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Another thought I will throw out to everyone. My thinking. When my late FIL was in an excellent SNF here - a decade+ ago - it cost about $60k/year and I reckon he was paying about $5k of that to subsidize Medicaid patients there. Today - the same place costs about $90k/year private pay - and the Medicaid subsidy is well over $10k - perhaps $15k (even with all the private charitable donations to this non-profit). Best I can tell from the financial reports. And the same place in NYC would cost what - $125k-150k/year? Look up the good Jewish SNFs in a place like New York and the costs. Let me know. Last time I looked at San Francisco it was $150k.
How much home health care can I buy for $90k/year here? How much can you buy for $125k/year or more in New York? Quite a bit IMO. Especially if you're talking about various levels of care - and you don't need skilled care 24/7. My father - 97 - was diagnosed with pancreatic cancer 4 months ago - and given 6-12 months to live. He is still doing fine - thank you very much . But if/when he starts to decline - he'll do it at home in his independent senior living villa. Because that is his wish. He wants his big screen TVs - his computer - his king sized bed - everything he has at home - to the end. And I honestly can't see that whatever he needs/wants will be more expensive at home than moving him into a SNF. If he winds up needing something like pain meds - home hospice can take care of that.
When it came to my late FIL in the SNF - the hardest thing for him was his diet. Very restricted because he had CHF. But that is something one can manage at home - although it might be tedious and perhaps expensive. That SNF is currently 2/3 Medicaid residents. The care is good but the rooms are teeny tiny. My father doesn't care to live there unless absolutely 100% necessary - and I am on the same page with him.
Perhaps it is better that we figure out how to plan dying at home? Robyn
Massachusetts has no partnership laws like NY. I checked into it with an insurance agent. There are only a handful of states that do. Partnership LTC policies are not available to the vast majority of people notwithstanding all the ink they get on this forum.
LTC Partnership policies are currently available for sale in 41 states.
Illinois, Michigan and Massachusetts have all passed legislation creating LTC Partnership programs.
I'm not sure why you would say that LTC Partnership policies are not available to the vast majority of people.
The only states that have not yet passed LTC Partnership legislation are:
Surprisingly, no one has mentioned the tax consequences of moving assets into an irrevocable trust.
Moving a retirement account into an irrevocable trust is a taxable event. The entire amount would be taxable as income in the year the account was transferred to the irrevocable trust.
Transferring an appreciated asset (e.g. stock, real estate) into an irrevocable trust also has tax consequences. When an appreciated asset is inherited, the heir is given a "step up" in cost basis and can sell the appreciated asset right away and avoid all capital gains taxes.
If the ownership of the appreciated asset is transferred to a trust there is no "step up" in cost basis and capital gains tax will be due when the asset is liquidated.
assets transferred to an Irrevocable Trust are subject to federal gift tax. which means that up to $14,000 in assets may be transferred to the trust tax-free a year . Any assets exceeding $14,000 will be go against the lifetime credit i believe with no taxes for most folks actually paid . i am far from an expert on trusts so this is what i think but i could be wrong .
Surprisingly, no one has mentioned the tax consequences of moving assets into an irrevocable trust.
Moving a retirement account into an irrevocable trust is a taxable event. The entire amount would be taxable as income in the year the account was transferred to the irrevocable trust.
Transferring an appreciated asset (e.g. stock, real estate) into an irrevocable trust also has tax consequences. When an appreciated asset is inherited, the heir is given a "step up" in cost basis and can sell the appreciated asset right away and avoid all capital gains taxes.
If the ownership of the appreciated asset is transferred to a trust there is no "step up" in cost basis and capital gains tax will be due when the asset is liquidated.
Even if you're moving a Roth? Just asking (I don't know).
FWIW - the worst part of irrevocable trusts IMO can be the conflict of interest between the lifetime income beneficiary (usually a spouse - usually a wife) - and the beneficiary of the corpus (often children) when the income beneficiary dies. This problem is especially acute in today's low interest rate environment:
Over the years - I have run across asymmetrical estate plans (mostly talking with female friends). Where the husband gets everything free and clear if the wife dies first - but the wife has a lot of assets tied up in a trust if the husband dies first. This is a big red flag to me. And I always tell the women involved that they need an independent lawyer to review the situation so they can best protect themselves.
