The post How to Keep Unsafe Elderly Drivers Safe in Arizona first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post How to Keep Unsafe Elderly Drivers Safe in Arizona appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
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Of course, this is not an easy transition to make—the elderly may dread this loss of their independence. What if they refuse to limit their driving?
If reasoning is not working, how do we protect our elderly loved ones (and those around them) who may be unsafe to drive? It may not be as simple as taking away their keys. They still have needs that need to be met and dignity that should be respected. Here are a few approaches to consider:
Driving is a privilege that can expire or be taken away. In Arizona, drivers over the age of 65 must pass a vision test every five years to renew their license.
Elderly adults typically don’t want to be a burden on their loved ones. They don’t have to be a burden if they can tap into resources in the community to help them meet their needs, such as transportation, groceries, prescriptions, appointments, etc. Not familiar with the resources available? Geriatric care managers or even local senior centers can help them find and coordinate resources that can meet their needs—their whole mission is to help the elderly safely age in place and manage chronic conditions.
You can let someone else be the “bad guy”. Your loved one may be more receptive to their medical providers determining their driving abilities. Given your loved one’s physical or mental limitations, their doctor may recommend they not drive or limit their driving. When sometimes the doctor’s advice or your own heart-felt pleadings are ignored, anyone can anonymously report an unsafe driver to the Motor Vehicle Department for a medical review, which can result in suspension of their license.
You might park their car somewhere else and say what it takes to distract them, such as the car is still “in the shop.” Or, for 100% honesty, if your mechanic allows it, maybe you could literally leave their vehicle parked at the shop. Again, if their needs are otherwise being met, your elderly loved one may not notice the absence of their vehicle as much.
You might disable their vehicle—disconnecting the battery may be a simple approach. There may be a number of other ways of accomplishing this—ask a mechanic!
A guardianship would be a last resort to protect an unsafe elderly driver, after all else has failed. As part of the guardianship proceeding, the court will suspend their driving privileges. The person you are attempting to protect must have a condition that affects their ability to make responsible decisions in general, with medical evidence to support that claim. This is not the same as someone just making bad decisions—legally you can’t stop a grown adult from their poor judgment. And this is a complex and expensive alternative that typically extends beyond just driving.
Can you stop an unsafe driver if you are their appointed agent under a Power of Attorney? Probably not. While POAs may allow you to help your loved ones, you legally can’t stop them from making poor decisions. The police also may not be helpful for the same reason.
Driving is a sensitive but serious subject for many elderly adults. Unfortunately, sometimes we must take drastic measures to protect them from themselves. If you have concerns, contact our experienced attorneys to discuss how you can protect your aging loved ones who are dangerous behind the wheel.
The post How to Keep Unsafe Elderly Drivers Safe in Arizona first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post How to Keep Unsafe Elderly Drivers Safe in Arizona appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>The post What to Do If Your ALTCS Application Is Denied first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post What to Do If Your ALTCS Application Is Denied appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>Medicaid is a program for low-income individuals, so it has strict income and asset eligibility requirements. Qualifying for ALTCS requires navigating the complicated application process, which has many potential stumbling blocks. However, an ALTCS denial does not mean you will not eventually qualify for benefits. You can always apply again.
ALTCS may deny an application for a number of reasons, including the following:
ALTCS is required to issue the denial notice with 45 days of the application. When you get a denial notice, read it carefully. The notice will explain why the application was denied and specify how to file an appeal.
Before filing a formal appeal, you can try informally asking the agency to reverse the decision. If you made a mistake on the application, this is the easiest and quickest way to proceed. If the caseworker made a mistake, it may be more complicated and require escalation to a supervisor or a formal appeal. And in some situations, it is easier and better to reapply than to appeal a decision.
The denial notice will tell how long you have to file an appeal—for ALTCS benefits, the deadlines is 35 days after the denial notice. It is important to file the appeal before the deadline. Whether the denial notice requires it or not, you should submit your request for an appeal in writing, so that there is a record of it.
Once your appeal is submitted, ALTCS will set a hearing date. Applicants must attend the hearing or their cases will be dismissed. You have a right to have witnesses testify at the hearing and to question the Medicaid agency’s witnesses. It is a good idea to have an attorney to help you through the appeal process. An attorney can make sure you have all the correct documentation and information to present at the hearing.
