Is A Medicaid Trust Right For You? by guest contributors Philip Bouklas, Esq., Managing Partner and

Sasha H. Herzig, Esq. Associate Attorney,

Bouklas & Associates PLLC

Congratulations, Tyler!

Family Wealth Decisions Group

FAMILY WEALTH DECISIONS GROUP

Link to

Please

Take Our

Survey

Registered associates of Family

Wealth Decisions Group are regis-

tered representatives of Lincoln Fi-nancial Advisors Corp.

Securities and investment advisory

services offered through Lincoln

Financial Advisors Corp., a broker/

dealer (member SIPC) and registered

investment advisor. Insurance offered

through Lincoln affiliates and other

fine companies. Lincoln Financial Group is the marketing name for

Lincoln National Corporation and its

affiliates. Family Wealth Decisions

Group is not an affiliate of Lincoln

Financial Advisors Corp Branch ad-

dress-6900 Jericho Tpke, Suite 101E,

Syosset, NY 11791

CRN-1260931-072915 Doug Lemons

Beth Tinelli

Tyler D Simmons

Roy S Gilbert

It is with great pleasure that we congratulate Tyler

Simmons upon earning the Retirement Income Certi-

fied Professional (RICP®) designation from the

American College in Bryn Mawr, Pennsylvania. This

accomplishment reflects his commitment to profes-

sionalism and his dedication to serving our clients.

Apr-Jun 2015

them from applying – but

there are other ways to protect

your assets, including your

home and investments.

Paying for long-term care out

of pocket could financially

devastate you and your fami-

ly. Many people are turning

to advance planning by creat-

ing and funding irrevocable

After years of saving and planning

for their future, many clients are

concerned that they might become

impoverished if circumstances re-

quired them to exhaust their sav-

ings to pay for nursing home or

other long term care costs. For

many, long-term care insurance is

not enough, and sometimes not an

option at all – they don’t qualify, it

is too expensive or they have a pre-

existing condition which prohibits

Continue on page 2

Continue on page 2

Our Team

Inside This Issue

Is a Medicaid Trust

Right For You? 1

Selt-Employed and

House-Hunting 1

Personally Speaking 3 (More Advice to My

Daughter)

Quarterly Market

Commentary 3

Ira’s IRA Tip 5

Aesop’s Corner 6

CPA Continuing 7

Education (and

even if you are

not a CPA)

Self-Employed and House-Hunting?

Top Five Mistakes To Avoid by guest contributor Warren Goldberg, President of Mortgage

Wealth Advisors Inc., a Certified Mortgage Planning Specialist®,

and a published author

duces the qualifying income

lenders calculate, and thus the

amount a self-employed indi-

vidual may borrow.

Years ago, there were No-

Income Verification loans

that catered to such borrow-

ers. But such loan options no

longer exist. Thus, if you’re

self-employed and contem-

Being self-employed brings its

share of benefits as well as head-

aches. Yet being self-employed

and house-hunting can present

problems and pitfalls unique to the

self-employed borrower.

Most self-employed individuals

take advantage of the tax benefits

available to them, utilizing accept-

ed accounting practices to reduce

their taxable income. While a

CPA would view this favorably,

this double-edged sword also re-

trust, and any principal held in

the trust may be distributed to

the Grantor’s children, grand-

children, or others (as selected

by the Grantor). These trusts

are also ideal for transferring

real property, both primary resi-

dences and vacation homes, as

the Grantor still retains the right

to use such property during his/

her lifetime. The Trustee may

also sell any property held in

the Trust and purchase replace-

ment residences for the Gran-

tor’s use and enjoyment with

the sale proceeds. Often, the

Grantor can be given the power

to fire and replace Trustees.

Upon the death of the Grantor,

the Trust can be administered

without a lengthy and costly

probate proceeding.

Funding such a trust can create

up to a five year period of ineli-

gibility for Medicaid nursing

home benefits. At the end of

the five year lookback, and as-

suming the individual meets the

income requirements, they will

then be eligible for Medi-

caid. Due to this long period of

time, it is recommended that

planning be undertaken well in

advance of any long term ill-

ness.

