Have we discussed estate planning here yet?

[KFC911]

Originally Posted by Porsche-O-Phile

...Do you want your assets going.... or worse still - to the government via probate?....

Is this an issue in other states, as it's certainly not here in NC? It's an old wives tale about everything going to the state, etc. There is a absolute trail of "next in line" (i.e. first spouse, then kids, then siblings, siblings kids, etc. on down the line and it's well documented). Just curious...MRM or other legal minds???

[MRM]

Every state has a procedure to follow when people die without wills. Generally spouses inherit everything unless there is a will or trust saying otherwise. If I recall correctly, the priority from there goes to children, then parents, then cousins, nieces/nephews, etc. The money only goes to the state if there is no easily identifiable relative still living. So the state could inherit everything if you don't have a will, but you would have to be pretty close to the end of your line.

[Porsche-O-Phile]

Even so, if stuff goes to probate, EVERYONE loses as a general rule.

It's your stuff. You worked hard to earn it and obtain it. You should be the one to decide its ultimate disposition, not someone else.

[KFC911]

Thanks MRM! POP, I agree wholeheartedly. I'd often heard of "everything going to the state", etc. but my atty. cleared all of that up for me just last year during some discussions regarding shared assets.

[74-911]

Originally Posted by Porsche-O-Phile

Even so, if stuff goes to probate, EVERYONE loses as a general rule.

It's your stuff. You worked hard to earn it and obtain it. You should be the one to decide its ultimate disposition, not someone else.

Not necessarily, a lot of that depends on what state you live in. I have been the executor of three estates in probate in TX (one of these was intestate). Probate is extremely simple here with an absolute minimum of court involvement because it allows independent administration of estates. If you have a will, most of your "stuff" will go as the will directs with no involvement of the court at all. If you are intestate, there is a well defined order of which heirs get what, no one sits around and decides who will get what. In none of the cases did anyone lose anything.

Of course if someone starts contesting wills, etc... all bets are as to what legal fees you can run up.

[wdfifteen]

Originally Posted by Porsche-O-Phile

Parents just set up an irrevocable trust - in their state this is required to protect assets and ensure access to Medicaid (you need to become "impoverished" and show no assets in your name otherwise the nursing home takes them all). A revocable trust isn't viewed as putting assets sufficiently out of your control to protect them from the Medicaid assessment. Check with a lawyer in your state for specifics of what you need. You do NOT want everything going to a nursing home or assisted living facility, you want it going to your beneficiaries / heirs.

In these uncertain times planning to stick taxpayers with the bill for your old age care shouldn't be part of estate planning. Conservatives and the tea party might just do away with or severely restrict medicaid by the time you need it.

[wdfifteen]

My parents died 37 days apart and had identical wills. If they had died within 30 days of each other both wills could have been probated together. Their lawyer had drawn up wills that were crap. They had some language that had the probate judge spinning in his chair. So I paid my attorney to first straighten out my dad's estate, then my mothers - 2 probate court fees, two attorney fees, two screwed up wills to straighten out. In the end it cost over $4000 to settle a $30,000 estate. I so wish I had taken the wills to an attorney for a second opinion before they were needed. There are good lawyers and bad ones - the bad ones can cost you big time.
I have my assets in a revocable trust. It cost about $1200 to set up and a hundred or so to retitle my cars.

[Porsche-O-Phile]

Originally Posted by wdfifteen

In these uncertain times planning to stick taxpayers with the bill for your old age care shouldn't be part of estate planning. Conservatives and the tea party might just do away with or severely restrict medicaid by the time you need it.

Frankly I hope they do, but since it's there for the time being and we're all forced to subsidize it at the barrel of a gun through the IRS, one may as well get something back for it. As I said before, any estate planning attorney will advise this (as well as availing oneself of all other available resources). The objective here is to give YOU the option to decide how you want YOUR things allocated and how you want YOUR family/friends/charities/whatever to benefit from you life's efforts without it going to the government or to institutions that have simply gained political favor through aggressive lobbying efforts, payoffs, kickbacks and other shenanigans over the years.

If you really feel morally compelled to pay 100% out-of-pocket for nursing home care, nobody will stop you either. You're more than welcome to. However you will have everything seized and lose all your assets, then when it's all exhausted you'll be kicked onto Medicare anyway.

