Continuing Care Retirement Communities, Here to Stay?

The Continuing Care Retirement Communities (“CCRC”) offer a blend of housing complex, activity center and health care system. They consist of independent living, assisted living, and nursing care as well as other programs and activities. Some offer specialized Alzheimer’s memory care units and programs.

However, in recent times, some CCRCs have begun to experience financial instability and therefore have attracted public concern and national attention. In Pennsylvania, at least 3 CCRCs have been impacted by bankruptcy filings. Even though there have been no complete closures to date, there have been significant changes impacting residents. Such changes include increases in service fees, elimination of some services, reduction of staff and changes in personnel management. These concerns generally result from change in ownership and persistent financial problems.

What is the answer to this growing concern? Residents have sought legal guidance, regulatory oversight and investigative reporting. It would appear that if CCRCs are to continue to be a viable option for the elderly all of these avenues most be adequately utilized. In addition, those on the front line of the issues, the residents, must continue to be vigilant in their own advocacy for self-representation. If governing boards of CCRCs do not have resident membership, then such should be sought after by the residents for better knowledge of and control over the financial viability of what has become their home.

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1. Protect Your Assets

Inside:

Stop! What Are You Waiting For?

Your Step-by-Step Guide to Estate Planning,

we visit Eve and Bob. Both Eve and Bob inherited wealth and made a lot more money beyond their inheritance. They now breed show dogs and actively participate in charities benefiting animals. They only have one daughter, Julia, who at thirty-six still can not quite make it on her own. She has already experienced personal bankruptcy and, given her unemployment history, would be on welfare if not for her parents’ continued support.

Eve and Bob want to make sure Julia will not become destitute when they die. Therefore, instead of leaving money outright to her upon their death, their estate plan includes a trust for the money left for Julia, who is not fiscally responsible enough to manage the money herself. A trust is effective because Eve and Bob appointed a trustee to both manage and distribute the money for Julia’s benefit.

The cash left for Julia by her parents will not be subject to the claims of Julia’s creditors. Nor will the cash be subject to any further bankruptcy, lawsuits, or divorce settlement Julia may experience in the future. It is Eve’s and Bob’s legacy that is being protected. They have the right to determine who will be the recipient of their bounty.

For Eve and Bob, money represents their primary asset. How do you define your assets? Do you consider your children, your home, or the money you have accumulated over your lifetime, as Eve and Bob did, your assets? Do you consider yourself an asset? However you define assets, it is important to know that we all have assets, and they are worth protecting.

Tomorrow, we will continue to follow the legacy of Eve and Bob and the journey of their daughter Julia. Leave your comments here or contact us at http://www.ythlaw.com/

Irrevocable Trust - When to Use

The Irrevocable Trust is an asset protection vehicle because it can protect your assets from creditors, bankrupty, divorce and nursing home costs. However, there is a 5 year look back period when applying for medicaid to cover nursing home costs.

Further, you must be cautious when placing anything in an Irrevocable Trust. If others can not reach the assets in the trust, neither can you. You can not change the terms of the trust or terminate the trust in order to retrieve the assets placed into the trust. You have to treat the trust assets as though you no longer own them because you no longer own them.

Consult with an estate planning attorney if you think that the Irrevocable Trust serves your interest. Leave your comments here or contact us at http://www.ythlaw.com/

Transfer Your Deed

Let's say you have a home and you want to leave it to your children. What would be the best way to leave your home to them? This third option (Life Estate and Irrevocable Trust were options discussed the last 2 days) would have you transfer all your interest to your children now while you continue to reside in the home.

Pros of Deed Transfer
(1) If you should need medical assistance in the future, the home would not be subject to recovery by the state since ownership was transferred out of your name to your children. If your deed was transferred to the children (without fair market consideration, ie it was gifted to them) within 5 years of you having to go into a nursing your eligibility for medicaid will be affected.
(2) Upon your death, your children would not have to pay an inheritance tax since they are already owners of the property.
(3) If your home was your only asset then there would be no need to probate your estate.

Cons of Deed Transfer
(1) Since you no longer own the property, you would have to have an agreement from your children that you may live in the house for as long as you like.
(2) If your children have issues with creditors, divorce or bankruptcy, the home is exposed to those issues. You could find yourself evicted by new owners.
(3) Your children would not have the advantage of a "step-up" basis of the property which one receives when they inherit property. Their basis would be the same as yours which is the value of the home at the time of your purchase. This could result in significant capital gain tax upon the sale by your children.

A deed transfer is ideal when: (1) you are well into retirement, late 70s into your 80s and beyond (2) your property is not income producing (3) you want to avoid the inheritance tax and (4) your children do not have issues that might put your home at risk; and (5) there would be no issues with a long term lease from your children.

Consult with our office if you would like to learn more about this estate planning technique.

Three (3) options to consider when transferring your home to your children

I grew up in Salisbury, Maryland and my parents still live in the home that we moved to when I was 12 years old. My parents were my first estate planning clients. They often revisit their plan with me to keep it up to date with changing times. They had a question about one thing recently which is often a question posed by many of my clients. As we get older, how should we hold the deed to our property? For many people, their home is their most valuable asset especially in an economy that is kinder then the one we currently face. The answer to this question depends upon your specific circumstances. The 3 primary options that could be considered are as follows:
Option 1. Add your children's name to your deed.
Issue - You expose your home to any issues that your children may have with creditors, banruptcy, divorce, etc.
Option 2. Maintain a life estate with the remainder interest to your children.
Issue - Children take your basis (for tax purposes) in the property and not the step-up in basis received when the property is inherited. This also is an issue in Option 1. and Option 2.
Option 3. Transfer the deed to your children, removing your names as owners.
Issues - All of the issues noted in option 1 and 2. Further, if you are transferring property to avoid nursing home costs, such transfer has to occur 5 years prior to the need to go in the nursing home.

There are other options that you could also consider from not doing anything to transferring the deed into the name of a trust, revocable or irrevocable both of which have their own issues to consider in your particular circumstances. Feel free to ask me a question through the comment section or call my office for a free consultation making reference to this blog entry.

The SEVENTH of TEN reasons to have a will

SEVENTH, a will protects your assets from creditors. Any property that you leave your heirs can be protected from bankruptcy, lawsuits, divorce settlement and other creditors by creating a trust in your will. Dynasties have been established this way. Small estates can grow without being subject to the claims of creditors of your heirs. Your money benefits only those you want to benefit. It's your money and you are in control if you plan!!!