North Carolina Estate Planning Blog : North Carolina Estate Planning Lawyer & Attorney : Trust Counsel, PA : Trust Administration : Serving Chapel Hill, Durham, Raleigh, Pittsboro, Orange County, Chatham County

One of the shortfalls of Medicaid for long-term care is that it provides financial assistance primarily for nursing homes, and I don’t need to tell you that most people prefer not to have to go into a nursing home. While Medicaid does cover some community-based in-home assistance, there are such long waiting lists that it is not a viable option for the older population. North Carolina offers a program called Special Assistance that provides financial assistance for assisted living facilities, but the program has an income cap that falls well-short of the cost of assisted living facilities, meaning that many people make too much income (even from a single Social Security check sometimes) to qualify for the assistance, yet cannot afford the private pay rate of an assisted living facility.

All this is to say that if someone needs help with some daily activities such as preparing meals, driving to the doctor, dressing or bathing, but does not have a family caregiver or the financial resources to get the level of care they need to stay at home or in an assisted living facility (or run out of money while paying for it), that may mean that Medicaid and a nursing home is the only remaining option.

The sad part about this is that the in-home care services needed to remain in the home often cost less than the nursing home. Some provisions in the federal health care reform seek to remedy this. Regardless of how you view the health care reform overall, these provisions are positive changes – they benefit both the recipients and the taxpayers. If more people who would have had to go into a nursing home and rely on Medicaid are able to stay in their home, and keeping them in their home costs taxpayers less than paying their way in a nursing home, that’s a win-win situation.

For an article summarizing the provisions in the Affordable Care Act that will address long-term care: http://www.familiesusa.org/assets/pdfs/health-reform/in-perspective/In-Perspective-Long-Term-Care.pdf

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 Wills Must Keep Up With Life Changes

 
A will is an essential part of planning for the future. But don't think creating a will is a one-time proposition. Even if you have a valid document, it may need to be updated for a variety of reasons. For example (this also applies to living trusts):

1. Deaths - If individuals named (as beneficiaries or executors) have died or they become incapacitated, a will should be changed.

2. Assets - Revisions may be needed if the value of assets has increased or decreased significantly, or they are no longer owned. For example, if you specifically leave your home to one of your children, and later sell it, you may want to change the distribution of your other assets.

3. Marriage - Wedding bells usually signal the need to review a will. Which assets should pass to your spouse? Are step-children involved? If this is not spelled out in a will, the state will decide. In a community property state, a spouse automatically inherits half of all community property. In most other states, such as North Carolina, a spouse may receive one‑third to one‑half of the estate, absent any other directions.

Where Is It?  Before it's too late, people should let someone know where their original will is stored. If one can't be found after a person dies, a court may decide it was destroyed. It's a good idea to keep a copy in a safe deposit box, but don't put the original there without checking state law. Some states require that safe deposit boxes be sealed after the renter dies.  In North Carolina it's relatively easy to access the safe deposit box.     Other options include: Store an original will in the office of the county Clerk of the Superior Court. (It is retrieved if the person moves.) Have your attorney retain the original will. Ask them what will happen to the document if they die, move, or quit practicing. Store the will at home. Of course, it could be lost, destroyed or discovered by an interested party who could deliberately destroy, conceal, or alter it.

Also, keep in mind that an unmarried couple living together may want to leave assets to each other but in order to make an inheritance happen, it must generally be spelled out in a will.

4. Divorce - In many states, a divorce automatically revokes a will or those provisions concerning an ex‑spouse. As a result, if you get divorced, it's best to have a new will drafted. For instance, you might have your former spouse removed as a primary beneficiary. In addition, you may want to change the beneficiary of your life insurance, pension or any existing IRAs. Consider the use of a trust if children from a previous marriage are involved.

You may also want to change your will if one of your children gets divorced.

5. Births - Once parents have children, their wills should be amended immediately to include the names of guardians to care for the children in the event the parents die prematurely. Also, parents or grandparents might wish to restructure their wills concerning distribution of assets after children are born. Again, the use of a trust may be recommended.