A trust is short money to protect you and your heirs from getting raped by the system. The government is NOT your friend here, as is the case most of the time - whether you want to admit it or not.

[KFC911]

Originally Posted by Porsche-O-Phile

...If you really feel morally compelled to pay 100% out-of-pocket for nursing home care, nobody will stop you either. You're more than welcome to. However you will have everything seized and lose all your assets, then when it's all exhausted you'll be kicked onto Medicare anyway.

A trust is short money to protect you and your heirs from getting raped by the system. The government is NOT your friend here, as is the case most of the time - whether you want to admit it or not.

I REALLY need to look into a trust...just haven't . I personally know of two recent incidences (one a terminal cancer patient, and the other a lung transplant at Duke). In both cases, they had decent insurance coverage, but that doesn't matter when the tab reaches a few million in short order. Just like most everyone in the US, they absolutely received the care they needed, but only after ALL their tangible assets were exhausted. Our system sucks

[berettafan]

Revocable trusts don't typically work for Medicaid planning. Because they are revocable the asset is still under control of the grantor.

I'm not advocating any particular option but it should be pointed out that trusts are not the answer to everything. In fact you can screw yourself with a trust in many estate situations.

[Porsche-O-Phile]

Correct (although my understanding is that it's state-by-state). My parents needed an IRRevocable trust for exactly this reason - the assets are under the full control of the Trustees and cannot be transferred back to them (although they can appoint, fire, replace or add Trustees as they see fit). For this reason it's very helpful and the assets are seen as being sufficiently out of their control so they don't come into play for purposes of Medicaid eligibility. I'm a Trustee, my brother is another one. We obviously will allow them full lifetime and unrestricted use of their property (especially their Real Estate via a "life estate" agreement). When they pass on, we can dispose of their assets as they wanted without the involvement of probate (some goes to us, some to their grandchildren, some to charity, etc.)

Neither of them wants nursing home care but the reality is that at some point one or both of them might need it since that's the only realistic way for them to obtain continuous care. Knowing this, would one really want to be exposed and force one's heirs (children, usually) into choosing between seeing "their" inheritances seized by a nursing home or their parents receiving lesser-quality care to stretch things out? These are very real situations and crummy decisions that people are forced into every day by our system. Setting up trusts very nicely sidesteps a lot of this and a lot of the potential battles between siblings that can result in estranged relationships and worse (again, these sorts of things happen every day...) All these considerations and more were explained by the lawyer. Money well-spent and very enlightening / informative.

As I said above, the government is NOT your friend here and neither is the system they've cooked up to benefit those with deep pockets and strong lobbying groups.

[Noporscheform]

Just to clarify - Medicaid is a program used to ensure that the poorest of our citizens can have access to medical care. It was not created to allow greedy, selfish people to move their assets outside of their estate in order to suck from the government tit. If you are concerned with long term care costs - buy a long term care policy- you can afford it - to stick the tax payers with the bill while the heirs go off and buy a Porsche is just plain wrong.

[Porsche-O-Phile]

If you don't like how it works, you're welcome to write to your representatives and ask them to change the laws.

[wdfifteen]

Originally Posted by Porsche-O-Phile

Frankly I hope they do, but since it's there for the time being and we're all forced to subsidize it at the barrel of a gun through the IRS, one may as well get something back for it. As I said before, any estate planning attorney will advise this (as well as availing oneself of all other available resources). The objective here is to give YOU the option to decide how you want YOUR things allocated and how you want YOUR family/friends/charities/whatever to benefit from you life's efforts without it going to the government or to institutions that have simply gained political favor through aggressive lobbying efforts, payoffs, kickbacks and other shenanigans over the years.

If you really feel morally compelled to pay 100% out-of-pocket for nursing home care, nobody will stop you either. You're more than welcome to. However you will have everything seized and lose all your assets, then when it's all exhausted you'll be kicked onto Medicare anyway.

A trust is short money to protect you and your heirs from getting raped by the system. The government is NOT your friend here, as is the case most of the time - whether you want to admit it or not.

It sounds like you and your estate planning attorney are depending on the government to be a very, very good friend. Good luck with that.
Personally, I don't trust the government that much.

