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My LTC Insurance is getting very expensive; What should I do?

If I had a quarter for every time, I was asked this question I would have a lot of quarters for sure.  Many LTC (long term care) companies made significant errors in their original underwriting of LTC policies. As a result, many companies are no longer in business.  The ones that are in business have greatly changed their practices.  However, the biggest issue that has come out of the miscalculation of LTC is that people who still have policies are losing their benefits and their premiums are going through the roof. The question now is what do we do?

This is a question that I receive on a regular basis in my estate planning and elder law practice. By way of full disclosure, I am not a licensed insurance agent, and I am not licensed to be able to sell long-term care insurance or any other insurance product. I am an attorney with approximately 20 years of experience in estate planning and elder law and I happen to be a Certified Elder Law Attorney under authorization of the Pennsylvania Supreme Court. While I am not the person who will sell the products, I am certainly an individual who has been advising numerous clients over the years and believe in the benefits of a long-term care policy and what they can provide. We have done numerous other blogs about long-term care insurance and the benefits of said policies.

When long-term care insurance first gained popularity, many companies completely missed out on the actuarial tables and in predicting what people were going to need. Because of this drastic miscalculation, most of the companies who originally were in the markets for long-term care insurance are no longer there. The few standing companies that are left are trying to figure out ways to make up for the mistakes of the past. Because of that, they are often forced to increase premiums and decrease benefits. Although these companies do have to get permission from the insurance board, it is not a very difficult proposition and, in most cases, they will almost always be able to receive permission. The most difficult part is that individuals have been paying into a plan for a number of years and now are learning that they’re going to have to decrease their benefits and even then, they may have to increase the premiums that they are paying. It is heart wrenching to have to provide guidance in these situations and ultimately, I always encourage them to bring in their financial professionals to try to make the decisions.  It is as much about the numbers and the common sense as it is about the emotion involved. It is very easy for us to get disgusted and upset about what is occurring, but it is a cold, harsh reality of the miscalculations that were made in the past.  In some instances, increasing premiums and decreasing benefits is the only way some of these companies will survive. 

My best advice to any and all people who are faced with this dilemma is to write out the pros and cons and to try to make the evaluation and determination about numbers and as little as possible about emotion of the situation. It is too easy to get hung up on the principle of the manner, but the truth is principals are expensive and cause wars. Make the best decision for you and your family based upon the information that you have in front of you. Long-term care is not going away and dropping the policy out of spite is not going to help anyone. 

If you are looking for advice in regards to estate planning, please call our office at 717-845-5390 or click the link here and we will contact you.

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Now is a Good Time to Review Your Estate Plan.

It has certainly been a strange year and it feels as though we are finally heading out of it and things are “getting back to normal”. It makes me very happy to hear everybody talking about all of their upcoming plans for travel and trips to visit family because they missed out on a lot of planned events this past year.

Let me tell you what has really hit home for me, is how painful lack of planning can be and how it can affect your family in many ways. There are far too many lessons that we have learned from the past year, but one, in particular, is how a lack of planning can devastate a family.

Before you head out on all of your great adventures and trips, please take a moment for yourself and put your own oxygen mask on. Please pull out your estate planning and take a quick look at it. Make sure that the documents read the way that you want them to read and that you understand them.

Furthermore, make sure that all of your beneficiary designations on your life insurance and retirement accounts match what you intend for them to do and do not incorrectly believe that your Will controls how those assets are distributed.

As we have stated in many other blogs and articles, the beneficiary designations on these items are the most important thing and will trump what you have in your Will. Just confirm that your plan is the way that you intend it to be and that there are no unintended consequences.

If you have not had it reviewed by a professional in the last three or four years, take the time now to bring it to someone to review to ensure that everything is the way that it needs to be.

We also encourage you to take the time, once your documents are review and updated as necessary, to talk to your family about your planning when you are on your adventures and at family gatherings to make sure that everybody knows what your wishes are and what your planning is for the future.

These simple steps will save heartache and avoid hurt feelings. The time is now to review prior to heading out. Enjoy your travels and please be safe.

If you are looking for advice in regards to estate planning, please call our office at 717-845-5390 or click the link here and we will contact you.

