New York Estate Planning & Elder Law

Protect Assets from Medicaid Recovery / White Plains, NY & New York, NY

“If you’re helping an aging parent navigate Medicaid because they don’t have long-term care insurance or you think you’ll need it yourself someday, it’s important to understand how the program works.”

Medicaid is a government program used by Americans to pay for nursing home and long-term care. The Medicaid Estate Recovery Program (MERP) is used to recoup costs paid toward long term care so that the program can be more affordable for the government, says the article “What is Medicaid Estate Recovery?” from kake.com. Beneficiaries of Medicaid recipients are often surprised to learn that this impacts them directly.

Medicare was created to help pay for healthcare costs of Americans once they reach age 65. It covers many different aspects of healthcare expenses, but not costs for long-term or nursing home care. That is the role of Medicaid.

Medicaid helps pay the costs of long-term care for aging seniors. It is used when a person has not purchased long-term health care insurance or does not have enough money to pay for long-term care out of their own funds.

Medicaid is also used by individuals who have taken steps to protect their assets using trusts or other estate planning tools.

The Medicaid Estate Recovery program allows Medicaid to be reimbursed for costs that include the costs of staying in a nursing home or other long-term care facility, home and community-based services, medical services received through a hospital when the person is a long-term care patient and prescription drug services for long-term care recipients.

When the recipient passes away, Medicaid is allowed to pursue assets from the estate. That often varies by state, but for the most part it means any assets that would be subject to the probate process after the recipient passes. That may include bank accounts, real estate, vehicles, or other real property.

In some states, recovery may be made from assets that are not subject to probate: jointly owned bank accounts between spouses, payable on death bank accounts, real estate owned in joint tenancy with right of survivorship, living trusts and any assets a Medicaid recipient has an interest in.

An estate planning attorney will know what assets your state’s Medicaid program can use for recovery and how to protect the family from being financially devastated.

While it is true that Medicaid can’t take a home or assets before the recipient passes, it is legal for Medicaid to place a lien on the property. Let’s say your mother needs to move into a nursing home. Medicaid could place a lien on the property. If she dies and you inherit the home, you’ll have to satisfy the lien before you can sell the home.

Heirs need to anticipate inheriting a smaller estate. Medicaid eligibility assumes that recipients are low income or have few assets to pay for long term care. However, if parents are able to leave some amount of assets to their children, the recovery program will shrink those assets.

Strategic planning can be done in advance by the individual who may need Medicaid in the future. One way to do this is to purchase long-term care insurance, which is the strategy of personal responsibility. Another is removing assets from the probate process. Married couples can make that sure all assets are owned jointly with right of survivorship or purchase an annuity that transfers to the surviving spouse when the other spouse passes away. An estate planning attorney can help create a Medicaid Asset Protection Trust which may remove assets from being counted for eligibility.

Speak with an estate planning attorney to learn how to prepare for yourself or your parent’s future needs. The earlier the planning begins, the better chances of successfully protecting the family.

Reference: kake.com (Feb. 6, 2021) “What is Medicaid Estate Recovery?”

For more information on elder law and estate planning, please visit my estate planning website.

Protect Your Estate from Nursing Home Costs / New York, NY & White Plains, NY

No one wants a nursing home but the longer we live, the higher the chance we may need a nursing home at the end of life.”

Nursing home care is expensive, costing between $12,000 to $20,000 per month, so most seniors should do all they can to prepare for this possibility. According to a recent article from the Times Herald-Record, “Elder Law Power of Attorney can save assets that would go to nursing home costs,” this is something that can be done even when entering a nursing home is imminent.

A Power of Attorney is used to name people, referred to as “agents,” to conduct legal and financial affairs, if we are incapacitated. Having this document is an important part of an estate plan since it reduces or completely avoids the risk of your family having to go through guardianship proceedings, where a judge names a legal guardian to take over your affairs.

The guardian likely will be someone you have never met, who does not know you or your family. It’s always better to plan in advance so you know who is going to be taking charge of your affairs.

The Power of Attorney should include unlimited gifting powers. Having this unlimited gifting power lets a single person who applies for Medicaid in a nursing home protect their assets, by using a gift and loan strategy.

