Michigan Elder Law & Estate Planning

The same technology that allows coffee and internet afficiandos to stay in one cafe for hours on end is now helping seniors to retain their independence and cope with serious health issues. A new Wi-Fi device is capable of alerting your physician in case of heart attack. Thoughtful implementation of new technologies offers a great deal of promise for those seeking to remain independent for as long as possible. Similar technologies offer the promise of helping seniors remain independent as long as possible. Advances in home design and remodeling are likewise helpful to seniors who wish to age in place.

Years of experience in management of long-term care crises is enough to convince anyone of the importance of planning. Working in the area of elder law generally and nursing home crisis situations in particular leads me to emphasize the importance of developing a plan for health care, finances and family to last through the retirement years. This type of planning is increasingly known as “life care planning.”

Life care planning is a comprehensive retirement, estate, and lifestyle plan. It encompasses all facets of estate planning, asset protection, health care, and retirement. The objectives of this planning can be as varied as the individual family, but in general the goal is to maximize resources, preserve independence, and avoid crises. Having assisted many families though nursing home crises, I am convinced that problems resulting from caregiver burnout, insufficient or inadequate health care, probate court fees, and financial waste can be greatly reduced or even eliminated with proper planning.

Read the rest of this entry »

The Michigan Department of Community Health announced today that Detroit nursing homes would receive $1.7 million for improvements. See this Free Press article for coverage. I have never visited a nursing home that did not have a dedicated, but heavily-burdened staff. And obviously there is no end to the needs of the nursing home residents. I can imagine that in Detroit in particular, there would be certain areas that would feel an acute scarcity. I am glad that the patients and staff of these facilities will be receiving some help.

One very important matter for retiring seniors is the decision of when to begin receiving social security benefits. This helpful calculator from AARP can help in the decision-making process. But be forewarned: there is a lot of information on the internet suggesting that you should delay receiving benefits as long possible. And this is not without some merit as your benefits will be higher and theoretically provide better cashflow through your retirement the longer you wait to begin receiving benefits. However, in many cases the modest monthly gain for waiting is not offset by the years of foregone benefits. Consider it this way: If you retire at 65 with a household income of about $50,000.00, you can immediately begin receiving about $1,750.00 per month. If you choose to wait until age 67 to begin receiving social security, your monthly benefit will be about $1,988.00 per month. Think you should wait for the extra $238.00 per month? Well, in order to receive that additional $238.00 per month, you will not receive $42,000.00 in benefits ($1750.00 x 24 months = $42,000.00). The additional $238.00 per month will take you a little more than 176 months to make up the difference between the total of what you would have received with the earlier election and waiting to have the higher monthly payout.

Several reforms to Michigan’s Blue Cross Health Insurance are currently pending in the Michigan Legislature. Proponents hope that these reforms will help reduce the costs of health care in Michigan, while advocates for the health insurance industry voice concerns about declining revenues and increased costs. The issues are complicated, but it seems fair to say that health care is only getting more expensive as the system continues to absorb the shock of a growing retiree population. Read the rest of this entry »

When one spouse requires long-term care in Michigan, the Department of Human Services will do an assessment of the couple’s total resources. Without any planning or asset positioning, the spouse at home will be permitted to keep 1/2 of the couple’s assets as of the date the spouse needing long-term care entered either the hospital or long-term care, with a maximum of $104,400.00 and a minimum of $20,880.00 (in 2008). For example, a marital estate valued at $100,000.00 in non-exempt assets will be limited to $50,000.00 that the at-home spouse can keep. The remainder will have to spent on long-term care or converted to exempt assets before Medicaid will provide assistance with the cost of long-term care.
Read the rest of this entry »

A recent article in The Economist explained how some senior citizens used Facebook to fight back when their investments in Asset Backed Commercial Paper ended up in bankruptcy court. Sometimes the innovations wrought by the internet can be a little startling, even if pleasantly so. The idea that a broad spectrum of investors, including many elderly, might form a coalition on Facebook and force a corporation to hear (and heed) their complaints is an astonishing example of how much has changed. Not only has the internet brought people together in wonderful new ways, but the phenomenon has spread to all parts of society, including the elderly:

Following the example of their children and grandchildren, some small investors formed a group on Facebook, a social-networking site, to trade information, provide mutual support and plot strategy. Brian Hunter, the group administrator, says the site turned out to be an “amazing tool”. People who would never have met in real life, from pig farmers and retired loggers to MBA students and pastors, created a formidable interest group.

I find the internet a fascinating world of possibility. There is no limit to the connections that can be formed or the information that can be harnessed. Although written several years ago (and updated more than once) I would recommend The World is Flat to anyone hoping to see the breadth of what has changed through the influence of the internet.

