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The Five Key Trusts You Must Know

Did you know that when it comes down to it there are only *five* trusts that serve 99.7% of all client needs? These include:

  1. The revocable living trust;
  2. The income only irrevocable trust;
  3. The control only irrevocable trust;
  4. The third party irrevocable trust; and
  5. The completed gift irrevocable trust.

Bigstock-Old-Keys-42114148This is all you need to serve 99.7% of all clients. The overindulgence in conversation about DAPT'S, GRATS, GRUTS, FLPs, and other advanced tax planning strategies are for mental exercise only and apply to less than 3 in 1,000 Americans.

The correct trust choice for clients when designing planning to protect their businesses, ensure they qualify for Medicaid, if the need for long-term care occurs, or the preservation and maximization of veteran's benefits, trust choice is critical. But more important than trust choice however, is the drafting utilized inside the trust chosen.

That's why the national Medicaid and VA experts are hosting a three day program to bring you together with your colleagues to show you the solution they have created to these often misused trusts. Click here for the course outline and to register. This three day program will not only address trust drafting and trust use, but also address all of the core elements in today's Asset Protection, Medicaid, and VA Benefits environment.

In just three days, we will show you…

ASSET PROTECTION:

  • Recent updates to asset protection and Medicaid compliant strategies.
  • The new asset protection strategies dominating the marketplace.
  • The death of DAPT'S, FLP'S, GRATS, GRUTS, and tax planning, and what's replaced them.
  • The five essential trusts and key drafting needs to serve 99.7% of clients.
  • Four "must have" drafting considerations and three "most forgotten" powers in trust.

MEDICAID:

  • Four steps to Medicaid eligibility for any client.
  • How to calculate the "breakeven" to ensure the proper filing date for the shortest penalty period.
  • Medicaid Qualifying Annuities: Hidden risks and how to properly disclose them to clients or protect from them.
  • The seven key factors to calculate any Medicaid case in seven minutes (or less!).
  • IRA's: Exemption versus taxes, how to calculate if IRA's should be liquidated or exempted in Medicaid and VA cases.

VETERANS' BENEFITS:

  • New claims process for veterans and widows.
  • Qualifying assisted living facilities as UME's.
  • Key choices to complete the physician affidavit for more timely approvals.
  • Update on three year look back for VA benefits.
  • The key reports no longer required for VA applications.
  • Dangers of annuities in VA benefits planning.
  • The effects of the Supreme Court decision on DOMA related to veterans benefits.

ALL PARTICIPANTS IN THIS SUMMIT WILL RECEIVE:

  • Asset Protection, Medicaid and VA Practice Kit which includes:
  • 50 state Medicaid Reference Resource Guide (summarized in 3 pages)
  • 50 state Estate Recovery Article and updated state by state summary.
  • Grantor Trust Summary and use tool.

HERE'S WHAT YOUR PEERS HAD TO SAY ABOUT THE PROGRAM:

“You don't know what you don't know. Come learn how to best serve your clients.” –Matthew Donald

“I would consider this mandatory training for any elder law/estate planning attorney. If not, they should plan for a mediocre practice at best.” –Tim Jarvis

“Just do it. The tools and training will absolutely be worth it!” –Rod Halstead

If you are ready for strategic solutions that you can see, touch, and feel, this is not an event you will want to miss. Click here now to begin your strategic approach to solving your clients' trust needs.

To Your Success,

Dave Zumpano
Co-Founder, Lawyers With Purpose
Practicing Attorney, Just Like You! 

 

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Congratulations to Peggy Timmel, LWP Member Of The Month

What is the greatest success you’ve had since joining LWP? 

Organization + Confidence = Increasing Success.  That’s the formula we now have in place.  Sure, we still are working through some of the processes, making them our own and getting the kinks worked out when and as needed.  Not all clients initially expect the process to be as involved, but there is no doubt that our efforts are appreciated. 

PhotoWhat is your favorite LWP tool?

