Tuesday, July 16, 2013

CALCULATING YOUR SOCIAL SECURITY PAYMENTS

social security lehn law

HOW DOES WORK AFFECT YOUR SOCIAL SECURITY PAYMENTS?

Many people continue to work beyond retirement age, either by choice or out of necessity. But if you are receiving Social Security benefits, you need to be aware of how working can affect your benefit payments. Earning income above Social Security thresholds can cause a reduction in benefits and mean your benefits will be taxed.
Whether it makes sense to work and collect Social Security at the same time is a complicated assessment that depends on how much you earn and when you begin taking Social Security benefits.
If you work and are full retirement age or older, you can earn as much as you want and your benefits will not be reduced. However, individuals may begin taking Social Security retirement benefits early beginning at age 62. If you are younger than full retirement age, there is a limit to how much you can earn and still receive full benefits. If you earn more than $15,120 (in 2013), Social Security will deduct $1 from your benefits for each $2 you earn over the threshold. In the year you reach full retirement age, you can earn up to $40,080 (in 2013) without having a reduction in benefits. However, if you exceed $40,080 in earnings, Social Security will deduct $1 from your benefits for each $3 you earn until the month you reach full retirement age. Once you reach full retirement age, your benefits will no longer be reduced.
For example, if your monthly Social Security benefit is $700 and you earn less than $15,120, you will receive $8,400 in benefits for the year. However, if you earn $16,560 ($1,440 over the threshold), you will receive $7,680 in benefits. For more information, click here.
Note that if your benefits are withheld, at least some of those benefits will be returned to you in the form of higher monthly benefits once you reach full retirement age. When you reach full retirement age, Social Security will recalculate your benefits to take into account the months in which your benefits were withheld. In addition, if your latest year of earnings turns out to be one of your highest years, Social Security will refigure your benefit based on the higher earnings and pay you any increase due.
Another way that working can affect Social Security is with regard to taxes. If your combined income (Social Security calculates "combined income" by adding one-half of your Social Security benefits to your other income) is between $25,000 and $34,000 (or $32,000 and $44,000, if filing jointly), you may have to pay taxes on 50 percent of your benefits. If your income is more than $34,000 (or $44,000 if filing jointly), then you may have to pay taxes on up to 85 percent of your benefits.