6. Retirement - This event may also trigger the need to make changes to an existing will. For example, many retirees sell their homes and move to other states. But state laws can vary widely. Furthermore, individuals should consider a power of attorney that enables someone else to act on their behalf in the event of incapacity.

7. Tax law revisions - The Internal Revenue Code is regularly changed. In fact, many aspects of estate tax planning are in flux right now. A will should be designed to take advantage of maximum tax benefits that exist today so it may have to be updated as tax laws change.

You don't have to tackle this problem on your own. If you need to update a will or living trust, rely on your estate planning attorney to guide you.  And don't delay - the financial and other consequences for failing to act could be significant.

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The stress of moving into a nursing home is great -- and it's compounded by the loss of freedom, dignity and privacy.

Adding to the anxiety is the fact that people moving to an elder care facility often have no choice. They may no longer be able to care for themselves without risking injury.

Family members should become advocates and observe their loved one's care and living conditions. Concerns should be discussed with the staff. And be aware that federal laws and various state laws provide nursing home residents with specific rights. For example, under the Nursing Home Reform Act, (OBRA '87) a number of protections are present, including:

Privacy and Confidentiality:

Residents can keep and use personal belongings and property as long as the items don't interfere with the rights, health, or safety of others.

The Right Choice Living in a nursing home will probably never be the same as living in a personal home. But the burden can be eased by choosing a facility that treats residents with respect and follows the law. For more information about what to look for, click here to read our previous article, "The Business of Care Giving."

Married couples can share a room if both spouses reside in the same facility.

Confidential medical and personal records must be made available. Residents have the right to review their medical records within 24 hours of making a request, and staff members must ask permission to release personal records to others.

Residents are allowed privacy in their rooms and during medical treatments. Privacy should also be available during telephone calls, visits and meetings with other residents. Mail should be received unopened. Residents have the right to see family members, a resident advocate, a physician, service providers, or representatives of the state or federal government.

Residents can plan their own daily activities, wear their own clothes, and participate in social, religious, and community activities that do not interfere with the rights of other residents.

Medical Care:

Medications and treatments can be refused. Residents have the right to see their own doctors and must be informed about their conditions and medications.

Equal access to quality care must be provided, regardless of whether residents pay privately or receive Medicare or Medicaid benefits.

Financial:

Residents can ask a nursing home to handle personal funds, but the facility must follow state and federal recordkeeping requirements. However, residents also have the right to manage their own finances unless a guardian or conservator has been appointed.

Relocation:

Notice must be received before a resident's room or roommate is changed.

Residents can refuse transfer to another room if the purpose is to move from a Medicare bed to a Medicaid bed, or vice versa. When it comes to a discharge or move for other reasons, such action must be necessary for the person's welfare; required to protect other residents; or appropriate because care is no longer needed. A move or discharge can also be made because a resident failed to pay bills or the facility is closing.

Abuse:

Residents must be protected from physical and mental abuse, neglect, mistreatment and misappropriation of their property. They must be allowed to stay with other residents and remain free from physical or chemical restraints except in emergencies.

Grievances:

Complaints about care or treatment must be allowed without punishment.

Residents must be informed about their rights. The facility must provide a written statement of rights if asked. The facility must investigate all claims of violations and report the results of the investigation to authorities if warranted. There must be a quick resolution of grievances.

North Carolina has Bills of Rights for Nursing Home Residents as well as Residents of Adult Care Homes.

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The results of the recent midterm elections may not bring about speedy estate tax repeal or reform.  To see why, check out this Forbes.com article Results of Midterm Elections Do Not Bring Certainty to the Federal Estate Tax.

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One way each of us can thank the veterans in our lives is to make sure they are aware of the benefits that they have earned as a result of their service to our country. Many, if not most, veterans do not know that they have earned a very important benefit that helps veterans and their spouses pay for in-home health care, assisted living care, or nursing home care. The benefits are known as “Housebound” and “Aid and Attendance” benefits.

Millions of veterans are eligible for the benefit, yet millions of veterans are failing to take advantage of this benefit. There are 2.3 million World War II veterans, 2.6 million Korean War Veterans and 7.7 million Vietnam veterans living in this country. Approximately 9.3 million veterans are 65 and older, and 6 million veterans have a disability. Yet only 105,000 veterans were using this benefit last year.

