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The Key Takeaways
• Long-term care is not covered by health insurance, disability insurance or Medicare.
• You have limited options when considering how these expenses could be paid.
• The best way to plan for the possible expense of long-term care is to accept it as a central requirement in your overall financial planning and seek professional assistance.
 
Who Pays for Long-Term Care?
Many people are surprised to learn that long-term care is not covered by health insurance, disability income insurance or Medicare. Health insurance plans cover nursing home expenses only for a short period of time while you are recovering from an illness or injury. Disability income insurance will replace part of your income if you are not able to work after a specified time, but does not pay for long-term care. Medicare, which covers most people over age 65, provides limited coverage for skilled care for up to 100 days immediately following hospitalization. After that, you’re on your own.
 
How Will You Pay for Long-Term Care if Needed?
1. Use your own assets. This is called self-insuring. If you need long-term care, you will pay for it from your own assets. If you don’t need the care, then you will not have spent money on insurance premiums. You can set aside a certain amount of your assets for this specific purpose or have the expenses paid from a general investment fund. Your financial advisor will be able to help you make that decision, determine how much you might need, and help you attain your goal through investments.
 
2. Buy long-term care insurance. This has traditionally been a good option, especially if you have assets and income you want to protect, you want to avoid being a financial burden on others, and you want to have some choice in the care you receive. Most policies give you the option of receiving care in your own home or in a private-pay facility. As with any insurance, the premiums are lower when you are younger and in good health; if you wait too long, the cost could be prohibitive and you might not qualify. In recent years, the premiums have gone up on these policies because the insurance companies under-estimated the actual costs. Your insurance advisor will be able to help you evaluate current policies and determine if one is right for you.
 
3. Purchase life insurance and annuities with long-term care benefits. Some life insurance policies have accelerated death benefits that will pay benefits if the insured has a care issue, as do some annuity products. The premiums for these will be higher, but they may be worth exploring. Your insurance advisor will be able to help you evaluate these options.
 
4. Qualify for Medicaid. Medicaid pays the bills for a large number of people in nursing homes today. But because the program is designed to provide services for those who cannot support themselves (children, the disabled, the poor), you will have to “spend down” your assets and be practically penniless in order to qualify for benefits. Your spouse will also be limited to the amount of assets and income he or she can have, and you will only be able to receive care from a facility that accepts Medicaid. (Most people would prefer to receive care at home or in a private-pay facility.)
 
If you have minimal assets, this may be an option for you. However, before you do anything, speak with a local elder law attorney who has experience with Medicaid planning. Medicaid, while a federal program, is administered by the states, so the rules vary from state to state. An innocent error could disqualify you from receiving benefits for many months.
 
Explore a Medicaid Trust. When properly prepared, these irrevocable trusts can help some people qualify for Medicaid without impoverishing the well spouse or spending the children’s inheritance. Five years must pass between the time assets are transferred to the trust and when the person is deemed eligible for Medicaid. This is known as the “look-back period.” Long-term care insurance is often used to cover the look-back period if care is needed before qualifying for Medicaid. Assistance from a local elder law attorney who has extensive experience with these trusts is absolutely essential.
 
What You Need to Know: The benefit of planning for the possible costs of long-term care is the peace of mind that comes from knowing that this care can be provided if needed without destroying the financial well-being of the entire family.
 
If you would like more information about long-term care planning, please call our office.

The Key Takeaways
• The cost of long-term care is the greatest threat to your financial health.
• Most of us will need long-term care for at least some time before we die.
• It is better to assume you will need long-term care and plan for it than to just hope it doesn’t happen to you or a family member.
 
The Expense of Long-Term Care
Long-term care can be provided in your home, in an assisted living facility or in a nursing home. All can become very expensive over time.
 
Costs for long-term care are hard to estimate. The average stay in a nursing home is three years. Patients with Alzheimer’s usually need care longer, often in specialized facilities. The actual costs will depend on the kind of care you need, how long you require it and where you live. Expect these costs to increase as the cost of medical care continues to rise.
 
What You Need to Know: Long-term care expenses are not covered by health insurance, disability income insurance or Medicare. If you do not plan for these costs, and you or another family member requires long-term care, the results can be financially devastating for your family.
 
If you would like more information about long-term care planning, please call our office.

Oscar-winning actor Philip Seymour Hoffman died at age 46 from a drug overdose in February 2014. He left behind three young children and a fortune estimated to be worth $35 million. After his death, Mr. Hoffman’s Last Will and Testament was filed for probate. The Will was signed on October 7, 2004, about a year and a half after the actor’s first child was born. The Will leaves his entire estate to Marianne “Mimi” O’Donnell, the mother of all three of Mr. Hoffman’s children. The couple never married and had separated in 2013 (due to Mr. Hoffman’s recurring drug problems).
 
Estate Planning Mistake #1 – Using a Will
Shortly after Mr. Hoffman’s Will was filed, The New York Post published it online and his final wishes instantly became public information.
• We know his request to have his son (the only child living when the Will was signed) raised in Manhattan, Chicago, or San Francisco so that he “will be exposed to the culture, arts and architecture that such cities offer.”
• There is another way – a private way. A Revocable Living Trust (as used by Elizabeth Taylor and Paul Walker) would have kept Mr. Hoffman’s final wishes a private matter.
 
Estate Planning Mistake #2 – Failing to Update His Estate Plan
Mr. Hoffman signed his Will in October 2004.
• During the next nine years, he had two daughters, won an Oscar for best actor for his performance in Capote, and amassed the majority of his fortune.
• Considering Mr. Hoffman’s well-documented, long-term struggle with drug addiction as well as the significant changes in his life and net worth during those nine years, it is surprising that he failed to update his estate plan.
• At the very least, your estate plan should be reviewed every few years to insure that it still does what you want it to do and takes into consideration changes in your finances, your family, and the law.
 