MEDICAID AND ASSET TRANSFERS

Congress has established a period of ineligibility for Medicaid for those who transfer assets. For transfers made prior to February 8, 2006, state Medicaid officials would look only at transfers made within the 36 months prior to the Medicaid application (or 60 months if the transfer was made to or from certain kinds of trusts). But for transfers made after February 8, 2006, the so-called "look-back" period for all transfers is 60 months.
While the look-back period determines what transfers will be penalties, the length of the penalty depends on the amount transferred. The penalty period is determined by dividing the amount transferred by the average monthly cost of nursing home care in the state. For instance, if the nursing home resident transferred $100,000 in a state where the average monthly cost of care was $5,000, the penalty period would be 20 months ($100,000/$5,000 = 20). The 20-month period will not begin until (1) the transferor has moved to a nursing home, (2) he has spent down to the asset limit for Medicaid eligibility, (3) has applied for Medicaid coverage, and (4) has been approved for coverage but for the transfer. Therefore, if an individual transfers $100,000 on April 1, 2010, moves to a nursing home on April 1, 2011, and spends down to Medicaid eligibility on April 1, 2012, that is when the 20-month penalty period will begin, and it will not end until December 1, 2013.
Transfers should be made carefully, with an understanding of all the consequences. People who make transfers must be careful not to apply for Medicaid before the five-year look-back period elapses without first consulting with an elder law attorney. This is because the penalty could ultimately extend even longer than five years, depending on the size of the transfer.
One of the prime planning techniques used before the enactment of the Deficit Reduction Act of 2005 (DRA), often referred to as "half a loaf," was for the Medicaid applicant to give away approximately half of his or her assets. It worked this way: before applying for Medicaid, the prospective applicant would transfer half of his or her resources, thus creating a Medicaid penalty period. The applicant, who was often already in a nursing home, then used the other half of his or her resources to pay for care while waiting out the ensuing penalty period. After the penalty period had expired, the individual could apply for Medicaid coverage.
Example: Mrs. Jones had savings of $72,000. The average private-pay nursing home rate in her state is $6,000 a month. When she entered a nursing home, she transferred $36,000 of her savings to her son. This created a six-month period of Medicaid ineligibility ($36,000/$6,000 = 6). During these six months, she used the remaining $36,000 plus her income to pay privately for her nursing home care. After the six-month Medicaid penalty period had elapsed, Mrs. Jones would have spent down her remaining assets and be able to qualify for Medicaid coverage.
One of the main goals of the DRA was to eliminate this kind of planning. To determine whether it is still an available strategy in your state, you will have to consult with a local elder law attorney.
Be very, very careful before making transfers. Any transfer strategy must take into account the nursing home resident's income and all of his or her expenses, including the cost of the nursing home. Bear in mind that if you give money to your children, it belongs to them and you should not rely on them to hold the money for your benefit. However well-intentioned they may be, your children could lose the funds due to bankruptcy, divorce, or lawsuit. Any of these occurrences would jeopardize the savings you spent a lifetime accumulating. Do not give away your savings unless you are ready for these risks.
In addition, be aware that the fact that your children are holding your funds in their names could jeopardize your grandchildren's eligibility for financial aid in college. Transfers can also have bad tax consequences for your children. This is especially true of assets that have appreciated in value, such as real estate and stocks. If you give these to your children, they will not get the tax advantages they would get if they were to receive them through your estate. The result is that when they sell the property they will have to pay a much higher tax on capital gains than they would have if they had inherited it.
As a rule, never transfer assets for Medicaid planning unless you keep enough funds in your name to (1) pay for any care needs you may have during the resulting period of ineligibility for Medicaid and (2) feel comfortable and have sufficient resources to maintain your present lifestyle.
Remember: You do not have to save your estate for your children. The bumper sticker that reads "I'm spending my children's inheritance" is a perfectly appropriate approach to estate and Medicaid planning.
Even though a nursing home resident may receive Medicaid while owning a home, if the resident is married he or she should transfer the home to the community spouse (assuming the nursing home resident is both willing and competent). This gives the community spouse control over the asset and allows the spouse to sell it after the nursing home spouse becomes eligible for Medicaid. In addition, the community spouse should change his or her will to bypass the nursing home spouse. Otherwise, at the community spouse's death, the home and other assets of the community spouse will go to the nursing home spouse and have to be spent down.
Permitted transfers
While most transfers are penalized with a period of Medicaid ineligibility of up to five years, certain transfers are exempt from this penalty. Even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:
  • Your spouse (but this may not help you become eligible since the same limit on both spouse's assets will apply)
  • Your child who is blind or permanently disabled.
  • Into trust for the sole benefit of anyone under age 65 and permanently disabled.
  • In addition, you may transfer your home to the following individuals (as well as to those listed above):
  • Your child who is under age 21.
  • Your child who has lived in your home for at least two years prior to your moving to a nursing home and who provided you with care that allowed you to stay at home during that time.
  • A sibling who already has an equity interest in the house and who lived there for at least a year before you moved to a nursing home.
 Medicaid and Assets