Why are so many veterans not taking advantage of this benefit?

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Below is text of IR-2010-108 (emphasis added):

IRS Announces Pension Plan Limitations for 2011 

WASHINGTON — The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2011. In general, these limits will either remain unchanged, or the inflation adjustments for 2011 will be small. Highlights include:

• The elective deferral (contribution) limit for employees who participate in section 401(k), 403(b), or 457(b) plans, and the federal government’s Thrift Savings Plan remains unchanged at $16,500.
• The catch-up contribution limit under those plans for those aged 50 and over remains unchanged at $5,500.
• The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are active participants in  an employer-sponsored retirement plan and have modified adjusted gross incomes (AGI) between $56,000 and $66,000, unchanged from 2010. For married couples filing jointly, in which the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan, the income phase-out range is $90,000 to $110,000, up from $89,000 to $109,000. For an IRA contributor who is not an active participant in an employer-sponsored retirement plan and is married to someone who is an active participant, the deduction is phased out if the couple’s income is between $169,000 and $179,000, up from $167,000 and $177,000.
• The AGI phase-out range for taxpayers making contributions to a Roth IRA is $169,000 to 179,000 for married couples filing jointly, up from $167,000 to $177,000 in 2010. For singles and heads of household, the income phase-out range is $107,000 to $122,000, up from $105,000 to $120,000. For a married individual filing a separate return who is an active participant in an employer-sponsored retirement plan, the phase-out range remains $0 to $10,000.
• The AGI limit for the saver’s credit (also known as the retirement savings contributions credit) for low-and moderate-income workers is $56,500 for married couples filing jointly, up from $55,500 in 2010; $42,375 for heads of household, up from $41,625; and $28,250 for married individuals filing separately and for singles, up from $27,750.

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Today I was alerted to the existence of a draft of the IRS from that will be required to be filed for estates of decedents dying in 2010 with estates in excess of $1.3 million.  IRS Form 8939 - Allocation of Increase in Basis for Property Received from a Decedent.  The due date is April 15, 2011.

This form is necessitated by the Modified Carryover Basis rules that replaced the estate tax for 2010.  Each decedent's estate gets $1.3 million worth of basis to allocate to appreciated assets, with an additional $3 million for assets going to a surviving spouse.  IRC Section 1022.  The allocated basis will effectively eliminate capital gains tax liability for assets sold soon after death.

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The Orange County Dispute Settlement Center, located here in Chapel Hill, is now offering specialized mediation dealing with elder care matters.  While the services of an elder law attorney and/or geriatric care manager are also advisable in most cases, mediation can help families deal with some of the disputes that may arise around elder care issues.  From today's Dispute Settlement Center newsletter:

We hear a lot these days about families dealing with care for aging relatives.

Aging is a transition that poses emotional, legal and financial challenges for families. Being able to talk about the issues can be tough. Avoiding decisions can be costly. Having high conflict conversations that don't end well can hurt family relationships for a long time.

Examples of eldercare issues:

• How will we plan for our family member's future housing and care?
• Can we get past this lingering dispute over inheritance?
• How do we divide the duties of care for our aging relatives?
• How can we communicate with each other better?

We can help. Experienced mediators can assist you and your family members in having the conversations you need to have.

Elder mediation is:

• Confidential;
• Overseen by a trained neutral; and
• Affordable.

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On October 30, 2010, there was a brief piece in the Durham Herald-Sun reporting that U.S. Representative Cynthia Lummis (R-WY) said that some of her constituents are so worried about the reinstatement of the federal estate tax that they plan to discontinue dialysis and other life-extending medical treatments so they can die before the end of the year.

Lummis, the sole Wyoming representative to the U.S. House, declined to name the residents who made the comments. 

I personally find it hard to believe that someone would chose to die just to save taxes.  But, it what Lummis says is true, that would make a great political commercial for Republicans - elderly farmers and ranchers saying that since Democrats are getting in the way of estate tax reform, they are going to pull their own plugs to save taxes for their children.

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