Congress is continually making it more difficult to protect your home and life savings from expensive nursing home care. It’s difficult, but it’s NOT impossible! Here is a useful technique to protect your assets from Medicaid, called Care Agreements.
First, some background. Lots of times children and other family members provide care to help mom or dad stay at home. Maybe it’s driving mom to the doctor, or picking up groceries. Perhaps it’s more extensive, like putting out the medications every morning, or helping dad dress and bathe. And sometimes it may mean living with mom or dad because they can’t be left alone. This work can be hard, physically and emotionally. Yet, most times kids provide this help without expecting to get paid.
But here’s the planning tool. Plan ahead for nursing home care by paying a child or other family member for services provided. Here’s an example. Say dad has $100,000. His daughter has provided all kinds of care for years, for free, just because she’s a good daughter. When dad has to go to the nursing home, he can’t just give away his money to his daughter—that will be penalized. His entire $100,000 will go to the nursing home before he gets Medicaid. But if dad has planned ahead and pays his daughter for help, he could protect some or all of his savings. Let’s say he pays his daughter $4,000 a month for her hard work. In two years, his entire $100,000 would have gone to his daughter, not the nursing home. If he then goes to a nursing home, Medicaid will pay.
One of the tricky issues is setting the appropriate payment amount. It must be a fair amount for the services provided. You can’t pay a child $10,000 for one trip to the doctor. But you could call a professional caregiving service and get a written estimate for the care your parent needs, then use that to set your fee. Also, services must actually be needed by the parent.
The agreement needs to be formalized by a written contract drafted by a lawyer. Otherwise, Medicaid may say these are gifts, not payments for services. And gifts are penalized. Additionally, Medicaid won’t let you pay afterwards for services provided without a written contract. You can go forwards, but not backwards.
Most people are willing to pay their fair share for long term care. But you shouldn’t have to lose everything you’ve worked so hard for. A caregiving agreement is one of the many legal strategies that allow you to protect at least some of your life savings.
Showing posts with label asset protection. Show all posts
Showing posts with label asset protection. Show all posts
Wednesday, January 19, 2011
Wednesday, June 2, 2010
DO YOU KNOW WHETHER YOU NEED ESTATE PLANNING OR MEDICAID PLANNING?
Most people don't. I meet with clients all the time who come in thinking that they need to protect assets from the nursing home and find out they really need new Wills, Trusts and Powers of Attorney. Or, the other way around!
Estate planning is the process of providing for yourself and your family in the event of your retirement, disability or death. Through a properly-crafted estate plan, you put your legal and financial affairs in order so that the assets you have accumulated during your lifetime will be preserved and transferred to your heirs with the least amount of financial and emotional cost. The most common estate planning tools available include a Will, a Trust, a Durable Power of Attorney, a Health Care Power of Attorney and a Living Will Declaration.
This encompasses sitting down with your family to plan out some of the most important issues you face. For example, who will handle your affairs when you are incompetent or dead, how do you want to pass your assets to the next generation and what kinds of medical treatment you want OR DON'T WANT at end of life.
You also have to plan to avoid probate, minimize federal and Ohio estate taxes and not leave a mess for your family. Your plan will vary depending upon your family situation, assets and goals and plans for the future. The more your net worth, the more complicated and more important the planning becomes.
Medicaid planning includes many of the same things as you need for Estate planning. However, the main focus is on how to protect and preserve your assets in the event that you need long-term medical care. It can dove-tail with Estate Planning or it can be mutually exclusive.
Often Medicaid planning means trying to qualify for Medicaid benefits, the only government program that will pay for long-term care at home, in assisted living and especially in the nursing home. However, it is a welfare program. You cannot have much in the way of assets or income to qualify.
With nursing home costs running up to $100,000 per year, people need to plan early to legally preserve as many assets as possible. This may include spending your money on certain protected assets or even giving them away. The planning is not easy, and must follow the letter of the law in order to not run afoul of the many regulations that exist. The longer you wait, the fewer options that exist.
You also need to plan to avoid the state's rights to recover any remaining assets from your or your spouse's estate if you die after having received Medicaid benefits. Again, there is not an easy or clear-cut solution.
