Elder Law

Tuesday, October 4, 2016

A Legal Update

There’s a bit of news in the estate planning world that I thought I’d share with you this week:

1. Pennsylvania Inheritance Tax Changes

There is currently a potential law (HB 971) working its way through the PA House and PA Senate to eliminate inheritance tax for property passing from a parent to children under the age of 21. We’ll continue to watch this and potentially other inheritance tax changes in the future. If this passes and is signed by the Governor, it could be a turning point for PA inheritance tax law. The inheritance tax is unpopular and many legislators want it on the chopping block.

Read more . . .

Monday, September 21, 2015

Medicaid and Immediate Annuities

Immediate annuities are advanced planning tools used by elder law and asset protection attorneys to assist married nursing home residents qualify for Medicaid (called Medical Assistance or MA in Pennsylvania) coverage while making sure the healthy spouse has sufficient income, and also to help preserve a portion of the estate for the families of unmarried or widowed nursing home residents.

Immediate annuities can help Medicaid applicants in two ways: 

First, many spouses of nursing home residents face a dramatic reduction in income when the “community spouse” (spouse going into the nursing home) qualifies for Medicaid.  Purchasing an immediate annuity can convert assets needing to be spent down into an income stream for the healthy spouse while avoiding a penalty for transferring assets.  

Next, a community spouse can purchase an annuity that will provide income to pay the nursing home while waiting out the Medicaid five-year look-back period caused by gifting.  Often, these latter annuities are of short duration – only as long as the penalty period.

But some states, including Pennsylvania, have maintained that short-term annuities – usually two years or less – are still subject to a transfer penalty.  This will change now that the Third Circuit Court of Appeals has ruled that Medicaid officials must accept applicants' short-term annuities, and that these types of annuities cannot be counted as resources and be made subject to penalty. Zahner v. Secretary Pennsylvania Dept. of Human Services (3rd Cir., Nos. 14-1328, 14-1406, Sept. 2, 2015).  

While the decision provides more certainty, immediate annuities must still meet a number of stringent requirements, including being actuarily sound, to be accepted as legitimate by County Assistance Offices in Pennsylvania.  Families considering them should get help from a qualified elder law attorney in the state where you are a resident. You should never attempt to purchase an immediate annuity for Medicaid planning yourself without a comprehensive Medicaid Plan by a qualified attorney.

If you are healthy and have the ability to plan in advance of long-term care needs, the use of a Medicaid Asset Protection Trust or long-term care insurance products (or hybrid life insurance products) may be options to help preserve assets without resorting to the use of immediate annuities.

Thursday, July 9, 2015

Procrastinating & Estate Planning

Many people feel guilty about procrastinating about their estate plan. But procrastination is normal. Frankly, not many people want to consider their own demise. But you can't wait until it's too late to start your estate planning. Remember that it's not just about you, but it's about your family and legacy. The younger you are, the more options we have to protect your estate and the easier it is to plan.

Make sure you have valid Powers of Attorney, a will and/or a trust, and any other estate planning tools that your attorney deems necessary.

Estate planning is not just about tax planning. Today, it's about a few more things:

  1. Your legacy -- in this complex world, a poorly written estate plan can tear a family apart forever.

  2. Your long-term care plan -- we are living longer, and long-term care is expensive. How will you protect your family while paying for your long-term care?

  3. Asset protection for your loved ones -- no one wants their hard earned savings to be part of their heir's divorce settlement, lawsuit judgment or creditor claim.

Now is the best time to plan or review your existing plan. Call our office today at (215) 706-0200 to schedule your complimentary telephone consultation at a time convenient for you.

Sunday, February 15, 2015

Do You Need a WILL or ESTATE PLAN?

It's not uncommon to hear people confuse a will and an estate plan. A will can be part of an estate plan, but is not a complete estate plan.

The question is, what is a "complete" family estate plan? Here's my definition broken down into bullet points:

  1. Provides a legacy that your loved ones will be proud of for years to come;
  2. Ensures your property passes to whom you wish it to pass;
  3. Protects the inheritance from outside forces, such as creditors, divorces and lawsuits;
  4. Addresses incapacity and long-term illness planning; and
  5. Saves your heirs every tax dollar possible, and saves them from making mistakes when inheriting your estate.
A Last Will & Testament only helps with one of the five items, item #2.  Item 2 is important, but aren't the other four equally important? 

