Estate and Disability Planning - PowerPoint PPT Presentation

About This Presentation

Estate and Disability Planning


Fanwood-Scotch Plains YMCA Estate and Disability Planning Presented by Donald D. Vanarelli, Esq., Certified Elder Law Attorney, Accredited Veterans Attorney, Founding Member, Association of Special Needs Planners – PowerPoint PPT presentation

Number of Views:116


Transcript and Presenter's Notes

Title: Estate and Disability Planning

Fanwood-Scotch Plains YMCA_______________________
_________________________Estate and Disability
PlanningPresented by
Donald D. Vanarelli, Esq. Certified Elder Law
AttorneyAccredited Veterans AttorneyFounding
Member, Assn. of Special Needs Planners
Seminar Topics
  • Planning for Disability
  • Estate Planning
  • Planning for Long-Term Care
  • Government Sources for Payment of Long Term Care
    Medicare, Medicaid and VA Benefits

Planning for Disability
Planning for Substitute Decision-Making
I. Capacity - A critical threshold issue. II.
Legal devices for substitute decision-making
1. Court-supervised 2. Voluntary
Court-Imposed Substitute Decision-Making
  • Guardianships
  • Conservatorships

Nature and Use of Guardianships
  • A guardianship is a legal mechanism designed
    to provide surrogate decision-making and
    financial management for a person who is no
    longer able to govern him/herself and who has not
    made alternate voluntary arrangements.

Characteristics of Guardianships
  • Involuntary.
  • Imposed by Court.
  • Only for persons who are legally incompetent -
    medical evidence needed.
  • Alternate voluntary arrangements - either not
    made or ineffective.

Voluntary Substitute Decision-Making
  • Representative Payeeships (SSA, SSI)
  • Joint Tenancies (Inc. joint bank accts.)
  • Powers of Attorney
  • Advance Medical Directives (Living Wills)
  • Do Not Resuscitate (DNR) Orders
  • Revocable and Irrevocable Trusts
  • Family Limited Partnerships and Limited Liability

Powers of Attorney
  • The most important, simplest and least expensive
    estate document.
  • A mechanism by which the principal authorizes an
    agent to manage the principals financial affairs
    if the principal becomes incapacitated.

Characteristics of Powers of Attorney
  • Creates Fiduciary Relationship
  • General vs. Special
  • Durable vs. Springing
  • Sole Agent vs. Joint Agents
  • Termination- death, revocation or expiration

Powers Conferred in Powers of Attorney
  • Flexibility is the goal
  • banking transactions
  • to make gifts, including gifts to the agent
  • prepare and sign tax returns
  • to create, amend and fund trusts
  • change beneficiaries
  • to execute contracts, leases and deeds
  • to loan or borrow money
  • to engage in long-term care planning

Advance Medical Directives (Living Wills)
  • The right to make decisions about medical
    treatment is a fundamental right protected under
    the federal and state constitutions.

Living Wills In New Jersey
  • N.J. law recognizes 3 planning devices
  • 1. Instruction Directive
  • 2. Proxy Directive - POA for Health Care
  • 3. Combined Directive
  • Religious preferences may be presented.

DNR Orders
Do Not Resuscitate (DNR) orders prohibit
cardiopulmonary resuscitation when the lungs or
heart stop working. DNR orders are normally
applicable only in hospitals, nursing homes and
other facilities. EMS personnel are generally
required to attempt resuscitation.
Practitioner Orders for Life Sustaining
  • Medical orders that help give seriously ill or
  • frail patients more control over end-of-life
  • Signed by both the doctor and patient/surrogate.
  • Can prevent unwanted or ineffective treatment,
  • reduce patient and family suffering and ensure
  • patient wishes are honored.

POLST (contd)
  • Information included on POLST form
  • Goals of care for the patient
  • Preferences regarding resuscitation attempts
  • Preferences regarding intubation and mechanical
  • ventilation for respiratory failure.
  • Preferences for artificially administered
  • and hydration
  • Other preferences regarding medical preferences

Psychiatric Advance Directive(PAD)
Psychiatric Advance Directive Allows a person to
specify important information for caregivers in
the event of a mental health crisis.
Psychiatric Advance Directive(contd)
  • As important as a medical directive
  • Helps make decision-making easier at time of
  • crisis
  • Improves communication between the individual
  • and family
  • Provides option to appoint representative
  • Personal preferences documented.

  • A trust is one of the most important estate
    planning tools.
  • A trust is a legal relationship in which a person
    transfers property to one or more trustees who
    own the property as fiduciaries. The trustees
    must use the property only as set forth in the
    trust agreement, or as provided by law.

