Medicaid Asset Protection Trust (MAPT)

[Music] it's very satisfying to help people i just can't imagine a better job oh good afternoon everyone and thank you for joining our zoom site chat today we're going to be talking about medicaid trusts i'm michael ettinger from ettinger law firm and this is one of our series of six zoom site chats including components of an elder law state plan the five steps to an elderly estate plan some selected topics such as uh second marriage planning and planning for adult-dependent children a couple other things but today the medicaid asset protection trust um so i think we have everybody aboard just by way of preliminaries there's a q a button at the bottom of your screen if you have a question please type it in there at the q a at the bottom we're going to take all the questions at the end i hope you can stay for the lively question answer session and including the ones that were sent in ahead of time i'm going to go right to the slides well actually one more thing as i just want you to know you're going to get a copy of this presentation later this afternoon you'll get a copy of the recording some of you may know him the author of the book elder law estate planning but knowing that not everybody wants to read a whole book or has the time to uh as my thank you for joining us today we're going to send you a copy of the condensed version of my book it's called elder law estate planning in a nutshell it's a four-color e-booklet it comes by email and that will also come with the copy of the recording um the slides i'm about to put up you got a copy with a confirmation of this email so you can look them over later but today probably just uh you're welcome to just follow along i'm going to share my screen now and pull up the first page uh this is one of a series of six zoom side chats today we're going to protect our home and life savings with a medicaid asset protection trust the mapt is the acronym there's our website trustlaw.com hundreds of pages of information on elder law state planning that's me in the middle of the top row to my left as my lovely wife and law partner suzanne ettinger our practice for 31 years has been limited to elder law state planning that consists of trusts and estates wills and probate estate tax saving strategies medicaid ass asset protection trusts and medicaid applications we have offices in nassau two offices we have three offices in suffolk county those that's five on the island we're in brooklyn staten island westchester we're in white plains at 140 grand street rocklin used to be a niacc just moved a couple months ago to new city 345 north main street in orange county we're in middletown in dutchess county we're in fishkill and rhinebeck in albany we're right on wolf road and in saratoga on broadway so let's go right into the topic if you just joined us again there's a q a button at the bottom of your screen if you have a question uh go ahead please and just type it in and at the end we'll take all the questions so we're going to take an overview of the medicaid asset protection trust by explaining what trusts are a trust is a legal entity that allows you to separate the use and enjoyment of property from the bear ownership so assets you want to protect like your house are re-titled to the trust but as the trust beneficiary of the houston enjoyment of the trust property so you have exclusive use and enjoyment remember we could separate that from the bear ownership it's the same as if you deeded your property your house to your children reserve the right to live there you have the youth and enjoyment they have the bear ownership but essentially while you have use of enjoyment you're not the uh technical owner so the bear ownership resides with the trust which is separate from you this is the medicaid asset protection trust that owns the property it's separate from you it has its own social security number known as a trust tax id number a tt id there's the lovely house we're trying to protect so something happens to you personally like you need care at home or in a nursing facility they can't get the asset because you don't own it of course as a look back period we'll get into that and uh the trust has been called the greatest invention of the english common law this idea that you could separate the use and enjoyment of something and keep using enjoyment without having the ownership so now we get right away to the five-year look back for facility care and it means medicaid can look back up to five years and why do they have to look back well if they didn't have the look back people would just wait until they needed to go into a nursing home move everything out of their name a few days before and then say i'm here take me i don't have anything i'm eligible so the look back means they can look back on anything you transferred out of your name into the trust for up to five years but it's not an all or nothing rule let's say you make four years from the time you transferred assets to the trust you only have to pay for the one year that's left i'm going to explain how that works technically let's say a client comes to us and they move the assets out four years ago or they're a client of ours they moved the assets four years ago they come and they say we need care in a facility we'll say well you're not eligible because you've made transfers in the last four years it has to be five years so what you have to do is you have to private pay for the one year that's left and there's ways to get money out of the trust for that purpose if you need it for private pay you can gift it out to your children and they can pay the facility they can't give it back to you but they can pay the facility so you pull out enough to pay for the last year lo and behold five years go by now we apply for medicaid remember we private paid for the last year now we apply for medicaid the question on the medicaid application is what have you transferred within the last five years the answer is nothing because you apply more than five years after you made the transfers and in fact you can't apply uh if you've made transfers within the last five years because you're not eligible that's why we don't apply we wait till the five years has passed and then we apply and because of covert possibly moving it to january 1 of not sure about that i haven't uh got a definitive answer on that yet they're talking about it but nevertheless it's coming sooner or later it's coming and the two and a half year look back right now it's starting july 1 and it's for 30 months which is two and a half years but it's not all starting on july one it's phasing phasing in so they're adding one month of a look back every month until the end of 2023 which is two and a half years later after then it'll be the full two and a half years so in in august it'll be a one month look back and september will be a two month look back you know et cetera et cetera until 30 months have gone by so it's being phased in but this makes the medicaid asset protection trust an essential tool for those who want to age in place everybody wants to be able to stay in their own home but if if they have to spend all their money paying for home care they may not be able to afford it so we want to shelter that money make them eligible for medicaid and they have that money either for their heirs or for additional needs without the medicaid asset protection trust a lot of people are going to be unable to afford care at home because they can't pay the caregivers and the costs of running the house and they'll be forced to sell their homes and use the money to pay for assisted living this is going to be a problem for people especially people don't know about it and don't plan ahead to avoid it what we want to do is shelter the money so that we're eligible for medicaid benefits we can afford to carry the house with our income and have the home care paid for by the medicaid program and why is home care so important because a lot of people use their as the caregiver and a lot of spouse caregivers die first from the strain remember it's a 24 7 365 job it's a hard job uh the caregiver the spouse is not even trained to do the job and again many of the caregivers die first or end up in the hospital from the stress of the 24 7 job we don't want that to happen we want to make you eligible for people to come in the house and help set up a medicaid asset protection trust well all trusts avoid prohibited death i'm probate's illegal proceeding to prove the will valid um so tomorrow i give a seminar on all of elder law state planning and in my seminar i'll talk quite a bit about probate and what it's like and why the general public wants to avoid it i saw someone raise their hand i can't take questions during the seminar but there's a q a section there if you have a question type in your question and we'll take it at the end for those of you just joined us looks like a couple of late stragglers i'm just going to go back and and just quickly um yeah i was just talking about the medicaid trust as a five-year look back um for home care there's a two and a half year look back starting on july 1 and that's where we are now why set up a medicaid trust well all trusts avoid probate so even if you don't have to go to a nursing home or you don't need home care it still saves a lot more than it costs because you avoid a court proceeding at death someone called probate like a lawsuit did you start against yourself remember there's nobody on the other side but for the will to be proved valid you have to go to court the executor has no power until the court is decided so it's essentially a lawsuit that you create by having a will what are your other options to setting up the mapt making assets joint with the children that doesn't work medicaid considers the combined assets of the joint owners as all being available for the care of the old person except to the extent the other person can prove the amount of their actual contribution so put it another way just putting son or daughter's name on an account doesn't save half of it medicaid says it's all yours unless they put money in and 99 of the time they didn't put money in um acid joint with the spouse are all available for the care of the ill spouse because medicaid considers spouses as one unit uh what about putting your assets in your children's names a lot of people do this and regret that they ever did it because you're uh running the risk that they might incur debt uh a bankruptcy a large medical bill a personal injury that they cause somebody uh sued for something else so you're subject to all their debts and liabilities what if they get divorced your son-in-law darden law can walk away with happier assets so not a good idea and what if you need it back later on they may have spent it or they won't give it back all of these things have happened many times to many people there's no protection this is basically amateurish people do this because they don't uh have good advice and they don't know what their options are and they don't know there's a better way to do things that protect the assets and protect them um and and finally you put in your son their daughter's name they die before you it ends up with with their children and you're you're never going to see it and they can be minors as well and be tied up in court with legal guardians a whole host of problems we want to avoid that's why we use trust instead of putting it into children's names um and as i said earlier you can't translate your spouse to protect it because the combined assets of spouses are available for the care of the ill spouse regardless whose names they're in now uh that's the rule but in new york we have an exception it's called spousal refusal and that occurs if if husband let's say could be wife but if husband has to go into nursing home move all the assets into wife's name she signs a document it's called a spousal refusal saying i need these assets or my care and i can't afford to contribute to my husband's care if you sign a spousal refusal by law they have to give the husband medicaid but they have a right of recovery from the wife they can go after her and family court for support now it's still better to use spousal refusal because medicaid pays a lower rate than the private person pays there's a private pay rate and the medicaid reimbursement rate medicaid reimbursement roughly a third less than the private pay rate so if you refuse and medicaid has to pay they can only come after you for what they pay which is much less than you would have had to pay so already you're saving a third sometimes they don't come after you but when they do come after you