A Utah Medicaid Primer 101

If you have elderly parents, don’t wait to learn about Medicaid — sometimes referred to by a litany of other state names, like Medi-Cal and MassHealth.

What is your Medicaid IQ? Most Americans have heard of Medicaid, since it has been part of the national political debate for some time. A political discussion is one thing, but what does Medicaid mean to your elderly loved ones?

If you have elderly parents, it is high time to learn about Medicaid and how it works.

Fortunately, a recent Forbes article is a good place to start. The article is aptly titled “Medicaid And Your Parents: The Basics.” Essentially, Medicaid is a program run jointly by the federal government and each respective state government. Think of it as government insurance for, among other things, late-in-life medical care like home care or nursing home care when the one needing care has too limited financial resources.

Medicaid is “means-tested.” Consequently, having too great an income and/or too much in assets will disqualify a Medicaid applicant and create a legal hurdle to receiving benefits. Currently, in Utah for a single person to qualify for aged, blind, disabled Medicaid, that person can have no more than $2,000 in non-exempt assets. In addition, having “assets” is not the same as having the money to pay for care.

For those with assets exceeding the Medicaid limits, “giving” assets away will only disqualify them from Medicaid assistance if the transfers violate the “look back” period designed to keep them from gaming the system.  Currently the look back period is 60 months.   Of course, an elderly individual might have had innocent intentions when they made a disqualifying gift a few years ago and the need for Medicaid was unforeseen. Regardless, such transfers are a red flag when it comes to Medicaid qualification.

Each state is subtly different in its approach, but these are very real rules and they require careful thought and timing. Otherwise, it is easy to run afoul of the rules now and be disqualified from care later. You owe it to your elderly loved ones to start planning for a worst case scenario without delay.

Reference: Forbes (February 11, 2014) “Medicaid And Your Parents: The Basics

Easing Into The Subject Of Conservation Easements

An easement is the legal removal of a right of use. Conservation easements generally protect wildlife habitat and recreational land by eliminating development rights. They are also a valuable estate-planning tool and landowners who donate these rights get substantial income-tax breaks.

Conservation easements are something of a hot topic these days, and have been for some time now. Think you know the basics? If you do not, then you might want to take a good look before you leap.

Better yet, you really ought to read a recent article in Private Wealth magazine titled “Legacies By The Acre.

If the concept of an easement is new to you, think of it as an act of charity by giving away the economic utility of the land for the greater good of preserving it. While you could sell the land to a developer who will build a resort hotel, you might choose to forever close off that possibility and preserve it as a pristine forest for wildlife or recreation.

All easements, even urban “façade” easements, follow this general pattern. However, rural or wilderness conservation easements can get a bit more complicated and even allow for certain “economic utility” to the owners. A prime example described in the original article is the concept of a “working forest conservation easement” (WFCE). This approach allows a family to give up the full economic utility of the land and continue to embrace a sustainable pattern of use. In other words, you do not build malls, but you do continue to responsibly run a family timber company from trees harvested on the land. For example, Friends of Alta, a Utah land trust organization located in Alta Utah reports that over 20% of the developable land in Albion Basin (a wild high mountain valley, near Alta, Utah) is now subject to conservation easements preserving the watershed and pristine nature of this high mountain valley while allowing skiing in the area.

Conservation easements can be as varied as the lands put up for easement. In addition, easements can be built to allow greater or lesser utility, rather than simply all or none. By doing good, the landowner can enjoy tax benefits to further sweeten the deal.

In the end, whether to go the conservation easement route will hinge on many factors, to include your family’s current land, its potential use, and specific market forces in play now and down the road. Understanding the true value of a conservation easement will take some experienced planning.

Reference: Private Wealth (July 11, 2013) “Legacies By The Acre

State Estate Tax in Utah?

Although most people’s estates aren’t large enough to be affected by the federal estate tax, residents in many states have to consider how state taxes may reduce their estates. Several states have their own estate tax, which can affect much smaller estates than the federal estate tax does. In addition, some states impose an inheritance tax on beneficiaries of an estate.

When it comes to taxes, where you live means everything. In fact, simply stepping over into the next state can change everything.

For those planning their estates, estate planning laws can be troublesome enough without the additional complexity of state estate and/or inheritance taxes. ElderLawAnswers recently considered this issue in an article titled “Have You Planned for State Estate and Inheritance Taxes?

