Zaremba Center for Estate Planning & Elder Law

Tweats to the ABLE Act Could Make It Even Better

There are currently bicameral bills (S. 2702/HR 4795) in consideration by both houses of Congress known as the Able to Work Act that would make real improvements to the Achieving a Better Life Experience Act (ABLE)

With an ABLE account, contributions were limited to $14,000 per year which could still spell trouble for any disabled working individual trying to maintain their eligibility for means based programs.  Enter the bicameral legislature being considered known as the ABLE to Work Act that would allow the disabled individual to also contribute up to the federal poverty level – currently, $11,770, that's above and beyond their ability to contribution the existing cap.  This would nearly double ($14,000 + $11,770) their savings amount. Keep in mind that an ABLE account balance cannot exceed $100,000.

Add to this legislation, the ABLE Financial Planning Act which would, if passed, allow families to roll funds from a traditional 529 saving plan into an ABLE account.  What is not clear to me is if the account had to first be established in the disabled child’s name or if it could be unused funds from another child’s 529 plan.

The reason I believe these two pieces of legislation –especially the ABLE to Work Act is so important is that those of us who have been advocating for the disabled have long wanted laws to reflect the disabled person’s desire to have meaningful employment without jeopardizes their eligibility for programs most average salaries could not possibly replaced.

Add to these two pieces of legislation the fact that the Special Needs Trust Fairness and Medicaid Improvement Act  was signed by the President (see my blog about the details of this Act entitled “ABLE Accounts Offer a Savings Strategy for Kids with Special Needs” dated February 16, 2015) and it is shaping up to be a great year for those with special needs and their loved one.

We help the disabled and their families with special needs planning strategies all the time.  Why not call to request your complimentary consultation at 757.259.0707 or request a consultation by clicking this link.

Reference: Disability Scoop (September 27, 2016) “Congress Eyes Changes To ABLE Act, Special Needs Trusts”

 

Medicaid: A Healthcare Safety Net?

Seniors need a strategy for paying for long-term care, should the need arise. In some instances, some individuals may have no option but to rely on Medicaid if they don't have enough income to purchase long-term care insurance, the assets to pay for care themselves or they cannot qualify for the insurance.

A recent article in The Victoria (TX) Advocate, titled “How does Medicaid factor into financial planning?”, recommends that the best plan to meet your long term care obligations is what it has always been: obtain a long-term care insurance policy if you can pay for it over the long term and are insurable.  What if neither apply in your case?

Medicaid planning can be as a viable tool for long-term planning in the absence of any alternative.  However, with the advent of new financial products and plans today’s baby boomer may find that there is a long-term care insurance policy that will work better and likely will have many more care options.  After all, Medicaid "planning" is actually a misnomer as most seniors don’t plan to go on Medicaid, but rather experience an urgent care need, and there aren't any other options.

To qualify for Medicaid in Virginia, a senior must have less than $2,000 in countable assets with monthly income that is less than the cost of care. Even if a senior is considered well off when he or she retires, medical and long-term care costs can literally wipe them out financially which means Medicaid would become an option.

One potential pitfall of depending on Medicaid for long-term care is that federal law requires states to look for recovery of Medicaid benefits. The state will put in a claim against any assets that pass through probate upon the death of the recipient. This will include assets not counted during eligibility, such as the senior’s home that was listed for sale during their lifetime and therefore was not a ‘countable’ until their death.

Because estate and lifetime planning can be overwhelming and wrought with pitfalls, the article advises seniors to enlist the help of an estate planning attorney and, more particularly, an elder law attorney to evaluate all options available.

You can learn more about this topic as well as other strategies on our website under the tab entitled: elder law planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.

Reference: The Victoria (TX) Advocate (February 13, 2015) “How does Medicaid factor into financial planning?”

 

Advice for Adult Caregiving

Adult children who become caregivers often pay a steep price. According to a 2011 MetLife study, women older than 50 who leave the workforce early to fulfill this role forfeit about $324,000 in wages, Social Security payments and retirement benefits. However, with some smart strategies, you can avoid sabotaging your financial future.  

Look into potential tax breaks. As noted in a recent article in Oprah Magazine, titled “Sanity-Saving Secrets For Caring For Your Aging Parents,” an elderly parent may be claimed as a dependent if their annual income is less than $3,900 and you provide more than 50% of their financial support. Their medical expenses may also be deductible. 

If you’re a full-time caregiver, don't use your 401(k) or IRA for living expenses.  There’s a 10 % penalty for an early withdrawal. The original article also advises to do whatever you can to keep your day job, even on a modified schedule. If your employer isn't helpful, you may be eligible for up to 12 weeks of unpaid time off through the Family and Medical Leave Act, allowing you time to make other arrangements. 

If you have to quit work or go part-time, talk to your siblings and other family members about reimbursement for your services.   Once you have analyzed what you stand to lose in lost wages, then negotiating a salary needs to be a top priority. At a minimum, you should have enough for basic expenses, including housing, food, insurance, and IRA contributions. If your parents are footing these bills, speak with a qualified and experienced elder care attorney to make sure you're not jeopardizing your parents’ Medicaid eligibility. Ask for a salary that offers you financial stability and peace of mind, both of which are critical for every caregiver.   Naturally, you should not approach this important responsibility without consulting an experienced elder law attorney. 

You can learn more about this topic as well as other strategies on our website under the tab entitled: elder law planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning. 

Reference: The Oprah Magazine (December 19, 2014) “Sanity-Saving Secrets For Caring For Your Aging Parents”

 

 

Estate Planning 101 in Virginia

If you don't have a will, you're probably thinking, “my situation is pretty straight forward.” So how basic does your situation have to be in order to not need a will? If you truly have no heirs and no worldly possessions, then you get a pass – but otherwise, you should probably have one.

A recent Forbes article titled "Do I Really Need a Will?" recommends that you should have a will to at least designate an executor or executrix to administer your estate. This individual will be responsible for taking care of your affairs after you pass away. Without a will, the probate court will appoint an administrator—this could end up being almost anyone. Anyone with a decent reason has the ability to petition the court to be appointed—like your cousin Reggie (who you last saw at your fourth birthday party) or your Uncle Ted (who is always dressed like it is 40 below, even in July).

Why even tempt Reggie and Uncle Ted? Name the person you want in your will. The executor or court-appointed administrator will identify and gather your estate assets, pay off any outstanding debts or taxes owed by you, and distribute the remaining assets to those designated as beneficiaries.

If you do not have a will when you pass away, the probate court in your state of residence will decide who gets the assets in your estate through its intestacy laws. Typically the assets generally pass to the immediate family first (spouse, children or parents). However, if you are single with no children or surviving parents, the state will distribute your assets to your remaining relatives. For example, this list ordinarily includes siblings and their children; then any grandparents, aunts, uncles and their children and grandchildren. If you have none of the above, then your estate may pass (“escheat”) to your State or Commonwealth.  So you see that Reggie and Uncle Ted still could get in there for some of your money, if you fail to draft a will with your estate planning attorney.

You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.

Reference:  Forbes (August 19, 2014) "Do I Really Need a Will?"