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 one. 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.
Archive for March, 2008
An asset protection plan is vital to a secure retirement
Posted by Jerrold Bartholomew on March 31, 2008
Posted in Asset Protection, Disability Planning, Estate Planning, Financing A Nursing Home Stay, Long Term Care Insurance, Medicaid Qualification, Nursing Home, Pre-Planning for Long Term Care, legal | Tagged: Asset Protection, Elder Law, Estate Planning, long term care, Medicaid, Nursing Home, nursing home costs, Pre-Planning, qualified funds, retirement, tax deferred funds | No Comments »
What is a Will?
Posted by Jerrold Bartholomew on March 26, 2008
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 »
Posted in Estate Planning, Probate Court | Tagged: Estate Planning, law, legal, Probate Court, probate estate, will | No Comments »
Elderly Often Financial Victims
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.
Posted in Annuities, Asset Protection, Insurance, Medicaid | Tagged: annuities, annuity, crisis plan, Divestment, investment, law, legal, long term care, Medicaid, pre-plan, risk tolerance | No Comments »
Problems with Small Insurance Policies
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 | Tagged: law, legal, life insurance, medicaid eligibility, Medicaid Qualification, Nursing Home | No Comments »
Estate Recovery
Posted by Jerrold Bartholomew on March 10, 2008
You have perhaps heard that Michigan passed a form of estate recovery in September of 2007, becoming the last state in the union to do so. Estate recovery is a program through which states attempt to recoup the costs of Medicaid long-term care benefits paid out from the estate of the Medicaid recipient. Although Michigan has passed the necessary legislation to begin estate recovery, it will not be until the program is reviewed and approved by CMS that estate recovery against real property is officially implemented.
Posted in Annuities, Estate Recovery | Tagged: annuities, Deficit Reduction Act, Elder Law, Estate Planning, Estate Recovery, law, legal, Medicaid Qualification, Michigan, Michigan Estate Recovery, Pre-Planning for Medicaid Qualification, probate | No Comments »
Free Durable Power of Attorney: Further Thoughts
Posted by Jerrold Bartholomew on March 10, 2008
Mr. David Goldman has raised some interesting points regarding the free durable power of attorney posted here and free durable power of attorneys generally. There are many problems with such documents and I have mentioned them in the previous post. Above all, you should certainly understand that any decision you make to use such documents will be your own and cannot be based upon anything written here. Mr. Goldman takes the argument a bit further. The first point he makes is that one should read carefully to be sure “free” documents are in fact free. He found a “free” power of attorney form elsewhere that only revealed in the fine print that you would be charged $19.95 per month for downloading the document.
Posted in Asset Protection, Disability Planning, Estate Planning, Probate Court | Tagged: durable power of attorney, Estate Planning, free durable power of attorney, legal, Medicaid Qualification | No Comments »
Medicaid Application for Long Term Care Assistance
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.
Posted in Asset Protection, Disability Planning, Medicaid, Medicaid Qualification, Transition to Nursing Home / Medicaid | Tagged: law, legal, long term care, Medicaid, Medicaid Qualification, Michigan, Michigan Seniors, Nursing Home, snap shot date | No Comments »
Rapid Changes in Medicaid Law Require Constant Vigilance
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.
Posted in Annuities, Medicaid, Medicaid Qualification, Nursing Home Crisis Planning, Transition to Nursing Home / Medicaid | Tagged: annuities, annuity, Elder Law, Estate Recovery, law, legal, long term care, Medicaid, medicaid penalty, Medicaid Penalty Period, Nursing Home, penalty period, policy | 1 Comment »
The Basics of Medicaid Qualification
Posted by Jerrold Bartholomew on March 6, 2008
It is important to understand the basic rules of qualifying for Medicaid Long Term Care Assistance in order to cope with the financial realities of a relative’s long-term care. The rules below apply in Michigan and have been updated for 2008.
First, you should understand that the rules are different for single people and those who are married. To make things just a little more complicated, if both spouses of a married couple are in the nursing home, they are both subject to the rules of a single person, with each spouse qualifying separately.