Because of the changes in the Federal Estate Tax Law, Utah currently does not collect estate tax.  Utah has always based its Estate Tax on the Federal state estate tax credit allowed on the Federal estate tax return (the “pick up tax”).  In 2005, the Economic Growth and Tax Relief Reconciliation Act (“EGTRAA”) officially phased out the pick up tax.  In response to this phase-out, some states changed their estate tax law to levee their own state estate tax.  Utah did not do so.   If your state also has a level of estate or inheritance taxation, then the applicability of such taxes is yet another obstacle to overcome. Accordingly, you should plan for them just as you would for the federal estate tax.

Note: the exemption amounts and tax rates may vary from the federal level (and in some states, they may even vary from person to person).

In addition, when it comes to state estate and inheritance taxes you need to plan for the future. Know the tax laws of your current state and any state in which you may consider in the future.

Bottom line: Be sure to plan for these unique state laws, even if the federal laws get all the press.

Reference: ElderLawAnswers (July 29, 2013) “Have You Planned for State Estate and Inheritance Taxes?

Utah POD as a Estate Planning Tool- When PODs Go BAD

Are payable on death accounts a simple way to pass assets to heirs or are they a mistake? It sure sounds simple. With a payable on death account or paid on death account, you name a beneficiary who gets the account when you die—no probate, no hassle … How can they go awry? If they contradict an estate plan that’s already in place.

Things that appear simple can be complex. So it is in life, and so it is in estate planning. For example: the simple “payable on death” account.

Forbes recently featured this subject in an article titled “When Payable On Death Accounts Backfire.

The promise of a “payable on death” account cannot be undersold. Funds subject to such an arrangement escape probate and transfer straight to the named beneficiaries. No muss, no fuss. Many are sold on this simple estate planning technique without being advised of the pitfalls.

Whenever an asset passes “outside” of your estate by avoiding probate, it may not be in sync with your overall estate plan. This is true when you really intend for all of your heirs to share in your estate equally. If you have any accounts “payable on death” to just one of your heirs, then he or she will receive more of your estate than intended.

Additionally, divorce can also effect these simplistic estate planning techniques.  Mom and Dad get a divorce.  Mom or Dad neglects to change the names on the POD accounts.  Time passes and upon the death of Mom or Dad, the ex-spouse gets all of the funds in the POD accounts.  Utah has a statute that attempts to remedy some of the consequences of  this neglect (75-2-804).  The statute, however, cannot effect the right of a survivor POD to an account.  POD’s are contractual rights and are thus exempt from the remedial effect of the Utah Statute.

Perhaps you want a particular account “payable” to the heir who also will be your executor. Your thinking is that such a move will enable them to have ready cash for funeral and other final expenses when needed. To avoid misunderstandings and hard feelings, make your intentions clear in your estate planning legal documents. For example, you could provide that any proceeds left after your funeral and final expenses will become part of the inheritance for that heir with an adjustment made to equalize the shares of the other heirs under your estate plan.

In short, “payable on death” accounts and other direct methods to designate beneficiaries outside of your estate planning documents can be incredibly useful when used correctly. Unfortunately, it can also be downright counterproductive if they are not properly taken into account.

Reference: Forbes (August 9, 2013) “When Payable On Death Accounts Backfire

Utah Estate Planning Gotchas During a Divorce

A scenario commonly encountered within estate planning is when an individual dies while negotiating a separation agreement with their spouse, or when in the midst of divorce proceedings.  While a divorce order will void specific bequests to a spouse, merely initiating negotiations or proceedings will not.

Married couples typically plan to leave significant portions of their estates to the surviving spouse. If a divorce were to occur, a change would need to be made to the estate plan to remove the ex-spouse. Most of the time, if you do not change your estate plan after getting a divorce, a judge will ordinarily disregard any specific bequests you made to your ex-spouse.  Utah statutes under most circumstances, provide for a share to go to the surviving spouse even though the current will does not provide for the surviving spouse.  The law assumes you would not want your estate to go to a former spouse.

However, as the Wills, Trusts & Estates Prof Blog points out in a recent article titled When Death Occurs Mid-Divorce,the same thing is not true if you are in the divorce process but your divorce has not yet been finalized. This is a common problem when a divorce has been filed and one of the parties passes away during the process. When that happens, it can cause issues with a family home that is owned by both parties. If the home is owned as joint tenants, then the property will automatically pass to the survivor. If the divorcing couple owns the home as tenants in common, however, the deceased party’s share of the home will go to his or her heirs.