Bouklas & Associates PLLC is

not affiliated with Lincoln Fi-

nancial Advisors Corp.

CRN-1250349-071515 BETTER START NOW - There

are 116 million households in the USA as of 3/31/15, split between 89 million house-holds headed by working-age individuals and 27 million households headed by non-working individuals. 40 million of the 89 million households headed by working-age indi-viduals do not own any pre-tax retirement accounts, e.g., a 401(k) or IRA (source: Na-tional Institute on Retirement Security).

trusts to assist them with the

very high costs of nursing-

home and at-home care.

A Medicaid Trust is a vehicle

that allows the grantor, or the

creator of the trust, to transfer

some or all of his/her assets

into the trust, thereby giving

up control of the transferred

assets to the Trustee of such

trust. For example, if you

transfer your home to a Medi-

caid Trust, the trust then be-

comes the owner of your

home, while allowing you to

live and use the home during

your lifetime. Similarly, any

bank or investment account

owned by the trust is con-

trolled by the Trustee (the

person whom you select to

manage the Trust on your

behalf).

While giving up control over

your assets to a Trustee (who

may be an adult child or an-

other family member if you so

desire) is a monumental deci-

sion for many people, it may

be necessary in order to quali-

fy for Medicaid. To qualify

for Medicaid—a joint federal

and state public assistance

program for financing health

care—you must have limited

assets. In 2015, an individual

will not qualify for Medicaid

if he has over $14,850 in re-

sources. When you transfer

your assets to a Medicaid

Trust, the Federal government

does not include those assets

as a part of your available

resources for determining

eligibility.

While these trusts may sound

restrictive because of their

irrevocability, the Grantor

actually has some entitlement

to the trust property. The

Grantor still has access to any

income produced from the

Page 2 Link to Survey

plating a home purchase or

refinance, it’s critically im-

portant you take steps to

avoid these Top Five Mis-

takes:

Not Self-Employed for Two

Years:

National underwriting guide-

lines provide that you should be

self-employed for at least two

years before your income can

be utilized. Regardless of the

form of your business, unless

you can document you’ve re-

ceived income from your self-

employment for a minimum of

two years, it’s highly unlikely

this income will be used to

qualify for a mortgage.

Not Showing All of Your In-

come On Your Tax Returns: Some business owners may not

report all of their income on

their tax returns. Many busi-

ness owners maximize their

expenses in order to reduce

their tax burden. Others may

write off so much that they

show a loss (negative income)

on their tax returns. Lenders

will review the most recent two

years’ filed tax returns and av-

erage the reported income to

calculate qualifying in-

come. Therefore, a business

owner may need to start think-

ing two years in advance about

how their tax filings could ulti-

mately affect their ability to

obtain a mortgage loan.

No Ability to Produce Inde-

pendent, Third-Party Verifi-

cation of the Business:

National underwriting guide-

lines provide that self-

employed borrowers verify via

an independent third-party, the

legitimacy of the business and

thus the source of this in-

come. This can often be docu-

mented by a business license

Is A Medicaid Trust Right For You? (from p. 1)

from their state agency, a

detailed letter from the busi-

ness’ CPA and sometimes

even copies of newspaper,

magazine, or online adver-

tisements verifying the busi-

ness name, address, and

phone number. If the legiti-

mate existence of the busi-

ness and the source of reve-

nue cannot be documented,

an underwriter may not uti-

lize this as a source of in-

come to qualify for a mort-

gage loan.

Using Business Funds

From a Business Account

Towards Your Mortgage

Transaction: If any business funds are to

be used towards the transac-

tion, the lender will want to

know the sources of all large

deposits going into the busi-

ness account for the prior

two bank statement peri-

ods. In addition, the mort-

gage lender is now required

to analyze the cash-flow of

the business to determine

whether the use of these

funds will have an adverse

impact on the business! This

adds a level of complexity

that many would wish to

avoid.