So, how do you know which kind of planning you need? And, how do you know what specific planning tools you need among the hundreds of tools available? You must to investigate all the possibilities. Please be sure to see a qualified Elder Law Attorney for assistance. He or she will assist you in focusing your Estate or Medicaid plan on your own personal needs and wants. One size definitely does not fit all with these issues!
Estate planning is the process of providing for yourself and your family in the event of your retirement, disability or death. Through a properly-crafted estate plan, you put your legal and financial affairs in order so that the assets you have accumulated during your lifetime will be preserved and transferred to your heirs with the least amount of financial and emotional cost. The most common estate planning tools available include a Will, a Trust, a Durable Power of Attorney, a Health Care Power of Attorney and a Living Will Declaration.
This encompasses sitting down with your family to plan out some of the most important issues you face. For example, who will handle your affairs when you are incompetent or dead, how do you want to pass your assets to the next generation and what kinds of medical treatment you want OR DON'T WANT at end of life.
You also have to plan to avoid probate, minimize federal and Ohio estate taxes and not leave a mess for your family. Your plan will vary depending upon your family situation, assets and goals and plans for the future. The more your net worth, the more complicated and more important the planning becomes.
Medicaid planning includes many of the same things as you need for Estate planning. However, the main focus is on how to protect and preserve your assets in the event that you need long-term medical care. It can dove-tail with Estate Planning or it can be mutually exclusive.
Often Medicaid planning means trying to qualify for Medicaid benefits, the only government program that will pay for long-term care at home, in assisted living and especially in the nursing home. However, it is a welfare program. You cannot have much in the way of assets or income to qualify.
With nursing home costs running up to $100,000 per year, people need to plan early to legally preserve as many assets as possible. This may include spending your money on certain protected assets or even giving them away. The planning is not easy, and must follow the letter of the law in order to not run afoul of the many regulations that exist. The longer you wait, the fewer options that exist.
You also need to plan to avoid the state's rights to recover any remaining assets from your or your spouse's estate if you die after having received Medicaid benefits. Again, there is not an easy or clear-cut solution.
So, how do you know which kind of planning you need? And, how do you know what specific planning tools you need among the hundreds of tools available? You must to investigate all the possibilities. Please be sure to see a qualified Elder Law Attorney for assistance. He or she will assist you in focusing your Estate or Medicaid plan on your own personal needs and wants. One size definitely does not fit all with these issues!
Monday, October 12, 2009
Medicaid Coverage For Expensive Nursing Homes At Risk in OHIO--The Rest of the US Better Watch Out!
If you or a loved one must enter a nursing home, be ready for some "sticker shock." The monthly cost for nursing home care can easily wipe out your life savings at a rate of $6000 to $9000 per month. The one governmental program available to cover nursing home costs is Medicaid. It is a federal health care safety-net program, administered by the states, to provide coverage for the middle class for long-term care costs. As a welfare program, it is hard to protect any of your life savings and receive Medicaid benefits.
Bank accounts, stocks, bonds, IRAs and even the cash value of life insurance policies are countable assets. A single person may keep only $1500 of assets in order to qualify for Medicaid. A married couple can keep a home as long as one spouse is living in it, and one-half of the countable assets, up to a maximum of just under $110,000 ( in 2009, this amount is indexed annually). The excess assets have to be "spent down." In the past, it was relatively simple to keep and protect these allowable assets from Medicaid. However, the state of Ohio has Medicaid regulations that make it terribly hard to obtain benefits in the first place and then pass the allowable assets on to children or other heirs.
For example, Medicaid lets a married couple keep a home as long as one spouse is living there. However, if at the time the first spouse enters the nursing home, the couple has their home in a revocable living trust (very common for probate avoidance and perfectly legal), the house is NOT exempt and becomes subject to spend-down. Additionally, assuming Medicaid is available for the nursing home spouse, if the healthy spouse dies first and the house is left back to the ill spouse, it will be lost to nursing home costs. Under previous Medicaid law, in order to protect the house, we disinherited the ill spouse and left the house to the children, without a problem. Now, Medicaid takes the position that the healthy spouse could have and should have left the home to the ill spouse. Therefore, if we use the same planning, when the home passes to children, it is as though the ill spouse GAVE AWAY the home and he or she is disqualified from getting Medicaid benefits for a period of time because a gift was made at death. In fact, Medicaid now even forces the house to remain in the healthy spouse's sole name as long as the ill spouse is receiving Medicaid. Any attempt to change the title during the lifetime of the ill spouse will create a gift at the time of the title change and disqualify the ill spouse from Medicaid immediately!
