Archive for the 'Pre-Planning for Long Term Care' Category
Posted by Jerrold Bartholomew on July 12, 2008
Any adult caregiver who has control over a parent’s assets (such as by power of attorney, as a trustee, or through joint bank accounts) can be in a very dangerous position for several reasons.
First, adult caregivers who receive compensation are vulnerable to charges of undue influence, constructive trust and other damaging allegations. How do these arrangements become such a problem? Consider that in many families, it is common for one child to bear a disproportionate share of the caregiving duties. Second, realize that such a caregiver is generally closer geographically and sometimes emotionally to Mom and Dad. The opportunity for jealousy to develop is obvious as well as the opportunity for wrongdoing. And regardless of what actually happened, it is easy for there to be an appearance of wrongdoing. Finally, bear in mind that caregiving is extremely time-consuming, stressful and expensive for the caregiver. Just as a stay-at-home mother is worth well over $100,000.00 per year in terms of replacement cost, a caregiver often makes an economic sacrifice to take care of Mom and Dad rather than work at a job. When you consider all of these factors together, it is easy to see how there is an emotional thunderstorm forming around the care of many seniors. Money is a significant factor, but it is often less significant than the stress on, and the quality of, relationships among family members. Read the rest of this entry »
Posted in Asset Protection, Estate Planning, Medicaid, Pre-Planning for Long Term Care, Seniors | Tagged: Asset Protection, Estate Planning, Nursing Home, penalty period, medicaid planning, durable power of attorney, caregiver stress, trustee, pre-death transfers | No Comments »
Posted by Jerrold Bartholomew on July 5, 2008
Perhaps the most important lesson an estate planning attorney can convey to a client is that your end-of-life decisions will be made for you-and possibly expose your estate to significant and unnecessary expense-unless you create legally enforceable estate plan documents. Without a clear expression of your wishes, some of your most important decisions may be made by a family member, a stranger, or a probate judge who may have no idea what your real wishes were. This can lead to increased costs, family disagreements, and other forms of waste. Several types of legal documents can help you and your family avoid these problems:
- A medical power of attorney is used to appoint someone to make your medical decisions and provide that person with guidance regarding your wishes.
- A financial power of attorney appoints someone to make your financial decisions. There are many different types of financial powers of attorney with significant differences between them. For example, whether your agent has the power to make gifts to others can have tax implications, as well as expose your estate to risk. On the other hand, without gifting authority, Medicaid planning can become more difficult. Read the rest of this entry »
Posted in Disability Planning, Estate Planning, Pre-Planning for Long Term Care, Probate Court | Tagged: conservatorship, Disability Planning, Estate Planning, financial power of attorney, guardianship, irrevocable trust, medical power of attorney, Michigan Estate Planning, probate, revocable living trust, Wills | No Comments »
Posted by Jerrold Bartholomew on June 13, 2008
There are two apparently contradictory themes running throughout this blog and indeed the field of elder law in general. On the one hand, one is regularly advised to plan ahead for long-term care needs with asset protection trusts and similar techniques. On the other hand, the law changes so rapidly in Medicaid qualification that pre-planning seems impossible. For just a few examples consider that recently a cap has been placed on the value of the automobile you can buy, the state has to be named as a remainder beneficiary on annuities, and estate recovery has been enacted. The list of changes is seemingly endless and the pace of change is rapid. So how is it possible to advise people to plan ahead when the law could be different tomorrow?
Read the rest of this entry »
Posted in Asset Protection, Estate Planning, Medicaid, Pre-Planning for Long Term Care | Tagged: Pre-Planning, Asset Protection, Medicaid, long term care, Nursing Home, Medicaid Qualification | No Comments »
Posted by Jerrold Bartholomew on June 3, 2008
There are a variety of reasons why one may wish to rescind an irrevocable trust, even if only in part. For instance, it may be the case that an irrevocable trust was established in order to shield assets from the cost of long term care, but long term care is needed before the five year look back period has elapsed. The assets of the trust are therefore needed to pay for long term care. The ability to return assets directly from the trust to pay creditors will provide a simple solution for executing an alternative spend down plan or paying through the remaining look back period.
Read the rest of this entry »
Posted in Estate Planning, Pre-Planning for Long Term Care | Tagged: Asset Protection, Estate Planning, long term care, Medicaid, medicaid look back period, Medicaid Penalty Period, Medicaid Qualification, Nursing Home | No Comments »
Posted by Jerrold Bartholomew on April 24, 2008
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, a person making significant donations to a church could be ineligible for Medicaid for several months after all other assets have been spent down. An elder law attorney helps families cope with these bizarre rules and avoid such unfortunate results.
Posted in Asset Protection, Disability Planning, Estate Planning, Financing A Nursing Home Stay, Medicaid Qualification, Nursing Home Crisis Planning, Pre-Planning for Long Term Care, Transition to Nursing Home / Medicaid | Tagged: Asset Protection, charitable giving, Detroit Elder Law Attorney, Elder Law, Genesee Elder Law Attorney, Lapeer Elder Law Attorney, long term care, Macomb Elder Law Attorney, Medicaid Qualification, Michigan Elder Law, Michigan Nursing Home, Nursing Home, Oakland Elder Law Attorney | 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.