Here’s an example: Amy, who is single, can’t live on her own and even having home health care aides is not enough care anymore. She has $500,000 in assets and does not qualify for Medicaid to pay for her care. Medicaid will allow her to keep only $15,900.

One option is for Amy to spend down all of her money on nursing home costs until all she has is $15,900. All of her savings will go to the nursing home, with very little left for her daughter, Ellen.

However, if Amy has a comprehensive Power of Attorney, a gift and loan strategy can protect her assets. Half of the money, $250,000, can go to daughter Ellen as a gift under the unlimited gifting powers. The other half goes to Ellen as a loan, under a promissory note with a set rate of interest.

Any gifts made in the past five years, known as a “five year look back,” cause a penalty period. Amy will have to pay for the nursing home for about twenty months. Every month during that period, Ellen will pay Amy a monthly payment that, with her income, is used to pay the nursing home bill. At the end of the 20 months, Amy qualifies for Medicaid to pay for her care for the rest of her life, and Amy may keep the $250,000 gift. Saving half of her assets by using the gift and loan strategy is sometimes called the “half a loaf is better than none” strategy.

With a Standard Power of Attorney, there are no unlimited gifting powers.

A Medicaid Asset Protection Trust (MAPT) created five or more years before Amy needed a nursing home could have saved her entire nest egg for Ellen.

Preplanning is always the better way to go. An elder law estate planning attorney is the best resource for determining what the best tools are to protect a nest egg if and when a person needs the care of a nursing home.

Many people make the mistake of thinking that it “won’t happen to me.” However, injuries and illnesses often accompany aging, and it is far better to plan for this eventuality in advance than waiting and hoping for the best.

DISCLAIMER: Medicaid planning is complex and the case hypothetical above with “Amy and Ellen” is provided for purposes of illustration. Whether this strategy would work for you or your loved ones depends on the laws of your state of residence given your unique circumstances. Consult with an experienced elder law attorney admitted to practice law in your state of residence before engaging in any Medicaid planning!

Reference: Times Herald-Record (Jan. 8, 2021) “Elder Law Power of Attorney can save assets that would go to nursing home costs”

For more information on elder law, retirement planning and estate planning, please visit my estate planning website.

Estate Planning for a Second Marriage and Blended Family / Greenwich, CT & New York, NY

“Second (or third or fourth) marriages often require careful balancing between the needs of the surviving spouse and the needs of the children from a previous marriage.”

It takes a certain kind of courage to embark on second, third or even fourth marriages, even when there are no children from prior marriages. Regardless of how many times you walk down the aisle, the recent article “Establishing assets, goals when planning for a second marriage” from the Times Herald-Record advises couples to take care of the business side of their lives before saying “I do” again.

Full disclosure of each other’s assets, overall estate planning goals and plans for protecting assets from the cost of long-term care should happen before getting married. The discussion may not be easy, but it’s necessary: are they leaving assets to each other, or to children from a prior marriage? What if one wants to leave a substantial portion of their wealth to a charitable organization?

The first step recommended with remarriage is a prenuptial or prenup, a contract that the couple signs before getting married, to clarify what happens if they should divorce and what happens on death. The prenup typically lists all of each spouses’ assets and often a “Waiver of the Right of Election,” meaning they willingly give up any inheritance rights.

If the couple does not wish to have a prenup, they can use a Postnuptial Agreement (postnup). This document has the same intent and provisions as a prenup but is signed after they are legally wed. Over time, spouses may decide to leave assets to each other through trusts, owning assets together or naming each other as beneficiaries on various assets, including life insurance or investment accounts.

Without a pre-or postnup, assets will go to the surviving spouse upon death, with little or possibly nothing going to the children.

The couple should also talk about long-term care costs, which can decimate a family’s finances. Plan A is to have long-term care insurance. If either of the spouses has not secured this insurance and cannot get a policy, an alternate is to have their estate planning attorney create a Medicaid Asset Protection Trust (MAPT). Once assets have been inside the trust for five years for nursing home costs and two-and-a-half years for home care paid by Medicaid, they are protected from long-term care costs.