Not Consulting a Compe-

tent and Experienced

Mortgage Professional Far

Enough in Advance:

Unfortunately, most borrow-

ers think about their mort-

gage financing only after

they’ve found a new house

to buy. By then, especially

for the self-employed bor-

rower, it may be too late to

plan properly and the mort-

gage loan may be destined

for a denial.

CRN-1230778-061915

Click to Comment

Top Five Mistakes To Avoid (from p. 1)

Page 3 Link to Survey

Personally Speaking…

More Advice to My Daughter

The first half of 2015 con-

tinued a long run of calm

markets. Equity returns

were generally positive.

Global economies contin-

ued to improve. The

Ukraine invasion, the Ebo-

la scare and other crises

faded from collective

memory. As we have seen

many times before, calm is

fleeting in global headlines

as well as in the minds of

many investors. Toward

the end of the second quar-

ter, things turned choppy

on a number of fronts.

Greece, a member of the

common euro currency,

balked at terms for an ex-

tension of its original

bailout with creditors.

This, it was feared, threat-

ened European stability

and growth. Through bro-

ken deadlines, posturing

and brinkmanship, the

matter has continued to

deteriorate. In Asia, after a

long period of strong re-

turns, Chinese stocks be-

gan to drop precipitously.

The Chinese government

intervened. So far, that has

had mixed results. Closer

to home, Puerto Rican offi-

cials announced that the

territory’s debt was unsus-

tainable and sought a

bailout of their own.

Media headlines have been

awash with news of these

triple threats. Pundits of-

fered conflicting predic-

tions of potential outcomes

Click to Comment

Quarterly Market

Commentary

Roth 401k (or designated

Roth account as it is some-

times known) resembles the

Roth IRA in that salary de-

ferrals are made with after-

tax dollars. Again, earnings

from the contributions grow

tax-free and she may not

pay taxes on distributions

when she starts making

withdrawals years later. I

also told her that she would

be able to participate in

both a Roth 401k and a

Roth IRA.

Another reason for young

workers to consider Roth

accounts is that they are

often in lower tax brackets

earlier in their careers than

they would be later on. As

such, they may pay less

income tax on earnings now

than they might pay later.

At some time in the future

when they may be earning

higher incomes, they may

want to consider traditional

IRAs or traditional 401Ks.

Decisions regarding IRAs

and retirement plans may

be more complex than my

daughter’s current situation.

If you need advice regard-

ing your particular situa-

tion, please feel free to con-

tact us.

Doug Lemons, CFP®

CRN-1256632-072315

CONTAGION EFFECT - 18% of Greek debt is owned or underwritten by other Eurozone governments (source: Argonaut Capi-tal).

tributions and the earnings

may be tax free. With a tra-

ditional IRA taxes are de-

ferred on contributions, and

earnings grow tax-deferred

in the account. When you

start making withdrawals

years later, distributions

from a traditional IRA are

taxable as ordinary income.

Earnings in a traditional

account are tax-deferred,

not tax-free.

I told my daughter that she

is young and will likely be

working for the next forty

years or more. Tax-free

growth in earnings over a

period of forty years is a

wonderful thing. Let’s con-

sider an example. Assume

that she contributes $5,000

at the beginning of each

year to a Roth IRA. At the

end of forty years she has

paid income taxes on

$200,000 ($5,000 x 40

years). If the Roth account

grows at 7% each year, it is

worth $1,068,000 at the end

of this period. More than

$860,000 of this amount

($1,068,000 - $200,000)

could represent tax-free

earnings. Had this money

been in a traditional IRA,

she would still need to pay

taxes on this $860,000 (in

addition to paying taxes on

the original $200,000).