Posted in Nursing Home Crisis Planning, Pre-Planning for Long Term Care | Tagged: 2008, Estate Planning, Financing A Nursing Home Stay, legal, long term care, Medicaid Qualification, Michigan Elder Law, Michigan Estate Planning, Michigan Long-Term Care, Michigan Nursing Home, Michigan qualification for Medicaid, Michigan Seniors, Nursing Home | 3 Comments »
Medicaid Applications Scrutinized More Than Ever
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.
Posted in Financing A Nursing Home Stay, Medicaid, Medicaid Qualification, Nursing Home Crisis Planning, Transition to Nursing Home / Medicaid | Tagged: application process, asset conversion, Asset Protection, legal, life insurance, Medicaid, medicaid application process, medicaid planning, Nursing Home | No Comments »
Free Durable Power of Attorney
Posted by Jerrold Bartholomew on March 5, 2008
The durable power of attorney is an extremely valuable estate plan document. It allows one person to designate an agent to conduct all financial affairs. These documents are typically durable meaning that the power continues through the disability of the principal (the person naming an agent). Alternatively, there can be springing powers of attorney, which only come into effect when the principal is incapacitated. Springing powers of attorney can be attractive in many ways since the principal’s assets remain untouchable while they can still be used and enjoyed by the principal. But many financial institutions will not honor a springing power of attorney. The apparent rationale goes like this: “You didn’t trust him while you were able to watch over your own affairs. Why should we trust him now?”
Posted in Disability Planning, Pre-Planning for Long Term Care, Probate Court, Transition to Nursing Home / Medicaid | Tagged: Estate Planning, Medicaid, durable power of attorney, Medicaid Qualification, accelerated medicaid qualification, legal | 5 Comments »
Late Life Divorce and Asset Protection
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. I always counsel my clients to disclose everything on the Medicaid application. Failure to do so can be considered fraud and even carry federal penalties. It is my job as an estate planning to arrange my client’s estate in a manner that allows qualification. But that is not a matter of hiding assets–nor is it a manner of simply spending down. I have helped countless 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 | Tagged: Asset Protection, crisis planning, divorce, Elder Law, law, legal, Michigan Seniors, Pre-Planning | No Comments »
Negative Inheritance?
Posted by Jerrold Bartholomew on March 5, 2008
A negative inheritance is a net loss of assets arising from the cost of caring for elderly members of one’s family. The cost of care is increasing rapidly, but that is simply a measure of the time and labor intensive nature of caring for the elderly. For some families, particularly those most devoted to the care of their aging parents, the time and expense of caring for oldest generation will outstrip the assets that are passed to the caregivers.
Posted in Selecting an Assisted Living Center, Transition to Nursing Home / Medicaid | Tagged: Care Giver Stress, Cost of Long Term Care, Inheritance, long term care | 1 Comment »
Protecting the Homestead: Part 2
Posted by Jerrold Bartholomew on March 4, 2008
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.
Posted in Asset Protection, Medicaid, Nursing Home Crisis Planning, Transition to Nursing Home / Medicaid, Your Home | Tagged: Divestment, Estate Recovery, homestead, Medicaid, penalty, penalty policy, Pre-Planning, real estate | No Comments »
Is Long Term Care Insurance a Good Idea?
Posted by Jerrold Bartholomew on March 4, 2008
This article provides some preliminary answers to an important question for today’s retirees and elderly: Is long term care insurance a good idea?
In general, I advise clients to get long term care insurance. The effects of being unprepared for this financial tsunami are too overwhelming to do otherwise. But be careful and be informed.
Among your first questions should be the extent of the coverage and the anticipated premium schedule. It is not uncommon to see nursing home care costs increase 10% or more in a single year. It is therefore important to understand how much coverage is needed and how much adequate coverage will cost.
Once you have that information, consider this: a properly drafted and funded asset protection plan will give you all of the benefits of your assets, but fully protect them from the cost of long term care after five years. When you look at the premiums, the escalation of long term care costs, and the uncertainty of the future, an asset protection estate plan combined with 5 years of long term care insurance makes the most sense for many people.
Posted in Asset Protection, Estate Planning, Financing A Nursing Home Stay, Insurance, Long Term Care Insurance, Nursing Home, Pre-Planning for Long Term Care | Tagged: cost increases, Estate Planning, Long Term Care Insurance, Pre-Planning, premiums | No Comments »
