Ep. 29 - Comprehensive Estate Planning Guide - Part 1: A
Are you prepared to secure your future with a robust estate and financial plan for long-term care? Tune in to discover how to protect your wealth and navigate these critical decisions. Welcome to The Good Steward Law and Wealth Podcast, where host Ledly Jennings delivers expert guidance on crafting an estate plan and financial plan for long-term care. In this continuation episode, Part 1-A, we dive deeper into strategies for funding long-term care, ensuring your estate plan aligns seamlessly with your financial plan.
IN THIS EPISODE:
- (01:25) Prepare for long–term care costs ahead of time in your estate plan
- (04:14) Paying for long-term care with private pay
- (08:28) Paying for long-term care using Medicaid: Qualify for Medicaid using legal strategies, not loopholes, to best support your financial plan
- (15:54) Check back for parts 2 and 3 of the series on estate planning and preparing for long-term care
KEY TAKEAWAYS:
- An effective estate plan addresses long-term care costs through options like private pay, insurance, or Medicaid. A strategic financial plan, such as using tax-deductible IRA withdrawals, optimizes payments for long-term care while preserving the estate plan’s goals.
- Medicaid within an estate plan involves managing assets to meet eligibility, such as reducing them to under $2,000, while protecting assets like a house. A financial plan ensures legal strategies align with government programs to support the estate plan without exploiting loopholes.
- A holistic estate plan, developed with attorneys and advisors, ensures long-term care needs are met through coordinated asset protection. Integrating a financial plan with the estate plan efficiently secures resources for long-term care and future inheritance.
RESOURCES:
Info@ljenningslaw.com - Email
Ep. 12 - Long-Term Care Planning: All You Need to Know
ABOUT THE HOST:
Attorney Ledly Jennings, founder of L. Jennings Law, specializes in protecting legacies and ensuring smooth transitions of personal and business assets. With offices in Arkansas, his firm offers expertise in estate planning, elder law, probate, and business planning. With a J.D. and MBA, plus valuable experience at Stephens, Inc., the state's largest investment bank, Ledly serves high-net-worth clients and family businesses statewide.
KEYWORDS: Estate Planning, Long-Term Care, Financial Plan, Medicare, Insurance, Incapacity, Power of Attorney, Living Will, HIPAA Authorization, Financial Decisions, Nursing Home Costs, Medicaid, Private Pay, IRA, Asset Protection, Estate Recovery Program, Good Steward Law and Wealth Podcast, L. Jennings Law, U.S. Law, Tax Deductions, Medicaid Qualifications, Long-Term Care Support, Long-Term Care Funding, Pension, Finances, funding long-term care, tax-deductible IRA withdrawals, Medicaid Eligibility, holistic estate plan, Attorneys, Advisors, asset protection, Living trust vs will, How to set up a trust fund, Medicaid planning strategies, IRA rollover rules, Estate tax strategies, Revocable vs irrevocable trust, Best retirement accounts, Power of attorney financial, Beneficiary planning, End-of-life financial planning, Living trust vs will How to set up a trust fund Medicaid planning strategies IRA rollover rules Estate tax strategies Revocable vs irrevocable trust Best retirement accounts Power of attorney financial Beneficiary planning End-of-life financial planning
Transcript
[00:00:25] Ledly Jennings - Host: Welcome back to The Good Steward Law and Wealth podcast. Glad to have everyone here. Uh, and this is a continuation episode of Part One that I previously did on the parts of a good estate plan. And this is still really part one we'll call it, you know, um, one A, uh, how do we plan for paying for our time and incapacity?
[:[00:01:03] This is how I break it down. I. You know, once we start talking about how do you, what documents do I need to prepare for incapacity, they're always like, well, how do I pay for this? And is the nursing home gonna take all my stuff? You know, is my house and personal stuff gonna go to the nursing home? So that's what I want to hit on today, is the answer to how we pay for it.
[:[00:01:46] Um, if you're going to full fledged nursing home care, you know, like, you know, a private room. Full fledged care. And obviously it's very expensive and you know, rightfully so. It may be expensive for a [00:02:00] specific reason. 'cause you really, you think about it like rent. Uh, you, when you go to long-term care, full fledged nursing home care, you're paying for your room, your board, your meals, your care, nursing care, all of it.
[:[00:02:30] So. Really, it's just like paying rent, but you get a lot of benefits from it. Even that it's still expensive and people want to plan for how they pay for that 10,000 a month. And really this varies by, um, where you live. If you're in a rural area, I. You may be, uh, it may be a lot less expensive than whether you're in, you know, New York City or Dallas or whatever it may be.
[:[00:03:14] So shout out to all those because they're really high quality facilities and their staff is really great to work with. But the fees vary and all this varies on, you know, where you are and uh, where you're going. So when we think about planning for how do you pay for this, I look at it as a holistic perspective because.
[:[00:03:56] And usually when that comes into play, it needs to be with the financial [00:04:00] advisor and the attorney or sometimes the office together, or sometimes the attorney is the financial advisor, but you're really doing holistic planning. 'cause you're looking at how do we. Private pay or how do we prepare for the future cost of long-term care?
