Kansas & Missouri Estate Planning

Pet Trusts Provide Peace of Mind

Do any members of your household have feathers, fins or fur? If yes, then they undoubtedly are special members of your family, too. Accordingly, proper planning ought address them as well.

Enter the pet trust.

Its a little-known legal option for the elderly and caregivers worried about what will happen to beloved animals following the deaths of their owners.

Whatever the size of your pet and whatever the size of your family, it's simply not always enough to leave these matters for your heirs to figure out. After all, the well-being of your pet (i.e., your friend and companion) is at stake. And it's worth considering legal devices to provide for them, such as a pet trust.

 In a way, the idea of a "pet trust" is a natural one and yet it's also not always common. Deborah Jacobs recently tackled the subject over at Forbes and her article certainly is worth a look. In its basic formula, a pet trust is like any other trust in its formation, however, it is designed to take care of a family member that, like a minor child, really can't take care of itself.

While that can be meaningful for many pet-owners, there also is reason for the elderly to pay special attention to the prospect, as another article over at the New Old Age Blog points out, here.  For the elderly, especially, a pet can be an incredibly important family member and one for whom planning can be all the more important.

Why?

The pet may outlive its owner.

In the end, a pet trust may afford important protection and care for the pet, as well as peace of mind to the owner.

Reference: Forbes (February 14, 2012) "If You Love Your Dog (Or Cat Or Gerbil), Read This" and The New York Times – The New Old Age Blog (February 3,2012) "The Pet Problem"

A National Alzheimer’s Agenda?

With budget plans just now coming to a head, Alzheimer's has become a priority.

Such measures still need to be passed through Congress, and positive advances may not be immediately forthcoming. However, it is heartening to see fiscal support for an issue that affects so many of us and our loved ones.

If all goes according to plan and the approach makes it through Congress – a politically trepidatious journey these days even for the most common-sense and appealing legislation – then the budget will earmark an infusion of $156 million for Alzheimer's research and care.

In many ways it's the flesh and bones to an earlier announcement from the administration regarding a national plan toward treating Alzheimer's that came out with no clear source of funding. The full details on allocation are still forthcoming, but at least a small portion of that infusion, some $26 million, is intended for immediate use and care of Alzheimer's patients. The rest is to go toward research and the hope of improving future care, and also perhaps systematic prevention.

How this news will affect us, and whether it will weather violent political and economic seas is yet to be seen.

Reference: The Kaiser Health News (February 7, 2012) "Alzheimer’s Research Gets Funding Boost"

Medicaid Misunderstandings Costly

When an elderly person is ready for the nursing home, some families are entirely understanding, in agreement, and financially able. As a result, the transition happens smoothly. Unfortunately, for a far larger number of families and elderly persons, some trip to the hospital will happen in between and may even immediately precipitate the transition to nursing home care.

If that's the case, then there are important hospital and Medicare policies of which you should be forewarned. Enter "observation care" which can make for a big bill upfront and even far bigger ones down the line.

According to a recent article in the Wall Street Journal, and their sources at the Medicare Rights Foundation, the number of "observation hours" has been steadily growing for years. Tragically, such observation hours count as "outpatient services," even if the service lasts for several days (as it sometimes does with the elderly) and Medicare pays for inpatient and outpatients services in entirely different ways.

As you likely know, Medicare Part A pays for inpatient bills, so those are usually taken care of, but Medicare part B is what takes care of outpatient services. And those services can add up to a far greater cost.

It's often vital to know the distinction between the two types of services from the hospital, and yet it's also fairly difficult. Medicare advises to simply ask, but then there are certain documents such as the "Important Message from Medicare" which accompanies inpatient care, but not outpatient. Still, the hospital can switch with little to no notice.

It's actually even more important than the size of the immediate bill. Medicare will only pay for nursing home expenses if the person was admitted inpatient at a hospital for at least three days, excluding the discharge day.

For so many families that's the sole reason why it takes a hospital visit to arrange for the transition to nursing home care in the first place, but if you are put under observation or other so-called "outpatient" care, and without your notice, it can literally mean thousands of dollars out-of-pocket down the line.

Bottom line: It all hinges on hospital practice and Medicare definitions.

Reference: The Wall Street Journal (February 5, 2012) "Check Hospital Tab"

Finding A Nursing Home for Dad... Simple Math Makes It Even More Difficult

Fact of Life: It’s harder to find a bed for a man than for a woman, especially when it comes to a bed in a nursing home.

Finding a nursing home for an ailing loved one, and a good nursing home that is affordable, is already a fairly difficult task. Unfortunately, it's only likely to grow in difficulty as the number of elderly in need of care begins to peak. Unfortunately, too, there are some factors of which you might not be aware. For example, it is disproportionately difficult to find a nursing home for a male patient.

This fact was recently showcased at the New Old Age Blog and I thought it was worth sharing.

