Nugen Law; focusing on estate planning and elder care law, emphasizing independence and quality of life.

Serving Indiana, Ohio, Michigan, and Florida.

More information at NugenLaw.com.

Good evening and welcome to PBS Fort Wayne.

The name of the show is LIFE Ahead and for good reason.

On this show, we have different topics every week, but what we try to do is give you information and education on topics that might help you and choices you have to make in your life ahead.

And tonight, no exception.

We have an attorney who visits this monthly and always gives you some good advice.

And I'd like you to meet him if you haven't been watching before.

This is Bryan Nugen.

Bryan, always nice to have you back with us.

Thank you, Sandy.

Good to see you.

Good summer.

It's been a great summer.

Great.

Thanks.

I would like it to be a little bit brighter than it's been, but a very nice summer so far.

I know we've had such crazy weather for, like, this entire year.

It's true.

It's true.

We'll cross out.

No, I can't do both.

Well, cross your fingers for a good finish.

Good.

Okay.

I want to talk about elder law and estate planning.

Are they the same thing, or how did they coordinate?

Well, they do relate.

When I think of estate planning, I think of your planning for at the time of your passing.

Where do your assets go?

Are they going through probate or are they not going through probate?

Who do we appoint as a personal representative to do those things on your behalf?

An elder law does all of those things that estate planning does, but it also focuses on things like guardianships, protecting assets during one's lifetime, securing benefits to pay for one's care as we age.

And we're going through that aging process to make sure we don't run out of money.

Those benefits to pay for care could be from the Veteran's Administration.

It could be from the Medicaid programs.

It might be from looking at long term care insurance policies, sometimes Medicare as well.

Not necessarily paying for personal care.

But Medicare is something that we speak about with clients as well to make sure that their Medicare plan is appropriate for their health care, etc.. Yeah.

What should people be doing to make sure that those things are appropriate for them?

How can they evaluate Medicare and any other life insurance or health insurance they might have?

I think if you're looking just at their insurance coverage to make sure that they have a good team around them to make sure that their agent really does sell those policies and that type of policy and that they're well educated in that area.

Right.

And to make the decision is an advantage plan appropriate for them as a traditional Medicare with a supplemental plan appropriate for them.

So I think making sure that you're working with the right professionals to make sure you have the most appropriate plan in place.

If we're talking about Medicare.

Okay.

So that would be the best advice that anybody could have.

Surround yourself with good people.

It isn't typically one person that's going to be taking care of all those things for you as you age.

But we would want to make sure you have somebody that if they're typically selling property and casualty insurance and that you're not normally selling advantage or, you know, placing advantage coverage or or traditional Medicare coverage, maybe that's not the person to speak with.

You'd want to speak with someone that does that on a regular basis and is well versed in that and can provide information to you on a regular basis and knows what policies are out there and what each policy exactly and can help you discover what's right for you.

Sure.

Okay.

Big question.

Yes, ma'am.

Taxes.

Taxes.

We always think about taxes.

How big of a role does that play in your estate planning?

I mean, do people think about this ahead of time or do a lot of people forget that there are going to be some things they need to pay tax on when they pull out that money?

Sure.

So when we're talking if we're strictly talking about taxes and with estate planning or when you're thinking about at the time of your passing, if you owe any tax, we're normally looking at two types of tax.

So just like when you file your personal tax return, a state return and a federal return.

In our estates, we're looking at state taxes and we're looking at federal estate taxes.

So the state taxes in Indiana, we call that inheritance tax, but we haven't had inheritance tax in Indiana for over a decade.

Yeah, I remember when it was a big deal years ago when that was the biggest continued.

So we don't worry about paying any money to the state of Indiana.

Yeah.

If we're living in Indiana at the time of our passing in regard to inheritance tax and then federal estate tax, so some one could be subject to federal estate tax, but your estate for an individual would be just need to be just shy of $14 million.

And if you're a couple, I'm not there yet.

You're almost there.

And there's a couple we have something called portability where you can take your spouse's credits as well.

So as a couple, if you are married, we could pass close to $28 million.

So while that does affect some folks, I'm sure it may affect some of our listeners.

