IN SICKNESS & IN HEALTH - The Garrett Law Firm · Take care of yourself and one another in sickness...

THE GARRETT LAW FIRM, PLLC 2016

Take care of yourself and one another in sickness and in health.

Secure your well-being and that of those you love.

Unlock your Future

IN SICKNESS

& IN HEALTH


The Garrett Law Firm, PLLC

4408 Spicewood Springs, Suite 413 Austin Texas 78759

www.elderlawaustin.com (512) 800-2420

© 2016 The Garrett Law Firm, PLLC. Reproduction permitted with attribution. Please

download any additional copies from www.elderlawaustin.com/

This document is provided as a public service. It does not constitute, nor is it intended to be, legal, tax or investment advice. It does not create an attorney-client relationship. Laws change. Please discuss your situation with an elder law and estate planning attorney, your CPA, and a Certified Financial Planner.

https://www.elderlawaustin.com/



TABLE OF CONTENTS

Home Sweet Home

1

Protecting Your Home 4

Home is Where the Health Is 6

No Wall Flowers Allowed 8

Choosing Your Medical Care in Advance 9

Paying for Your Medical Care in Advance 10

Stretching Your Money 13

Protecting Your Money 15

Protecting Your Family 18

Making the Family Business Work 20

Will You or Won’t You? 21

About the Author 23

THE GARRETT LAW FIRM, PLLC 2016 1

HOME SWEET HOME ---------------------------------------------------

If you are among the almost 80% of Americans who retire owning their own home, your home itself can help you enjoy your retirement years in more ways than you may have imagined.

How Does Owning Your Home Help?

First, you can live there. Housing is one of the three biggest expenses during retirement. If you own your home, you do not need to worry about rising rents. In many Texas cities (including Austin), your property taxes will be capped when you turn 65.

Second, wherever you call home, because it is yours, you can make it senior friendly. That will help you live there longer, perhaps indefinitely.

95% of seniors live in

the community.



Third, you can sell your house, enjoying a tax-free profit of up to $500,000 ($250,000 if you are single.)

Fourth,

a lot of your health care and personal assistance can come to you.

Fifth, in determining whether you are financially eligible for Nursing Home Medicaid, Texas will not count your home as a spendable asset -- as long as you intend to return to it.

SELLING YOUR HOUSE

Means that you can move to:

• a neighborhood which is

walker, wheelchair, and

scooter friendly

• a town with more of the

activities you enjoy

• a community closer to your adult children

• a home which requires

less yardwork, less

housework and fewer

repairs

• a duplex or house with a garage apartment to

rent out for extra income so your home can

support you



Sixth, if you are the longer-lived spouse and must be in a nursing home for an extended period of time, in Texas you can lease your home, having the lessee pay all the utility and other bills.

Seventh, you can leave your home to someone using a trust, a revocable “Lady Bird” or transfer on death deed.

Medicaid Reimbursement If Texas Medicaid paid for all or part of your health care after

age 54, only certain people can inherit your home before Medicaid is reimbursed. These are:

❖ your spouse, ❖ your disabled child, ❖ your minor child, ❖ a sibling who owns part of your home, ❖ your child who moved in to take care of you so that you did not

have to go to a nursing home or so that you could postpone going to a nursing home for at least two years.

If your home is a farm, ranch, or other business providing at least half of your children’s support, they can also inherit the family home without first needing to reimburse Medicaid for your care.


PROTECTING YOUR HOME ---------------------------------------------------

Just as your home can benefit you in many ways, it can also be a target for fraud.

Salesmen and contractors target older Americans for home repairs and modifications they do not really need. These "improvements" are often at inflated prices. Bullying techniques and outrageous contracts are common. Some people even lose their homes.

Loan modification consultants do nothing but make promises and take your money.

Loan auditors and foreclosure specialists make promises and take your money. If they do anything, it is not effective.

Short sale consultants claim that they will convince your lender to let you sell your home for less than the amount of the loan. You will still owe the lender the full amount.

Sale–leaseback specialists do not explain that you will no longer own your home. You will lease it. The rent will probably rise. You could be evicted.


Protecting Your Home

Reverse mortgages can have so many hidden fees that you will owe

money even if you never borrow a dime. The more you borrow, the less equity you will have. Contracts typically transfer title of the home to the lender if neither you nor your spouse resides there for a specified period, usually 6 or 12 months. You may have no home to return to.

It may be better to downsize or to lease your home. Always check with the federal Consumer Protection Finance Bureau and an experienced person who has nothing to gain financially when you are considering whether a reverse mortgage is right for you.


HOME IS WHERE THE HEALTH IS ---------------------------------------------------

95% of Americans 65 and above live in the community. Home health care generally costs about half what nursing home care does. Family, friends, neighbors and others can visit easily. It is also easier for you to get out and about.

