Ronald Morton's Elder Law Blog

Protect Your Children: Choose a Guardian

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 Coverage for Nursing Homes

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: 

1. 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);
   
2. 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
   
3. 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.)

Why do Men Claim Social Security Early?

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.

Long Term Care Payments Counted as Income

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).

Taxation of Trusts Simplified

 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.