What Can Happen, and What Can You Do?

If you lose Medicaid coverage, you may be responsible for paying the full cost of your long-term care services. This situation can be financially challenging, as long-term care expenses can be significant. Finding an alternative payment source is an immediate concern, even if you plan to reenroll for Medicaid coverage. The application process takes some time to complete.

Tap Into Existing Resources

For the short term, you may need to seek family help. If you previously did Medicaid planning, you may tap into personal savings or sell assets. If you qualify, you may need to explore other government programs providing financial assistance for long-term care, such as veterans benefits. Medicare policies traditionally don’t cover long-term care, but they do cover some skilled nursing home care in specific situations for a limited time.

Negotiate with the Care Facility

If you can’t cover the full cost of your long-term care, you may need to negotiate with the care facility, nursing home, or in-home services to find a solution. Some facilities may be willing to work out payment plans to avoid resident churn or make other arrangements to help you continue care. It’s in your best interest to seek the counsel of a disability or elder law attorney specializing in long-term care to negotiate a solution.

Care Facility Discharge

When a short-term fix isn’t available, or negotiations to alter payment obligations fail, the loss of Medicaid coverage may result in discharge from the facility or denied in-home or community-based care services. However, a facility is legally obligated to provide notice before discharging a resident. During this time, the facility and your elder law attorney can work with you or your family to arrange a safe and suitable transition to another living arrangement.

Disenrollment Numbers

The number of Medicaid cutoffs for previously existing beneficiaries has surpassed one million, with the expectation to increase between 14 to 18 million. So far, Medicaid-dependent facilities, nursing homes, and at-home and community-based services are not widely affected. Still, the law of large numbers indicates disenrollment can significantly impact some beneficiaries requiring long-term care.

Many Medicaid beneficiaries who have been released due to procedural issues or technicalities anticipate being reenrolled. However, according to Medicaid, states have up to “twelve months to return to normal eligibility and enrollment operations.” The permitted time frame creates havoc for many Americans who rely on Medicaid benefits. However, it’s catastrophic for beneficiaries receiving Medicaid for long-term care as costs in a facility may range from about $4,000 – $8,000 per month, depending on the location.

If You or a Loved One Are in Long-Term Care

Understand that the unwinding of Medicaid continuous enrollment happens by state. Some long-term care beneficiaries may be unaware that continuous enrollment has stopped. Beneficiaries or their loved ones may neglect to return Medicaid paperwork or omit required documents consistent with current Medicaid qualifiers.

Some long-term care providers raise concerns that staff shortages in state agencies that handle reenrollment will create delays in processing required patient paperwork. The twelve-month grace period Medicaid provides to the states creates a slow reenrollment process that affects providers who continue to care for residents without reimbursement.

Consult a Disability or Elder Law Attorney

If you have been cut off from Medicaid and need to reenroll, an attorney can guide you through the general steps to ensure your benefits begin again as soon as possible. Your lawyer can help you confirm the reason for the discontinuation of benefits. It may be a failure to provide required documentation since the end of continuous enrollment or changes in eligibility requirements.

Once you understand why it has happened, your attorney can gather the necessary documentation for the reenrollment process. Documents may include:

• Proof of income
• Identification documents
• Proof of residency
• Social Security number
• Other documents your state’s Medicaid office requests

Your disability or elder law attorney can ensure all relevant financial documents and medical records are included to support your application. They may contact the state’s Medicaid office and advise them that you have been receiving long-term care benefits in an effort to flag your application for expedited processing.

Because short-term loss of benefits can make maintaining residency in a long-term care facility difficult, your attorney can strategize a short-term solution that addresses your unique situation.

Appeals and Advocacy

If your Medicaid reenrollment application is denied or you face challenges during the reenrollment process, an elder law or disability attorney specializing in long-term care can help you through the appeals process. They can gather additional information, advocate on your behalf, and represent you in administrative hearings or appeals.

If you are in long-term care and lose Medicaid benefits, specific consequences will depend on individual circumstances and your state’s regulations. Pay close attention to your Medicaid status. Disenrollment may continue to affect long-term care beneficiaries for some time due to the end of the requirement in FFCRA legislation requiring continuous enrollment.

Consult with one of our experienced elder law or disability attorneys specializing in Medicaid and long-term care issues. They understand the laws and regulations and help you reenroll in Medicaid, securing the necessary coverage to continue your long-term care benefits.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

The post Medicaid Disenrollments Could Threaten Long-Term Care Patients appeared first on Seif & McNamee.

Most matters the probate courts handle, like admitting wills and assigning executors, are standard operating procedures and go uncontested. However, legal contests arising from a person’s death or mental incapacity may lead to probate litigation over powers of attorney, will and trust contests, guardianships, conservatorships, and living wills.

