Happy New Year / New Decade!!

January 1, 2020

The new year (and new decade) is the perfect time to add meeting with an attorney to review your current estate plan to your list of “new year resolutions” for 2020; particularly, if your estate plan includes either a trust and/or deferrable retirement benefits.  The new year / new decade will usher in significant changes to the laws impacting estate planning with trusts and retirement planning for Illinois residents.

At the state level, recent legislation (with a January 1, 2020 effective date) created the new Illinois Trust Code (ITC).  The ITC applies not only to Illinois trusts created on, or after, January 1, 2020, it also applies to existing trusts which become irrevocable on, or after, January 1, 2020 and/or when there is a trustee change and a new trustee begins serving.  Among other changes, the ITC adds specific, new requirements for Illinois trustees.

The other significant change occurred at the federal level, with the recent passage of the Secure Act. This new act substantially alters the existing law governing deferrable retirement accounts.  Of particular note are the changes made to the “stretch” rules for inherited IRAs, as a result of the passage of the Secure Act.

The bottom line:  quite simply,  if you have not already added reviewing your estate and retirement planning with your attorney and/or your tax advisor to your “to do” list for 2020, we strongly encourage you to add it to your list!

The Elder Law Center, P.C. (a division of Mickey, Wilson, Weiler, Renzi, Lenert, & Julien, P.C., http://www.mickeywilson.com) is located in Sugar Grove, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.


Tips on Creating an Estate Plan that Benefits a Child with Special Needs

July 15, 2019

Parents want their children to be taken care of after they die. Children with disabilities, however, will likely have increased financial and care needs. As such, proper planning by parents to maximize a disabled child’s (including an adult disabled child’s) long-term welfare is necessary. Such planning may also result in assisting the siblings of a disabled child, who may be left with the caretaking responsibility.

Special Needs Trusts

The best and most comprehensive option to protect a disabled child is to set up a special needs trust (also known as a supplemental needs trust). These trusts allow the child to receive inheritances, gifts, lawsuit settlements, or other funds and yet not lose their eligibility for certain government programs, such as Medicaid and Supplemental Security Income (SSI). The trusts are drafted so that, pursuant to the applicable laws, the funds will not be considered to belong to the beneficiaries in determining their eligibility for public benefits.

There are three main types of special needs trusts:

A first-party trust is designed to hold a beneficiary’s own assets. While the beneficiary is living, the funds in the trust are used for the beneficiary’s benefit, and when the beneficiary dies, any assets remaining in the trust are used to reimburse the government for the cost of medical care. These trusts are especially useful for beneficiaries who are receiving Medicaid, SSI or other needs-based benefits and come into large amounts of money, because the trust allows the beneficiaries to retain their benefits while still being able to use their own funds when necessary.

A pooled trust is an alternative to the first-party special needs trust, which is also designed to hold a beneficiary’s own assets.  Essentially, a non-profit association sets up these trusts that allow beneficiaries to pool their resources with those of other trust beneficiaries for investment purposes, while still maintaining separate accounts for each beneficiary’s needs. When the beneficiary dies, the funds remaining in the account reimburse the government for care, but a portion also goes towards the non-profit organization responsible for managing the trust.

A third-party special needs trust is most often used by parents and other family members to assist a child with special needs. These trusts can hold nearly any kind of asset belonging to the family member or other individual, including a house, stocks and bonds, and other types of investments. The third-party trust functions like a first-party special needs trust in that the assets held in the trust do not affect a beneficiary’s access to benefits and the funds can be used to pay for the beneficiary’s supplemental needs beyond those covered by government benefits.  However, a third-party special needs trust does not contain the “payback” provision found in first-party trusts. This means that when the beneficiary with special needs dies, any funds remaining in the trust can pass to other family members, or to charity, without having to be used to reimburse the government.

