It was a packed house for “I Cried When I Opened the First Nursing Home Bill!” workshops in Torrance on November 9th and 12th.
A lot of good questions were asked and there were many comments about how informative and educational the material was.
People just kept calling up to the very last minute. This is why we don’t put the location in the ad and postcard. It’s to make sure that we have enough material and seats for everyone.
That’s it for this year’s workshops. Watch the Rafu, your mailbox, or our website under the Upcoming Workshops tab (http://www.KarlKimCo.com), for next year’s workshop schedule. See you there!
Many people commented that they liked the “Ticking Time Bomb” portion of the workshop. They found the information on why your living trust may be a ticking time bomb very helpful.
So for this newsletter, we are including excerpts from my book which is available for sale on this website under the ebook tab.
Do You Have The Ticking Time Bomb?
From our last article “The 3-3-3 Financial Plan to Deal With Alzheimer’s”, we went over the steps to determine the proper estate planning documents to have.
Sadly, a lot of people we see already have a living trust in place. This is the first thing that many people do, not the last. They went to a workshop, friends have one, or family tells them that they need one.
So they get a living trust, wrap it in plastic and put it in their drawer or closet….never to be seen again until something happens. The guy is attorney. He must know what he is doing. Right?
Is this you?
The sales pitch from the attorneys at workshops is that you must avoid probate and unnecessary estate taxes. You need a living trust! (But they don’t tell you what kind)
Let me ask you, when does probate happen?
After you die.
When do you need long term care?
When you are living.
“Houston, this is Apollo. I think we have a problem!”
Doesn’t it make sense to plan for long term care first? We think so.
Even worse is the number of people that don’t have a will, living trust or powers of attorney. That’s like driving without a license!
But before we even get started, you must know that we are not attorneys.
However we work with a network of attorneys that we have known for a long time. They are estate planning attorneys that specialize in wills, trusts and probate but also have a good knowledge of Medi-Cal.
In Torrance, we have been working with Dennis Mochizuki, Esq. for a very long time. Also, if you need a Japanese speaking attorney, Kaz Uemura, Esq, is also an attorney that we would recommend in Torrance.
For those of you in Monterey Park and Montebello areas, we recommend Glenn Nakatani, Esq. in Covina. In Orange County, it is Bill Oei, Esq. and in Culver City, Kevin Quock, Esq.
Finally, in downtown Los Angeles, David LaSalle of Mitsumori and LaSalle.
What we will cover in this article is not to be construed as legal advice because only an attorney can give legal advice. We will be describing the issues and solutions that we have seen.
Here we go.
The first thing we need you to get out of your head is that all wills and trusts are alike. Just because an attorney is licensed doesn’t mean that they are Medi-Cal knowledgeable.
There is specific language that is put into these documents to cover a wide range of Medi-Cal situations that a traditional estate planning attorney may not be familiar with.
Having the proper estate planning documents is an essential part of the Medi-Cal and retirement planning process.
Living trusts offer no protection from Medi-Cal.
Having the right type of revocable living trust is important for a husband and wife. A Disclaimer trust is what our attorneys recommend rather than an A/B or A/B/C trust.
The disclaimer trust gives the surviving spouse (upon the death of the first spouse) the option to keep all of the assets in one pot rather than two pots (A/B trust).
Keeping the assets in a single trust gives the surviving spouse the flexibility to move assets around in order to qualify for Medi-Cal.
Dividing the assets into an A/B trust is most often done to minimize estate taxes, but makes it difficult or impossible for the surviving spouse to move assets around in order to qualify for Medi-Cal.
What type do you have?
Getting approved for Medi-Cal is one thing, avoiding Recovery is another.
Think of Medi-Cal as a loan program. The State will help to pay your nursing home costs while you are alive.
But after you die, or your spouse if married, they want their money back.
This is called Recovery.
Because you can qualify for Medi-Cal owning a home, people mistakenly believe that it is also exempt from Recovery.
But there are straight forward and legal ways to avoid Recovery….but you have to plan for it.
Early on, a Durable Power of Attorney for Asset Management (financial) should be prepared. This will allow the attorney-in-fact (spouse or children), to remove the person’s name from the home if they cannot sign or do not have capacity.
This is the most important estate planning document that someone can have. This will help to avoid Recovery and protect assets for the spouse and family.
The Durable Power of Attorney for Asset Management should also allow gifting in excess of the annual exclusion which is currently $13,000. This situation would occur if we were to gift the home to an adult child for instance or to get rid of excess countable assets for a single person.
We hope that you now know that you have to see the right kind of attorney, one that is Medi-Cal knowledgeable or work with a financial planner that is.
Hopefully you also see the importance of having the proper estate planning documents in place as soon as possible because you never know when a health care crisis will occur.
Karl Kim, CFP, CLTC is the President of Retirement Planning Advisors, Inc. and is a Medi-Cal specialist. He has submitted over 1000 applications with a 99.9% success rate over the past twenty years with a 99.9% success rate. This is meant to be an educational article. Do not make any decisions solely on the information contained herein. Consult your tax advisor, financial planner and attorney before taking any action. We are not responsible for any inaccuracies or misinformation.
P.S. Have a Happy Thanksgiving from us here in the office cooking away in front of a hot oven! Gobble Gobble!