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Important Changes in Veterans’ Long-Term Care Benefits

It’s now harder than ever for veterans to qualify for long-term care benefits.

Recently, the Department of Veterans Affairs (VA) finalized new rules that make it more difficult to qualify for long-term care benefits. The rules establish an asset limit, a look-back period, and asset transfer penalties for claimants applying for VA pension benefits that require a showing of financial need. The main benefit for those needing long-term care is Aid and Attendance.

The VA offers Aid and Attendance to low-income veterans (or their spouses) who are in nursing homes or who need help at home with everyday tasks like dressing or bathing. Aid and Attendance provides money to those who need assistance.

Currently, to be eligible for Aid and Attendance a veteran (or the veteran’s surviving spouse) must meet certain income and asset limits. The asset limits aren’t specified, but $80,000 is the amount usually used. However, unlike with the Medicaid program, there historically have been no penalties if an applicant divests him- or herself of assets before applying. That is, before now you could transfer assets over the VA’s limit before applying for benefits and the transfers would not affect eligibility.

New Regulations in Effect October 18, 2018

Not so anymore. The new regulations set a net worth limit of $123,600, which is the current maximum amount of assets (in 2018) that a Medicaid applicant’s spouse is allowed to retain. But in the case of the VA, this number will include both the applicant’s assets and income. It will be indexed to inflation in the same way that Social Security increases. An applicant’s house (up to a two-acre lot) will not count as an asset even if the applicant is currently living in a nursing home. Applicants will also be able to deduct medical expenses — now including payments to assisted living facilities, as a result of the new rules — from their income.

Three-Year Look-Back Provisions

The regulations also establish a three-year look-back provision. Applicants will have to disclose all financial transactions they were involved in for three years before the application. Applicants who transferred assets to put themselves below the net worth limit within three years of applying for benefits will be subject to a penalty period that can last as long as five years. This penalty is a period of time during which the person who transferred assets is not eligible for VA benefits. There are exceptions to the penalty period for fraudulent transfers and for transfers to a trust for a child who is unable to “self-support.”

Under the new rules, the VA will determine a penalty period in months by dividing the amount transferred that would have put the applicant over the net worth limit by the maximum annual pension rate (MAPR) for a veteran with one dependent in need of aid and attendance. For example, assume the net worth limit is $123,600 and an applicant has a net worth of $115,000. The applicant transferred $30,000 to a friend during the look-back period. If the applicant had not transferred the $30,000, his net worth would have been $145,000, which exceeds the net worth limit by $21,400. The penalty period will be calculated based on $21,400, the amount the applicant transferred that put his assets over the net worth limit (145,000-123,600).

The new rules went into effect on October 18, 2018. The VA will disregard asset transfers made before that date. Applicants may still have time to get through the process before the rules are in place.

Veterans or their spouses who think they may be affected by the new rules should contact their attorney immediately.

This article is a service of the Law Firm of Myrna Serrano Setty, P.A. We don’t just draft documents, we guide our clients to make the best choices for themselves and their loved ones.

Estate Planning Mistakes Seniors (Including You or Your Parents) Can’t Afford to Make

couple, elderly, man

It’s no secret that many of us put off estate planning. But once you or your parents reach senior status, you really can’t afford to put it off any longer. Unfortunately, without proper planning, seniors can lose everything, even if they have family to look after them. Having a will isn’t enough.

More and more, the media is highlighting stories of seniors being taken advantage of, and even being targeted by unscrupulous professional guardians. The New Yorker  recently published an article about many seniors in Nevada that were targeted by professional guardians, had their rights and property stripped away, and were isolated from their own families.

While planning for your incapacity and death can be scary, it’s even scarier to think of all the horrible things that can happen to your family if don’t have the right planning in place.

Here are a some of the most common mistakes that seniors make:

Mistake #1: Not creating advance medical directives

In your senior years, health care matters become much more relevant and urgent. At this age, you can no longer afford to put off important decisions related to your medical needs. How do you want your medical care handled if you become incapacitated and can’t communicate your wishes? And at the end of life, how do you want your medical care handled? You can address both of these situations with a Designation of Health Care Surrogate and a Living Will.

With the Designation of Health Care Surrogate, you appoint a health care decisionmaker that can step in for you when you can’t make your own health care decisions. With the Living Will, you provide guidelines for what medical care you want or don’t want at the end of your life. You can even include other instructions, such as who can visit you.

