Trying to plan your North Carolina estate? Get the answers you need to protect your family.

Jackie Bedard has compiled a list of the most frequently asked questions in response those who need help protecting their families with North Carolina estate plans.
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  • Why Proper Estate Planning is Important, Especially if Medicaid is Involved

    Most married couples have what are commonly referred to as reciprocal wills. These wills say give all to wife if husband dies first, and give all to husband if wife dies first, and when both are gone, then to the children. What if the husband is in the nursing home on Medicaid and the wife is healthy at home? They have reciprocal wills, and then, the wife dies first. Who inherits with reciprocal wills? The husband does. What does Medicaid do? It stops paying for the husband’s nursing home care until he has exhausted the money inherited from his wife. The wife, as the community spouse, was able to keep half of their assets up to a certain amount plus the exempt assets such as the house and the car. Now the husband in the nursing home owns all of those assets, and they will have to be spent down to nothing before he can qualify for Medicaid to pay for his care again.

    This unexpected and potentially devastating result could have—and should have—been avoided with the use of bypass planning. While several options exist for bypass planning, such as disinheriting the husband and passing those assets to the next generation, one excellent option is the supplemental needs trust.

    The supplemental needs trust is part of the wife’s estate planning documents and is formally established on her death for the benefit of the nursing home husband. The supplemental needs trust does two very important things. First, it maintains the nursing home husband’s eligibility for governmental benefits such as Medicaid. Second, the supplemental needs trust makes the money in the trust available on behalf of the husband to pay for all the things Medicaid does not pay for such as eyeglasses, hearing aids, dentures, and so on. The wife would choose a trustee for the supplemental needs trust (often an adult child) who would be in charge of using the money for the husband’s benefit according to the guidelines set forth in the trust. In this way, eligibility for benefits is preserved, while the wife has the peace of mind of knowing that she has provided for her husband if she dies first, without all of the money going to nursing home care. The nursing home husband’s quality of life is improved and, often, an inheritance is still available to the couple’s children or grandchildren, since the money is not being spent on nursing home care at a monthly cost often exceeding $5,000.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • Should I Let the Nursing Home Help With My Medicaid Planning?

    It is not the job of the Medicaid agency or the nursing home to tell you how to use Medicaid’s rules to help you preserve assets. The Medicaid agency basically processes your application and tells you whether you are approved for Medicaid. Even if the Medicaid agent sees ways you can preserve assets, she is unlikely to tell you.

    Nursing homes receive more pay for people paying out of their own pocket than they do for those on Medicaid. Further, the person at the nursing home that assists the nursing home’s clients in applying for Medicaid is not trained to know the strategies available to preserve assets. Her job for the nursing home is to assist those clients in applying for Medicaid who have spent down their assets by paying their money to the nursing home. Her job does not include telling you all the strategies to keep you from having to pay your money to the nursing home. In fact, she might get in trouble with her employer, the nursing home, if she starts telling you such strategies, assuming she even correctly knows any.

    It makes sense that these institutions should be able to support your understanding and use of Medicaid. So, it’s important to realize that while they work with the program, they can’t provide advice on planning, payment, and best practices. An elder law attorney is your best resource to provide clear and strategic approach to Medicaid. It’s always a good idea to do your research as well.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • Should I Include Medicaid Planning in My Long-Term Care Planning?

    Medicaid planning is the art and science of working within the Medicaid laws and rules to preserve assets to improve the quality of life of the person receiving Medicaid benefits, the quality of life of that person’s spouse, and to improve the quality of life of the person’s loved ones. Medicaid planning is analogous to tax planning. Tax planning does not seek to evade paying taxes, it only seeks to minimize the amount of taxes owed through good pre-planning and taking advantage of the rules in the Internal Revenue Code. Medicaid planning works the same way.

    Why do Medicaid planning? A true story illustrates its importance. Two adult daughters visited their mother in the Alzheimer’s unit of the local nursing home. This lovely elderly lady, who needed Medicaid to pay for her care, had hearing aids, the kind that are small and fit inside the ear. While the two daughters talked to her, the mother’s hearing aid fell out. Mom picked it up and held it in the palm of her hand for a moment, looking at it. Her daughters thought she was about to insert it back into her ear. Instead, with a quick movement, the mother popped the hearing aid into her mouth and started to chew. She thought it was a piece of candy! She chewed the hearing aid hard enough to destroy it, to crack the hearing aid’s battery case, and to chip and damage several teeth.