Factors Affecting the Risk of Bankruptcy

The on-going global economic downturn has brought difficult financial times for businesses and individuals across the country, with many struggling to make ends meet and sinking further and further into debt.
Encouragingly, the latest figures from the American Bankruptcy Institute have shown that consumer bankruptcy filings have fallen by 11% compared to May 2012, from 104,197 to 92,413. However, these figures suggest that too many people are still living with the stress of unmanageable debt.
For many, the need to make a bankruptcy filing isn’t the result of over-spending or living a reckless lifestyle, but is caused by unexpected external factors that are out with the individual’s control, such as a sudden job loss or prolonged period of illness.
There is also a link between bankruptcy and people struggling with addiction, such as an addiction to alcohol. For someone with a serious alcohol addiction, finding the money to fund that addiction can become an overwhelming priority, often to the detriment of their overall financial position. In order to buy alcohol bills don’t get paid, credit cards are maxed out, money is borrowed repeatedly and debt begins to pile up. This in turn can trigger even greater drinking to deal with the stress and worry of debt. The best way out of this downward spiral is to tackle both aspects of the problem together. Specialist advice and treatment is available to deal with alcohol addiction in Missouri and Florida, and other states across America, through sites like drugabuse.com. An experienced bankruptcy Attorney will be able to help resolve the financial issues, bringing peace of mind and a financial plan for the way forward.  
Link between cancer and bankruptcy  
An interesting study by researchers at Fred Hutchinson Cancer Research Center looked in detail at the impact illness can have on the incidence of bankruptcy by focusing on people who were suffering from cancer. The researchers found that people who had received a cancer diagnosis were two-and-a-half times more likely to declare bankruptcy than people who didn’t have cancer.
“This study found strong evidence of a link between cancer diagnosis and increased risk of bankruptcy,” the authors wrote. “Although the risk of bankruptcy for cancer patients is relatively low in absolute terms, bankruptcy represents an extreme manifestation of what is probably a larger picture of economic hardship for cancer patients. Our study thus raises important questions about the factors underlying the relationship between cancer and financial hardship.”
According to the researchers, because a cancer diagnosis is normally sudden and unexpected, the likelihood of bankruptcy will be affected by the level of existing debt before the diagnosis, and other matters such as  whether the patient has health and disability insurance, whether there are dependent children, and whether other family members are bringing in an income.
The study also found that younger cancer sufferers were between two and five times more likely to be bankrupt than older patients. According to the authors, this was likely to be because their diagnosis came at a time when their debt to income ratios are at their highest because, for example, they are paying off a student loan or in the process of buying a house.
“All working-age people who develop cancer face loss of income and, in many cases, loss of employer-sponsored insurance, both of which can be devastating for households in which the patient is the primary wage earner,” the authors explained.
Bankruptcy and divorce
There is also a strong link between divorce and the incidence of bankruptcy. Ending a relationship can be a very expensive business; not only are there legal fees to pay for, but suddenly all the normal costs associated with running a house are doubled. There are now two rents or mortgages to pay and two sets of utilities. Unfortunately, income doesn’t usually increase at the same time to help meet all these expenses.
Financial matters are one of the biggest causes of marital disputes, and if serious enough, these disputes can eventually result in divorce. If a couple is divorcing because of financial disagreements, it is often the case that the couple has already found themselves in financial difficulties, and will not be in a strong financial position to be able to move on post-divorce. This increases the likelihood of debt problems getting out of control and a higher risk of bankruptcy.
Bankruptcy can offer a way out of seemingly insurmountable financial difficulties, and give you the chance to regain your financial freedom. Contact an experienced Port Charlotte bankruptcy Attorney today for advice on the best way forward for you. This article was written by Melissa Hathaway.