Mistake #2: Relying only on a will

Many people mistakenly believe that a will is the only estate planning tool they need. While wills are definitely one key aspect of estate planning, they come with some serious limitations:

● Wills require your family to go through probate, which is open to the public, can be time consuming and expensive.
● Wills don’t offer you any protection if you become incapacitated and unable to make legal and financial decisions.
● Wills don’t cover jointly owned assets or those with beneficiary designations, such as life insurance policies.
● Wills don’t shield assets from your creditors or those of your heirs.
● Wills don’t provide protections or guidance for when and how your heirs take control of their inheritance.

Mistake #3: Not keeping your plan current

Far too often people prepare a will or trust when they’re young, put it into a drawer, and forget about it. But your estate plan is worthless if you don’t regularly update it when your assets, family situation, and/or the laws change.

We recommend you review your plan at least every three years to make sure it’s up to date and immediately amend it following events like divorce, deaths, births, and inheritances. And if you have a trust in place, you need to make sure that you’re using it properly. Many people who have trusts aren’t using them effectively, leaving their property vulnerable to probate or mismanagement.

Mistake #4: Not pre-planning funeral arrangements

Although most people don’t want to think about their own funerals, pre-planning these services is a key facet of estate planning, especially for seniors. By taking care of your funeral arrangements ahead of time, you not only eliminate the burden and expense for your family, you’re able to make your memorial ceremony more meaningful, as well.

In addition to basic wishes, such as whether you prefer to be buried or cremated, you can choose what kind of memorial service you want—simple, elaborate, or maybe none at all. Are there songs you want played? Prayers or poems recited? Do you have a specific burial plot or a spot where you want your ashes scattered?

Pre-planning these things can help relieve significant stress and sadness for your family, while also ensuring your memory is honored exactly how you want. It’s important that you take care of your estate planning immediately and avoid these common mistakes. Our firm can walk you step-by-step through the process, ensuring that you have everything in place to protect yourself, your assets, and your family.

This article is a service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents, she helps her clients make informed and empowered decisions about life and death, for themselves and the people they love. Contact Myrna today at (813) 514-2946.

Strategic Retirement Planning

Are you approaching retirement, and questioning how you can ensure a smooth transition from working life to retired life?  Walking away from regular paychecks and employer-provided benefits can feel a little nerve-wracking. You can minimize the impact of these major life changes though by planning accordingly, and by keeping these things in mind.

Time It

Get your timing right. Review and understand your employer’s policies on 401(k) matching and profit sharing. Make sure you plan to retire at a time when you can reap all the vested benefits you have coming to you before they expire. Sit down with your company’s HR department to discuss your retirement benefits.

Bridge the Insurance Gap

If you are retiring before the age of 65, you could have a lapse in insurance coverage before you are eligible for Medicare. If your employer, like most employers, doesn’t offer retiree health insurance benefits, look into COBRA insurance to extend your current coverage, or an individual insurance plan to carry you over until Medicare kicks in. Don’t forget about life insurance and long-term care insurance either. If you do not have an insurance advisor you trust, we can refer you to someone, and we can also provide an objective backstop review on any insurance you do have in place to make sure it’s the right amounts and right types for you.

Petition for Your Pension

Apply for your pension at least five months before you retire. Get a benefits statement, and consider your payout options if you have them (e.g. lump sum vs. annuity). Coordinate your pension payout to minimize your tax liability while still meeting your financial needs.

Rearrange Your Retirement Funds

Consider the pros and cons of consolidating accounts and rolling 401(k) funds into an IRA for more investment freedom and easier management. Some retirees find the investment options with employer-provided 401(k)s are cheaper than those bought independently. Make sure you discuss your options with a financial professional and choose the option that maximizes your income and gives you the flexibility you need. As always it is important, of course, to ensure your beneficiary designations are set up to make sure your retirement benefits go exactly where you choose.

Closing Thoughts

Planning a strategic retirement takes forethought, but make sure you don’t short sell yourself on all the perks you may be owed. Make sure you take advantage of all the benefits your employer offers and carefully plan how you will manage your retirement income to minimize tax liabilities. Following these simple steps can help ensure you are financially prepared for retirement.

Attorney Myrna Serrano Setty realizes that estate planning has many moving parts that are impacted by life changes, like retirement.  And that is why she works with a network of trusted advisors in the insurance, tax and financial planning fields. If you haven’t already done so, contact our firm to schedule a Life & Legacy Planning Session. We’ll get you thinking about what you own, what matters most to you and help you make informed and empowered decisions about life and death, for yourself and the people you love.  Call our office today to schedule a Planning Session and mention this article to find out how to get this $500 session at no charge.