I could make a case that each one of the five are the most important items on the list, but the truth is, they're all important. One remarkable but little-known truth of estate planning is that in the modern estate, typically only half of the estate passes through the will. The other half passes by beneficiary form. Think about your IRA's, life insurance policies and annuities: They all have beneficiary designation forms. IRA's in particular offer great rewards, but great dangers to your heirs if they inherit them without knowing what to do. 

The best advice (perhaps biased advice) that I can give you is to design your entire estate plan with an estate planning attorney. He or she can walk you through all of the steps, and discuss all of the points above. Every plan is different. The plan really depends on your goals, the types of assets you own, your family and more. 

Don't get a false sense of security if you have a simple will. If you haven't visited with an estate planning attorney, take the initiative to do so. If nothing else, you'll learn a lot!

Tuesday, January 27, 2015

Caution: Plan For Long-Term Care Now!

The New York Times published an article two days ago entitled “To Collect Debts, Nursing Homes Are Seizing Control Over Patients.” As I began to read thearticle, two colleagues and a friend sent me a link to the story. We were all stunned.

In essence, author Nina Bernstein paints the picture of a nursing home taking control of a patient by going to court and attempting to get guardianship over her, even though the patient had valid powers of attorney (her husband was power of attorney). There was a billing dispute that led the nursing home to take such action. Read the article in full—it’s an eye opener. Article Link

I have not yet heard of a case yet in Pennsylvania where a nursing home has attempted to get guardianship over a patient, but it’s plausible that it could happen in the future. Imagine discovering that you have to go to court and spend thousands of dollars to fight for control of a close family member. Of course, there have been a couple cases in Pennsylvania under the filial responsibility law where the nursing home has sued a family member for recovery of medical costs.

Cases like these are few and far between, but still give us all pause. The situations are always extremely unfortunate, mostly for the family but also for our long-term care system in general. The question as a society we must confront is how to deal with the costly combination of skyrocketing long-term care costs and greater life expectancies.

Place yourself in the following situation that I have seen happen plenty of times in my practice: You have a sizable estate that you expect to pass to your children, and all of the sudden, you need long-term care and the estate is eaten up by the nursing home costs. It’s quite a dilemma. On one hand, you have a responsibility to pay for your care if you have the means to do so. On the other hand, you expected to leave your loved ones at least some of your life savings. This is more than just a financial issue, but a moral and ethical issue that is not easy to square.

Having said that, the best advice I can give is this: Do not wait until it's too late to plan.

While you’re in good health (typically, 50’s and 60’s are appropriate ages), try to put a plan in place in case you need long-term care in the future. Financial planning is important, but so is protecting your dignity and legacy. As one well-known advisor put it to me years ago, “Do you really want your children to take care of you? Or would you rather have a professional handle your care, and allow your children to enjoy their visits with you?”

Some ideas for planning:

  • There may be some property that you can put into a Medicaid Asset Protection Trust so that it’s properly protected from ever being spent on your long-term care. This trust is appropriate for only certain assets and a portion of your estate, not your entire estate.
  • Consider insurance policies, either traditional long-term care or a “hybrid” life insurance policy that contains a long-term care rider.

In my office, we assist clients regularly with both strategies.

Planning for long-term care is difficult in general. Waiting until you actually need nursing care can cause intense stress on the family, and put your back against the wall. The earlier you plan, the more options you will have.

Tuesday, November 18, 2014

"Simple Will"

Is a simple will really so simple? Jeremy Wechsler shares with you his thoughts about what a simple will really means, and why it is a disservice for you and your family. Read more in this blog post.

Read more . . .

Monday, October 27, 2014

Social Security Benefits Increase 1.7 Percent in 2015

The nation's elderly and disabled Social Security recipients will receive a 1.7% increase in payments in 2015. This is expected to raise the average monthly payment for the typical retired worker by $22.  The increase is slightly higher than last year’s 1.5% cost-of-living adjustment (COLA). The same COLA will apply to pensions for federal government retirees and to most veterans.

As was the case last year, the small rise in benefits will not be whittled down by a Medicare premium increase because the standard Medicare Part B monthly premium will remain $104.90 in 2015, the same as it was in 2014.  Most Medicare recipients have their premiums deducted from their Social Security payments.  (In a recent column, Reuters columnist Mark Miller argues that the COLA doesn't measure retiree inflation accurately and that it's time to "adjust the adjustment.")