Life Insurance

Not everyone has a large chunk of money that can be left to a special needs trust for a disabled child.  Some parents, therefore, will utilize life insurance, when planning for their disabled child.  If you have established a special needs trust, a life insurance policy can pay directly into the trust. By designating the third-party special needs trust as the beneficiary of the policy, the proceeds become an asset that will not have to go through probate. Also, it is important for parents to be sure to review the beneficiary designation to make sure it names the trust, and not the child.  Ideally when utilizing life insurance, and if financially feasible, parents will want to do their best to make sure that they have enough insurance to pay for their child’s care long after they are gone. Without proper funding, the burden of care may fall on siblings or other family members. Using a life insurance policy also increases the likelihood that there will money for the future funding of the trust, while keeping the parents’ estate intact for other family members.

ABLE Account

An Achieving a Better Life Experience (ABLE) account allows people with disabilities who became disabled before they turned 26 to set aside up to $15,000 a year in tax-free savings accounts without affecting their eligibility for government benefits. This money can come from the individual with the disability or anyone else who may wish to give him money.

Created by Congress in 2014 and modeled on 529 savings plans for higher education, these accounts can be used to pay for qualifying expenses of the account beneficiary, such as the costs of treating the disability or for education, housing and health care, among other things. ABLE account programs have been rolling out on a state-by-state basis, but even if your state does not yet have its own program, many state programs allow out-of-state beneficiaries to open accounts. (For a directory of state programs, click here.)

Although it may be easy to set up an ABLE account, there are many hidden pitfalls associated with spending the funds in the accounts, both for the beneficiary and for his/her family members. In addition, ABLE accounts cannot hold more than $100,000 without jeopardizing government benefits like Medicaid and SSI. If there are funds remaining in an ABLE account upon the death of the account beneficiary, they must be first used to reimburse the government for Medicaid benefits received by the beneficiary, and then the remaining funds will have to pass through probate in order to be transferred to the beneficiary’s heirs.

Get Help with Your Plan

Quite simply, the bottom line is that proper planning is essential for parents of disabled children. Thus, talking with an attorney, who is knowledgeable about special needs planning, is strongly recommended to help parents of disabled children create the best plan for their family.

The Elder Law Center, P.C. (a division of Mickey, Wilson, Weiler, Renzi, Lenert, & Julien, P.C., http://www.mickeywilson.com) is located in Sugar Grove, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.


The Importance of Signing Up for Medicare Supplemental Coverage

February 25, 2019

You are turning 65 and enrolling in Medicare, but as a healthy senior do you really need to also sign up for Medicare’s supplemental coverage? The bottom line is that NOT signing up initially (when you first become eligible for Medicare and eligible to purchase a Medigap policy) can be very costly down the road.

Medicare pays for only about half of all medical costs. To augment Medicare’s coverage, you can purchase a supplemental or “Medigap” insurance policy from a private insurer. In addition, Medicare offers a federally subsidized prescription drug program, in which private health insurers provide limited insurance coverage of prescription drugs to elderly and disabled Medicare recipients.

Purchasing the supplemental coverage means paying more premiums. As such, if you do not typically go to the doctor very much, you may be tempted to forego purchasing a Medigap policy. However, choosing to not sign up for a Medigap is quite risky. If you get sick, what Medicare does not cover may prove to cost you significantly more than having opted to purchase a Medigap policy and to pay the extra premiums.

As expected, the monthly cost for a plan that covers most of your out-of-pocket expenses will be more expensive than plans offering less coverage. As for Medigap plans, there are currently 10 government standardized Medigap plans (known as Plan A through Plan N in Illinois, and most states). Each lettered plan will always have the same benefits, no matter which insurance company sells the policy to you. However, each letter plan offers a different combination of benefits.  You can review the benefits of each lettered plan and choose the combination of benefits that is right for you. To compare the benefits offered in each standardized letter plan, visit the official Medicare website at: https://www.medicare.gov/find-a-plan/results/medigapresults/medigap-view-all-policies.aspx

It is, also, important to understand that waiting to buy coverage until after you get sick can be difficult and expensive. The good news is that, if you apply for and purchase coverage within six months of enrolling in Medicare Part B, you cannot be denied a Medigap policy for pre-existing conditions. If you choose to not purchase a policy within that time frame, then the insurance company can use medical underwriting to decide whether to accept your application. Essentially, the insurance company will look at your age, gender, and pre-existing conditions and can charge you higher premiums, restrict coverage, or even reject your application.

