Attorney & Mediator
Attorney & Mediator

More on Long‑term Care

It is important for people engaged in planning for their senior years to understand the difference in the types of long-term care that are needed or are available.

Most think of long term care as nursing home care.  In some instances this is true.  This type of care is Skilled Nursing Home Care.  It means that the individual is unable to meet and care for certain life activities and skills.  This is the type of care that is covered by long term care insurance and once an individual qualifies by Medicaid.

There is, however, often a gap between the elderly individual who is able to reside in his or her home independently and the need for skilled nursing care.  This is assisted care.  In such a circumstance, the individual moves into an assisted living situation which may be similar to an apartment like setting.  Certain of his or her needs are taken care of, however, he or she is relatively independent.

This type of living is NOT covered by insurance.  Neither long term care insurance nor Medicaid covers this type of care.

This distinction is very important.  It is a circumstance that should be carefully discussed by the entire family when the time comes for planning.  If an individual is no longer able to live independently but is not eligible for long term nursing care, where is he or she to live?  Most importantly, if the assets and income of the individual are limited, who will pay for this care?

This is a gap that catches many people by surprise and unaware.

Estate Planning: Passwords

I remember paying my monthly bills before the internet.  I would once a month, gather the stack of bills, write out a check for each one, enter it into my check register, put the check and the payment stub into the envelope, put on a stamp and mail.  Sometimes, this took a couple of hours.

Now, most bills are automatically debited from my checking account or are charged to a credit account.  For the few that do not have this feature, I go on line to the creditor, click a “pay amount due” button and the payment is made.  This now takes a few minutes per month.

This is great!  But not if you become disabled or die without leaving a roadmap.

How would your family know which bills are automatically debited? and from which account?

How would they know if the bill is automatically charged to a credit card?  and to which one?

How would they know which bills need to be paid by going to a website?  There is no notification received in the mail.

Once they go to the website, how would they access your account information?  What is the user name?  the password?

Where are your bank accounts?  What are the user names and passwords for those?

While this is a great convenience for those of us who love the on-line ease of bill paying, this is also a nightmare for agents under a Durable Power of Attorney or a Personal Representative or Trustee.

For this reason, it is vitally important that you leave a listing of all accounts, including the name of the institution, its website address, your account number(s), the user name and passwords.  Also, you must list whether the billing is automatically paid, and from what account.  If a bill must be manually paid, that must be listed as well.

These lists must be kept up to date when you change your passwords.

Finally, if you have a password to get onto your laptop or desk computer, that needs to be written down as well.  Put this information in a secure place, but tell your agent(s) and family where the information is so that it can be accessed in the event of need.

Leave a roadmap.

List your Creditors

While many people go to great lengths to list their assets and have all other documents in order, they fail to list their creditors.

An estate cannot be settled until all of the creditors have been identified and paid.  This must be done prior to the distribution of assets to the heirs and/or beneficiaries.

There is always the chance that a creditor can come forward and demand payment.  If your records don’t contain enough information concerning the debt, your Personal Representative or Trustee won’t be able to verify or refute the claims.

Many think that their mortgage company and car loan are the only creditors for their estate.  All of your final debts must be paid, and those include your final medical bills, funeral bill, and VISA, Mastercard, QVC, Cable TV, Cell Phone, etc.

Make a listing of all of your credit cards together with the account numbers.  Also make a listing of all of your utilities and monthly bills.  This will give your Personal Representative the information he/she needs to make certain that all of the final bills are taken care of.



Gifts and the Limit

Many clients will state that they know they can make gifts of up to $10,000 per year and they “don’t count”.  However, they don’t really understand what they “don’t count” against.

This has to do with the Federal Estate and Gift Tax.  We each now have an exempt amount of (adjusted for inflation in 2013) of $5.25 Million.  What that means is that over our lifetime, we are able to pass along through gifts or bequests at our death, the sum of $5.25 Million before our estate must pay Estate Tax.

During our lifetime, when we make gifts, the amounts must be applied against this exempt amount.  They way that this is done is by filing a Gift Tax Return for the year of the gift.  If the amount of the gifts is under $5.25 Million then no tax is due; however, it uses up our lifetime exemption.

So, what about the $10,000 gift that “doesn’t count”?  First, this amount has been adjusted for inflation so that it is now $14,000.  Next, it doesn’t count against the $5.25 Million if the gift is limited to $14,000.  If you are married, spouses can combine their gift so that they can give $28,000 to an individual.

Who can you make this gift to?  Anyone

How many people can you make such a gift to?  As many as you want.

For example this year, relying on the annual exclusion, a married couple with a child who is married and has two children could make a joint cash gift of $28,000 to the adult child, the child’s spouse and each grandchild – four people – providing the family with $112,000 a year. Only gifts that exceed the limit count against the lifetime exclusion.