we can negotiate a lower amount so it always pays to go spousal refusal um now the medicaid asset protection trust is known as an income-only trust and it means what it says uh if you put in stocks you only get the dividends if you put in cds you won't get the interest if you put in your house you get the equivalent of the income exclusive right to live there use and enjoy that property during your lifetime what happens these assets they stay in the trust and they go to your heirs free up the expense and delay of probate now a couple of uh principles that make the uh trust work it's an irrevocable trust um and that is because in a revocable trust uh there's no nursing home protection because you could take it out at any time you're in charge of a revocable trust in an irrevocable trust you put somebody else in charge usually one or more the adult children uh and medicaid has no control over them so if you were in charge they say well you can get it take it out and give it to us but if you name the children medicare has no control over the children they can't make them take it out so you limit your access to principal by naming somebody else beside you your spouse's trustee again one or more the adult children uh because as i said if you can get it they can get it this way you can't get it they can't get it and income only is dividends on stocks interests on cds the trucks is ideal for assets you're not spending like your home for heaven's sakes move to protect your home what happens if you own a home and you end up needing care in a nursing facility they put a lien on the house and pretty soon at those rates the lien gets bigger in the house and eventually medicaid walks away with the house every day medicaid walks with people's houses all over new york and it's totally unnecessary for more than 30 years allowed to take the house put it into the medicaid trust and any time after five years you need care they can't touch it it's really a no-brainer there's no downside to keep all your exemptions on the house you want to sell the house the trust sells the house trust buys a condo and the name of the trust is already protected you already have your five years um so of course protect the house no downside uh what about other assets certain assets are exempt from medicaid ira 401k 403 b example it's true if you're over 72 you have to take the required minimum distributions they get those but they can't that might be two three thousand a month at most they can't go into the ira itself and get the rest of that eighteen thousand a month at the nursing homes charge because the ira itself is exempt they can only get the rmds required minimum distribution but what about assets that are not ira not protected so non-qualified ira is called qualified deferred to 72 non-qualified a lot of people come into the office and have a nest egg uh let's pick a number 500 000. a lot of clients tell me that they don't need the 500 000 to live on because they have enough income it's extra money just in case a lot of other clients say we're not spending the 500 000 we're taking the interest or dividends well fine the trust gives you the interest or dividends but you realize if you have a nest egg that you don't need to live on you're actually safe keeping it for the nursing home industry so we want to protect those assets um we put those assets in the trust there's some access to them you get the income there is a way to get principal i'm going to talk about that in a moment but essentially when you set up an mapt it doesn't affect your lifestyle still get your pension directly your social security interest dividends your requirement distributions you have the exclusive right to use and occupy the primary residence under the trust remember i said the trust separates the use and enjoyment from the ownership you don't own it but you have the exclusive use of occupancy you have life rights like a life estate you keep your exemptions on the property senior veteran star uh you have a an investment account let's say with morgan stanley we put in the trust now your son or daughter's name is on as trustee but they can sign a third-party authorization say i authorize data mom to trade on the account you can still run it if you do your online trading they take out a pin they give you the pin and you can go on uh yourself um now we don't like to give up control uh we want to keep control so you reserve the right to change the trustee at any time this is your control they're in charge of the trust but you're in charge of them so you have a falling out you don't like how they're handling it you can fire them and put in somebody else we will help you do that if you need to as i said you can sell the house and buy a condo doesn't start the look back period over trust combine and sell and trade stock it's very flexible i raise other qualified plans exempt from medicaid so we don't put them into the mapt they're also exempt from probate remember iras and other qualified plans have a designated beneficiary goes right to the person name um but if you want to sell your house you may be aware that you can exclude the capital gains taxes on 250 000 of gain if you're single 500 000 again if you're a couple that the trust preserves that exclusion so you keep that if you sell the house if the trust sells it um now a lot of people are afraid of the word irrevocable um but in new york you can revoke an irrevocable trust it's an irrevocable just because you the people who created it called the grand tourist you can't revoke it yourselves but new york has another rule that says if all the parties named in an irrevocable press degree in writing that they no longer want to trust you may revoke it on consent of all the name parties well who are all named parties you and the adult children so if everybody signs you're going to do it now what if one of them won't sign well actually we have a work around for that we can take their name out of the trust and they're not a name party and they don't have to science so you're always in control you can always undo that trust um and there's the workaround i was talking about we can take them out if they won't sign let's look at the uh alternative to the mapt which is the life of state deed what is a life of state deed a lot of people and this is people who see a a general lawyer or a family lawyer real estate lawyer they say oh you can protect your house by deeding it to the children reserving the right to live there well that's what a life estate deed is you need it to children you have life rights now if you have to go into a nursing home um there's a drawback uh if the house is sold prior to death the life estate you know generally around 50 of the value according to medicaid goes to the nursing homes you can't sell it uh if the house is rented um the life tenant is entitled to the rents because they have life rights so the rents go to the nursing home uh if the house is sold during your lifetime uh you also lose the uh a big part of the capital gains tax inclusion i just mentioned 500 thousand for a couple two hundred fifty thousand for a single you don't own the whole house you don't only know about fifty percent but the life estate so you lose uh fifty percent of the exemption um so what happens is mom or dad has to go into nursing facility uh for a few years and you can't sell the house and can't rent the house can end up carrying a vacant home for years uh the trust basically solves that problem because the trust can can buy and sell assets trusts can sell the house uh get the money and invest it um we mentioned you keep your property tax exemptions uh control you can change the trustee at any time you can change who you leave it to so i'm always amazed when i see uh somebody come up with a medicaid trust or a near a vocal trust and lawyer didn't reserve these rights because um it's common sense you know people change their minds things happen you have to be able to change who your heirs are what if one of them disappears on you or you become a stranger you're already a strange you need that flexibility you need the flexibility to change the trustee now what if you need money from the trust let's say one day you decide you need fifty thousand dollars from that trust remember the trust you get all the income but now you need you need principal you need fifty thousand dollars to take your family and your lawyer on a round-the-world cruise uh you know very worthwhile endeavor you can't take out principle because if you could get it the nursing home can get it but you are allowed to make a gift of principle to your son or daughter because when i apply for medicaid they're going to ask me what do you take out of your name and put into that trust but they're not allowed to ask me with the trustscape to somebody else so you make a gift of 50 000 from the trust your son or daughter that gift is tax free um now can they give it back to you well no they can't give it back to you because again if i have to apply for medicaid i have to show them all your investments bank accounts for last five years if they see fifty thousand came in they're going to say where did that come from and if it came from the trust you're sunk so they can't give it back to you but tell me if you give them the 50 000 you think they could take that 50 000 go pay the travel agent for the trip well it's their money they can do whatever they want with it so this is a way to get principal out through the gifting power and remember we can undo the trust on consent of all the name parties so we have all this flexibility when you really understand the trust it's not really intimidating at all you can undo it you can change it you leave it to you can change who's in charge you can get money out if you need it and there's no downside to a properly drafted irrevocable trust uh why don't more people set up a lot of people say why don't more people set it up well you know what a lot of people do set it up um they just don't broadcast it uh we've done it for tens of thousands of people over the years so we know a lot of people do it um some people you know the people who don't do it in my experience are people who haven't heard of it which obviously you haven't heard of it you can't do it but the other thing is a lot of people get the wrong advice you know a lot of people think and this is my experience i'll share with you a lot of people think if they ask enough questions they're going to get the answer so they go around asking everybody no they know they ask their relatives they ask their friends they ask their financial advice they're asking the accountant but they never get around to asking somebody who actually knows all the answers which is an experienced elder law attorney and they end up getting the wrong advice because everybody knows a little bit the financial advisor knows a little bit the accountant knows a little bit the friends of health know a little bit but nobody knows whole the whole picture and then of those who know a little bit um you know much of what they know is not correct some of what they know is correct but some isn't and you have no way of evaluating um if i have cancer i don't really care what my friends and relatives say i want to know what the oncologist has to say because that's the person knows the answer so uh there you go um so i said people haven't heard of it or to get the wrong advice people are well-meaning uninformed friends relatives neighbors and professionals well they're professionals but they're not professionals in elder law and estate planning they're just professionals in their field so be careful about that um the quality of information or the weight the weightiness of information or advice is different from different people what about long-term care insurance versus the medicaid asset protection trust constant care today uh you know maybe between 500 and 700 a day on average so we'll say 15 to 20 20 21 000 a month um now if you set up an mapt it's not likely you're going to need long-term care insurance for the five-year look-back because you're not likely to need care within the five years you wouldn't be setting it up what insurance do you need well um if you're looking at long-term care insurance and this is tricky long-term care insurance not comparing to mapt but if you're looking at long-term care insurance how much do you need well calculate your income and ensure for what you're short because you're still going to have your income so that's not going away you only need insurance for the amount you're going to be short for the cost to care some people use a hybrid approach they take both long-term care insurance in the mept