When applying for Medicaid, the assets of both spouses are at risk, regardless of pre- or postnup documents.

Discuss the use of trusts with your estate planning attorney. A will conveys property, but assets must go through probate, which can be costly, time-consuming and leave your assets open to court battles between heirs. Trusts avoid probate, maintain privacy and deflect family squabbles.

Creating a trust and placing the joint home and any assets, including cash and investments, inside the trust is a common estate planning strategy. When the first spouse dies, a co-trustee who serves with the surviving spouse can prevent the surviving spouse from changing the trust and by doing so, protect the children’s inheritance. Let’s say one of the couple suffers from dementia, remarries or is influenced by others—a new will could leave the children of the deceased spouse with nothing.

Many things can very easily go wrong in second marriages. Prior planning with an experienced estate planning attorney can protect the couple and their children and provide peace of mind for all concerned.

Reference: Times Herald-Record (Sep. 21, 2020) “Establishing assets, goals when planning for a second marriage”

For more information on asset preservation and estate planning, please visit my estate planning website.

Different Trusts for Different Estate Planning Purposes / Greenwich, CT & New York, NY

“Trusts are legal entities that own assets, and all trusts are not alike. They are created by a written trust document with certain provisions that can vary from trust to trust.”

There are a few things all trusts have in common, explains the article “All trusts are not alike,” from the Times Herald-Record. They all have a “grantor,” the person who creates the trust, a “trustee,” the person who is in charge of the trust, and “beneficiaries,” the people who receive trust income or assets. After that, they are all different. Here’s an overview of the different types of trusts and how they are used in estate planning.

“Revocable Living Trust” is a trust created while the grantor is still alive when assets are transferred into the trust. The trustee transfers assets to beneficiaries when the grantor dies. The trustee does not have to be appointed by the court, so there’s no need for the assets in the trust to go through probate. Living trusts are used to save time and money when settling estates and to avoid will contests.

A “Medicaid Asset Protection Trust” (MAPT) is an irrevocable trust created during the lifetime of the grantor. It is used to shield assets from the grantor’s nursing home costs but is only effective five years after assets have been placed in the trust. The assets may also be shielded from home care costs under certain circumstances. Assets in the MAPT trust do not go through probate.

A Special Needs Trust (SNT) is used to hold assets for a disabled person who receives means-tested government benefits, like Supplemental Security Income and Medicaid. The trustee is permitted to use the trust assets to benefit the individual but may not give trust assets directly to the individual. The SNT lets the beneficiary have access to assets without jeopardizing their government benefits.

An “Inheritance Trust” is created by the grantor for a beneficiary and leaves the inheritance in trust for the beneficiary on the death of the trust’s creator. Assets do not go directly to the beneficiary. If the beneficiary dies, the remaining assets in the trust go to the beneficiary’s children, and not to the spouse. This is a means of keeping assets in the bloodline and those assets are protected from the beneficiary’s divorces, creditors and lawsuits.

An “Irrevocable Life Insurance Trust” (ILIT) owns life insurance to pay for the grantor’s estate taxes and keeps the value of the life insurance policy out of the grantor’s estate, minimizing estate taxes. As of this writing, the federal estate tax exemption is $11.58 million per person.

A “Pet Trust” holds assets to be used to care for the grantor’s surviving pets. There is a trustee who is in charge of the assets, and usually a caretaker is tasked with caring for the pets. There are instances where the same person serves as the trustee and the caretaker. When the pets die, remaining trust assets go to named contingent beneficiaries.

A “Testamentary Trust” is created by a will and assets held in a Testamentary Trust do not avoid probate and do not help to minimize estate taxes.

An estate planning attorney in your state will know which of these trusts will best benefit your situation.

Reference: Times Herald-Record (August 1,2020) “All trusts are not alike”

For more information on asset preservation and estate planning, please visit my estate planning website.

Your Children Wish You Had an Estate Plan / Greenwich, CT & New York, NY

“Without a proper elder law estate plan, the children’s responsibilities are even more exhausting, stressful and sad.”