LWP Meeting Focuser (the green sheet) – it may sound strange to some members, but that sheet is reviewed at the end of client meetings so that tasks are delegated and the next meeting with the client put on the calendar.  I’ve been using it for cases that are pre-LWP or non-LWP, like guardianships.  It keeps our team more focused and allows us to move our clients through the entire process more smoothly.

How has being part of LWP impacted your team and your practice? 

We get to travel three times a year and always come back with something to improve our practice.  It has been incredibly helpful to have the support system that LWP provides.  The members provide a great community of support and the LWP systems and processes give us a great foundation to continually improve our practice.

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The Medicaid Aspects In The Estate Planning Drafting Software

Our Medicaid software is industry-changing. We've designed software with artificial intelligence – it knows the applicable laws and exemptions as you enter clients' information. Not only does it tell you the plan of action to take, but it also designs the funding plan and drafts an opinion letter for you to give to clients.

Click this link to watch the video of Dave discussing the unique Medicaid aspects of the software.

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Live Webinar TOMORROW On The Recent Supreme Court Decision

As many of you learned at our last Member Tri-Annual Retreat the U.S. Supreme Court in Clark v. Rameker ruled that inherited IRAs are not "retirement accounts" for purposes of protection from creditors and predators.  While this shocked many in the industry, it has been the position we have held and trained all of our Lawyers With Purpose Members for the last ten years! 

So what does this mean to us as practitioners? 

Bigstock-Brown-Gavel-46632817Actually, it validates our planning strategy and creates an incredible marketing opportunity for us to go back to our clients and those clients of other attorneys who have not been kept abreast of this very important topic.  It's also a wake-up call to those of you in LWP who do not stay as "active" as capable to stay aware of these things which we regularly talk about on the Live ListServ, and at our Member Tri-Annual Retreat. The good news is, Lawyers With Purpose is swift and the first national organization addressing it – and we will be TOMORROW. 

On Tuesday, June 24th at 12:00 p.m. Eastern Standard Time I will be hosting a live Lunch & Learn for all of our LWP members, all of my financial professionals, and the general estate planning industry at large.  In this one‑hour program you will get:

  • An understanding of the key holdings of the recent Supreme Court decision.
  • Learn the asset protection strategies available for inherited IRAs.
  • Know the four requirements for trusts to qualify to own IRAs without causing taxation.
  • Discover the "inside" and "outside" planning strategies we have used for years to protect inherited IRAs and provide clients with the maximum number of options at death to avoid the loss of an IRA to creditors and long-term care costs.

Also of relevance to LWP members, the complete marketing package that I have created to roll out to my local referral sources will be available and posted to the member ListServ and be posted on the member web site.  This packet will include:

  • E‑blast to send to your referral sources
  • The Power Point presentation to deliver to your advisors
  • The recording of the live presentation to see how I presented it  
  • A complete evaluation that will be a call to act to those in attendance of the program. 

As a side note, at the last Member Tri-Annual Retreat I lead an entire focus session reviewing all the reasons for naming the trust the beneficiary of IRAs.  What was amazing was I indicated in that program, that we were expecting a decision from the U.S. Supreme Court "any day."  Little did we know it would be the very next day.  The powerful parts for those "in the room" is that they are now properly prepared and ready to address this issue and they have a full understanding of the "inside" and "outside" strategies utilizing trusts for IRA protection.  

Please join me for tomorrow's Live Presentation by registering using the link below:
 

David J. Zumpano, Esq, CPA, Co-founder Lawyers With Purpose, Founder and Senior Partner of Estate Planning Law Center

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Integrating Easy

Tiffany Brown, Vice President of DocuBank, again join the Lawyers With Purpose blog as a guest and shares her perspective of how the administrative part of running a practice can be daunting. 

DocuBank logo with tagWhenever you find something that builds value AND is simple to set up, it’s a win-win.

Thanks to some clever programming on the part of Lawyers with Purpose, getting started with DocuBank is one such winning proposition.

The DocuBank service is a value-added benefit for both your clients and your firm but it’s also one other very important thing – easy.

The DocuBank enrollment form is built right into the Lawyers with Purpose software so that your clients simply sign the form during the signing meeting and your staff  then sends it along with the documents to establish their membership.  Any information not supplied by the software can always be added by the client at a later date.

