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Alzheimer’s Disease: The Game Changer

In the mid-90’s, my grandpa Bellomo was diagnosed with Alzheimer’s Disease, and I remember watching him progress through the stages of this disease and thinking how horrible it was and that he was no longer my grandfather. I remember being very optimistic that there would be a cure for this disease in the very near future. Here we are in 2022 and there are no cures to this difficult disease. 

In my practice as an estate planning and elder law attorney, we have answers to just about every question and solutions to just about every problem. The one constant difficult issue that arises on a regular basis is a client who is diagnosed with Alzheimer’s Disease and how to provide the care that they need to keep them safe as long as possible. Certainly, keeping somebody at home is a much better option than taking them out of their environment into another situation but as this disease progresses, the individuals will often get combative and violent and oftentimes cannot remain in the home. There are several wonderful care options at assisted living facilities that are called memory units. Unfortunately, these are private pay situations with no ability for government funds to help assist or pay for this type of living. Oftentimes, memory care units can cost somewhere between $7,000 and $9,000 a month which often becomes cost prohibitive. In many cases, the individual ends up being placed in a nursing home not because a nursing home is the right place for the client, but rather because there are ways to have the government assist with the funding of the approximate $12,000 to $13,000 a month of care. 

Whether or not this is the best place for the individual is certainly debatable but for some families it is simply not an option. Alzheimer’s is a very difficult disease and our hats off to all caregivers out there who are assisting to the best of their ability. 

Please feel free to give us a call if you have any questions or comments at 717-845-5390.

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Potential Decrease in Federal Gift and Estate Tax Exemption, Did it Pass and Does it Impact You?

A hot topic among our clients is the proposed amendment to the Federal Lifetime Gift & Estate Tax Exclusion and how it may affect their current estate plan.  At this point Congress did not pass the proposed amendment to the law that was to go into effect January 1, 2022.  And there does not seem to be a lot of talk of bringing this to the forefront again for a vote anytime soon.  

The current law doesn’t reduce the exemption until January 1, 2026, when it would revert to $5 million.  The exemption is a lifetime exemption per person and applies to gifts you make during your life or distributions to your beneficiaries after your death.  Any amounts gifted or passed through your estate in excess of the deduction amount will be subject to either federal gift tax or federal estate tax.  

This change will only impact you if your net worth is in excess of $5 million (adjusted for inflation).  If you are like many people, me included, who can only dream of having $5 million dollars of assets in your lifetime then the reduction of the exemption on January 1, 2026, or before, will have no effect on you or your planning.  However, if you do have significant assets you may want to consult a qualified estate planning attorney to determine if you can make additional gifts before the law rolls the exemption amount back to $5 million in approximately 4 years.  The attorney will also be able to advise you if establishing and funding a grantor trust prior to the exemption being reduced would benefit you and help to reduce any federal gift or estate taxes.  Please keep in mind that this law and any changes applies to federal gift and estate taxes and has no effect on the assets or value of the assets subject to Pennsylvania inheritance tax.  Inheritance tax in Pennsylvania is separate and apart from any federal laws and currently inheritance tax is assessed on almost every asset you own with the exception of life insurance.  

For questions on if the proposed changes in the federal gift and estate tax laws in early 2026 will negatively impact you or your estate planning or questions on Pennsylvania inheritance tax, please consult a qualified estate planning attorney for a review of your estate plan.  We would be happy to schedule a time to speak with you regarding your individual situation.  

Please feel free to give us a call if you have any questions or comments at 717-845-5390.

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Why You Should look at LTC Insurance

The bottom line is that LTC (long term care) insurance has come a long way.  There are new types of LTC insurance and even a PA Partnership Care Plan.  We encourage our clients to talk to an agent to determine if it is right for them.  Specifically, we like the riders that keep our clients in their home and in an assisting living facility as long as possible.

I am not a financial advisor, nor am I licensed to sell insurance, nor can I receive any commission from anyone who does. Thus, I have no incentive to say that I think long-term care policies are important; the reasons may be different than what you might expect.  

I always hear the push-back that long-term care insurance is very expensive, and that, in many cases, if you don’t use it, you lose it. Since approximately 2009 Pennsylvania has become a part of something called a partnership care plan.

Essentially, for example, if you have $200,000 of long-term care insurance that pays out, the state will allow you to exempt an additional $200,000 of assets at the time that you enter a nursing home, and still qualify for Medicaid. When the plan first came out, the concern was that the state would take over long-term care insurance, but so far that has not occurred.