If you win the appeal, your benefits will be retroactive to the date of your eligibility—usually the date of your application. If you lose the appeal, the notice will explain how to appeal the decision. The next step in the appeal process usually involves submitting written arguments. If the next appeal is unsuccessful, then you will have to appeal to court. It is crucial to have the assistance of an attorney for this.
If your application was denied correctly due to excess assets or income, there are steps you can take to spend down your assets or put your income in a trust. Or perhaps your medical condition has worsened or could be described more accurately since your original application. Contact our firm to find out what actions you can take to qualify for benefits. Once you do this, you can then reapply for benefits. Note that when you reapply for benefits, your eligibility date will change to the date of the new application.
We can help you navigate the complex ALTCS eligibility policies and application process so that your application is approved the first time. Call us today to schedule a consultation.
The post What to Do If Your ALTCS Application Is Denied first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post What to Do If Your ALTCS Application Is Denied appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>The post After a Dementia Diagnosis: Preparing for the Future first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post After a Dementia Diagnosis: Preparing for the Future appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>People with dementia can execute legal documents to plan for their futures when they have the mental state — or capacity — to do so. Capacity refers to your ability to understand the contents of a legal document, such as a will, and know the consequences of executing it. If you know who your family is, understand your assets, and comprehend your will, you can execute a valid will and plan for the distribution of your estate after your death, provided you understand what you are signing and its effect on your life.
The following can help you in planning where you wish to live, what kind of care you receive, and what happens to your assets if you get severely ill or pass away.
Consider appointing a health care agent to make medical decisions if you become incapacitated. You can name a health care agent using a health care power of attorney. Your health care agent can make medical choices if you can no longer do so.
Picking someone you trust, such as a responsible child or spouse, or another family member, can give you peace of mind that they will have your best interests and desires in mind when they make decisions. For instance, dementia patients who prefer receiving in-home care can express this wish to their agent.
In the power of attorney document, you can also state your intentions regarding health care and limit your agent’s capabilities if you wish.
For an added layer of protection, you can also draft an advance directive or living will that states your desires regarding medical treatment if you are unable to communicate with your physician. Your living will can express whether you want treatment to prolong your life.
Using a financial power of attorney, known as a power of attorney for property, you can select a trusted individual to handle your financial affairs if your disease progresses such that you can no longer make financial decisions. Your financial agent can manage your money and pay bills on your behalf, but they cannot use your money for themselves.
In the power of attorney for property document, you can restrict your agent’s powers. For instance, a person might specify that the agent can manage personal accounts, but not sell the family home.
After a dementia diagnosis, consider whether you would like to receive long-term care at home or in a facility, and whether you intend to apply for Medicaid or long-term care insurance. If you want to apply for Medicaid, you might need to prepare your finances to become eligible.
Making a last will and testament, also known as a will, can help ensure your assets go to your family and friends when you pass away. You can determine how much of your money each beneficiary will receive and make bequests to individuals. For example, if you have items of sentimental value, you can leave them to specific people. Without a will, your assets will transfer to your heirs according to the law in your state.
Consider meeting with one of our knowledgeable elder law attorneys to discuss your plans for your future.
The post After a Dementia Diagnosis: Preparing for the Future first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post After a Dementia Diagnosis: Preparing for the Future appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>The post Should I update my estate plan from another state if I moved to Arizona? first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post Should I update my estate plan from another state if I moved to Arizona? appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>For instance, a client complained that a hospital rejected his parent’s power of attorney for health care decisions. If all they did was read the title of the document “Health Care Directive” (as I suspect was the case), Arizona medical providers may think that the document was a Living Will (aka Advance Directive), which is just instructions for end of life treatment, or even a Pre-Hospital Medical Directive (aka Do Not Resuscitate), not a power of attorney. However, once I actually read the document, I discovered that it was in fact a health care power of attorney, authorizing an agent to make all health care decisions for the person. Although the “Health Care Directive” document could legally be honored by Arizona health care providers, in practice it is reviewed by non-
legal professionals who may not be familiar with the difference in terminology or even take the time to read the document. This could delay or frustrate medical treatment when you need it.
The good news about updating your estate plan when you relocate to a new state is that the changes should be easy to make. You are not starting from scratch—you already made the most of the more complicated decisions in the estate planning process, such as how you wish to be treated in the event of your incapacity or death, who your beneficiaries are and how they are to inherit from you, and which type of estate planning vehicle best accomplishes your estate planning goals, such as a will or trust. Now the issues are simpler—how relocating affects your existing estate plan. Here are a few more common estate planning issues to consider when you move to a new state:
Estate plans should be reviewed with a local estate planning attorney on a regular basis to identify any changes of laws or your circumstances, such as a move to another state, that may warrant updating your documents. A move is a good excuse to review your plan to make sure everything is up to date. Our experienced attorneys are happy to help you determine if you should update your estate planning, including when you move to Arizona.