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Having “a talk” with your parents about their long term living situation.

No, we are not talking about the birds and the bees but rather talking about having a conversation with your parents about what their wishes are in regards to their long-term care living situation.  I find in my practice that oftentimes parents will think a lot about where they’re going to live as they age and what type of situation they would prefer to be in.  Unfortunately, many parents do not feel comfortable having the conversation with their children ahead of time for many reasons.  I also find that the opposite is equally true: the kids often wonder what will happen but don’t feel that it’s right to bring it up and don’t want to push mom and dad into having to discuss make decisions about that determination.

I cannot begin to tell you how important it is to discuss these situations early and often.  Both parties are hesitant, but it is better for everybody involved to know what mom and dad think and what their wishes and hopes are for their living situation at the end of the day.  To the extent that mom and dad want to remain home, there are plenty of things that can be done including modifications to the home or purchase of a new home to make that happen.  To the extent that they want to go to an assisted living community and live independently now or to a continuing care retirement community, there are many tours and interviews to take with mom and dad to see where they feel the most comfortable.  The options are plentiful and regardless of what mom and dad are hoping for, it is typically pretty straightforward in finding an option.  

A friend of mine recently told me that she does not want to have the conversation because she is afraid that mom and dad are expecting they will be able to move into her house with her and her family.  My response to her was wouldn’t you rather know that now and have the conversation now with them rather than wait until they need assistance and cause not only them extra stress but you and your family extra stress?  She definitely came around after about a 25-minute conversation explaining that it wasn’t about her and her family but rather about her parents’ wishes.  Just because they wanted to do that doesn’t mean that it would work for her and her family nor does it mean that that is what has to happen, but having the conversation will at least open up the dialogue and allow her to express her concerns and reasons why she doesn’t think that would happen or be able to work and look for another alternative.  Ultimately, she did have the conversation with her family, which is not what they were looking for or expecting, so it was nothing more than a miscommunication.  I urge adult children to have a conversation with their parents about aging and their wishes sooner rather than later. This conversation will avoid lots of heartache and misunderstanding later and allow for plenty of time to plan for the future.

 

If you are interested in learning more about long-term care living, please call our office at 717-845-5390, or click the link here to RSVP to our upcoming workshop to learn more about it.

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I Am a Beneficiary of an Estate. How Long Will it Take For Me to Get My Money?

This is a question that we receive at least once a month if not more in our office.  Individuals who were named in a Last Will and Testament as a beneficiary, once they realize that they are a beneficiary, want to know how long it will take for them to receive their inheritance. 

The probate process in the Commonwealth of Pennsylvania is actually a very straight-forward process.  Many states in the country have a very complicated process that individuals have to go through, but Pennsylvania is not one of them.  However, that does not mean that an individual who is named as a beneficiary will receive their money overnight because there are a lot of things that have to occur before a beneficiary can get the money that they are entitled to under the Will.  

In the Commonwealth of Pennsylvania, there are requirements of an executor that he or she must comply with in order to ensure that he or she will not be personally responsible or liable for the taxes or to the beneficiaries.  For example, an executor must provide notices to heirs as well as advertise the estate in the local newspaper and local legal journal to provide notice to creditors to start the statute of limitations for creditors to come forward with a claim.  The executor must also get date of death valuation letters from every institution who holds an account or had an asset of the decedent at the time of their death.  

Once the executor and the attorney for the estate receive all the date of death letters, they are then in a position to begin to prepare the Pennsylvania inheritance tax return.  Once the Pennsylvania inheritance tax return is prepared and filed it can take the Department of Revenue up to one year to review and approve the return.  It typically takes 6 to 9 months for the approval process but can take up to 1 year.  Typically the attorney will prepare receipt and releases for each and every beneficiary if the estate is going to make a partial distribution to the beneficiaries prior to receiving the approval from the Department of Revenue.  

It is always my recommendation to the executor not to distribute all monies to the beneficiaries at this point because the Department of Revenue still has to sign off on the appraisement and the tax return agreeing that they are not looking for any additional tax in the estate.