I also advised my daughter

that when she becomes eli-

gible to participate in a re-

tirement plan in two years,

she may want to consider a

Roth 401k if her employer

offers her the option. The Continue on page 4

In our last newsletter I wrote

about advice I gave to my

daughter. I urged her to start

saving for retirement as soon

as possible. In today’s world

there are fewer and fewer

defined benefit pensions and

people are living longer and

longer. Saving enough for

retirement will be a challenge

for many young people just

entering the workforce.

Therefore, it is important that

they begin saving for retire-

ment early.

Upon graduation from college

in May, my daughter secured

employment in the non-profit

sector. She is fortunate to

have gotten a job so quickly.

She is also fortunate in that

she loves what she is doing.

Unfortunately, though, she is

not eligible to participate in

her retirement plan for two

years. Taking heed from my

previous advice, she wants to

start an IRA. She asked for

my advice on whether she

should open a traditional IRA

or a Roth IRA. Without hesi-

tation I told her that she

should select the Roth IRA.

Contributions to a Roth IRA

are made with after-tax dol-

lars. That is, taxes are paid

on the money when it is

earned. However, earnings on

the Roth contributions grow

tax free. It is this tax-free

growth that makes a Roth so

powerful. When you start

making withdrawals years

later, you may not pay taxes

on the distributions from a

Roth account. You have al-

ready paid taxes on the con-

as measured by nominal

Gross Domestic Product.

Compared with the level of

GDP among U.S. states,

Greece’s entire economy

would be considerably small-

er than Tennessee’s.

While the news of a

“plunging” Chinese market

may be alarming, a closer

examination could provide

some additional perspective.

While the Shanghai Compo-

site Index did drop about

30% from the highs, this

merely reversed massive

gains from earlier in the

year. This leaves the index

roughly unchanged for the

year-to-date as of the date of

this letter. Of course, a head-

line reading, “Chinese

Stocks Go Up And Down -

End Where They Started,”

doesn’t sell newspapers or

drive ratings. Our interest is

on you. This way of thinking

is uncommon and vital to

successful investing.

Again, we are not downplay-

ing these events. While re-

cent reports indicate the

Greek and Chinese situations

are settling down, they could

flare up again. We take each

event and its effect on your

portfolio seriously. We don’t

ignore the possibility of re-

percussions and unintended

consequences. We do know

that through our own finan-

cial crisis and recovery, we

have likely seen far worse

than this.

Domestic Equities: Equities

were stronger earlier in the

and repercussions. Inter-

estingly, a study has

shown that there is an in-

verse relationship between

the number of times a per-

son appears on TV and the

accuracy of their predic-

tions*. It seems clear that

regarding the economy,

foreign affairs and global

politics, “experts” have

strong opinions. Equally

clear is that their short-

term opinions often have

little value to serious in-

vestors.

As mathematically-based

stewards of wealth, we

take a different approach.

We prefer to make im-

portant decisions with the

TV turned off. Often, an

examination of market

history, application of

mathematics and a thor-

ough knowledge of a cli-

ent’s risk tolerance are

more productive. While

we do not downplay these

events, we do note that

similar situations have

happened.

The possibility of a Greek

default is an example. In

Europe and Latin America,

since 1975, 20 countries

have defaulted or restruc-

tured their debt. Some, like

Argentina, have done so

several times. There have

been 44 default events

among those 20 countries

since 1975. It should also

be noted that Greece is a

very small economy.

Greece represents less than

2% of the European Union

Page 4 Link to Survey

quarter. As the macroeco-

nomic news turned darker,

shares retreated. In the

end, equities were mixed

for the second quarter.

The S&P 500 eked out a

0.3% return. For the calen-

dar year, the index is up

1.2%. Smaller companies,

as measured by the Rus-

sell 2500, edged down

0.3%. For the year, the

index is up 4.8%.

International Equities: As

with the domestic markets,

there was a lot of news

and churning about with

little overall movement

during the quarter. The

MSCI EAFE Index, an

index of stocks in devel-

oped international mar-

kets, rose a modest 0.6%.

For the year the index is

up 5.5%. As noted above,

emerging markets stocks

have experienced consid-

Click to Comment

erable volatility. Returns

overall have been positive.

