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Knowing The Breakeven Point… A Must When Pre-Planning!

by with No Comment Asset ProtectionEstate Planning Drafting Software

When Medicaid planning, many practitioners focus on the look back date and the penalty period to identify the best strategy to ensure Medicaid eligibility in the shortest period of time.  While that may be true for crisis planning, when preplanning for Medicaid benefits,  the look forward period and the breakeven date are critical factors to become eligible in the shortest period of time. 

Bigstock-Marketing-background--Break-E-69885466When pre‑planning, practitioners must strategize on two premises; (1) what the worst case scenario would be (if the client fell ill the day after pre‑planning is completed) and compare that to (2) the best case scenario, which occurs when the client stays healthy for 60 months.  While crisis practitioners focus on the look back date and review of financial records for the previous 60 months,  pre‑planning practitioners must focus on the date of a conveyance (uncompensated transfer) and "look forward" 60 months to determine the timeframe in which the the transfer will be in the purview of a future Medicaid application.  Understanding the distinction between the look-back period and the look forward period is critical in determining the breakeven date when preplanning for future Medicaid benefits. 

So, what is the breakeven date?  It is the date, when pre-planning, that if it is reached, it will be better to wait out the 60 months from the original conveyance date than to convert to a crisis case.  The breakeven date is calculated by determining the worst case scenario and comparing it to the best case scenario.  The worst case scenario is if the client fell ill the day after pre‑planning was completed. What would be the best case scenario in such an event?  To determine that, you would calculate as if it were a crisis case, and determine the "minimum months to qualify", the soonest period in which you would be able to get the client eligible for Medicaid if they came in in crisis.  Once you have calculated the minimum months to qualify, and then compare it to the best case scenario, if the client had stayed healthy for sixty months. The breakeven point is simply the best case minus the worst case.  Restated the best case is remaining healthy 60 months (the entire look forward period) and the worst case is if it were a crisis case and you calculate the minimum months to qualify.

Let's give an example.  Assume a client came into you in crisis and after doing your calculations you are able to determine that you can get them qualified for Medicaid in 23 months.  This is done by transferring assets and reserving enough assets to pay through the 23 month ineligibility period.  It's pretty straightforward in a crisis case.  Assume now the same exact client came in, but was healthy.  In preplanning case you would calculate what would happen if the client were in crisis (like we just presumed) and then compare it to the best case scenario (they stay healthy 60 months).  In this pre‑planning case the breakeven date would be 37 months (60 minus the minimum months to qualify of 23 months) from when the preplanning was completed. 

Therefore in a pre‑planning case if the need for nursing home care occurred within 37 months, you would convert the pre‑planning case to a crisis case at that time and get them qualified in 23 months.  If however, the client's need for nursing home care occurred after month 37 (the breakeven point), then instead of converting to a crisis case, you would privately pay until the 60th month after the original transfer (look forward date).  Sounds confusing, but it's really quite simple once you understand these new terms. 

To learn about these key terms join our FREE Webinar February 24th on Simplifying Medicaid Eligibility & & Qualified Transfers.  

Here's just some of what you'll discover…

  • Understanding the 12 Key terms of Medicaid
  • Learn the Qualification Standards: Does Client Meet Needs Tests?
  • Learn the Medicaid Terms of Art
  • Learn the Snap Shot, Look Back/Look Forward Distinction: And how to put it all together
  • At the end of the event receive an ALL STATES Medicaid Planning Resource Guide
  • …and much, much more!

Just click here to register to reserve your seat… it's 100% FREE!

And you can learn how the LWP-CCS™ Medicaid software can calculate both crisis and preplanning strategies optimal to every client fact pattern: and simplify this otherwise confusing planning opportunity!

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

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First Four Memberships FREE For Joining This DocuBank Webinar!

by with No Comment Estate Planning Drafting Software

Sign up for this exclusive LWP webinar to learn about how you can enhance your firm and protect your clients with DocuBank.  

6a019b000cafc8970b01a73dd558f5970d-320wiWhen you attend this webinar, your first four memberships will be FREE. Lawyers With Purpose members enjoy a substantial discount, waived setup fee, and turnkey implementation thanks to LWP software integration. 