Beneficiaries who enroll in Medicare Advantage plans cannot also buy a Medigap policy. But if they chose Medicare Advantage as their first form of insurance and later decide to return to original Medicare, they must select a Medigap policy within the first year of their initial Medicare enrollment or risk being shut out of a policy.

Medicare beneficiaries are also subject to significant financial penalties for late enrollment in the Medicare drug benefit (Medicare Part D). For every month you delay enrollment past the Initial Enrollment Period, the Medicare Part D premium will increase at least 1 percent. For example, if the premium is $40 a month, and you delay enrollment for 15 months, your premium penalty would be $6 (1 percent x 15 x $40 = $6), meaning that you would pay $46 a month, not $40, for coverage that year and an extra $6 a month each succeeding year.

There are some exceptions built in to both Medigap and Medicare Part D. For example, there is an applicable exception, if you did not enroll right away because you had other coverage.

Quite simply, the bottom line is that if you choose not to enroll because you think you will not need the plan, it may not be easy to change your mind later on, and doing so may also prove to be very costly down the road.

The Elder Law Center, P.C. (a division of Mickey, Wilson, Weiler, Renzi & Andersson, P.C., http://www.mickeywilson.com) is located in Sugar Grove, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.

 


Medicaid for Long-term Care & Planning for One’s Home

January 14, 2019

Planning for long-term care, and protecting one’s home in the process, is a concern for many.  In general, selling one’s one home in order to qualify for Medicaid coverage for nursing home (or other covered long-term) care is not necessarily required.  Despite this fact, there is a common fear amongst individuals applying for, and those who anticipate needing to apply for, Medicaid coverage for nursing home (or other covered long-term) care that they will lose their home; or, that their spouse will lose the home and will have nowhere to live. While this fear, and the desire to protect one’s home, is certainly understandable, it is important to understand that giving away one’s home to his/her children (or someone else) may not be the best way to protect it.  In fact, doing so may lead to severe unintended consequences.  Accordingly, here are three reasons why individuals should NOT transfer their home, without first consulting with their elder law attorney regarding the potential negative consequences that may occur and to learn what other options might be available in their particular circumstance:

  1. Medicaid ineligibility.  Transferring one’s home to his/her children (or someone else) may make one ineligible for Medicaid for a period of time. The Medicaid eligibility and transfer penalty rules regarding the transfer of one’s home (when determined to be a non-allowable transfer) are harsh and unforgiving. Basically, the state Medicaid agency looks at any transfers made within five years of the Medicaid application. If the applicant has made a transfer for less than market value within that time period, the state will impose a penalty period during which the applicant will not be eligible for benefits. Depending on the value of the home, the period of Medicaid ineligibility could stretch on for years, and it would not even start until the Medicaid applicant is almost completely out of money.  Exceptions:  There are, however, some exceptions to the Medicaid penalty rules related to the transfer of one’s home.  The circumstances under which one can transfer his/her home without incurring a Medicaid penalty requires that very specific criteria (which may vary from state to state) be met. Thus, it is critical that individuals consult with a qualified elder law attorney BEFORE proceeding with such a transfer to determine whether their circumstance fits within any of the exceptions. 
  2. Loss of control.  By transferring one’s home to another person or persons (usually one’s children), the individual will no longer own and/or have control of the home.  The recipients of the transfer will be able to do whatever they want to with the home.  In addition, if the recipients are sued or get divorced, the house will be vulnerable to their creditors.
  3. Adverse tax consequences.  Inherited property receives a “step up” in basis when one dies, which means the basis is the current value of the property. However, when one makes a lifetime transfer of his/her home to a child (or someone else), the tax basis for the home is the same price for which the individual purchased the home. Thus, unless the recipient of the gift of the home meets the IRS rules to qualify the home as his/her residence for the required length of time, the recipient (usually the individual’s child or children) will incur capital gains taxes, when he/she sells the home (which may or may not be after the individual’s death).  Accordingly, it is important to seek both legal and tax advice BEFORE proceeding to determine the likely tax consequences to the recipient of the transfer.