It is the adult children who oversee aging parents when they need long-term care. They are also the ones who settle estates when parents die. Even if they can’t always come out and tell you, the recent article, “Why your children wish you had an Elder Law Estate Plan” from the Times Herald-Record spells out exactly why an elder law estate plan is so important for your loved ones.

Avoid court proceedings while living. In a perfect world, everyone over age 18 will have an advance directive, including a power of attorney, a health care proxy, and, in some states, a living will. These documents appoint others to make financial, legal, and medical decisions, in case of incapacity. Without them, the children will have to get involved with time-consuming, expensive guardianship proceedings, where a judge appoints a legal guardian to make these decisions. Your life could be turned over to a court-appointed guardian, instead of your children or another person of your choosing.

Avoid court proceedings after you die. If you die and assets are in your name alone, then your estate will go through probate, a court proceeding that can be time consuming and costly. Not having any assets in trusts leaves your kids open to the possibility of wills being challenged, disputes among family members and litigation that can drag on for years.

Wills in probate court are public documents. Trusts are private documents. Do you really want a stranger to access your will and learn about your assets?

An elder law estate plan also plans for the possibility of long-term care and costs. Nursing home care costs can run between $12,000—$18,000 per month. If you don’t have long-term care insurance, you can create a Medicaid Asset Protection Trust (MAPT) that protects assets in the trust from nursing home costs once the assets are in the trust for five years. The MAPT also protects assets from homecare provided by Medicaid, called “community” Medicaid, once the assets are in the trust for 30 months under a new rule that starts on October 1, 2020.

The “elder law power of attorney” has unlimited gifting powers that could save about half of a single person’s assets from the cost of nursing homes. This can be done on the eve of needing nursing home care, but it is always better to do this planning in advance.

Having a plan in place decreases stress and anxiety for adult children. They are likely busy with their own lives, working, caring for their children and coping in a challenging world. When a plan is in place, they don’t have to start learning about Medicaid law, navigating their way through the court system, or wondering why their parents did not take advantage of the time they had to plan properly.

You probably don’t want your children remembering you as the parents who left a financial and legal mess behind for them to clean up. Speak with an elder law estate planning attorney to create a plan for your future. Your children will appreciate it.

Reference: Times Herald-Record (May 23, 2020) “Why your children wish you had an Elder Law Estate Plan”

For more information on elder law, retirement planning and estate planning, please visit my estate planning website.

Elder Law Estate Planning Can Be Helpful for Your Children / Greenwich, CT & White Plains, NY

Children may not have to make as many major decisions at a difficult time in their lives.

Elder law estate planning can make the lives of adult children easier by setting major goals and tasks in the process, according to the Times Herald-Record in “Three ways for seniors to make things easier for their kids.”  Those tasks are planning for disability, protecting assets from long-term care or nursing home costs and minimizing costs and stress in passing assets to the next generation.

Here’s what you need to do, and how to do it:

Disability planning includes signing advance directives. These are legal documents that are created while you still have all of your mental faculties. Naming people who will make decisions on your behalf, if and when you become incapacitated, gives those you love the ability to take care of you without having to apply for guardianship or other legal proceedings. Advance directives include powers of attorney and health care proxies.

Your power of attorney will make all and any legal and financial decisions on your behalf. In addition, if you use the elder law power of attorney, they are able to make unlimited gifting powers that may save about half of a single person’s assets from the cost of nursing home care. With a health care proxy, a person is named who can make medical decisions and base those decisions on your wishes for end-of-life care, including resuscitation and artificial feeding.

When advance directives are in place, you spare your family the need to have a judge appoint a legal guardian to manage your affairs. That saves time, money and keeps the judiciary out of your life. Your children can act on your behalf when they need to, during what will already be a very difficult time.

Goal number two is protecting assets from the cost of long-term care. Losing the family home and retirement savings to unexpected nursing costs is devastating and may be avoided with the right planning. The first and best option is to purchase long-term care insurance. If you don’t have or can’t obtain a policy, the next best is the Medicaid Asset Protection Trust (MAPT) that is used to protect assets in the trust from nursing home costs after the assets have been in the trust for five years.