DocuBank is the leading document-access solution utilized by thousands of estate planning professionals across the country. Clients receive an Emergency Card for 24/7/365 access to their advance directives and an online SAFE for convenient access to their entire estate plan. 

You'll also learn about the numerous integrated marketing features for your firm including ongoing touches with your clients that help solidify your lasting client relationships.

Join us Tuesday, February 17th at 2:00 EST.  Click here to register now.

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

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How To Know When An SNT Needs A Tax ID Number

by with No Comment Asset ProtectionEstate Planning Drafting SoftwareLegal TechnicalSNT

The question among many practitioners is, does a supplemental needs trust need a separate tax I.D. number and have to file a separate income tax return?  The answer is, it depends.  So let's examine when an SNT needs a separate tax I.D. and when it doesn’t.

Bigstock-School-Kids-on-a-Chalkboard-14563127A supplemental needs trust will be a first party or third party trust.  A first party supplemental needs trust is funded with assets of the disabled individual who is also the beneficiary of the trust.  Under law a first party supplemental needs trust can only be created by the parent or grandparent of the individual, or a court.  Once the first party supplemental needs trust is created, it will not require a separate tax I.D. number, but instead will use the tax I.D. number of the disabled beneficiary.  All income earned by the first party supplemental needs trust will be reported on the income tax return of the disabled beneficiary, but will not affect or be counted toward their continuing eligibility, as long as distributions are made on the beneficiary’s behalf and not made directly to the beneficiary.

A third party supplemental needs trust is created and funded by someone other than the disabled beneficiary, but for the benefit of a disabled beneficiary.  Whether a tax I.D. number is required for the third party SNT will depend upon how the trust is structured.  In most third party SNT’s, the creator of the trust (grantor) wishes to maintain control of the trust for the benefit of the disabled beneficiary.  In this case, no separate tax I.D. number would be required as it would be considered a "grantor" trust and all income would be taxed to the grantor.  If the grantor is not the trustee, but retains other identified rights, then the same rules would apply.  Alternatively, if the grantor creates a trust and retains no rights to change it, benefit from it or control its distribution, then it may be a non‑grantor trust and need a separate tax identification number. 

Similarly, after the grantor who created the trust and retained rights to make it a grantor trust dies, the third party supplemental needs trust now becomes a "non‑grantor trust" and requires a separate tax identification number.  Annual income tax returns would have to be filed for non-grantor SNT’s but the actual tax will be deemed payable by either the beneficiary, or the trust, depending upon the actual distributions made.  For example, if a supplemental needs trust earned $10,000.00 in a year, and they used $7,000.00 of it for the beneficiary, it would "pass through" the $7,000.00 in taxable income to the beneficiary on a Form K1.  The remaining $3,000.00 retained in the trust, would be taxed at the trust tax rate and payable by the trustee directly with the tax return filed by the trust with the IRS.  Finally, in relation to IRAs, the IRS has ruled in Private Letter Ruling 200820026, that an IRA payable to a supplemental needs trust at the death of the IRA owner, will not be required to be liquidated and, but instead, the age of the disabled beneficiary will be used for "stretch purposes" and it will be considered a grantor trust of the beneficiary for purposes of the IRA distribution.

So does a supplemental needs trust need a tax I.D. number?  No and yes it all depends how you create the trust during lifetime and how you plan for it!

If you are interested in learning more about estate planning and more specifically on the iPug Business Planning, join us February 12th at 8 EST where we'll talk about:

  • Learning the difference between General Asset Protection, DAPT Protection, Medicaid Protection and iPug® Protection
  • Comprehensive outline of the 2 primary iPug® Business Protection Strategies
  • Learn why clients choose single purpose Irrevocable Pure Grantor Trusts™ over LLCs
  • Learn how it all comes down to Funding

And much much more… Click here to register now!

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

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How To Plan For The Home The Right Way

by with No Comment Asset ProtectionEstate Planning Drafting SoftwareLegal Technical

A major question comes up often during estate planning for seniors in determining what to do with the primary residence.  There are many choices, but the actual selection will depend heavily on the ultimate goal of the client.  Typical client goals include basic estate planning,  probate avoidance, home management in the event of incompetency, benefits planning (Medicaid/VA), asset protection planning, and estate and income tax planning.  Let's review strategies in each of these situations.