At least 72% of us will at some point need assistance with "Activities of Daily Living." This is often what is known as "long-term care."

Long-term care is only part of the assistance we will need. Yardwork, heavy chores, shopping, cooking, getting to the doctor, and taking our medicines correctly will all pose challenges as we age.

Activities of Daily Living (ADL):

• bathing • dressing and

grooming • maintaining

continence • toileting • moving from one

place to another • getting sufficient

nutrition and hydration


Staying Healthy At Home

Your doctors, nurses, therapists, home

health care and personal assistants are all members of a team, your team. Like the owner of a baseball team, you are in charge. You choose the geriatric care manager. You choose who coaches the team, maybe your spouse or an adult child, niece, or nephew. You hire the players. You designate relief pitchers and pinch hitters.

Especially if a family member is one of your care givers, insist on a care giver support group, training, and respite for your family member. The primary reason people who do not absolutely need to be in a nursing home are there is that their families are exhausted. An early 2015 study found that today 51.6% of us die in a nursing home. That does not have to be you.

Use your plan of care and your spending plan to create a Family Care Giver Agreement. A geriatric care manager and an elder law attorney can help you maximize both care and cash.


NO WALLFLOWERS ALLOWED ---------------------------------------------------

While boomers’ biggest worry is usually whether they will have enough money to pay for health care during retirement, the biggest complaint of older Americans is isolation and loneliness.

You need friends who share your interests and friends who will introduce you to new things. You need a “deep bench” of friends of different ages and strengths to guard against loneliness, abuse, fraud and neglect.

You may be a happy homebody, but do you really want your spouse to grow old alone?


CHOOSING YOUR MEDICAL CARE IN ADVANCE ---------------------------------------------------

Choosing your medical care in advance helps you get what you want. It can save your family stress, confusion, uncertainty and guilt.

When you sign a Medical Power of Attorney, attach a letter saying what you want. Under stress, people can get confused. An unanticipated situation may arise. Your letter can reassure someone that they are making the kind of choices you want made.

As long as you are medically competent, you can change any decision about your health care. If you want to die at home and not hooked up to machines in a hospital, ask your doctor to sign an Out-of-Hospital Do Not Resuscitate Order. If you change your mind when EMS arrives, just tell them.

With this and other legal documents, you can stay in control of your own life. You will have less to worry about. You can focus on enjoying life.


PAYING FOR YOUR MEDICAL CARE IN ADVANCE ---------------------------------------------------

How do you pay for your medical care in advance when you do not know what you or your spouse will need?

You might need things such as a wheelchair ramp and lower counters. You might need people to help you with transportation or to help you around the house. You might need home health care assistants. You might need therapists or skilled nursing.

An elder lawyer can help you plan, protect your spouse and any

family members or dependents with special needs.


Advance Planning - Insurance

• Catastrophic illness insurance. One-third of men and half of women 65 and older will develop cancer; 10% of men and 18% of women, who are longer-lived, are expected to become demented.

• Hospital insurance to supplement Medicare.

• Life insurance with a rider providing extended medical care.

• Life insurance with a long-term care rider which can be converted to pay for long-term care.

• Texas Partnership Medicaid-advantaged long-term care insurance.

• Long-term care insurance not offered through the Texas Partnership.

• Conversion of life insurance or an annuity to long-term care insurance.

• Conversion of a smaller life insurance policy to a package of long-term care benefits.

• Accelerated life insurance benefits.

• Irrevocable life insurance trust for either or both you and your spouse. While you are alive, the trust can borrow against the policy to pay any health or other expense not covered by government benefits. What is left can pay for your spouse’s expenses or be left to your heirs as a death benefit.

Talk with an elder law

attorney about what options would work best for you.


Activities of Daily Living (ADL):

• bathing • dressing and

grooming • maintaining

continence • toileting • moving from one

place to another • getting sufficient

nutrition and hydration

Advance Planning - Medicaid

If you might need Medicaid someday, and most people will, don’t randomly spend down or transfer everything to the kids.

Your home and some other important assets are not counted in determining financial eligibility. Assets can be transferred to your spouse, used to purchase a Medicaid-qualified annuity, or deposited in a special needs trust or an irrevocable life insurance trust. Income can be assigned to a qualified interest trust to pay for unreimbursed medical expenses, such as dentistry, to support your spouse, to pay your nursing home co-pay.

When and how you transfer assets and income is critical. Some transfers should take place at least 60 months before you will need nursing home Medicaid. Others should not take place until you are in a Medicaid- certified nursing home.

How Does Medicaid Work?

Medicaid pays for skilled nursing and therapy and a limited number of hours of care by nurse’s assistants.

Medicare and Medicaid pay nothing unless you are suffering a certain degree of cognitive decline or are unable (without substantial help and for at least 90 days), to perform at least one of the Activities of Daily Living (ADL).

