Glossary
Allowed Gift Amount
The total original amount of the gift less the amount returned to the applicants equals the allowed gifted amount (the amount protected).
The total original amount of the gift less the amount returned to the applicants equals the allowed gifted amount (the amount protected).
Annual Gift Tax Exclusion
Technique to allow gifts without the imposition of estate or gift taxes and without using lifetime exclusion.
Technique to allow gifts without the imposition of estate or gift taxes and without using lifetime exclusion.
Annuity
An annuity is an insurance contract that provides regular income to the owner, in exchange for a lump sum investment.
An annuity is an insurance contract that provides regular income to the owner, in exchange for a lump sum investment.
Beneficiary
A person who derives advantage from something, especially a trust, will, or life insurance policy.
A person who derives advantage from something, especially a trust, will, or life insurance policy.
Burn Rate
The amount of money that an applicant will "burn" through in one month of a plan. When dividing the spend-down amount by the burn rate, the resulting figure is the number of months the applicant can afford to privately pay throughout a penalty period.
The amount of money that an applicant will "burn" through in one month of a plan. When dividing the spend-down amount by the burn rate, the resulting figure is the number of months the applicant can afford to privately pay throughout a penalty period.
Children’s or Grandchildren’s Irrevocable Education Trust
A Trust used by parents and grandparents for a child’s or grandchild’s education.
A Trust used by parents and grandparents for a child’s or grandchild’s education.
Charitable Remainder Interest Trust
A trust whereby donors transfer property to a charitable Trust and retain an income stream from the property transferred. The donor receives a charitable contribution income tax deduction, and avoids a capital gains tax on transferred property.
A trust whereby donors transfer property to a charitable Trust and retain an income stream from the property transferred. The donor receives a charitable contribution income tax deduction, and avoids a capital gains tax on transferred property.
Community Spouse
The spouse who remains at home or in an assisted living community and does not require Medicaid benefits.
The spouse who remains at home or in an assisted living community and does not require Medicaid benefits.
Community Spouse Resource Allowance (CSRA)
The amount of countable assets the spouse is entitled to retain, in order for their spouse to obtain Medicaid benefits.
The amount of countable assets the spouse is entitled to retain, in order for their spouse to obtain Medicaid benefits.
Conservatorships/Guardianships
This is the court-supervised proceeding which names an individual or entity to manage the affairs of an incapacitated person.
This is the court-supervised proceeding which names an individual or entity to manage the affairs of an incapacitated person.
Crisis Medicaid Planning
Financial and legal planning done to accelerate one's eligibility for Medicaid benefits, particularly when no previous long-term strategy or planning has been performed.
Financial and legal planning done to accelerate one's eligibility for Medicaid benefits, particularly when no previous long-term strategy or planning has been performed.
Durable Power of Attorney for Health and Living Will
These documents authorize termination of life support if you are terminally ill and appoint an Agent, of your choice, to make health care decisions for you if you become incapacitated.
These documents authorize termination of life support if you are terminally ill and appoint an Agent, of your choice, to make health care decisions for you if you become incapacitated.
Federal Estate Tax
A tax levied by the federal government upon the estate of a deceased person. The federal government gives certain exclusions and deductions and then taxes everything above a set level.
A tax levied by the federal government upon the estate of a deceased person. The federal government gives certain exclusions and deductions and then taxes everything above a set level.
Fiduciary Responsibility
Where one person places complete confidence in another in regard to a particular transaction or one's general affairs or business.
Where one person places complete confidence in another in regard to a particular transaction or one's general affairs or business.
Fractional Interest Gift
Allows a donor to transfer partial interests in real property to donees and obtain fractional interest discounts for estate and gift tax purposes.
Allows a donor to transfer partial interests in real property to donees and obtain fractional interest discounts for estate and gift tax purposes.
Funding
Is the process that entails transferring assets you own as an individual into the name of your Trust.
Is the process that entails transferring assets you own as an individual into the name of your Trust.
General Durable Power of Attorney
This is a General Power of Attorney that remains valid even during your incapacity.
This is a General Power of Attorney that remains valid even during your incapacity.
General Power of Attorney
Provides your Agent with broad authority. It says that at any time – and in just about any capacity – your Agent can conduct business in your name. The Agent can be given great discretion.
Provides your Agent with broad authority. It says that at any time – and in just about any capacity – your Agent can conduct business in your name. The Agent can be given great discretion.