Bigstock-Happy-Senior-Couple-From-Behin-47944529The most common form of ownership of the primary residence by a husband and wife is as tenants by the entirety or similar legal ownership.  By state law, this provides asset protection during life as 100 percent of the property will convey to the surviving spouse without any liens attached by a deceased spouse’s liabilities.  Obviously for single individuals no asset protection is provided and non-spousal joint tenancy may protect the assets for the surviving joint tenant, subject only to Medicaid and IRS's right to recovery.  The most typical funding strategy is to transfer the primary residence to a revocable living trust (RLT) to avoid probate.  Some states also allow payable-on-death deeds (ladybird deeds) or heirship deeds.  While funding the home to a revocable trust or these other strategies avoid probate and could provide post death asset protection (RLT), they do not effectively provide protection "during life".

Another primary strategy is to convey the home to an irrevocable trust.  These are typically done when clients are interested in estate tax savings or asset protection.  The primary question relates to whether the irrevocable trust is a "grantor trust" or a "non-grantor trust” for tax purposes.  Traditionally, estate tax reduction trusts are non-grantor trusts and the home would maintain its "carry over tax basis" to the beneficiaries of the trust thereby creating a capital gains tax on the difference between the sales value and the original price paid by the grantor who conveyed it to the trust.  In contrast, a grantor trust that retains rights that include the value of the irrevocable trust in the estate of the deceased grantor, would receive a "step up" in basis after the death of the grantor.  While these serve estate and income tax needs, they often may conflict with benefits planning, such as for Medicaid and/or veterans' benefits. In addition, one must be cautious in conveying a principle residence to a RLT or irrevocable trust as it could defeat any real property tax exemptions. The client is eligible for when the property is owned in the client’s name.  You need to confirm with your local assessor on the impact of the credits upon funding the home to the trust chosen.

Medicaid and veterans' benefits, on the other hand, have additional restrictions above and beyond the tax and legal restrictions regarding trusts.  Putting a personal residence in an irrevocable trust for Medicaid can provide asset protection during lifetime but doing so creates a uncompensated transfer which affects future eligibility.  Another question in funding the personal residence is whether to retain a reserved life estate in the deed and convey the remainder to the trust or to convey the whole residence to the trust and maintain a right for the grantor to live there inside the trust document. This is often avoids the loss of any real property tax credits but if the home is sold during the grantor’s lifetime, then the grantor's pro rata ownership (lifetime interest) proceeds would be considered “available” in determining the grantor's ongoing Medicaid eligibility.

In contrast to Medicaid planning, planning for VA benefits has additional considerations.  A veteran can convey their home to an irrevocable “grantor” trust without consequence.  The caution, however, is if the residence is sold during the grantor's lifetime and converted to an income producing asset (cash, stocks, ect.) it would thereafter trigger the asset value in determining the veteran's future benefit eligibility.

Planning for the home appears simple but is absolutely essential that the overall client goal is identified before determining where to fund the home.  Understanding these strategies are essential.

If you would like to learn more about irrevocable trust (iPug Trust) join our FREE webinar Thursday, February 12th at 8 EST click here to register now.   During this webinar you'll discover:

  • Learn the difference between General Asset Protection, DAPT Protection, Medicaid Protection and iPug® Protection
  • Comprehensive outline of the 2 primary iPug® Protection Strategies
  • Learn why clients choose single purpose Irrevocable Pure Grantor Trusts™ over LLCs
  • Learn how it all comes down to Funding

Click here to register.  We'll see you then!

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

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Key Distinction In Asset Protection

by with No Comment Asset ProtectionLegal Technical

Many attorneys confuse asset protection with Medicaid planning, and estate tax avoidance.  It is essential attorneys and allied professionals are very clear on the key distinctions of asset protection and the types of asset protection that can be obtained. 