BANKRUPTCY DECLINE

A Welcome Drop in Bankruptcy Filings by Melissa Hathawaylehn law
The latest figures released by the American Bankruptcy Institute (ABI) have revealed a welcome drop in the total number of bankruptcy filings that took place across the United States in April 2013.
According to the data, which was provided by Epiq Systems, Inc., there were a total of 100,702 bankruptcy filings in April 2013, a fall of 8% from the 108,996 that were filed in April 2012.
Looking at the figures in greater detail, they show that consumer filings fell by a significant 7% - from 103,798 in April 2012 to 96,344 in April 2013. Total commercial filings saw an even greater decrease, falling by 16% from April 2012 to April 2013.
However, the news is not so positive for commercial Chapter 11 filings, which apparently increased by 5% across America as a whole, from 666 commercial Chapter 11 filings in April 2012 to 701 in April 2013. The risk of bankruptcy is all too real for many businesses in Florida, and in some cases can be caused by factors not totally within the business owner’s control. Smaller businesses can often be at greatest risk because they are more vulnerable to external forces and have fewer resources to enable them to survive incidents such as non-payment by customers, unexpected expenses or declining market conditions. It is therefore essential for small businesses to take as many measures as possible to protect their business operations and cash flow, such as ensuring they have adequate business insurance, keeping on top of debtors, and developing good marketing strategies to take advantage of new and existing markets.
Consumers spending more cautiously
The ABI has suggested that the drop in bankruptcy filings by consumers may partly be the result of their more cautious spending behavior.
“Households and businesses continue to adjust their balance sheets in response to low interest rates, tighter lending standards and decreased consumer spending,” commented ABI Executive Director Samuel J. Gerdano. “These trends will continue to suppress bankruptcy filings this year.”
The idea that consumers are being very careful with their spending is supported by the findings of a recent survey by Deloitte, which found that 94% of Americans who took part in the study were continuing to act cautiously and didn’t intend to increase their spending on food, drink and other household goods.
“One of the most notable year-over-year trends in the study is how embedded frugality has become due to the recession,” explained Pat Conroy, vice chairman, Deloitte LLP.
State variations in bankruptcy filings
The ABI data also revealed that the average per capita bankruptcy-filing rate across the USA increased in April to 3.52 (total filings per 1,000 per population) compared to the average rate of 3.40 for the first quarter of 2013.
Looking at the figures on a more local level, the per capita bankruptcy rate varied from state to state, with the following five states registering the highest per capita bankruptcy filing rate in April 2013: Tennessee (6.76), Georgia (5.76), Alabama (5.75), Illinois (5.59) and Nevada (5.27).
Impact of payday loans on bankruptcy
While the ABI report gives factual data on the number of bankruptcy filings, other studies have been carried out to investigate the possible causes of bankruptcy.
One such study was conducted by the Insight Center for Community Economic Development (Insight Center), which has recently published a report looking at the impact of payday loans on the number of Chapter 13 bankruptcies being filed in America and also on the wider economy.
The report looked at the incidence of payday loans in 33 states and suggests that these loans cost the American economy around $774 million in 2011 and led to a net loss of around 14,000 jobs.
According to the study, the use of payday loans also led to around 56,250 Chapter 13 bankruptcies in 2011, with an average cost of $3,000 per bankruptcy. When this bankruptcy cost is included in the overall cost calculation, the report claims the total loss to the economy from the use of payday loans is around $1 billion.
The report looked at the usage of payday loans at both national and state level. It found that the five states where the highest rate of interest was charged on payday loans were California, Texas, Florida, Mississippi, and Illinois.
“We wanted to give a true picture of the economic impact of payday lending – examining all potential economic benefits and costs and see how they balanced out,” explained Tim Lohrentz, author of the report and Program Manager at the Insight Center. “Our findings clearly show that payday lending is a drain on the U.S. economy.”

10 TIPS ON HOW TO REBUILD CREDIT AFTER BANKRUPTCY

  So, you filed bankruptcy, now what? The debts are gone, creditors have stopped calling, you still have your car, still living in your house. Everything is perfect, except your credit. As a bankruptcy attorney I hear these comments from satisfied clients on a daily basis. True, chapter 7 and chapter 13 bankruptcy both wipe out debt and yet that is only part of the benefit that the debtor realizes.
    Clients come to my office because they are drowning in debt and many of them take a solemn oath to never use another credit card as long as they live. My response startles them. I tell them that "they will be offered credit around 6 months after they file for bankruptcy and they should apply for it." After I  repeat myself and explain why it is a good idea to rebuild credit my advice usually sinks in.
   Some financial advisors, debt consultants, friends, spouses and family members go to great lengths to scold debtors after they file bankruptcy and opine that credit is bad. Nothing could be further from the truth. Abusing credit and piling up debt is bad. My clients come to my office at probably the worst time of their life. They are beaten down, depessed, overwhelmed and often defeated. Sometimes life just happens.
   Our firm motto is "We help good people get a fresh start." Life goes on after bankruptcy, credit worthiness is a necessity for most people. Rebuilding credit takes time, people with good credit pay less for insurance and houses and cars. Further, credit is needed to handle life's emergencies. Try renting a car in New York or at a major airport without a credit card. Credit is important, imagine receiving a phone call in the middle of the night because your child or family member has a financial emergency. Good credit is a necessity.
Here are 10 tips to responsibly and successfully rebuild credit:
  1. Pay your utility bills and rent on time for at least a year.
  2. Open a checking or savings account. Lenders may look at this to determine if you can responsibly handle money.
  3. Find a friend or relative to cosign for you on a loan and pay it on time.
  4. Look for car dealers and mortgage brokers that attest to be "bankruptcy friendly".
  5. Buy a used car so you do not get hit with the depreciation that occurs during the first two years of a new car purchase.
  6. Stay away from payday loans that are high interest rates and are a "bad credit" trap.
  7. Write a letter to each credit reporting agency explaining the circumstances that lead to you filing.
  8. Live within your means. Do not unnecessarily increase your debt to income ratio by taking on credit to purchase luxury items that you do not need. Your payments on consumer debt should equal no more than 20% of your expendable income after costs for housing and a vehicle.
  9. Pay your reaffirmed, pre-bankruptcy debts on time.
  10. Applying for store and gas credit cards that you would normally pay cash.
This blog post was written by Joseph W. Lehn, Esq. Attorney Lehn practices chapter 7 and chapter 13 bankruptcy in Sarasota, Manatee, Desoto, Charlotte and Lee county, Florida. Joseph W. Lehn is the managing partner of Lehn Law, P.A. with offices in Port Charlotte and Sarasota,Florida.

