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Estate planning is vital if you want to leave a lasting legacy to your loved ones. Despite its importance, a survey by Caring.com, however, revealed that the number of adults in the United States than ever before are engaging in estate planning. The study found a 25% decrease in the number of individuals that have wills or similar documents since 2017. Remember, estate plans are not made for the creator, but instead are created for the benefit of your loved ones and among other advantages can avoid placing your family members and friends in the difficult position of making healthcare decisions for you in case you end up incapacitated. In the hopes of getting you started on writing an estate plan today, this article reviews 5 fast facts to remember about estate planning.

# 1 – Estate Planning Is for Everyone

Estate planning exists to protect both the creator as well as loved ones in case of incapacity or death. Despite what some people think, estate planning is not only for the wealthy. If you own any type of assets or are interested in having a say in the type of healthcare that you receive if you become incapacitated, estate planning is worth utilizing. While estate planning can be utilized to make decisions about the healthcare you receive and who will receive your assets, many people overlook estate planning because it can be difficult to face your mortality, particularly during a global pandemic.

It’s an unfortunate reality that many people who apply for Medicaid end up discovering that they have too many assets to qualify for the program. Instead of being available to everyone, Medicaid is classified as a “needs-based” program and a successful applicant must be determined to have insufficient assets before the program will “kick in” and provide assistance. 

The process of reducing a person’s assets to qualify for Medicaid is also known as “spend-down”. Like many estate planning processes, many misconceptions exist about the “spend-down” process. For example, rather than only medical care, there are various things that a person can spend on without disrupting qualification for Medicaid. 

Allowable Spend-Down Categories

While some people are still debating the outcome of the 2020 election, it is extremely likely that Joseph R Biden Jr. 

will be the next President of the United States. As President, Biden and his administration will likely attempt to pass new regulations that remove some estate planning opportunities to raise revenue to pay for costs associated with things like increasing assistance during the pandemic. While it is only possible to speculate at the moment, this article discusses some of the most likely changes during the administration that individuals should consider while estate planning.

# 1 – Exemption Amounts Will Be Reduced

Family members as caregivers overwhelmingly provide for elderly and disabled loved ones at home. Although a labor of love, taking care of ailing loved ones also has a market value, meaning that caretakers may be paid as a way to protect assets.
Through the use of a Caregiver Agreement, also known as a Personal Services Contract, the disabled or elderly person may transfer money to family members as compensation rather than as a gift. Gifts to family members made in the last five years before applying for Medicaid to pay for nursing home costs disqualify the applicant from receiving Medicaid for a certain period of time, known as a “penalty period.”
For example, mom depends on daughter Janice for her care. If mom gifts $100,000 to Janice, then goes into a nursing home in the next five years and applies for Medicaid, the gift to Janice will result in about a ten month penalty period. Janice will have to give the $100,000 back to mom to pay nursing home costs during the penalty period, or mom will have to use other resources to pay.

While ninety percent of American businesses are family owned, only about thirty percent of them continue to the next generation. Half of those again make it to the third generation. The most common reason: lack of a business succession plan.
There are many reasons owners fail to plan. In addition to confronting the issues of age and mortality, the business owner also faces potentially giving up his or her life’s work – often a venture started, nurtured and grown by him or her over many years.
Business succession planning should start while the entrepreneur is young enough to spend time monitoring the next generation, be it family or otherwise. Around the age of sixty should allow enough time, say five to ten years, for the process to begin and develop.

Elder Law Estate Planning is an area of law that helps us maintain control of our lives and assets in four basic areas.

First, Elder Law is planning for disability which includes naming people who will make decisions for us if we become incapacitated. You choose the people who will act on your behalf and thereby avoid the government taking over your life in a “guardianship proceeding.” Wills do not provide for disability because they are plans for death. Living trusts, on the other hand, name trustees who manage trust affairs during incapacity. Other necessary disability planning documents include a Power of Attorney that names people who make financial and legal decisions, a Health Care Proxy that names people who will make medical decisions and a Living Will that expresses end of life decisions such as resuscitation.