Bigstock-Old-Keys-42114148 copyThe first distinction is identifying if protection is desired during life (now), after death, or both?  Determining when asset protection is sought, will lead to whether a revocable living trust or irrevocable living trust is utilized.  Revocable living trusts typically provide for the management of an individual’s assets during their lifetime if they become incapacitated, and can provide asset protection for those same assets to the beneficiaries, after the grantor’s death.  In contrast, a properly drafted irrevocable trust created during lifetime, can provide asset protection when funded, but may not meet the requirements to qualify for benefits eligibility planning, Medicaid, VA and other needs based benefits.  A traditional irrevocable trust will provide asset protection as long as the grantor who funds the trust gives up the right to the assets and/or income which protection is desired.  Simply restated, if the grantor retains the right to income but not principal, the principal will be protected, but the income will not.  General asset protection begins when the asset protection trust is funded.  If any liability arose or became known prior to the funding of an irrevocable asset protection trust, the protection will be not be achieved as to those known potential liabilities.  Any liability occurring after the funding of the trust, will be protected from any claims related to it.

Unlike asset protection, benefits eligibility planning requires additional restrictions beyond what is required for asset protection.  The two most significant distinctions are (1) any rights provided to the spouse of the grantor will be determined available to the grantor or spouse in determining the grantor or spouse’s eligibility for a needs-based benefit; or (2) unlike an asset protection trust where the assets are protected immediately upon funding, funding of an irrevocable asset protection and needs benefits trust exposes the asset to “view” and still be considered in determining the future eligibility of the grantor or spouse for up to five years after the trust is funded.  These two additional restrictions are problematic for general asset protection attorneys whose client’s later attempt to qualify for needs-based benefits.  A final distinction in needs based benefits planning relates to veteran’s benefits which provide that any asset owned in an asset protection trust that is a grantor trust,  is counted (in “view”)  in determining eligibility for the Veteran’s Aid and Attendance and Housebound benefits.  One caveat however is property held trust which does not generate income and therefore not targeted (or in “view”) by the Veteran’s Administration.  Any conversion of the property to income producing will make the proceeds countable in determining the Veteran’s eligibility for benefits, even though it’s in an irrevocable asset protection trust.

Another key distinction with asset protection is whether a “domestic asset protection trust (DAPT)” is utilized or an iPug™.  DAPT’s are complicated and available in only 14 states.  Typically DAPT’s require a nexus with the state it is created and a close assessment of each of the individual rules associated with the states DAPT statute.  In addition, domestic asset protection trusts are typically not successful in being able to plan for needs-based benefits.  A more useful approach is the iPug™.  The irrevocable pure grantor trust allows the grantor remain as trustee, change the beneficial interest to anyone except themselves, maintain the benefits during their lifetime of income or use of the residence, and to receive a full step up in basis on all trust assets at the grantor’s death.  

A final consideration with asset protection is whether any tax reduction strategies are a goal.  Some asset protection planning trusts can be utilized to reduce federal estate taxes while others choose to ensure the assets of the asset protection trust are included in the estate of the grantor, to ensure a “step up in basis” on the assets owned by the trust.  Other asset protection trusts enable the spreading of income generated by the trust to beneficiaries who are in a lower income tax bracket than the Grantor, thereby minimizing income tax. The choice of trusts available for Estate and income tax planning are various and complex.

So you think you know asset protection, think again.  Get clear on your client’s needs and goals and then pursue the trust that best accomplishes them.

If you want to learn more about understanding how iPug Trusts are used for clients with businesses for asset protection join our FREE webinar this Thursday, February 12th at 8:00 EST.  Click here to register now and reserve your spot today.

Here's just some of what you'll discover during the webinar…

  • Learn the difference between General Asset Protection, DAPT Protection, Medicaid Protection and iPug® Protection
  • Comprehensive outline of the 2 primary iPug® Business Protection Strategies
  • Learn why clients choose single purpose Irrevocable Pure Grantor Trusts™ over LLCs
  • Learn how it all comes down to Funding
  • And much much more… register now to reserve your spot!

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

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Congratulations To Frank McClure, LWP Member Of The Month

by with One Comment Uncategorized

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

The greatest success we have had is implementing the entire LWP system. We all know what has happened in the past, we go to a program or seminar and come back to the office on Monday morning and dump the binders on the desk where they sit. With LWP the key is follow through and accountability which our Team is now able to provide to each other through our coaching calls and implementation calls. Are we 100% where we want/need to be? No, but we also realize that it is progress and not perfection.  We finished 2014 with consistently hitting our monthly goals and we look forward to 2015! 

GroupWhat is your favorite LWP tool?