BUYING A HOME AFTER BANKRUPTCY-YES YOU CAN!!!

One of the most frequently asked questions I get as a bankruptcy attorney is, when will I be eligible to purchase a new home and qualify for a mortgage after filing for a chapter 7 or a chapter 13 bankruptcy? I usually respond with telling them that the bankruptcies of today are not the bankruptcies of our parents and that qualifying for a mortgage after bankruptcy or a foreclosure, a short sale or a deed in lieu of foreclosure is possible as long as they follow a few simple strategies and meet the lenders criteria.
As the old saying goes,"time heals all wounds." This is very true with qualifying for a mortgage after filing bankruptcy. Once a bankruptcy discharge is granted in a chapter 7 bankruptcy or when a chapter 13 plan is complete the clock starts ticking for the debtor to rebuild credit. All lenders have certain criteria that an applicant must meet to qualify for a mortgage. I have attached a chart that explains this criteria.


FHA
USDA
VA
Conventional
Bankruptcy Chapter 7
24 Months
36 Months
24 Months
48 Months
Bankruptcy
Chapter 13
12 months has elapsed since the BK. Timely payments were made during Chapter 13 and permission was granted from court to enter into a new mortgage.
36 months from discharge or dismissal.
12 months has elapsed since the BK. Timely payments were made during Chapter 13, and written permission was obtained from court to enter into a new mortgage.
Extenuating circumstance 24 months from dismissal or discharge date.
Foreclosure
36 Months
36 Months
2 years, with exceptions on extenuating circumstances—can be less.
7 Years
Short Sale
36 Months
36 Months
2 years, with exceptions on extenuating circumstances—can be less
*2 years—80% LTV
*4 years—90% LTV
*7 years—can follow standard guidelines
Re-established Credit
3 trade lines open active for 24 months were paid as agreed. No derogatory accounts since the event. 12 month verified residential NO lates.
3 tradelines open active for 24 months paid as agreed. No derogatory accounts since the event. Must have a
24-month verifiable residential history NO lates.
3 trade lines open active for 24 months paid as agreed. No derogatory accounts since the event. 12 month verifiable residential NO lates.
3 trade lines open active for 24 months paid as agreed. No derogatory accounts since the event. 12 month verifiable residential history NO lates.
The most important step a debtor seeking a fresh start can do is to apply for and establish credit once a chapter 7 discharge is granted or a chapter 13 payment plan is completed. Credit is based on debt to income ratios and the beauty of a bankruptcy discharge is that nothing is chasing the debtor, the debt is gone! Establishing credit, no matter how small and keeping current on the payments for 24 to 36 months will do wonders for increasing your credit score. I had a client call me just the other day to tell me his credit score is now 814, he filed a chapter 7 bankruptcy two years ago. This brings great satisfaction to this bankruptcy attorney. A fresh start and a clean slate is truly possible.
If you are serious about qualifying for a mortgage I highly recommend that you speak with a mortgage broker who is familiar with the VA, FHA and the USDA mortgage programs available to home buyers.
Joseph W. Lehn, Esq. of Lehn Law, P.A. is a Port charlotte bankruptcy attorney who has offices in Sarasota and Port Charlotte.