It isn't.

It isn't affecting a majority of people.

In fact, from what I understand, it affects less than 1% of the population.

Is paying federal estate tax.

So perhaps less than 1% of our listeners would have to worry about federal estate tax, but not a majority.

Now, what's interesting about that, in the year 2026, it's set to go back to the level of estate tax where it was in 2018, but adjusted for inflation.

So if the law doesn't change, our tax code doesn't change in regard to federal estate tax, it could go back to maybe around $7 million per person in the year 2026.

But we're waiting to see what the federal government does with our federal estate tax and gift credits, etc..

So more to come on that in several months.

How often are there changes?

Is an annual thing or a review?

You know, it is there is not a set period of time when we see changes in the tax code.

We know that.

And even with the tax code as it's as it's in place right now, we can talk.

I can talk about estate tax.

I can't talk about the entire code.

That's not in my purview of of authority, but it's it's if nothing happens, as I say, it's set to go back to the level that it was in 2018, which was 5 million, adjusted for inflation.

That's why people are guessing it may be around 7 million.

But there was a period of time it was 600,000 for years and years, and then it started changing.

It was slowly going up to $1,000,000.

And then at one point it jumped to 5 million.

And now that we're in 28, since 2018, we're in the code that we're in right now.

It really doesn't change on an annual basis.

So if we're in 2025 now and the last code was 2018, so we're looking at seven years long time.

Yeah, right.

Yeah.

Okay.

There isn't a set time where we say every so many months or every so many years that's going to change.

It doesn't work like that came on the government and it does.

That's true.

Okay.

I want to talk about gifting.

That's really something that a lot of people are concerned about or wonder about.

And maybe somebody will tell you, well, if you know you're toward the end of your retirement or the end of your life, perhaps then I start gifting away my money, that will be a cheaper way to go.

Is that true?

And what about gifting?

Well, I think it depends on the type of asset that you're giving away.

Okay.

So does it have to be money doesn't have to be money.

So if first of all, we can gift $19,000 per year per person, the year 2025 per person, that we would be gifting to.

That's right.

What you're saying.

So the grantor can give to a grantee $19,000 per year in the year 2025 with no gift tax consequence.

If we gift more than that, technically there is a gift tax.

However, remember those those credits, those numbers I was just throwing around?

Yeah.

You have $14 million worth of gift in estate tax credits.

So if you give away more than $19,000, you have 14 million to pull from.

So even if you were to gift more than that, assuming your estate wouldn't be over 14 million at the time of your passing, it's unlikely you're going to be paying any gift tax.

People are sometimes confused that the person giving the money actually pays the tax, not the person receiving the money.

I do get that question in my and my office.

So we assume that you're getting it.

You're going to pay tax on it like you would is if you were working.

That's not how that works.

But when we your question send you is about end of life and should I be gifting at the end of my life.

And that's a way to avoid tax.

It is not the way to avoid tax.

If you have an estate that isn't subject to federal estate tax and in fact, sometimes it can hurt you.

So if you're giving an asset away, that's an appreciated asset like stock or real estate.

If someone passes owning that appreciated asset.

And what I mean when I say that is I bought the stock and it was worth $100 a share, it's now worth $300 a share.

So my basis is what I paid for 100.

The current fair market value is 300.

So if I were to give that stock to a child, their basis is still going to be 100.

So if they were to sell it, they would pay something called capital gains tax.

On the difference between that 100 share value and the 300 per share value.

But if I pass away owning that appreciated asset, my children, assuming my children are the beneficiaries, it could be anyone.

My children would have a basis now reset to 300 300 per share, which is called a step up in basis.

So if I sell that stock, I'm not going to have that capital gains tax hit.

So we also think about that with real estate.

If we give the real estate away prior to our passing, then the individual that's receiving that as a gift, their basis would be what you, the grand tour, had paid for that real estate.

But if you pass away owning it and then they receive it, their basis is the then current fair market value.

So generally gifting is not something that we're seeing a lot of with estate planning as much as we used to when our our gift in estate tax credits were much lower.