    Who pays to replace the hearing aid? Who pays to repair her teeth? In many states, Medicaid will not pay for such things. Medicaid doesn’t pay for eyeglasses in many states or pays so rarely (one pair of glasses every five years) that it’s tantamount to not paying at all. Medicaid does not pay for clothes. If the Medicaid recipient wants a phone in her room, she pays for it herself. If she wants a television in her room, she pays. Medicaid only allows her to have a personal needs allowance, so small that it tantalizes by what it cannot pay, rather than for what it does pay. Medicaid planning sets funds aside to be used for the benefit of the person who needs help. Medicaid planning improves the quality of the person’s life.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • Why Should I Consider Medicaid Planning?

    Medicaid planning is the art and science of working within the Medicaid laws and rules to preserve assets to improve the quality of life of the person receiving Medicaid benefits, the quality of life of that person’s spouse, and to improve the quality of life of the person’s loved ones. Medicaid planning is analogous to tax planning. Tax planning does not seek to evade paying taxes, it only seeks to minimize the amount of taxes owed through good pre-planning and taking advantage of the rules in the Internal Revenue Code. Medicaid planning works the same way.

    Why do Medicaid planning? A true story illustrates its importance. Two adult daughters visited their mother in the Alzheimer’s unit of the local nursing home. This lovely elderly lady, who needed Medicaid to pay for her care, had hearing aids, the kind that are small and fit inside the ear. While the two daughters talked to her, the mother’s hearing aid fell out. Mom picked it up and held it in the palm of her hand for a moment, looking at it. Her daughters thought she was about to insert it back into her ear. Instead, with a quick movement, the mother popped the hearing aid into her mouth and started to chew. She thought it was a piece of candy! She chewed the hearing aid hard enough to destroy it, to crack the hearing aid’s battery case, and to chip and damage several teeth.

    Who pays to replace the hearing aid? Who pays to repair her teeth? In many states, Medicaid will not pay for such things. Medicaid doesn’t pay for eyeglasses in many states or pays so rarely (one pair of glasses every five years) that it’s tantamount to not paying at all. Medicaid does not pay for clothes. If the Medicaid recipient wants a phone in her room, she pays for it herself. If she wants a television in her room, she pays. Medicaid only allows her to have a personal needs allowance, so small that it tantalizes by what it cannot pay, rather than for what it does pay. Medicaid planning sets funds aside to be used for the benefit of the person who needs help. Medicaid planning improves the quality of the person’s life.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • What Is a Reverse Mortgage? How Can They Be Used to Pay For Long-Term Care?

    A reverse mortgage is a non-recourse loan where the home is used as collateral to get tax-free cash from the equity of the home without incurring monthly expenses. With a reverse mortgage, the homeowner does not need an income to qualify. There are no income, credit, or health requirements, and there is no effect on Social Security or Medicare benefits.

    Reverse mortgages guarantee that the homeowner can stay in the property for as long as he or she lives in the property as his or her principal residence and pays the property taxes and insurance and maintains the property in a reasonable condition, even if the outstanding loan and interest grow to exceed the property’s value. Reverse mortgage fees can be high, although fees are usually rolled into the loan and not paid up front. The costs associated with a reverse mortgage are very similar to those of a conventional loan.

    A reverse mortgage can be a sound strategy to:

    •          Increase your income

    •          Pay unexpected expenses

    •          Pay off debts

    •          Make necessary changes to your home

    •          Make your home more accessible

    •          Help you get the home care services you need to remain independent

    Reverse mortgages can be used for:

    •          Medical bills and prescription drugs

    •          Long-term health care

    •          Retirement and estate tax planning

    •          Daily living expenses

    Another important consideration is that any remaining value on the home goes to the homeowner or his or her heirs when the house is sold. Home ownership is often a person’s most valuable asset. It is important to remember that getting a reverse mortgage is essentially the same as you withdrawing the money you would expect to leave to your heirs. 

    Free Caregiver’s Guide:

    Solid legal and financial planning is critical for a loved one with long-term care needs. Download our free Caregiver’s Guide to learn the critical information you need to know about caring for your loved one.

  • How Does Medicaid Define Assets Within the Qualification Process?

    The first procedure in the Medicaid qualification process is to divide assets into two categories: (1) exempt and (2) non-exempt or countable. Exempt assets do not count against you in the sense that owning these exempt assets does not affect your qualifying or not qualifying for Medicaid. Medicaid considers non-exempt or countable assets in determining whether you qualify.

    Exempt assets are:

    The most common exempt assets are:

    • Your residence
    • One motor vehicle of reasonable value (although what is a reasonable value can vary from state to state)
    • Pre-paid or irrevocable funeral and burial plans (another area where requirements vary from state to state)
    • The combined cash value of life insurance policies with total face value of $10,000 or less
    • Normal household goods including personal jewelry
    • Certain other assets such as Medicaid-compliant annuities.