Common Legal Concerns in Probate Court

Some common problems leading to probate litigations include:

• Will contests – The validity of a will can be challenged. Interested parties may dispute the will’s authenticity, allege undue influence or fraud, or argue that the person who made the will (testator) lacked the mental capacity to create a valid will.
• Estate administration disputes – Disagreements may arise among beneficiaries, executors, or administrators regarding the management and distribution of estate assets. These disagreements can include allegations of mismanagement or conflicts over the interpretation of the will or trust provisions.
• Claims against the estate – Creditors or individuals who believe they have a rightful claim to the deceased person’s assets may file claims against the estate. Claims can include outstanding debts, unresolved contracts, or disputed property ownership.
• Guardianship or conservatorship disputes – If there are disputes over the appointment of a guardian for a minor or an incapacitated adult or concerns about the actions of an appointed guardian or conservator, it can result in probate litigation.
• Breach of fiduciary duty – Executors, administrators, trustees, and other fiduciaries are legally obligated to act in the best interests of the estate and its beneficiaries. Allegations of misconduct, self-dealing, or failure to fulfill these obligations may lead to litigation.
• Document interpretation – Disputes may arise over the interpretation of a will, trust, or other estate planning documents. These conflicts can involve disagreements about the intended meaning of certain provisions, the scope of powers granted to trustees or executors, or the distribution of assets among beneficiaries.
• Family disputes – Family dynamics can often lead to probate litigation, especially with strained relationships, blended families, or unequal distributions of assets. Sibling rivalry, disputes with former spouses, or disinheritance can result in legal challenges.

Individuals marrying multiple times without a prenuptial agreement are also likely to incite probate litigation upon their death. Life insurance trusts can be a valuable way to separate the interests of the decedent’s spouses and children.

Probate, Estate, and Trust Litigation Attorneys

If you anticipate probate litigation, an experienced estate administration attorney can provide guidance and explain your rights and options to prevent future problems. If you are involved in a dispute, a probate litigation attorney can help you navigate the legal system and resolve it. There are also attorneys who specialize in conflicts with trust administration and litigation.

It’s essential to consider your legal situation and an attorney’s experience, reputation, and track record when handling similar matters. It’s also crucial to feel comfortable working with them.

Early Steps in Probate Litigation

In probate litigation, your attorney plays a key role in representing your interests while navigating the legal process. All things begin with an initial lawyer consultation to discuss your case’s details, goals, and concerns. Your attorney will evaluate the strength of your claims or defenses and explain the legal process, potential outcomes, and available strategies to achieve your objectives. Most states have strict statutes of limitations, so the earlier you contact a probate litigation lawyer, the better.

Your attorney will then thoroughly research your case’s relevant laws, precedents, and regulations. They will analyze the facts and circumstances to develop a legal strategy tailored to your situation. All relevant documents will be gathered and reviewed, including wills, financial records, trusts, and other evidence relating to the dispute. Your attorney will then prepare and draft legal documents like complaints, petitions, answers, motions, and discovery requests.

Probate Court Processes

Probate litigation hearings and trials are usually held in the county probate court where the decedent died. The probate litigation attorney you select should be familiar with the county probate court where the case is being tried.

Your attorney will engage in the discovery process by gathering evidence, documents, and depositions from other parties. They will also respond to discovery requests from the opposing party. Each side will advocate for their client’s interests, work to reach a favorable settlement if possible, and advise on the merits of accepting or rejecting settlement offers.

Trial preparation and representation will occur if the settlement phase fails. Your lawyer will prepare you for trial, make legal arguments, examine and cross-examine witnesses, and present your case to the court. Throughout the process, your attorney will help you make informed decisions regarding the direction of your case.

Probate court can illicit high emotions and tense interactions that greatly disrupt family relationships and leave the estate open to creditor lawsuits as well.

Our estate administration and probate litigation attorneys help prevent estate-related contests through proper estate planning and significantly reduce the likelihood of probate litigation in the first place. Should you find yourself in need of an experienced litigator, we can represent you. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

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Assessing tax options can determine the best way to conduct business or personal transactions and inheritance to reduce or eliminate tax liability. Tax avoidance differs from tax evasion, which reduces tax liability through concealment or deceit. Tax evasion is a crime, but tax avoidance can lower your tax bill by structuring transactions to save the most money.

Minimizing Your Heirs’ Tax Burden

Inherited assets often come with tax burdens, and planning ahead can simplify some of the processes and lower taxes for your heirs. Depending on the state of the deceased’s estate, inheritance taxes will differ. As laws and regulations change regarding inheritable assets, your estate planning attorney can conduct a routine review of your plan to ensure transferring wealth is tax-efficient.

Gifting Your Money And Assets

The most direct way to minimize inheritance tax is to start gifting your heirs money each year while you’re still alive. Taking advantage of the gift tax exclusion of $17,000 per year per person is a quick way to transfer non-taxable cash or assets to heirs. A married couple can gift $34,000 yearly to each child or other inheritor without tax consequences to the gifter or the recipient.

