Blog - Elder Law

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Our Comprehensive Guide to Estate Planning: Key Components, Tools, and Strategies

Our Comprehensive Guide to Estate Planning: Key Components, Tools, and Strategies

Estate planning is crucial for organizing the distribution of our assets and ensuring our financial affairs are in order. It involves making decisions about inheritance, managing property, and preparing for potential incapacity. Estate plans provide peace of mind by outlining clear instructions for the distribution of assets and can help avoid conflicts among family members after an individual's passing. Understanding the laws and titles involved is essential to ensure that our wishes are carried out as intended. By taking proactive steps in estate planning, we can secure our family's future and bring clarity to a potentially complex event.

Understanding Estate Planning and Its Purpose

Comprehensive Approach

Estate planning is a comprehensive approach to managing our assets during our lifetime and after death. It involves creating legal documents that outline how we want our assets to be distributed and who will make decisions on our behalf.

Estate planning allows us to have control over what happens to our assets, and ensures they are managed according to our wishes even if we become incapacitated or after we pass away.

Protecting Loved Ones and Peace of Mind

Estate planning aims to protect our loved ones and ensure our peace of mind. By creating a clear plan for the distribution of assets, we can prevent disputes among family members and ensure that those we care about are provided for in the way we intend. For example, we can include provisions for minor children or individuals with special needs by offering them financial security and guardianship arrangements if necessary. An estate plan can also help protect children from misspending their inheritance, help protect it from being subject to creditors, or help protect it from future ex-spouses.

By clearly outlining the distribution of assets in advance through estate planning, we can minimize potential conflicts among family members after we are gone. This not only provides peace of mind during our lifetime but also ensures harmony among our heirs.

Minimizing Taxes

A significant benefit of estate planning is minimizing taxes and costs associated with asset transfer. Through proper estate planning, we can take advantage of strategies that help reduce tax liabilities on inherited assets. By doing so, more wealth can be passed on to our loved ones instead of being diminished by hefty tax bills.

Moreover, effective estate planning allows us to address potential expenses related to probate court proceedings and other legal formalities after death. This means there will be fewer financial burdens on those who inherit from us since unnecessary costs have been minimized through careful planning. For example, we can opt for a pre-paid funeral or make charitable donations to reduce our estate’s tax burden and costs.

Key Components of an Effective Estate Plan

The Importance of a Will

Having a will is crucial. This legal document ensures that our assets are distributed according to our wishes after we pass away. For example, if I want my vintage record collection to go to my niece and my savings to be split equally between my siblings, I need a will in place.

A will also allows us to name an executor who will carry out these instructions and settle any outstanding debts or liabilities with our estate. By clearly outlining everything from beneficiaries to specific items or amounts, we can prevent potential disputes among family members and creditors. This expedites the probate process. 

Often, people assume a will prevents probate. It does not. Instead, a will is a guide for the probate court on how you wish your assets to be distributed after you are gone. A trust is the primary tool for avoiding probate.

Utilizing Trusts

In addition to wills, trusts are another essential tool in effective estate planning. They offer various benefits such as managing and protecting assets during our lifetime and ensuring their smooth transfer upon death. By setting up trusts, we can control how and when our assets are distributed while potentially minimizing estate taxes. 

For instance, if we have minor children or individuals with special needs who require ongoing financial support, establishing a trust can ensure that they receive the necessary care and resources even after we are gone. Moreover, trusts provide privacy since they do not go through probate court proceedings like wills do.

Powers of Attorney and Advance Healthcare Directives

Apart from wills and trusts, powers of attorney play a vital role in estate planning. These legal documents enable someone we trust to make financial or healthcare decisions on our behalf if we become incapacitated due to illness or injury. 

A durable power of attorney allows us to appoint an agent who will manage our financial affairs if we become incapacitated. It's comforting to know that someone we trust will handle bill payments, investments, or property transactions if we're unable to do so ourselves.

Likewise, a healthcare power of attorney is vital as it designates someone to make medical decisions on our behalf if we're unable to communicate our wishes due to illness or injury. This ensures that medical treatments align with what we would have wanted while providing peace of mind during challenging times.