Getting started with DocuBank is easy.  We have been working with attorneys for more than two decades to establish and comprehensive turnkey process.  Having the software integration as part of the DocuBank and Lawyers with Purpose partnership means that the DocuBank solution is even easier for you to implement. 

The discounted rates available to you through Lawyers with Purpose mean that adding DocuBank memberships to the service you provide for your clients is also affordable.  Click here to find out more about DocuBank.

Click here to find out more about how DocuBank can be a great value-added tool for your firm and your clients.

Tiffany Brown, Vice President, DocuBank

 Roslyn Drotar – Coaching, Consulting & Implementation, Lawyers With Purpose

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Making Medicaid Qualification Easy – A Quick 10 Minute Demonstration

With the proliferation of those online will factories, some believe traditional estate planning is dead.  But that is not the experience of Lawyers With Purpose members.  With nursing home costs rising more and more out of reach of most people, clients are looking for ways to protect what they have scraped and saved and worked so hard to build. 

Bigstock-Play-button-53748670And those clients are turning to Lawyers With Purpose attorneys to help them do it.  Lawyers With Purpose can help you quickly get up to speed to effectively and competently work with your clients in the Medicaid area.  We provide our members many tools to help them do that.  One of those tools is the Medicaid Qualification Worksheet.  The Medicaid Qualification Worksheet can help you immediately determine whether or not a client is currently qualified for Medicaid if they go into a nursing home, what you might need to do to help them get qualified if they are not already, and show them that they may not have to wait five years after they do planning with you before they could qualify for the benefit. 

You will never forget the feeling you get as you watch the wave of relief that washes over the face of the first client you are able to tell that to!  Watch this video to see how the worksheet works.

If your interested in learning more about this and other ways Lawyers With Purpose can help enhanse your estate planning practice, join us at our Practice With Purpose Program in June.  If your at all interested click the link and register today!  The hotel is close to selling out and seats are filling quickly!

 

Aaron Miller, Legal/Technical Trainer – Lawyers With Purpose.

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MQA’s Hidden Dangers

Today, many elder law attorneys rely on Medicaid qualifying annuities to get their clients qualified to receive Medicaid benefits. They're also used when clients seek VA pension benefits.

Bigstock-Erasing-Risk-30906179While Medicaid qualifying annuities have become the default solution, they are not without risk. One challenge is that MQA's do not work well for single individuals. Second, even when used in married planning, there is no assurance the amount placed in the Medicaid qualifying annuity will actually be preserved. In fact, it could all be lost with the subsequent disability or death of the community spouse.

These are just some of the issues (not to mention the Veterans Administration's changing position on annuities when applying for veteran pension benefits) that we will be discussing at the Asset Protection, Medicaid and VA Practice With Purpose Program June 9th – 11th in Chicago.

National Asset Protection, Medicaid and VA experts and dozens of attorneys like you will be collaborating to identify the hidden risks in the different Medicaid and veterans' benefits strategies. This program promises to be the hands-on strategic solving many lawyers crave in their practice. Click here to get a full outline and to register for the program.

In these three days here is just some of what we will cover:

ASSET PROTECTION:

  • Recent updates to asset protection and Medicaid compliant strategies.
  • The new asset protection strategies dominating the marketplace.
  • The death of DAPT'S, FLP'S, GRATS, GRUTS, and tax planning, and what's replaced them.
  • The five essential trusts and key drafting needs to serve 99.7% of clients.
  • The Power of Powers of Appointment, in the right places.
  • Four "must have" drafting considerations and three "most forgotten" powers in trust.

MEDICAID:

  • Four steps to Medicaid eligibility for any client.
  • How to calculate the "breakeven" to ensure the proper filing date for the shortest penalty period.
  • Medicaid Qualifying Annuities: Hidden risks and how to properly disclose them to clients or protect from them.
  • The seven key factors to calculate any Medicaid case in seven minutes (or less!).
  • IRA's: Exemption versus taxes, how to calculate if IRA's should be liquidated or exempted in Medicaid and VA cases.