The COLA by the Numbers

Starting in January 2015, the average monthly Social Security retirement payment will rise from $1,306 to $1,328 a month for individuals and from $2,140 to $2,176 for couples. The 1.7 percent increase will apply to both elderly and disabled Social Security recipients, and individuals who receive both disability and retirement Social Security will see increases in both types of benefits.  The maximum Social Security benefit for a worker retiring at full retirement age, which is age 66 for those born between 1943 and 1954, will be $2,663 a month.

The Social Security COLA also raises the maximum amount of earnings subject to Social Security taxation to $118,500 from $117,000.  This means that those earning incomes above $118,500 will pay no tax on any income above that threshold.

The COLA increases the amount early retirees can earn without seeing a cut in their Social Security checks.  Although there is no limit on outside earnings beginning the month an individual attains full retirement age, those who choose to begin receiving Social Security benefits before their full retirement age may have their benefits reduced, depending on how much other income they earn.

Early beneficiaries who will reach their full retirement age after 2015 may now earn $15,720 a year before Social Security payments are reduced by $1 for every $2 earned above the limit. Those early beneficiaries who will attain their full retirement age in 2015 will have their benefits reduced $1 for every $3 earned if their income exceeds $41,880 in the months prior to the month they reach their full retirement age.

For 2015, the monthly federal Supplemental Security Income (SSI) payment standard will be $733 for an individual and $1,100 for a couple.

For a complete list of the 2015 Social Security changes, go to:

Friday, September 26, 2014

Medicare vs. Medicaid for Long-Term Care Costs

Although their names are similar, Medicaid and Medicare are vastly different government programs. Both provide health coverage, but Medicare is an “entitlement” program, meaning that everyone who reaches age 65 and is entitled to receive Social Security benefits also receives Medicare (Medicare also covers people of any age who are permanently disabled or who have end-stage renal disease).

Medicaid is a public assistance program that helps pay medical costs for individuals with limited income and assets. To be eligible for Medicaid coverage, you must meet the program’s strict income and asset tests. Also, unlike Medicare, which is a federal program, Medicaid is a joint state-federal program. Every state operates its own Medicaid system, but each state must conform to federal guidelines in order for the state to receive federal money, which pays for about half the state’s Medicaid costs.

Medicare and Medicaid Coverage of Long-Term Care

The most significant difference between Medicare and Medicaid in the realm of long-term care planning is that Medicaid covers nursing home care, while Medicare generally does not.  Medicare Part A covers only up to 100 days of care in a “skilled nursing” facility per spell of illness. The care in the skilled nursing facility must follow a stay of at least three days in a hospital. And for days 21 through 100, you must pay a copayment of $152 a day (in 2014). (This is generally covered by Medigap insurance.)

In addition, the definition of “skilled nursing” and the other conditions for obtaining this coverage are quite stringent, meaning that few nursing home residents receive the full 100 days of coverage. As a result, Medicare pays for less than a quarter of long-term care costs in the U.S.

In the absence of any other public program covering long-term care, Medicaid has become the default nursing home insurance of the middle class. Lacking access to alternatives such as paying privately or being covered by a long-term care insurance policy, most people pay out of their own pockets for long-term care until they become eligible for Medicaid.

The fact that Medicaid is a joint state-federal program complicates matters, because the Medicaid eligibility rules are somewhat different from state to state, and they keep changing. (Pennsylvania’s Medicaid program name is “Medical Assistance” or “MA”.) Both the federal government and most state governments seem to be continually tinkering with the eligibility requirements and restrictions. This is why consulting with an elder law attorney is so important.

As for home care, Medicaid has traditionally offered very little. Recognizing that home care costs far less than nursing home care, more and more states are providing Medicaid-covered services to those who remain in their homes.
It’s possible to qualify for both Medicare and Medicaid.  Such recipients are called “dual eligibles.”  Medicare beneficiaries who have limited income and resources can get help paying their out-of-pocket medical expenses from their state Medicaid program.

Middle class families with an individual entering a nursing home can do “Medicaid” planning, and preserve some assets in spite of the rigid spend-down requirements. In addition, healthy individuals can purchase long-term care insurance products to defray the cost of long-term care. Finally, there are multiple estate planning techniques, that when used properly, can preserve assets against Medicaid spend-down. Again, it is important to consult an elder law planning attorney for professional assistance with any of these strategies.