The post Should I update my estate plan from another state if I moved to Arizona? first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post Should I update my estate plan from another state if I moved to Arizona? appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>The post What’s the Difference Between Alzheimer’s and Dementia? first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post What’s the Difference Between Alzheimer’s and Dementia? appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>Alzheimer’s disease is a type of dementia and makes up 60 percent to 80 percent of dementia cases, per the Centers for Disease Control and Prevention. Most cases of Alzheimer’s occur when people reach their 70s and 80s.
Although Alzheimer’s disease accounts for many dementia cases, other types of dementia are distinct from Alzheimer’s disease, such as vascular dementia and Lewy body dementia. Alzheimer’s disease differs from other diseases involving dementia when it comes to its symptoms, effect on the brain, and treatments.
The most prevalent type of dementia is Alzheimer’s disease, which is the fifth-leading cause of death for adults 65 and over. The illness is marked by difficulty remembering recent events. People with Alzheimer’s can usually recall the past, but have trouble remembering what transpired recently. An individual with Alzheimer’s disease may be able to tell you about their childhood in detail, but not about the previous day’s events. As the condition progresses, people can have challenges walking and talking, and may experience personality changes.
Physicians believe that a buildup of proteins in the brain causes Alzheimer’s disease. Alzheimer’s disease degrades neurons and their connections in parts of the brain involved in memory, and lesions form in the brain, preventing those affected from storing new memories. As the disease progresses, the brain shrinks. To treat Alzheimer’s, doctors prescribe medicine targeting the lesions in the brain.
In some cases, people can inherit a genetic predisposition for the condition. According to the Centers for Disease Control and Prevention, a parent with Alzheimer’s increases a person’s risk by between 10 percent and 30 percent. However, the Alzheimer’s Society reports that the genetic link is more robust in early-onset Alzheimer’s, where adults show symptoms beginning in their 60s.
After Alzheimer’s, Lewy body dementia (LBD) is the second most common type of dementia; people with LBD often also have Alzheimer’s. LBD impairs areas of the brain involved in problem-solving and reasoning and is related to Parkinson’s disease, a neurological disorder affecting movement.
Symptoms of LBD include:
In the brain, an abnormal buildup of proteins, known as Lewy bodies, causes LBD. These proteins are related to Parkinson’s. People with LBD also have the same kind of brain lesions as those with Alzheimer’s.
When individuals receive an LBD diagnosis, physicians often prescribe medications for Alzheimer’s and Parkinson’s.
Like Alzheimer’s, advanced age is the most significant predictor of LBD. However, a stroke increases a person’s risk of developing the disease.
Although vascular dementia shares symptoms with Alzheimer’s disease, such as memory loss, there are significant distinctions. The characteristic symptom of vascular dementia is slow speaking and thinking, as well as trouble with problem-solving.
Vascular dementia can happen when a stroke blocks a blood vessel in the brain. In many cases, more strokes follow, and the symptoms become more severe with each additional stroke.
Conditions that harm blood vessels and impair circulation, preventing oxygen and nutrients from reaching the brain, can also cause vascular dementia, such as diabetes, high blood pressure, and high cholesterol. Treating vascular dementia typically encompasses treating the underlying conditions. For example, a person with hypertension might focus on taking steps to lower their blood pressure.
People who have vascular dementia tend to experience symptoms earlier than those with Alzheimer’s, as the onset of vascular dementia commonly happens between ages 60 and 75.
In addition to Alzheimer’s, LBD, and vascular dementia, many other types of dementia exist, including:
There are many organizations you can reach out to for support and to learn more about Alzheimer’s disease and related disorders, such as the Alzheimer’s Association or the Banner Alzheimer’s Institute.
The post What’s the Difference Between Alzheimer’s and Dementia? first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post What’s the Difference Between Alzheimer’s and Dementia? appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>The post What to Do If Your Medicaid/ALTCS Application Is Denied first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post What to Do If Your Medicaid/ALTCS Application Is Denied appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>Medicaid is a program for low-income individuals, so it has strict income and asset eligibility requirements. Qualifying for ALTCS requires navigating the complicated application process, which has many potential stumbling blocks. However, an ALTCS denial does not mean you will not eventually qualify for benefits.