VETERANS' BENEFITS:

  • New fully developed claims process for veterans and widows.
  • Qualifying assisted living facilities as UME's.
  • Key language to complete the physician affidavit for more timely approvals.
  • Update on three year look back for VA benefits.
  • The key reports no longer required for VA applications.
  • Dangers of annuities in VA benefits planning.
  • The effects of the Supreme Court decision on DOMA related to veterans' benefits.

HERE'S WHAT YOUR PEERS HAD TO SAY ABOUT THE PROGRAM:

  • "It will change your practice and your life!" — John Koenig
  • "Great way to grow into a real firm and help one's community." — Antoinette Middleton
  • "Go to the training session and consider and evaluate upgrading your delivery of services, for me it's modernizing what I can offer." — Wally Kelleman

Are you going to miss or attend the most important event of the year? Click here now to join some of your most successful colleagues in Chicago and to be confident in the strategies you provide every day.

David J. Zumpano, Esq, CPA, Co-founder Lawyers With Purpose, Founder and Senior Partner of Estate Planning Law Center

 

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Medicaid Planning: The Ins & Outs of MMMNA #6 – Snap Shot Dates

This will be the sixth and final installment in our Medicaid planning series on MMMNA, or the minimum monthly maintenance needs allowance, which is the minimum income allowance for the community (or well) spouse in a Medicaid claim. If you didn't see the first five posts, click on the links to find numbers One, Two, Three, Four and Five.

Bigstock-Solution-563994The one thing most people don’t understand when calculating MMMNA is determining the snap shot date, which is the date used to calculate the community spouse resource allowance (CSRA). On the snap shot date the Medicaid authorities will take a snap shot of all of the client’s assets, and that’s how they determine how many assets the applicant has to be divided by two.

Medicaid law says the snap shot date is the first day of the month that the Medicaid applicant is admitted to a healthcare facility for at least 30 continuous days. So what happens if the applicant is not admitted for 30 continuous days? That breaks the required continuity and you won’t have a snap shot date. What if the applicant went in on the 15th of the month? If that was the first of 30 continuous days, the first day of that month would be the date that you calculate the CSRA. Not the 15th of the month, but if the client went in on April 15 and stayed at least 30 days, then we have our continuous stay on the 15th of April and the first day of that month would be April 1. That would be the date to use our community spouse resource allowance.

A couple of details are important in this calculation. For one, hospital and nursing home stays are considered continuous institutionalization. And that’s what we’d typically call this: the first day of continuous institutionalization, and hospitals and nursing homes piggyback. So, for example, if I have a client that goes into the hospital on November 15, and then goes into a nursing home on December 3, and then into your office on January 3, what’s the snap shot date?

The first question to ask yourself is, have there been 30 days of continuous institutionalization? Your answer is yes. The client went from the hospital to the nursing home, and those two piggyback, so there have been 30 days. The next question is, when did the continuous institutionalization begin? It began on November 15, so the snap shot date is November 1, the first day of the month of continuous institutionalization.

Let's consider a different example. The client went into the hospital on November 15 but was discharged on December 3 because there were no nursing home beds available. Then the client goes into a nursing home on December 5 and comes into your office on January 3. Well, we know that that interruption is OK because, under the Medicare rules, as long as you get admitted to a nursing home within 30 days of your discharge then Medicare will pay the first 20 days of your stay in a nursing home. Medicare will pay the first 20 days of nursing home care as long as you’re admitted to a nursing home within 30 days of being discharged from the hospital and you were in the hospital for at least three days.

But we’re not talking about Medicare – this is Medicaid. We're working on what the snap shot date would be. So the question is, have 30 continuous days occurred? The client went into the hospital on the November 15 and stayed until December 3, which is not 30 days. There was another stay from December 5 to January 3, so there is no continuous institutionalization yet. Assuming that the client stays in for another two days, then you will have had 30 days of continuous institutionalization. And since the first day of the continuous institutionalization was December 5, then the snap shot date will be December 1, and they will take a snap shot of all of the assets of the husband and wife on that date. That's all there is to calculating the snap shot date.