As most couples own their property as joint owners, it is important to talk to an estate planning attorney as early in the divorce process as possible. It might be in the interests of both you and your spouse to sever the joint tenancy in the home before the divorce is finalized. When getting divorced, there are many other estate planning issues you will need to consider during the process as the terms of the divorce will have a large impact on your eventual estate.

Reference:  Wills, Trusts & Estates Prof Blog (July 25, 2014) When Death Occurs Mid-Divorce

Ruling by Supreme Court Changes IRA Safety

A ruling by the U.S. Supreme Court holding that assets contained in an inherited individual retirement account (IRA) don’t qualify as retirement funds for the purposes of bankruptcy exemption, has turned the estate planning community on its head.

Prior to a recent US Supreme Court ruling, inherited IRAs were treated as retirement savings and not as current income. It was thought that if you made an heir a beneficiary of your IRA, the money in the IRA would be safe from your heir’s creditors after you passed away. Well, those inherited IRAs may now be fair game to creditors.

As Insurance News Net points out, in an article titled Court Decision Has Implications for Estate Planning,the full implications of this court ruling are not yet clear. The court’s decision leaves open the possibility that a surviving spouse named as the beneficiary of an IRA might still be able to treat it as retirement savings, but the court did not address that issue. For other beneficiaries, however, it is clear that in most states, inherited IRAs will be much easier for creditors to claim in bankruptcy proceedings or otherwise. Such an inheritance will be treated as income, not retirement savings.

If leaving an heir money in a way that is protected from the heir’s creditors is an important component of your estate plan, then you need to speak to an estate planning attorney as soon as possible. If you rely on your IRA to accomplish your goals, as is common, then you will need to make other plans. There are several possibilities including a retirement trust, which is a trust designed to preserve retirement income. An attorney can help you consider other alternatives as well.

Reference: Insurance News Net (July 24, 2014) Court Decision Has Implications for Estate Planning

Appealing Denial Of Your Utah Medicare Treatment by Medicare Advantage

f you have a Medicare Advantage plan, your plan may overrule your doctor and refuse to cover a treatment or procedure that it deems to be medically unnecessary or experimental … However, there is an appeal process to resolve these conflicts.

Medicare Advantage plans can make certain decisions regarding their plans and what will be covered, as they should. After all, this discretion is what keeps them in business and from being “gamed” by scammers. That noted, the plans are not always right when exercising their discretion to deny doctor-prescribed treatments or procedures.

If you (or a loved one) have a Medicare Advantage plan, then it is important to be prepared should the plan itself overrule your doctor and deny you coverage. That certainly would be an unfortunate turn of events! Fortunately, you can seek to overrule coverage denied by your Medicare Advantage plan, but you must know how.

While you can be denied coverage, it is important to remember that the Medicare Advantage plan is not the final arbiter and you can appeal their decision. This is an important right built into the very structure of Medicare. A timely article in ElderLawAnswers.com titled “Appealing Medicare Advantage Plan Decisions” provided some insights into this process.

Did you know that above every Medicare plan is the judicial oversight of an Administrative Law Judge (ALJ)? When the plan makes an adverse coverage decision, first you should appeal to their better judgment. If you are unsuccessful, then you can go over their heads and appeal to the ALJ.

But wait, there is more. If you are unsuccessful before the ALJ, then go even higher to the Medicare Appeals Council (MAC). Be aware, however, that at this level the process becomes a matter of litigation and all that entails time and money. Nevertheless, litigation is sometimes a necessary evil to pursue necessary care (and justice).

You may never need to challenge a denial of coverage. In case you do, however, it is best to be prepared and that means being well-informed regarding your rights.

Reference: ElderLawAnswers.com (last modified September 26, 2013) “Appealing Medicare Advantage Plan Decisions

Blended Utah Family Estate Planning Challenges

Americans are increasingly cobbling together new families out of earlier broken marriages … Effective estate planning for these modern families, made up of past and present marriages, requires a fair amount of finesse and family engagement, to settle disagreements early on and to financially provide for both the current spouse and the children from a previous marriage.

The “family tree” is a wonderful little metaphor. More than that, however, the family tree is the basis of the body of laws surrounding family, estates, and probate (with equal metaphorical oomph, see “per stirpes”).

For better or for worse, the “modern family” is not the same as the well-tended tree of former times, and those old legal definitions just are not cutting it these days. For the modern family, there simply has to be a bit more planning to get it right.

So, what is the modern family and how do we even begin to get things right these days? That is an ever-evolving ambiguity. Recently, Barron’s Penta took a shot at the topic in a recent article titled “Estate Planning for Modern Families.