Naming Beneficiaries for Retirement Accounts and Life Insurance Policies

Another critical aspect of estate planning involves naming beneficiaries for retirement accounts and life insurance policies. Doing so ensures that these assets bypass probate court and directly pass on to the designated individuals or entities upon our passing. This simple step can save time and money while ensuring that our loved ones receive the intended inheritance promptly.

Common Estate Planning Tools and Strategies

Revocable Living Trusts

A revocable living trust is a popular estate planning tool that allows for the management and distribution of assets while avoiding probate. This means that our loved ones can access these assets without having to go through the lengthy and costly probate process. With a revocable living trust, we can also make changes or revoke it if our circumstances change throughout our lifetime, providing flexibility.

For example, let's say we own multiple properties in different states. By placing these properties into a revocable living trust, we can streamline the transfer of ownership to our heirs without the need for separate probate proceedings in each state. This saves time and money for our beneficiaries.

Another benefit is privacy. Unlike wills, which become public record after going through probate, trusts provide confidentiality as they are not subject to public scrutiny.

Gifting Strategies

Gifting strategies can help reduce the size of an estate for tax purposes. By gifting assets during our lifetime, we can lower the overall value of our estate that may be subject to estate taxes upon our passing. For instance, giving monetary gifts or transferring property to family members now reduces the taxable value of what remains in our estate later on.

However, it is crucial to consider potential gift tax implications when employing gifting strategies. The IRS has annual gift tax exclusion limits that should be considered when making substantial gifts.

Life Insurance

Life insurance is another essential component of estate planning. It provides liquidity to cover estate taxes or provide for loved ones after death. In this way, life insurance ensures that there are funds available to settle any outstanding debts and expenses without requiring liquidation of other assets intended for inheritance by beneficiaries. Moreover, life insurance proceeds generally pass outside of probate directly to named beneficiaries promptly after death.

Providing for Loved Ones with Special Needs

Trusts not only safeguard assets but also ensure that our loved ones with special needs are taken care of even after we are gone. For instance, establishing a special needs trust for a family member with disabilities can provide ongoing financial support for them without affecting their eligibility for government assistance. Our firm is uniquely qualified to assist families and individuals with these types of trusts.

Overcoming Misconceptions and Getting Started with Your Estate Plan

Importance for Everyone

Estate planning is not just for the wealthy. Many people mistakenly believe this, but it is crucial for individuals of all income levels. Organizing our affairs and ensuring that our wishes are carried out in the event of incapacity or death is not exclusive to any one economic status.

It is also important to understand that estate planning is an ongoing process, not something we do once and forget about. As life changes, so should our estate plan. This means regularly reviewing and updating documents to reflect any major life events such as marriage, divorce, births, deaths, or significant changes in financial status.

Taking Action Early

Procrastination often prevents us from getting started with estate planning. We might think we're too young or don't have enough assets to worry about it yet. However, starting early allows us to make decisions without feeling rushed or pressured by unexpected circumstances.

Partnering with an experienced estate planning attorney can also alleviate some of the stress associated with this process. They can guide us through the necessary steps and help tailor a plan specific to our needs while addressing any questions or concerns along the way.


Estate planning is crucial for securing our financial legacies and ensuring that our loved ones are taken care of according to our wishes. Proactive planning offers peace of mind and safeguards for our family's future.

With this in mind, we should take steps to initiate or review our estate plans. Seeking professional guidance and leveraging the insights shared can help us navigate the complexities of estate planning with confidence.

Frequently Asked Questions

What is Estate Planning?

Estate planning involves making arrangements for the management and distribution of your assets after your death. It typically includes wills, trusts, powers of attorney, and other legal documents to ensure that your wishes are carried out.

Why is Estate Planning Important?

Estate planning allows you to specify how you want your assets distributed and who should manage them if you become incapacitated. It can also minimize taxes and legal fees, provide for loved ones, and support charitable causes.

Which Documents are Essential for an Estate Plan?

Key documents include a will, power of attorney for finances, advance healthcare directive (living will), and possibly a trust. These documents outline how you want decisions made on your behalf if you're unable to make them yourself.