Life Insurance

A solid insurance plan can also set up future inheritors without tax consequences. Choosing between whole life and term life insurance will determine how long the policy will last. A term or whole life insurance policy generally provides the beneficiary a death benefit not subject to income taxes unless they receive payouts in installments.

Irrevocable Life Insurance Trusts

An irrevocable life insurance trust (ILIT) can control whole or term life insurance policies while the owner is alive. Transferring your policy to the trust or using the trust for purchase means you own your insurance policy as the trust grantor. You can determine who administers assets, designate beneficiaries, and the terms of receiving benefits. Your estate planning attorney helps you set up the trust and properly fund it.

An ILIT removes the life insurance policy from your gross estate, which minimizes or eliminates estate tax liabilities on assets not qualified as marital or charitable deductions. The policy provides immediate liquidity to the decedent’s estate and beneficiaries upon the insured’s death.

Death Benefit Annuities

An annuity with a death benefit pays a lump sum to a beneficiary. There are also joint-and-survivor annuities that provide a guaranteed income stream to the beneficiary for life. While annuities are subject to tax, they can be structured to minimize the tax burden to the beneficiary.

Retirement Accounts Converted to Roth Accounts

Heirs will pay tax on any inherited retirement benefits if they are in a 401(k) or Individual Retirement Account (IRA). However, taxes on a Roth 401(k) or Roth IRA are already settled upon conversion, so there is no additional tax on distributions. While this is great for inheritors, when the owner converts a standard 401(k) or IRA to Roth, there will be regular income tax consequences for the conversion to occur.

Real Estate

Real estate is one of the most significant non-liquid assets to pass on to heirs. Capital gains tax will apply to real estate, and the recent IRS Revenue Ruling 2023-02 removes the step up in basis even if the real estate is in an irrevocable grantor trust.

However, this new ruling doesn’t apply if the irrevocable trust is in the grantor’s gross estate. The rules and applications are complex and will require the review of an estate planning attorney to decipher.

If the property is not in an irrevocable trust, there are three other options to pursue:

1. Sell it – If you plan on downsizing or putting your home’s equity to use elsewhere, selling the home to an heir might be a good option. It removes the property from your taxable estate, establishing a new cost basis. The property’s future sale has a cost basis tied to the home’s value on the date of transfer, lowering capital gains tax. Do not, however, sell the property below fair market value, or the difference may be subject to gift tax.
2. Gift it – While a generous gift, providing a home to an heir during your lifetime might have negative tax consequences. This gift will count toward your lifetime gift tax exemption which may not be a problem now, but in 2026, the exemption will be cut in half as adjusted for inflation. Depending on your estate’s size, it may result in up to 40 percent federal estate tax. State-level gift, estate, and inheritance taxes may also be a factor depending on where you live.
3. Pass it Down – Depending on how many heirs you have and their ability to maintain a property, you can leave your home in your will, a living trust, or in some states, a transfer-on-death deed. Again, these methods may no longer receive a step-up in cost basis and should be discussed at length with your estate planning attorney before making a decision.

Stock Investment Accounts

Unlike other gifted securities, inherited stocks don’t maintain their original cost basis. Upon inheriting a stock, the inheritor receives a step-up in cost basis determined by the stock’s value at the date of death. If you have held dividend-producing stocks for a significant time, the cost basis may make selling financially unproductive. However, an inheritor with a step-up in cost basis can immediately sell the stock to create cash flow without tax consequences.

Capital gain tax methods are a highly-contentious topic in the ongoing debate of inheritance and taxes. Often regulations may change without Congress enacting a law, as in the case of IRS Revenue Ruling 2023-02. To ensure your strategy is in tax compliance and advantageous to inheritors, review your estate plan routinely to account for any legal changes.

Estate Planning Attorneys and Tax Planning

Your estate planning attorney can help you legally minimize tax liabilities to your heirs by gifting assets during your lifetime, establishing trusts, and leveraging exemptions. Tax-advantaged accounts, capital gains tax planning, and other tax-efficient investments like life insurance can minimize taxes to your heirs.

Further, you can use family and charitable trusts or philanthropic foundations to receive tax benefits. There are many creative ways that your estate planning attorney can legally help to minimize taxes to your heirs. Estate planning guidance is key in creating wealth transfer management and tax strategies. Your attorney can provide personalized advice based on current tax laws and regulations and work with your tax advisor to create the best outcome for your heirs.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

The post Legally Transferring Wealth to Heirs While Avoiding Taxes appeared first on Seif & McNamee.

High Net Worth Individuals (HNWI) and Ultra High Net Worth Individuals (UHNWI) can make adjustments to maximize giving before the federal estate tax threshold rollback on January 1, 2026. Unless Congress intervenes, this historically high estate exemption limit of almost $13 million per individual will be reduced by approximately half. Clients with applicable net worth need to consider using exemptions as soon as possible. Changes to current tax laws seem unlikely in the near term.