What is working against our male elderly loved ones is not much more than "simple math" (and, trust me, I am "math challenged"), with a bit of Medicare policy work at play. From a "numbers" standpoint, women have a longer life span on average. As a result, therefore there are more women in nursing homes. That fact alone has created a bottleneck based on population statistics.

Aside from women ruling the roost in nursing homes, throw in the fact that, under Medicare rules, most rooms in nursing homes are no more than "semi-private" (a delicate euphemism). Bottom line: Co-ed rooms aren't allowed either. Thus, with more women already in such semi-private rooms there are vacancies for which only women can be admitted into a facility. The math is fairly easy to figure out, but it's a strange and unintended consequence nonetheless.

Good news for fellas: If you do make it to a nursing home, then it is a "buyer's market." As the Beach Boys sang in Surf City, there are (at least) "two girls for every boy."

Reference: The New York Times The New Old Age Blog (January 30, 2011) "Fewer Beds For Men Entering Nursing Homes"

Medicare Red Tape Confuses Many Seniors

As many readers will know, it's fairly critical to understand the rules for filing for Social Security. Likewise, the rules for filing for Medicare benefits can make or break your retirement. Unfortunately, it's also fairly easy to forget about the basics of Medicare filing, as a recent article out of Reuters highlights the importance of filing earlier rather than later.

For each full 12-month period that a senior could have had coverage but didn't sign up, the monthly Medicare Part B premium jumps 10 percent. The average monthly cost of Part B coverage is $99.90, so just a few years delinquency will result in $20, $30, or more a month; that adds up, is unnecessary waste, and is permanent.

Suffice it to say that the government really wants you do sign up when it's time. But why is that difficult? Well, for one, the full retirement age for Social Security is no longer the age for Medicare enrollment. As a result, many otherwise forward-thinking people are waiting until age 67 to enroll in Social Security (for the maximum monthly benefit), but 65 is the age for Medicare.

In addition, with so few people actually leaving the workforce it's easy to forget (or fail to realize, since you’re not really retired) that it might be time for Medicare. That also can depend on the nature of your employment. For example, if you are still working at age 65 and your employer has fewer than 20 employees, Medicare is the primary payor; at companies with more than 20 workers, the employer's plan is primary.

In the latter situation, a senior can postpone filing for Parts A (hospitalization) or Part B, although many choose to enroll for Part A anyway, since it doesn't require premium payments. If you delay your Part B coverage, you can enroll without penalty when you do retire for up to eight months following that point.

The bottom line is to keep all of this on your radar, regardless whether you will be relying on Medicare. In fact, not relying on Medicare may be the source of the problem.

If you are employed it may be worth a visit with the company accountant to be sure on which side of the line the company falls, and therefore what your insurance ought to be like.

Reference: Reuters (January 20, 2012) "Big penalties await those who delay Medicare filing"

Elder (Financial) Abuse Advice

Oftentimes an aging parent and siblings are a recipe for discord, especially when but a few of the siblings manage the elder's finances.

On the topic of disclosures, a reader inquired of the New Old Age blog regarding what to do about her family of eight siblings and one elderly father. Craig Reaves, past president of the National Academy of Elder Law Attorneys, practices elder law in Kansas City, Mo., fielded the inquiry and provided some sage advice.

According to the reader, long ago the siblings got together and put two of the sisters in charge of their father, largely because his will and other directives advised as much. As a result, they were granted power-of-attorney and access to his accounts.

Now, the reader has discovered that they aren't forthcoming with information about their father, his care, and his finances. The reader is worried that she won't hear anything until there's a demand for money to care for their elderly father, and, perhaps, that the original funds weren’t adequately used.

The response of Craig Reaves is tailored to the reader's unique situation, but his advice is applicable for many in this same or similar position. As a preliminary caveat, there are specific state laws (i.e., like those regarding "powers of  attorney") that govern the authority, responsibility and liability of agents and fiduciaries.

Read enlightening response of Craig Reaves in his original post.

Reference: The New York Times – The New Old Age Blog ( January 18, 2012) "Ask the Elder Law Attorney: Disclosures and Loans"

Hospice: A Medicare and Medicaid Profit Center?

Healthcare lawsuits involving the various ways the elderly can be taken advantage of turn up in the news on a (seemingly) daily basis these days. Why? Well, partly for political reasons and partly for the sheer number of egregious situations that have been created.

As an informed citizen/taxpayer, it's important to think about and understand the big picture. However, as a family member, it's vitally important to remember them for the sake of your elderly loved ones.

Consider this: A national hospice company improperly cycled patients through nursing homes and hospice with a goal of making as much profit as possible from Medicare, according to a whistleblower lawsuit announced recently.

A new legal battle has begun to churn, as recently reported at Kaiser Health News. Yet another healthcare company is being accused of taking advantage of the elderly and their families to draw the greatest yield from Medicare and Medicaid coffers. Here a large company, operating across several states, is accused of actively recruiting and cycling patients through nursing home and hospice services.

