Posted by Jerrold Bartholomew on May 3, 2008
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.
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Posted in Asset Protection, Estate Planning, Estate Recovery, Medicaid, Medicaid Qualification, Pre-Planning for Long Term Care, Your Home | No Comments »
Posted by Jerrold Bartholomew on April 24, 2008
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.
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Posted in Asset Protection, Disability Planning, Estate Planning, Financing A Nursing Home Stay, Financing Assisted Living Costs, Medicaid, Medicaid Qualification, Pre-Planning for Long Term Care | No Comments »
Posted by Jerrold Bartholomew on April 7, 2008
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.
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Posted in Annuities, Asset Protection, Disability Planning, Estate Planning, Medicaid, Medicaid Qualification, Nursing Home Crisis Planning, Technical, Transition to Nursing Home / Medicaid | No Comments »
Posted by Jerrold Bartholomew on March 22, 2008
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.
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Posted in Annuities, Asset Protection, Insurance, Medicaid | No Comments »
Posted by Jerrold Bartholomew on March 21, 2008
Yesterday, I learned of a case where a small insurance policy caused an extended period of ineligibility for Long Term Care Medicaid. This means it will be a long time before the nursing home bill gets paid, if ever.
Posted in Disability Planning, Estate Planning, Financing A Nursing Home Stay, Medicaid, Medicaid Qualification, Nursing Home, Transition to Nursing Home / Medicaid | No Comments »
Posted by Jerrold Bartholomew on March 7, 2008
The process is of applying for Medicaid long term care assistance can be somewhat difficult. The documentation requirements can be voluminous and the process will typically take at least 45 days. I have seen several recent cases take as long 4 months to be approved.
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Posted in Asset Protection, Disability Planning, Medicaid, Medicaid Qualification, Transition to Nursing Home / Medicaid | No Comments »
Posted by Jerrold Bartholomew on March 7, 2008
An astounding thing happened during the fall of 2007. Michigan changed its Medicaid policy with respect to annuities and implemented those changes with retroactive effect.
The new policy requires annuities to have several features in order to avoid being considered a divestment. Among the requirements is a rule that the state of Michigan must be named a remainder beneficiary to the extent of Medicaid benefits received. This law applies to all annuities purchased or altered after February 8th, 2006, the day President Bush signed the Deficit Reduction Act into law.
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Posted in Annuities, Medicaid, Medicaid Qualification, Nursing Home Crisis Planning, Transition to Nursing Home / Medicaid | 1 Comment »
Posted by Jerrold Bartholomew on March 6, 2008
Under previous Medicaid policy, applicants for long term care were given the benefit of a doubt most of the time. In some cases, a demonstrated intent to complete asset conversion, which is the process of converting non-exempt assets into exempt or excluded assets and is the heart of Medicaid planning, would be enough to pass scrutiny.
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Posted in Financing A Nursing Home Stay, Medicaid, Medicaid Qualification, Nursing Home Crisis Planning, Transition to Nursing Home / Medicaid | No Comments »
Posted by Jerrold Bartholomew on March 5, 2008
Many Elder law attorneys advise loving couples to pursue divorce as a method of asset protection. I have never found the technique necessary and, frankly, find the approach ethically questionable. Alternatives exist for both pre-planning and crisis planning that avoid the murky waters of a consensual divorce between an otherwise happily-wed pair. It is my view that you should not have to pretend to be something that you are not in order to protect assets. Everything is always disclosed in the Medicaid applications I advise clients on and the asset protection plans I create. I have helped dozens of couples protect their estates from the cost of long term care and there has never been a reason to resort to divorce.
Posted in Asset Protection, Financing A Nursing Home Stay, Medicaid, Medicaid Qualification, Nursing Home Crisis Planning, Pre-Planning for Long Term Care | No Comments »
Posted by Jerrold Bartholomew on March 4, 2008
This post is continuation of what I expect to be a long series on protecting the homestead of long term care patients.
Before the Deficit Reduction Act was signed in February of 2006, it was relatively easy for an elder law attorney or a well-informed layperson to set aside money to pay for the upkeep of a nursing home patient’s homestead. A simple contract could be created and assets transferred to a responsible relative who would pay for the utilities, taxes, insurance and maintenance of the nursing home patient’s home. It also used to be possible to gift a significant amount of money each month. Therefore one could simply give assets to another to keep up the home. These techniques were necessary because a person in a nursing home can generally have only $2,000.00 in cash or equivalent non-exempt assets and all but a small portion of income will go to the cost of care. Since such a small amount of money is dwarfed by property taxes alone, the policy allowing money to be set aside for homestead maintenance made sense for several reasons.
First of all, some people do return home, even after long stays in a nursing home. Second, there are significant tax benefits to waiting until one’s passing to transfer a homestead to a relative. But with the possibility of tax foreclosure or dissipation through neglect, a sale or significant financial hardship is difficult to avoid with the owner in a nursing home. Moreover, Medicaid policy considers the transfer of a homestead a divestment subject to penalty in most cases. Third, the sale of home in financial distress is a loss to an effected family, particularly in today’s troubled real estate market.
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Posted in Asset Protection, Medicaid, Nursing Home Crisis Planning, Transition to Nursing Home / Medicaid, Your Home | No Comments »