The Secure Act and Secure Act 2.0

The SECURE Act (Setting Every Community Up for Retirement Enhancement Act) and SECURE Act 2.0 introduce several retirement planning changes that have implications for estate planning, including:

• Changes to Required Minimum Distributions (RMDs) – The age when individuals must begin to take RMDs from retirement accounts will increase from 70 ½ to 72. This change may impact current retirement account distribution planning in estate plans.
• Elimination of the “Stretch IRA” – Most non-spouse beneficiaries will no longer be able to “stretch” distributions from inherited retirement accounts over their lifetimes. Instead, these beneficiaries must typically withdraw the balance within ten years of the account owner’s death. This change may affect estate plans leaving retirement accounts to non-spouse beneficiaries.
• Exceptions to the “Stretch IRA” Rule – Some eligible designated beneficiaries can still stretch distributions from inherited retirement accounts over their lifetimes. They include surviving spouses, minor children, individuals with disabilities, and individuals not more than ten years younger than the account owner. Estate plans can be modified or designed to take advantage of these exceptions and minimize the tax impact on beneficiaries.

Reviewing and updating beneficiary designations on retirement accounts is crucial to align with your estate planning goals and the new rules. These actions will ensure the desired individuals or entities receive the assets as intended and tax-efficiently.

Ongoing Market Fluctuations and Interest Rates

The current market environment is tricky regarding tax management issues in short-term investing and estate planning. Reducing losses by optimizing investment tax write-offs is a silver lining for many. Still, the monthly movement in the applicable federal rate (AFR) can affect estate planning strategies, particularly regarding the Section 7520 rate used to calculate the value of a certain annuity. Market movements and rising interest rates shift estate planning strategies to some long-overlooked strategies.

Incorporating Asset Protection Strategies

Asset protection is becoming an increasingly important aspect of estate planning. Individuals are exploring strategies incorporating new laws and regulations regarding trusts, limited liability companies (LLCs), and family limited partnerships (FLPs) to safeguard their assets from potential risks and creditors.

Some states have extended or eliminated the rule against perpetuities regarding trusts. States with these changes may allow a trust to last 100 years or some to last indefinitely. Some states allow “directed trusts,” which appoint a trustee for the legal title and property custody, while at the same time, an investment adviser is granted decision-making authority, and a distribution adviser makes decisions regarding distributions to beneficiaries.

States are competing for trust business and creating greater flexibility and additional options regarding the administration of trusts. For example, a New York resident may want to create a trust in perpetuity for their descendants. However, there is a law against NY trusts in perpetuity. Instead, they can create a trust using a Delaware trust company as trustee because, under current law, forming a trust in Delaware permits the trust to last forever.

International Estate Planning

As globalization, cross-border relationships, and increased mobility become more common, international estate planning is gaining importance. The unique challenges of planning for assets in different jurisdictions, its tax implications, and coordinating with legal systems in multiple jurisdictions and countries are key considerations in international estate planning.

Integrating Digital Estate Planning

As digital assets play a significant role in people’s lives, estate planning increasingly incorporates provisions for managing and distributing these assets. Cryptocurrencies, social media accounts, and online businesses place greater estate planning emphasis on addressing these assets. The plan may include creating digital inventories, designating digital asset trustees, and providing instructions for accessing and transferring digital assets.

Family Business Succession

Succession planning for family-owned businesses will remain an important aspect of estate planning. Ensuring a smooth transition of ownership and management to the next generation or other designated individuals can help preserve the family’s legacy and protect the value of the business.

Sustainable and Charitable Planning

The trend toward incorporating sustainable and philanthropic goals in estate plans will continue. Many individuals may include charitable bequests, establish family foundations, or incorporate environmentally-friendly strategies such as impact investing or funding renewable energy projects in their estate plans. Some trusts can support charities and provide assets to beneficiaries using a charitable lead or charitable remainder trust.

Long-term Care Planning

With the aging population and rising health care costs, there is a growing emphasis on long-term care planning in estate plans. Provisions include funding long-term care, selecting appropriate health care proxies or agents, and establishing trusts or insurance policies to cover potential expenses.

Special needs planning is a subset of long-term care for individuals with disabilities. Establishing a plan that can evolve to address the needs of these individuals using trusts, ABLE accounts, and other planning techniques can assure additional support while preserving eligibility for government benefits.

Privacy and Confidentiality

Privacy and confidentiality concerns lead individuals to explore strategies to protect their personal and financial information in their estate plans. The goals are to limit public disclosure of assets, utilize trusts and other entities for privacy, and incorporate digital security measures.

These trends reflect individuals evolving needs and priorities in estate planning relating to changes in federal and state inheritance and tax laws. It’s important to meet with an estate planning attorney to create or review an existing estate plan. Our attorneys explain how these trends may apply to your specific situation and jurisdiction and ensure compliance with current laws and regulations while looking to the future.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

The post Legal Trends in Estate Planning: Planning for the Future appeared first on Seif & McNamee.

