is cared for, or that you’re able to financially support loved ones after you’re gone without putting you at risk of losing everything to a nursing home while you’re still alive. That said, this is just one type of trust, and certainly not a one-size-fits-all solution. When it comes to gifting and planning for long-term care, the best strategy for your circumstance is the one you develop with a caring elder care or estate planning attorney. If you’re looking for someone with heart who can help you and your family, set up a complimentary consultation with one of our attorneys today.