[:[00:04:36] Um, so private pay, I've seen it a lot where people can easily private pay for their care. 'cause really when you sit down and think about it, let's say you worked your whole life. You've saved up, you have max Social Security, uh, let's call it 3,500 a month in Social Security. Then that gets you over a third of the way there for the cost.
[:[00:05:15] And have enough interest to pay for my long-term care. Um, for, I usually ballpark about five years. At the longest case, sometimes it can go a lot longer, but that's usually what we ballpark when we're planning. I. And how you pay for it, where the money comes from is really important. And this is what a lot of my practice is shifting toward, focusing on now, is actually advising clients on where to take the money from to pay for this care.
[:[00:06:07] You know, you need to pay for it out of that investment account that you have. But really, if you think about it, medical expenses. Are deductible. So your nursing home and long-term care costs are deductible. So my advice usually is to take your IRA and the taxable income from that and pay for your care with that because you spend taxable income on things that you get tax deductions for.
[:[00:06:54] Um. When you think about these families, and this is very common when mom or dad's [00:07:00] 80, 85 kids are usually 50 range, 50 sixties, and they're in their highest earning years, so they're in the highest tax bracket. And the bad thing about IRAs is when you inherit an IRA, you have to withdraw it all within 10 years.
[:[00:07:38] And maybe you talk with your accountant and say, Hey, we've got these deductions. We need to pull out some more money. You can take out another 5,000 grand from the IRA put in another account 'cause it's better to inherit that way and you've done your job because mom or dad is in the 0% tax bracket 'cause they've wiped out all their income.
[:[00:08:25] Um, so that generally that is private pay. The next one is long-term care insurance. I won't spend a ton of time on this one because it's not my expertise and I don't come across it a lot nowadays, when you have the decision whether to buy or not buy. It used to be really, really popular. And then all of a sudden the, the, uh, policies became unaffordable for the insurance companies and then therefore the price became unaffordable for the buyers of 'em.
[:[00:09:19] So it's just kind of an analysis that we run. But I would let you know that there's two types of long-term care insurance. You know, just the insurance that you pay, the premium, you get the product. But there's also a life insurance, uh, policy with a long-term care rider. The benefit of that is you can purchase life insurance.
[:[00:09:57] It usually doesn't make any [00:10:00] sense to insure your cash with cash, you know, to, if you can pay for it, just pay for it and don't purchase something with a premium. Because I've seen a lot that I do see now is people with long-term care insurance and it is an extreme hassle. To get the company to pay for the care.
[:[00:10:36] So that's another downside to the insurance is it's a, it's a hefty process to. Get the benefits and usually when you're trying to get the benefits, you're not in, you know, the best, uh, position mentally or physically to be doing all this work. Um, so. If you've got the cash, it usually makes sense to avoid long-term care insurance.
[:[00:11:15] Um. But that's kind of the other option. I'd just say if you want long-term care, find an insurance professional to give you options, but also have attorney financial advisor review and look at it from your holistic perspective as well. Um, now the third option and is the bulk of my practice when it comes to this, is Medicaid planning.
[:[00:11:55] If Medicaid's paying the bill now, Medicaid may take your stuff. It's called um, [00:12:00] MERP, merp Medicaid Estate Recovery Program. Um, that is where you think of Medicaid, like a loan. So the government's loaning you money to pay for your care. But when you die, they want to get their money back. So that is where the estate recovery program comes in, is how they get their money back, and that's where clients come and say, Hey, well I wanna make sure my house is at least protected.
[:[00:12:48] I mean, unless that house is not in your estate, because it's Medicaid estate recovery program, so they can only recover from your estate. So there are types of deeds that we can do to protect your house and get it [00:13:00] out of your estate, um, without any lookback period. Um, I. A lot of people make gifts to get qualified for Medicaid and there is a lookback period on those gifts of five years.
[:[00:13:30] Um. And check out a previous pod that we did on crisis planning where I go into this, um, and I'll say, so to get you qualified for the rest of this, if you have more assets in your house, you know you still have to be under $2,000. And that's where I come in as an attorney, is how do we gift, how do we move, how do we purchase various annuities to get you qualified for Medicaid?
[:[00:14:16] You could. Uh, get credits for various things. You can deduct the interest on your house. That is, because that's what the law allows. That's what the government and the legislators who set it up wanted it to say. So we just advise people on how to use the law. We are not finding any loopholes. We look at it and it's black and white, and the intent for how they set it up.
[:[00:14:58] Um, you put money into [00:15:00] it from your check, but you also saved and worked diligently and had, you know, investment accounts and retirement accounts. I. Saved up. So just because you worked diligently and saved your money doesn't mean you shouldn't be able to use the program that you paid into. So that's another kind of ethical reason that we do estate planning.
[:[00:15:37] That's something I'll talk with you about, but that's how you get on Medicaid, um, is we move assets around to get you qualified. So that's the third form of how you pay for incapacity and that's the important portion of part one of an estate plan. So. The rest of these parts will have part two and part three on how you leave things, how you [00:16:00] avoid probate, and how you leave things in a protected manner.
[:[00:16:21] Thank you.
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