Another punitive regulation is the procedure when a mistake is made in the application process. Mistakes are common because, typically, the person in the nursing home cannot apply on his own. A family member is handling the application. In the past, mistakes were handled simply and easily. The caseworker allowed the spend-down of any additional funds and Medicaid continued. Now, when a mistake is made, the mistake is presumed intentional, Medicaid fraud has occurred and the person can be turned over to the prosecutor's office for prosecution.
Medicaid planning is very complex. Note that this article includes OHIO rules, and every state is different. In order to protect yourself and your assets, you need to consult an attorney who is well versed in Elder Law issues, including Medicaid eligibility. If you need help in Ohio, or for more information, please see our website at http://www.budishandsolomon.com/.
Bank accounts, stocks, bonds, IRAs and even the cash value of life insurance policies are countable assets. A single person may keep only $1500 of assets in order to qualify for Medicaid. A married couple can keep a home as long as one spouse is living in it, and one-half of the countable assets, up to a maximum of just under $110,000 ( in 2009, this amount is indexed annually). The excess assets have to be "spent down." In the past, it was relatively simple to keep and protect these allowable assets from Medicaid. However, the state of Ohio has Medicaid regulations that make it terribly hard to obtain benefits in the first place and then pass the allowable assets on to children or other heirs.
For example, Medicaid lets a married couple keep a home as long as one spouse is living there. However, if at the time the first spouse enters the nursing home, the couple has their home in a revocable living trust (very common for probate avoidance and perfectly legal), the house is NOT exempt and becomes subject to spend-down. Additionally, assuming Medicaid is available for the nursing home spouse, if the healthy spouse dies first and the house is left back to the ill spouse, it will be lost to nursing home costs. Under previous Medicaid law, in order to protect the house, we disinherited the ill spouse and left the house to the children, without a problem. Now, Medicaid takes the position that the healthy spouse could have and should have left the home to the ill spouse. Therefore, if we use the same planning, when the home passes to children, it is as though the ill spouse GAVE AWAY the home and he or she is disqualified from getting Medicaid benefits for a period of time because a gift was made at death. In fact, Medicaid now even forces the house to remain in the healthy spouse's sole name as long as the ill spouse is receiving Medicaid. Any attempt to change the title during the lifetime of the ill spouse will create a gift at the time of the title change and disqualify the ill spouse from Medicaid immediately!
Another punitive regulation is the procedure when a mistake is made in the application process. Mistakes are common because, typically, the person in the nursing home cannot apply on his own. A family member is handling the application. In the past, mistakes were handled simply and easily. The caseworker allowed the spend-down of any additional funds and Medicaid continued. Now, when a mistake is made, the mistake is presumed intentional, Medicaid fraud has occurred and the person can be turned over to the prosecutor's office for prosecution.
Medicaid planning is very complex. Note that this article includes OHIO rules, and every state is different. In order to protect yourself and your assets, you need to consult an attorney who is well versed in Elder Law issues, including Medicaid eligibility. If you need help in Ohio, or for more information, please see our website at http://www.budishandsolomon.com/.
Monday, September 14, 2009
It won't Happen to ME!!!
When dealing with leaving assets at death, I have clients all the time who say, my children are perfect, they won't fight or ever have any financial problems! Famous last words. Consider this:
When Sharon was planning for how her assets would pass to her four children, she envisioned an easy transition. She had read all the articles on avoiding probate, setting up trusts, and organizing her affairs. She had even spoken to her children about her wishes (a very difficult thing to do). All of her children had wonderful relationships with each other and the assets were to be divided equally. After Sharon died, the transition was easy; each of her children received an equal share of assets and everyone was happy. Unfortunately, shortly thereafter the real trouble began.