Another issue with gifting, if you're doing that as you're aging and maybe when you need help as you're aging, is that making those gifts can create consequences that you may not be able to get all of your VA benefits for a period of time or or be able to receive your Medicaid benefits for a period of time because there's a penalty that those programs have if you're giving money away, oh, they don't want you to anyone else.

And Medicaid, they don't want necessarily want you giving money away as a means of going on those benefits, either VA or Medicaid.

So we have to be very careful about trying to reduce the size of our estate while we're living.

Yeah, if we're thinking that we may need assistance from the Veteran's Administration, we may need assistance for Medicaid.

So gifting is something we need to do very cautiously and think about it in a in a much broader picture than just I'm getting close to the end of my life.

I may want to start gifting.

And sometimes you'll here folks say, I'm going to give it to my children.

They'll hold the money for me.

My concern always with that is everything is great.

If nothing changes with the individual that's holding the money, holding the money for you.

But if they have a disability, if they pass while they're holding the money for you, if they have debt or a divorce right.

The four D's that negatively impacts that money that you've asked them to hold for you.

So we have to be very cautious about making those gifts, that there may be a consequence that we never thought about, not only the capital gains tax end of it or the tax side of it, getting that step up in basis.

But it could affect your ability to get the VA.

It could affect your ability to get Medicaid.

And so we have to do that very cautiously.

Well, a couple of things.

I'm going to go to Medicaid for for a minute.

I think you've said before on this show that if you receive Medicaid, you or want to and you're going to use it for a nursing home or assisted living, you have to be careful because they're going to look at your assets, Right.

That it to see you so qualified they will set up five five year lookback.

So we're looking at two different things.

What your question I'd see too I see two points that you're bringing up.

One is, yes, they're going to say they're Medicaid would be saying in the past five years, in the past 60 months, have you given anything away without getting something in return?

Was it a gift?

So giving money to your children is a gift.

Setting money aside and giving it to a friend is a gift.

So have you made any gifts for which you didn't get something in return if in fact you have, then Medicaid will say, okay, how much have you given away in the past six months?

We're going to divide that by a number that changes every year and that the answer.

So if you've given away, hypothetically, $75,000 and hypothetically, the divisor by Medicaid at that time is 7500.

So I gave away 75,000 within the last 60 months, the last five years.

And the divisor that Medicaid is using at that time is 7500.

The answer is ten.

So for ten months you are unable to receive any of those Medicaid benefits.

So we have to be very cautious about I've given that money away thinking I'm going to help myself to reduce my assets.

But actually you're creating a penalty for yourself.

Medicaid is for those folks that have $2,000 or less in their name.

If they're looking for Medicaid to pay for in-home care or, as you're referencing before, to pay for their stay at an assisted living facility or a nursing home.

So we have to be very cautious.

And how we get to that $2,000 level.

You said if they have a $2,000 assets that include cash savings, does that include property like a house or car?

It can include those things depending upon if they're a single person, if they're a married person.

So the car is an exemption so we don't have to look at the car.

As far as cash, yes, we look at cash.

We look at cash value of life insurance policies, CDS, stocks, bonds, if you are living in your home, will ignore it so long as the home has a value below a certain amount.

If you're married and your spouse is living in the home again, we're going to ignore looking at that home.

But all other assets.

Yes, Medicaid's going to be looking at everything that you have and determining and determining if you're an appropriate candidate for Medicaid or you're not an appropriate candidate for Medicaid.

And again, you know, we're talking about Medicaid.

Yes, not Medicare.

Yes.

Let's start let's go back to the paying taxes again.

You spoke about who who pays what or.

Yes, what is eligible to be paid.

If you've gifted somebody something who does pay the taxes, the gift there are the gifts, the gift or the person that if I have the money and I'm giving you Sandy, $50,000.

Thank you.

I'm the person that pays the tax.

I'm the person that gives it pays the tax, not the recipients of the grant or the gift or pays the tax.

The grantee, the recipient does not pay the tax.

Okay.

I thank you for clarifying that.

I think that's certainly a factor that people need to think about.

Sure.

If they're going to do some gifting now, I feel the need to interject this.

I'm sorry for interrupting you when we're looking at how much you can gift per year and I was giving the figure of 19,000.

