Learn more about elder law and long term care planning for you and your family by reading the answers to some of our most frequently asked elder law questions:
Elder Law FAQ'S
Q: What Are The Three Possible Ways For Seniors To Pay For Long Term Care As They Age?
A: There are three ways for seniors to pay for long term care: They can either pay it themselves, they have long term care insurance that will pay part or all of it, or they will need to rely upon government help. Since the average cost of residential care facilities in California ranges from $4,000 to $9,000/per month, while skilled nursing care is upwards of $12,000/month, most people can't afford to pay privately for very long. This financial strain is compounded, if both a husband and wife need care, or if acute care is needed. In such circumstances, costs could easily exceed $30,000/month. So while many people can afford to pay privately, they usually can't afford these costs indefinitely. That's where long term care insurance and government benefits come in. If you were fortunate enough to have qualified for, had the foresight to purchase, and could afford the premiums of long term care insurance, that insurance will be incredibly valuable in paying for your long term care. Unfortunately, most people don't have long term care insurance and even if they do, usually this insurance doesn't cover everything, forever. Which highlights the third way people pay for care: They are a veteran who qualifies for Veterans Pension Benefits or Medi-Cal steps in to pay for care. Both these programs require that an applicant show limited resources. Of course, there is no problem qualifying for these programs once a person has already spent all their money on long term care and they are now broke. But it is very important to realize that the government will only help with food, shelter and medical long term care needs. Everything else underneath the sun, the government will not pay for. Maybe family members can chip in to pay for items and services that are needed. The much better approach however is to speak with an elder law attorney and protect some, or even all, of your assets so that you can age with dignity and not have to rely upon others to pay for your basic needs.
Q: What Is The California Medi-Cal Program And How Can A Person Qualify For It?
A: Medi-Cal is a combined Federal and California State program designed to help people pay the costs of long term nursing care for public assistance recipients and other low-income persons. Medi-Cal is a need-based program and those who seek its assistance must pass certain eligibility requirements. The Affordable Care Act does not affect the Medi-Cal program for those who are over 65 years of age. The rules surrounding Medi-Cal qualification, in the long term skilled-nursing care arena, are incredibly confusing and difficult to navigate. You should definitely not try to do so on your own without the help of an experienced expert. But to learn more about the specifics and how to qualify for Medi-Cal, Click here to read more...
Q: What Are Veterans Pension Benefits And How Can Veterans And Their Spouses Get Them?
A: The Department of Veterans Affairs offers two disability income benefits for veterans who served on active duty. The first of these benefits — Pension — provides supplemental income to disabled or older veterans who have a low income. Pension is for war veterans who have disabilities that are not connected to their active-duty service. If the veteran's income exceeds the Pension amount, then there is no award. However, income can be adjusted for future and recurring unreimbursed medical expenses, and this allows veterans with household incomes larger than the Pension amount to qualify for a monthly benefit. There is also an asset test to qualify for Pension. The second disability income benefit is called “Compensation” and it is designed to award the veteran a certain amount of monthly income to compensate for potential loss of income in the private sector due to a disability or injury or illness incurred while in the service. In order to receive Compensation, a veteran has to have evidence of a service connected disability. Most veterans who are receiving this benefit were awarded an amount based on a percentage of disability shortly after they left the service. There is generally no income or asset test for most forms of Compensation, and the benefit is nontaxable. Most elderly veterans who never applied for Compensation, may not realize they can apply many years after leaving the service. Other veterans may be receiving Compensation but their condition has worsened. They can reapply and get a larger amount based on a higher disability rating. Compensation and Pension claims are submitted on the same form and VA will consider paying either benefit. If a claimant is awarded both benefits, the claimant can only receive one of them. Generally, for applications associated with the cost of home care, assisted living or nursing home care, the Pension benefit results in more income. Unfortunately, much like the Medi-Cal program, the VA Pension Benefit program is incredibly confusing and rife with pitfalls for the uninformed. To learn more about the specifics and how to qualify for VA Benefits, Click here to read more...