• Procrastination – This is a fundamental error. The drawbacks that procrastination presents are often severe and sometimes unrecoverable. Heirs can incur unnecessary taxes and lose significant percentages of wealth. A business owner may unknowingly create discord with existing partners and vendor relationships. A simple Will may not be enough to address a more complex estate. If you haven’t already, it is time to take the first step and meet with an estate planning attorney to create your unique plan. During this process, you will identify which additional professional services can best benefit your planning.
• Traditional gender roles – While gender roles continue to evolve, more women, particularly the younger generations, are taking the reins of financial discussion and decision-making. However, many in the baby boomer generation (and older) occupy a space of traditional male-female roles. On average, women will outlive men. This statistic implies that inheritable assets between spouses will pass from a man to a woman most of the time. Therefore, the female’s estate plan more often than not controls the ultimate disposition of family wealth, and it is imperative to plan according to this likelihood. The involvement of both spouses is crucial for smooth transitions — a spouse of whichever gender may need more information to understand estate planning. Both spouses need to know their estate planning attorney, CPA, and other relevant planners.
• Older estate planning documents requiring review – Just because you already created your estate plan does not mean that changes in your life and your family do not affect what is in writing. A periodic review of your estate plan with your attorney and accountant can catch minor errors that may otherwise lead to catastrophic problems. Wills, trusts, divorce settlements, pension, insurance, and stock statements can be missing a critical step that may render the document invalid or not in full force. A missing signature, or an incomplete document can implode your estate plan. An unfinished divorce decree can derail your plans to pass wealth to your children, especially in the complex situations where remarriages occur and there are other competing interests in your property.

Change is a constant in life. A key player such as a named executor may be in failing health and no longer a viable solution in your estate plan. You may need to remove this person or add a contingent executor. If you have made significant structural changes to your finances, it will affect your estate plan. Some named inheritors may predecease you. It is essential to dial into the details with your attorney and accountant regularly with your documents and ensure they represent your most current situation and desires.

• A Will or Trust assumes that “fair” and “equal” are the same thing. Even if you have a simple estate plan, documents that divide your assets equally among heirs can have devastating consequences within a family system. If, for example, there are two adult children and one is involved in a family business, a parent may still want to divide the business asset fifty-fifty. On the face of it, this distribution seems equal however the child without involvement in the business will typically be pursuing their own professional goals leaving the family business interests protected solely by the family business involved inheritor.

Your estate planning attorney may suggest a buy-sell agreement allowing one child to take control of the business. The other child may receive a life insurance policy payout as compensation, creating an equal distribution of assets moving forward. This life insurance asset is generally tax-free to the beneficiary; therefore, the more independent child receives an asset without burdening the business’s financial and tax obligations. This decision may create a new imbalance; another life insurance policy can again equalize the asset value inherited by the child remaining in the family business. As the complexity of remaining equal increases, the services of a corporate attorney and an insurance specialist may become a requirement.

Other assets with changing value conditions like raw land, fine art, jewelry, and stocks, are factors to consider as the IRS will establish a value for your estate at the time of your death. Professional reappraisals of these assets, like estate document review, can help you keep your asset distribution as equal as possible under changing conditions.

Estate planning can be complex, and there is a constant potential for mistakes because of life changes, lack of coordination, and even oversights. Assembling the right group of professionals will get you to the estate plan you need for your legacy aspirations.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

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Evaluating Your Specific Situation

The first step is meeting with your special needs planning attorney to review your assets. They will set up a special needs trust, transfer ownership of assets to the trust, and make your child the beneficiary of those assets. Understand that beneficiary designation accounts (think IRAs, 401(k)s, life insurance) and joint tenancy accounts pass through your will and outside of the trust. Also, be aware that if your special needs child is a direct beneficiary of these types of investment accounts, the money passes directly to the child upon your death, not to the special needs trust. Your estate plan requires coordination of your will, trusts, and beneficiary designations to ensure they do not work against each other.

Besides a special needs trust, you may opt to name your “estate” as the beneficiary of life insurance proceeds if you have multiple children. In this manner, the proceeds can divide conveniently into however many portions you need with the caveat that the share for your child with special needs will pass directly to their trust. Essentially, the only downsides of naming your estate as a life insurance beneficiary are any unwanted public exposure during a probate process, and claims by your creditors.

Changes in Legislation

For inherited IRAs and other retirement plans, the SECURE Act of 2019 updated distribution rules for inherited IRAs et al. by eliminating the idea of stretch IRA (expectancy payout) for most beneficiaries. Note that if there was a special needs trust inherited IRA prior to 2019, it is grandfathered under the old stretch rules, and the SECURE Act does not apply. The RMDs will still be based on the IRS Uniform Life Expectancy Tables. Any inheritable retirement plan since 2019 falls under the regulations of the SECURE Act.