Long-term care insurance and some VA benefits generally require that you be unable to perform two at least two ADLs. Other VA benefits may be available if you are house-bound, even in an assisted living facility. (Medicaid does not pay for an assisted living facility but may pay for ADL assistance there.)


STRETCHING YOUR MONEY ---------------------------------------------------

Life Insurance Policy

Life insurance policies can be used while you are alive, whether in an irrevocable life insurance trust or through a long-term care policy conversion. You can also purchase a life insurance policy which includes a long-term care rider. By combining the long-term care component with accelerated death benefits you can get long-term care for an extended period. Social Security Benefits

You can get more in Social Security Retirement Benefits if one spouse delays receipt of Social Security until age 70. The other spouse’s retirement benefits will grow by 8% each year. Assistance from an elder law attorney or www.maximizemysocialsecurity.com may help you find the best filing combination for your family. Pension

If you are among the 22% of Texans with a pension or “defined benefits” retirement plan, consider taking less now so that your pension will continue to pay the longer-lived spouse.

Talk with an elder law attorney about what options will improve your quality of life and that of your spouse.

http://www.maximizemysocialsecurity.com/


Stretching Your Retirement Money

401(k), 403(b), 457

If you or your spouse have a “defined contribution” plan:

• Make sure that your current spouse is named the contingent or secondary beneficiary.

• Discuss who should start taking the annual required minimum distributions and when. You can begin taking them anytime between age 59 1/2 and 70 1/2.

• Decide whether to convert part of the money (the lesser of 20% or $125,000) into an annuity which starts paying later in life, when your medical expenses may be higher and Social Security benefits less.

Roth IRA

Even after you have stopped working, you can “roll over” money from a traditional IRA or defined contribution plan into a Roth IRA.

Ordinary income tax is paid on money withdrawn from a traditional IRA or defined contribution plan.

Money in a Roth IRA continues to grow tax-free. Because it is withdrawn tax-free, the money which it earns is never taxed.

Unlike a traditional IRA or defined contribution plan, there are no annual required minimum withdrawals from a Roth IRA. This makes retirement spending flexible.


PROTECTING YOUR MONEY ---------------------------------------------------

A Dozen Ways to Protect Your Money

When you need to make decisions, you must have a clear understanding of your choices. Here are 12 suggestions for understanding and protecting your money.

1. Make sure that each of you thoroughly understands your finances.

2. Use automatic deposits and withdrawals as much as possible.

3. If you use a credit card, be sure to pay it off every month and to write the credit card company immediately if you see an entry which you do not recognize.

4. Look at your checkbook and credit card bills once a month to make sure that no one was paid twice.

5. Review your brokerage statements quarterly.



6. Review your monthly Medicare statement and all medical bills carefully. There is no limit on the amount you could owe if someone impersonates you and has "your" appendix removed -- again.

7. Order a free credit report from one of the three credit reporting agencies every four months. (Each is required to give you one free credit report each year.) Check it carefully. Close any accounts which you no longer use. Question any apparent errors. Regular examinations help keep the information accurate. http://www.annualcreditreport.com

8. Place your insurance policies, bank and brokerage statements, and automobile titles in an easy-to-find folder. Put copies in your safety deposit box.

9. Limited Financial Power of Attorney. The first thing we tend to slip up on is managing money day to day. Give one person a limited financial power of attorney to pay your regular bills and file your insurance claims and tax returns.

http://www.annualcreditreport.com/



10. Durable Financial Power of Attorney or Revocable Living Trust for your investments and your home. • Consider a spousal Revocable Living Trust or a Durable Power

of Attorney which takes effect when your doctor writes that you lack medical competency to manage your finances..

• Include detailed instructions. • Require them to keep your property

correctly titled, maintain an ongoing account of expenses, with receipts, and make regular reports to you and someone else you name.

A Revocable Living Trust is less important in Texas, with its simplified probate. It is less important throughout the country now that the federal estate tax exemption for a couple’s combined estate is almost $11 million. But it still allows assets to be shifted and Medicaid planning done when one spouse, but not both, lack medical competency.

11. Trusts. Although it may not look like it at first, a trust can keep you independent. Your needs govern, whatever they may be. Trusts record exactly what you want: Medicare, Medicaid, or an insurance company cannot decide for you. If the person or bank handling the trust is not doing a good job, they can be replaced.

12. Remove your name from telemarketing databases. • Remove your name from direct mail lists, internet and e-

mail ads. DMAchoice • Remove your name from telemarketing lists. National Do Not

Call Registry. • Opt out of pre-approved credit offers. Opt Out Prescreen • Read the privacy policy on any social networking sites you

use, such as Facebook. Avoid posting private information.