Sue Schiebel has written an excellent article on Medicaid Planning. While her article concerns MassHealth, which is the Massachusetts Medicaid program, the rules and ideas explained are the same in Michigan. She writes:

A lot of middle-aged people don’t realize Medicare, the federal health insurance program, pays for a very limited amount of skilled nursing home care. As we live longer, that means more of us will have to spend our own money for long-term care or must rely on MassHealth, the state health insurance for low income people. Many people wind up doing both — first using up many of their own assets to “spend down” to Medicaid limits so they are financially eligible for state help.

Medicaid qualification is a complex area of the law. To highlight just one counter-intuitive aspect, consider that donations to a church or charity are treated as gifts under the law. One making such a gift is technically creating a period of ineligibility for Medicaid. Strictly speaking, one could then have no means to pay for a nursing home after all other assets have been spent down. An elder law attorney helps families cope with these bizarre rules and avoid such unfortunate results.

Many of my clients are uneasy about placing their assets into a trust as part of an asset protection plan. In order to demystify the process and help you understand why you might consider having a trust drafted for your specific needs, I would like to explain some of the reasons you might consider having a trust and little bit of how a trust works.

Trusts are an important part of elder law and estate planning. Elder law is really the art and science of preserving personal and financial independence for seniors. Many forces threaten a senior’s independence, from ailing health to limited finances to extensive regulatory systems. The goal in creating comprehensive estate plans is to extend resources as much as possible and to create options. How is this possible? The right trust agreement is an important tool for achieving this goal.

Read the rest of this entry »

Retirement assets (401ks, IRAs, etc) are considered available assets for purposes of Medicaid qualification in Michigan. In simple terms, that means that those funds have to be spent down until the threshold for asset eligibility is met. In the case of a single person, asset eligibility is generally about $2,000.00, with some additional allowances for the homestead, modest life insurance and funeral expenses. In the case of a married person, the threshold is higher, and will be between $20,880.00 and $104,400.00, depending on the couple’s assets before entering the nursing home. For more details, see The Basics of Medicaid Qualification, below.

In order to avoid having to spend these assets on the cost of care, it is very common to annuitize the retirement assets. For a variety of reasons, I think this is something to avoid whenever possible. First of all, the return on such annuities is low. With inflation likely to increase in the present economic climate, it is difficult to recommend a long-term investment with a low return. An additional concern is that current law requires an annuity to pay out in level installments and in an actuarially sound manner. The days of the deferred annuity with a substantial amount held until after the passing of the owner are gone. Furthermore, under current law, the state of Michigan must be named as the remainder beneficiary after the community spouse or a disabled child. It is true that an annuity will provide secure retirement income for a community spouse, but it should be considered an alternative of last resort in light of these considerations.

Read the rest of this entry »

Estate Planning often involves transfer of real property. Care must be taken to avoid incurring unnecessary property taxes as an asset protection plan is carried out.

One of the biggest obstacles to overcome is the so-called uncapping of property taxes. In Michigan, property taxes can only increase by a fixed percentage each year, regardless of the increase in fair market value of the real estate so long as the real estate is owned by the same person or joint owners. For those who have held real property for a long time, this rule has helped to keep their property taxes down.

Read the rest of this entry »

Retirement for many people is defined as the time when they are able to live off of the income from their assets combined with Social Security and perhaps a pension. But anything from a car accident to a stay in long term care can quickly deplete retirement assets and jeopardize the fruits of a lifetime’s work. This can be particularly devastating for a married couple when one of the spouses falls ill and the assets of both must be devoted to the care of the other. Medicaid law permits the Community Spouse (the spouse not in long-term care) to retain a maximum of $104,400.00 in non-exempt assets, but without planning, in many cases that amount can be lower.

Read the rest of this entry »

The simple will is an important estate planning document to understand. One easy way to understand how a will works is to think of it as a set of instructions to a probate judge for distribution of a deceased person’s property. These instructions replace the default rules established by state law. Without a will, a deceased person’s estate will be distributed according to rules established by the state called the rules of intestacy. A probate court is a special division of the state court system that is given authority over incompetent persons and decedent’s estates.
Read the rest of this entry »

In my practice I have all too often I found evidence that my elderly clients have been victims of financial abuse in one way or another. This story shows just how common the phenomenon is:

Motivated by the high interest rates and the fear that Jeannetta, at least, might outlive their savings, the Mounceys drained their bank accounts and invested $135,000.

“With Jack being so sick, we wanted to make sure we had decent income, because I couldn’t afford our house on my own,” said Jeannetta Mouncey, 64.

Less than a year later, though, the interest checks had stopped and much of the Sarasota couple’s money was unaccounted for. Their First Liberty sales agent, Fred Howard, had disappeared. Eventually, the company went dark, too, its president locked up in an Arizona prison on securities fraud charges.

Read the rest of this entry »