Many parents suddenly find themselves considering estate planning
because they want to ensure the care of their children. Some new clients of mine, John and Anna, a couple from Madison, Mississippi, recently adopted a newborn
baby. Even though they are in their late twenties, they're concerned
about who would care for their son if something happened to them. As a
result, they have begun to look into estate planning and evaluate their
current financial plans. They have a retirement plan (IRAs, pensions
and 401(k) benefits), life insurance and other investments, but they
recognize that those plans may not meet their new needs as parents. So,
what should parents know about guardianship and conservatorship or
"guardian of the estate?" And, how do you go about choosing the best
person to care for your children's physical, mental and financial needs?
Medicare Part A covers up to 100 days of
"skilled nursing" care per spell of illness. However, the conditions
for obtaining Medicare coverage of a nursing home stay are quite stringent. Here
are the main requirements:
The Medicare recipient must enter the nursing
home no more than 30 days after a hospital stay that itself lasted for at least
three days (not counting the day of discharge);
The care provided in the nursing home must be
for the same condition that caused the hospitalization (or a condition medically
related to it); and
The patient must receive a "skilled"
level of care in the nursing facility that cannot be provided at home or on an
outpatient basis. In order to be considered "skilled," nursing care
must be ordered by a physician and delivered by, or under the supervision of, a
professional such as a physical therapist, registered nurse or licensed
practical nurse. Moreover, such care must be delivered on a daily basis. (Few
nursing home residents receive this level of care.)
Most married men claim Social Security benefits at age 62 or 63,
well short of Social Security's Full Retirement Age or the age at which
they would get the most value from their benefits. The economic
sacrifice isn't great for the men -- their benefit is less than 4
percent less than what it could optimally be if they waited to collect
Social Security -- but for their widows, the impact is much more
severe. The survivor benefit is on average nearly 20 percent less than
its value would have been had the men waited to collect.
A Florida appeals court finds that long-term care insurance payments
that do not reimburse actual medical expenses must be counted as income
when determining Medicaid eligibility. Rosenshein v. Florida Department of Children (Fla. Ct. App., 3rd Dist., No. 3D07-989, Oct. 24, 2007).
Trusts are Separate Taxpayers All trusts are
separate taxpayers. Unless disregarded under the exception for grantor
trusts discussed below, each trust has its own tax year and tax
accounting method. Trusts also receive income and pay expenses. Net
income is taxed either to the trust or to the beneficiaries, depending
upon the trust terms, local law and, in the cases of complex trusts
(defined below), whether the trust distributed the income.