For the quarter the emerg-

ing market index was up

0.7%. For 2015, it is up

2.9%.

Fixed-Income: For years,

many have predicted that

interest rates had to go up

from historic lows. They

did not. Finally, due to a

stronger economy, rates

rose. The Barclays Aggre-

gate Index, a basket meas-

uring the total bond market,

dropped 1.7% for the quar-

ter. The decline for the year

is a less than dramatic

0.1%. It should be noted

that rising rates could, in

fact, be a good thing. It

means that the economy is

improving and needs less

support to stand on its own.

While there may be some

pressure on prices as rates

Quarterly Market Commentary (From p. 3)

% Return as of 06/30/2015

Equity Indexes 2nd Q YTD 3 Yr

S&P 500 0.3 1.2 17.3

Russell 2500 -0.3 4.8 18.7

MSCI EAFE 0.6 5.5 12.0

Emerging Market 0.7 2.9 3.7

Wilshire REIT -9.9 -5.7 9.0

Bond Indexes

TIPS -1.1 0.3 -0.8

Aggregate -1.7 -0.1 1.8

Governments -1.5 0.1 0.9

Mortgages -0.7 0.3 1.9

Investment Corporate -3.2 -0.9 3.2

Long Corporate -7.8 -4.7 3.5

Corporate High-Yield 0.0 2.5 6.8

Municipals -0.9 0.1 3.1

Cash Equivalents

3-Month T-Bill 0.0 0.0 0.1

Consumer Price Index 0.5 0.3 1.2

Continue on page 5

move up, for many, the

prospect of higher coupons

going forward will make

the transition worth it.

Real Estate: As interest

rates gradually rose, some

interest rate sensitive areas

came under pressure.

While real estate is certain-

ly a different asset class

than bonds, both generally

produce a stream of in-

come over time and there-

fore can be affected by rate

movements. The Wilshire

US REIT Index, an index

of publicly traded real es-

tate investment trusts, fell

9.9% for the second quar-

ter. For the year, the index

is down 5.7%. Given the

strong performance last

year, real estate still pro-

duced a positive 5.2% re-

turn of the last 12 months.

We know it is tempting to

“do something” in the face

of considerable uncertain-

ty. In fact, with your help,

we have been doing some-

thing all along. All of our

discussions, knowledge of

your goals and modeling

have gone into your portfo-

lio. We typically design

portfolios that are diversi-

fied across many asset

classes. These often in-

clude bonds, domestic eq-

uities, and many other

types of securities. Con-

centrations in specific

stocks or countries are of-

ten discouraged. We like to

design portfolios in ad-

vance of volatility not in

Page 5

Quarterly Market Commentary

(from p. 4)

Link to Survey Click to Comment

Ira’s IRA TIP

reaction to it. Making

drastic changes during

times of great volatility

and with incomplete infor-

mation is often the wrong

thing to do. This is not to

say we will “buy and

hold” and hope for the

best. You deserve more

than that. Just as in previ-

ous uncertain times, we

will be following these

situations and any effects

on your portfolio and

goals.

Please let us know if there

is anything you need. We

are here to help.

*Dr. Philip Tetlock, Uni-

versity of California Berk-

ley

CRN-1245683-071015

RETIREES ARE MILLION-AIRES? - The maximum retirement benefit paid by Social Security to an indi-vidual retiring in 2015 at the full retirement age of 66 is $2,663 per month. $3.2 million invested in a pre-tax account earning 1% annually on a tax-deferred basis would gen-erate $32,000 per year or $2,667 per month of taxa-ble income, i.e., income taxes are due upon with-drawal from the pre-tax account (source: Social Security).

MORE AND MORE - There

are 59 million Social Secu-rity beneficiaries today. That number is projected to grow to 78 million in 2025 and almost 100 mil-

lion in 2040 (source: Con-gressional Budget Of-fice).