and why do they do it because long-term care insurance is very expensive you know 600 a day is very expensive uh but no one wants to go to nursing homes so what a lot of people do is they get long-term care insurance for 300 a day which of course is half the cost of 600 a day and that pays for home care they say i'm willing to insure half the boat for home care but if i need facility care i don't want to get 600 a day i'll use the medicaid trust to protect my assets and qualify for medicaid so get the long-term care for home care and the medicaid press in case they need facility care it's a hybrid approach there are some do's and don'ts with the medicaid trust do make all transfers to your trust as a vibe as advised by us in a timely manner you can use the trust assets for repairs maintenance and improvements to the house um you don't have to this is permissive it's not required um so your big bills repairs maintenance improvements and insurance on the house that could all be paid from the press that's not taken out of the trust so you still get all the income from the trust but this is on top of the income you can use trust assets to pay real estate taxes and homeowners insurance uh and but this is permissive you can use non-trust taxes to pay these however your tax deduction is lost if the trust pays the real estate taxes that has to be paid by you personally to take the deduction not everybody needs the deduction for various reasons so you can consider that as a possibility do take dividends and income on trust assets on at least a quarterly basis if at the end of the year you didn't take the income these medicaid says that's the same as if you put the money in so it's consider an addition to principal that creates a five-year look back on the new money that you didn't take it's considered new money because you should have taken it so it's the same as adding it do contact us when you wish to make a gift from the trustee or anybody to any of your beneficiaries there's no limit on the gift we just need to tell you how to prepare the letter i hereby direct you my trustee to make a gift to so and so from my trust and amount of such and such contact us if the grantor needs medicaid benefits either for home care or facility care or when the grantor dies there's some don'ts don't use trust assets to pay personal expenses what's personal utilities on the house the cable bill the phone bill that sort of thing don't use trust assets to buy a car since all the assets in the trust be exposed to liability there's a car accident we actually have asset protection to trust so we want the car outside the trust so there's an accident they can't get the assets in the trust they're they're sheltered so never buy a car in the name of the trust uh don't use trust ass to pay telephone or utility bills you mentioned that don't take principal or capital gains from the trust assets that's a no-no if you absolutely need it gift it out to one of the children and give them the bill they can pay it for you but they can't give it back to you don't transfer iras or 401k to the trust first of all you all the taxes will become due that's a taxable event but there's no need to put them in the trust they're exempt from medicaid and they're exempt from probate they have a designated beneficiary don't allow beneficiaries to give back to the trust or to the grantor any gift made from trust assets don't make additional transfers to the present future without letting us know because we're keeping track of the look back for you so there you have the basics of the elder law medicaid asset protection trust every wednesday at 2 i give my seminar my regular seminar for advantages of using trust i talk about avoiding guardianship on disability i talk about probate what it is and why you want to avoid it i talk about the inheritance protection trust which protects the inheritance you leave from children's divorces losses and creditors and best get it when they die it passes it by blood to your grandchildren without the trust you go to your son-in-law or daughter-in-law and their families a lot of people use those we've done them for well over ten thousand clients so that's ettingerplan.com you go online and register ettingerplan.com um it's wednesday too but if you're not available wednesday or two you get the recording anyway you can watch it at your leisure so don't be shy um and as i say if you can't make it register and get the recording the next day um worried about our unique planning process uh it's begun here today we offer a free initial consultation uh you come in with your current plan will trust power of attorney health products or whatever we review it see if it's legally adequate see if it's personally unacquitted these still the people you wanted charges is still the way you want to leave it give you a free copy of my book elder law state planning tell you which chapters apply to you uh you get a fixed fee quote by the way if you have any questions type them in the q a now we're going to go to the question and answer in a moment uh we tell you we don't do business really in the first meeting we're getting to know each other but we always tell people you know if you decide to go ahead this is how much it'll cost uh it doesn't depend on how much you have it depends on what work you need and we have a fee schedule for that but people like to know where they stand so we like to give them a heads up this is the direction you're looking at this where we're going come in for a second follow-up consultation to have your questions answered you come in for your second meeting we answer any questions you have which arose out of the first meeting which we discussed but also the chapters in the book you read might be an hour's worth of reading we draft that estate plan together with you we ask you who do you want for legal medical financial decisions who's your second choice how do you want the estate distributed all at once equal not equal spread out over time uh and then at the end of the meeting we give you a detailed three-page written proposal the fees are the same as mentioned in the first meeting but now we have details of what we're going to provide then we ask you what would you like to do and now ettinger law firm i believe is the only firm in the united states of america uh only a state planning firm that does not require retainer we examined the retainer system years ago i was trained the same way as other lawyers and we came to the conclusion that the purpose of the retainer agreement and the retainer agreement is this you want to go ahead laura says sign the agreement and give us a check usually for half which is called a retainer so now you're bound by contract and you've paid half um we don't do that because what we uh found when we analyzed it was the retainer agreement is designed for the benefit of the lawyer it's not for the benefit of the client because when you sign you don't have anything you actually have a promise and it doesn't always pan out sometimes lawyer takes too long or you don't like how they're handling it or or other other issues arise but you're not having control you've already signed the agreement you've paid half the money so what we and i think this is a breakthrough in legal thinking what we did at edinger law firm is we realized that if we put the client in control clearly it's the best place for the client to be and if we're here to serve the client then that's the best place for the client to be we think it's the best place for us to be so instead of a fee agreement we replace it with a fee proposal we sign it you don't sign it and our proposal says based on your say so we're going to go ahead and prepare all these documents trusts inheritance protection trust health proxy living will power of attorney these your properties you come in for a third meeting after everything is signed you pay at the end but agreement says unless and until you write us a check or hand us the credit card um you have no obligation to the firm you're free to walk away at any time so we keep the you're in control which is a great place for you to be and uh we think it's a great place for us to be too when we have over 30 000 satisfied clients uh and partly due to that system um so as i say you're coming for that third meeting um these meetings generally two to three weeks apart at most we review all the documents with you you sign and you pay at the end either by credit card or check and you can pay all at once so you could pay it in three monthly installments uh at that point we don't say goodbye uh the standard in new york is thank you very much goodbye i don't think anybody listening today has ever heard from lawyer prepared their will uh but we don't agree with that system we don't say goodbye we say hello you're welcome to the firm uh and we trademarked the process to make sure that if you have a net manager plan it's going to work when you need it not when you wrote it i hope decades earlier so we keep you up to date with law changes and other matters of interest to you through our weekly ettinger elder alert i won an award for it it comes by email that's why it's called the alert it goes nice with that and journal there too um but it's our it's our warning system we're writing a lot about the biden administration tax proposals and if you're getting uh well you'll still you'll get them i i just wrote an article on uh gift and tax saving strategies for 2021 that will not be coming up this week that will be coming out next week and if you're on the zoom you will be on the alert as well so you'll get that and then when the buy administration changes become law after all the horse trading is done i will give you a complete analysis of the law and where you stand and what you need to do once you're a client of the firm as i said we don't say goodbye we call you in every three years for a free review why we want to see are there any changes in your health your assets your family births deaths marriage divorces um so we've been doing this for more than two decades so i'll tell you how it works we people come in after three years you know not too many people need a change but we um you know re-establish relationship catch up with you um it's it's social there's there's a real social aspect to being an estate planning lawyer and uh we're renewing the acquaintance we're building the relationship after six years naturally more people need a change but the reason we do it is statistically it's been shown that very few people can get past nine or twelve years without needing a major change who's in charge who they're leaving to something else happens to do an amendment amendments of course are legal work you're going to pay for them um but we're still talking hundreds not thousands and amendments they say statistically once every 10 years or so so not too serious the point is when you go to use a net injured plan it's designed to work when you need it not when you wrote it i helped decades earlier and we have saved thousands of people countless thousands of problems with this um and it's a very nice system at ettinger law firm we don't charge for phone calls emails are questions why because we want you to communicate with us without worrying about getting a bill and you know once you become a client of the firm you have this elder law estate planning firm on retainer and you're going to need us sooner or later and it's nice to be able to pick up a phone or send an email and get the correct answer every time because it's all we've been doing for 31 years and we've handled well over 30 000 state plans and also filed over 4 000 medicaid applications so you're going to get the right answer here and as i say by using this program your plan is never more three years old designed to work when you need it not when you signed it i hope many many decades earlier uh how do you schedule a free consultation i put 500 value because a lot of firms charge for the consultation uh we want to keep you in control we don't charge we actually have more experience in a lot of those firms so it's still worth 500 you just don't have to pay for it it'll be with myself or mrs ettinger one of our other experienced elder law state planning attorneys um we're seven attorneys at the moment um they're all experienced we don't have any inexperienced state planning attorneys because they're of no value to the client the consultations are available in the office more and more people are coming in uh you know more and more people are vaccinated of course myself and mrs ettinger vaccinated it could be by video zoom or by phone um you'll get a copy of this um seminar later today in the next