I'm giving that figure when we're looking at gift tax, when we're talking about Medicaid in the same conversation, that's a different number.

So Medicaid permits one to gift $1,200 per year in total, not per person.

So that sometimes is confused or I can gift $19,000 per child.

So I'm going to make a 19,000 hour gift to my five children and then I'm going to apply for Medicaid.

Medicaid has different rules.

So Medicaid is permitting you to gift a total of $1,200, not per person, but annually to give away.

That's not mine.

It isn't much.

So that's why I say to two people, be very careful when you're gifting.

If you're thinking you're going to reduce your assets strictly by gifting it, that's not necessarily the best approach to take unless you're doing it in a very structured way, in a way that Medicaid will recognize.

Yes, you're making this gift.

However, you're also going to take another step to be able to get through that penalty period that I was mentioning earlier.

And that could be by there are certain promissory notes that could be used or annuities that could be used.

So there is a means of helping yourself get through that penalty period if, in fact, you have created one by gifting money.

Okay, So say someone has gone through that process.

So yes, trying to acquire Medicaid again, Medicaid not Medicare.

And you have qualified so far.

Now, here's my question.

Yes, ma'am.

Is that it?

Is that a one time thing or maybe in two or three years you're still living in the nursing home?

Do they reevaluate your offense?

So, yes, at least annually, they're going to look at your assets and do okay.

How much money do you have in your checking account?

How much money do you have in your savings account?

So Medicaid will look at your assets on the last day of the month at 11:59 p.m.. How much do you have in your checking account?

How much do you have in your savings account?

So if you're on Medicaid, you could have more money than 2000 during the course of the month.

So that's how you get your Social Security, a pension, whatever it may be.

You have more than $2,000 not to panic.

We're either going to use that money to pay for our care at the nursing home or care in the home wherever it may be.

We could put it into a special trust called a qualified Income Trust.

Possibly.

So by the end of the month, we're back below the $2,000.

Got it.

Okay.

Okay.

Now, you know, we've been talking about as people retire or as they age, another thing that they probably are thinking about a lot is who's going to take care of me and can I afford it?

What are some alternatives for cost of care as people begin to age and they have to think about?

Well, I think those appliances are first, the Veterans Administration, if you're a veteran, there is an excellent program that the VA has for veterans where you would be assessed at the VA hospital to see if you do need attendant care.

Do you need that?

In-Home care vets are typically receiving 10 to 20 hours per week of care.

So I always encourage vets if they need that assistance, to look to the VA hospital about having an assessment to see if you're an appropriate candidate for that attendant care, that type of care is not based upon your assets, it's not based upon your income.

It's simply having served as a veteran, you can receive that care in the home.

There is another VA program called Aid and Attendance.

The aid in attendance program is like a pension.

They they if you are incurring costs to pay for your care, they're going to reimburse you up to a certain dollar amount for that care.

And with that program that attends program, not only can the then the veteran rather benefit from it, but the spouse of the veteran can benefit as well.

And then finally, we're looking at Medicaid and the Medicaid program can pay for care in your home.

The Medicaid program can pay for at a nursing home or a memory care unit assisted living facility.

If the VA if the assisted living facility takes Medicaid, there are multiple programs that elder law attorneys are typically working with for the benefit of their clients.

I like to talk about VA benefits because from, you know, talking to a lot of people, I think a lot of people are aware that they're eligible.

So a lot of these things that they could be getting go unclaimed.

True.

And if you're a veteran that has hearing loss, has had medical conditions, has had a cancer be assessed for a disability.

So there are different times for disability assessments to be done.

But if you haven't had a disability assessment done in the past, without a doubt have a disability assessment done.

And I'd like to tell my veterans with whom I'm speaking, explain to them the worst day that you've experienced, not your best day.

You need help on your worst day.

So let them know.

Yes, I have had this issue.

I have had that issue.

Don't be proud.

They're there to help you.

And as Sandy was saying, there's a robust program there available for veterans to receive disability.

So it would be a shame for them not to have that assessment done.

And after you've had the assessment done, you can also be reassessed.