Q: How Can A Medi-Cal Asset Protection Trust Or Veterans Asset Protection Trust Help Me?
A: Great question! Over 99% of the trusts floating out there in the U. S. are revocable living trusts. These trusts are not only useless when it comes to qualifying for government help, but most of the time these revocable living trusts actually hurt California seniors seeking Medi-Cal and/or VA Pension Benefits. That's because living trusts say that the Grantor (person who set up the trust), holds all of his or her assets, for his or her own benefit. And that totally makes sense, except in the case where a person needs to obtain government benefits to help pay for long term care. Asset protection trusts and elder law planning allow a senior to “gift” assets into a trust, in order to take those assets out of their “direct estate.” It might sound counterintuitive to some, but asset protection trusts are NOT directly held for the benefit of a Grantor, but nevertheless succeed in helping seniors obtain crucial government benefits, while the assets inside these trusts still can be available to benefit the senior(s) who set that trust in motion. When compared to outright gifting, asset protection trusts provide valuable tax benefits as well. Indeed, Medi-Cal and Veterans Asset Protection Trusts are valuable tools for those who are trying to pay for long term skilled-nursing, assisted living costs or at-home care, while enabling seniors to avoid probate, obtain tax benefits and, of course, achieve asset protection. These trusts can literally make the difference between a senior receiving necessary care while preserving family assets or a senior struggling to pay for all their needs while draining all their finances.
Q: What's The Difference Between California Medi-Cal And Veterans Asset Protection Trusts?
A: A Medi-Cal Asset Protection Trust (MAPT) and Veterans Asset Protection Trust (VAPT) differ in a few significant ways. With a MAPT, the person setting up the trust can continue to receive the income from that trust. With the VAPT, the person setting up the trust does not receive the income directly. Rather, a trusted love one receives the income, and is able to use that income in the most efficient manner. Another difference between the MAPT and VAPT is how a home is held in the trust. With a VAPT, the home can never be rented and is held in an “intentionally defective grantor sub-trust” to preserve positive tax results. Still, the house can be sold and the proceeds can be used. With a MAPT, the trust is slightly less complicated because there is no need to worry about renting the house and thus, the sub-trust in the VAPT is not needed. Otherwise the basic structure of these trusts are the same. Both are considered irrevocable grantor trusts ready to receive a “gift.” In the case of a MAPT, the trust can provide the Grantor a stream of income over his or her lifetime. However, any assets transferred to a MAPT are no longer available to the Grantor. In practice, the future Medi-Cal benefits applicant makes a gift of these assets to the trust in return for an expected income stream. In the case of a VAPT, income works differently. With a VAPT, the Trustee of this trust can make lifetime distributions from the trust to certain people. These beneficiaries can then turn around and use that money for whatever they want, including paying for items or services for the Veteran. With both trusts, the Grantor keeps a limited power of appointment to change who can receive what is in the MAPT or VAPT upon their passing. This is an extremely important point to remember: Even though the person setting up the irrevocable trust loses some direct control over their assets inside that trust, he or she can always change the ultimate beneficiary(ies) of that trust. In a round about way, the ability to control ultimate disposition of the assets inside that trust, usually provides great comfort to a person putting assets inside an asset protection trust. Also, there are significant tax advantages to holding assets in a MAPT or VAPT. With both a MAPT and VAPT, the grantor retains enough power over the assets so that the assets can stay in the grantor's estate for estate tax purposes. This allows for a “step up” in tax basis on the property. Thus assets that have appreciated since being acquired by the Grantor will receive a step up in basis at the time of the Grantor's death — a very significant tax benefit to the beneficiaries. Compare this to an outright gift: if you give appreciated assets to a beneficiary, that beneficiary receives your basis (what you paid for the property) and when the beneficiary sells the property they are going to pay capital gains on all the profit. Plus, those assets are available to the beneficiaries creditors-including ex-spouses, defunct businesses, car accidents, etc. In conclusion, the main point to remember with asset protection trusts is that while MAPTs and VAPTs differ in some significant ways, both types of trusts are superior to outright gifting from a tax planning and asset protection standpoint.