All of the tools together is what makes LWP so beneficial to our practice. The system and processes guide our team in the day to day operations of our law firm.  If we have a question or if there is something that just doesn’t seem to be running smoothly there is a system or process within the process that can provide the answer.

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

The Tri-Annual Retreats, Implementation Calls and Coaching Calls have impacted our team on a level that we never thought possible. Through LWP all team members are on the same page and speak the same LWP language.  We can truly say that our law firm is a TEAM and all members of our team are needed for the firm to run smoothly and for us to reach our goals. LWP provides the systems and processes to make this happen.

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SPECIAL GUEST BLOG: “We Fight Back!”

by with No Comment Asset Protection

Lawyers With Purpose welcomes guest blog and Tri Annual Practice Enhancement Retreat sponsor, David A. Weintraub, P.A. "Many Stockbrokers and Investment Advisors Take Advantage of Senior Citizens. We fight back!"

Lwp-weintraub2The sad truth is that not all stockbrokers and investment advisors are ethical.  While many are very ethical and do the best they can for their clients, others give ill-advised or inappropriate advice, and sell high commission, high risk products, that are not suitable for your clients.  Much of this predatory behavior is at the expense of senior citizens – your clients – who are unaware of the consequences of these unethical and illegal practices. 

We fight back against these predators.  We protect the interests of those who have been taken advantage of by unscrupulous investment advisors.  We hold them accountable for their actions and strive to compensate their victims for their losses.

We look forward to meeting you next week and working with you to help your clients recover losses they should never have incurred. 

For more information about David Weintraub’s practice, please click here.  David was also recently mentioned in the elder abuse related article you can find here:  http://www.sun-sentinel.com/local/broward/pembroke-pines/fl-pines-century-village-financial-20150122-story.html 

Lawyers With Purpose cannot wait to be in the room with all of our member and vendors next week in Charlotte for our Tri Annual Practice Enhancement Retreat!  Safe travels and we'll see you soon.

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

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The Veterans Administration Proposes 3 Year Look Back On Gifts

by with 3 Comments Asset ProtectionEstate Planning Drafting SoftwareLegal TechnicalVA

On Friday, January 23, 2015, the VA issued proposed new Veterans Administration regulations that would penalize wartime veterans up to ten years for making gifts of assets for less than fair market value. The VA is trying to stop what they perceive as lawyers and financial advisors “taking advantage of veterans” when helping them strategically plan to preserve assets and qualify for the Improved Pension benefit.

The proposed changes in regulations would:

  • Establish a 3 year look back for gifts
  • Impose penalties for up to 10 years
  • Create a bright-line net worth standard of $119,220, which includes annual income
  • Deny any expenses related to independent living facilities as care costs
  • Require Veterans to sell their home place property if the lot coverage exceeds 2 acres.

Bigstock-new-year-concept-79384237How will this work?  When a veteran or widow of a veteran applies for the Improved Pension with Aid and Attendance, the VA will ask if any transfers of assets for less than fair market value have been made in the three years prior to the application.  If so, the VA will presume it was for the purpose of meeting the VA eligibility standards.

Penalized gifts include gifts of money or assets to children or others, establishing estate plans with the use of trusts, and establishing retirement plans through the use of annuities which can provide a life time income stream. 

When a gift has been determined to have happened during the look back period, the VA will calculate the penalty by dividing the value of the gift by the claimant’s pension rate with aid and attendance. Each classification of claimant varies, thus, the penalty periods will be different depending on who makes the claim.  The pension rates with aid and attendance are as follows:

(1)   Married veteran = $2,120

(2)   Single veteran = $1,788

(3)   Widow = $1,149

Thus, if a married veteran gives away $15,000 and a widow gives away $15,000, the widow is penalized almost double that of the veteran.  (Married veteran $15,000 divided by $2,120 = 7 month penalty; widow $15,000 divided by $1,149 = 13 month penalty.) 

Also, because the “net worth” standard will include income, high income earners will be allowed to have low to no savings for emergency items; whereas, very low income earners will be permitted to keep much more in savings.  Because of the strict ruling on how the VA plans to define “medical care,” veterans who have dementia, Alzheimer’s Disease or other degenerative diseases and live in independent living facilities because they no longer drive and need a safe environment in which to live, will not be eligible for the benefits because they may not yet the hands on care for bathing, dressing, eating, toileting or transferring (ADLs).  Although they are unsafe to live at home due to their health care condition of cognitive decline, the VA refuses to consider any expenses of care for a facility as deductible from the claimant’s income unless the claimant needs assistance with no less than 2 ADLs.