Now that I told you how the law works, be aware that most states do not do it that way. Instead, most states will use the date you apply, which is an advantage to you. You can control the date you apply, but you cannot control the date someone is institutionalized. So again, even though the federal law spells out the rule above to determine the snap shot date, only some states follow that rule. The rest will use the date you’re in the facility and apply for Medicaid.

So that’s how we deal with the snap shot date. And again, the significance of that date is that it is the date they take a snap shot of all assets to determine how many assets the husband has, how many assets the wife has and how much can be exempted under the CSRA.

If your interested in learning more about MMMNA, consider joining us for our Asset Protection, Medicaid Planning & VA Practice With Purpose program June 9-11th in Chicago.  Click here to register or learn more.  

David J. Zumpano, Esq, CPA, Co-founder Lawyers With Purpose, Founder and Senior Partner of Estate Planning Law Center

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Medicaid Planning: The Ins & Outs of MMMNA #5 – Asset Tests

This post continues our Medicaid planning series with a deep dive into MMMNA, or the minimum monthly maintenance needs allowance, which is the minimum income allowance for the community (or well) spouse in a Medicaid claim. We've already covered some of the basics of determining MMMNA for your clients; If you didn't see the previous posts, click on the links to find numbers One, Two, Three and Four.

Bigstock-Solution-563994So, similar to the rules we covered on the individual income allowances, there’s also the asset test. Unlike the income allowances where you’re allowed $60 a month or $80 a month, under the asset test you’re allowed a certain amount of assets. The minimum is $1,500; by federal law they cannot allow you less than $1,500 of assets per month. About 80% of the states go beyond that, allowing $2,000 per month. And in a few states it's even higher. One day New York sent out a notice saying the state was increasing the individual resource allowance to $14,400, which was a windfall for our clients. There are also some states at $5,000 or other amounts, and about a dozen other states are at the $1,500 minimum.

When you see a state that has a $1,500 resource allowance, then you know it's a 239B state. What does that mean? Back in the '70s there was a code section 239B that raised the allowance from $1,500 to $2,000 federally. But some states complained, so under 239B of the statute they allowed the states to opt out of the increase. Remember, federal Medicaid laws allow the states to be less restrictive but not more restrictive. So you would think if a state allows a $1,500 resource allowance when the federal minimum is $2,000, such a state would run afoul of that standard. And you would be correct, unless that state filed an election under section 239B to maintain the $1,500 minimum resource allowance. So if your state’s minimum resource allowance is $1,500, you are a 239B state. It's a term worth knowing because you might hear it at CLEs and events of that nature.

So what about the community spouse? We know the individual can only have $1,500 to $14,400, depending on which state you’re in. The federal government addressed the community spouse question with the 1988 Medicare Catastrophic Coverage Act. The MCCA, attempting to avoid impoverishing community spouses, set a new federal minimum amount that a community spouse has to be allowed to keep. And what is that amount? Much like the federal government did with income limits, it set a minimum maximum and a maximum maximum. And for some reason, the minimum changes every July and the maximum changes every January. Last July the minimum was raised to $23,184, so the states cannot allow a community spouse less than that. If you’re in a max state, then your state will now allow the community spouse $115,920.

And again, similar to the income exercise, if the community spouse’s assets are more than the minimum but less than the maximum, then the community spouse resource allowance (CSRA) will be the amount of the community spouse’s assets. So, for example, if I were to say that a husband had $200,000 of assets and a wife had $10,000 of assets, we would first determine who went into the nursing home. If the husband went into the nursing home, the wife only has $10,000, so she would be able to take $13,184 of the husband’s excess assets and then the rest would have to be used toward his cost of care. If the wife went into the nursing home with her $10,000 of assets and the husband had $200,000, the most that the community spouse could have is $115,920, so the difference between the $115,920 and $200,000 would have to go toward the cost of care.

There are exceptions. We can keep some assets by utilizing some special exemptions. But generally speaking, the rule is very simple. The institutionalized spouse is allowed to have $1,500 to $14,400; the community spouse is allowed a minimum of $23,184 or a maximum of $115,920 if you’re in a range state, and if you’re in a max state the allowance is $115,920.