Estate Planning Mistake #3 – Ignoring a Trusted Advisor
In probate court documents filed in July, it was revealed that Mr. Hoffman’s accountant repeatedly advised him to protect his children with a trust fund. But the actor ignored this good advice.
• With the terms of the old 2004 Will left unchanged, the estate will pass to Mr. Hoffman’s estranged girlfriend, outright and without any protections.
• Nothing will go directly to his children.
• Had Mr. Hoffman listened to his accountant and worked with an estate planning attorney, he could have established a lasting legacy for his children, protecting them and their inheritances.
 
You can avoid mistakes like Mr. Hoffman’s. Please contact our office with any questions about estate planning.

Have you explained your planning to your family? Will they understand how your plan will work and what they may need to do if you become ill or when you die? Will they wonder why you made certain decisions?
 
The Key Takeaways
• Having a well-run family meeting in which your plans are explained will help prevent misunderstandings and confusion in the future. This is an important benefit of executing a comprehensive plan in the first place.
• Ask your estate planning attorney and financial advisor to participate. They will be able to explain how your plan works and why key decisions were made. They will be able to answer family members’ questions on the spot. Also, it helps to introduce your advisory team to family members now so they will be more comfortable working together in your absence.
• Open discussion is important, but having an agenda will help keep the meeting on track.
 
Setting the Agenda
The agenda for the meeting should cover your objectives, purposes, plans and expected outcomes. Make a list of the topics you want to cover. Otherwise, you may forget something important if the meeting becomes emotional. No specific financial information or values of assets needs to be disclosed at this time. This meeting should be a general explanation of what you have planned and why. The purpose is to prepare family members for what they can expect and may need to do if you become disabled or die. Allow for and encourage questions and discussion.
 
What You Need to Know
Expect there to be some anxiety as the meeting begins, because these are often sensitive issues. You may find additional challenges if you have a blended family. Or there may be a child that you do not feel is financially ready to handle an inheritance. Putting these issues out in the open can be difficult at first, but it often leads to greater understanding and acceptance.
 
If you would like more information about estate planning, please call our office.

The Key Takeaways:
• A living trust document has more provisions than a will because it deals with issues while you are living and after you die, while a will only deals with issues that occur after your death.
• A properly prepared and funded living trust will avoid court proceedings at incapacity and death. A will provides no such protection and can, in fact, ensure court intervention at both events, which can be very costly (in time, privacy and dollars) to your family.
 
Instructions at Death and Incapacity
Both a will and a living trust contain instructions for distributing your assets after you die. But a living trust also contains your instructions for managing your assets and your care should you become incapacitated.
 
A Living Trust Avoids the Costs of Court Interference at Incapacity and Death
A properly prepared and funded living trust (one that holds all of your assets) will avoid the need for a court guardianship and/or conservatorship if you become incapacitated. The person(s) you select will be able to manage your care and your assets privately, with no court interference.
 
A will can only go into effect at your death, so it can provide no instructions regarding incapacity. In that case, your family would almost certainly have to ask the court to establish a guardianship and/or conservatorship for your care and your assets—a process that is public, time consuming, expensive and difficult to end.
 
Costs to Transfer Assets…Pay Now or Later
There may be some minor costs to transfer assets into your living trust when you set it up, and then from your trust to your beneficiaries after you die. But these will be minimal if you and your successor trustee do much of the work yourselves. With a will, the probate court (with its costs and attorney fees) is the only way to transfer your assets to your heirs after you die. So you can pay now to set up your trust and transfer titles, or you can pay the courts and attorneys to do this for you after you die.
 
If you would like more information about wills and living trusts, please contact our office.

Probate can be easily avoided, but most estates are dragged through the process. Why? Many people fail to create an estate plan, so probate is required. And – others plan with just a Will, so probate is required. As a result, assets end up at the mercy of a probate judge, open to public scrutiny, and delayed passing to beneficiaries.
 
Probate can drag on for months – or even years. Here are some of the most common reasons why probate takes so long:
 
1. Many Beneficiaries. In general, estates with many beneficiaries take longer to probate than estates with just a few beneficiaries. Why? It takes time to communicate with each and every beneficiary and, if documents need to be signed, there are always beneficiaries who fail to return their signed documents in a timely manner. Regardless of advances in modern technology and communications, it simply takes a long time to reach multiple beneficiaries, spread out across the United States or in a foreign country.
 
2. Estate Tax Return. Estates, required to file an estate tax return at the state and/or federal level, are usually complicated. And, the personal representative can’t make a final asset distribution until she is absolutely sure that the estate tax return has been accepted and the estate tax bill has been paid in full. At the federal level, it can take up to a year before the IRS gets around to reviewing and accepting an estate tax return.
 
3. Angry Beneficiaries. Nothing can drag out the probate process like a family feud. When beneficiaries don’t get along or won’t speak to each other, the personal representative may be forced to go to court to get permission to do just about everything. That takes time.
 
4. Incompetent Personal Representative. A personal representative, who is not good with money, irresponsible, disorganized, or busy with his job or family, will drag probate on and on. Why? Because a personal representative must efficiently and effectively handle the responsibilities and duties that go along with serving. It’s a lot of work.
 
What Can Be Done to Speed Up Probate?
The best way to speed up probate is to avoid it altogether. Avoidance is the only way to eliminate probate delays. If properly drafted and funded, a Revocable Living Trust will avoid probate perils, stresses, and delays. If you would like more information about Revocable Living Trusts, please call our office.