Generation Skipping Tax
This is a tax levied on assets that are given to individuals who are more than one generation away from the donor. An example would be a grandparent giving an asset to a grandchild either during the grandparents life or at death. Effective use of generation-skipping exemption allows the assets to avoid estate tax inclusion in the childs taxable estate.
This is a tax levied on assets that are given to individuals who are more than one generation away from the donor. An example would be a grandparent giving an asset to a grandchild either during the grandparents life or at death. Effective use of generation-skipping exemption allows the assets to avoid estate tax inclusion in the childs taxable estate.
Gift
A gift is when any money, property, items, or other assets are conveyed to another person for less than they are worth.
A gift is when any money, property, items, or other assets are conveyed to another person for less than they are worth.
Gift Tax Exclusion
An IRS regulation that allows an individual to give away a certain amount of money each year, without incurring a tax. This exclusion is NOT applicable when planning for Medicaid benefits.
An IRS regulation that allows an individual to give away a certain amount of money each year, without incurring a tax. This exclusion is NOT applicable when planning for Medicaid benefits.
Gifting Language
Special language that may be drafted and included with your Trust document and Power of Attorney to give authority to gift assets to accomplish planning goals.
Special language that may be drafted and included with your Trust document and Power of Attorney to give authority to gift assets to accomplish planning goals.
Grantor
The party who transfers title in real property (seller, giver) to another (buyer, recipient, donee) by grant deed or quitclaim deed.
The party who transfers title in real property (seller, giver) to another (buyer, recipient, donee) by grant deed or quitclaim deed.
Guardianship/Conservatorship
Is a court-supervised proceeding which names an individual or entity to manage the affairs of an incapacitated person (minor child or incompetent adult). A guardianship may also include the duty to care for the incapacitated person.
Is a court-supervised proceeding which names an individual or entity to manage the affairs of an incapacitated person (minor child or incompetent adult). A guardianship may also include the duty to care for the incapacitated person.
Health Care Power of Attorney
Instrument used to allow a person you name to make health care decisions for you should you become incapacitated.
Instrument used to allow a person you name to make health care decisions for you should you become incapacitated.
HIPAA Release
The Health Insurance Portability and Accountability Act of 2003, known as “HIPAA,” created privacy protections for medical information which prevents hospitals and physicians from providing your personal health information to anyone that is not listed in a signed HIPAA Release. This release allows the Agents under your Advance Health Care Directive/Durable Power of Attorney for Health Care, and the Trustees under your Revocable Living Trust to carry out their duties.
The Health Insurance Portability and Accountability Act of 2003, known as “HIPAA,” created privacy protections for medical information which prevents hospitals and physicians from providing your personal health information to anyone that is not listed in a signed HIPAA Release. This release allows the Agents under your Advance Health Care Directive/Durable Power of Attorney for Health Care, and the Trustees under your Revocable Living Trust to carry out their duties.
Individual Resource Allowance
The amount of assets a Medicaid applicant can retain and still qualify for benefits, typically used for discretionary spending.
The amount of assets a Medicaid applicant can retain and still qualify for benefits, typically used for discretionary spending.
Institutionalized Spouse
The spouse who is in or requires nursing home facilities and is seeking Medicaid benefits.
The spouse who is in or requires nursing home facilities and is seeking Medicaid benefits.
Intestate
Referring to a situation where a person dies without living a valid will.
Referring to a situation where a person dies without living a valid will.
Irrevocable Life Insurance Trust
A Trust used to prevent estate taxes on insurance proceeds received at the death of an insured.
A Trust used to prevent estate taxes on insurance proceeds received at the death of an insured.
Joint Tenancy
When property is held in joint tenancy with rights of survivorship by two or more people, upon the death of one of the owners, all of his or her interest in the property is transferred immediately to the surviving owners.
When property is held in joint tenancy with rights of survivorship by two or more people, upon the death of one of the owners, all of his or her interest in the property is transferred immediately to the surviving owners.
Last Will & Testament
A legal document that states in writing how the testator (the person preparing the documents) would like to have their estate distributed upon their death and who will carry out those duties. It must be by two (2) or more credible witnesses in the presence of the testator.
A legal document that states in writing how the testator (the person preparing the documents) would like to have their estate distributed upon their death and who will carry out those duties. It must be by two (2) or more credible witnesses in the presence of the testator.
