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Do You Need a Trust?

This question is by far the most asked question that we receive in our office. However, there is absolutely no standard or right answer for everyone. Trusts are typically used for either probate avoidance purposes, tax avoidance purposes, or asset protection. Trusts are often used for disability planning but generally, that is not the sole reason for people’s use of trusts.

Currently, the federal estate tax limit provides an $11.7 million exemption per person. This means that an individual currently will not pay federal estate tax unless their estate, per person, goes over $11.7 million or $23.4 million for a husband and wife. This law is set to go back to $5 million in 2025, set for inflation which predictions are that it will end up being around $5.8 million. Even with the reduction in 2025, most people in our local community will not need to do a trust for tax purposes. Certainly, there are rumors each and every day about Congress changing the laws and lowering the exception amounts, but until that happens, I would not make plans for something that may or may not occur. History tells us that all of the rumors that we are hearing, probably none of them will actually look like the actual law if it is ever enacted, and we have always taken the position to plan for the law as it is in effect, and if and when it changes, then we can pivot. With that said, there is not a high percentage of people who will need to do trusts for tax purposes as we sit here today in May of 2021.

Probate avoidance is usually a situation where there are properties in several different states across the country. While every state has different laws as to whether a person needs to open an estate in their specific state, generally speaking, if the property is in a person’s name alone at the time of their death, the state will require them to go through that state’s probate process. We find that many people like to avoid probate in these situations so that they do not have to hire attorneys in each state to finalize for their families. In a situation where a family does not have properties in multiple states, generally, probate avoidance is not something that people are overly concerned about unless they’re in a state that the probate process is very burdensome and overwhelming, which currently, it does not happen to be in the Commonwealth of Pennsylvania.

Asset protection is one reason that people will often do trusts in the Commonwealth of Pennsylvania, to avoid potential creditor issues and long-term care costs. These are a very specific animal of trusts and the rules are very unique to these trusts alone since they are not being set up for tax purposes. It is our recommendation that you speak to a professional well-versed in these types of trusts before completing one. They are very unique and there are very simple rules; however, it is very easy to make mistakes in this area. An elder law attorney well versed in these types of trusts will be able to provide advice as to whether this type of trust makes sense for you. There is no one size fits all answer to the question of “do I need a trust?”. It is important to get very clear on your personal goals and what your goals are for your family. Once you have a very clear picture of that, then a professional will be able to advise you, based upon your current situation, as to whether it makes sense. We would certainly be honored to assist you through this process, and we offer weekly workshops which will give you insight into the thought process in regards to whether trust is right for you. We look forward to seeing you in the future.

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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With premiums increasing drastically, should I keep my long-term care insurance?

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 the 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 definitely believe in the benefits of a long-term care policy and what they can provide. We have done numerous other logs 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.  This is as much about the numbers and common sense as it is about the emotion involved. This becomes 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 the 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. 

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Stretching & Protecting Wealth

My estate planning and elder law practice have given me insights into these topics that I never thought possible. I encounter questions on a daily basis in my practice, how can an individual get the most out of retirement and how do you stretch your money and protect your wealth for future generations?

I am an estate planning and elder law attorney who happens to have a Masters in Laws and Taxation as well as being a Certified Elder Law Attorney under authorization of the Pennsylvania Supreme Court. However, more than any class or degrees I have received, representing numerous families over the years and watching their decisions, and in some cases mistakes, has really provided me the most prevalent insight into these questions and their answers. 

 I firmly believe it is very important to work with a financial professional to assist you during your working  or earning years, as well as heading into your retirement years. Although it is possible for some people to “do it alone,” I’m a firm believer in hiring professionals to provide assistance in their area of expertise.

The small fee you will pay will be far worth it in the long run versus what you would save in the short term. Having a financial professional and a plan for retirement, not only how to get there, but also how you will live during retirement — is imperative. Stretching your money during retirement is similar to when you were saving for retirement, being disciplined and having a goal in mind. 

 The one piece that no one ever wants to talk about is the cost of long-term care and how we’re going to pay for it. Although none of us really want to receive long-term care in our home or in a nursing facility, statistically it is a likely possibility that we need to consider.