Annual Financial and Legal Checkup

Review these documents once a

year, perhaps on your birthday, just like you

get an annual physical.

http://www.dmachoice.org/

http://www.donotcall.gov/



https://www.optoutprescreen.com/


_________________________

PROTECTING YOUR FAMILY ---------------------------------------------------

One way to protect your family is through the use of trusts. There are many useful types of trusts - special needs trusts, spousal protection trusts, trusts which protect minors and any children from a previous relationship or marriage…

What Is A Trust?

A trust is a legal agreement in which one person trusts another to handle money, investments or other property for his benefit or for that of someone else. This agreement can also give a third person or group of people the power to remove the trustee (the person handling the trust assets) if they think the job is not being done well.

A Trust Can Be A Good Way To:

• Provide for your current spouse and for the children of a previous marriage.

• Delay children or grandchildren getting more money than they can handle as young adults while still providing for someone experiencing job loss, divorce or a medical hardship.


Protecting Your Family

• Direct money toward goals such as a college education or the down

payment on a home.

• Provide for someone with special needs while preserving his or her eligibility for Social Security, Medicaid, and Medicare benefits needed now or in the future.

• Pets. Some people form trusts to provide care for their pets when they cannot.


MAKING THE FAMILY BUSINESS WORK ---------------------------------------------------

If you have a family business, arranging for eventual retirement and smooth, low-cost transfers of ownership is crucial.

Small businesses can offer retirement benefits which let you “catch up” after years of putting everything into growing the business.

With the right operating agreement a limited liability company, family limited partnership, or even a corporation can keep you in control while transferring ownership to the next generation and deferring and decreasing taxes.

You may want to keep the ranch in the family. Or you may want a way for partners or others to buy out your share of the business, whether getting the money to you through annual payouts or promptly paying your family.

Either way, be sure that your elder lawyer is experienced in business as well as trust and estate law.


WILL YOU OR WON’T YOU? ---------------------------------------------------

Regardless of whether or not you have a will, your affairs must be settled. The costs of your last illness, the handling of your earthly remains, and any taxes must be paid.

With a Texas will written specifically for you by a qualified Texas attorney, you can choose who gets what, “pour over” your assets into a trust, leave money to a charity, provide for your pets, and determine what happens to your frequent flyer miles, Facebook page, and other digital assets and accounts.

No one can completely avoid probate. At a minimum, an Affidavit of Small Estate must be filed. In Texas, however, the cost and time involved in probate can be minimized with the assistance of an experienced probate attorney.

Without a will, your family may have to pay thousands of dollars for an heirship determination. Your affairs may have to be settled under court supervision by a stranger whom the court appoints instead of by someone you choose.

While making a will, check to make sure that your non-probate assets are held properly - decreasing taxes and protecting those assets from creditors. These include your bank and retirement accounts and any life insurance policies. Also check to see how any real property is held.


Planning ahead gives you and your family

peace of mind and allows you to

enjoy your retirement years

to the fullest.

© 2016 The Garrett Law Firm, PLLC. Reproduction permitted with attribution. Please

download any additional copies from www.elderlawaustin.com

This document is provided as a public service. It does not constitute, nor is it intended to be, legal, tax or investment advice. It does not create an attorney-client relationship. Laws change. Please discuss your situation with an elder law and estate planning attorney, your CPA, and a Certified Financial Planner.

The Garrett Law Firm, PLLC

4408 Spicewood Springs, Suite 413 Austin Texas 78759

www.elderlawaustin.com (512) 800-2420





ABOUT THE AUTHOR ---------------------------------------------------

Terry Garrett practices in Central Texas. She has been helping family business owners since 1984 and has helped local families with their estate plans and probate for over a decade.

She enjoys sharing the keys to successful retirement and estate preparation with people in a wide variety of situations, from those needing simple medical and financial plans to those with complicated family circumstances or international businesses.

Terry Garrett graduated with honors from Cornell University. She was on the Dean's List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.

She is an active member of the Business Planning Committee of the American Bar Association's Real Property, Trust and Estates Section and the Business Tax Committee. She is also a member of the Real Property, Trust and Estates Law Section of the State Bar of Texas and the Estate Planning and Probate Section of the Austin Bar Association.

Terry Garrett is a member of the National Academy of Elder Law Attorneys, the Academy of Special Needs Planners, ElderCounsel and the AARP Legal Services Network.

She is an Approved Guardianship Attorney and is appointed by the court in heirship proceedings. She is accredited by the Department of Veterans Affairs. She handles matters pro bono in Central Texas for Volunteer Legal Services.

© 2016 The Garrett Law Firm, PLLC. Reproduction permitted with attribution.

IN SICKNESS & IN HEALTH - The Garrett Law Firm · Take care of yourself and one another in sickness...

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Transcript of IN SICKNESS & IN HEALTH - The Garrett Law Firm · Take care of yourself and one another in sickness...