A notice of proposed regulations regarding the SECURE Act distribution rules was issued in February 2022 by the United States Treasury. These regulations change how practitioners may interpret distribution rules for inherited IRAs by eliminating life expectancy payout structures and implementing for most beneficiaries a ten-year rule. The clarification by the Treasury Department means an annual track of distributions for years one through nine using life expectancy, but upon the tenth year, the remaining balance must be distributed unless you are an eligible designated beneficiary (EDB).

Eligible Designated Beneficiaries (EDB)

For inherited IRAs and other retirement plans, the SECURE Act of 2019 updated distribution rules by eliminating the idea of stretch IRA (expectancy payout) for most beneficiaries. Note that if there was a special needs trust inherited IRA before 2019, it is grandfathered under the old stretch rules, and the SECURE Act does not apply. The Required Minimum Distributions (RMD)s will still be based on the IRS Uniform Life Expectancy Tables. Any inheritable retirement plan since 2019 falls under the regulations of the SECURE Act.

A notice of proposed regulations regarding the SECURE Act distribution rules was issued in February 2022 by the United States Treasury. These regulations change how practitioners may interpret distribution rules for inherited IRAs by eliminating life expectancy payout structures and implementing a ten-year rule for most beneficiaries. The clarification by the Treasury Department means an annual track of distributions for years one through nine using life expectancy, but by the tenth year, the remaining balance must be distributed unless you are an eligible designated beneficiary (EDB).

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

The post Designating a Special Needs Child as a Beneficiary of an IRA or Retirement Plan in a Trust appeared first on Seif & McNamee.

What is a CRAT?

A charitable remainder annuity trust (CRAT) is a legal arrangement in which an individual transfers assets, typically appreciated securities or real estate, into an irrevocable trust. The donor receives a fixed annuity payment each year, predetermined when the trust is established. This fixed annuity provides the donor with a stable income stream throughout their lifetime or for a specified number of years. Since a CRAT is an irrevocable trust, it can’t be changed once it’s created, and no additional contributions can be made.

Benefits of CRATs

One of the key benefits of a CRAT is the immediate charitable income tax deduction the donor receives at the time of the transfer. This deduction is based on the present value of the remainder interest that will ultimately pass to one or more chosen charitable organizations. By establishing a CRAT, individuals can reduce their current tax liability while supporting the causes they care about.

What is a CRUT?

A charitable remainder unitrust (CRUT) operates similarly to a CRAT but with a crucial distinction. Instead of receiving a fixed annuity payment, the donor receives a variable payment based on a fixed percentage of the trust’s assets. The value of the CRUT is reassessed annually, allowing the income stream to fluctuate with the performance of the trust’s investments.

Benefits of CRUTs

The flexibility of a CRUT can be particularly appealing to donors who anticipate the need for adjustments in their income stream over time. If the trust’s investments experience growth, the income payments will increase proportionally, ensuring the donor benefits from their philanthropic investment. Moreover, donors can make additional contributions to the CRUT during their lifetime, allowing them to further benefit from tax deductions and increase the ultimate charitable contribution.

Making a CRAT or CRUT Part of Your Estate Plan

Both CRATs and CRUTs allow you to support charitable causes while enjoying tax benefits and a stable income stream. Whether you choose a fixed annuity payment through a CRAT or a variable income stream through a CRUT, the ability to leave a meaningful legacy while achieving personal financial goals makes these charitable trusts attractive options.

Setting up and administering CRATs and CRUTs requires careful planning and the assistance of legal and financial professionals. Donors must comply with specific rules and regulations established by the Internal Revenue Service (IRS) to ensure the eligibility of the trust for tax benefits. Consulting with your estate planning attorney and financial advisor is essential to navigating the complexities associated with these agreements.

Contact our office at (740) 947-7277 today to learn more about your estate planning and wealth management options. We will help you achieve your estate planning goals and establish a meaningful legacy.

This article offers a summary of aspects of estate planning. It is not legal advice. It does not create an attorney-client relationship. For legal advice, you should contact an attorney.

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About half of US adults have gone without or delayed medical care in the last year due to a lack of affordability. Even with insurance benefits, many are still unable to afford the high cost. Approximately one-third of insured US adults are worried about being able to afford their monthly premiums. Additionally, 44% worry that they can’t afford their deductible. Health care costs are rising globally, but the US accounts for more than 40% of total global spending.

The Cost of Avoiding Treatment

Delaying or avoiding annual checkups or treatment for a seemingly minor illness may seem like an easy way to cut expenses. However, it may result in significant physical and financial costs later. For example, minor problems can become chronic illnesses as we age and eventually lead to the need for long-term care. This financial burden can carry over to other family members or result in losing a home or a lifetime of savings.

Complications from minor illnesses can easily be avoided with basic treatment. Otherwise, infections can worsen, potentially leading to hospitalization or other serious conditions.

Annual checkups and preventative care are the first line of defense against disease and provide early detection for better health-related outcomes. Routine cardiovascular exams and various cancer screenings save thousands of lives every year.