Tuesday, September 16, 2014

Five Ideas To Improve Your Estate Plan Now

  1. Use Trusts Instead of Outright Distributions: An outright distribution offers no protection to your loved ones and you have no control to ensure the inheritance stays in your bloodlines. Asset protection is crucial if you want your estate plan to work through the years and perhaps generations to come. Asset protection is important to prevent risks including divorce, lawsuits and creditors from eating up an inheritance. Also, asset protection can protect beneficiaries from themselves, if they have issues that would prevent them from managing an inheritance properly.

  2. Create a Long-Term Care Plan: Previously, tax planning was what motivated clients to plan their estates. Because estate taxes are no longer an issue for most people, the new estate planning is long-term care planning. The question to ask yourself is, what will happen if I need to go into a nursing home or need long-term care? Long-term care costs can significantly diminish an estate leaving nothing for your spouse and loved ones. Insurance is an option but not the only option. The use of Medicaid Asset Protection Trusts are also a possibility. Build a long-term care plan today to ensure you preserve at least part of your estate for your heirs.

  3. Regularly Update Your Estate Plan: Updating your estate plan on a regular basis will bring you peace of mind and ensure that the plan will work the way it should work. Normally, it’s best to update your plan at least every 3-5 years, or sooner if a major family event occurs, or circumstances change. As your life changes, your plan must change with it.

  4. Ensure Your IRA Becomes a Stretch IRA: Your will does not control your IRA. If you create asset protection trusts in your will for your heirs, those trusts will not protect the IRA. IRA’s pass by beneficiary form, and you run the risk of your heirs cashing out the IRA’s as lump sum distributions, taking the “Stretch IRA” off the table. It’s called a Stretch IRA because a younger beneficiary can keep the account as an IRA and stretch it out over his or her lifetime. You can use a special retirement account trust to ensure the beneficiary takes the Stretch IRA, the IRA has asset protection, and the money stays in the bloodlines.

  5. Consider Life Insurance: Life insurance is tax free cash for your loved ones, that can help pay for final expenses, debts, taxes and administration costs. In other words, life insurance can be a great way to leverage your estate. Life insurance may also have benefits for you while you’re living—it can be used as an investment tool, or you can choose a policy that has a long-term care rider, allowing you to use the death benefit towards your long-term care costs.


These are just a few ideas to improve your estate plan now. Always consult with a professional when planning your estate.

For a complimentary estate planning consultation, contact our office today at (215) 706-0200.

Tuesday, August 26, 2014

Joint Accounts with Children = Poor Estate Plan

Three Reasons Joint Accounts May Be a Poor Estate Plan

By Jeremy A. Wechsler, Esq.
Your Estate Planning & Asset Protection Attorney

Many people see joint ownership of investments, bank accounts and real estate as an inexpensive way to avoid probate since joint property passes automatically to the joint owner upon death. Joint ownership can also be an easy way to plan for incapacity since the joint owner of accounts can pay bills and manage investments if the primary owner falls ill or suffers from dementia. These are all legitimate benefits of joint ownership, but three potential drawbacks exist as well described below. Please note that I am discussing joint ownership with your children or other loved ones, excluding your spouse. Jointly owning property with a spouse is normal and makes complete sense. 

Drawbacks to Joint Accounts:

  1. Risk: Joint owners of accounts have complete, unconditional access and the ability to use the funds for their own purposes. I have seen children who are caring for their parents take money without first making sure the amount is accepted by all the children. In addition, joint assets are available in the case of divorce, creditor claims, bankruptcy, lawsuits and more. Joint assets could be considered as belonging to all joint owners if applying for public benefits or financial aid.

  2. Inequity. If you have one or more children on certain accounts, but not all children, at your death some children may end up inheriting more than the others. While you may expect that all of the children will share equally (“they will do the right thing”), it is far from a guarantee. If you have several children, you can maintain accounts with each, but you will have to constantly work to make sure the accounts are all at the same level, and there is little guarantee that this plan will actually work. This type of planning will only create discord and conflict in the family later on.

  3. The Unexpected. A plan based on joint accounts can truly fail if a child passes away before the parent. Then it may be necessary to seek guardianship to manage the funds or they may ultimately pass to the surviving siblings with nothing or only a small portion going to the deceased child's family. For example, a mother put her house in joint ownership with her son to avoid probate and Medicaid’s estate recovery claim. When the son died unexpectedly, the daughter-in-law was left high and dry despite having devoted the prior six years to caring for her husband's mother.