    Countable assets are:    

    All other assets are countable with the caveat that some states exempt assets, such as an IRA, that generates income. The income is counted as part of evaluating the income limitations, but the asset is not. Similarly, some states exempt income producing real estate property such as rental houses or farmland. Check with your local elder law attorney for your state’s rules.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • What is the estate tax exemption?

    Estate Planning PitfallsFor 2019, the Federal estate tax exemption amount—the amount that you can pass free of federal estate taxes—is $11.4 Million.

    This tax law is set to expire on December 31, 2025 and revert to prior the prior level of $5 Million indexed for inflation. The estate tax exemption can also be changed by Congress at any time. As a result, it’s prudent for high net worth individuals to establish estate tax planning to “lock in” the currently high estate tax exemption before the rules change again.

    The applicable estate tax rate on assets in excess of the estate tax exemption is 40%. For example, if your total estate is $12.4 Million, your estate tax exemption can be used to shelter the first $11.4M from estate tax (assuming you didn’t use your exemption during lifetime—see below). The remaining $1M would be taxed at 40% resulting in a $400,000 estate tax bill.

    North Carolina repealed the state-level estate tax effective January 1, 2013.

    Estate Tax & Gift Tax Are Linked

    Keep in mind that the Estate Tax Exemption and the Lifetime Gift Tax Exemption are linked together. Any portion of your Lifetime Gift Tax Exemption used will reduce your available Estate Tax Exemption upon death. For example, if you use $2M of your lifetime gift tax exclusion during your lifetime, then upon death your estate tax exemption amount will be reduced by $2M.

    Estate Tax & Generation-Skipping Transfer Tax (GST Tax)

    When the estate tax was first created, many affluent families (e.g., the Rockefellers, Vanderbilts, etc.) began using trusts to shelter assets from estate taxes for multiple generations by setting up their estate plans such that some assets would “skip” their children and pass directly to grandchildren or younger beneficiaries.  Here’s how it would work: Grandpa realizes that then he leaves his estate to his children, it will be subject to estate tax. And then later, when Grandpa’s children die and pass the wealth down to the grandchildren, it will be subject to estate tax again (as part of the child’s estate). So Grandpa decides that he has enough wealth that he will just leave part of his estate to his children, and then for the rest of his estate he’ll “skip” his children and leave it directly to the grandchildren, thereby sheltering the money from being taxed as part of the child’s estate.

    Congress eventually got tired of these generation-skipping shenanigans and added the Generation-Skipping Transfer Tax to the law books. Essentially, if you leave assets to grandchildren or younger beneficiaries in an effort to “skip” a generation of estate taxes, there is a secondary tax that kicks in to make it as if you had paid estate tax at each generation.

    The Federal generation-skipping transfer tax (GST Tax) exemption is currently the same as the estate and gift tax exemption: $11.4 Million.

    Need to Discuss Your Tax & Asset Protection Planning?

    In our years of experience working with thousands of individuals in the Wake County area, we find that asset protection planning is particularly important if any of the following apply:

    • You own a home and have an estimated net worth of $1M or more;
    • You own vacation property;
    • You own rental property;
    • You are high income-earning professionals;
    • You are high income-earning business owners;
    • You own a business with significant value.

    Don’t leave yourself or your loved ones stuck dealing with the financial aftermath of avoidable taxes, a lawsuit, long-term care costs, or an unexpected tragedy can bring to your family. Contact Carolina Family Estate Planning today at (919) 443-3035 or fill out our online form to speak with someone about registering for a seminar or a Vision Meeting. You may also wish request a free copy Jackie Bedard’s book, Estate Planning Pitfalls: The Twelve Most Common Threats To Your Estate & Your Family’s Future.

     

  • Why Should I Hire an Attorney to Prepare and File My Medicaid Application?

    It might be easy to think that filing for Medicaid assistance for nursing home care is as simple as completing the Medicaid application forms, but that is just the start of a time-consuming process that often takes several months.

    Working with an attorney can be critical to the success of your application.  Here are a few reasons how working with our office can be beneficial:

    • We make sure that the client is actually eligible and is filing the application at the correct time.  Due to budget cuts, most county Medicaid offices are understaffed and it can take several months for them to review and approve or deny your application.  Thus, it is critical to make sure that you are eligible.  Otherwise, if the applicable is denied several months after filing it, that’s several months of lost coverage—potentially resulting in tens of thousands of dollars being owed to the nursing home.
       