Providing for Personswith DisabilitiesSpecial
Needs Trusts
  • Purpose - To preserve the disabled persons
    eligibility for needs-based governmental benefits
    (SSI, Medicaid, DDD services) while providing a
    vehicle to hold funds owned by disabled person,
    or funds contributed by the parents or other
    third parties, to supplement public benefits.

SNT May SupplementPublic Benefits
  • The trust assets can be used solely as a
    supplement to any public benefits received. The
    funds must be used to improve the beneficiarys
    quality of life.

Estate Planning
  • Property not disposed of prior to death or by
    will passes in accordance with the laws of
  • NJ Intestacy Statute, N.J.S.A. 3B5-1, et.
    seq. - turns on identity of persons living at the
    time of decedents death and relationship to the

Last Will and Testament
  • The basic document for directing the distribution
    of your property at death.

Your Will Allows You To
  • 1. Determine who will receive your assets when
    you die (spouse, children, friends, etc.) and in
    what manner (outright, in trust, to guardian,
  • 2. Name the executor of your estate.
  • 3. Appoint a guardian for your minor children.
  • 4. Provide for disabled children.
  • 5. Delay distribution of assets to your heirs
    until they reach a certain age.
  • 6. Provide for the continued operation of your
  • 7. Enjoy significant estate tax savings.

Probate vs. Non-Probate Estate
  • There may be 3 types of property in any
    decedents estate
  • 1. Probate Estate.
  • 2. Contract Estate. (Non-Probate)
  • 3. Joint Ownership Estate. (Non-Probate)
  • Your will disposes of assets in the probate
    estate only.

Federal Estate Taxes

Maximum Year Exempt Amount Estate Tax
Rate 2001 675,000 55 2002 1.0
Million 50 2003 1.0 Million 49 2004 1.
5 Million 48 2005 1.5 Million 47 2006
2.0 Million 46 2007 2.0 Million 45 2008
2.0 Million 45 2009 3.5
Million 45 2010 Repealed Repealed (Gift
tax-35) 2011 5.0 Million 35 2012
5.12 Million 35 2013 5.25
Million 40 2014 5.34 Million 40

New Jersey Death Taxes
  • New Jersey Estate Tax
  • For estates exceeding 675,000, tax rate is
    roughly 10. For example, for a 1M estate, the
    taxable amount is 325,000, and the NJ estate tax
    is approx. 33,000.
  • New Jersey Inheritance Tax
  • Spouse, Descendants and Ancestors 0
  • Brothers and Sisters 11
  • Everyone Else
  • First 700,000 15
  • Over 700,000 16

Gift Taxes
  • 1. Federal-
  • a. Annual Gift Tax Exclusion-14,000 per
    person, per year, in 2014
  • b. Unified Estate and Gift Tax System
  • 2. State-
  • No Gift Tax in New Jersey

  • Portability
  • There is often no need for tax planners to
    reduce or eliminate federal estate taxes because
    married couples are permitted to add any unused
    portion of their estate tax exemption of the
    first spouse to die to the surviving spouses
    estate exemption. This allows married couples to
    pass 10.68 M (in 2014) to heirs free from
    federal estate taxes with absolutely no planning
    at all. However, they must file a federal estate
    tax return on the death of the first spouse.
  • Estate tax planning is still useful in

Life Insurance1. Can provide
an instant estate upon death.2. Can provide
needed estate liquidity.3. Proceeds can be used
to pay estate taxes.4. Life insurance proceeds
are included in your estate for federal estate
tax purposes unless a life insurance trust is
established, the policy is transferred and the
owner survives the transfer by 3 years (or
trustee purchases the policy).

Generation-Skipping Trusts (Dynasty Trusts)1.
Leave exempt amount in trust for future
generations. 2. Avoid estate taxes on
spouses death.3. No distribution to children
or grandchildren so no estate taxes due on their

Planning for Long Term Care Needs
Long Term Care
Long Term Care refers to the kind of care a
person needs when he or she is unable to care for
himself or herself due to disability, frailty or
cognitive impairment. Long Term Care is
sometimes called Custodial Care - assistance with
activities of daily living (ADLs) - bathing,
eating, dressing, toileting, continence and
transferring - or supervision made necessary
because of severe cognitive impairment.
The Cost of Long Term Care
Average cost of 24 hour Home Health Aides
provided by an agency - 5,500 per month, or
66,000 per year. Range of costs charged by
Assisted Living facilities - 5,500 - 7,500 per
month, or 66,000 - 90,000 per year. Typical
cost of Nursing Home care in New Jersey - 9,000
per month, or 108,000 per year.
Who Pays For Long Term Care?
1. Private Pay 49 2. Medicaid 44 3. VA
Benefits 4 4. Medicare 2 5. Long Term
Care Insurance 1
Overview of Government Sources for the Payment of
Long Term Care Costs
Long Term Care CostsCovered by Medicare
1. Home Health Care 2. Nursing Home Care
Medicare - Home Health Aides
  • Covers up to 100 home visits per spell of
  • Preconditions to payment prior hospital stay
    of at least 3 days and home health care initiated
    within 14 days of discharge.
  • Beneficiary must be homebound and need skilled
    nursing care, physical or speech therapy, NOT
    custodial care.