It is also worth noting that there is a significant time delay currently with the Department of Revenue and receiving notice back of the inheritance tax and that the appraisements are okay. As of September 2020, we had filed appraisements October of 2019 that we still had not gotten final approval back on. This is significant, because although the normal lag time is five to six months, we are currently seeing about a 10 to 12 month delay in receiving the appraisements back from the Department with final approval currently.

I always recommend to my executors that they not make final distributions and have the beneficiary sign off on the receipts and releases/family settlement agreement until we have the final paperwork back.

It is obvious that in the current times, In light of COVID and the state having to close for a period of time and not getting to any tax returns, the time frame from a beneficiary to receive their money under current times is fairly significant. However, this is not normal, and under normal circumstances the final appraisement certainly would be quicker.

 It also is a case by case basis as to how much we can distribute before receiving the final word from the government. In some situations, when there’s a close family, they will distribute more with the partial distribution than in other situations. In a case where it is contentious and there are beneficiaries who are not family or who have caused nothing but issues, we will often recommend that we not distribute anything until we get the final word from the Department. In these cases, under the current situation, it could take a year or more before we are in a position to be able to do that. 

It is important to know that in a situation where somebody does a living trust or a Grantor trust in the Commonwealth of Pennsylvania and retains control, an inheritance tax return is still required to be filed. That means that even under a trust administration, if we are waiting on the Department to approve the inheritance tax return, the time frames would remain the same. I say this because many people think that probate is the problem, or that it is the fault of the local Register of Wills or Orphans’ Court, but in reality, that is not it at all, we are at the mercy of the Department of Revenue for final approval of the inheritance tax return. 

For any questions or assistance through this process, please contact us at (717) 845-5390. We would love to help you.

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Protecting Your Assets with a Nevada Trust / York, PA

MP900442488“Are you interested in protecting your assets? I recently interviewed Provident Trust Group’s Neil Schoenblum, a Senior Trust Officer based in Nevada, on the value of Nevada Asset Protection Trusts to protect assets.”

Building assets can be a tricky game and, barring sudden wealth and lucky lottery tickets, it generally means being smart about where you place your assets and what investments you maintain. Protecting assets is a different game, but it is just as tricky. Protecting assets can also come down to choosing the right place to keep your assets; enter the Domestic Asset Protection Trust.

Trusts are powerful legal machines and the Domestic Asset Protection Trust (DAPT) is a particularly intriguing machine, indeed. A recent article in Forbes sheds light on the concept and some of the finer points. The article, titled “How To Use a Nevada Asset Protection Trust To Safeguard Your Assets,” notes that in the same way all trusts are built they are not same, not all states treat them the same. It just so happens that a Nevada DAPT is a particularly well-crafted and well-situated machine for its purpose.

DAPTs in any state are a specific subset of trusts that protect assets by placing them within the safe confines on an irrevocable trust, but allow the owner to retain a level of control over the assets. In other words, it’s a way of having your cake and eating it too. It just so happens that trusts like these are also well-suited to multiple purposes and blend well into your overall plan for your assets during life and as part of your estate. In fact, a DAPT is never going to be your sole vehicle, because putting all of your assets into a protection trust is neither practical nor entirely defensible (it might not pass the sniff test for fraud). On the other hand, a DAPT may be your most precious holding.

So why Nevada? The article speaks deeper on the specifics and there’s much to be said regarding the state laws surrounding these trusts, but it does come down to favorable laws. Namely, trusts protect assets from creditors or lawsuits by separating ownership. Nevertheless, many trusts can be ransacked all the same if a creditor can pierce/bust the trust. Nevada has a specific “seasoning” rule that protects against attempts to pierce or bust the trust once it is properly “seasoned,” which is to say after two years. That’s a neat concept.

Nevada Asset Protection Trusts are a hot topic. If you’re only now starting to look into them, consider digging in and having a look at how you can protect the assets you worked so hard to build. The DAPT is only one tool, and not without imperfections or vocal detractors, but the DAPT is still a powerful tool and prime asset protection vehicle for many.

For more information about protecting your assets, please visit my estate planning website.

Reference: Forbes (May 21, 2014) “How To Use a Nevada Asset Protection Trust To Safeguard Your Assets

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