Exploding 4 Harmful Estate Planning Myths

Exploding 4 Harmful Estate Planning Myths

By Solid Serenity Legal Solutions

As with many technical, but necessary, things in life estate planning can seem mysterious. People often do not know what they need, when they need a plan, or how to get a plan.

Today we are exploding 4 harmful estate planning myths to help you sort through the noise and conflicting information about estate planning we all hear.

(1) Medicare Will Pay For My Nursing Home Care

People who believe this may be confusing Medicare with Medicaid. Medicaid does provide benefits to low-income individuals, and nursing home care can be included. However, Medicare does not.

Medicare will pay for up to 100 days of skilled-nursing or rehabilitation care if it is deemed necessary and you have spent 3 days in the hospital. In that situation, Medicare will pay 100 % of costs for the first 20 days and 80 % of costs for the remaining 80 days. Medigap insurance can cover the remaining costs.

But, when the 100 days are up, you have to find another way to pay for ongoing skilled services. Some options for payment include long-term care insurance, Veteran’s benefits, Medicaid, and private pay.

(2) I Can Give Everything Away and Qualify for Medicaid to Pay for Long-Term Care

Long-term care is expensive. The current average monthly expense in Oklahoma is $6,000 for long-term care.

Medicaid benefits will pay for that care, but only for families with a certain amount of assets and income. Some people wrongly believe they can reach that threshold by giving away all their assets when they need Medicaid.

But, when qualifying for Medicaid, the government will “look back” at transfers within a certain period of time to determine if the transfers meet any exclusions to the penalties assessed for asset transfer. If the transfer does not meet an exclusion, the assets will be counted against the Medicaid applicant and disqualify them for a certain period of time from getting Medicaid benefits.

There are ways to plan for receiving Medicaid in your later years, but this planning is complex and requires the help of a professional. Find out more about estate planning.

(3) I Can Give As Many People As I want $10,000 Per Year and Not Pay Gift Taxes

Gift tax is a complicated system. In reality, the amount you can give is up to $15,000 per year to as many people as you want. When you exceed this limit, you fill out a gift-tax return. But, the gift tax is a deduction from your overall estate taxes when you die.

That means if you gift over $15,000 one year, the amount over $15,000 is just deducted from your $5.3 million Federal exclusion from estate taxes at your death. You will not actually pay a tax unless or until you have gifted more than $5.3 million.

(4) If I Have a Will, My Family Avoids Probate Court

This is an unfortunate myth because so many people seem to believe it to their detriment. An estate consists of assets titled only in your name, with no joint owner, no beneficiary, or no Trust when you die.

A Will does not transfer the title of your assets. So, it does not avoid probate. If you have any assets left entirely in your name at your death, with or without a Will, your family will have to go to probate Court.

The ins and outs of estate planning are complex and there is a lot of wrong information out there. To make the best plan for your family that meets your goals, book online with us today.