Medicare Payment of Nursing Home Care
  • Immediate prior hospital stay of 3 days
  • Admitted to NH within 30 days of hospital
  • Covers skilled nursing care or rehabilitation
    only, NOT custodial care.

How Much Does NH Medicare Pay?
  • Maximum Coverage - 100 days
  • Day 1-20 - Medicare pays 100 of covered charges
  • Day 21-100 - Medicare pays all covered charges,
    except coinsurance amount. Year 2014 coinsurance
    payment 152/day, or about 4,623/month
  • Day 101 - on your own

Joint Federal and State Program Provides
medical assistance for financially eligible
persons who are aged, blind or disabled.
Income Limits
Income - all income is counted in determining
eligibility. Income cap - Community Medicaid
programs which pay for home health aides and care
in assisted living facilities have an income cap.
In 2014, the cap is 2,163/month. No cap for
Nursing Home Medicaid.
Resource Limits
Countable resources - all assets in the sole
name of applicant, in the sole name of spouse, or
in joint names, either with the spouse or another
person. Includes pension and retirement assets
of BOTH the applicant and spouse. Resource
Limits - 2,000 for an individual and 3,000 for
a couple. Excess resources - must be spent
Transfer of Resource Rules
To prevent gifting of assets, Medicaid imposes a
penalty period, or period of ineligibility for
Medicaid, for all gifts made within the lookback
Comparing Medicare and Medicaid Coverage for
Long-Term Care Costs
Medicare covers costs of home health aides and
nursing homes for those who need skilled nursing
care or therapy, but for a limited time only. No
financial limits. Medicaid covers home health
aides, assisted living facilities and nursing
homes, but only for the aged, blind and disabled
who need custodial care and who meet strict
financial limits.
Overview of Major VA Benefit Programs
  • Service-Connected Compensation
  • Disability compensation is a monetary benefit for
    veterans who are disabled by an injury or disease
    that was incurred or aggravated during active
  • Needs-Based Pension
  • Pension is a monetary benefit for veterans who
    (1) are disabled (not service-connected) (2) have
    low income and resources, and (3) served during a
    period of wartime.

Basic Eligibility Criteria for VA Improved
Pension Program
All of the following criteria must be met
before a veteran or widow(er) of a veteran can
receive Improved Pension benefits a. The
veteran must have served at least 90 days of
active duty service, one day of which must have
been during a wartime period In
general, wartime is World War I World
War II Dec. 7, 1941 Dec. 31, 1946 Korean
War June 27, 1950 Jan. 31, 1955 Vietnam
War Aug. 5, 1964 May 7, 1975 Gulf War
August 2, 1990 through date to be set by law
by Presidential Proclamation
Basic Eligibility Criteria for VA Improved
Pension Program (contd.)
b. The veteran must have received a
discharge other than dishonorable c.
The claimant must have limited income and
assets and, d. The claimant must be
permanently and totally disabled, or be
over age 65.
VA Improved Pension ProgramThree Tiers of
  • 1. Low Income Pension
  • 2. Housebound Benefits
  • Aid and Attendance Benefits
  • Housebound benefits and Aid and Attendance
    benefits are supplements paid in addition to the
    basic Low Income Pension to certain veterans to
    cover the additional costs of care for their
    added disabilities.

Net Worth Standard
The VA considers the net worth of the individual
seeking benefits, excluding the value of the
persons home, furnishings, and car. The
standard as to whether a person will be eligible
for benefits is whether the person has
sufficient means to pay for his or her care.
Assets that are counted toward the sufficient
means analysis include bank accounts,
certificates of deposit, money market accounts,
investment accounts, annuities, retirement
accounts, life insurance cash surrender values,
Net Worth Test
  • STANDARD Sufficient Means to Self-Pay
  • Sufficient Means A commonly used measure is
    80,000 or less for a married couple, 50,000 or
    less for a single veteran.
  • Age Analysis Age vs. Asset test

VA Transfer of Resources Rules
No look-back period Compare Medicaid with VA
Pension rules regarding transfers of resources.
But, note difference in VA Nursing Home Rules.
Thank You For Your Attention
  • Questions or Comments?
Write a Comment
User Comments (0)