Read the rest of this entry »
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 | Tagged: Asset Protection, Estate Planning, long term care, Medicaid Qualification, revocable living trusts, irrevocable trusts, creditor protection, veteran's benefits | 2 Comments »
Posted by Jerrold Bartholomew on March 31, 2008
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.
Read the rest of this entry »
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: Pre-Planning, retirement, Asset Protection, qualified funds, tax deferred funds, Estate Planning, nursing home costs, Medicaid, long term care, Nursing Home, Elder Law | No Comments »
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.
Read the rest of this entry »
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 »
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?”
Read the rest of this entry »
Posted in Disability Planning, Pre-Planning for Long Term Care, Probate Court, Transition to Nursing Home / Medicaid | Tagged: accelerated medicaid qualification, durable power of attorney, Estate Planning, legal, Medicaid, Medicaid Qualification | 5 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. 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: Michigan Seniors, Pre-Planning, Asset Protection, Elder Law, law, divorce, crisis planning, legal | No Comments »
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: Pre-Planning, Estate Planning, Long Term Care Insurance, premiums, cost increases | No Comments »
Posted by Jerrold Bartholomew on March 1, 2008
When President Bush signed the Deficit Reduction Act of 2006, the states began to implement that law through a steady patchwork of regulations. Michigan issued revisions to Medicaid qualification rules on a quarterly basis throughout 2007 and there is no reason to think that this pace will slow down in 2008. I will be posting on a regular basis on the many recent changes that have been introduced here in Michigan, including those with retroactive effect and those pertaining to estate recovery.
This article highlights the reality that more changes in Medicaid law are forthcoming.
CMS has proposed new rules that would give states more latitude in designing their Medicaid programs. The rules, which address provisions of the Deficit Reduction Act of 2005 and the Tax Relief and Health Care Act of 2006, would give states the ability to build Medicaid programs that work more like their local private health plans. CMS also has issued proposed regs, based on DRA provisions that will allow states to change premiums and cost-sharing rules.
CMS (The Center for Medicare and Medicaid Services) is a federal agency that oversees the states’ implementation of Medicare and Medicaid. For instance, Michigan has submitted its recently passed estate recovery program to CMS for approval. Whether Michigan will be allowed to use the comparatively mild form of estate recovery will depend on the opinion of CMS.
Medicare and Medicaid are hugely expensive programs and with the average cost of care in a nursing home at about $6,500.00 month in Michigan, long term care Medicaid is a particularly expensive program. It is generally encouraging that CMS is allowing states to develop programs more tailored to their particular circumstances. This may allow some states to stretch their already strained budgets a bit further. But eligibility rules for long term care Medicaid will become ever more restrictive in the near future, and, I would suggest, that if the Deficit Reduction Act is not enough to limit access to Medicaid, that further reform will be coming. This highlights the need for both pre-planning and long term care insurance.
Posted in Asset Protection, Estate Planning, Medicaid, Medicaid Qualification, Pre-Planning for Long Term Care, Transition to Nursing Home / Medicaid | Tagged: Pre-Planning, Medicaid, Estate Recovery, medicare, cms, medicaid eligibility | 1 Comment »
Posted by Jerrold Bartholomew on March 1, 2008
States have begun to encourage all citizens to obtain long term care insurance as part of the Deficit Reduction Act. No one likes paying premiums on insurance, but for those of modest means, the premiums are especially burdensome and the benefits, considering that Medicaid is available when the assets run out, negligible. According to this article from the Wall Street Journal, “States Draw Fire for Pitching Citizens on Long Term Care Insurance,” the broad encouragement to obtain long term care insurance is generating profits for the insurance industry at the expense of people who cannot afford it:
The state endorsements are “the single best thing that has happened to the long-term care industry,” says Jesse Slome, executive director of the American Association of Long-Term Care Insurance. Total premiums collected for long-term care, or LTC, policies were $10 billion in 2007, up 21% from $8.2 billion in 2004.
Critics are sounding alarm bells. They argue that the financial benefits of LTC insurance for many target customers are negligible to nonexistent. Their income and assets are so low that they would quickly qualify for free care under Medicaid.
I have seen people with long term care insurance who had little to gain from having it, and I did not ask how much the premiums were–money that had been squandered. It is certainly common to see premiums of more than $3,000.00 per year.
My view is that long term care insurance can certainly be a good idea, but that decision cannot be made without the a thorough consultation with an elder law attorney. Why? Qualification for Medicaid is a specialty in of itself. The law is nuanced and subject to change. Whether one should have long term care insurance is a fact sensitive determination that should be made in the context of an overall estate plan with clearly defined goals. I can tell a client how soon they can qualify for Medicaid (which will be sooner than you think) and what value long term care insurance will have. A one hour consultation can easily save tens of thousands of dollars–by protecting assets or avoiding unnecessary insurance.
The key is to match estate planning goals with the best means available to achieve those goals. Frequently, a combination of long term care insurance along with an asset protection plan will make the most sense for people who are pre-planning their long term care needs. But if one cannot afford or cannot obtain long term care insurance, an asset protection plan is an excellent substitute and generally, a comparative bargain.
Posted in Asset Protection, Disability Planning, Financing A Nursing Home Stay, Long Term Care Insurance, Pre-Planning for Long Term Care | Tagged: Michigan Seniors, Pre-Planning, Asset Protection, Estate Planning, Medicaid, Nursing Home, Elder Law, Long Term Care Insurance, Deficit Reduction Act, Michigan Elder Law | No Comments »