The third step that will make your adult children’s lives easier, is to have a will. This lets you leave assets to the family as you want, with the least amount of court costs, legal fees, taxes and family battles over inheritances. Work with an experienced estate planning attorney to have a will created.  If your attorney advises it, you can also consider having trusts created, so your assets can be placed into the trusts and avoid probate, which is a public process. A trust can be easier for children because estates subject to a trust rather than a will are likely to settle more quickly.

An estate planning attorney can advise you on creating an estate plan that fits your particular circumstances.

Reference: Times Herald-Record (July 13, 2019) “Three ways for seniors to make things easier for their kids”

For more information on elder law, retirement planning and estate planning, please visit my estate planning website.

Working with an Attorney? Tell the Truth! / New York, NY & Greenwich, CT

It will most likely be difficult or impossible to complete the tasks if all the facts are not available.

When you go to visit an elder law and estate planning attorney, it is important to tell the truth about all aspects of your family members and other potential heirs. If not, it is possible the estate plan may need to be revised or recreated, your assets may not go where you would like and conflicts can arise in the family, according to the Times Herald-Record in “What you need to tell the elder law estate planning attorney.”

Elder law is all about planning for disability and incapacity, identifying the people who would make decisions for you if you become incapacitated and protecting your hard-earned assets from the cost of nursing home care.

Estate planning is focused on transferring assets to the desired people the way you want, when you want, with minimal court costs, taxes, or unnecessary legal fees and avoiding disputes over an inheritance.

Here are some of the things your attorney will need to know, with full disclosure from you:

Family dynamics. If you have a child you haven’t seen in years, you need to discuss the child. They may have a legal claim to your estate, and that must be planned for. Perhaps you want to include the child in the estate, perhaps you don’t. If you disinherit a child in a will and you die without a plan, that child becomes a necessary party to probate proceedings and has the right to contest your will.

Health issues are important to disclose. If you don’t have long-term care insurance, you need five years to protect assets in a Medicaid Asset Protection Trust (MAPT). Therefore, now may be the time to start a plan. If you have a child who is disabled and receives government benefits, you can leave them money in a Special Needs Trust (SNT).

Full disclosure of all your assets, income, how assets are titled, who the beneficiaries are on your IRAs, 401(k)s and life insurance policies, are all the kinds of information needed to create a comprehensive estate plan. Keeping secrets during this process could lead to a wide variety of problems for your family. Your entire estate could be consumed by taxes or the cost of nursing home care.

There’s no doubt of the seriousness of these issues. You or your spouse may experience some strong emotions while discussing them with your attorney. However, creating a proper estate plan, preparing for incapacity and loved ones with special challenges will provide you with peace of mind.

Reference: Times Herald-Record (May 25, 2019) “What you need to tell the elder law estate planning attorney”

For more information on elder law and estate planning, please visit my estate planning website.

A Trust May Protect Assets from Medicaid / New York, NY & Greenwich, CT

If you end up needing Medicaid, the government will look closely at your assets.

There are some ways around the problem of having assets and needing Medicaid. A trust is one of the answers, according to the Times Herald-Record in "Benefits of Medicaid Asset Protection Trust."

A Medicaid Asset Protection Trust is a trust that is set up specifically to protect assets from Medicaid, while still qualifying an elderly person for Medicaid assistance with long-term care. These are irrevocable trusts and any assets put into them at least five full years before applying for Medicaid are protected. The trusts are not perfect, since the trust settlors cannot use any of the principal in the trusts. However, income can be used.

An elder law attorney can advise you about a Medicaid Asset Protection Trust.

Reference: Times Herald-Record (March 8, 2018) "Benefits of Medicaid Asset Protection Trust."

For more information on elder law and estate planning, please visit my estate planning website.

Securing The Future For Aging Parents / White Plains, NY & Greenwich, CT

"So don't give away your money. There are other things you can do ahead of time. Talk to an elder law attorney to make sure you are maximizing your dollars, that you can still give your kids some kind of inheritance and still go into a skilled nursing home on Medicaid."