Long-term care in a nursing home will cost anywhere from 10,000 to $12,000 a month. And in home care, depending on the amount of care that is being received, can cost anywhere from between $17,000 to $20,000 a month. This care is often necessary and needed but if there isn’t a plan in place, it can devastate a family pretty quickly and wipe out all of their savings. 

The most obvious way to pay for long-term care is to simply self-insure, make certain you have enough in assets or investments to cover the cost. I find this to be a very difficult proposition, not only because it is impossible to know ahead of time how much care you are going to need, but also the cost of the care in the future is very unpredictable. I remember at the beginning of my career the cost of a nursing home was around $5,000 a month, and now it is well over $10,000 and in some cases in our area $12,000.

I honestly don’t think it is out of the realm to predict the cost will more than double in a short period of time. But the people who were planning to self-insure, it was certainly a shock to them when they finally got to the point of needing it, and learning that we were closer to $12,000 a month. Although this can be possible for the wealthy individuals, it is not typically possible for the middle class, since they cannot accumulate enough wealth to absorb $12,000 a month in costs. The other thing to remember is that often times one spouse is the caregiver for another spouse, and when the well spouse ends up needing care himself or herself, both spouses end up in the nursing home to the tune of $25,000 a month. It would be very difficult to self-insure this kind of need. 

Another option is long-term care insurance. I am not licensed to sell insurance and have done numerous blogs on the topic of long-term care insurance. I am a big fan in general of the insurance because I love that it could keep an individual in their own home for as long as possible. If you are looking at long-term care insurance policies, I would definitely look at a rider that will pay for in home care.

Pennsylvania has products that are hybrid policies which are life insurance policies, as well as having the riders that provide for in-home care or nursing care. Pennsylvania also participates in the partnership plan, which will allow an individual who has a long-term care policy to exempt an amount of assets equal to the amount of benefit that they have received. I am a big fan of both of these, and if an individual is able to afford it, I believe it is absolutely a good investment. You certainly want to talk to an agent to determine if it is something that is possible for you and your loved one, as well as whether it is financially doable. 

In many cases self-insuring or long term care insurance is not an option, for a myriad of reasons, but often times we are stuck with a situation where a spouse does not have any way to pay for the long-term care, and they are reliant upon the crisis rules. Currently in the state of Pennsylvania, the crisis rules are very favorable, and will allow us to protect 100% of the assets for the spouse in the community. If you are interested in learning more about Medicaid crisis planning, 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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Meet the Team: Deb Pingel

Deb Pingel a Wisconsin Native joined our team in 2020. Customer Service has been instill in Deb for her whole life. From babysitting, helping elderly through church, to customer service, Deb is in the front of the line to help others. Most recently she managed the online shopping at a local grocer, helping get groceries for the customers that were not comfortable shopping during the pandemic. Having a history of Medicaid Planning on the annuity side will bring another great dynamic to the Medicaid team. Deb loves being a wife, mother to her children as well as her fur babies. Deb received her Degree from UW-Milwaukee in Science and Arts.

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Meet the Team

Introducing Sharee Bishop

Hello!  I am Sharee Bishop and work remotely from Ebensburg as a Medicaid Coordinator.   After I retired from the Commonwealth of Pennsylvania working 25+ years in a County Assistance Office as a long-term care caseworker, I joined Bellomo and Associates in June 2019.

I enjoy working with families requesting Nursing Home Care or Waiver Services.  I understand the stress created when asking for help for a loved one.  And I know that gathering documents can be very overwhelming.  My goal is to alleviate that stress and work closely with the family towards approval of Medicaid benefits.

In my personal time, I enjoy reading and spending time with family.  I am an avid Pittsburgh Penguins fan; but also, watch football and college wrestling.

 

Introducing Lisa Wolfe

I am Lisa Wolfe and began working in client services with Bellomo & Associates over a year ago.  I am now assisting in both the Probate and Medicaid Departments.  I enjoy assisting clients and strive to give them the best possible client experience.  In my free time I like to cook and to try new recipes.  I also enjoy listening to classical music, especially when it is performed by my daughters.

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