Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, explains how trusts, prenups, Medicaid’s five-year look-back and long-term care planning can help today’s families protect their assets and inheritance. Jeffrey Snyder, Broadcast Retirement Network Lawrence, thanks so much for joining us. Really appreciate having you on the program this morning. Thank you, Jeff. Great to be here. It’s great to see you. And this is really focused on a piece that you wrote for Stony Brook University in October, which was National Estate Planning Month. We’re now in November, obviously. So it’s still important. And that’s why we’re covering it. Let me start off with a basic question and then we can get into like the process, et cetera. And that is, how has the paradigm shift of having blended families, how has estate planning modernized and evolved since you started working with clients? Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, Well, blended families with 50% of marriages ending in divorce and plenty of remarriages out there. It’s a question of how you balance those concerns that you people have. How do you take care of your new spouse while at the same time, making sure you protect the inheritance for your children? A lot of people struggle with this and some people go on a hope and a prayer. And maybe the second marriages could last a lot first, a lot longer than the first marriage. And they love each other and it’s a great situation for them. And if they leave everything to the surviving spouse, who they love, it’s up to the surviving spouse where the money goes next. And so what I see sometimes when they both agreed everything would go equally to all their children, I see everything ends up going with all those children. But sometimes what I see is, well, it’s been 10 years since he died and his kids don’t call me as much anymore. And they forgot my birthday, they didn’t invite me to Thanksgiving and I’m very resentful of that. And you know what? They don’t deserve the money anymore. And so they tend to give the money to their own kids. I also have people say, he just died, I’ve had it with those kids. I know I told them I was gonna give everything to them, but I’m not, let’s change the will. So you get all types of situations out there in these blended families. So everybody’s gotta assess what their comfort zone is with it. And there are tools that we have that have evolved over time to answer your question, where we find a way to balance protecting the livelihood, the standard of living of the surviving spouse, but still protect the inheritance for your own children. And very often that’s done with a trust. And there are other ways to do it. Jeffrey Snyder, Broadcast Retirement Network Yeah, well, I wanna get into that in a second, but what we’re talking about this morning is estate planning. And let me just, this isn’t just for the uber wealthy. I mean, obviously if you have a lot of assets, this is important, but wouldn’t some of what we’re talking about this morning apply to regular real Americans, right? Anybody that’s got a house or any type of assets. So anybody should be listening to our conversation this morning. Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, I would say that more affluent people have less of a problem because there’s enough money to go around. Jeffrey Snyder, Broadcast Retirement Network Okay. Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, Middle-class people, working class people, the average people that we know, it’s more of a problem because the surviving spouse really may need the money to maintain their livelihood and their standard of living. So again, we have to figure that out with wills and trusts to make sure that we can balance all those issues. Jeffrey Snyder, Broadcast Retirement Network So where do I start? So if I’m watching, listening to you, this conversation, what’s the best place to start? Obviously you wanna start before someone passes on. So that’s the easy answer. But in all seriousness, do you start at the time you get married or remarried? Where do you go? Where do you start? Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, Well, I would start before you remarried because one of the first questions may be, do you need a prenuptial agreement? Jeffrey Snyder, Broadcast Retirement Network Okay. Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, So those issues have to be ironed out. Even if you left 100% of your assets in a trust with a surviving spouse, a surviving spouse does have a right of election, in English, you can’t just inherit your spouse. You have to leave them at least a third or to put it differently, they have a right to take one third. If you don’t want them to take one third, you wanna put it in the trust of them. That’s something that has to be ironed out in a prenuptial agreement. So yes, the conversation really needs to start before marriage. And it’s a conversation. It starts with a conversation and it starts with, and this is true for all of this estate planning stuff, it starts with education. You educate yourself first. You educate a couple, you should educate yourself together, talk these things out, and then come up with a solution that makes sense for your particular family. Jeffrey Snyder, Broadcast Retirement Network Yeah, really, really important. And thank you for straightening me out on that. I know that you’re based on Long Island in New York. Are there different laws depending on if you’re domiciled in New York state like you are? I’m in North Carolina, other people may be in one of the other 50 states. Does each state have a different set of laws? Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, Every state has their own set of laws. You really should be talking to an estate planning or an elder law attorney in the state where you live, or more importantly, the ones where you’re gonna die. Jeffrey Snyder, Broadcast Retirement Network And to that end, and it’s true. So it’s gonna be where you finally, your final resting place in some way. How do I find someone that’s capable and competent? Obviously people can reach out to you, they can go to your website and reach out to you directly, but candidly, you have a lot of resources, but maybe you can’t serve 330 million Americans. How do you find somebody that’s capable and competent? Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, Well, I could try. Jeffrey Snyder, Broadcast Retirement Network You could try. That might be a good question. That might be challenging though. Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, I don’t know if you’ve done that. I think one of the first places I would go would be to the National Academy of Elder Law Attorneys, who have a directory. And in that directory, they show all the members throughout the country, some of which they will show that they’re certified elder law attorneys or HEALAs, or they may even show exactly what they specialize in to really zone in. I think that’s a good start, but then I would, the best thing to do, I think, is to network. Find somebody in that state that’s already gone through this, talk to your accountant, talk to your financial planner. Who are they recommending? I think a personal recommendation may go a lot further than just some name in the directory. Jeffrey Snyder, Broadcast Retirement Network Yeah, or it used to be you had the yellow pages, you would look in the yellow pages, but you’re right. When it comes to a financial planner, a CPA, someone that you’re gonna be working with, it really is based on personal preference. In the piece that you wrote for Stony Brook, you brought up, and I wanna ask you about this, this is not a quiz, by the way, but I just happened to read it this morning, understanding Medicaid’s five-year look back. Why is that so important? Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, Well, one of the things that people need to consider is how they’re going to pay for their long-term care. Here in New York, we have a $7.35 million exemption from the state tax, the federal exemption, $15 million. Most of my clients don’t have that much money and they’re not concerned about taxes, but the biggest threat to their estate may be the cost of long-term care. Long-term care is a year in a nursing home that would be $200,000 plus. The average stay there is three years, so it could be $600,000. So people want an answer to protect their assets, but find a way to pay for that care. And one way that people handle that is by learning and educating themselves about Medicaid. Medicare does not pay for long-term care. Medicaid does, but you have to be poor. So people get their assets out of their name, they put them in trust and other techniques, and the government understands that that’s what people are doing. You can’t just give away your assets today and say Medicaid should pay for your nursing home the next day. They impose something called a five-year look back. In other words, you have to wait five years. The assets have to be adjudicating for five years before you’d be 100% protected on those assets. Jeffrey Snyder, Broadcast Retirement Network So there’s a lot of planning. It’s not just writing and codifying in a form of a document. There’s a lot of planning, what I’m understanding from you, is with this five-year look back, you’ve got to make sure that if you’re going to request money from Medicaid, you’re going to have to liquefy or transfer into trust your assets in order to stage them in a way so that you can- Well, you have to re-title them. Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, You will keep all the same assets that that’s leaving with. You create this trust. You do a new fee, transferring your house into the trust. You have to move a new fee into the trust. You can use a mutual funding to the trust. Whatever you’re trying to protect, if you move them to the trust, but it has to be done five years before you use Medicaid to protect all of those assets. Jeffrey Snyder, Broadcast Retirement Network I would imagine you brought up long-term care. Obviously, that is a big deal now. We have an aging America. Clearly, you’re working with a lot of clients. I would assume that the perception is, hey, they’re starting to think about getting older. They’re going to live a lot longer. How do I take care of myself, especially in those later years, the last five or so years? Those health expenses go up. I’m going to need money. Is this, has that created a sense of urgency for your clients and for services that you offer? Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, Well, it’s for some, especially those who had to deal with their own parents and they learned the hard way. So more and more people are being aware of it. There’s more and more education out there. There’s more and more articles. There’s more and more AI searches on all that stuff. Everybody’s becoming an expert and being aware of it, which is great. Now, I started the first elder law firm here in Suffolk County, Long Island back 40 years ago, and nobody knew what I was talking about. Nobody really knew what Medicaid was about and looked back for trust and all this kind of stuff. And it’s been an education. It’s been a calling to educate people on this. And now, you know, there’s elder law attorneys all over the place. It’s become a real, law schools are now teaching it. It’s out there. People are aware, but then I still get people coming in here. I’m here for a while. Well, did you think about long-term care? Oh, I didn’t, I never heard about that. And so there’s still a lot of work to be done to educate people. And I’m so glad we’ve had this, we’re having this opportunity to educate even more people here today, Jeff. So thank you for that opportunity. Jeffrey Snyder, Broadcast Retirement Network Well, thank you. I mean, it takes two to tango, or so I’m told, I’m not a dancer. Let me ask you, you brought up AI, and I wanna, you know, people often now are going using chatbots. You really, based on your experience, I mean, you really need to work with an attorney. And that’s not just saying that because I want you to hire yourself or you wanna be hired, but have you seen AI or some of the technology that’s out there able to replicate in the same way you approach? Because it is personalized. Jeff Snyder’s gonna be different than yourself. Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, No question, every client is gonna be different. Yeah. Not cookie cutter, so. But AI is something that I think people, I’m encouraging people to use it to learn. It’s a great tool to teach you at least the right questions to be asking to make you more aware of the issues that could be involved. And then you come in, and the conversation that we might have might be at a higher level within just the ABCs. We might be starting at X, Y, Z in the discussion of developing the plans for a particular client. So the better educated the client is, the better client I think they are. And the more that they’ll get out of what I’m trying to teach them. So I’m encouraging it, and I think it’s amazing. Jeffrey Snyder, Broadcast Retirement Network Last question, thank you for that. And last question for you, our show is not political, but I do wanna ask you, are there lessons here for local, state, and federal policy makers? Clearly we’ve got an aging America. These are big issues that are impactful at all these levels. Are there lessons that policy makers and regulators should be learning based on the knowledge that you have and other people like you and your associations? Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, People know, the government knows that people are moving their assets around to take advantage of government programs that when they originally were enacted, it wasn’t meant for using it today. So when they created the Medicaid system in 1955, it was under President Johnson, it was supposed to be for poor people. It has evolved into a middle class entitlement. And that’s been accepted. But for policy makers, they have to decide is number one, is that okay? And who should be paying for it? So right now, I think it’s a fight between Medicare and Medicaid. Medicare is federal, where Medicaid is mostly, or is predominantly state. So is it a state expense? Is it a federal expense? Should it be, so people say this should be Medicare for all and it should cover all of this long-term care stuff. Well, that is a federal tax that you’d have to increase. Right now, it’s Medicaid is paying for it, it’s a state issue. So policy makers have to decide which person should be paying for this, which entity should be paying for this. And do we wanna pay for it at all? I believe that everybody should have the ability for the government to help us pay for long-term care, not just who ends up getting the best lawyer. So I’m more for a universal approach, but how do you pay for that? And that’s the more difficult issue. And while I might say on one side of my brain, I want everyone to be covered, on the other side of my brain is I’m not sure how we can pay for that. So I don’t have all the answers. I’m not a politician, but I see people coming into my office every day with the same questions. If I get sick and I end up going to a nursing home, I don’t wanna lose everything I worked a lifetime to acquire let me know my choices and let’s get it done. And that is something to talk about every single day and educate everybody about. Jeffrey Snyder, Broadcast Retirement Network Yeah, apologies for interrupting. I was gonna just end conclude by saying I think this is a big issue. Long-term care is a big issue. Obviously, social security, Medicare, those are things that we’re gonna have to figure out as a country, as a nation, what we’re gonna make available and what we’re not gonna make available. Lawrence, we’re gonna have to leave it there. Thank you so much. Wow, that went fast. Thank you, Jeff. Thank you so much for coming on the program and we look forward to having you back again very soon. Lawrence Eric Davidow, CELA, of Davidow, Davidow, Siegel and Stern, LLP, My pleasure, take care.
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