Between 2012 and 2014, Congress introduced two different bills, each imposing a three year look back penalty.  Both bills were died.  Nevertheless, the VA is moving forward on their own to create the look back and penalties.  These changes will not only hurt wartime veterans, specifically WWII and Korean war vets, but it will further exacerbate the enormous claims back logs that already exist. 

To fight this from happening, everyone who cares about a veteran must respond.  Public comments must be received no later than March 24, 2015 and can be sent through http://www.regulations.gov or by mail or hand-delivery to: Director, Regulation Policy and Management (02REG), Department of Veterans Affairs, 810 Vermont Ave. NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026.  Comments must include that they are in response to “RIN 2900-AO73, Net Worth, Asset Transfers, and Income Exclusions for Needs-Based Benefits.”

Victoria L. Collier, Veteran of the United States Air Force, 1989-1995 and United States Army Reserves, 2001-2004.  Victoria is a Certified Elder Law Attorney through the National Elder Law Foundation, Author of 47 Secret Veterans Benefits for Seniors, Author of Paying for Long Term Care: Financial Help for Wartime Veterans: The VA Aid & Attendance Benefit, Founder of The Elder & Disability Law Firm of Victoria L. Collier, PC, Co-Founder of Lawyers for Wartime Veterans, Co-Founder of Veterans Advocate Group of America.  

If are in the Charlotte NC, area, or will be attending our Practice With Purpose Program or our Tri Annual Practice Enhancement Retreat, consider joining Victoria for her Specialty Program on Wednesday, February 4th, and get your initial VA Accreditation through the VA.  If you provide legal advice to Veterans about specific VA claims, to include drafting asset protection trusts for VA Benefit qualifications, you MUST be accredited by the VA.  Contact Molly Hall at mhall@lawyerswithpurpose.com for registration information.

**  Before attending this course, you must have submitted an Application for Accreditation, VA Form 21a, to the Office of General Counsel and received approval.

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How To Distinguish The Snapshot Date From The Look Back Date

by with One Comment Asset ProtectionEstate Planning Drafting SoftwareLegal Technical

Many lawyers doing Medicaid qualification for their clients often get confused between the snapshot date and lookback date.  These dates are not only confused by lawyers, but also often by the Medicaid departments processing the application.  So let's set it straight.   42 US 1396r-5 (c) states the snapshot date occurs on the first day of the month in which a Medicaid applicant reached thirty days of "continuous institutionalization".  Continuous institutionalization is identified as thirty consecutive days in an institution of care.  These include hospitals, nursing homes, VA facilities, or the like. 

Bigstock-Tip-of-fountain-pen-marking-da-48743531If an individual enters a hospital on January 15, is discharged on January 30, enters a nursing home on February 5, and applies for Medicaid on March 1, no snapshot date has occurred.  Why?  It's simple.  Thirty continuous days of institutionalization has not occurred by March 1.  By virtue of the discharge from the hospital on January 30 and readmission to the nursing home on February 5, a lag occurred, restarting the 30 day period.  Since they entered the nursing home February 5, and applied March 1, no snapshot date is set because thirty continuous days has not occurred.

Continuing, if the client stays in the nursing home through March 5, then the snapshot date would be February 1, the first day of the month in which the applicant entered a facility for thirty days of continuous institutionalization.  The significance of the snapshot date is it represents the date Medicaid will look at all financial assets owned by the Medicaid applicant and spouse in determining whether or not they are eligible for benefits.  In this case, Medicaid would take a "snapshot" of all assets owned by the applicant and spouse on February 1 and use this information to determine the client's individual resource allowance, the community spouse resource allowance, and the client's net available monthly income that can be used for the cost of care.

What makes all this confusing is, although the federal statute is clear as outlined above, most states treat the “lookback date”, as the "snapshot date."  The lookback date is entirely different; it is the date when applicant resides in a nursing home AND applies for Medicaid benefits.  In this case the lookback date does not occur until the Medicaid applicant applies for Medicaid.  Since they are already in the nursing home, they would have to apply for benefits to establish the lookback date. 