Likewise, when planning for one’s home, understanding the rules regarding when the state may file either a lien, or an estate claim (upon one’s death) against the home is also important.  When Medicaid contributes to the cost of one’s long-term care in a nursing home (or other covered care), the state must attempt to recoup from one’s estate whatever benefits it paid for the individual’s care. This is called “estate recovery.”  Again, consulting with an elder law attorney regarding the Medicaid rules related to liens and estate claims, BEFORE proceeding with such a transfer, will allow one to carefully consider all of the necessary information, and crucial pieces, of putting together a plan that may result in protecting one’s home, should Medicaid coverage for long-term care be necessary.

Simply put, the bottom line is that there may be viable ways to protect one’s home for the benefit of a qualified person and/or from a potential lien and/or Medicaid estate recovery.  However, to determine what options may be available, consulting with an elder law attorney PRIOR to proceeding with a home transfer, is absolutely critical.

The Elder Law Center, P.C. (a division of Mickey, Wilson, Weiler, Renzi & Andersson, P.C., http://www.mickeywilson.com) is located in Sugar Grove, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.

 


May is OLDER AMERICANS MONTH & NATIONAL ELDER LAW MONTH!!

May 1, 2018

On April 18, 1963, President Kennedy issued Proclamation 3527, which designated May 1963 as Senior Citizens Month. In this proclamation, President Kennedy specifically noted that there were currently more than seventeen million persons age sixty-five and over in the United States. He went on to note that “this large segment of our population represents a great national resource of skills, wisdom, and experience upon which much of our Nation’s progress has been built and which continues to enrich our daily lives and to provide counsel and leadership.” Every President since 1963 has, likewise, recognized the importance of this “great national resource,” and continued with the tradition of issuing a proclamation declaring May as a month to show support for older Americans. In 1980, President Carter, changed the name to Older Americans Month. Thus, every year since 1980, May has been known as Older Americans Month. To, further, honor older Americans, the National Academy of Elder Law Attorneys continues to support the annual proclamation by having also established May as National Elder Law Month.

We could not agree more with President Kennedy and every President, thereafter, that persons age sixty-five and older absolutely do represent a “great national resource,” for which we are most grateful. It is a resource that has grown tremendously, since that first proclamation in May of 1963, and  it is a resource which is continuing to grow. According to the United States Census bureau, as of 2016, this resource had increased to 49.2 million persons and accounted for 15.2 percent of the total U.S. population. These numbers translate to a significant population of Americans with a wealth of wisdom and experience, who are positively influencing our communities each and every day.

We recognize the privilege and honor that lies before us, as we salute our older Americans, and commemorate both Older Americans Month and National Elder Law Month this May and encourage all to join in our nation’s observance of Older Americans Month and National Elder Law Month.

(A copy of President Kennedy’s Proclamation 3527 declaring May 1963 as the first Senior Citizens Month, can be found at: http://www.presidency.ucsb.edu/ws/?pid=24066)

The Elder Law Center, P.C. (subsidiary of Mickey, Wilson, Weiler, Renzi & Andersson, P.C., www.mickeywilson.com) is located in Sugar Grove, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.

 


National Healthcare Decisions Day 2018

March 28, 2018

“It always seems too early, until it’s too late.”
(National Healthcare Decisions Day (NHDD) website: www.nhdd.org)

We could not agree more with the sentiment expressed in the above quote from the NHDD website. When it comes to creating advance planning documents for one’s future healthcare, we often hear individuals say that “it is too early for them to think about that,” or they say, “I will get around to it, one of these days.” The reality is that we never know when an illness or accident may lead to our incapacity. The good news, though, is that we can be proactive and plan ahead by creating an advance directive, prior to a personal healthcare crisis. In Illinois, the most common advance directive for healthcare is a durable Power of Attorney for Health Care (POAHC). This is the legal document that individuals use to select the person that they wish to be their voice for healthcare decisions, if they are ever unable to speak for themselves. By creating a POAHC now (while competent), individuals increase the chances that their healthcare wishes will be followed and that they will receive medical treatment in accordance with their wishes, should they ever be incapacitated,