Living Will
Sometimes called a physicians directive, is a document in which you give directions for life sustaining treatment should you become unable to communicate your wishes. Some states have combined this into the advanced health care directive.
Sometimes called a physicians directive, is a document in which you give directions for life sustaining treatment should you become unable to communicate your wishes. Some states have combined this into the advanced health care directive.
Long Term Care
The care provided to an individual who is in need of daily assistance with basic functions of daily life. It includes eating, bathing, dressing, transferring, toileting, medication management, and assistance with prosthetic devices. 70% of individuals over the age of 65 will require some type of long-term care during their lifetime.
The care provided to an individual who is in need of daily assistance with basic functions of daily life. It includes eating, bathing, dressing, transferring, toileting, medication management, and assistance with prosthetic devices. 70% of individuals over the age of 65 will require some type of long-term care during their lifetime.
Look Back Period
The lookback period is the 5-year period in which a state’s Medicaid agency will “look back” to determine if a Medicaid applicant has made any transfer of assets. If the individual and/or spouse has made any uncompensated transfers, and the transfers are not cured/returned, the applicant will be subject to a penalty period of ineligibility.
The lookback period is the 5-year period in which a state’s Medicaid agency will “look back” to determine if a Medicaid applicant has made any transfer of assets. If the individual and/or spouse has made any uncompensated transfers, and the transfers are not cured/returned, the applicant will be subject to a penalty period of ineligibility.
Medicaid
A state and federal government program intended for people with low income or limited resources. Provides payment for the majority of long-term care services required by elderly citizens.
A state and federal government program intended for people with low income or limited resources. Provides payment for the majority of long-term care services required by elderly citizens.
Medicaid Triggers
These “triggers” or events can put into motion the shift of assets out of the name of the person who is incapacitated in order to qualify for Medicaid benefits.
These “triggers” or events can put into motion the shift of assets out of the name of the person who is incapacitated in order to qualify for Medicaid benefits.
Medical Requirements for Medicare
Aged (meaning over the age of 65), blind or otherwise disabled.
Aged (meaning over the age of 65), blind or otherwise disabled.
Medicare
A program directed by the federal government that functions primarily as a health insurance program for people over age 65. Medicare benefits are intended for short-term services, when the medical condition is expected to improve, and acute care. In most cases, Medicare does not pay for long-term care services.
A program directed by the federal government that functions primarily as a health insurance program for people over age 65. Medicare benefits are intended for short-term services, when the medical condition is expected to improve, and acute care. In most cases, Medicare does not pay for long-term care services.
Monthly Maintenance Needs Allowance (MMNA)
The amount of monthly income to which a community spouse is entitled. If the community spouse’s income does not meet his or her MMNA, he or she is entitled to a shifting of income from the institutionalized spouse.
The amount of monthly income to which a community spouse is entitled. If the community spouse’s income does not meet his or her MMNA, he or she is entitled to a shifting of income from the institutionalized spouse.
Mirror Wills
The wills of a husband and wife which are identical except that each leaves the same gifts to the other, and each names the other as executor.
The wills of a husband and wife which are identical except that each leaves the same gifts to the other, and each names the other as executor.
Monthly Income Shortfall
The monthly cost of the nursing home minus the applicant’s available income.
The monthly cost of the nursing home minus the applicant’s available income.
Partial Cure
If an ineligible gift has been made during the look-back period, the gift can be returned to the Medicaid applicant, and potentially reduce the penalty period and/or eligibility for Medicaid benefits.
If an ineligible gift has been made during the look-back period, the gift can be returned to the Medicaid applicant, and potentially reduce the penalty period and/or eligibility for Medicaid benefits.
Penalty Period
The period of ineligibility imposed by the State Medicaid agency if uncompensated transfers have occurred within the lookback period. The length of the penalty period is based on the amount transferred and the state’s specific divestment penalty divisor.
The period of ineligibility imposed by the State Medicaid agency if uncompensated transfers have occurred within the lookback period. The length of the penalty period is based on the amount transferred and the state’s specific divestment penalty divisor.
Pre-Planning
When someone plans for long-term care costs and/or their estate is structured to allow them to qualify for Medicaid benefits with consideration for assets, income, gifts, look-back period, etc.
When someone plans for long-term care costs and/or their estate is structured to allow them to qualify for Medicaid benefits with consideration for assets, income, gifts, look-back period, etc.