Second, another protection of Elder Law is asset protection planning from the costs of long-term care. Plan A to protect assets from long-term care and nursing home costs is to buy long-term care insurance. If you do not have long-term care insurance, Plan B is the Medicaid Asset Protection Trust (MAPT) that protects trust assets from nursing home costs paid for by Medicaid after the assets are in the trust for five years. The MAPT protects assets from home care costs paid for by Medicaid after the assets are in the trust for two and a half years.

Medicaid is state and federal funding that pays for long-term care costs, either at home, called “Community Medicaid,” or in a nursing home, called “Institutional” or “Nursing Home Medicaid.” The Medicaid rates change every year for income and asset requirements to determine eligibility for benefits. Following are the 2020 New York rates.

A single applicant for Community Medicaid may keep up to $15,750 in assets and $875 in income. If the applicant’s income is greater than the limit, a “Pooled Income Trust” created by a non-profit organization may shelter the excess income to make the applicant eligible for community Medicaid.

A married applicant for Community Medicaid may keep up to $15,750 in assets and $875 in monthly income. The non-applicant spouse may keep their own income and keep up to $128,640 in assets. The rules are different if one spouse is enrolled in a Managed Long Term Care Plan. The applicant spouse may keep $409 of monthly income and the other spouse may keep $3,216 of monthly income. The healthy spouse may keep between $74,820 and $128,640 in assets. “Spousal Refusal” is another option that may help the healthy spouse keep more income and assets. A review of the couple’s income and assets helps determine which approach is more favorable.

The Setting Every Community Up for Retirement Enhancement Act of 2019, Pub. L. 116–94, was signed into law by President Donald Trump on December 20, 2019, as part of the Further Consolidated Appropriations Act, 2020 (The Secure Act). Future beneficiaries of retirement accounts have different rules than current inheritors. What follows is a brief description of some of the ways the new rules under The Secure Act may impact your future beneficiaries.

 The Secure Act changes the way people will inherit money — are you affected by the new rules?

 The new rules do not treat all beneficiaries the same. Beneficiaries of qualified retirement accounts, such as individual retirement accounts and 401(k) plans, now must withdraw all of the money out of those accounts within 10 years, instead of over their lifetime as was previously allowed (commonly referred to as the “stretch IRA” provision). An IRA is an individual retirement account. There are no required minimum distributions within that time frame, but the account balance must be zero after the 10th year.

In December 2019, the United States Treasury recently released guidelines in Subchapter Z of the Internal Revenue Code. the regulations play the vital role of clarifying earlier 2018 and 2019 regulations about financial opportunity zones. This article briefly reviews some of the most important lessons to be learned from this announcement. 

The Role of Opportunity Zone Investment

The Tax Cuts and Jobs Act of 2017 created many estate planning changes including the introduction of opportunity zone provisions. These provisions allow people to defer capital gains tax by reinvesting the amount in a qualified opportunity fund (QOF). A QOF is a low-income tract  A WOF is an entity created to invest in opportunity zone property and must hold at least 90% of its assets in qualified opportunity zone property (QOZ). QOZ property must satisfy four elements:

The average student loan payment, according to credit.com, is $393 a month. That represents almost 20% of the monthly household income after taxes. During your prime working years, you may be tempted to postpone saving for retirement or maxing out your 401K contribution. If you’re on a federal income-based repayment plan, however, saving for retirement while paying off your student loans may actually reduce your monthly student loan payment.

 Most federal repayment plans calculate your monthly payment based on your adjusted gross income (your net pay after deductions for taxes). The lower your net income take-home pay, the lower your monthly student loan payment may be. Not all federal repayment plans will result in a lower monthly payment. The eligible repayment plans include:

  •   Revised Pay as You Earn Repayment Plan (REPAYE)
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