How Do Trusts and Powers of Attorney Factor into Estate Planning?

Trusts allow you to transfer assets to beneficiaries without going through probate court while maintaining control over the assets until certain conditions are met. Powers of attorney designate someone to make financial or medical decisions on your behalf if necessary.

When Should I Start Estate Planning?

It's never too early to start estate planning. Life is unpredictable, so it's best to have a plan in place as soon as possible. Reviewing and updating your estate plan regularly ensures that it aligns with changes in laws or personal circumstances.

How Often Should I Review My Estate Plan?

You should review your estate plan at least every three years or whenever there is a change in your family (including the quality of relationships), a change in what you own, or a change in the law.

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How Does the Medicaid Look-Back Period Work?

Navigating the complexities of Medicaid can be daunting, especially when considering the "Medicaid look-back period." This crucial aspect involves reviewing an individual's financial transactions to determine eligibility for long-term care benefits. Understanding how this period works is essential for proper planning and compliance.

Defining the Look-Back Period

What is it?

The Medicaid look-back period refers to a specific timeframe that Medicaid examines for any asset transfers made by an individual seeking long-term care coverage. This period helps determine if any assets were transferred below fair market value. 

During this time, Medicaid scrutinizes all financial transactions to prevent individuals from transferring assets to fraudulently qualify for benefits. 

Purpose of a Look-Back Period in Determining Medicaid Eligibility

The primary aim of the look-back period is to ensure that individuals do not give away their assets just before applying for long-term care benefits. By doing so, they may artificially lower their asset levels to meet eligibility requirements.

This scrutiny discourages improper asset transfers and maintains the integrity of the Medicaid program, ensuring that benefits are allocated fairly and only to those who genuinely need them. This is not to be confused with a spend-down plan, where an individual can pay bills, or purchase exempt resources which helps them meet financial eligibility requirements.

Duration Overview

Typically, the look-back period for Medicaid spans sixty (60) months, or five years, preceding the date of application. Any transfer of assets during this duration is carefully evaluated. If improper transfers are identified, penalties such as a waiting period for benefits may be imposed.

Understanding Look-Back Penalties

Calculating Penalties

Medicaid look-back penalties are determined by dividing the total value of transferred assets by the penalty divisor.

The penalty divisor is calculated based on the average private pay rate for a nursing home in a specific state. In Michigan, the state typically publishes these numbers twice a year, in January and July.

Transfers made during the look-back period that exceed Medicaid's asset limits trigger these penalties.

Financial Implications

Look-back penalties can result in individuals being ineligible for Medicaid coverage for a certain period, delaying their access to crucial healthcare services.

Individuals may have to cover long-term care costs out of pocket until the penalty period ends, leading to significant financial strain.

Assets transferred within the look-back period can impact an individual's eligibility for Medicaid benefits, affecting their overall financial stability.

Impact of Gifts and Transfers

Gifts or transfers made during the look-back period can lead to penalties if they exceed Medicaid's asset limits.

These transfers are scrutinized to prevent individuals from artificially impoverishing themselves to qualify for Medicaid benefits quickly.

It is essential for individuals to carefully consider any gifts or transfers they make within the look-back period due to potential repercussions on their Medicaid eligibility and finances.

The penalty period, or months of ineligibility for Medicaid benefits, does not start to run until 1) the individual is in a skilled nursing facility and 2) they meet the Medicaid eligibility criteria. In short, the individual is in a nursing home and has no money but has to somehow privately pay for their care during the penalty period. The impact of improper gifting can be severe.

Exceptions to the Rule

Exempt Assets

Certain assets are exempt from the Medicaid look-back period, allowing individuals to qualify for benefits while owning these assets. These include a primary residence, personal belongings, a prepaid funeral contract, and one vehicle. A properly drafted special needs trust and ABLE account are also exempt resources.

Medicaid does not take these exempt assets into consideration when determining eligibility during the look-back period. For instance, if an individual has been residing in their primary home or using a single vehicle regularly, these assets are typically not subject to review.