In this case, if an application was filed, the lookback date would also be March 1, the first day of the month of application after admission.  In many cases clients come to you long after the snapshot date and in many cases may have been residing in a nursing home for many, many months, before they apply for Medicaid so no lookback has been established.  The lookback date has a use and different significance than the snapshot date.  While the snapshot is used to calculate all the allowable exemptions, the lookback date is used to establish the date at which Medicaid will look back sixty months at all financial data of an applicant to determine if there were any uncompensated transfers.

Understanding these key definitions is critical in having an effective Medicaid practice, but more importantly, to get your clients confident they will be eligible in the timeframe you identify.  To learn more about Asset Protection and Medicaid Planning for your estate or elder law practice, consider joining us next week in Charlotte, NC, for our Practice With Purpose Program.  We'll be covering this and so much more just on Day 1!  We'll also be allowing a test drive in the room to review our drafting software!

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

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This Monday…. (tomorrow)

by with One Comment Coaching & Implementation

Has your mood felt a bit low lately? The New Year isn’t kicking off quite as well as you had hoped?  Well, I’ve got news for you – you’re not the only one!

Bigstock-Monday-72555904I was reading one of my favorite blogs this a.m. by Kimberly Snyder and she mentioned that it turns out this coming Monday, January 26th is “Blue Monday”. Blue Monday is purported to be the most depressing day of the year. The concept was first publicized as part of a 2005 Cliff Arnall, the Centre for Lifelong Learning, a Further Education center attached to Cardiff University, press release which claimed to have calculated the date using an equation of  this milestone represents “the least happy day of the year.”

The formula; W=weather, D=debt, d=monthly salary, T=time since the holidays, Q=time since failing our new year’s resolutions, M=low motivational levels, and Na=the feeling of a need to take action.

  • W= Weather. It’s still dark out.  Although we’re moving further and further away from the shortest days of the year, our daylight hours haven’t yet extended to the point where most people can enjoy them after leaving the office at the end of the work day. Feels like Ground Hog Day.
  • D= Debt. Our holiday bills are due.  Holiday gifts, trips and time off seemed like a good idea when you were filled up with holiday spirit, but the end of January means credit card statements are rolling in, and the financial reckoning is upon us.
  • d= Monthly Salary. Not Meeting Monthly Goal and its Tax time. The New Year is already looming with 11 months behind and its looming time to pay the tax man.
  • T= Time since Holidays. The parties are over. The family and friend gatherings have stopped. January is a month where Americans go into hibernation mode and we are spending more time alone that ever. And if our business calendars are empty and no strategic plan to change that around on the horizon, it feels a bit like solitary confinement.
  • Q= Time since failing our New Year’s resolutionsOur New Year’s Resolutions are failing.  January 17th is the most common date to give up on your resolutions; it’s marked by Ditch New Year’s Resolutions Day. Unfortunately, only a fraction of those who make resolutions will achieve their goals, and those that don’t begin losing hope and resorting back to “It is what it is” mindset around this time.
  • M= Low Motivation Levels. And nothing to look forward to until Spring Break or sadly possibly a summer vacation. There is no accountability in place and no one holding your feet to your dreams. No signs of “help is on the way.”
  • Na=The feeling of need to take action. “I know I must do something differently but I don’t have the time, money or energy to power down and make the investment in finding my way” is what I have been hearing from attorneys this month calling with a sense of terror. Some have been calling me for over two years with this exact statement. Doing the same thing over and over again and expecting different results.

Basically, we’re stuck inside, we’re further in debt than ever and we’re confronted with the reality that a “Goal” alone isn’t enough to create the practice we have been wishing for. Appears to be much like the fact pattern of this time last year for many firms I speak with looking to hear more about LWP.

Here is what I know to be true for a cure for the common law Practice: 4 days. Invest in 4 days to get in the room; “90% of success starts with taking the leap of faith and getting in the room.” Mark your calendar now for The Practice with Purpose and Practice Enhancement Retreat February 3-6 in Charlotte, NC.

Don’t let “I don’t have the time, money or energy to power down and make the investment to find the solution” be the default motto for 2015. Now is the time.  

Molly Hall, Director Of National Enrollment, Lawyers With Purpose