few hours and you'll also get a a request or an invitation to schedule an appointment online using our calendly link so you click on you get our calendar and you pick the time that's good for you you'll get that later today if you prefer you can call uh our director of client relations patty brown been with the firm for more than 26 years can answer any questions you have she's very personable shall take the time with you and she's at the 800 number on your screen email her patty brown p brown trust law or text free c for consultation to the number on your screen um there we go um now we're going to stop the share and we're going to go to the questions of which we have about 16 so please stay and join us uh andrea or andrea depending how i like to pronounce it m says if an elderly parent 94 years old sells a second home in florida and wishes to gift money to the children the children have to hold on to that money for five years oh yes because um let's say the elderly parent has to go into a nursing home tomorrow you don't have any look back you would have to pay for five years so uh gradually you can start using the money but you always have to keep enough behind to pay for the five years if you're not enough for pay for five years just keep all the money and um you have to keep enough to pay for what you could have paid so yes you have to hold on to it for a time tim r what happens if you want to sell your houses in the trust and buy a different one not a problem tim the trust sells the house the money's paid to the trust trust buys a new house in the name of the trust and you don't start the five years over again anonymous says if you're legally separated and bought your spouse out of the family home do you make a trust as a single person um yes you do when you say legally separated i suppose you mean according to a written separation agreement because that's what legally separated means yes you can do a trust as a single person problem is if you need medicaid they still consider you married so we may want to discuss completing that or the reasons why some people stay separated but they stay together for medical insurance reasons so we'll talk about that so your spouse's assets may still be available for your care anonymous how to choose trustees if you're skeptical of relatives squandering the assets particularly involving a special needs trust that's for a special needs child or grandchild can an mapd can an mapt medicaid dress be set up in conjunction with a special needs trust and can the special needs trust be beneficiary of an ira there's a lot there but um a lot of people who have issues with family will choose the lawyers here at ettinger law firm our lawyers will be the trustee and do it for you uh we can run a special needs trust uh there's an article on special needs trusts on my website trustlog.com under practice areas yes you can set up an mapt with a special needs trust you can leave the mip access to the special needs trust and the special needs trust yes can be beneficiary of an ira all possible tim r says if you revoke the trust does the five-year look-back period start over well no it doesn't start over tim because you revoke the trust there is no look back all the assets are available um forever unless you move them out again um so the five-year look back doesn't start over it ends the five-year look back and the five-year look-back only starts over you set up a new trust alonzo w says is new york the only state where you converse the irrevocable trust um alonzo is not the only state but it's one of just a few states that allow that um i you know i looked it up years ago you know there are a few states that allow it uh new york is a very progressive state in terms of uh legal planning so we have a lot of uh loopholes that other states don't have anonymous what if your house is near a volca trust can you sell your house and not buy another house and use the money to pay rent for a place to live yes you need to sell your house invest the money but remember you only get the income from the trust so the rental has to be uh the income or less than you're getting from the nest egg that you got from the sale of the house so you sell the house for seven eight hundred thousand maybe you get an income of twenty five hundred three thousand a month whatever it is uh and you'll you'll use the trust income for that but also you might have your pension social security other income so you do the arithmetic and figure out uh how much you could afford anonymous why put money in the air buckle dress if you can't use it but you can give it to your beneficiaries or trustee why not just give it to your children now instead well i mentioned this if you give it to them well if you need it back they may not give it back they might get sued they might get divorced they might die before you and it goes to their area so look if there's no chance you're ever going to need the money back or you're never going to need it for your care yeah you can give it to your children but for most people they want to secure that money in case they need it later for some purpose mario p says what are the major differences between an mept and an irrevocable trust they're the same thing i mean there's a hundred different types of irrevocable trust mario but uh the medicaid trust is one of the forms and when i use the word irrevocable trust i mean the medicaid trust elise al says is one mapt used for a couple or do you need one for each well the current estate tax exemption is six million in new york if you're under six million you only need one price if you're over six million you need two trusts to double the exemption so you don't pay taxes unless you go over uh 12 million six million for each spouse but you have to set up two trusts to get two exemptions some of you may know the blind administration is proposing to limit the the six million to three and a half million and if it's three and a half million if you're over that you will also need to trust to save the estate tax can double the exemption if you're three and a half million to seven million and save all the taxes on the second three and a half million you have to do that before the first spouse dies richard w says what is the role of the trustee well trustee is a fiduciary they have a duty to uh file tax returns they have a duty to maintain the investments um they have a duty to keep the um beneficiaries notified of things that affect the beneficiaries but you can go onto my website and read about trustees and trust administrations under practice areas and get more details in the medicaid trust as a practical matter the parents are living they're competent they handle things you know all the all the tax bills come to the house they pay the tax bills they pay the insurance they do have the trustee in these irrevocable medicaid trusts are generally like figureheads the parents handle everything and they just sign uh you're welcome rich thank you for the thank you um anonymous why is susie orman so against hero vocal trust on your show when she likes them um i'm sorry why is susie online so against irrevocable trust on her show when you like them she always supports revocable trust well a couple of reasons one is susie orman doesn't know anything about elder law she doesn't know anything about medicaid so and also she sells revocable trust so she'll sell her revocable trust for a couple of ground all day long uh including to a lot of people actually need irrevocable trust remember she's a financial advice she's not a lawyer she's certainly not an elder law attorney i i don't know what she does or doesn't know about a medicaid trust but there's the problem of relying and i mentioned this earlier you know so-called professionals well she's a professional financial advisor she's not a professional trust lawyer or a professional elder law attorney or professional states lawyer so you're getting the wrong advice it's that simple um you know every estate planning lawyer in the country has issues with susie ormond because of her uh you know lack of expertise but her bully pulpit at the same time james r should life insurance policy be titled to a trust you don't have to put the life insurance policy in the press but very often you have to change the beneficiary to the trust so my death make it payable to the trust it passes according to the terms of trust marcella s says do you handle state planning for families with special needs children uh all the time marcella if you get a chance go to my website look which is trustlaw.com onewordtrustlaw.com look under uh practice areas and read my uh chapter from my book it's there on the special needs trust and special needs children uh william b what happens if you have no one left to serve as a trustee you have the lawyers here can act as backup trustees not a problem alonzo w says is every additional transaction um gifts paying out a trust center consider an amendment which is chargeable no taking things out and put putting them in a trust is not an amendment an amendment is changing who's in charge of who you're leaving it to that's why they're pretty rare um and alonso's another question if you're in the process of selling a home in new york this year expect to buy a home in florida in 2022. should you wait on setting up the press in florida absolutely owns a loan so i would recommend you wait set it up in florida because you're going to be there and you want your lawyer there if you're moving to the southeast coast have a good lawyer there joe carp with a k he's carplaw karplaw.com if it's somewhere else in florida you can go to the website of the national academy of elder law attorneys if you have a pen write this down n a e l a dot org i'll repeat it n a e l a dot org and you can search for an elder law attorney by zip code wherever you're moving to um now um frank f sent in a question ahead of time if you own a co-op join me with your spouse do you need to put that in a medicaid press to protect against nursing home access well first it's going to depend on whether the co-op allows a transfer to a trust you have to check with the managing agent see if they allow a transfer to a trust and find out their procedure and the cost um but the co-op department will be protected if you have a spouse but you need a good power of attorney so we can move it to the spouse uh who's who's staying there the one who's in the apartment is called the community spouse the one who needs care it's called the institutionalized spouse if you want to get an exemption and you have one spouse that's institutionalized you have to put it into the community spouse's name and so you need a power of attorney to do that but it's not protected if one spouse dies in the surviving spouse needs care then the apartment is in play because you can't do spousal refusal you don't have a spouse so that's going to depend on whether the co-op allows you to transfer it into the co-op and then of another question sent in ahead of time from rich w if my assets and house are an aerobuckled trust and need to have repairs on the house done where would this money come from the trust can pay for repairs improvements because that's not taken out of the trust it's moving it from one trust asset to the other next is our rmd distributions from a qualified plan considered income yes um now the the qualified retirement is not going to be in the era vocal trust because it's exempt but the rmds are considered income and go towards the cost of your care so uh there we have it um i hope you'd join me next week for the next zoom side chat uh i enjoy doing them enjoying sharing the information with you and we hope to see you all in the office very soon so thank you stay safe and we'll see you next week bye