Have you contributed to an after tax

or non-deductible IRA? Are you

doing so now, or planning to do so?

You should inform your tax prepar-

er about this so that Form 8606 may

be included with the tax return work

he/she does. Some tax advisors

even suggest including the 8606

form with every subsequent return -

even when no addition contributions

are made – so that the amounts of

the original contributions might not

be forgotten. When you begin to

withdraw funds from these IRA

accounts, you probably would not

want to pay tax again on your after

tax contributions. In order to avoid

such a bad result, you need to be

able to track the contributions over

the years and Form 8606 can be

helpful in that regard. CRN-1250345-071515

Ira, the IRA man

AESOP’s Corner—

this is not an Aesop’s Fable; but we think he would have liked it.

Page 6

THE PARABLE OF THE OX

In 1906, Sir Francis Galton, in an effort to prove the ignorance of the masses at a county fair, predict-ed that the guesses by 800 fairgoers of an ox’s weight would be grossly inaccurate. However, the av-erage of the guesses fell within 1% of the actual weight.

We see this concept repeatedly when large numbers of data points create the “bell shaped curve”.

The moral of this fable is: Beware the wisdom of the crowd

Today, unlike 1906, the wisdom of the crowd is on display – thanks in large part to technology and social media. However, it is not always easy to determine if the “wisdom” offered is based on many data points….or only one.

Moreover, it is not entirely clear whether the easy access to “wisdom” represents a mere reporting of information or whether it is a mechanism which participates in shaping it and/or creating it.

Before implementing a piece of “collected wisdom” learned from social media or the internet, due diligence as to its accuracy may be critical. If the information is financial in nature, a trusted financial advisor may be invaluable.

What roles do your advisors play in your due diligence process regarding ideas you get from the inter-net?

CRN-1250352-071515

Link to Survey Click to Comment

CPA

Continuing

Education

Page 7

Seating is very limited, therefore advance RSVP to Beth at 516-682-7564 is required for attendance

Location Seminar Social Security Planning I

What Workers Should Know to Maximize

Retirement Benefits

10:45am-11:45am

Social Security Planning II

What Individuals Should Know to Maximize Family

and Survivor Benefits

12:Noon-1:00pm

Syosset office October 21, 2015 1 CE 1 CE

Syosset office January 20, 2016 1 CE 1 CE

Link to Survey Click to Comment

Location Seminar

When I’m 65

10:45am-11:45am

Medicare-Managing Health Care Expenses in

Retirement

12:Noon-1:00pm

Syosset office August 19, 2015 1 CE 1 CE

Syosset office November 18, 2015 1 CE 1 CE

We Provide Continuing Education for CPAs (Contact Us to Schedule)

As part of our continuing effort to provide

CPE credits for CPAs, we include our

schedule for CPE events. These events are

open to CPAs only and not to the general

public. These events will be held at our of-

fices . Refreshments will be provided. We

expanded our course selection to provide a

well rounded series of topics in keeping

with your requests for a more well rounded

syllabus. Topics now include insurance and

annuity planning, Social Security planning,

business exit strategy and back by poplar

demand , estate planning and retirement

planning. A full list of seminars may be

found on our website:

http://familywealthdecisions.com/Web/

WebObjects/Web.woa/wa/menu?sid=fw-cpe-

seminarsC:\Users\ISPDAL\Documents\My%

20Music

Contact us to arrange a private CPE session for

your firm at your office (3 or more CPAs re-

quired for private CPE session). We have at our

disposal subject matter experts that can provide

answers to your client’s specific needs. If you

are interested in arranging for one or more semi-

nars for your firm, please contact Beth Tinelli at

516-682-7564.

(email BethT@FamilyWealthDecisions.com)

Location Seminar Savvy IRA For Boomers

10:45am-11:45am

CyberSecurity

12:Noon-1:00pm

Syosset office September 16, 2015 1 CE 1 CE

Syosset office December 16, 2015 1 CE 1 CE

Even if you are not a

CPA and would like to

attend, please call us.