So now that you've seen how to calculate the CSRA, let's try a few examples. If a couple has $130,000 of total countable assets between the husband and wife at the snap shot date, then how much would the CSRA be? The couple lives in Connecticut, which is a range state. In a range state, how much would the community spouse be allowed to keep? Well, we know that half of $130,000 is $65,000. And according to range state rules, if x is greater than the max, then the CSRA equals the max. If x is less than the minimum, then the CSRA equals the minimum or the assets. If x is greater than the minimum but less than the max, then the CSRA equals x. So in this case, that’s what we would have. Connecticut’s a range state. And because $65,000 is below the maximum of $115,920 but above the minimum of $23,000, then the CSRA in Connecticut would be $65,000.

Now try another example: We’re in Florida, which is a max state. So even though half of the countable assets are $65,000, the CSRA cannot be less than $115,920 in a max state, so that is what the CSRA would be in this example.

How about a case in Kansas where one half of the countable assets come to $8,500? If you're asking yourself whether Kansas is a max state or a range state, well, it really doesn’t matter for this example, does it? The CSRA minimum is $23,184, so the CSRA cannot be more than the amount of assets they have. So in Kansas, which is a range state, the whole $17,000 would be exempt, but the additional $6,184 would also be exempt if that client came into additional assets.

And finally, if I’m in Arizona, which is a max state, I can never have more than the $115,920. So if the couple has $250,000, then half of that still exceeds the max. I can never have less than the minimum or greater than the max. If you’re in the middle, you get the range amount, and in this case you can keep $115,920, because there’s a total of $130,000 assets.

Hopefully these examples help you understand how this works. We will wrap up our MMMNA series with a post on snap shot dates, so check back soon.

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Medicaid Planning: The Ins & Outs of MMMNA #4 – Income Cap States

Thanks for coming back for more about MMMNA, or the minimum monthly maintenance needs allowance, which is the minimum income allowance for the community (or well) spouse in a Medicaid claim. We've already covered some of the basics of determining MMMNA for your clients; If you didn't see the previous posts, click on the links to find numbers One, Two and Three.

Bigstock-Solution-563994One question you might have to deal with in MMMNA calculations is the income cap, if you're in a state that has one. Income cap states are a little bit of a different animal, and they raise a question: Does the insurance allowance include the Medigap premium? Yes it does. So Medicaid will allow you to deduct any cost of insurance and Medicare will be a primary insurer, which means they’re going to allow you any insurance costs related to the Medigap because that benefits Medicaid. In other words, Medicare would be the primary payer, and Medicaid would become the secondary.

Another issue along these lines is income limits. The income limit applies to the institutional spouse only in an income cap state.To review, in our previous posts we talked about the MMMNA individual allowance and the personal needs allowance, and we went over the MMMNA for a person who is married. The income cap is a different provision. In income cap states, it doesn’t matter if you’re married or single. It doesn’t matter what your income allowances are. It’s just a simple test: If a Medicaid applicant’s income exceeds $2,130, then the applicant doesn’t qualify for Medicaid. According to income cap states, that person has too much money.

It doesn’t matter how much the spouse’s income is. This is an income limit on the applicant only. So in the case we had before where the husband made $3,000, he would be over the income cap and therefore would not qualify. It might sounds ridiculous and you might feel bad for people who are in an income cap state, but that's the bottom line.

So our usual approach in such states is to do a Miller trust, which is a qualified income trust, or QIT. In a Miller trust, the husband assigns his income to the trust and then the trust pays the cost of care. It’s kind of silly to have to take that step, but those of you who are in income cap states are probably pretty familiar with the Miller trust, so it's not a big issue. If you’re not in an income cap state, you won't have to worry about it.

That's about all we can cover in today's post.  Check back back soon for a discussion on MMMNA asset tests.

To learn more about Medicaid join us at our Practice With Purpose event in June.  You'll experiece 2.5 days of all that you need training about Asset Protection, Medicaid and VA.

David J. Zumpano, Esq, CPA, Co-founder Lawyers With Purpose, Founder and Senior Partner of Estate Planning Law Center