ALTCS may deny an application for a number of reasons, including the following:
ALTCS is required to issue the denial notice with 45 days of the application. When you get a denial notice, read it carefully. The notice will explain why the application was denied and specify how to file an appeal.
Before filing a formal appeal, you can try informally asking the agency to reverse the decision. If you made a mistake on the application, this is the easiest and quickest way to proceed. If the caseworker made a mistake, it may be more complicated and require escalation to a supervisor or a formal appeal. And in some situations, it is easier and better to reapply than to appeal a decision.
The denial notice will tell how long you have to file an appeal—for ALTCS benefits, the deadlines is 35 days after the denial notice. It is important to file the appeal before the deadline. Whether the denial notice requires it or not, you should submit your request for an appeal in writing, so that there is a record of it.
Once your appeal is submitted, ALTCS will set a hearing date. Applicants must attend the hearing or their cases will be dismissed. You have a right to have witnesses testify at the hearing and to question the Medicaid agency’s witnesses. It is a good idea to have an attorney to help you through the appeal process. An attorney can make sure you have all the correct documentation and information to present at the hearing.
If you win the appeal, your benefits will be retroactive to the date of your eligibility—usually the date of your application. If you lose the appeal, the notice will explain how to appeal the decision. The next step in the appeal process usually involves submitting written arguments. If the next appeal is unsuccessful, then you will have to appeal to court. It is crucial to have the assistance of an attorney for this.
If your application was denied correctly due to excess assets or income, there are steps you can take to spend down your assets or put your income in a trust. Or perhaps your medical condition has worsened or could be described more accurately since your original application. Contact our firm to find out what actions you can take to qualify for benefits. Once you do this, you can then reapply for benefits. Note that when you reapply for benefits, your eligibility date will change to the date of the new application.
The post What to Do If Your Medicaid/ALTCS Application Is Denied first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post What to Do If Your Medicaid/ALTCS Application Is Denied appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>The post Professional Trustee: Corporate vs. Licensed Fiduciary? first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post Professional Trustee: Corporate vs. Licensed Fiduciary? appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>The common belief is that family member or close friend should act as trustee of a family trust. However, there may be reasons to appoint professionals instead, such as:
Once you determine to appoint a professional trustee, the next question is which type of professional you prefer. In Arizona, there are corporate professionals, such as banks or trust companies, and there are licensed fiduciaries, who are private individuals regulated by the Arizona Supreme Court. Which type is best for you depends on your preferences. Here are a few distinctions between the two options that may help you decide:
Distinctions | Corporate Trustee | Licensed Fiduciary |
Regulation (in addition to their removal by you, your beneficiaries, or a court) | Ongoing oversight by Federal and State agencies and regulations | Arizona Supreme Court; complaints heard by a Fiduciary Board. |
Fees | Flat fee based on percentage of assets under their management, and may be additional fees for irregular services | Hourly |
Personal | Nationally-based trustees may have different departments to handle different tasks or be more removed from the situation because they are located in another state | Usually fewer individuals involved; able to provide personal attention and in-person observations. |
Response time | Sometimes review committees and more regulatory hoops to jump through may delay response time | Few or no others to approve decisions may mean faster response time. |
Roles | May be limited – some only manage trust property and investments (perhaps only within their financial institution); others are also able to act as agent under power of attorney (manage IRAs/401ks, credit cards, other obligations) or to probate an estate | Can handle all roles, including trustee, powers of attorney, probate of estate, etc. No limitations with whom they invest. |
Succession | Corporate trustees do not retire or are less likely to go out of business. | May retire or go out of business; however they should have a succession plan for another fiduciary to take over their practice. |
These distinctions are general and may not apply to all corporate trustees or licensed fiduciaries.
We are happy to discuss this with you further or to help you weigh your options with your unique situation and preferences. Contact us today to schedule a consultation.
The post Professional Trustee: Corporate vs. Licensed Fiduciary? first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post Professional Trustee: Corporate vs. Licensed Fiduciary? appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>The post ALTCS’ “Snapshot” Date and Its Crucial Impact on a Couple’s Financial Picture first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post ALTCS’ “Snapshot” Date and Its Crucial Impact on a Couple’s Financial Picture appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>In order to be eligible for ALTCS benefits the applicant may have no more than $2,000 in “countable” assets (the figure may be somewhat higher in some states). Medicaid law also provides special protections for the spouses of Medicaid applicants to make sure they have the minimum support needed to continue living in the community while their spouse is receiving long-term care benefits.