[Music] it&#39;s very satisfying to help people i just can&#39;t imagine a better job oh good afternoon everyone and thank you for joining our zoom site chat today we&#39;re going to be talking about medicaid trusts i&#39;m michael ettinger from ettinger law firm and this is one of our series of six zoom site chats including components of an elder law state plan the five steps to an elderly estate plan some selected topics such as uh second marriage planning and planning for adult-dependent children a couple other things but today the medicaid asset protection trust um so i think we have everybody aboard just by way of preliminaries there&#39;s a q a button at the bottom of your screen if you have a question please type it in there at the q a at the bottom we&#39;re going to take all the questions at the end i hope you can stay for the lively question answer session and including the ones that were sent in ahead of time i&#39;m going to go right to the slides well actually one more thing as i just want you to know you&#39;re going to get a copy of this presentation later this afternoon you&#39;ll get a copy of the recording some of you may know him the author of the book elder law estate planning but knowing that not everybody wants to read a whole book or has the time to uh as my thank you for joining us today we&#39;re going to send you a copy of the condensed version of my book it&#39;s called elder law estate planning in a nutshell it&#39;s a four-color e-booklet it comes by email and that will also come with the copy of the recording um the slides i&#39;m about to put up you got a copy with a confirmation of this email so you can look them over later but today probably just uh you&#39;re welcome to just follow along i&#39;m going to share my screen now and pull up the first page uh this is one of a series of six zoom side chats today we&#39;re going to protect our home and life savings with a medicaid asset protection trust the mapt is the acronym there&#39;s our website trustlaw.com hundreds of pages of information on elder law state planning that&#39;s me in the middle of the top row to my left as my lovely wife and law partner suzanne ettinger our practice for 31 years has been limited to elder law state planning that consists of trusts and estates wills and probate estate tax saving strategies medicaid ass asset protection trusts and medicaid applications we have offices in nassau two offices we have three offices in suffolk county those that&#39;s five on the island we&#39;re in brooklyn staten island westchester we&#39;re in white plains at 140 grand street rocklin used to be a niacc just moved a couple months ago to new city 345 north main street in orange county we&#39;re in middletown in dutchess county we&#39;re in fishkill and rhinebeck in albany we&#39;re right on wolf road and in saratoga on broadway so let&#39;s go right into the topic if you just joined us again there&#39;s a q a button at the bottom of your screen if you have a question uh go ahead please and just type it in and at the end we&#39;ll take all the questions so we&#39;re going to take an overview of the medicaid asset protection trust by explaining what trusts are a trust is a legal entity that allows you to separate the use and enjoyment of property from the bear ownership so assets you want to protect like your house are re-titled to the trust but as the trust beneficiary of the houston enjoyment of the trust property so you have exclusive use and enjoyment remember we could separate that from the bear ownership it&#39;s the same as if you deeded your property your house to your children reserve the right to live there you have the youth and enjoyment they have the bear ownership but essentially while you have use of enjoyment you&#39;re not the uh technical owner so the bear ownership resides with the trust which is separate from you this is the medicaid asset protection trust that owns the property it&#39;s separate from you it has its own social security number known as a trust tax id number a tt id there&#39;s the lovely house we&#39;re trying to protect so something happens to you personally like you need care at home or in a nursing facility they can&#39;t get the asset because you don&#39;t own it of course as a look back period we&#39;ll get into that and uh the trust has been called the greatest invention of the english common law this idea that you could separate the use and enjoyment of something and keep using enjoyment without having the ownership so now we get right away to the five-year look back for facility care and it means medicaid can look back up to five years and why do they have to look back well if they didn&#39;t have the look back people would just wait until they needed to go into a nursing home move everything out of their name a few days before and then say i&#39;m here take me i don&#39;t have anything i&#39;m eligible so the look back means they can look back on anything you transferred out of your name into the trust for up to five years but it&#39;s not an all or nothing rule let&#39;s say you make four years from the time you transferred assets to the trust you only have to pay for the one year that&#39;s left i&#39;m going to explain how that works technically let&#39;s say a client comes to us and they move the assets out four years ago or they&#39;re a client of ours they moved the assets four years ago they come and they say we need care in a facility we&#39;ll say well you&#39;re not eligible because you&#39;ve made transfers in the last four years it has to be five years so what you have to do is you have to private pay for the one year that&#39;s left and there&#39;s ways to get money out of the trust for that purpose if you need it for private pay you can gift it out to your children and they can pay the facility they can&#39;t give it back to you but they can pay the facility so you pull out enough to pay for the last year lo and behold five years go by now we apply for medicaid remember we private paid for the last year now we apply for medicaid the question on the medicaid application is what have you transferred within the last five years the answer is nothing because you apply more than five years after you made the transfers and in fact you can&#39;t apply uh if you&#39;ve made transfers within the last five years because you&#39;re not eligible that&#39;s why we don&#39;t apply we wait till the five years has passed and then we apply and because of covert possibly moving it to january 1 of not sure about that i haven&#39;t uh got a definitive answer on that yet they&#39;re talking about it but nevertheless it&#39;s coming sooner or later it&#39;s coming and the two and a half year look back right now it&#39;s starting july 1 and it&#39;s for 30 months which is two and a half years but it&#39;s not all starting on july one it&#39;s phasing phasing in so they&#39;re adding one month of a look back every month until the end of 2023 which is two and a half years later after then it&#39;ll be the full two and a half years so in in august it&#39;ll be a one month look back and september will be a two month look back you know et cetera et cetera until 30 months have gone by so it&#39;s being phased in but this makes the medicaid asset protection trust an essential tool for those who want to age in place everybody wants to be able to stay in their own home but if if they have to spend all their money paying for home care they may not be able to afford it so we want to shelter that money make them eligible for medicaid and they have that money either for their heirs or for additional needs without the medicaid asset protection trust a lot of people are going to be unable to afford care at home because they can&#39;t pay the caregivers and the costs of running the house and they&#39;ll be forced to sell their homes and use the money to pay for assisted living this is going to be a problem for people especially people don&#39;t know about it and don&#39;t plan ahead to avoid it what we want to do is shelter the money so that we&#39;re eligible for medicaid benefits we can afford to carry the house with our income and have the home care paid for by the medicaid program and why is home care so important because a lot of people use their as the caregiver and a lot of spouse caregivers die first from the strain remember it&#39;s a 24 7 365 job it&#39;s a hard job uh the caregiver the spouse is not even trained to do the job and again many of the caregivers die first or end up in the hospital from the stress of the 24 7 job we don&#39;t want that to happen we want to make you eligible for people to come in the house and help set up a medicaid asset protection trust well all trusts avoid prohibited death i&#39;m probate&#39;s illegal proceeding to prove the will valid um so tomorrow i give a seminar on all of elder law state planning and in my seminar i&#39;ll talk quite a bit about probate and what it&#39;s like and why the general public wants to avoid it i saw someone raise their hand i can&#39;t take questions during the seminar but there&#39;s a q a section there if you have a question type in your question and we&#39;ll take it at the end for those of you just joined us looks like a couple of late stragglers i&#39;m just going to go back and and just quickly um yeah i was just talking about the medicaid trust as a five-year look back um for home care there&#39;s a two and a half year look back starting on july 1 and that&#39;s where we are now why set up a medicaid trust well all trusts avoid probate so even if you don&#39;t have to go to a nursing home or you don&#39;t need home care it still saves a lot more than it costs because you avoid a court proceeding at death someone called probate like a lawsuit did you start against yourself remember there&#39;s nobody on the other side but for the will to be proved valid you have to go to court the executor has no power until the court is decided so it&#39;s essentially a lawsuit that you create by having a will what are your other options to setting up the mapt making assets joint with the children that doesn&#39;t work medicaid considers the combined assets of the joint owners as all being available for the care of the old person except to the extent the other person can prove the amount of their actual contribution so put it another way just putting son or daughter&#39;s name on an account doesn&#39;t save half of it medicaid says it&#39;s all yours unless they put money in and 99 of the time they didn&#39;t put money in um acid joint with the spouse are all available for the care of the ill spouse because medicaid considers spouses as one unit uh what about putting your assets in your children&#39;s names a lot of people do this and regret that they ever did it because you&#39;re uh running the risk that they might incur debt uh a bankruptcy a large medical bill a personal injury that they cause somebody uh sued for something else so you&#39;re subject to all their debts and liabilities what if they get divorced your son-in-law darden law can walk away with happier assets so not a good idea and what if you need it back later on they may have spent it or they won&#39;t give it back all of these things have happened many times to many people there&#39;s no protection this is basically amateurish people do this because they don&#39;t uh have good advice and they don&#39;t know what their options are and they don&#39;t know there&#39;s a better way to do things that protect the assets and protect them um and and finally you put in your son their daughter&#39;s name they die before you it ends up with with their children and you&#39;re you&#39;re never going to see it and they can be minors as well and be tied up in court with legal guardians a whole host of problems we want to avoid that&#39;s why we use trust instead of putting it into children&#39;s names um and as i said earlier you can&#39;t translate your spouse to protect it because the combined assets of spouses are available for the care of the ill spouse regardless whose names they&#39;re in now uh that&#39;s the rule but in new york we have an exception it&#39;s called spousal refusal and that occurs if if husband let&#39;s say could be wife but if husband has to go into nursing home move all the assets into wife&#39;s name she signs a document it&#39;s called a spousal refusal saying i need these assets or my care and i can&#39;t afford to contribute to my husband&#39;s care if you sign a spousal refusal by law they have to give the husband medicaid but they have a right of recovery from the wife they can go after her and family court for support now it&#39;s still better to use spousal refusal because medicaid pays a lower rate than the private person pays there&#39;s a private pay rate and the medicaid reimbursement rate medicaid reimbursement roughly a third less than the private pay rate so if you refuse and medicaid has to pay they can only come after you for what they pay which is much less than you would have had to pay so already you&#39;re saving a third sometimes they don&#39;t come after you but when they do come after you we can negotiate a lower amount so it always pays to go spousal refusal um now the medicaid asset protection trust is known as an income-only trust and it means what it says uh if you put in stocks you only get the dividends if you put in cds you won&#39;t get the interest if you put in your house you get the equivalent of the income exclusive right to live there use and enjoy that property during your lifetime what happens these assets they stay in the trust