Misconception #1: Most seniors move into nursing homes as a result of minor physical ailments that make it hard for them to get around. Wrong! A large percentage of admissions to nursing homes is because of serious health, behavior, and safety issues caused by Alzheimer’s disease and dementia.
Misconception #2: Nursing home costs in Arkansas average $1,500 to $2,500 per month per person. Hardly. Current nursing home charges for one resident typically run $5,200 per month, or $62,400 per year, which does not include prescription drugs — and those costs continue to rise.
Misconception #3: Children can care for a parent with Alzheimer’s disease at home, without the need for nursing home care. Not true! Many patients with Alzheimer’s disease end up in nursing homes because children are simply unable to provide the level of care their parent needs. In most cases, the children want to care for their parents. But, as a practical matter, they simply can’t. Moving a parent into a nursing home is an intensely personal issue and should not be labeled as a right or wrong decision. In many cases, it’s the only realistic option. The rare exception is when the family has enough money to pay for skilled nursing care at home.
Misconception #4: Standard legal forms are all you need for a good estate plan. Not true. A competent estate plan begins with clearly defined goals, supported by well-drafted legal documents, and the repositioning of assets, as needed, to protect your estate from taxes, probate costs, and catastrophic nursing home costs.
Misconception #5: Your child will never move you into a nursing home. Wrong. Most children consider all options before moving a parent into a nursing home. But, sadly, children usually find they have no other alternative. As a result, parents who never expected to live in a nursing home soon discover that a nursing home is the only place with the staff and equipment to provide the care they need.
Misconception #6: As payment for nursing home care, the government will take your family home. Not true, if you plan ahead. Many people fear that the government will take their home in exchange for nursing home care, but you can avoid this with proper planning. You’ll be glad to know there are some ways you can protect your home so it won’t be taken.
Misconception #7: You will never end up in a nursing home. That’s hard to predict. Your odds are roughly 50/50. Of Americans reaching age 65 in any year, nearly half will spend some time in a nursing home. And a surprising number will require care for longer than one year. That means every year, tens of thousands of seniors will face costs of $48,000 or more, which does not include the cost of prescription drugs.
Misconception #8: If your spouse enters a nursing home, all of your joint savings will have to be spent on his or her care. No. With proper planning you can keep half of your combined “countable” assets up to approximately $129,000. In some circumstances, you may be able to protect nearly all of your life savings. In fact, it is often possible to protect much more than the $129,000 maximum. “Countable” assets are those assets such as cash, checking accounts, savings, CDs, stocks, and bonds that the government considers available to be spent on the cost of nursing home care.
Misconception #9: Legally, you can give away only $14,000 to each of your children each year. Not true. You can give away any amount, but you have to report to the IRS gifts in excess of $14,000 per recipient per year ($28,000 if both husband and wife make a gift). However, there is no requirement that you pay any gift tax unless you have exhausted your lifetime exclusion amount, which is currently set at $5,450,000 for an individual.
Misconception #10: You can wait to do long-term planning until your spouse or you get sick. Yes, to some degree. However, you and your spouse will be much better off if you have taken important planning steps in advance, before a crisis occurs. What stops most people from being able to effectively plan when they are in the middle of a crisis is that the ill person is unable to make decisions and sign the necessary legal documents.
Misconception #11: All General Durable Powers of Attorney are created equal. Completely false! A General Durable Power of Attorney is a highly customized legal document — and NOT a form! Most Durable Powers of Attorney don’t contain even the most basic gifting authority. Without a gifting power, your agent is usually limited to spending your money on your bills and selling your assets to generate cash to pay your bills.
Some Durable Powers of Attorney contain a gifting provision, but often it is limited to $10,000 or $11,000 per year. This figure is too small for effective asset protection planning, and relates to a completely different type of federal estate and gift tax issue. Other Durable Powers of Attorney allow transfers only to certain people and do not take into account that you may want your agent, spouse, or children to receive your property.
Misconception #12: Since you are married, your spouse will be able to manage your property and make financial decisions without a general durable power of attorney. Not true. If you become incapacitated and your spouse needs to sell or mortgage the family home — or gain access to financial accounts that are in your name only — your spouse will need a general durable power of attorney. Without one, your spouse will have to go to Court and get the judge’s permission to act on your behalf by way of a conservatorship proceeding.
Misconception #13: You can hide your assets while you become eligible for Medicaid. False! Intentional misrepresentation in a Medicaid application is a crime and can be costly. The IRS shares any information concerning your income or assets with the local Medicaid eligibility office. You — or whoever applied for Medicaid — may have to repay Medicaid to avoid prosecution.
Misconception #14: Medicaid rules that applied to your neighbor when he went into a nursing home will also apply to you. Maybe not. Medicaid rules change. Don’t assume the law that applied to your neighbor will also apply to you. In addition, there may have been facts about your neighbor’s situation that you just don’t know.
from Protecting You And Your Family http://ift.tt/29AT0ol
from DeWitt Law Firm, PLLC
No comments:
Post a Comment