In general, the community spouse may keep one-half of the couple’s total “countable” assets up to a maximum of $137,400 (in 2022). This is the community spouse resource assessment (CSRA), the most that a state may allow a community spouse to retain without a hearing or a court order. The least that a state may allow a community spouse to retain is $27,480 (in 2022).
Medicaid agencies must pick a date to use to analyze the applicant’s assets. The date that the agency chooses can affect how much money the applicant must spend down before qualifying for benefits and how much a spouse is able to keep. It is called the “snapshot” date because ALTCS is taking a picture of the applicant’s assets as of this date.
The snapshot date is usually the date of “institutionalization,” the day on which the ALTCS applicant enters either a hospital or a long-term care facility in which he or she then stays for at least 30 consecutive days. States use as the snapshot date either the first day of the month the applicant entered the facility or the actual date of entry. If the applicant enters a hospital or nursing home, stays for 30 days, goes home, and then reenters a hospital or nursing home, the snapshot date is the date the applicant entered the hospital or nursing home for the first stay.
Not all ALTCS long-term care applicants are in an institution. The snapshot date is usually either the date of the application or the date the applicant is determined to need a nursing home level of care.
On the snapshot date, the ALTCS agency counts up all of an applicant’s and his or her spouse’s assets, excluding the couple’s house. Then depending on the state’s CSRA, the agency determines how much the community spouse can keep. If any assets above $2,000 remain, then that money must be spent down before the applicant will qualify for benefits.
Example: If a couple has $100,000 in countable assets on the snapshot date and the state allows the spouse to keep half the couple’s assets up to the maximum CSRA, the ALTCS applicant will be eligible for ALTCS once the couple’s assets have been reduced to a combined figure of $52,000 — $2,000 for the applicant and $50,000 for the community spouse. If the state allows the spouse to keep the entire amount of the maximum CSRA, then the community spouse could keep the entire amount and the applicant would not be required to spend down assets.
How Can We Help?
Proper planning can help a couple determine when the best time to apply for ALTCS benefits based on the snapshot date and maximize the assets the couple can keep. Consult with our experienced attorneys for advice specific to your situation.
The post ALTCS’ “Snapshot” Date and Its Crucial Impact on a Couple’s Financial Picture first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post ALTCS’ “Snapshot” Date and Its Crucial Impact on a Couple’s Financial Picture appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>The post Guardianship: When Can Someone Be Declared Legally Incapacitated? first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post Guardianship: When Can Someone Be Declared Legally Incapacitated? appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>If a loved one is unable to make decisions for him or herself, the court may appoint a substitute decision maker, often called a “guardian,” but in some states called a “conservator” or other term. A guardian is only appointed as a last resort if less restrictive alternatives, such as a power of attorney, are not in place or are not working.
Generally, a person is judged to be in need of guardianship when he or she shows a lack of capacity to make responsible decisions or decisions that are in their best interests, and the appointment of a guardian is necessary to meet his or her needs.
The court usually looks at a number of factors in determining the need for a guardian or conservator, including the following:
A person cannot be declared incapacitated simply because he or she makes irresponsible or foolish decisions, but only if the person is shown to lack the capacity to make sound decisions to meet his or her needs. For example, a person may not be declared incapacitated simply because he or she spends money in ways that seem odd to someone else. Also, a developmental disability or mental illness is not, by itself, enough to declare a person incapacitated.
To avoid guardianship, a person may be able to sign legal documents, such as a power of attorney or trust, before they become incapacitated to authorize others to act on his or her behalf. Keep in mind that the standard for whether someone is incapacitated to care for themselves is not always the same as whether they have the capacity to make legal decisions. Proper execution of a legal instrument requires that the person signing have sufficient mental “capacity” to understand the implications of the document.
Our experienced attorneys are happy to discuss with you the most appropriate means of protecting your vulnerable loved ones, whether that be guardianship or other legal instrument, such as a trust or power of attorney.
The post Guardianship: When Can Someone Be Declared Legally Incapacitated? first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post Guardianship: When Can Someone Be Declared Legally Incapacitated? appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>The post ABLE Accounts vs. Special Needs Trusts: Why Not Have It All? first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post ABLE Accounts vs. Special Needs Trusts: Why Not Have It All? appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
]]>Patterned on Section 529 college savings accounts, ABLE accounts offer a tax-advantaged way for people with disabilities to put money aside in excess of the SSI program’s $2,000 resource cap without compromising their eligibility for government benefits like SSI and Medicaid.
