Trusts have been touted as the ideal solution for Ohio  residents looking for estate planning tools to protect assets from the catastrophic costs of long term care – but can a living trust actually protect assets under Medicaid law?

First, to review how a living trust works:

• A living trust is a legal arrangement in which a person, called the grantor, shifts ownership of property, such as stock, a home, real estate or bank accounts, from their ownership into the legal ownership of the trust. 
• The grantor must actually change the title of ownership of each asset that will be placed in the trust from his or her name to ownership by the trust, which is known as funding the trust.
• A trustee manages the trust’s assets according to the terms of the trust agreement. The trustee can be the grantor, a friend or family member or a corporate entity (such as a bank, a trust attorney or trust company). As the initial trustee, the grantor can maintain full control of the trust until his or her death or incapacity. When the grantor relinquishes the trustee role, a successor trustee takes over the trustee duties. The successor trustee has legal responsibility for administering the trust solely for its named beneficiaries.

Online advertisements and aggressive sales pitches have sometimes used unscrupulous tactics to sell living trusts, even claiming that if individuals transfer property to a living trust, their assets are protected from nursing home costs.

This claim is false.  A living trust is a revocable trust, so it can be changed, revoked or modified at any time by the grantor.  This means that both the income and the property owned in the trust are considered available to cover nursing home expenses under Medicaid law.

A Medicaid attorney can best advise you on the Medicaid planning tools that can be used to meet your needs and goals, it is best not to rely on the advertisements and sales pitches.

The Alpern Law Firm is a member of the American Academy of Estate Planning Attorneys.

An important aspect of estate planning involves knowing the options available in your later years.  Medicaid often enters the lives of seniors when it becomes necessary to pay for nursing home care.  Many people mistakenly believe that Medicare or a private health plan will cover the expense of a nursing home.  This is not the case, and often they must turn to Medicaid, a federally-funded, state-run program for those with little or no resources or income. 

Medicaid law is a complex and challenging set of rules and regulations that often change.  A Medicaid attorney may be needed to help you through the maze of these regulations.  One area in particular may impact your estate plan, and it’s known as a “look-back period.”

A look-back period represents a form of a statute of limitations; if you have made any gifts in excess of $500.00 within that period of time and (1) you are in a nursing home and (2) you apply for Medicaid because you have run out of money, Medicaid will NOT  pay for your nursing home care.  If you make such a gift and a certain amount of time has passed, which is five years in Ohio, you will qualify for Medicaid and your nursing home care will be paid for by Medicaid.   Medicaid planning is a method that is used to allow individuals to plan for their eligibility and takes into account the look-back period.

The look-back period begins on the date the applicant is institutionalized and applies for Medicaid.  A transfer made within the look-back period is deemed “proper” or “improper”, depending on the circumstances or purposes of the transfer.  Improper transfers that occur during a look- back period are subject to a restricted Medicaid coverage period, meaning a penalty is assessed making the applicant ineligible for benefits during a calculated timeframe. 

Obviously, Medicaid law is complex, and many families can benefit from not only from estate planning that accounts for various senior care options, but consulting with a Medicaid attorney to help them through the maze of Medicaid.

The Alpern Law Firm is a member of the American Academy of Estate Planning Attorneys.

Many people count on social security to be part of their retirement income, but often don’t know the details or how much to expect.  Following are several frequently asked questions regarding this program:

What determines how much social security I’ll receive when I retire?

There are two main factors that determine the monthly benefit that you will receive:  you’re earnings throughout your working career and the age you begin receiving your benefits.  You are eligible to receive benefits at the age of 62, but they will be reduced according to your retirement age, which is based on your birth year, the earlier you begin to take retirement, the lower your benefit will be.

What is the best age to begin receiving social security benefits?

This is a decision that should be based on your personal situation.  It should be weighed carefully whether it would be better to receive benefits early with a smaller monthly amount or wait for the larger monthly benefit payment at a later date.  Some of the factors to consider in this decision are:

Other retirement income sources;

• Whether or not you plan to work part time or full time during your retirement.
• Your health;
• Your financial needs; and
• The amount of your benefits.

What is the difference between the monthly benefit at 62 and the monthly benefit at full retirement age?

The earliest you may begin collecting benefits is age 62.  If your estimated full benefit amount is $1,000, you would receive approximately $750 at age 62, $1,000 at your full retirement age (which differs based on the year of your birth) and approximately $1,300 at age 70.  These benefit amounts would not normally change throughout your retirement years, unless you are working during retirement.  In that case, after you reach full retirement age, social security reevaluates your benefit amount to give you credit for any months in which you did not receive your full benefit because of your earnings.

How can I find out how much my monthly benefits would be from social security when I retire?

The Social Security Administration mails this information annually.  In your Social Security statement is the estimated monthly benefit amounts you and your family may qualify for now and in the future.  This information is based on your earnings and years worked, and changes during your lifetime.

The Alpern Law Firm is a member of the American Academy of Estate Planning Attorneys.

Medicare, in simple terms, is the federally funded health insurance for people over age 65. Others may also qualify if they have a disability of suffer from permanent kidney failure and need dialysis. Medicare covers most acute (non-permanent) medical ailments, and is divided into four parts (A, B, C and D).

Medicare Part A pay for hospital stays, skilled nursing care in a nursing facility and hospice. Part B pay doctor’s bills, outpatient care and physical and occupational therapy.  Part C deals with HMOs and preferred provider plans that offer health insurance plans. The plans have to offer similar coverage as Parts A and B.  Part C providers can offer vision and dental coverage as well, and to minimize costs, they can also limit the doctors and hospitals to in-network providers. Medicare Part D offers prescription drug discounts through private insurance companies, and extra premiums are assessed for Part B and D.

Under the original Medicare plan, seniors still have to pay for some health care costs, or a deductible, every year. Each January 1, the amount of deductible, as well as the premiums for Part B and D changes.  In order to cover the gap between what Medicare pay for and the deductible, seniors can purchase Medigap insurance. If seniors meet certain income requirements or have a Part C plan, they may not have to pay for a supplemental Medicare insurance policy through coverage under Medicaid.

The Alpern Law Firm is a member of the American Academy of Estate Planning Attorneys.