February 2011 Archives

Life Insurance Audits

February 21, 2011,

by Michael Ettinger, Esq.

Let's face it, life insurance is a mystery to most people. Few know whether they have the best insurance for the money.

Here are some changes that may require you to review what you have.

1. Interest rates have fallen, lowering the internal rate of return on your policy. This may cause it to "blow up" at a later date, where only the payment of large premiums will save it.

2. The coverage may be inadequate, or it may be excessive, depending on your changed circumstances. Perhaps the money might now be better used elsewhere, say for long-term care insurance instead. Or have both - borrow the cash value to pay for long-term care insurance and keep the death benefit too.

3. Due to new life expectancy tables, you may be able to get more insurance for less money.

4. The financial stability of your insurance company should be looked at every few years. After paying for so many years you want to be sure of the long term viability of the carrier.

An insurance audit will reveal deficiencies, point out excesses and provide you with recommendations. If you would like a referral to a Certified Life Underwriter (CLU) who is knowledgeable in reviewing, analyzing and making policy recommendations, a New York estate planning lawyer can provide a referral. At Ettinger Law Firm, please contact Pattie Brown at 800-500-2525 ext. 117.

"Nice" Lawyer Costs Family $300,000.00

February 11, 2011,

by Michael Ettinger, Esq.

A couple came in to see me today for the husband's 88 year old father who is a nursing home in Florida. They now wish to bring him up to New York to be nearer to the family. He has about $600,000 in assets, including his home.

They told me about the very nice lawyer he has down on the west coast of Florida, who set up a revocable living trust for Dad and for Mom who died last year, in February of 2006, and amended it in March of 2010.

They had a great deal of confidence in the lawyer, especially since he had won an award as one of the top lawyers in the locality.

Regrettably, while the attorney prepared a fine estate plan, he was not an elder law attorney and took no steps to protect the couples' assets back in 2006, when they were well into their eighties.

Had the lawyer been knowledgeable in elder law, which unfortunately so many estate planning attorneys are not, he would have set up a Medicaid Asset Protection Trust (MAPT) and started the five year "look back" period running. It is now February, 2011, five years later. Had the MAPT been set up when it should have, in February 2006, instead of the revocable living trust, all of Dad's assets would now be protected and he would be eligible for Medicaid benefits to pay for the cost of his nursing home care.

Instead, the couple will only save half the assets by using the "gift and loan" strategy developed by elder law attorneys to save half the assets on the nursing home doorstep when the client has failed to set up the MAPT. The technique is also call "half a loaf" planning after the old expression.

Nevertheless, the "nice" lawyer ended up costing the family $300,000.00 and it is not the first time we have seen it happen. Indeed, it is the reason your writer published "Ettinger on Elder Law Estate Planning", available on Amazon.com. We believe that clients need a new york "elder law estate planning" attorney and not just an "estate planning" attorney so mistakes like this no longer happen to good people.