If you are concerned about incapacity, instead of joint accounts, consider using a power of attorney. It is much safer and does not give the appointed agent personal rights over your funds (unlike as a joint owner). The agent has a fiduciary responsibility to you and your beneficiaries.

Regarding probate and ease of administration, joint accounts are convenient but as described above, it presents risks. In Pennsylvania, probate is not a difficult or burdensome process. Also, property passing to children is taxed at a 4.5% inheritance tax rate, which is a relatively low rate compared to historical federal estate tax rates. With a well written will and trust, you can have peace of mind knowing your plan will work just the way you intend it to work, free of conflict and problems. Joint accounts may seem like an easy answer, but often create more headaches. Please review your estate plan to ensure that it will work as you intend for it to work. 


Tuesday, July 22, 2014

Caution: Gifting & Medicaid

Many seniors and retirees consider gifting assets for estate and long-term care planning purposes, or just to help out children and grandchildren. Gifts and transfers to a trust can initially make a lot of sense because they can save money in taxes and long-term care expenditures, and they can help out family members in need.

But some gifts can cause problems, for both the donor and the recipient of the gift. Before making a gift, you should absolutely see a professional (lawyer, financial advisor and CPA).

Below are a few questions you should ask yourself about making a gift:

  1. Why are you making the gift? Is it simply an expression of love on a birthday or big event, such as a graduation or wedding? Or is it for tax planning or long-term care planning purposes? If the latter, make sure that there's really a benefit to the transfer. If the value of your assets totals less than the estate tax threshold in your state, your estate will pay no tax in any case. For federal purposes the threshold is $5.34 million (in 2014). Gifts can also cause up to five years of ineligibility for Medicaid, which you may need to help pay long-term care costs.

  2. Are you keeping enough money? If you're making small gifts, you might not need to worry about this question. But before making any large gifts, it makes sense to do some budgeting to make sure that you will not run short of funds for your basic needs, activities you enjoy -- whether that's traveling, taking courses or going out to eat -- and emergencies such as the need for care for yourself or to assist someone in financial trouble.

  3. Is it really a gift (part one)? Are you expecting the money to be paid back or for the recipient to perform some task for you? In either case, make sure that the beneficiary of your generosity is on the same page as you. The best way to do this is in writing, with a promissory note in the case of a loan or an agreement if you have an expectation that certain tasks will be performed.

  4. Is it really a gift (part two)? Another way a gift may not really be a gift is if you expect the recipient to hold the funds for you (or for someone else, such as a disabled child) or to let you live in or use a house that you have transferred. These are gifts with strings attached, at least in theory. But if you don't use a trust or, in the case of real estate, a life estate, legally there are no strings attached. Your expectations may not pan out if the recipient doesn't do what you want or runs into circumstances -- bankruptcy, a lawsuit, divorce, illness -- that no one anticipated. If the idea is to make the gifts with strings attached, it's best to attach those strings legally through a trust or life estate.

  5. Is the gift good for the recipient? If the recipient has special needs, the funds could make her ineligible for various public benefits, such as Medicaid, Supplemental Security Income or subsidized housing. If you make many gifts to the same person, you may help create a dependency that interferes with the recipient learning to stand on his own two feet. If the recipient has issues with drugs or alcohol, he may use the gifted funds to further the habit. You may need to permit the individual to hit bottom in order to learn to live on his own (i.e., don't be an "enabler").

If after you've answered all of these questions, you still want to make a gift, discuss it with a professional before you proceed. Your advisor can ensure you are made aware of Medicaid rules, tax issues and other possible implications of your generosity.


Need elder law assistance now? Please call our office at (215) 706-0200 to schedule your consultation today.

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The Law Offices of Jeremy A. Wechsler assist clients with Estate Planning matters in Willow Grove, PA as well as Abington, Hatboro, Dresher, Horsham, Bryn Athyn, Huntingdon Valley, Fort Washington, Jenkintown, Glenside, Oreland, Warminister, Wyncote, Ambler, Elkins Park, Flourtown, Philadelphia, Warrington, Cheltenham, Gwynedd Valley, Jamison, Feasterville Trevose, Richboro, North Wales, Blue Bell, Lafayette Hill, King of Prussia, Collegeville, Oaks, Phoenixville, Oxford Valley, Langhorne, Penndel, Bristol, Fairless Hills, Bensalem, Plymouth Meeting, Furlong, Philadelphia County, Bucks County and Montgomery County.

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