Long-Term Care Services Have Room to Improve According to New Report

A new state-by-state scorecard evaluates the effectiveness of long-term care services across the country and concludes that there is a lot of room for improvement. The State Long-Term Services and Supports Scorecard examines the performance of state long-term care services for older people and adults with physical disabilities. The purpose of the report is to provide information on how to improve long-term care systems so that everyone can have affordable, high-quality, well-coordinated services, and family caregivers have the support they need.

The scorecard, a collaboration between the AARP, The Commonwealth Fund, and The SCAN Foundation, looked at the range of services and supports available for people who need long-term care, whether in their home, nursing home, assisted living facility, or other setting. The report ranked the performance of long-term care systems in states in four main categories: affordability and access, choice of setting and provider, quality of life and quality of care, and support for family caregivers. According to the report, Minnesota, Washington, and Oregon provided the best long-term services and Mississippi, Alabama, and West Virginia provided the worst.

The findings indicate that there is a lot of area for improvement even in the top-performing states, and the report presents several actions that states can take to improve performance. One recommendation is that states expand Medicaid eligibility to increase access and choice as well as move the balance of services away from institutional care and toward home or community-based options. Other recommendations include providing greater flexibility to consumers to direct their own services, helping to move nursing home residents who want to return to the community back to their homes, and making sure nursing homes are properly and frequently monitored.

All the information from the scorecard has been put into an interactive Web site (http://www.longtermscorecard.org/) to allow policymakers to identify areas where improvement is needed and uncover gaps within the system.

To read the report and see a breakdown by state, go to http://www.longtermscorecard.org/.

To discuss elder law issues with an attorney, please email the Elder Law Center or call 630-844-0065. The Elder Law Center is located in Aurora, IL, Kane County, in the Chicago Western Suburbs.

IRAs Require Special Consideration in Estate Planning

Individual Retirement Accounts (IRAs) are a popular investment tool for retirement, but they also need to be taken into account when doing estate planning. Although IRAs can be used to provide for heirs either directly or through a trust, to what extent your heirs will benefit from the IRA and avoid unnecessary taxes depends on proper planning.

What Is an IRA?
IRAs are personal savings plans that allow you to set aside money for retirement and create tax savings. The advantage of IRAs is that you may be able to deduct some or all of your contributions to an IRA from your taxes and also be eligible for a tax credit equal to a percentage of your contribution. Earnings in a traditional IRA generally are not taxed until distributed to you. At age 70 1/2 you have to start taking distributions from a traditional IRA. Earnings in a Roth IRA are not taxed nor do you have to start taking distributions at any point, but contributions to a Roth IRA are not tax deductible. Any amount remaining in your IRA upon your death can be paid to your beneficiary or beneficiaries.

Rule Number One: Name Beneficiaries
From an estate planning perspective, the most important thing to remember with an IRA is to name a beneficiary. While a spouse is usually the logical choice for a beneficiary, you should be sure to name contingent beneficiaries as well. If you and your spouse died at the same time and there was no contingent beneficiary, then the IRA would go to your estate and be subject to probate (the legal process of administering the estate of a deceased person). When a spouse inherits an IRA, he or she can roll it over into his or her own IRA. When a non-spouse inherits an IRA, the heir will need to start taking distributions within a year after the IRA owner dies.

Stretching an IRA
If you don’t need the funds in your IRA for retirement and want to use them to provide for your beneficiaries instead, you may be interested in “stretching out” your IRA. To do this, when you reach 70 1/2, take only the required minimum distributions, leaving more assets in your IRA. When you die, your beneficiary can also stretch distributions out over his or her lifetime and then designate a second-generation beneficiary. It makes sense to name a young beneficiary because the younger the beneficiary, the smaller each distribution must be, which gives the funds in the IRA extra tax-deferred years to grow. For more information on stretching out an IRA, click here.

Trusts as Beneficiaries
In some cases, it may make sense to name a trust as a beneficiary. This is particularly true if you have minor children, children with special needs, or a beneficiary with poor spending habits. But the trust must be properly drafted to avoid negative tax consequences. If the trust is a “see-through” trust or “conduit” trust, then the distributions from the IRA to the trust after the participant’s death can be stretched out over the life expectancy of the oldest trust beneficiary. If you are planning to leave your IRA to a trust, you must consult with your attorney to ensure that the trust is properly drafted.

An IRA can be a valuable part of an estate plan, but the rules can be complicated.  To find out your options, please email the Elder Law Center or call 630-844-0065. The Elder Law Center is located in Aurora, IL, Kane County, in the Chicago Western Suburbs.