Family Member Situations

In some cases, transfers of assets between family members may be exempt from the Medicaid look-back period. For example, if a property transfer occurs between siblings with shared ownership rights without exchange of funds, it might not violate Medicaid rules.

Family members who provide care for an elderly individual and receive compensation through asset transfers may also fall under certain exemptions. This scenario involves a direct correlation between caregiving services provided and asset transactions.

Asset Spend-Down Strategies

Legal Methods

Asset transfer is a common strategy to reduce countable assets within the Medicaid look-back period. It involves transferring excess assets to family members or setting up trusts.

To protect assets while complying with Medicaid rules, individuals can utilize legal tools such as irrevocable trusts. These trusts allow for asset protection by removing ownership from the individual.

Financial Transactions/Spend Down

Another effective strategy is converting countable assets into non-countable ones through financial transactions, often called a spend down, like purchasing exempt items or paying off debts. This helps lower the individual's asset levels for Medicaid eligibility.

Utilizing these strategies requires careful planning and consideration of the look back period regulations. While they can be beneficial, it's crucial to ensure full compliance with all legal requirements. 

Avoiding Look-Back Violations

Proper Documentation

Maintaining detailed records of all financial transactions is crucial to avoid inadvertent violations of the Medicaid look-back period. Documenting every expenditure, transfer, or asset conversion helps in demonstrating compliance. Without proper documentation, the government agencies reviewing a Medicaid application will assume such a transfer was a gift or transfer for less than full market value.

Seek Professional Guidance

Consulting with a financial advisor, special needs or elder law attorney can provide valuable insights into navigating the complexities of Medicaid regulations. These experts can offer tailored advice on structuring assets to adhere to look-back rules.

Be Mindful of Timing

Understanding the specific timeframes involved in the Medicaid look-back period is essential. Being aware of when the clock starts ticking and ensuring that all financial decisions align with these timelines can prevent violations.

Consequences of Violations

Violating Medicaid's look-back rules can result in significant repercussions, including penalties, delayed eligibility for benefits, and even legal consequences. It's vital to prioritize compliance to avoid these adverse outcomes.

Michigan Specifics

Asset Documentation

Michigan applicants must meticulously document their property and assets to successfully navigate the Medicaid look-back period. Proper documentation is essential to avoid ineligibility.

Time Frames and Rules

Michigan has specific time frames and rules concerning asset transfers that can lead to Medicaid ineligibility. These regulations may differ from those of other states, requiring careful consideration by applicants. An experienced elder law or special needs planning attorney will be able to help outline the best available options that meet a client’s goals and unique circumstances.

Seeking Professional Medicaid Planning


Consulting with an elder law or special needs planning attorney is crucial when preparing for potential nursing home care needs. These experts possess in-depth knowledge of the intricate program requirements and regulations.

Expert guidance can help individuals navigate the complex Medicaid look-back period, ensuring compliance with all necessary rules. This proactive approach can prevent costly mistakes and protect assets from being disqualified.


Seeking advice from an experienced elder law or special needs planning attorney can lead to significant benefits, such as maximizing eligibility for Medicaid benefits while safeguarding assets. Professionals can develop tailored strategies to meet individual needs and goals.

By leveraging the expertise of these attorneys, individuals can potentially reduce the financial burden associated with long-term care, making it more manageable for families in challenging situations.

Finding Professionals

When looking for a Medicaid planning expert, consider factors such as experience, credentials, and client testimonials, including involvement in organizations that support the experience you are looking for. Research reputable firms or professionals specializing in elder law or Medicaid planning services.

It's advisable to schedule consultations with multiple professionals to compare their approaches and determine who best aligns with your objectives and preferences.

Final Remarks

The complexities of Medicaid's look-back period demand careful navigation to avoid penalties and ensure compliance. Understanding the nuances, exceptions, and strategies is crucial for asset protection and successful Medicaid planning. Seeking professional guidance in this intricate process can provide invaluable insights tailored to individual circumstances.

For those embarking on Medicaid planning journeys, staying informed and proactive is key. By implementing asset spend-down strategies effectively and adhering to regulations, individuals can safeguard their financial well-being. Remember, meticulous planning and expert advice are instrumental in securing a stable financial future amidst the intricacies of the Medicaid look-back period.