 

A recent article in Hometown Life article, titled "Plan ahead to assure secure future for aging parents," stressed the importance of planning ahead for elderly parents who are or may become physically or mentally unable to care for themselves. This process should include two important documents: a power of attorney—which can give an adult child legal authority to act on behalf of elderly parents with financial matters—and a patient advocate designation—to help them in medical matters. By starting early, children and their parents can work together to create these documents.

 

The article also answers questions on a few other topics:

 

What about putting your name on your parents' bank accounts?

Children should not be joint owners, because you’ll be subjecting your parents' assets to all of your liabilities, causing issues for future benefits. The government is more likely to scrutinize a joint account if the parent applies for Medicaid when transitioning to a skilled nursing facility. Instead, a signed financial power of attorney allows an adult child to pay bills, sign checks, and help the parent with other financial matters—without the need for joint bank accounts.

 

Who pays when an elderly parent, on Medicare, needs rehab in a skilled nursing center?

Medicare may pay 100 percent of the first 20 days. After that, Medicare may pay 80 percent, and supplemental insurance may pay the other 20 percent of the bill. There is a 100-day Medicare benefit, but not everyone qualifies. You also need to have a 30-day wellness period outside the hospital or a skilled nursing center for that benefit to reset. For example, if the parent leaves the facility on Day 20—but returns the next week—they start where they left off at Day 21 because they didn't have a 30-day wellness period.

 

Should I give any money away if considering entering a skilled nursing home (with Medicaid)?

No, Medicaid will examine the past five years of your finances when you apply for coverage. If you have given money away, you could be severely penalized with long periods of ineligibility and you may not get Medicaid even if you have zero dollars.

Reference: Hometown Life (January 23, 2015) "Plan ahead to assure secure future for aging parents"

 

For more information on asset preservation and estate planning, please visit my estate planning website.

Caring for Your Parents: Where Do You Begin? / Rye Brook, NY & Greenwich, CT

There is no one right way to be a caregiver; everyone’s situation is different. You will find that, among a host of things, family dynamics, financial resources and the ability of your parent(s) to provide guidance for the support that they desire will shape your situation.

If you've been tasked to set up care for an aging parent or loved one, where do you even begin? What is the right way to go about this important task?

Luckily a recent PBS article, titled "How to care for your aging parents from a distance," assures us that there is no one right way to be a caregiver, as everyone’s situation is different. Caregiving responsibilities can entail at least information gathering and the coordinator of services.

One step is to ask your parent(s) to provide you with information to locate their important records, phone numbers, email addresses and other essential contact information.  This includes legal documents like a Durable Power of Attorney for Health Care and Durable Power of Attorney for financial matters. These should be created before a health condition makes it impossible.

The original article suggests that to keep things in order, long-distance caregivers will benefit from keeping a Care Notebook. This is a central place to maintain all critical information and can be digital or just a regular old three-ring binder with pocket dividers. Do not forget current info on your parent’s prescriptions. Also, if you hire professional caregivers for your loved one, keep a separate notebook to document medication administration and other basic physical and mental health status information. Instructions to paid caregivers should be in writing.

PBS provides a few other important suggestions, such as: 

Communicate. Whenever possible, include your loved one in the decision making process—especially choices on care and housing. Consider his or her expressed preferences and respect their values, even if they are not yours.

Education. Read up on the available care and services. Every region and location is unique in the types of services that are available, but some are found throughout the U.S.

Take Care of Yourself. Caregiving can be stressful, and you should have a support network for yourself.  Hire help and get other family members involved. Attempting to do it all yourself is not healthy or safe for you or your loved one.

Changing Needs. Remember that your loved one's care needs may change over time, and original article stressed that it is never too early to consider possible future needs. There are many options to be considered; making informed, well-thought-out decisions about your parent’s care are vital, and your elder law attorney can help.

The realization of your new role as a caregiver can be stressful. The good news is that you can contact a qualified elder law attorney to get more information and the answers you need.

Reference: PBS (October 9, 2014) "How to care for your aging parents from a distance"

For more information on elder law and estate planning, please visit my estate planning website.