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                Last week I was talking about the difficulties in funding long term care through long term care insurance or Medicaid.  Insurance companies are getting out of the long term care market entirely or drastically raising premiums.  Medicaid, the primary government program that covers long term care, is still a fall back for many.  But, there are gaps in terms of what it will and will not cover, and it is increasingly difficult for many to navigate the Medicaid system.                 This is especially so given the 2 objectives most of our clients want to achieve – making sure they have enough money to meet their own needs but also passing on a legacy to their children and grandchildren.  Without proper planning for long term care, however, the first objective may overwhelm the second, making it unachievable.                 That’s where long term care insurance has sometimes helped.  It’s also where, what I call the legal solution that we often employ – 5 year planning using trusts  - has also helped.  But, sometimes there is no long term care insurance, it’s too late to get it and the legal solution can only go so far.                 Self funding with asset based long term care

                As I always explain to people, there are 3 ways to pay for long term care.  One way is to use your own money.  A second source is long term care insurance and the third is government benefits – primarily Medicaid and the VA Aid and Attendance program.                 I have written much in this blog about government benefits, especially Medicaid.  Because long term care is so expensive and so many people run out of money, Medicaid, as a last resort, must always be considered.                 But, the economy is still struggling and tax revenues, which provide the funding for Medicaid, are down.  State and Federal governments are looking for ways to cut costs and Medicaid is likely to continue to be a target.  The VA Aid and Attendance benefit, which has been a help but not a total solution by itself, is also likely to be more restrictive.  And, of course, it has never been an option for the non-Veteran senior population.   As we see fewer World War II veterans, there are fewer Korean veterans behind them, and still fewer Vietnam veterans coming behind them.                 Long term care insurance is an important piece as well but, unfortunately, we find that

                Last week I raised the legal issues faced by digital assets – specifically property rights.  Who owns my Facebook account after I die?  Who can access that account when I am alive but incapacitated?                 Courts are often wrestling with these issues for the first time.  State legislatures have not, in many cases, modified the laws to keep up with technological changes.  There have been a number of cases around the country in which family members of a deceased online account holder have fought to gain access to that account, some successful and others not.                 Many online companies have established rules regarding access.  For example, Facebook allows already confirmed friends to continue to access a deceased person’s account.  Yahoo’s policy is that the account expires when the accountholder dies.  Google provides that accounts can be deleted if they have not been accessed for a period of time.                 But, is that the last word?  Do the companies get to lay down the rules with regard to access and ownership?  Not necessarily.  One Michigan judge directed Yahoo to hand over a deceased Marine’s emails to his parents, who argued that he would have wanted them to see the emails.                 Some people have

                Technology has allowed us as a society to go places and do things never before imagined.  But, it has created issues and problems that, likewise, we could never have imagined.  Much has been written about the problem of texting while driving or “sexting” by minors.  Our laws have been struggling to keep up, because they were never written with computers, cellphones and the internet in mind.                 Criminal laws are often the first to be modified.  But, because technology allows us to create and preserve information in many different formats, property rights must be addressed as well.  The term often used to refer to what technology allows us to create is “digital assets”.                 What exactly are digital assets?  They include emails, email accounts, digital music, books, photographs and video, social network accounts, domain registrations, Domain Name System (DNS) service accounts, file-sharing accounts, blogs, listservs, financial accounts, banking accounts, web-hosting accounts and online accounts.  As technology continues to advance, new digital assets are created.                 And unlike paper, these assets can’t simply be thrown in the trash bin.  The volume of digital assets can dwarf that which is put to pen and paper.  This leads to legal issues in the realm of

                So your parent has an insurance policy that they can no longer afford and they are in spend down mode to qualify for Medicaid.  Cashing in the policy and spending the proceeds is necessary before Medicaid will kick in.  But last week I mentioned another option, something called a life settlement.                 Here’s how it works.  The parent, as the owner, sells the policy to a third party for cash.   To be clear, the death benefit won’t be paid to the children any longer.  The third party investor will become the owner and beneficiary.  But, the senior can very often receive more money than he/she would by surrendering it for the cash value.  Typical life settlement payments range from 30 to 60% of the face amount (death benefit).   Term insurance policies, which have no cash value, can also be sold through life settlements.                 The cash received can help pay the cost of care for the senior.  This might allow Mom or Dad to stay in an assisted living setting or at home longer before money runs out and a move to a nursing facility becomes necessary.  It could also help get a family through a Medicaid penalty period resulting from

For 20 years now, I’ve been guiding clients and their families on the spend down of assets before applying for Medicaid.  Successful applicants must spend down just about everything before getting Medicaid approval, including any life insurance policies that have cash surrender value. For many seniors the cash surrender value of their policies is a fraction of the death benefit value, typically 10%.  Cashing in the policy for a few thousand dollars, in some instances, causes the loss of a death benefit of $50,000 or more.  Certainly, the insurance companies don’t mind.  Pay them years of premiums and then cancel the policy before they ever have to pay a claim.  Even where Medicaid isn’t yet a consideration, many seniors on fixed incomes let their policies lapse because they simply can’t afford them any longer.  Hundreds of millions of dollars in death benefits are never claimed. When we come across these scenarios, where the “spread” between the cash surrender value and death benefit is large, we explore ways to keep the policy in force.  Sometimes children or other family members with the financial means to do it, can purchase the policies for the cash value.  The senior gets the cash which must then