Modern families are breaking down boundaries and pulling “branches” together and apart too fast for the legal system to figure it out. The original article appeals to the ABC show of the same name, Modern Family. However, a healthy jumping off point comes from the U.S. Census Bureau. It found that in 30% of all marriages at least one spouse had previously been married, bringing along assets, retirement accounts and kids. In other words, there are lots of “blended families” (i.e., families composed of greater and lesser proportions of blood relationship through divorce, remarriage, adoption, and more)! Adding to the complexity, in many portions of the country a modern family may be the result of same-sex marriage and same-sex couples adopting.

If your family tree would take some artistry to draw out – and some of the best ones do – then so too should your estate plans.

So how do you do that? The original article has some ideas, but since your family is unique consider them guidelines. With the assistance of an experienced estate planner you can come to a careful, tailored plan for all of your loved ones.

Reference: Barron’s Penta (October 14, 2013) “Estate Planning for Modern Families

Growing Old – The Golden Years Aren’t What They Are Cracked Up To Be

Sorry, kids, but I was never gracious, and it just gets harder and harder. I want the right, at 86, to play kick-the-can, to do whatever I choose, and that right has been forfeited to age and decrepitude, and I mind it terribly. Which makes me a very ungrateful old lady.

Life is a cycle.  We start off life as children being cared for by our parents and then become parents ourselves  and then to be cared for by our children.  To live with and care for an elderly loved one is not an easy thing. On the other hand, it is not an easy thing to be cared for either. Over and above all the medical issues, the time crunches, or the money concerns, oftentimes it is the emotional issues (and even the fighting) that can wear on you.

What you need is a little bit of empathy.  Remember, if you will, when you were children and you yearned for your independence. Ah to be able to go where you wanted without reporting to your parents.  Remember first time you were able to make choices on your own?  Think of that desire for independence now that your elderly parents are now losing theirs and you are now making choices for them.

In the name of empathy, then, especially as we sit down with our loved ones for the holidays – a trying time for some – consider a recent piece reported in The New York Times titled “‘A Very Ungrateful Old Lady.’

In this instance, the “old lady” is none other than Sheila Solomon Klass. She is an English professor and a blogging grandma at the seasoned age of 86. Nevertheless, Klass is someone’s elderly loved one, too.

As the title of her essay suggests, Klass considers herself a burden and confesses that she is not always good about expressing her gratitude, without expressing frustration instead.

As you click over to her original essay, think about yourself and your own loved ones. Think of A little dose of empathy can go a long ways.

Reference: The New York Times – The New Old Age Blog (November 8, 2013) “‘A Very Ungrateful Old Lady’

When Wills Don’t Work (And Sometimes Why). Properly Titling your Utah Property Is Important

Most people assume that their wills are the ultimate guide on who gets their bank or brokerage accounts after they die. But a person’s last words may not, in fact, be the last word. An estate plan can be undermined by the way an account owner names—or titles—beneficiaries to their accounts.

So your Will is just that, your Last Will and Testament. After all, this is the legal document to set it all down and get it all straight, right? Wrong.

The key to the disposition of your estate is how your assets are “titled” and how the beneficiaries are designated.

In fact, none other than the The Wall Street Journal considered this subject in a recent article titled “A Will Is Not Alwayv s the Last Word.

Essentially, your Will is a powerful piece of legal documentation. It is oftentimes the centerpiece of an estate plan and the north star of a probate proceeding. However, for many Americans, their estate planning is a hodge podge of formal legal planning (e.g., a Last Will and Testament) and more informal planning (e.g., beneficiary designations on retirement funds or other assets outside of a Last Will).

Assets that pass “outside” of the control of a Last Will are not subject to the controls you establish in your Last Will. An example of the problems that this can create recently came to my office.  Parent wanted one of three children to help him with his daily bill paying.  To facilitate this, one child was placed on the parent’s bank account as “pay on death”.  Parent wished to divide all of the assets equally between his three children upon his death and said so in his will.  Upon the death of the Parent, all of the money in the bank account, a substantial portion of the Parent’s estate went to the one child and bypassed the will entirely, leaving the other two children without an equal share of the Parent’s bank account.

As the original article notes and common sense validates, the careful coordination of your estate planning legal documents (i.e., Last Will and Testament, Revocable Living Trust, etc.) and the titling/beneficiary designations of your assets is fundamental to the success of your estate distribution objectives.

Reference: The Wall Street Journal (November 10, 2013) “A Will Is Not Always the Last Word