MEDICAID, SARASOTA NURSING HOMES TRANSFER PENALTY EXPLAINED

The second major rule of Medicaid eligibility is the penalty for transferring assets. Congress does not want you to move into a nursing home on Monday, give all your money to your children (or whomever) on Tuesday, and qualify for Medicaid on Wednesday. So it has imposed a penalty on people who transfer assets without receiving fair value in return. These restrictions, already severe, have been made even harsher by enactment of the DRA.
This penalty is a period of time during which the person transferring the assets will be ineligible for Medicaid. The penalty period is determined by dividing the amount transferred by what Medicaid determines to be the average private pay cost of a nursing home in your state.
Example: For example, if you live in a state where the average monthly cost of care has been determined to be $5,000, and you give away property worth $100,000, you will be ineligible for benefits for 20 months ($100,000 / $5,000 = 20).
Another way to look at the above example is that for every $5,000 transferred, an applicant would be ineligible for Medicaid nursing home benefits for one month.
In theory, there is no limit on the number of months a person can be ineligible.
Example: The period of ineligibility for the transfer of property worth $400,000 would be 80 months ($400,000 / $5,000 = 80).
However, for transfers made prior to enactment of the DRA on February 8, 2006, state Medicaid officials will look only at transfers made within the 36 months prior to the Medicaid application (or 60 months if the transfer was made to or from certain kinds of trusts). But for transfers made after passage of the DRA the so-called lookback period for all transfers is 60 months.
The second and more significant major change in the treatment of transfers made by the DRA has to do with when the penalty period created by the transfer begins. Under the prior law, the 20-month penalty period created by a transfer of $100,000 in the example described above would begin either on the first day of the month during which the transfer occurred, or on the first day of the following month, depending on the state. Under the DRA, the 20-month period will not begin until (1) the person making the transfer has moved to a nursing home, (2) he has spent down to the asset limit for Medicaid eligibility, (3) has applied for Medicaid coverage, and (4) has been approved for coverage but for the transfer.
For instance, if an individual transfers $100,000 on April 1, 2010, moves to a nursing home on April 1, 2011, and spends down to Medicaid eligibility on April 1, 2012, that is when the 20-month penalty period will begin, and it will not end until December 1, 2013.

TIPS ON CHOOSING A NURSING HOME

Can there be a more difficult job than finding a nursing home for a parent or spouse? Nursing homes often carry a bad stigma. No one wants to live in a nursing home. They serve as institutions of last resort when it's impossible to provide the necessary long term care in any other setting. And, typically, the search takes place under the gun when a hospital or rehabilitation center is threatening discharge or it's no longer possible for the loved one to live at home. Finally, in most cases, finding the right nursing home is a once-in-a-lifetime task, one you're taking on without the experience of having done it before.
That said, there are a few rules of thumb that can help you:
  • Location, location, location. No single factor is more important to quality of care and quality of life of a nursing home resident than visits by family members. The quality of care is often better if the facility staff knows that someone who cares is watching and involved. Visits can be the high point of the day or week for the nursing home resident. So, make it as easy as possible for family members and friends to visit.
  • Get references. Ask the facility to provide the names of family members of residents so you can ask them about the care provided in the facility and the staff's responsiveness when the resident or relatives raise concerns.
  • Check certifying agency reports. Medicare's Nursing Home Compare is a free site that allows consumers to compare the quality of the nursing homes they're considering, using Five-Star Quality Ratings, health inspection results, nursing home staff data, quality measures, and fire safety inspection results. Another source for nursing home reports is HealthGrades. HealthGrades will provide you with a report that rates the nursing home and provides information on inspections and complaint investigations. CareScout is an unbiased source for ratings and reviews of eldercare providers nationwide. Detailed, 7-10 page Nursing Home reports are available for a fee.
  • Talk to the nursing home administrator or nursing staff about how care plans are developed for residents and how they respond to concerns expressed by family members. Make sure you are comfortable with the response. It is better that you meet with and ask questions of the people responsible for care and not just the person marketing the facility.
  • Tour the nursing home. Try not to be impressed by a fancy lobby or depressed by an older, more rundown facility. What matters most is the quality of care and the interactions between staff and residents. See what you pick up about how well residents are attended to and whether they are treated with respect. Also, investigate the quality of the food service. Eating is both a necessity and a pleasure that continues even when we're unable to enjoy much else. It is also advisable to try and get a tour of the facility that is not prearranged. While this is not always possible, it does give you the opportunity of seeing an unrehearsed atmosphere.