I believe the reason is because these are still traditional long-term care policies that, if you don’t use it during your lifetime, you lose its value at your death.

However, more recently long-term care insurance companies have come out with what is called a hybrid policy, which is a life insurance policy that has a rider for long-term care insurance. The main reason that I like long-term care policies, specifically the ones that have riders to provide for care in the home or in the personal care home, is because more and more, people want to live at home as they age and until they die.  

In all of my years of practice, no one has ever told me that they want to go into a nursing home. I often hear that they want to stay home, or they want to stay in a personal care home, but unfortunately, it is too expensive, or the assets will become completely depleted.

Although I understand that long-term care insurance or a long-term care hybrid policy may seem expensive now, trust me, the peace of mind that it will provide later when you or a loved one wants, and is able, to stay home or go to a personal care home, the money spent on the policy which allows you to do so is small compared to the out-of-pocket cost of that care, and, at least as importantly, your peace of mind.  

Although we are fortunate in the state of Pennsylvania to be able to assist people in crisis, we are not as easily able to help people to stay in their homes or in a personal care home.  Do yourself and your family a favor, and if at all possible secure your long-term care insurance now for peace of mind later; the earlier the better.  

If you want to talk about this or any other estate planning matter your wanting more information about, contact us!  

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Considerations For Trust Type

Trusts are a major tool in estate planning.  Trusts can be used for disability planning, probate avoidance, asset protection, and/or tax planning.  Given the high thresholds for federal estate tax planning few individuals are concerned about tax planning.  In this article we want to focus primarily on grantor vs. non-grantor trusts.

When we are educating on trusts and the use of trusts in estate planning, people often get a concept confused. There is a difference between a grantor trust and a non-grantor trust. Simply stated, the assets in a grantor trust remain in the grantor’s Social Security number and are reported on the grantor’s personal income tax return.  For a non-grantor trust a separate tax ID number will be obtained to hold the assets and you will file separate trust tax returns, this return is separate and apart from your personal income tax return. 

We will typically use grantor trusts for asset protection trusts and revocable living trusts.  

However, we often use a non-grantor trusts for VA purposes as well as for estates that have a federal estate tax concern. Currently, a person has a federal estate tax issue if their estate is greater than $12.06 million and for a married couple $24.12 million. It is very rare in our practice to use non-grantor trusts, which require separate tax ID numbers and pay at higher trust tax rates, because not a lot of veterans are doing planning where they have to or want to give up complete control of their assets, and not a lot of estates are big enough to need federal estate tax planning. 

In those situations where we use grantor trusts, we intentionally put language in the trust so that is included in the person’s estate, as well as subject to income tax. We include this language because we want to get a step-up in basis at the death of the decedent, and we also want the parent or client to pay the income taxes, because generally retired clients have a lower income tax burden than their children who are still working. 

There are a lot of other factors that go into what type of trust should be used and under what circumstances, but this provides a basic understanding of the difference between grantor and non-grantor trusts. If you would like to learn more about these and other trust concepts, I invite you to come to one of our free in-house workshops to learn more. We would be more than happy to assist. Just call our office or go to our website to enroll in a workshop at a date and time which is convenient for you.

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How to Help Your Loved One Avoid Isolation

Isolation is something that many seniors experience on a regular basis. However, with the COVID pandemic, that isolated feeling is more common than ever. Today, we want to encourage the individuals who know someone living alone to take some small steps to help your loved one socialize.

We always encourage our clients to incorporate video conferencing or video chat to allow the family member to see their loved ones on a regular basis. This could be on a scheduled date and time each week where you have a conversation and catch up, or maybe schedule meals together where you leave the video on while everybody eats. You have to eat anyway and giving the opportunity for your loved one to spend their mealtime talking with their family and seeing familiar faces is a small gesture that could go a long way! Not only will it help them, but it will also give you the chance to assess whether your loved one is having any hearing or sight issues that should be addressed.

Encourage your loved one to join clubs. Many of them are now virtual to allow as many people possible to partake. Having them be a part of these groups will give them interactions outside of your conversations and have stories to bring you when you visit or call.

Although these are very minor suggestions, they can go a long way in helping your loved one not feel so isolated. Please feel free to give us a call if you have any questions or comments at 717-845-5390.

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