Pour Over Will
Is used first to name a guardian for minor children. Second, it protects against intestacy in the event any assets have not been transferred into the Trust at the death of the Trustor/Owner. Its function is to pour any assets left out of the Trust into it so they are ultimately distributed according to the terms of the Trust.
Is used first to name a guardian for minor children. Second, it protects against intestacy in the event any assets have not been transferred into the Trust at the death of the Trustor/Owner. Its function is to pour any assets left out of the Trust into it so they are ultimately distributed according to the terms of the Trust.
Power of Attorney
You empower someone else to act on your behalf. Technically, this person becomes your “Attorney in Fact,” but is more commonly referred to as your “Agent.”
You empower someone else to act on your behalf. Technically, this person becomes your “Attorney in Fact,” but is more commonly referred to as your “Agent.”
Private Foundation
An entity used by higher-wealth families to receive charitable income, gift, or estate tax deduction while allowing the family to retain some control over the assets in the foundation.
An entity used by higher-wealth families to receive charitable income, gift, or estate tax deduction while allowing the family to retain some control over the assets in the foundation.
Probate
Is the court procedure used to change title to assets from the name of an individual who has passed away into the name of the beneficiaries. It is also where all creditors of a decedent file claims to collect their debts and where interested parties can contest the Will. An individual who passes away with a Will or no estate plan will go through this process.
Is the court procedure used to change title to assets from the name of an individual who has passed away into the name of the beneficiaries. It is also where all creditors of a decedent file claims to collect their debts and where interested parties can contest the Will. An individual who passes away with a Will or no estate plan will go through this process.
Property Power of Attorney
Instrument used to allow an agent you name to manage your property.
Instrument used to allow an agent you name to manage your property.
Revocable Living Trust
A device used to avoid probate and provide management of your property, both during life and after death.
A device used to avoid probate and provide management of your property, both during life and after death.
State Estate or Inheritance Tax
A state estate tax is a tax levied by a state government upon the estate of a deceased person. It is levied in much the same way as the federal estate tax. A state inheritance tax is a tax levied by a state government that varies depending upon the relationship of the inheritor to the deceased person. Nearly half the states have a separate state estate or inheritance tax which kicks in at a lower level than that of the federal government.
A state estate tax is a tax levied by a state government upon the estate of a deceased person. It is levied in much the same way as the federal estate tax. A state inheritance tax is a tax levied by a state government that varies depending upon the relationship of the inheritor to the deceased person. Nearly half the states have a separate state estate or inheritance tax which kicks in at a lower level than that of the federal government.
Step-up in Basis
A step-up or step-down in basis is an adjustment for income tax purposes to an asset’s fair market value at the date of the death of the owner of the asset. For example, if you bought a share of stock for $100 that increased in value to $500 at the time of your death, your tax basis was $100 but increases to $500 at the time of death.
A step-up or step-down in basis is an adjustment for income tax purposes to an asset’s fair market value at the date of the death of the owner of the asset. For example, if you bought a share of stock for $100 that increased in value to $500 at the time of your death, your tax basis was $100 but increases to $500 at the time of death.
Testator
A person who has died leaving a will.
A person who has died leaving a will.
Trust
A legal instrument that holds property as its nominal owner for the good of one or more beneficiaries.
A legal instrument that holds property as its nominal owner for the good of one or more beneficiaries.
Trustee
The person or entity in charge of the assets in a Trust. While you are alive, you may act as Trustee. For married couples, either one or both spouses may act as Trustee or co-Trustees. The successor Trustee is an individual or corporation fiduciary whom you designate to be in charge of your Trust in the event of disability or upon death.
The person or entity in charge of the assets in a Trust. While you are alive, you may act as Trustee. For married couples, either one or both spouses may act as Trustee or co-Trustees. The successor Trustee is an individual or corporation fiduciary whom you designate to be in charge of your Trust in the event of disability or upon death.
Trustor
The creator of a trust (who normally places the original assets into the trust), called a “settlor” or “donor” in many states.
The creator of a trust (who normally places the original assets into the trust), called a “settlor” or “donor” in many states.
Will
A legally enforceable declaration of how a person wishes his or her property to be distributed after death. In a Will, a person can also recommend a guardian for his or her children.
A legally enforceable declaration of how a person wishes his or her property to be distributed after death. In a Will, a person can also recommend a guardian for his or her children.