Preparing for Health Care Costs with Employee Savings Plans

It’s hard to predict the cost of doctor’s visits if you’re uninsured or have a high-deductible health insurance plan without copays. Health care bills are usually higher than anticipated, which creates financial strain and debt. Many people turn to family and friends to borrow money or deplete retirement accounts or home equity to pay medical bills. Unexpected accidents or illnesses can cause lasting financial damage.

One way to prevent medical debt is by contributing to a health savings account (HAS) or flexible spending account (FSA). A payroll deduction puts tax-free funds directly into your account to use for out-of-pocket medical expenses, including vision and dental needs. HSAs have annual contribution limits and are usually only available to those with high-deductible health insurance plans. FSAs may have a slightly lower annual contribution limit and a requirement to use the funds within that calendar year.

Creating Your Own Savings Plan

You can create your own savings account to use for medical and financial emergencies. Research different financial institutions to find the best interest rate. Then stretch your savings by comparing treatment prices on your insurance provider’s website or checking with customer service. You can also look at third-party sites like Clear Health Costs, FAIR Health, and Healthcare Bluebook for average costs.

Also, let your doctor know if you are having trouble affording your medications. They won’t offer low-cost options unless you tell them it’s a concern.

Many Americans avoid treatment regardless of income level and access to health insurance. Our elder law and estate planning attorneys help families plan ahead to avoid the financial devastation that can result from high health care costs in medical emergencies and the need for long-term care as they age. We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

The post The Cost of a Doctor’s Visit Is Out of Reach for Many Americans appeared first on Seif & McNamee.

What are the different forms of a Power of Attorney?

A “power of attorney” and “limited power of attorney” may manage your affairs until you are legally considered incapacitated or incompetent. The word “limited” narrows a power of attorney’s authority to transact business only to a specific property or with an agent’s limited access to funds. A “durable power of attorney” remains in effect until the principal revokes the document or upon their death. A “springing” durable power of attorney will not go into effect until a doctor certifies the principal incapacitated, allowing you to keep control over your affairs until you are unable. A “medical power of attorney” is always durable and permits healthcare decisions on behalf of the principal. The document includes sections similar to a living will, guiding the agent and doctors’ medical decisions to the principal’s wishes.

Like your will, durable power of attorney documents requires drafting according to the state laws you live in and some forethought of your selection of agents. Every state has laws governing the creation and use of valid power of attorney documents. Does your state abide by The Uniform Power of Attorney Act of 2006? This Act intends to standardize the approach, provide safeguards for the principal, and eliminate differences between state laws. As of 2019, twenty-six US states abide by The Uniform Power of Attorney Act. Residents of multiple states and snowbirds who routinely travel and transact business in other states may benefit from creating a valid durable power of attorney documents in both states.

Take note that if your spouse is your power of attorney, this designation does not automatically end when you finalize a divorce between you unless you live in these twelve states: Alabama, California, Colorado, Illinois, Indiana, Kansas, Minnesota, Missouri, Ohio, Pennsylvania, Texas, Washington, or Wisconsin.

What to Consider When Appointing a Power of Attorney

When appointing a power of attorney, the agent you select is a personal decision. There are things to consider, such as if your adult children are trustworthy and mature in handling finances and medical decisions on your behalf. Some adult children move away or lose touch and are not necessarily suitable candidates simply because they are your children. You may select a contemporary friend who becomes disabled themselves or pre-deceases you, so you must have a backup agent in the documentation. Always make the decisions regarding your power of attorney selection while you are in good mental and physical health.

What Role Does Your Financial Power of Attorney Play?

A financial power of attorney can have the authority to perform some or all of these tasks:

• Pay everyday expenses for you and your family with your assets
• Maintain, pay taxes on, sell, buy, and mortgage real estate and other property
• Collect government benefits including Medicare, Social Security, Disability, and more
• Invest your money in mutual funds, stocks, and bonds
• Transact with banks and other financial institutions
• Buy and sell annuities and insurance policies on your behalf
• File and pay your taxes
• Operate your small business
• Claim inheritance or other property to which you are entitled
• Transfer property to a trust you created
• Hire someone to represent you in court
• Manage your retirement accounts

There may be other actions necessary to perform; however, the above list constitutes significant duties. Your agent must act in your best interest, keeping accurate records and avoiding conflicts of interest.

What Role Does Your Medical Power of Attorney Play?

Your medical power of attorney is one type of healthcare directive that outlines your healthcare preferences if you are too ill or injured to do so. The agent you select must be trustworthy and mature in overseeing your medical care and healthcare decision-making. Your healthcare agent will coordinate with doctors and other healthcare providers, ensuring you receive the medical care you prefer. To make these preferences clear, you may choose to use the second type of healthcare directive known as a “living will” or “healthcare declaration.” In this document, you can make clear your healthcare preferences. In some states, medical power of attorney and healthcare declaration combine into one form known as an “advance health care directive.” With this information, your agent is legally bound to comply with your treatment preferences to ensure they are made aware in the documentation.