Her number 1 son was a doctor. He had a good practice and he thought his patients were happy. One was not, and sued him above his malpractice insurance levels, and WON! Suddenly all of this son's assets, including Sharon's legacy, were gone.
Daughter number 2 was married with 3 children of her own. She thought she would follow her mother's estate plan when she died, since things had progressed so smoothly. Suddenly her husband filed for divorce, and demanded half of all assets, including Sharon's. After a terrible legal battle (which cost thousands in legal fees), most of Sharon's money was gone.
Daughter number 3 was ill most of her life, but had a terrific husband who cared for her, along with a faithful nurse and two children. When she died, she left everything to her loving husband, who promptly married the nurse. He added her name to all the assets. When he later died, everything was left to the nurse. Daughter number 3's children got nothing.
Son number 4 was single, and had never had much money. After receiving Sharon's inheritance, he felt rich and proceeded to buy all the thing in life he had never been able to afford. Before too long, all the money was spent and he was no better off.
What happened? This was not what Sharon had planned so carefully for. She missed one critical step: protecting her money even after she was gone. But how? With a BLOODLINE TRUST! This starts out like a simple Living Trust while Sharon is alive. She has full access to and control of the funds. Upon her death, the assets avoid probate, but instead of distributing outright to her four children, the assets are divided into four separate trust shares to be held for each of her children for life. Each child can have access to his or her share for everyday living expenses, but does not receive the lump sum in one chunk. The share held in trust is protected from the lawsuits, divorce, death or crazy spending of the children. Yet the money is there if needed. Plus, when each child dies, his or her remaining share is left to his or her children, Sharon's grandchildren, whom she adored and wanted to benefit if she could.
This simple, but often overlooked, planning tool would have been the answer to Sharon's prayers, and could be perfect for you too. See an attorney who focuses on Estate Planning and Probate Avoidance to establish a Bloodline Trust.
When Sharon was planning for how her assets would pass to her four children, she envisioned an easy transition. She had read all the articles on avoiding probate, setting up trusts, and organizing her affairs. She had even spoken to her children about her wishes (a very difficult thing to do). All of her children had wonderful relationships with each other and the assets were to be divided equally. After Sharon died, the transition was easy; each of her children received an equal share of assets and everyone was happy. Unfortunately, shortly thereafter the real trouble began.
Her number 1 son was a doctor. He had a good practice and he thought his patients were happy. One was not, and sued him above his malpractice insurance levels, and WON! Suddenly all of this son's assets, including Sharon's legacy, were gone.
Daughter number 2 was married with 3 children of her own. She thought she would follow her mother's estate plan when she died, since things had progressed so smoothly. Suddenly her husband filed for divorce, and demanded half of all assets, including Sharon's. After a terrible legal battle (which cost thousands in legal fees), most of Sharon's money was gone.
Daughter number 3 was ill most of her life, but had a terrific husband who cared for her, along with a faithful nurse and two children. When she died, she left everything to her loving husband, who promptly married the nurse. He added her name to all the assets. When he later died, everything was left to the nurse. Daughter number 3's children got nothing.
Son number 4 was single, and had never had much money. After receiving Sharon's inheritance, he felt rich and proceeded to buy all the thing in life he had never been able to afford. Before too long, all the money was spent and he was no better off.
What happened? This was not what Sharon had planned so carefully for. She missed one critical step: protecting her money even after she was gone. But how? With a BLOODLINE TRUST! This starts out like a simple Living Trust while Sharon is alive. She has full access to and control of the funds. Upon her death, the assets avoid probate, but instead of distributing outright to her four children, the assets are divided into four separate trust shares to be held for each of her children for life. Each child can have access to his or her share for everyday living expenses, but does not receive the lump sum in one chunk. The share held in trust is protected from the lawsuits, divorce, death or crazy spending of the children. Yet the money is there if needed. Plus, when each child dies, his or her remaining share is left to his or her children, Sharon's grandchildren, whom she adored and wanted to benefit if she could.
This simple, but often overlooked, planning tool would have been the answer to Sharon's prayers, and could be perfect for you too. See an attorney who focuses on Estate Planning and Probate Avoidance to establish a Bloodline Trust.
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