and they go to your heirs free up the expense and delay of probate now a couple of uh principles that make the uh trust work it&#39;s an irrevocable trust um and that is because in a revocable trust uh there&#39;s no nursing home protection because you could take it out at any time you&#39;re in charge of a revocable trust in an irrevocable trust you put somebody else in charge usually one or more the adult children uh and medicaid has no control over them so if you were in charge they say well you can get it take it out and give it to us but if you name the children medicare has no control over the children they can&#39;t make them take it out so you limit your access to principal by naming somebody else beside you your spouse&#39;s trustee again one or more the adult children uh because as i said if you can get it they can get it this way you can&#39;t get it they can&#39;t get it and income only is dividends on stocks interests on cds the trucks is ideal for assets you&#39;re not spending like your home for heaven&#39;s sakes move to protect your home what happens if you own a home and you end up needing care in a nursing facility they put a lien on the house and pretty soon at those rates the lien gets bigger in the house and eventually medicaid walks away with the house every day medicaid walks with people&#39;s houses all over new york and it&#39;s totally unnecessary for more than 30 years allowed to take the house put it into the medicaid trust and any time after five years you need care they can&#39;t touch it it&#39;s really a no-brainer there&#39;s no downside to keep all your exemptions on the house you want to sell the house the trust sells the house trust buys a condo and the name of the trust is already protected you already have your five years um so of course protect the house no downside uh what about other assets certain assets are exempt from medicaid ira 401k 403 b example it&#39;s true if you&#39;re over 72 you have to take the required minimum distributions they get those but they can&#39;t that might be two three thousand a month at most they can&#39;t go into the ira itself and get the rest of that eighteen thousand a month at the nursing homes charge because the ira itself is exempt they can only get the rmds required minimum distribution but what about assets that are not ira not protected so non-qualified ira is called qualified deferred to 72 non-qualified a lot of people come into the office and have a nest egg uh let&#39;s pick a number 500 000. a lot of clients tell me that they don&#39;t need the 500 000 to live on because they have enough income it&#39;s extra money just in case a lot of other clients say we&#39;re not spending the 500 000 we&#39;re taking the interest or dividends well fine the trust gives you the interest or dividends but you realize if you have a nest egg that you don&#39;t need to live on you&#39;re actually safe keeping it for the nursing home industry so we want to protect those assets um we put those assets in the trust there&#39;s some access to them you get the income there is a way to get principal i&#39;m going to talk about that in a moment but essentially when you set up an mapt it doesn&#39;t affect your lifestyle still get your pension directly your social security interest dividends your requirement distributions you have the exclusive right to use and occupy the primary residence under the trust remember i said the trust separates the use and enjoyment from the ownership you don&#39;t own it but you have the exclusive use of occupancy you have life rights like a life estate you keep your exemptions on the property senior veteran star uh you have a an investment account let&#39;s say with morgan stanley we put in the trust now your son or daughter&#39;s name is on as trustee but they can sign a third-party authorization say i authorize data mom to trade on the account you can still run it if you do your online trading they take out a pin they give you the pin and you can go on uh yourself um now we don&#39;t like to give up control uh we want to keep control so you reserve the right to change the trustee at any time this is your control they&#39;re in charge of the trust but you&#39;re in charge of them so you have a falling out you don&#39;t like how they&#39;re handling it you can fire them and put in somebody else we will help you do that if you need to as i said you can sell the house and buy a condo doesn&#39;t start the look back period over trust combine and sell and trade stock it&#39;s very flexible i raise other qualified plans exempt from medicaid so we don&#39;t put them into the mapt they&#39;re also exempt from probate remember iras and other qualified plans have a designated beneficiary goes right to the person name um but if you want to sell your house you may be aware that you can exclude the capital gains taxes on 250 000 of gain if you&#39;re single 500 000 again if you&#39;re a couple that the trust preserves that exclusion so you keep that if you sell the house if the trust sells it um now a lot of people are afraid of the word irrevocable um but in new york you can revoke an irrevocable trust it&#39;s an irrevocable just because you the people who created it called the grand tourist you can&#39;t revoke it yourselves but new york has another rule that says if all the parties named in an irrevocable press degree in writing that they no longer want to trust you may revoke it on consent of all the name parties well who are all named parties you and the adult children so if everybody signs you&#39;re going to do it now what if one of them won&#39;t sign well actually we have a work around for that we can take their name out of the trust and they&#39;re not a name party and they don&#39;t have to science so you&#39;re always in control you can always undo that trust um and there&#39;s the workaround i was talking about we can take them out if they won&#39;t sign let&#39;s look at the uh alternative to the mapt which is the life of state deed what is a life of state deed a lot of people and this is people who see a a general lawyer or a family lawyer real estate lawyer they say oh you can protect your house by deeding it to the children reserving the right to live there well that&#39;s what a life estate deed is you need it to children you have life rights now if you have to go into a nursing home um there&#39;s a drawback uh if the house is sold prior to death the life estate you know generally around 50 of the value according to medicaid goes to the nursing homes you can&#39;t sell it uh if the house is rented um the life tenant is entitled to the rents because they have life rights so the rents go to the nursing home uh if the house is sold during your lifetime uh you also lose the uh a big part of the capital gains tax inclusion i just mentioned 500 thousand for a couple two hundred fifty thousand for a single you don&#39;t own the whole house you don&#39;t only know about fifty percent but the life estate so you lose uh fifty percent of the exemption um so what happens is mom or dad has to go into nursing facility uh for a few years and you can&#39;t sell the house and can&#39;t rent the house can end up carrying a vacant home for years uh the trust basically solves that problem because the trust can can buy and sell assets trusts can sell the house uh get the money and invest it um we mentioned you keep your property tax exemptions uh control you can change the trustee at any time you can change who you leave it to so i&#39;m always amazed when i see uh somebody come up with a medicaid trust or a near a vocal trust and lawyer didn&#39;t reserve these rights because um it&#39;s common sense you know people change their minds things happen you have to be able to change who your heirs are what if one of them disappears on you or you become a stranger you&#39;re already a strange you need that flexibility you need the flexibility to change the trustee now what if you need money from the trust let&#39;s say one day you decide you need fifty thousand dollars from that trust remember the trust you get all the income but now you need you need principal you need fifty thousand dollars to take your family and your lawyer on a round-the-world cruise uh you know very worthwhile endeavor you can&#39;t take out principle because if you could get it the nursing home can get it but you are allowed to make a gift of principle to your son or daughter because when i apply for medicaid they&#39;re going to ask me what do you take out of your name and put into that trust but they&#39;re not allowed to ask me with the trustscape to somebody else so you make a gift of 50 000 from the trust your son or daughter that gift is tax free um now can they give it back to you well no they can&#39;t give it back to you because again if i have to apply for medicaid i have to show them all your investments bank accounts for last five years if they see fifty thousand came in they&#39;re going to say where did that come from and if it came from the trust you&#39;re sunk so they can&#39;t give it back to you but tell me if you give them the 50 000 you think they could take that 50 000 go pay the travel agent for the trip well it&#39;s their money they can do whatever they want with it so this is a way to get principal out through the gifting power and remember we can undo the trust on consent of all the name parties so we have all this flexibility when you really understand the trust it&#39;s not really intimidating at all you can undo it you can change it you leave it to you can change who&#39;s in charge you can get money out if you need it and there&#39;s no downside to a properly drafted irrevocable trust uh why don&#39;t more people set up a lot of people say why don&#39;t more people set it up well you know what a lot of people do set it up um they just don&#39;t broadcast it uh we&#39;ve done it for tens of thousands of people over the years so we know a lot of people do it um some people you know the people who don&#39;t do it in my experience are people who haven&#39;t heard of it which obviously you haven&#39;t heard of it you can&#39;t do it but the other thing is a lot of people get the wrong advice you know a lot of people think and this is my experience i&#39;ll share with you a lot of people think if they ask enough questions they&#39;re going to get the answer so they go around asking everybody no they know they ask their relatives they ask their friends they ask their financial advice they&#39;re asking the accountant but they never get around to asking somebody who actually knows all the answers which is an experienced elder law attorney and they end up getting the wrong advice because everybody knows a little bit the financial advisor knows a little bit the accountant knows a little bit the friends of health know a little bit but nobody knows whole the whole picture and then of those who know a little bit um you know much of what they know is not correct some of what they know is correct but some isn&#39;t and you have no way of evaluating um if i have cancer i don&#39;t really care what my friends and relatives say i want to know what the oncologist has to say because that&#39;s the person knows the answer so uh there you go um so i said people haven&#39;t heard of it or to get the wrong advice people are well-meaning uninformed friends relatives neighbors and professionals well they&#39;re professionals but they&#39;re not professionals in elder law and estate planning they&#39;re just professionals in their field so be careful about that um the quality of information or the weight the weightiness of information or advice is different from different people what about long-term care insurance versus the medicaid asset protection trust constant care today uh you know maybe between 500 and 700 a day on average so we&#39;ll say 15 to 20 20 21 000 a month um now if you set up an mapt it&#39;s not likely you&#39;re going to need long-term care insurance for the five-year look-back because you&#39;re not likely to need care within the five years you wouldn&#39;t be setting it up what insurance do you need well um if you&#39;re looking at long-term care insurance and this is tricky long-term care insurance not comparing to mapt but if you&#39;re looking at long-term care insurance how much do you need well calculate your income and ensure for what you&#39;re short because you&#39;re still going to have your income so that&#39;s not going away you only need insurance for the amount you&#39;re going to be short for the cost to care some people use a hybrid approach they take both long-term care insurance in the mept and why do they do it because long-term care