Choosing your agent well, appointing backup agents, and tailoring your documents to your needs and specifications can take away a lot of worry about your future care and well-being. Having valid power of attorney documents avoids guardianship issues, which are time-consuming, expensive, and limit freedoms. An elder law attorney can address any questions or concerns you may have about establishing power of attorney documents for your particular needs.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

The post An Overview of Power of Attorney Appointments appeared first on Seif & McNamee.

Early January of 2023, the Department of Health and Human Services (HHS) released a Medicaid federal policy guide covering key dates for the end of the continuous enrollment provision no longer linked to the end of the public health emergency. In fact, the expiration has already occurred. As of April 2023, states may terminate Medicaid coverage and request a beneficiary redetermination.

Previous Spike in Medicaid Enrollment

Medicaid enrollment increased substantially during the pandemic. Now that continuous enrollment is ending, millions of Americans are at risk of losing their existing Medicaid coverage. Medicaid disenrollments happen at the state level, but states must comply with the federal rules to conduct renewals. Each state’s process may vary slightly.

The Kaiser Family Foundation (KFF), a non-profit focusing on national health issues, estimates between 5.3 to 14.2 million people will lose Medicaid coverage. HHS estimates as many as 15 million people may be disenrolled, including 6.8 million who may remain eligible but need to re-enroll.

Those who temporarily lose Medicaid coverage and re-enroll quickly are called “churn.” Churn may account for those individuals who experience short-term changes in circumstances or income that temporarily render them ineligible or face barriers in maintaining coverage because of the redetermination process that the end of the continuous enrollment provision brings.

Eligibility Checks

The federal government required states to develop plans to resume routine operations during the unwinding of the continuous enrollment process. Each state has renewal priorities and estimates for the time needed to complete the redetermination process and apply updated standards to reduce inappropriate coverage loss.

Streamlining renewal processes can help the continuity of coverage under the Affordable Care Act (ACA). Medicaid agency services can check eligibility through available data sources like the state wage databases before sending renewal forms or document requests to an enrollee. These electronic data checks can verify ongoing eligibility. However, of the 42 participating states, only 11 report completing 50 percent or more redeterminations using this process. The renewal process will be lengthy and cumbersome for most beneficiaries.

Medicaid Redetermination Process

Individuals who don’t renew automatically must go through the Medicaid redetermination process to continue receiving coverage. Absent the FFCRA provision for ongoing enrollment, the process will return to its annual renewal basis to ensure individuals receiving Medicaid benefits are still eligible.

The Medicaid agency will request that beneficiaries provide updated income, assets, and household information. They may also require the beneficiary to provide documentation such as pay stubs, tax returns, and bank statements to verify eligibility.

If the agency determines a beneficiary is no longer eligible for Medicaid, they may send a notice of termination and allow the individual to appeal the decision. If the beneficiary disagrees with the appeal decision, they can request a fair hearing to have their case reviewed by an impartial hearing officer.

Medicaid beneficiaries must respond promptly to any request for information from the Medicaid agency and keep their contact information current to receive important notices about their eligibility for benefits.

An Elder Law Attorney Helps with Redetermination Approval

An elder law attorney with disability experience can help during the Medicaid redetermination process in several ways, including:

• Assisting a beneficiary in preparing and submitting the necessary documentation and information to the Medicaid agency to support their continued eligibility for benefits. Preparation may include obtaining medical records, documenting changes in income or household composition, and responding to additional requests for information from the Medicaid agency.
• Helping a beneficiary understand their rights and options if their Medicaid benefits are terminated or reduced due to the redetermination process. Options may include appealing the decision, requesting a fair hearing, and advocating for the beneficiary’s rights and interests throughout the process. The attorney may represent and speak for them at an agency hearing.
• Assisting a beneficiary in navigating the complex rules and regulations of the Medicaid program, including any changes in eligibility criteria or program requirements. These changes may impact their ability to receive benefits, particularly since the end of the ongoing provision prompted requirements to change. Keeping current with program rules and regulations and any changes is particularly important for individuals with disabilities or chronic health conditions who may require ongoing medical care and support.

The prediction for millions of individuals to lose their Medicaid coverage, some temporarily and others more permanently, as the system returns to pre-pandemic annual eligibility reviews may be a costly disruption for some. For others, losing Medicaid coverage may be catastrophic to their health.

Medicaid is a joint federal and state program, and while the federal government has general rules which all state Medicaid programs must follow, each state runs its program. All states can now terminate Medicaid coverage and request a beneficiary redetermination process putting many at risk.

Contact one of our elder law attorneys at (740) 947-7277 to represent you if you are a Medicaid beneficiary facing the redetermination process. We protect your rights and access to vital healthcare services needed to maintain health and wellbeing.

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