Irrevocable vs. Revocable Trusts – Is One Better than the Other? (Part 2)
Last week I explained that the initial reaction to irrevocable trusts vs. revocable ones is generally negative. People perceive there to be a loss of control or really a loss of the use of the funds transferred to irrevocable trusts. But, is that really true? No, it isn’t because irrevocability is not synonymous with loss of control. It all depends on the purpose and the terms of the trust. If, for example, I want to transfer assets out of my name in order to reduce the value of my estate for estate tax purposes and I have sufficient other assets so that I won’t ever need the assets transferred to the trust, then an irrevocable trust would be drafted to accomplish the tax benefit. I would never be able to get the assets back but that’s OK. My purpose is to get the tax benefit and I’m not worried about using the assets for my own personal needs. On the other hand, the clients for whom we set up irrevocable trusts for long term care planning very well may need to use the funds in those trusts. They hope they won’t need to but we just can’t be sure.
Irrevocable vs. Revocable Trusts – Is One Better than the Other? (Part 1)
When I talk about trusts – and specifically irrevocable ones – many people quickly reply that they don’t like irrevocable trusts because they don’t like the idea that they are losing control of their assets. They much prefer a revocable trust. Each type of trust has its uses but first, let’s look at what revocability actually means. A trust is established by a grantor, sometimes referred to as a trustor, by way of a written agreement. Revocability means the trust can be revoked by the grantor who can basically “tear up” the trust agreement and take all the assets back. Revocability also means the trust can be amended by the grantor (ie. the terms of the trust can be changed). Revocable trusts are typically used to avoid probate. Assets held in the trust are not subject to state probate proceedings, making for immediate unrestricted access to the trust assets when the grantor dies. Revocable trusts also may be created to minimize or in some cases avoid estate taxes by creating other trusts into which assets pour over after the grantor’s death. Revocable trusts, however, do not protect assets from the cost of long term care, which is a primary
Assisted Living Medicaid Isn’t Necessarily Forever (Part 2)
Last week I was telling you about Joe’s dad. He had qualified for Medicaid in an assisted living facility (ALF) and been assigned one of the facility’s 10% of its beds that are set aside for Medicaid residents. Everything was fine until he fell and broke his hip. When the hospital was ready to discharge him, the ALF said they couldn’t take him back. The reason is because dad needed a hoyer lift to move him. A hoyer lift allows a person to be lifted and transferred with a minimum of physical exertion. The ALF told Joe that it was not equipped with a hoyer lift. He offered to purchase one but the facility said they couldn’t accept that. Joe’s situation highlights the potential problem with ALF Medicaid. Because an ALF is not a nursing home - meaning it isn’t licensed to provide nursing home level care – there are instances where a resident’s health is such that the ALF cannot care for that resident, despite the fact that he/she qualified for Medicaid. In other words, being approved for Medicaid is not a guarantee that every resident can stay for the rest of his/her life. That will depend in
Assisted Living Medicaid Isn’t Necessarily Forever – Part 1
Dad is in an assisted living facility (ALF) and is close to running out of money. I would like him to stay in that facility rather than moving him to a nursing home. In the past I have discussed the hurdles of getting assisted living Medicaid, which is different than nursing home Medicaid in many respects. ALFs have to make 10% of their beds available for New Jersey Medicaid if they agree to become a “Medicaid facility”. Most ALFs limit their Medicaid beds to that 10% number so even if you are approved by New Jersey’s Medicaid office you might end up on the ALFs waiting list until a bed opens up and may have to continue to private pay. I have also talked in the past about the need to medically qualify as needing nursing home level care. Not all ALF residents meet that test so a Medicaid application can fail even though the financial requirements have been met. Joe’s recent call highlights another important issue with assisted living Medicaid. Joe had gotten past the hurdles I just mentioned. His dad had spent down his assets and had applied for and was now receiving Medicaid. Everything was fine
Trumpcare – What Doe it Mean for Long Term Care? (Part 2)
Last week I was discussing the impact that the Republican party’s health care bill, dubbed by some “Trumpcare”, might have on long term care. As of Friday it appears that the American Health Care Act is dead and Obamacare, at least for now, is still with us. Nevertheless, let’s take a look at how this bill or any new bill proposed by Congress might impact Medicaid. My point in last week’s post is that the proposed healthcare bill did not appear to have a direct impact on Medicaid’s long term care coverage. By that, I mean to say that it did not contain any changes to the existing Medicaid laws that relate to long term care. There isn’t anything in the proposed law, for example, that would extend the Medicaid lookback beyond the current 5 years. The law meant to address health care coverage, not long term care coverage. That does not mean, however, that long term care coverage under Medicaid wouldn’t be affected at all. Trumpcare included ending Medicaid expansion under Obamacare and cuts to Medicaid funding so that a set amount would be allotted to the states by the federal government for their Medicaid programs. Medicaid is
Trumpcare – What Does It Mean for Long Term Care?
As is a majority of the country, I am watching with great interest the development of President Trump and the Republican party’s proposal to repeal and replace Obamacare. As an eldercare attorney focused on helping families figure out how to pay for long term care, someone asked me the other day how would the new Republican health care bill (the American Health Care Act or not surprisingly being nicknamed “Trumpcare”) would affect Medicaid coverage for long term care. While it is too early to say for certain since the details of the proposed bill were only made public a few weeks ago, the speed with which Republicans will attempt to get the law passed is troubling. As with any bill, changes are often introduced during the process of gaining the votes necessary to get it passed, although Republican party leaders say they intend to get the new law passed in about 4 weeks. Who knows what those changes might look like? Nevertheless, we can certainly consider the details that have been announced so far and project how things might play out. My initial response to the question of how it would impact long term care is similar to my