Frequently Asked Questions

What is the significance of the Medicaid look-back period?

The Medicaid look-back period is crucial as it determines if any assets were transferred for less than their value. This affects eligibility for Medicaid benefits and can lead to penalties.

How do look-back penalties impact Medicaid eligibility?

Look-back penalties result in a delay of Medicaid coverage based on assets transferred during a specific timeframe. Understanding these penalties is essential to avoid complications in the application process.

Are there exceptions to the look-back period rule?

Yes, certain circumstances like transfers made for fair market value or transfers to a spouse are exempt from the look-back period scrutiny. Knowing these exceptions can help navigate through Medicaid planning effectively.

What are asset spend-down strategies in relation to Medicaid planning?

Asset spend down strategies involve reducing assets legally to qualify for Medicaid benefits. This may include converting excess resources into exempt items or paying off debt strategically within guidelines.

How can one avoid violations related to the look-back period?

Avoiding look-back violations involves careful planning and adherence to regulations. Seeking professional guidance, understanding permissible asset transfers, and following proper procedures are key steps in compliance with Medicaid rules.

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New Tax Law Makes Changes to ABLE Accounts

Families taking advantage of ABLE savings accounts will have a little more flexibility in planning for special needs as a result of the new Tax Cuts and Jobs Act signed into law by President Trump on December 22, 2017.

As we previously discussed, ABLE accounts, created by Congress via the passage of the Achieving a Better Life Experience (ABLE) Act in 2014, allow people with disabilities and their families to save for disability related expenses, while maintaining eligibility for Medicaid and other means-tested public benefits programs.

Currently, people can contribute up to $15,000.00 annually into qualified ABLE accounts.  A provision in the new tax law allows families who have saved money in 529 savings accounts to roll over up to $15,000 each year from a 529 account to an ABLE account.   The 529 account must be for the same beneficiary as the ABLE account or for a member of the same family as the ABLE account holder.  Many disability advocates had previously pushed for this change via a bill known as the ABLE Financial Planning Act.   Also as part of the new tax bill, while 529 accounts could previously only cover costs for college, they can now pay for a child’s K-12 education in a public, private or religious school.

The tax bill also includes changes to benefit ABLE account beneficiaries earning income from employment. These individuals will be able to make ABLE contributions above the $15,000 annual cap from their own income up to the Federal Poverty Level, which is currently $11,770 for a single individual, provided they do not participate in their employer’s retirement plan. This change was previously proposed in legislation known as the ABLE to Work Act.

The Consortium for Citizens with Disabilities previously voiced opposition to this revision, on the basis that if not properly implemented, it could increase the beneficiaries’ vulnerability to losing public benefits and pose major administrative burdens.

To read the text of the final bill, the Tax Cuts and Jobs Act, click here.

Click here to read more about ABLE accounts from with the ABLE National Resource Center.

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How Does Workers’ Comp Affect SSDI Benefits?

Some people become disabled as the result of a work-related illness or injury. In these cases, the individual may be eligible for both Social Security Disability Insurance (SSDI) and workers’ compensation benefits. Unfortunately, their total benefits may be limited by what is known as the “workers’ compensation offset.”

Key to understanding the interplay between the two programs is to understand their separate purposes. Workers’ comp programs, which are run at the state level, seek to compensate workers who suffer job-related illnesses or injuries. SSDI is a federal program that compensates people with sufficient work histories who are considered unemployable due to their disabilities, regardless of any connection between their work and the disability.

Not all people who qualify for workers’ comp will also be eligible for SSDI, which sets a strict eligibility standard. Specifically, the Social Security Administration (SSA) defines disability for SSDI purposes as “the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment(s) which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.”

Workers' comp eligibility standards are more flexible. In New York State, for example, workers’ comp beneficiaries can be deemed to have total or partial disabilities, and either of these can be classified as permanent or temporary.

Since monthly benefits tend to be significantly higher under workers’ comp, the Social Security Administration (SSA) imposes a cap on SSDI payments when people receive both types of benefits.

