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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  • Who Would Make Medical Decisions for Your Minor Children?

    God forbid, but if your family is ever in an accident, who would be authorized to make medical decisions for your children if you’re unable to?

    Did you know that you can authorize who can make medical decisions for your child if you’re unable to? If you have minor children, this is a medical authorization for your minor children is a critical component to your estate planning. It’s one of the many important components of our Children’s Safeguard Plan

    You see, we’ve thought long and hard about all the various “what if” scenarios for families with minor children and what we could do to better protect your family.  That’s how the Children’s Safeguard Plan came into being. We were seeing far too many parents with “cookie cutter” wills that did too little to protect their young children. We wanted to provide a better solution to the unique planning concerns of young families like yours.

    Free Guide for Parents with Minor Children:

    If you have minor children, make sure you check out our free guide, on Children's Safeguard Planning, that covers the unique issues involved in estate planning when you have minor children, including naming guardians and protecting their future. Or, contact us to discuss the best way to get started at 919-443-3035 or via our contact form.

  • How Does the Medicaid Application Work for Nursing Home Care?

    What could be easier? Go down to your local Medicaid office, pick up and fill out an application, turn it in, and you’re qualified. Not exactly. While there are medical, asset, and income qualification issues, other aspects come into play when a caseworker evaluates your application. Here we will discuss some of those issues and highlight the need to understand exactly what the application is asking and how answers will be evaluated.

    “Do you intend to return to your home?” Eight simple words that we all understand. But answering that question incorrectly can convert the home from an exempt asset that does not count against the applicant, into a countable asset that will need to be sold and the money spent on nursing home and medical care. Why?

    The home of a Medicaid applicant only retains its exempt status if the person intends to return to the home. But let’s be honest. Unless a person is discharged to a nursing home to receive a short period of therapy and rehabilitation, that person is not likely to come out of the nursing home. In other words, the applicant knows, the family knows, and the caseworker knows, that the person is not likely ever to return home. Nonetheless, the question needs to be answered with a “yes” or the home loses its exempt status.

    When to file the Medicaid application can be a difficult issue as well due to the convoluted Medicaid laws and regulations. During recent years, rules have changed for qualifying for Medicaid. The two most commonly discussed are the look-back period and the calculation of the penalty period. The look-back period is the time frame during which Medicaid can “look back” at your finances to ensure that you meet all the rules for qualifying for Medicaid. The look-back period is nothing more than the length of time for which Medicaid can require you to provide your financial information.

    An elder law attorney in your state will have a complete list of information that the state requires to be submitted with the Medicaid application. Download our article on why it may make sense to hire an elder care attorney to assist you with the Medicaid application.

    At a minimum, an applicant has to provide proof of citizenship; marital status; death certificate for deceased spouse; a photo ID; copies of social security, Medicare, and health insurance cards; information on any pre-paid funeral or burial plans; and complete and comprehensive financial information for the entire look-back period. This information includes all open or closed bank accounts, all investments, life insurance policies, income information, annuities, and literally everything to do with your finances that occurred during the look-back period.

    People sometimes ask, “How does Medicaid find out about my finances?” The answer is simple: you have to tell them. Failing to do so or hiding assets or income are violations of federal law and, when discovered, will be penalized with fines and possible time in jail. No applicants for Medicaid should do anything other than make full and proper disclosure of all required information. And remember, sometimes it’s best to get help from a professional to plan for Medicaid.

    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.

  • Are Joint Accounts Protected for Medicaid Eligibility Purposes?

    All too often a parent will add a child’s name to bank accounts. Often the parent does this as a matter of convenience, to keep the accounts out of probate, or from a mistaken belief that the accounts are then protected from Medicaid and nursing homes. Generally, the parent does not know the potential problems created by adding the child to the accounts, but there are a few issues that should be considered before creating this type of account.

    When a child’s name is added to an account that child becomes an owner along with the parent. The child could draw out the entire account balance and use the money for himself. Further, if the child gets divorced, the account might be considered by the divorce court as an asset of the child’s to be divided in the divorce proceedings. Even if the court ultimately decides that the spouse of the child is not entitled to any of the account, the account might be tied up in expensive litigation for a long period of time.

    Another thing most people don’t realize when they put a child on an account is that the ownership is usually joint with rights of survivorship. This means that when the parent dies, the account does not pass through the parent’s Will, but instead, the surviving child automatically owns the account. If there is only one child, this might not be a big deal. However, if a parent has multiple children and the parent’s Will leaves the parent’s assets equally to all of the children, then the parent’s intention will not be followed insofar as the co-owned accounts legally go to just one child—the child who was on the account. 

    Furthermore, adding a child to an account does not help with regard to Medicaid and nursing home planning. The entire account balance will still be considered by Medicaid as being owned by the parent except to the extent that the child can prove she actually contributed some of her own money to the account.

    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 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.