Archive for the 'Asset Protection' Category
Posted by Jerrold Bartholomew on September 7, 2008
Drew Sygit, a certified mortgage specialist from the Lending Edge Team in Rochester Hills, Michigan sent me some interesting thoughts regarding the government takeover of Fannie Mae and Freddie Mac over the weekend. Drew offers several helpful points:
- Look for mortgage-based lending standards to become even stricter in the coming months.
- Look for increased flexibility in workouts and mortgage rehabilitation for distressed homeowners. Cash flow means everything under the present circumstances and policies geared toward keeping people in homes and making some payment may become more widespread. Drew explains that the irrational policies of the past that left properties vacant when the homeowner could have made substantial partial payments were largely a consequence of privity of contract. Going forward from the takeover, it appears possible that partial forgiveness of debt or debt-restructuring will be considered in order to keep people in their homes and keep some cash moving.
- The federal takeover is calculated to produce stability in the real estate and lending markets.
Drew Sygit’s complete email can be read in pdf here.
The fact that previous policies protected the contractual rights of the purchasers of mortgage debt on the secondary market makes me wonder whether the new policies have the potential to harm the purchasers of mortgage backed securities (MBS)—like pension funds and insurance companies. In other words, it appears likely that the mortgage meltdown will expand to other financial markets. The question for most seniors is whether the failure of Fannie and Freddie will be significant enough to impact their savings in life insurance products like annuities or whole life insurance. Comments are open.
Posted in Annuities, Asset Protection, Detroit Elder Law, Estate Planning, Michigan Elder Law, Mortgages, financial planning | Tagged: Estate Planning, Elder Law, financial planning, Mortgages, Financial, Investments, Pension, Fannie Mae Takeover | No Comments »
Posted by Jerrold Bartholomew on August 1, 2008
Question: I approached my local Veterans’ Administration office for information about the Aid and Attendance Pension. They told me I had too much money to receive the pension. But I have reoccurring medical expenses of more than $1,000.00 per month. Is there anything I can do?
Answer: This is a delicate situation. On the one hand, some estate planning could allow you to qualify for the Aid and Attendance Pension. On the other, you would be mistaken to think that qualification for the Aid and Attendance Pension alone is sufficient. You need to be planning ahead for Medicaid long-term care at the same time that you are qualifying for veterans’ benefits. Read the rest of this entry »
Posted in Asset Protection, Assisted Living, Disability Planning, Estate Planning, FAQ, Financing A Nursing Home Stay, Financing Assisted Living Costs, veteran's benefits | Tagged: annuity, annuities, Medicaid Qualification, Michigan, Michigan Elder Law, veteran's benefits, Oakland Elder Law Attorney, Lapeer Elder Law Attorney, Macomb Elder Law Attorney, Wayne County Elder Law, Medicaid Long Term Care, FAQ, FAQ: Medicaid Qualification, Medicaid Pre-planning | No Comments »
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 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?
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Posted in Asset Protection, Estate Planning, Medicaid, Pre-Planning for Long Term Care | Tagged: Asset Protection, long term care, Medicaid, Medicaid Qualification, Nursing Home, Pre-Planning | 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.
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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 | Tagged: Asset Protection, creditor protection, Estate Planning, irrevocable trusts, long term care, Medicaid Qualification, revocable living trusts, veteran's benefits | 2 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 | Tagged: annuities, Asset Protection, Estate Planning, Estate Recovery, legal, long term care, Medicaid, Michigan Estate Planning, Michigan qualification for Medicaid | 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.
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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 »
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 | Tagged: annuities, annuity, crisis plan, Divestment, investment, law, legal, long term care, Medicaid, pre-plan, risk tolerance | No Comments »
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.
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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 »
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 | Tagged: law, legal, long term care, Medicaid, Medicaid Qualification, Michigan, Michigan Seniors, Nursing Home, snap shot date | 1 Comment »
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 »
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.
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Posted in Asset Protection, Medicaid, Nursing Home Crisis Planning, Transition to Nursing Home / Medicaid, Your Home | Tagged: Pre-Planning, Medicaid, penalty, penalty policy, Divestment, homestead, Estate Recovery, real estate | No Comments »
