Attorney Outlines Elders’ Options

For Long-Term Care

By Jan Howard

Estate tax and Medicaid changes were among issues discussed by attorney Barbara Reynolds of New Milford during a program on Long Term Care Planning sponsored by Ashlar of Newtown’s assisted living complex, Lockwood Lodge, on September 20.

Ms Reynolds, who practices in New Milford, is one of six attorneys certified as an elder law attorney by the National Elder Law Foundation, recognized by the American Bar Association. She obtained her law degree with honors from the University of Connecticut School of Law. She was formerly a teacher in Newtown schools.

 She advises clients on long-term care planning, qualifying for Medicaid (Title 19) assistance, dealing with nursing home issues, preparing powers of attorney and health care directives, and obtaining conservatorships. She also prepares wills, living trusts, and settles estates and counsels clients on reducing or eliminating death taxes and providing for children and grandchildren.

Ms Reynolds noted there have been many changes in tax laws, minimum distribution for IRAs, and possible changes are being discussed for Title 19.

“Even with the uncertainty of events, or because of them, planning is important,” Ms Reynolds said. “Being prepared takes on a whole new meaning.”

Ms Reynolds said people should examine their goals and needs and determine how they should be accomplished in their best interest.

These needs include potential care needs, housing options, insurance, and financial investments. There are legal documents that must be in place so plans can be put in effect, she said.

After a person’s situation is analyzed, a legal plan can be established, she said.

She suggested that people take a tour of a care center, look at what housing options are available, and investigate long-term care insurance.

Program participants were provided with A Shopper’s Guide to Long-Term Care Insurance, provided by the National Association of Insurance Commissioners.

“There is variety in the types of policies you can buy,” Ms Reynolds said. “It gives background on the subject. Get yourself educated and informed, and talk to two to three people about your long-term care needs.”

Because law has become so complex, Ms Reynolds said, “It is very important to see an elder law attorney. Look at their credentials.” She said senior citizens should ask elder law attorneys about their experience with Medicaid, powers of attorney, wills, and other issues of importance.

The most important planning document is the durable power of attorney, Ms Reynolds said. “You name someone to help you handle your affairs should you become unable to do so or don’t want to do so.” The document should not be a standard form as provided in state statutes. “The form in the statutes might not meet your needs,” she said. “You have to have specific provisions in it that are added to the standard form.”

The durable power of attorney is effective when it is signed. The person named in the durable power of attorney should be someone who puts your wishes above their own, Ms Reynolds said. “A person often will choose a relative. It depends on the situation.” The person chosen should be discussed with an attorney, she noted, and some people do need guidance in who to choose.

According to law, the durable power of attorney is good forever or until it is revoked. However, most banks don’t recognize it if it is over five years old. “It should be updated,” she said.

If a person doesn’t have a power of attorney, the Probate Court will make an appointment if the person is unable to handle things themselves, Ms Reynolds said. “Probate costs money. A bond has to be posted, and your money pays for that bond. It’s an unnecessary expense.”

A durable power of attorney is necessary even if you have a spouse, she said. “There are actions they can’t take for you without a power of attorney.”

A health care directive is another important document. It is a statement of preferences about medical care in the event of terminal illness and designates a person to act on your behalf in making medical decisions. “If you are in a permanent vegetative state, it says you don’t want to be kept alive artificially,” Ms Reynolds said. “It makes sure they are conveying your wishes.”

A conservator should be designated to assume responsibility if you are unable to handle your own affairs. “Say in advance who you want. The Probate Court will usually listen to your wishes,” she said. However, generally speaking, if a power of attorney and health directive are in place, a conservator is not needed.

 

Wills and Estate Taxes

Annuities, 401Ks, and insurance policies with a named beneficiary are not probated as part of a will, Ms Reynolds said. They pass directly to the named beneficiaries. Also, in cases where assets are held jointly, such as a house, the assets pass to the joint owner.

“Make sure your plan is accomplished through a will and designation of beneficiaries,” she said.

Ms Reynolds cautioned attendees to be careful in the use of joint accounts because the joint holder has full access to the account, and this may not be what is intended.

“Make sure everything works together,” Ms Reynolds said.

If there is no will, the surviving spouse receives the first $100,000, and the spouse and the children split the rest, she noted. Without a will, “You could have your assets going to the wrong people.”

The Connecticut Succession Tax is not as much of an issue anymore because anything passing to a spouse, child, or grandchild is exempt, Ms Reynolds said. Siblings, nieces and nephews are still taxed if the amount of the estate is over $600,000.

“It is eventually being phased out,” she said.

The intent is to phase out the federal estate tax by 2010. In 2001, there are no taxes on estates up to $675,000, and this exempted amount increases every year until it is phased out.

However, Ms Reynolds noted, there is a sunset provision in 2010. Unless the act is extended, the federal estate tax will revert back to what it is this year. “There is uncertainty between now and then. You need to talk about how to handle an unknown situation.”

The federal estate tax comes from the assets of the deceased. If assets are passed on to the spouse, they will increase the money that is taxable for that spouse. Ms Reynolds suggests that a trust be set up that is not part of the spouse’s estate. “When setting up a trust, write the terms of what you want done. You can say whatever you want,” she said. “The charge for a trust depends on the purpose and nature of the trust.”

Connecticut is also phasing out its gift tax.

Housing Options

Years ago, as people needed care, the first step was a nursing home, Ms Reynolds said. “The assisted living option has changed goals and planning a lot,” she said. “I’ve seen many clients get their care needs met through an assisted living facility. The quality of life is far greater than a nursing home. You have as much independence as you’re capable of doing.”

Congregate housing offers an apartment, cooking facilities, and one meal a day with no assistance, she explained. “It’s the intermediate step between home and assisted living.”

To finance long-term care needs, it is necessary to know the provisions of Medicaid (Title 19), Ms Reynolds said. Medicaid is a federal program administered by the state. It is needs based, and an assets and income test is required to qualify. It covers long term care, intermediate and skilled, and covers at-home custodial care. Contribution is based on income.

If a person is in a nursing home and is unable to pay for their care, application can be made for Title 19. For single adults, assets must be reduced to $1,600 to be eligible. Exempt from being counted for eligibility are irrevocable funeral contracts up to $5,400 or revocable to $1,200 and life insurance with a face value of $1,500 or below. Also exempt are term life insurance; burial plot; car, if needed for transportation for medical reasons; and house, if living there or have the prospect of returning soon.

To make sure a nursing home patient’s spouse has adequate income, the state looks at the couple’s assets on the first day a person is in a nursing home. The house is excluded. “They look at other assets, no matter whose name is on it,” Ms Reynolds said. “The spouse can keep one half of the couple’s total counted assets up to $87,000. This may be increased if the spouse demonstrates a need to keep additional income-producing assets.

Medicare pays nursing home stays for 20 days if the stay follows three days of inpatient hospital care and includes skilled nursing care or rehabilitation services daily. It co-pays the next 80 days if qualifications continue. “More and more people are not getting 100 days of care,” Ms Reynolds said. “Supplemental insurance stops when Medicare stops.”

Long-term care insurance will pay if a person is in a nursing home or for assisted living facilities, she said.

She reiterated the need to see an elder law attorney. “When you go to the attorney, you are paying that person to look out for you. They are being paid to look out for your best interest.”