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Glenn A. Jarrett, Esq., CFP® Jonathan D. Secrest, Esq. Vermont Bar Association Young Lawyers Division Mid-Winter Thaw
Glenn A. Jarrett, Esq., CFP®
Jonathan D. Secrest, Esq.
Vermont Bar Association
Young Lawyers Division
Mid-Winter Thaw
Glenn A. Jarrett Jarrett Law Office, PLC
v Attorney at Law since 1973 v Certified Elder Law Attorney (CELA) by National Elder Law Foundation v CFP® Practitioner v A.B., Middlebury College, with honors v J.D., Georgetown University Law Center v Member, National Academy of Elder Law
Attorneys, President-Elect, VT Chapter v Member, Vt Bar Ass’n Elder Law Section
Jonathan D. Secrest Corum Mabie Cook Prodan Angell & Secrest
Elder Law, Estate Planning, Probate, Real Estate
Practicing for 11 years, in Vermont since 2003
J.D., Northwestern University School of Law, Chicago
B.A., Amherst College, Amherst, MA (magna cum laude), 1990
Member, National Academy of Elder Law Attorneys (VT– Founding member of chapter)
Member, VT Bar Ass’n Elder Law Section
Our Agenda The importance of planning for incapacity and death
Long-Term Care Issues
How does an elder maintain independence?
What are the options?
Medicaid
Basics
How to Protect the Family Home
Why Don’t People Plan? Only about 1/3 of Americans have a written estate
plan!
Why? Procrastination
Denial
Lack of Knowledge
What Types of Planning are Needed?
Two Basic Types:
1) INCAPACITY PLANNING
2) PLANNING TO TRANSFER ASSETS
Incapacity Planning
3 Important Areas
Incapacity Planning— 1) Medical Decisions--√
2) Financial Decisions--√
3) Access to Medical Information-√
Second Type of Planning
Planning to Transfer Assets
Wealth Transfer Plan
Two basic ways to handle this issue—
1) Will
2) Living Trust
Long Term Care Planning
Why Plan for Long Term Care? May be a need for care
Protect life savings
Plan or lose everything
Catastrophic Illness and Nursing Homes Costs are rising: Average costs are $8,000 to $9,000+ per month or more!
You may lose everything and be at the poverty level if you don’t plan
How long can you pay before your life’s savings are all gone?
What types of care are available? How do seniors keep independent? Aging in Place
Independent Senior Living & Senior Communities
Care at home
Private caregivers
Choices for Care—Medicaid at home
Residential Care Homes
Assisted Living Facilities
Skilled Nursing Facilities
PACE—Program for All-Inclusive Care for Elderly
Average Cost of Nursing
Homes in Vermont (Oct. 2011) $92,398 per year
Long Term Care Insurance Planning
You wouldn’t think of going without homeowners or car insurance
Insurance transfers the risk
The cost can be economical and gives peace of mind
What if it’s too late for LTCI? Must plan to pay for long-term care
expenses
Can plan to qualify for Medicaid
Our Goal is to Design a Plan to Allow Our Clients to Stay at Home as Long as Possible…
…and to Protect Our Clients and
their Families if that is not Possible
Two Situations 1. Emergency… (no time to plan)
2. When there is time to plan
What if a family member is ill or is in a nursing home already?
At the current cost for nursing home care…client must act quickly
Consult with an elder law attorney immediately
Learn about legal options including Medicaid
What is Medicaid? Financial assistance for nursing care
Do not confuse it with Medicare
Must meet certain medical, asset and income requirements
Share of Cost - Income Single Applicant
ALL of applicant’s income goes to
Nursing Home
Except personal needs allowance
($47.66 in Vermont) and health
insurance premiums
Medicaid pays the
rest of the nursing
home cost
Share of Cost - Income Married Couple
Community spouse keeps
ALL of his or her income
Monthly Maintenance Needs Allowance (MMMNA) Minimum =$1,857
Maximum of $2,841
Summary of Assets For single person or spouse in
nursing home—
$2,000 in countable assets
For community spouse—
$113,640 in countable assets
Deficit Reduction Act of 2005 Most important Medicaid features:
Increased lookback period from 3 years to 5 years
Changed how penalties are calculated to make gifting to qualify much more difficult
Outright Gifting
Giving money or other assets away for
less than fair market value will avoid a
penalty only after the passage of 5 years
from the date of the gift
One problem in outright gifting is that the
assets are subject to being lost to
creditors of the recipients or a divorce or
a recipient dipping into the money
Medicaid Planning Trusts Irrevocable Income Only
Medicaid Trust Parents retain income
Children access principal
Would take 5 years to avoid
transfer penalty
Avoids problems of outright gifting
Summary of Post-DRA Strategies Medicaid-compliant Annuities
Irrevocable Income Only Trust
Conversion to Non-Countable Assets
Use of Medicaid-compliant Promissory Notes
Gifting to disabled individuals
Many of these may not be available for long
Protecting the Family Home
Home is the single most important asset to most individuals
Desire to preserve it for spouse and heirs
Protecting the Family Home Home as Exempt Asset
$506,000 limit to value of home
No limit to size of home or number of acres of land
Must have intent to return home if in nursing home
Protecting the Family Home
Transfer of Residence
Transfer to Spouse is exempt
If institutionalized spouse is not capable of executing deed, transfer may be through durable POA or guardianship proceeding
Protecting the Family Home Life Estate Deed with Enhanced Powers
(aka, a Lady Bird Johnson Deed)
• Enables Transfer to beneficiaries or Revocable
Living Trust, which avoids probate and estate
recovery
• See article in VBA Journal, Winter 2008-2009 by
John Facey, John Newman and Heather
Cooper—”Top Ten” Pitfalls in Preparing Lady
Bird Johnson Deeds
Estate Recovery–What is It? Under federal law, State has duty to try to recover
from estate of deceased Medicaid recipient for services provided during lifetime
States may have different definitions
of what is considered “estate”
Most conservative = Probate Estate
• This is currently Vermont’s approach
Estate Recovery–What is It? Some states include joint tenancy property, life
estates, transfer on death accounts or property
This is probably the direction
more states will go in order
to increase the amounts the
State can recover
• Vermont has begun to talk
about these types of changes
Estate Recovery–What is Protected? Life Estate Deed with retained powers
Joint Tenancy Deeds
POD Accounts
Life Insurance with Beneficiary
IRA with Beneficiary
Annuities with Beneficiary
But these protected assets
are subject to attack if States
determine to change the rules
For Further Information:
Glenn Jarrett, Esq.
Jarrett Law Office
South Burlington
802-864-5951
Jonathan Secrest, Esq.
Corum Mabie Cook Prodan Angell & Secrest
Brattleboro
802-257-5292 x 5