Perhaps your disability has worsened over time, so you don't want to just have one disability and never have the assessment done again.

Consider having a reassessment done at some point to see if your disability ranking has changed, which you were not eligible for at a certain point in time.

If your condition worsened, you might now.

That's right.

Legible.

Good advice.

As far as planning again for all older age or retirement.

Yep.

And we're not talking about Medicaid or Medicare here, but just simply what are some things people can be doing in advance and when should they start?

That planning should start when you're 50 to plan for your.

Well, 70, I think.

Well, if you're thinking about planning for retirement and how much money you have in the bank in order to retire, that needs to start early on.

That's that's with your first job.

20.

Yeah.

But when you're talking about estate planning itself, I think that we plan differently at different stages of life.

Oftentimes I think people, when they have their first child, they may speak to an estate planning or elder law attorney to have their estate planning in place, make sure a guardianship is is within their estate planning documents and appointing someone to serve as guardian for that baby.

If that situation arises.

I think also when someone has been diagnosed their Laura Young, they've been diagnosed with something that was they didn't anticipate.

Oftentimes I'll see folks speaking about estate planning and how to pay for that care as they're aging, then I do think that the next time that people are thinking about that is when they're getting close to retirement or they've just retired.

They're talking about, do I need a will?

Do I need a trust?

What other documents do they need?

And having a will or having a trust or what?

What's most appropriate for that individual?

It's so unique to each person.

So I would encourage the listeners not to think, Oh, my neighbor did this or my dad did that, or I heard, you know, my coworker did this.

Make sure that when you're speaking with your attorney, that you're talking with them about your situation and coming in with an open mind?

I think generally attorneys that work in this area want to help you.

They want to educate you so you have the best plan in place for you that's most appropriate for you and your beneficiaries is going to be receiving your assets when you pass.

Without a doubt.

Also, as we're aging and we're thinking about, gosh, I may need care in the future, the type of estate planning that we do changes.

We're shifting from strict estate planning to thinking more about elder law, and maybe we're trying to protect those assets if we need benefits in the future from the VA or for Medicaid or thinking into the future.

And we're wanting to have those things in place as long in advance of the of the care as possible and to documents that can't be overlooked are durable powers of attorney for financial decisions and health care designations.

We want those to be in place.

There was a time where they can be combined in Indiana.

We can't combine those anymore.

They need to be separate.

A power of attorney to deal with finances and health care representative designation so someone can make health care decisions on your behalf.

I encourage everyone to have those.

If you're 18 and going away to school, sometimes parents will think, Oh, I can make decisions for my child.

They're my child.

I can make decisions for them, or they're my spouse.

I can sign a check for them or talk to their h.r.

Department or speak with their financial advisor.

Their attorney actually know we want those durable powers of attorney to be in place.

We want those health care rep designee designations to be in place.

So you've appointed a designee, someone that can make decisions for you in those emergency situations.

When you have an unexpected stay in the hospital, an illness comes upon us and we're not planning that usually when that's exactly what happens.

Exactly.

Yep.

Very quickly, because we're almost here at the end of the show.

Bryan Naming beneficiaries.

Yes.

Can you have different people for different assets that you have?

It doesn't have to be the same person.

It doesn't have to be the same person.

Well, I'll say very quickly about that is that I like for people to think about percentages of their estate versus this account to that person, this dollar amount to that person, because today what's in that account may not be the same as what is in that account at some point in the future.

So think about percentages and divide your estate that way versus a specific asset or a specific dollar amount that makes sense.

That makes sense.

Thank you.

Okay.

Well, unfortunately, we've come to the end of this show, but I hope you have learned a little bit and have some good advice for you as you begin to plan your retirement and plan what's going to be happening then?

Again, our thanks to Bryan Nugen, elder law attorney.

Thanks to you viewers that watch us every week here on life.

And that's Wednesday nights at 7:30.

And you can also catch this show and any other episodes of life ahead on YouTube.

Have a good night and we'll see you again next week.

Nugen Law; focusing on estate planning and elder care law, emphasizing independence and quality of life.

Serving Indiana, Ohio, Michigan, and Florida.

More information at NugenLaw.com.