Under the “workers’ compensation offset,” created by Congress in 1965, the total amount from SSDI and workers’ comp cannot exceed 80 percent of the person’s “average current earning,” or the total SSDI received by the recipient’s entire family during the first month receiving workers’ comp, whichever is higher. In most cases, the former is higher.

Here’s an example of how the offset works: Before she became disabled, Sally’s average earnings were $4,000 a month. Sally is eligible to receive a total of $2,200 a month in SSDI benefits. Sally also receives $2,000 a month from workers’ compensation. Because the total amount of benefits she would receive ($4,200) is more than 80 percent ($3,200) of her average current earnings ($4,000), her SSDI benefits will be reduced by $1,000 ($4,200 – $3,200).

The SSA calculates “average current earnings” based on the highest monthly earnings under one of three formulas.

  • The average monthly wage used for determining the SSDI amount
  • The average monthly wage based on the person’s five highest earning years in a row
  • The average monthly wage based on the single year that the person’s disability began or any one of the five previous years

Some workers’ compensation claimants receive a lump-sum payment in addition to, or instead of, a monthly benefit. These payments may also reduce the amount of SSDI received, although attorneys will try to draft settlement agreements to minimize the workers’ comp offset.

While in most states, the workers’ compensation offset works to reduce the person’s SSDI, 16 states have adopted a “reverse offset” program. In these states, the person’s workers’ comp, rather than their SSDI benefit, will be reduced to meet the SSA’s prescribed formulas.

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Life Insurance Can Still Play a Key Role As Part of an Estate Plan

Life insurance can be beneficial in replacing lost income for young families, but as people get older, it can also serve a purpose as part of an estate plan.

Historically, one main reason to buy life insurance as part of an estate plan was to have cash available to pay estate taxes. Now that the estate tax exemption is so big (in 2016, estates can exempt $5.45 million per individual from taxation), most estates don’t pay federal estate taxes. However, life insurance can still be helpful in a number of other ways.

  • Immediate cash. Life insurance provides cash to use for the payment of debt, burial fees, or estate administration fees. In addition, life insurance can be used to pay state estate taxes, if the state requires it.
  • Wealth replacement. It can replace income or assets lost to pay for long-term care. It can also be used to fund a trust for a minor child or a child with special needs.
  • Buy out business interests. It can allow a partner or a family member to buy out the deceased partner’s interest in a closely held business to ensure the business can continue.
  • Fund a charity. Proceeds from a life insurance policy can be used to fund a charity. The policy can be donated directly to the charity, which also has the benefit of giving the donor a charitable income tax deduction. Alternatively, the charity can be named as the beneficiary of the policy.
  • Treat family equally. A life insurance policy can be used to make sure children receive an equal inheritance. For example, if one child is inheriting a certificate of deposit, a life insurance policy can ensure that the other child receives the same amount.

To find out if you should include life insurance as part of your estate plan, talk to your attorney.

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Nursing Home Residents Win Back Right to Sue

In recent years, nursing homes have increasingly asked — or forced — patients and their families to sign arbitration agreements prior to admission. By signing these agreements, patients or family members give up their right to sue if they believe the nursing home was responsible for injuries or the patient’s death.

Now, in an unexpected move, the federal Centers for Medicare and Medicaid Services (CMS) is forbidding nursing homes from entering into binding arbitration agreements with a resident or their representative before a dispute arises.  The agency has issued a final rule prohibiting so-called pre-dispute arbitration agreements in facilities that accept Medicare and Medicaid patients, affecting 1.5 million nursing home residents. After a dispute arises, the resident and the long-term care facility could still voluntarily enter into a binding arbitration agreement if both parties agree.

For years, patient advocates have contended that those seeking admission to a nursing home are in no position to make a determination about giving up their right to sue. Families are focused on the quality of care, and forcing them to choose between care quality and forgoing their legal rights is unjust, the advocates said.  Courts have sometimes struck down arbitration agreements as unfair, but others have upheld them.