    • We know what documentation is required to support an application so that we can help assemble and file as thorough an application as possible to reduce delays with application approval.
       
    • Unlike the nursing home, our duty is to act in your best interests.  The private pay rate at most nursing homes is significantly higher than the Medicaid reimbursement rate (the amount that the government pays them for a patient that is approved for Medicaid).  Thus, it’s not really in the nursing homes best interest to help you get your application approved as quickly as possible.
       
    • We conduct a full application “audit” prior to submitting the application to Medicaid.  We review all of the bank statements and supporting information as if we were as caseworker from the Medicaid office to look for any “red flags” that might slow down or jeopardize the application.  If we find any, we’ll work with you to get them properly documented to ensure that your application gets approved as quickly as possible.
       
    • While your application is pending and after the application is approved, you are still responsible for paying a “Patient Monthly Liability,” i.e., your share of the nursing home bill.  We’ll calculate this amount for you to make sure that you don’t fall into arrears while the application is pending.

     

    Spend-Down and Eligibility Planning

    If it is determined that you are not yet eligible for Medicaid, then we can assist you with a Medicaid spend-down plan to achieve Medicaid eligibility.  There may be separate legal fees to create a Medicaid spend-down plan.  As part of the plan, we’ll discuss various Medicaid exemptions and allowable expenditures until assets are reduced sufficiently to qualify for Medicaid.  Legal fees for Medicaid spend-down planning and/or assistance with preparing and filing the Medicaid application are allowable Medicaid spend-down expenses. 

    Pre-Filing of the Application

    Our process begins with working with you to gather the supporting documents for the Medicaid application.  When appropriate, we are happy to contact banks and financial institutions on your behalf to gather supporting financial information (though some banks will charge a fee for this service). While we will do what we can to reduce the burden on you of tracking down information, we will need your involvement in tracking down records such as important biographical information (e.g., birth certificates and similar), but we work with you to try and make this as easy as possible.  We’ll provide you with a thorough checklist of information needed.

    Our office will then conduct a pre-submission “audit” of the application materials and supporting documents to ensure that the client is eligible, that we’re filing at the correct time, and if there are any potential “red flags” in the financial statements, that we have the supporting documents for them.  We’ll also calculate the Patient Monthly Liability for you and instruct you regarding how to pay the nursing home while the application is pending.

    Filing of the Application & Advocating for Eligibility

    Once we file the application, we will handle all follow-up and interaction with the Medicaid office until the application is processed.  Due to budget cuts, many Medicaid offices are understaffed, so the Medicaid application review process can take several months.  During this time, we will follow up on your application status to ensure that it was properly received and filed, that is has been assigned to a caseworker, and what the status of the application processing is. 

    While the application is pending, we’ll answer any questions that might arise from the Medicaid office regarding the application.  We’ll also continue to work with you if any questions arise on your end.

    We are well versed on the Medicaid manual and the various eligibility rules and exemptions.  When we file your application, we include supporting documentation specifically citing the various sections of the Medicaid manual that allow for certain exemptions to ensure that the application is processed in a timely manner and that you receive the exemptions that you are entitled to.

    During the Medicaid application process, it is common for the Medicaid office to send “Requests for Information.”  These letters come with strict deadlines and it is critical to comply with them.  We docket all deadlines, ask for extensions when needed (however the number of exemptions is limited), and work diligently to gather the information requested and submit it in a timely manner.

    Review of Medicaid Approval

    When the Medicaid application is approved, we’ll review the approval letter to ensure that the Patient Monthly Liability was properly calculated.  We’ll also advise you regarding how to ensure that you maintain ongoing Medicaid eligibility and don’t do something to jeopardize your Medicaid status. 

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

     

  • What is a Gun Trust and Why Do I Need One?

    There are many gun owners who worry about what will happen to their firearms and magazines when they die or become incapacitated. If you become incapacitated, a typical revocable living trust may require the sale of your firearms or transfer to an ineligible individual or one who does not understand the additional laws and restrictions relating to the ownership, transfer, and use of firearms. Similarly, when you die, firearms need to be transferred properly and only to those who are legally able to be in possession of them. While a traditional trust can be used to purchase NFA firearms, there are many problems with using a traditional trust and therefore only a NFA Gun Trust should be used. For more detailed information, please contact our office at 919.443.3035.

  • What is Elder Law?

    Elder law is a growing field of law that deals with the issues faced by the fastest growing segment of the U.S. population, seniors. With the goal of Asset Protection, this area of law combines parts of Long Term Care Planning, Veterans Benefits, Special Needs Planning, Medicaid Planning, Estate Planning, Senior Estate Planning, and Trust or Probate Administration.