Assets are allowed to grow, tax-free, inside the account, and withdrawals are not taxed so long as the money is spent on qualified disability expenses (QDEs) such as transportation, assistive technology, health and wellness, and employment support. Another major advantage of ABLE accounts is that they can be used to pay for food and shelter expenses of the beneficiary without reducing his SSI benefits—the same cannot be said if a SNT or anyone else pays for those expenses.
And, unlike a special needs trust, which leaves the account under the control of an assigned trustee, an ABLE account can be managed and controlled by the beneficiary once she comes of age. Being able to spend money without having to obtain a trustee’s permission translates into welcome financial independence for a person with a disability.
ABLE accounts are easy and inexpensive to set up. Almost all states, including Arizona, now have ABLE programs, and if yours doesn’t, you can set up an account using the program in another state that accepts out-of-state account holders.
However, ABLE accounts have several serious drawbacks and limitations. The beneficiary with special needs is the owner of the assets but may lack the capacity to manage the money responsibly. If the parents die before the beneficiary, the account would have to be managed through guardianship or conservatorship, which can be cumbersome, if the beneficiary is unable to establish a power of attorney. Alternatively, the Social Security Administration (SSA)-appointed Representative Payee can manage the account.
Perhaps the most significant drawback to an ABLE account is that the beneficiary must have become disabled before the age of 26 to qualify. Also, the beneficiary can only have one account and if its value exceeds $100,000, any benefit from the SSI program is suspended automatically. (ALTCS eligibility is not affected by the value of the account.) Annual contributions are limited to $16,000, as aligned with the federal gift tax exclusion. Lastly, most states that administer ABLE programs have a Medicaid (ALTCS) payback provision upon the death of the beneficiary. This means the state can claim reimbursement, dollar for dollar, for any Medicaid funds that went to the beneficiary during his lifetime, if any money remains in the ABLE account.
Click here for more information about Arizona’s ABLE account.
An SNT can be a way around these limitations. Unlike ABLE accounts, there is no limit to the size of the trust, and the funds can be used for almost anything a beneficiary needs to supplement her government benefits. (Payment of SNT funds for food and shelter expenses can result in reduction of SSI benefits.) Annual contributions are not limited as they are for ABLE accounts. Because the trust, and not the person with special needs, owns the assets, it is not counted against the beneficiary’s financial eligibility for SSI or Medicaid/ALTCS. Upon the beneficiary’s death, the assets in a third-party SNT can pass to the donor’s other relatives or anywhere else and are not subject to the state’s Medicaid payback provision (assets in a first-party SNT, which holds the beneficiary’s own assets, are subject to payback).
On the downside, setting up a trust may require the services of an attorney, which will cost more than opening an ABLE account. And, as noted earlier, trust distributions are controlled by the trustee, not the beneficiary. Also, third-party SNTs do not enjoy the same tax benefits as ABLE accounts. Income over $4,300 is taxed at the highest rate (37 percent) for federal taxes, and state taxes may be due as well, although deductions apply that can lower this rate to the beneficiary’s tax rate. Assets within the trust do not grow tax-free over time but are subject to capital gains taxes, and these can be considerable. Because the property originally belonged to an owner other than the primary beneficiary with special needs, capital gains are assessed when the assets were originally purchased, perhaps at a very low cost if they were held over a long period of time.
The best solution is to use both. The ABLE account can be funded over time from the SNT, giving the person with a disability who has capacity the ability to manage his or her own assets up to $100,000. This approach offers the best of both worlds: ensuring that the person with a disability is able to manage significantly more money in an ABLE account while at the same time preserving public benefits and having assistance in managing an entire inheritance in the SNT. Using both types of planning can avoid reduction of SSI benefits if the ABLE account, rather than the SNT, pays for food and shelter expenses—an amazing way of using both options in tandem.
Our experienced special needs planning attorneys can work with you to devise the strategy that works best for your family.
The post ABLE Accounts vs. Special Needs Trusts: Why Not Have It All? first appeared on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
The post ABLE Accounts vs. Special Needs Trusts: Why Not Have It All? appeared first on Tempe Estate Planning & Elder Law Attorney | Charlotte C. Johnson.
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