This year NHDD is encouraging others to join in recognizing the importance of, and/or promoting NHDD throughout the entire week of April 16 – 22, rather than on just one day.  According to NHDD website (www.nhdd.org), NHDD “exists to inspire, educate and empower the public and providers about the importance of advance care planning. NHDD is an initiative to encourage patients to express their wishes regarding healthcare and for providers and facilities to respect those wishes, whatever they may be.” Additional information about NHDD 2018 and the themes for each day of NHDD Week can be found on the NHDD website.

The Elder Law Center, P.C. is pleased and honored to, once again, join with other national, state, and community organizations to lead a massive effort to highlight the importance of advance healthcare decision-making.  As a participating organization, it is our pleasure to provide information and tools for the public to talk about their wishes with family, friends, and healthcare providers, and to execute a written advance directive in accordance with Illinois state laws.  Specifically, throughout the month of April, the Elder Law Center, P.C. will be offering members of the community a unique opportunity to meet, on a complimentary basis with one of the following attorneys: Katie Lenert, Rick Petesch, or Connie Renzi, at our office located at 140 S. Municipal Dr., Sugar Grove, Illinois 60554.  At the conclusion of the informational appointment, individuals (who meet the Illinois statutory requirements) will have the option of working with the attorney to create and execute, free of charge, an Illinois durable Power of Attorney for Health Care specifically for them. The available appointments are limited, and will be scheduled on a first call, first serve basis.  For additional information about, and details, regarding our April 2018 NHDD event, see the attached flyer by clicking the following link:   Flyer

The Elder Law Center, P.C. (subsidiary of Mickey, Wilson, Weiler, Renzi & Andersson, P.C., www.mickeywilson.com) is located in Sugar Grove, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.

 


Breath In, Breath Out…

November 15, 2017

Recently, I had the opportunity to re-read various articles that I have saved over the years, for one reason or another.   I quickly noticed a recurring theme that appeared in several of the articles that I had saved.  This common theme is that there are simple breathing techniques that we can do almost anytime and anywhere, which may be able to provide us with just what we need, without any financial cost, to nurture our bodies, mind, and souls. The various articles that I had saved touted the potential health benefits that might occur when performing breathing exercises, as well as the potential to  simply help one calm/relax (de-stress).  After re-reading these articles, a quick search online led to the following, August 14, 2017 post by Melanie D. Tucker, on the Livestrong.com website:

https://www.livestrong.com/article/92264-benefits-deep-breathing/

In both my personal and professional life, I have encountered many persons (myself included) whose daily lives are often busy, and at times, hectic.  In particular, the daily lives of “caregivers” comes to mind.  It is not uncommon for caregivers (particularly caregiver spouses, children, and parents) to report that there “simply are not enough hours in the day” for the caregiver to also take care of themselves.  As a result, the well-being of caregivers may suffer.   Breathing exercises (or even just pausing in times of stress to focus on taking a few deep breaths) may be a helpful “tool” that caregivers can easily add to their “tool chests of care” both for their loved one and for themselves.

Thus, as we celebrate and honor “family” caregivers during “National Family Caregivers Month,” we encourage caregivers to incorporate simple breathing exercises into his/her daily routine.  Our encouragement, however, is not limited to caregivers, simply put: the bottom line is that we encourage all persons to consider adding this simple technique to your own personal tool chest.  In times of stress, you may be glad that you did!

The Elder Law Center, P.C. (a division of Mickey, Wilson, Weiler, Renzi & Andersson, P.C., http://www.mickeywilson.com) is located in Sugar Grove, IL, Kane County, in the Chicago Western Suburbs, phone number: 630-844-0065.

©Copyright 2017 by Constance Burnett Renzi. All rights reserved.