“Clauses embedded in the fine print of nursing home admissions contracts have pushed disputes about safety and the quality of care out of public view,” the New York Times wrote in its coverage. “With its decision, [CMS] has restored a fundamental right of millions of elderly Americans across the country: their day in court.”

The nursing home industry has countered that the new rule will trigger more lawsuits that could increase costs and force some homes to close.  Mark Parkinson, the president and chief executive of the American Health Care Association, said that the change “clearly exceeds” CMS’s statutory authority.

Although the rule could be challenged in court, for now it is scheduled to take effect on November 28, 2016, and will affect only future nursing home admissions. Pre-existing arbitration agreements will still be enforceable.

To read the final rule, click here.

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Typical Social Security Recipient Will Get $4 Benefit Increase in 2017

Social Security benefits will rise only slightly in 2017. This follows no increase in benefits in 2016 and small increases for many of the previous years. The small bump in 2017 will likely be eaten up by higher Medicare Part B premiums.

The nation’s more than 65 million Social Security recipients will get a 0.3 percent cost of living increase in payments in 2017. This is expected to raise the monthly payment for the typical beneficiary by $4. Cost of living increases are tied to the consumer price index, and low inflation rates and gas prices means smaller increases. The cost of living change also affects the maximum amount of earnings subject to the Social Security tax, which will increase to $127,200 from $118,500.

The small increase in benefits means that some seniors may face a large hike in Medicare premiums. Most elderly and disabled people have their Medicare Part B premiums deducted from their monthly Social Security checks. For these individuals, if Social Security benefits don’t rise, Medicare premiums can’t either. But this “hold harmless” provision does not apply to about 30 percent of Medicare beneficiaries: those enrolled in Medicare but who are not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $85,000 a year, and “dual eligibles” who get both Medicare and Medicaid benefits.

Medicare premium increases have not been announced yet, but projections point to a 22 percent increase for the monthly Part B premium. The premium increase is so steep because another law says that premiums must cover increases in Medicare costs.  With 70 percent of Medicare recipients shielded from any premium increase because Social Security benefits are only rising slightly, the entire obligation of paying for the increased Medicare costs is falling on the other 30 percent who are not protected from premium increases.

Last year Congress stepped in and loaned money to Medicare to help cover the premium increase. Advocacy groups are calling on Congress to do something similar this year. However, Congress is not in session until after the election, which means it will not be able to act quickly.

For 2017, the monthly federal Supplemental Security Income (SSI) payment standard will be $735 for an individual and $1,103 for a couple.

For a complete list of the 2017 Social Security benefit levels, click here.

For more information about the increase, click here.

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What Is a Life Estate?

The phrase “life estate” often comes up in discussions of estate and Medicaid planning, but what exactly does it mean? A life estate is a form of joint ownership that allows one person to remain in a house until his or her death, when it passes to the other owner. Life estates can be used to avoid probate and to give a house to children without giving up the ability to live in it.  They also can play an important role in Medicaid planning.

In a life estate, two or more people each have an ownership interest in a property, but for different periods of time. The person holding the life estate — the life tenant — possesses the property during his or her life. The other owner — the remainderman — has a current ownership interest but cannot take possession until the death of the life estate holder. The life tenant has full control of the property during his or her lifetime and has the legal responsibility to maintain the property as well as the right to use it, rent it out, and make improvements to it.

When the life tenant dies, the house will not go through probate, since at the life tenant’s death the ownership will pass automatically to the holders of the remainder interest. Because the property is not included in the life tenant’s probate estate, it can avoid Medicaid estate recovery in states that have not expanded the definition of estate recovery to include non-probate assets. Even if the state does place a lien on the property to recoup Medicaid costs, the lien will be for the value of the life estate, not the full value of the property.

Although the property will not be included in the probate estate, it will be included in the taxable estate. Depending on the size of the estate and the state’s estate tax threshold, the property may be subject to estate taxation.

The life tenant cannot sell or mortgage the property without the agreement of the remaindermen. If the property is sold, the proceeds are divided up between the life tenant and the remaindermen. The shares are determined based on the life tenant’s age at the time — the older the life tenant, the smaller his or her share and the larger the share of the remaindermen.