Such companies are compensated by Medicare based on the length of time patients receive care. Medicare picks up the entire nursing home tab for the first 20 days (after that the patient has to contribute), and conversely, if a patient spends too much time in hospice care, Medicare demands their money back since the patient was clearly admitted to end-of-life care under false pretenses.

Here's the rub: If you cycle between nursing home regimens and then jump into hospice care as early as possible (but not too early), Medicare will pick up the entire tab and for the maximum amounts, and that's the issue.

The legal battles, as well as the politics and economics aside, stories like these also demand a certain amount of attention since they could directly impact your family.

If you have a loved one in need of nursing home and/or hospice care, it's important that they find and receive that care… and that they not be abused by an uncaring system.

Reference: Kaiser Health News (January 4, 2012) "Lawsuit Accuses Company of Fraudulently Cycling Patients through Nursing Homes, Hospice Care."

Unclaimed “Death Benefits” Awaiting Claims

To make a broad but warranted generalization, life insurance companies generally don't like to pay out death benefits. You really can't begrudge them.

Fact of Life: Life insurance companies profits only decrease whenever they pay out death benefits.

A recent article in the Wall Street Journal may give you pause regarding whether you might be owed some life insurance money. Why? According to state regulators, as much as one billion dollars is languishing in the form of uncollected life insurance death benefits.

All is right by the insurers, however, as most policies require the beneficiary to file a claim to collect. This occurs when a beneficiary doesn't collect or doesn't know that they are entitled to collect. Unjust or not, this phenomenon has raised regulator suspicions and, out of good will or regulator urgings, some companies have started programs to determine if policy holders have passed and whether claims ought to be filed.

Still, it is a difficult enterprise. The potential for paying erroreous claimes is one of the reasons insurers let beneficiaries make the claims in the first place. So, if you want to ensure that you (or your loved ones) receive all that is owed, consider doing some sleuthing yourself.

The original article has some advice regarding how to find out about a missed policy. An even bigger lesson is for policy holders, and estate planners generally. One billion dollars sits in policies that were meant to care for the policy holders' families, and it's there mostly because it's unknown.

Teaching Point: It is essential, whether your estate planning is elaborate or simple, that you make your family aware of what you own, what your plan is, and how it is to work. Oh, by the way, this especially includes making sure they know the details about any life insurance you may own.

Reference: The Wall Street Journal (December 31, 2011) "Are You Owed Life Insurance?" 

Tax Breaks for Caregivers Worth A Look

If you have had to arrange for a caregiver for an aging loved one, then you have some appreciation of the enormity of the costs often involved. It's important, then, not to overlook tax breaks that just might help reduce the economic pain.

A recent article from Forbes offers a helpful reminder. The costs of a caregiver, under certain circumstances, can be partially tax deductible as medical expenses. After all, they are, in fact, very important and very costly medical expenses. However, conditions for taking the deduction essentially amount to proving that fact to the IRS.

So, what are some of these key conditions?

For one, you must document a care regimen for someone who is chronically ill. This means a licensed health care practitioner has to prescribe it. Unfortunately, it can't be up to your own discretion, but such prescriptions and suggestions are common for aging persons, especially when they suffer from dementia.

Next, there is an expense threshold. Medical expenses are deductible only to folks who itemize, and then only to the extent that the expenses exceed 7.5% of adjusted gross income. Itemizing taxes can be a little more of a burden, but with the associated medical costs involved it is generally easy to qualify. Caregiving expenses are generally rather expensive and include the wages, employment taxes, and actual medical costs along with the associated living costs from meals to even costs of rent, if live-in care is needed.

Finally, this deduction is not without caveats and the IRS watches those who try to abuse it. For example, if the cost of the caregiver is covered by insurance (e.g., long-term care or medical insurance) then you can't double-dip and claim both costs.

This is a complicated issue. There are many moving pieces.

Fortunately, the Forbes article shares some anecdotes from some illustrative cases and tax court challenges. Nevertheless, if you're using a caregiver now (or will in the future), don't overlook this potentially valuable deduction.

Reference: Forbes (December 8, 2011) "Tax Breaks For Caregiving Expenses Help Sandwich Generation"

Filling the Medicare Doughnut Hole

There is some good news for many Medicare recipients, present and future. According to new Medicare figures, the cost of falling into the “doughnut hole” is shrinking.

The so-called "doughnut hole," as many know all-too-well, is the treacherous territory you fall into when you have spent too much of your Medicare Part D benefits to continue receiving full benefits (but not so much of your own money to qualify for "catastrophic coverage").

It's an easy hole to fall into, especially if you have a special medication. With the new health law, however, pharmaceutical companies have begun offering a 50% discount on medications to beneficiaries in the gap, and that has meant a great deal of savings.

According to the figures, the average beneficiary who falls into the coverage gap already would have spent $1,504 this year on prescriptions. Yet, with the new law, that cost fell to $901, with each individual doing better or worse depending on which medicines they use.

I thought you could use a little cheery news today.

Reference: ABC News (November 27, 2011) "AP Newsbreak: Medicare’s Drug Coverage Gap Shrinks"