[KFC911]

Originally Posted by Noporscheform

Just to clarify - Medicaid is a program used to ensure that the poorest of our citizens can have access to medical care. It was not created to allow greedy, selfish people to move their assets outside of their estate in order to suck from the government tit. If you are concerned with long term care costs - buy a long term care policy- you can afford it - to stick the tax payers with the bill while the heirs go off and buy a Porsche is just plain wrong.

Just to clarify, I know of absolutely no one who has ever received Medicaid. I am referring to Medicare (for the elderly) as I have had many, many older relatives (and we all will be someday) who depend upon "socialized medicine" in their latter years. Yep, I've seen what private insurance can (and would) do before the ACA was implemented when a patient reached a "cap". If it weren't for "socialized medicine" (Medicare), then what do you suggest? If you think private insurance co's can (will) cover our aging (LONGER living) population then I've got news for ya. One day of tests at Duke can easily reach $150K. My mom broke her ankle last year...4 day hospital stay was 40K. We'll just have to disagree on this one...an elderly person losing everything they own because of an accident or short illness is just plain wrong too imo. Until you walk in their shoes...

[Noporscheform]

The difference between Medicare and Medicaid is significant. Medicare is health care/insurance for people over 65, it is an insurance program (it will become socialized medicine once it runs out of money in the trust fund - - 10-15 years from now, if not earlier). It is generally, what all working Americans will use for their primary health insurance provider after age 65. IT DOES NOT COVER LONG TERM CARE COSTS. Most private health insurance plans exclude long term care costs as well.

Medicaid is health care for the poor. There are maximum income levels and assets, that a person can have in order to be eligible. Medicaid covers Long term care costs as their patients are poor, they do not have any other assets to pay these costs, the same as they did not have assets to pay for medical care.

Some feel that it is ok to structure assets in a manner to make them appear to be eligible for Medicaid, even if though they did not actually qualify. Many call this fraud

Apparently it is ok for someone to use their money for vacations, eating out or other activities , but when it comes to paying for long term care (LTC) costs - they want uncle Sam to step up, regardless of their ability to pay. They feel that the heirs should inherit the money (that would have been spent on long term care) as it is ok to stick the taxpayers with the bill.

The option everyone has is to buy LTC insurance - just like you buy health insurance, in order to cover the specific risk of needing nursing home services at some point in your life.

[Noporscheform]

Finally, one of the provisions of the ACA (Obamacare) is to remove the caps from health insurance - which is where your friends ran into trouble. The caps in health insurance are no different then limits of exposure in any insurance product - Life insurance is sold with a dollar value of death benefit, disability insurance is sold with a maximum monthly payment, car/house insurance has limits of liability - you augment with an umbrella policy based on the risk that you want to cover. At the end of the day - if we believe that any amount of money should be spent to provide care for people - then we better get a better health care system, because the one we have we cannot afford.

[Noporscheform]

per Medicaid.gov
Spousal Impoverishment: Protects the spouse still living in the community from becoming impoverished when the other spouse enters a nursing facility or other medical institution and is expected to remain there for at least 30 days.

Treatment of Trusts: When an individual, their spouse, or anyone acting on the individual’s behalf establishes a trust using at least some of the individual’s funds, that trust can be considered available to the individual for purposes of determining eligibility for Medicaid.

Transfers of Assets for Less Than Fair Market Value: This practice is prohibited for purposes of establishing Medicaid eligibility. Applies when assets are transferred, sold, or gifted for less than they are worth by individuals in long-term care facilities or receiving home and community-based waiver services, by their spouses, or by someone else acting on their behalf.

Estate Recovery: State Medicaid programs must recover from a Medicaid enrollee's estate the cost of certain benefits paid on behalf of the enrollee, including nursing facility services, home and community-based services, and related hospital and prescription drug services. State Medicaid programs may recover for other Medicaid benefits, except for Medicare cost-sharing benefits paid on behalf of Medicare Savings Program beneficiaries.

Third Party Liability: Third Party Liability (TPL) refers to third parties who have a legal obligation to pay for part or all of the cost of medical services provided to a Medicaid beneficiary. Examples are other programs such as Medicare, or other health insurance the individual may have that covers at least some of the cost of the medical service. If a third party has such an obligation, Medicaid will only pay for that portion.