Helping Seniors & Families
Plan For Their Future
Feasterville, PA
215.396.1001
Doylestown, PA
215.345.5858

The Gifting Season is Here: What to Know Before You Give

estate planning bucks pa

We’re thinking a lot these days about gifting, and not just because the holiday shopping season is upon us.

Gift giving is an act of kindness, a way to demonstrate our love and affection for people, but it’s also an essential tool in the world of estate planning.

What do we mean? Well, you might want to give away assets while you’re still alive so that they aren’t included in your estate and open to taxation after your death.

We understand this impulse. It not only makes financial sense, but you’ll get to see your loved ones enjoy your gifts. However, it’s important to think about the tax implications that might apply before you act.

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How to Prove that a Gift was not Made to Qualify for Medicaid

medicaid gifting rules

It’s important to understand the medicaid gifting rules. If you are admitted to a nursing home, you will usually want to qualify for Medicaid benefits as soon as possible.  However, even if you qualify in all other respects, if you have made a gift within five years of applying for Medicaid, you may not qualify. The PA Department of Human Services will penalize you one month of ineligibility for every $10,043.28 you gave away.

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Using a Prepaid Funeral Contract to Spend Down Assets for Medicaid

Meeting with an elder law attorney

No one wants to think about his or her death, but a little preparation in the form of a prepaid funeral contract can be useful. In addition to helping your family after your death, a prepaid funeral contract can be a good way to spend down assets in order to qualify for Medicaid.

A prepaid or pre-need funeral contract allows you to purchase funeral goods and services before you die. The contract can be entered into with a funeral home or cemetery. Prepaid funeral contracts can include payments for: embalming and restoration, room for the funeral service, casket, vault or grave liner, cremation, transportation, permits, headstones, death certificates, and obituaries, among other things.

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How Medicaid’s Look-Back Period Works

elderly transfer of assetsMedicaid’s look-back period can be confusing, but it’s important because it can have a very significant effect on your ability to pay for long-term care.

Unlike Medicare, Medicaid is a system that’s available only to people who have very few assets. As a result, the government is concerned that people will “game the system” by giving away all their assets to family members and then applying for Medicaid shortly afterward. That’s obviously not fair to the taxpayers who support the system.

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Your IRA Can Affect Your Medicaid Eligibility

Long Term Care PlanningWhen you are planning for Medicaid coverage in a nursing home, it’s important to take any IRAs you own into account.

Medicaid applicants can keep only a small amount of resources (usually $2,400) in order to be eligible for benefits. Certain resources may be exempt from this rule. Whether your IRA is exempt often depends on whether it is in “payout status.”

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Veterans Face New Limits On Long-Term Care Help

Senior Veterans BenefitsThe U.S. Department of Veterans Affairs offers a pension benefit to low-income veterans (and their spouses) who are in an assisted living facility or who need help at home with everyday tasks such as dressing or bathing. The program is called “Aid and Attendance.”

Unfortunately for many veterans, the government recently proposed new regulations that will tighten the qualification rules and impose a look-back period and transfer penalties similar to those under Medicaid. As a result of these changes, anyone who may be eligible for Aid and Attendance should probably talk to an attorney about how to proceed.

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Medicaid Helps Children Who Live With Aging Parents

children helping parentsIn Pennsylvania, if you give your home to your children (or to someone else) and then apply for Medicaid coverage in a nursing home, you may be ineligible for Medicaid for a period of time. You are required to spend down your resources on your own care before applying for Medicaid, rather than give them away.

However, there is an important exception that allows you to give your home to your child in certain circumstances.

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Short Term Medicaid Annuities Approved by Court

medicaid annuities rulingRecently, the United States Court of Appeals for the Third Circuit ruled that short term annuities are a viable Medicaid planning tool for nursing home residents attempting to protect a portion of their resources and qualify for Medicaid benefits.

Many people believe that in order to qualify for Medicaid in a nursing home, you must deplete all of your resources. This is not correct. Medicaid annuities permit you and or/ your spouse to protect a significant portion of your resources.

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Power of Attorney VS Guardianship

Power of AttorneyMost of us do not want to look into the future and find that we are unable to care for ourselves, or manage our day-to-day affairs. However, planning for this possibility is a necessity you should seriously consider.

Preparation of a Power of Attorney is key in preparing for the possibility of your disability or incapacity. Several types of Power of Attorney are as follows:

General Durable Power of Attorney. This Power of Attorney is comprehensive and gives your agent all the powers and rights that you have yourself. For example, you can give your agent the right to sign legal documents, pay your bills, and conduct financial and healthcare matters on your behalf. This Power of Attorney continues in effect until you revoke it or you die. A Power of Attorney designated as “durable” remains effective after you become incapacitated or disabled. In Pennsylvania, all Powers of Attorney are durable unless specified otherwise in the document.

Healthcare Power of Attorney. This Power of Attorney, which is also usually durable, permits your agent to act on your behalf in all healthcare related matters if you become disabled or incapacitated.

Limited Power of Attorney. This Power of Attorney gives your agent the power to act on your behalf for a limited purpose. For example, if you are selling your home and cannot attend settlement, you could prepare a limited Power of Attorney authorizing your agent to sign the settlement documents on your behalf. The authority of the agent to act under a limited Power of Attorney usually ends at a specific time or upon the completion of a specific event, as set forth in the document.

Springing Power of Attorney. This Power of Attorney gives your agent the power to act in your behalf only when you become disabled or incapacitated. Unlike a General Durable Power of Attorney, your agent cannot act under this document solely for your convenience if you are not disabled or incapacitated. If you choose to prepare a Springing Power of Attorney, it is important that the trigger used to determine your disability and/or incapacity be set forth clearly in the document.

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