insurance is very expensive you know 600 a day is very expensive uh but no one wants to go to nursing homes so what a lot of people do is they get long-term care insurance for 300 a day which of course is half the cost of 600 a day and that pays for home care they say i&#39;m willing to insure half the boat for home care but if i need facility care i don&#39;t want to get 600 a day i&#39;ll use the medicaid trust to protect my assets and qualify for medicaid so get the long-term care for home care and the medicaid press in case they need facility care it&#39;s a hybrid approach there are some do&#39;s and don&#39;ts with the medicaid trust do make all transfers to your trust as a vibe as advised by us in a timely manner you can use the trust assets for repairs maintenance and improvements to the house um you don&#39;t have to this is permissive it&#39;s not required um so your big bills repairs maintenance improvements and insurance on the house that could all be paid from the press that&#39;s not taken out of the trust so you still get all the income from the trust but this is on top of the income you can use trust assets to pay real estate taxes and homeowners insurance uh and but this is permissive you can use non-trust taxes to pay these however your tax deduction is lost if the trust pays the real estate taxes that has to be paid by you personally to take the deduction not everybody needs the deduction for various reasons so you can consider that as a possibility do take dividends and income on trust assets on at least a quarterly basis if at the end of the year you didn&#39;t take the income these medicaid says that&#39;s the same as if you put the money in so it&#39;s consider an addition to principal that creates a five-year look back on the new money that you didn&#39;t take it&#39;s considered new money because you should have taken it so it&#39;s the same as adding it do contact us when you wish to make a gift from the trustee or anybody to any of your beneficiaries there&#39;s no limit on the gift we just need to tell you how to prepare the letter i hereby direct you my trustee to make a gift to so and so from my trust and amount of such and such contact us if the grantor needs medicaid benefits either for home care or facility care or when the grantor dies there&#39;s some don&#39;ts don&#39;t use trust assets to pay personal expenses what&#39;s personal utilities on the house the cable bill the phone bill that sort of thing don&#39;t use trust assets to buy a car since all the assets in the trust be exposed to liability there&#39;s a car accident we actually have asset protection to trust so we want the car outside the trust so there&#39;s an accident they can&#39;t get the assets in the trust they&#39;re they&#39;re sheltered so never buy a car in the name of the trust uh don&#39;t use trust ass to pay telephone or utility bills you mentioned that don&#39;t take principal or capital gains from the trust assets that&#39;s a no-no if you absolutely need it gift it out to one of the children and give them the bill they can pay it for you but they can&#39;t give it back to you don&#39;t transfer iras or 401k to the trust first of all you all the taxes will become due that&#39;s a taxable event but there&#39;s no need to put them in the trust they&#39;re exempt from medicaid and they&#39;re exempt from probate they have a designated beneficiary don&#39;t allow beneficiaries to give back to the trust or to the grantor any gift made from trust assets don&#39;t make additional transfers to the present future without letting us know because we&#39;re keeping track of the look back for you so there you have the basics of the elder law medicaid asset protection trust every wednesday at 2 i give my seminar my regular seminar for advantages of using trust i talk about avoiding guardianship on disability i talk about probate what it is and why you want to avoid it i talk about the inheritance protection trust which protects the inheritance you leave from children&#39;s divorces losses and creditors and best get it when they die it passes it by blood to your grandchildren without the trust you go to your son-in-law or daughter-in-law and their families a lot of people use those we&#39;ve done them for well over ten thousand clients so that&#39;s ettingerplan.com you go online and register ettingerplan.com um it&#39;s wednesday too but if you&#39;re not available wednesday or two you get the recording anyway you can watch it at your leisure so don&#39;t be shy um and as i say if you can&#39;t make it register and get the recording the next day um worried about our unique planning process uh it&#39;s begun here today we offer a free initial consultation uh you come in with your current plan will trust power of attorney health products or whatever we review it see if it&#39;s legally adequate see if it&#39;s personally unacquitted these still the people you wanted charges is still the way you want to leave it give you a free copy of my book elder law state planning tell you which chapters apply to you uh you get a fixed fee quote by the way if you have any questions type them in the q a now we&#39;re going to go to the question and answer in a moment uh we tell you we don&#39;t do business really in the first meeting we&#39;re getting to know each other but we always tell people you know if you decide to go ahead this is how much it&#39;ll cost uh it doesn&#39;t depend on how much you have it depends on what work you need and we have a fee schedule for that but people like to know where they stand so we like to give them a heads up this is the direction you&#39;re looking at this where we&#39;re going come in for a second follow-up consultation to have your questions answered you come in for your second meeting we answer any questions you have which arose out of the first meeting which we discussed but also the chapters in the book you read might be an hour&#39;s worth of reading we draft that estate plan together with you we ask you who do you want for legal medical financial decisions who&#39;s your second choice how do you want the estate distributed all at once equal not equal spread out over time uh and then at the end of the meeting we give you a detailed three-page written proposal the fees are the same as mentioned in the first meeting but now we have details of what we&#39;re going to provide then we ask you what would you like to do and now ettinger law firm i believe is the only firm in the united states of america uh only a state planning firm that does not require retainer we examined the retainer system years ago i was trained the same way as other lawyers and we came to the conclusion that the purpose of the retainer agreement and the retainer agreement is this you want to go ahead laura says sign the agreement and give us a check usually for half which is called a retainer so now you&#39;re bound by contract and you&#39;ve paid half um we don&#39;t do that because what we uh found when we analyzed it was the retainer agreement is designed for the benefit of the lawyer it&#39;s not for the benefit of the client because when you sign you don&#39;t have anything you actually have a promise and it doesn&#39;t always pan out sometimes lawyer takes too long or you don&#39;t like how they&#39;re handling it or or other other issues arise but you&#39;re not having control you&#39;ve already signed the agreement you&#39;ve paid half the money so what we and i think this is a breakthrough in legal thinking what we did at edinger law firm is we realized that if we put the client in control clearly it&#39;s the best place for the client to be and if we&#39;re here to serve the client then that&#39;s the best place for the client to be we think it&#39;s the best place for us to be so instead of a fee agreement we replace it with a fee proposal we sign it you don&#39;t sign it and our proposal says based on your say so we&#39;re going to go ahead and prepare all these documents trusts inheritance protection trust health proxy living will power of attorney these your properties you come in for a third meeting after everything is signed you pay at the end but agreement says unless and until you write us a check or hand us the credit card um you have no obligation to the firm you&#39;re free to walk away at any time so we keep the you&#39;re in control which is a great place for you to be and uh we think it&#39;s a great place for us to be too when we have over 30 000 satisfied clients uh and partly due to that system um so as i say you&#39;re coming for that third meeting um these meetings generally two to three weeks apart at most we review all the documents with you you sign and you pay at the end either by credit card or check and you can pay all at once so you could pay it in three monthly installments uh at that point we don&#39;t say goodbye uh the standard in new york is thank you very much goodbye i don&#39;t think anybody listening today has ever heard from lawyer prepared their will uh but we don&#39;t agree with that system we don&#39;t say goodbye we say hello you&#39;re welcome to the firm uh and we trademarked the process to make sure that if you have a net manager plan it&#39;s going to work when you need it not when you wrote it i hope decades earlier so we keep you up to date with law changes and other matters of interest to you through our weekly ettinger elder alert i won an award for it it comes by email that&#39;s why it&#39;s called the alert it goes nice with that and journal there too um but it&#39;s our it&#39;s our warning system we&#39;re writing a lot about the biden administration tax proposals and if you&#39;re getting uh well you&#39;ll still you&#39;ll get them i i just wrote an article on uh gift and tax saving strategies for 2021 that will not be coming up this week that will be coming out next week and if you&#39;re on the zoom you will be on the alert as well so you&#39;ll get that and then when the buy administration changes become law after all the horse trading is done i will give you a complete analysis of the law and where you stand and what you need to do once you&#39;re a client of the firm as i said we don&#39;t say goodbye we call you in every three years for a free review why we want to see are there any changes in your health your assets your family births deaths marriage divorces um so we&#39;ve been doing this for more than two decades so i&#39;ll tell you how it works we people come in after three years you know not too many people need a change but we um you know re-establish relationship catch up with you um it&#39;s it&#39;s social there&#39;s there&#39;s a real social aspect to being an estate planning lawyer and uh we&#39;re renewing the acquaintance we&#39;re building the relationship after six years naturally more people need a change but the reason we do it is statistically it&#39;s been shown that very few people can get past nine or twelve years without needing a major change who&#39;s in charge who they&#39;re leaving to something else happens to do an amendment amendments of course are legal work you&#39;re going to pay for them um but we&#39;re still talking hundreds not thousands and amendments they say statistically once every 10 years or so so not too serious the point is when you go to use a net injured plan it&#39;s designed to work when you need it not when you wrote it i helped decades earlier and we have saved thousands of people countless thousands of problems with this um and it&#39;s a very nice system at ettinger law firm we don&#39;t charge for phone calls emails are questions why because we want you to communicate with us without worrying about getting a bill and you know once you become a client of the firm you have this elder law estate planning firm on retainer and you&#39;re going to need us sooner or later and it&#39;s nice to be able to pick up a phone or send an email and get the correct answer every time because it&#39;s all we&#39;ve been doing for 31 years and we&#39;ve handled well over 30 000 state plans and also filed over 4 000 medicaid applications so you&#39;re going to get the right answer here and as i say by using this program your plan is never more three years old designed to work when you need it not when you signed it i hope many many decades earlier uh how do you schedule a free consultation i put 500 value because a lot of firms charge for the consultation uh we want to keep you in control we don&#39;t charge we actually have more experience in a lot of those firms so it&#39;s still worth 500 you just don&#39;t have to pay for it it&#39;ll be with myself or mrs ettinger one of our other experienced elder law state planning