Be aware that transferring your property and retaining a life estate can trigger a Medicaid ineligibility period if you apply for Medicaid within five years of the transfer. Purchasing a life estate should not result in a transfer penalty if you buy a life estate in someone else’s home, pay an appropriate amount for the property and live in the house for more than a year.

For example, an elderly man who can no longer live in his home might sell the home and use the proceeds to buy a home for himself and his son and daughter-in-law, with the father holding a life estate and the younger couple as the remaindermen. Alternatively, the father could purchase a life estate interest in the children’s existing home. Assuming the father lives in the home for more than a year and he paid a fair amount for the life estate, the purchase of the life estate should not be a disqualifying transfer for Medicaid.  Just be aware that there may be some local variations on how this is applied, so check with your attorney.

To find out if a life estate is the right plan for you, contact your attorney.

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Top Tips to Avoid Caregiver Burnout

One constant thing we see daily in our office when family members are confronted with the task of caring for their loved ones is caregiver burnout. As the population ages and more adults are finding themselves having to juggle their lives while caring for an aging parent, the number of people acting as caregivers for their parents has skyrocketed. Often, these newly-appointed caregivers find themselves overwhelmed with their new role and they begin to neglect their own personal care needs, in order to make sure that the needs of their parent are met. This is not an option. Neglecting your own personal needs in order to meet the needs of the person you are caring for can result in burnout, illness and injury. If you or someone you love are a caregiver be sure to continue reading to find tips to avoid and minimize the effects of caregiver burnout by taking care of yourself so you can take care of your loved one.

  1. Ask for help. If there are family members available to help shoulder the caregiving burden, suggest a family meeting and discuss how all involved can divide and conquer the caregiving tasks so the burden is not placed solely on one person. Also check your local volunteer organizations for potential sources of relief. Often these organizations will provide companions for your loved one while you attend to your personal needs. One excellent resource for these types of organizations is your county Area Agency on Aging Office.
  2. Take time for yourself every day. Whether it is calling a friend, watching television, doing a crossword, or reading a novel, make sure that you take at least a few moments for yourself every day.
  3. Maintain your healthy lifestyle. It can be tempting to pick the quickest meal option and skip exercise when your days are flying by. However, making sure that you are properly fueling your body with healthy and nutritious foods will provide you with the energy you need to manage the stress of caregiving. Exercise can help to lower stress and to improve physical wellbeing, which is important to provide you with the energy and stamina that you need when caring for your loved one. A simple walk around the neighborhood can be enough to get your blood pumping and can also help you clear your head.
  4. Enjoy a hobby. Schedule time each week for yourself to do something that you find enjoyable, preferably something that takes you away from the burdens of caregiving for a few hours, such as reading a book, getting your hair or nails done, watching a movie or gardening. If possible attempt to schedule a short vacation so you can recharge for a few days. Coordinate with family members and local community organizations for alternative care for your loved one. Options such as adult daycare and respite care are available for a fee, which may seem like an unnecessary expense, however, these services provide the crucial relief that many caregivers seek out desperately. Making sure you make time for yourself is crucial, even if all you need is one afternoon a week.
  5. Do not neglect your health. It can be easy to be so focused on making sure that your loved one takes their medicine and attends all scheduled doctor’s appointments that you neglect to schedule and attend your own. Setting alarms when you need to take a medication and keeping a calendar with both your personal appointments and the appointments for your loved one can be an effective way at staying on top of your health issues.
  6. Sleep. Acting as a caregiver is exhausting with a proper night’s rest. Lack of sleep can result in loss of patience and can potentially can put you and your loved one at risk for injury. Create a soothing space in your bedroom that promotes restful sleep and make sure that you carve out adequate time to get a full night’s rest. 7. Consult with an Elder Law Attorney. There are many different programs available to those who are elderly that can help to reduce, or in some circumstances possibly even eliminate, the cost of caring for a loved one. In order to access these programs, individuals need to qualify financially prior to receiving benefits. An experienced elder law attorney can help your loved one qualify for benefits while at the same time preserving your loved one’s assets. Depending on the situation, you may be entitled to compensation for the care that you are providing.