10 REASONS BABY BOOMERS NEED TO PREPARE AN ESTATE PLAN NOW

Many Baby Boomers think that estate plans are for someone else, not them. They may rationalize that they don't have enough money to reap the tax benefits of a plan. But as the following list makes clear, estate planning is for everyone, not just Baby Boomers regardless of age or net worth.
1. Loss of capacity. What if you become incompetent and unable to manage your own affairs? Without a plan the courts will select the person to manage your affairs.
2. Minor children. Who will raise your children if you die? Without a plan, a court will make that decision. With a plan, you are able to nominate the guardian of your choice.
3. Dying without a will. Who will inherit your assets? Without a plan, your assets pass to your heirs according to your state's laws of intestacy (dying without a will). Your family members (and perhaps not the ones you would choose) will receive your assets without benefit of your direction or of trust protection. With a plan, you decide who gets your assets, and when and how they receive them.
4. Blended families. What if your family is the result of multiple marriages? Without a plan, children from different marriages may not be treated as you would wish. With a plan, you determine what goes to your current spouse and to the children from a prior marriage or marriages.
5. Children with special needs. Without a plan, a child with special needs risks being disqualified from receiving Medicaid or SSI benefits, and may have to use his or her inheritance to pay for care. With a plan, you can set up a Supplemental Needs Trust that will allow the child to remain eligible for government benefits while using the trust assets to pay for non-covered expenses.
6. Keeping assets in the family. Would you prefer that your assets stay in your own family? Without a plan, your child's spouse may wind up with your money if your child passes away prematurely. If your child divorces his or her current spouse, half of your assets could go to the spouse. With a plan, you can set up a trust that ensures that your assets will stay in your family and, for example, pass to your grandchildren.
7. Financial security. Will your spouse and children be able to survive financially? Without a plan and the income replacement provided by life insurance, your family may be unable to maintain its current living standard. With a plan, life insurance can mean that your family will enjoy financial security.
8. Retirement accounts. Do you have an IRA or similar retirement account? Without a plan, your designated beneficiary for the retirement account funds may not reflect your current wishes and may result in burdensome tax consequences for your heirs (although the rules regarding the designation of a beneficiary have been eased considerably). With a plan, you can choose the optimal beneficiary.
9. Business ownership. Do you own a business? Without a plan, you don't name a successor, thus risking that your family could lose control of the business. With a plan, you choose who will own and control the business after you are gone.
10. Avoiding probate. Without a plan, your estate may be subject to delays and excess fees (depending on the state), and your assets will be a matter of public record. With a plan, you can structure things so that probate can be avoided entirely.
The time is now to think about the future, most people don't plan to fail, they fail to plan. Plannin g for the inevitable takes the burden off your family.

HOW GIFTS CAN AFFECT MEDICAID ELIGIBILITY

We’ve all heard that it’s better to give than to receive, but if you think you might someday want to apply for Medicaid long-term care benefits, you need to be careful because giving away money or property can interfere with your eligibility. 
Under federal Medicaid law, if you transfer certain assets within five years before applying for Medicaid, you will be ineligible for a period of time (called a transfer penalty), depending on how much money you transferred. Even small transfers can affect eligibility. While federal law allows individuals to gift up to $13,000 a year without having to pay a gift tax, Medicaid law still treats that gift as a transfer.
Any transfer that you make, however innocent, will come under scrutiny. For example, Medicaid does not have an exception for gifts to charities. If you give money to a charity, it could affect your Medicaid eligibility down the road. Similarly, gifts for holidays, weddings, birthdays, and graduations can all cause a transfer penalty. If you buy something for a friend or relative, this could also result in a transfer penalty.
Spending a lot of cash all at once or over time could prompt the state to request documentation showing how the money was spent. If you don't have documentation showing that you received fair market value in return for a transferred asset, you could be subject to a transfer penalty.
While most transfers are penalized, certain transfers are exempt from this penalty. Even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:
  • your spouse
  • your child who is blind or permanently disabled
  • a trust for the sole benefit of anyone under age 65 who is permanently disabled
In addition, you may transfer your home to the following individuals (as well as to those listed above):
  • your child who is under age 21
  • your child who has lived in your home for at least two years prior to your moving to a nursing home and who provided you with care that allowed you to stay at home during that time
  • a sibling who already has an equity interest in the house and who lived there for at least a year before you moved to a nursing home
Before giving away assets or property, check with your elder law attorney to ensure that it won't affect your Medicaid eligibility.