BTW - although most states do have long term care partnership programs - their terms vary from state to state. For example - here in Florida - if you buy a policy with $150k in benefits - you will pretty much shield $150k in assets from Medicaid. That's it. Best I can tell - the policies don't shield you from Medicaid income requirements either. It's not an especially good program IMO when it comes to shielding larger amounts of income/assets:
Another thought I will throw out to everyone. My thinking. When my late FIL was in an excellent SNF here - a decade+ ago - it cost about $60k/year and I reckon he was paying about $5k of that to subsidize Medicaid patients there. Today - the same place costs about $90k/year private pay - and the Medicaid subsidy is well over $10k - perhaps $15k (even with all the private charitable donations to this non-profit). Best I can tell from the financial reports. And the same place in NYC would cost what - $125k-150k/year? Look up the good Jewish SNFs in a place like New York and the costs. Let me know. Last time I looked at San Francisco it was $150k.
How much home health care can I buy for $90k/year here? How much can you buy for $125k/year or more in New York? Quite a bit IMO. Especially if you're talking about various levels of care - and you don't need skilled care 24/7. My father - 97 - was diagnosed with pancreatic cancer 4 months ago - and given 6-12 months to live. He is still doing fine - thank you very much . But if/when he starts to decline - he'll do it at home in his independent senior living villa. Because that is his wish. He wants his big screen TVs - his computer - his king sized bed - everything he has at home - to the end. And I honestly can't see that whatever he needs/wants will be more expensive at home than moving him into a SNF. If he winds up needing something like pain meds - home hospice can take care of that.
When it came to my late FIL in the SNF - the hardest thing for him was his diet. Very restricted because he had CHF. But that is something one can manage at home - although it might be tedious and perhaps expensive. That SNF is currently 2/3 Medicaid residents. The care is good but the rooms are teeny tiny. My father doesn't care to live there unless absolutely 100% necessary - and I am on the same page with him.
Perhaps it is better that we figure out how to plan dying at home? Robyn
Excellent thoughts imo. Even if I could afford the pricey care at a SNF, honestly I wouldn't want it. I've seen enough of the reality of those places (they were "high quality") for elders I know. As long as pain could be managed, I'd want my comfy bed with my feisty Jack Russell (and spouse!) snuggled next to me, my great view out the bedroom window (if we're still here), eat what and when I want, watch my own TV/movies, blast Bach, and have people stopping in any time with offerings. The mere thought of being in a nursing home makes me break out in hives. We cannot control what happens, though.
assets transferred to an Irrevocable Trust are subject to federal gift tax. which means that up to $14,000 in assets may be transferred to the trust tax-free a year . Any assets exceeding $14,000 will be go against the lifetime credit i believe with no taxes for most folks actually paid . i am far from an expert on trusts so this is what i think but i could be wrong .
Pre-tax retirement accounts (e.g. 401k, 403b, traditional IRA, etc...) transferred into an irrevocable trust must have income tax paid on their full value the year in which the transfer is made. They are also subject to the gift tax.
As far as I know irrevocable trusts cannot be the owner of Ira accounts ever. Trusts can only be beneficiary's ,never owners . You really have to cash them out .
As far as I know irrevocable trusts cannot be the owner of Ira accounts ever. Trusts can only be beneficiary's ,never owners . You really have to cash them out .
That's my point.
In order to transfer that asset to an irrevocable trust, he'd be "cashing out" the retirement account, paying the full income tax on it (both state and federal) then transferring the remainder into the irrevocable trust.
It would be a very expensive transfer.
That's another reason why it would make more sense for him to get a Partnership policy. If he has a decent sized retirement account, he could end up paying 40% or more in federal and state income taxes on it.
It'd be "cheaper" to buy a long-term care partnership policy.
If he bought a Partnership policy in NY, and then moves to Arizona, the policy will still be recognized as a "LTC Partnership" policy in Arizona.
The best advice would be for him to buy a Total Asset Protection policy in New York. Arizona will only give him "dollar for dollar" protection. But, he would have the option of moving back to NY after using up the policy, if he wanted to have total asset protection.
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. But if/when he starts to decline - he'll do it at home in his independent senior living villa. Because that is his wish. He wants his big screen TVs - his computer - his king sized bed - everything he has at home - to the end. And I honestly can't see that whatever he needs/wants will be more expensive at home than moving him into a SNF. If he winds up needing something like pain meds - home hospice can take care of that.