attorneys um we&#39;re seven attorneys at the moment um they&#39;re all experienced we don&#39;t have any inexperienced state planning attorneys because they&#39;re of no value to the client the consultations are available in the office more and more people are coming in uh you know more and more people are vaccinated of course myself and mrs ettinger vaccinated it could be by video zoom or by phone um you&#39;ll get a copy of this um seminar later today in the next few hours and you&#39;ll also get a a request or an invitation to schedule an appointment online using our calendly link so you click on you get our calendar and you pick the time that&#39;s good for you you&#39;ll get that later today if you prefer you can call uh our director of client relations patty brown been with the firm for more than 26 years can answer any questions you have she&#39;s very personable shall take the time with you and she&#39;s at the 800 number on your screen email her patty brown p brown trust law or text free c for consultation to the number on your screen um there we go um now we&#39;re going to stop the share and we&#39;re going to go to the questions of which we have about 16 so please stay and join us uh andrea or andrea depending how i like to pronounce it m says if an elderly parent 94 years old sells a second home in florida and wishes to gift money to the children the children have to hold on to that money for five years oh yes because um let&#39;s say the elderly parent has to go into a nursing home tomorrow you don&#39;t have any look back you would have to pay for five years so uh gradually you can start using the money but you always have to keep enough behind to pay for the five years if you&#39;re not enough for pay for five years just keep all the money and um you have to keep enough to pay for what you could have paid so yes you have to hold on to it for a time tim r what happens if you want to sell your houses in the trust and buy a different one not a problem tim the trust sells the house the money&#39;s paid to the trust trust buys a new house in the name of the trust and you don&#39;t start the five years over again anonymous says if you&#39;re legally separated and bought your spouse out of the family home do you make a trust as a single person um yes you do when you say legally separated i suppose you mean according to a written separation agreement because that&#39;s what legally separated means yes you can do a trust as a single person problem is if you need medicaid they still consider you married so we may want to discuss completing that or the reasons why some people stay separated but they stay together for medical insurance reasons so we&#39;ll talk about that so your spouse&#39;s assets may still be available for your care anonymous how to choose trustees if you&#39;re skeptical of relatives squandering the assets particularly involving a special needs trust that&#39;s for a special needs child or grandchild can an mapd can an mapt medicaid dress be set up in conjunction with a special needs trust and can the special needs trust be beneficiary of an ira there&#39;s a lot there but um a lot of people who have issues with family will choose the lawyers here at ettinger law firm our lawyers will be the trustee and do it for you uh we can run a special needs trust uh there&#39;s an article on special needs trusts on my website trustlog.com under practice areas yes you can set up an mapt with a special needs trust you can leave the mip access to the special needs trust and the special needs trust yes can be beneficiary of an ira all possible tim r says if you revoke the trust does the five-year look-back period start over well no it doesn&#39;t start over tim because you revoke the trust there is no look back all the assets are available um forever unless you move them out again um so the five-year look back doesn&#39;t start over it ends the five-year look back and the five-year look-back only starts over you set up a new trust alonzo w says is new york the only state where you converse the irrevocable trust um alonzo is not the only state but it&#39;s one of just a few states that allow that um i you know i looked it up years ago you know there are a few states that allow it uh new york is a very progressive state in terms of uh legal planning so we have a lot of uh loopholes that other states don&#39;t have anonymous what if your house is near a volca trust can you sell your house and not buy another house and use the money to pay rent for a place to live yes you need to sell your house invest the money but remember you only get the income from the trust so the rental has to be uh the income or less than you&#39;re getting from the nest egg that you got from the sale of the house so you sell the house for seven eight hundred thousand maybe you get an income of twenty five hundred three thousand a month whatever it is uh and you&#39;ll you&#39;ll use the trust income for that but also you might have your pension social security other income so you do the arithmetic and figure out uh how much you could afford anonymous why put money in the air buckle dress if you can&#39;t use it but you can give it to your beneficiaries or trustee why not just give it to your children now instead well i mentioned this if you give it to them well if you need it back they may not give it back they might get sued they might get divorced they might die before you and it goes to their area so look if there&#39;s no chance you&#39;re ever going to need the money back or you&#39;re never going to need it for your care yeah you can give it to your children but for most people they want to secure that money in case they need it later for some purpose mario p says what are the major differences between an mept and an irrevocable trust they&#39;re the same thing i mean there&#39;s a hundred different types of irrevocable trust mario but uh the medicaid trust is one of the forms and when i use the word irrevocable trust i mean the medicaid trust elise al says is one mapt used for a couple or do you need one for each well the current estate tax exemption is six million in new york if you&#39;re under six million you only need one price if you&#39;re over six million you need two trusts to double the exemption so you don&#39;t pay taxes unless you go over uh 12 million six million for each spouse but you have to set up two trusts to get two exemptions some of you may know the blind administration is proposing to limit the the six million to three and a half million and if it&#39;s three and a half million if you&#39;re over that you will also need to trust to save the estate tax can double the exemption if you&#39;re three and a half million to seven million and save all the taxes on the second three and a half million you have to do that before the first spouse dies richard w says what is the role of the trustee well trustee is a fiduciary they have a duty to uh file tax returns they have a duty to maintain the investments um they have a duty to keep the um beneficiaries notified of things that affect the beneficiaries but you can go onto my website and read about trustees and trust administrations under practice areas and get more details in the medicaid trust as a practical matter the parents are living they&#39;re competent they handle things you know all the all the tax bills come to the house they pay the tax bills they pay the insurance they do have the trustee in these irrevocable medicaid trusts are generally like figureheads the parents handle everything and they just sign uh you&#39;re welcome rich thank you for the thank you um anonymous why is susie orman so against hero vocal trust on your show when she likes them um i&#39;m sorry why is susie online so against irrevocable trust on her show when you like them she always supports revocable trust well a couple of reasons one is susie orman doesn&#39;t know anything about elder law she doesn&#39;t know anything about medicaid so and also she sells revocable trust so she&#39;ll sell her revocable trust for a couple of ground all day long uh including to a lot of people actually need irrevocable trust remember she&#39;s a financial advice she&#39;s not a lawyer she&#39;s certainly not an elder law attorney i i don&#39;t know what she does or doesn&#39;t know about a medicaid trust but there&#39;s the problem of relying and i mentioned this earlier you know so-called professionals well she&#39;s a professional financial advisor she&#39;s not a professional trust lawyer or a professional elder law attorney or professional states lawyer so you&#39;re getting the wrong advice it&#39;s that simple um you know every estate planning lawyer in the country has issues with susie ormond because of her uh you know lack of expertise but her bully pulpit at the same time james r should life insurance policy be titled to a trust you don&#39;t have to put the life insurance policy in the press but very often you have to change the beneficiary to the trust so my death make it payable to the trust it passes according to the terms of trust marcella s says do you handle state planning for families with special needs children uh all the time marcella if you get a chance go to my website look which is trustlaw.com onewordtrustlaw.com look under uh practice areas and read my uh chapter from my book it&#39;s there on the special needs trust and special needs children uh william b what happens if you have no one left to serve as a trustee you have the lawyers here can act as backup trustees not a problem alonzo w says is every additional transaction um gifts paying out a trust center consider an amendment which is chargeable no taking things out and put putting them in a trust is not an amendment an amendment is changing who&#39;s in charge of who you&#39;re leaving it to that&#39;s why they&#39;re pretty rare um and alonso&#39;s another question if you&#39;re in the process of selling a home in new york this year expect to buy a home in florida in 2022. should you wait on setting up the press in florida absolutely owns a loan so i would recommend you wait set it up in florida because you&#39;re going to be there and you want your lawyer there if you&#39;re moving to the southeast coast have a good lawyer there joe carp with a k he&#39;s carplaw karplaw.com if it&#39;s somewhere else in florida you can go to the website of the national academy of elder law attorneys if you have a pen write this down n a e l a dot org i&#39;ll repeat it n a e l a dot org and you can search for an elder law attorney by zip code wherever you&#39;re moving to um now um frank f sent in a question ahead of time if you own a co-op join me with your spouse do you need to put that in a medicaid press to protect against nursing home access well first it&#39;s going to depend on whether the co-op allows a transfer to a trust you have to check with the managing agent see if they allow a transfer to a trust and find out their procedure and the cost um but the co-op department will be protected if you have a spouse but you need a good power of attorney so we can move it to the spouse uh who&#39;s who&#39;s staying there the one who&#39;s in the apartment is called the community spouse the one who needs care it&#39;s called the institutionalized spouse if you want to get an exemption and you have one spouse that&#39;s institutionalized you have to put it into the community spouse&#39;s name and so you need a power of attorney to do that but it&#39;s not protected if one spouse dies in the surviving spouse needs care then the apartment is in play because you can&#39;t do spousal refusal you don&#39;t have a spouse so that&#39;s going to depend on whether the co-op allows you to transfer it into the co-op and then of another question sent in ahead of time from rich w if my assets and house are an aerobuckled trust and need to have repairs on the house done where would this money come from the trust can pay for repairs improvements because that&#39;s not taken out of the trust it&#39;s moving it from one trust asset to the other next is our rmd distributions from a qualified plan considered income yes um now the the qualified retirement is not going to be in the era vocal trust because it&#39;s exempt but the rmds are considered income and go towards the cost of your care so uh there we have it um i hope you&#39;d join me next week for the next zoom side chat uh i enjoy doing them enjoying sharing the information with you and we hope to see you all in the office very soon so thank you stay safe and we&#39;ll see you next week bye

Transcript for:Medicaid Asset Protection Trust (MAPT)

Transcript for:
Medicaid Asset Protection Trust (MAPT)