In a perfect world, everyone would establish a long-term care plan well in advance of needing such care, all the necessary finances to pay for any such needs would be in order and everyone in the family would be prepared to help execute that plan at any given moment. But the reality is that most people procrastinate on any type of planning that focuses on the possibility of serious illness or death.
When an unplanned event happens that requires immediate long-term care, and in the absence of an existing plan, long-term care ‘crisis’ planning can help you navigate the days to come. What is Long-term care ‘crisis’ planning? This term is based on the notion that an event occurred that now requires you to make decisions regarding long-term nursing home care, including addressing the cost of such care, in a short period of time.
Your first step might be to seek advice from professionals who are trained in the area of long-term care planning and stay current on the best methods for addressing your situation, as the rules and regulations of Medicaid are complicated and change frequently. Below are a few of the ways a trained professional might help you manage your long-term care crisis situation:
For more information on long-term care crisis planning, contact Davis & McCann, P. A., Dodge City, KS. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and Elder Law. We focus our practice on providing clients with the best legal advice on estate planning, Medicaid and Long-term Care Planning, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate Transactions, 1031 Exchanges, and related matters.
November is Long-term Care Awareness Month. Statistics show that between 50%-70% of our population who reach age 65 will require long-term care at some point in their life. Losing all of one’s assets to pay for nursing home care is a legitimate concern for people. With the cost of a private room in a Kansas nursing home at approximately $70,000-$90,000 annually, it’s no wonder why senior citizens are looking for help to preserve at least some of their assets for their heirs.
Let’s review some facts about long-term care planning, specifically Medicaid planning. The purpose of Medicaid planning is to preserve your assets and set up your affairs in such a way that the State will pay the majority of your nursing home care costs, if or when the time comes. With good Medicaid planning, you should need only to contribute your income toward nursing home care costs. With Medicaid planning, the goal is to avoid selling your assets to pay for your long-term care. If you have a spouse still living at home, then Medicaid planning may also allow you to preserve income for that spouse rather than paying it to the nursing home.
When married couples consider Medicaid planning, the “best case scenario” is to retain the benefits of all their assets and still have Medicaid pay for nursing home care when the time comes. To accomplish this, all planning and funding should be completed five (5) or more years prior to one of the individuals needing full-time nursing home care. If you have less than five (5) years before an anticipated nursing home admission, other options exist to preserve assets, but those options are more limited and vary, based on circumstances.
A single person can also utilize Medicaid planning, although the percentage of assets preserved may vary, again depending on the circumstances.
Elder law generally, and Medicaid planning specifically, is a complex body of law and an area that sees frequent rule revisions. The application process can be a paperwork nightmare, so having an experienced professional to guide you through the system is advisable. You are not required to use an attorney to plan for possible nursing home admissions. However, most nursing home and social services professionals are not trained to provide sophisticated Medicaid planning advice, which can protect the greatest amount of your assets. Additionally, not just any attorney is qualified to advise you on your long-term care options. Look for an attorney specifically trained in Elder law and Medicaid planning issues to provide you with a plan of action to preserve the greatest amount of your assets, as allowed by law.
If you have questions about Medicaid or long-term care planning, contact Davis & McCann, P.A., Dodge City, Kansas at 620-225-1674. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and the National Academy of Elder Law Attorneys (NAELA). We focus our practice on providing clients with the best legal advice on Estate Planning, Medicaid and Long-term Care Planning, Special Needs Planning, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate, 1031 Exchanges, and related matters.
If your loved one is facing admission to a nursing home for long-term care and you’re concerned that you won’t have enough money to cover their expenses, there are a few things you should consider. With an average cost of over $5,600 per month for a semi-private nursing home room in Kansas (2019 Genworth Cost of Care Survey), very few of us could afford to private pay for a nursing facility for very long. KanCare is the Kansas Medicaid Program that you will apply to if you need government benefits to assist with payment in Kansas.
Too often, well-intentioned friends, neighbors and non-elder law attorneys or other professionals make recommendations on how to apply for Medicaid benefits to cover nursing home expenses that result in a denial or extended delays in benefits, both of which result in unnecessary expenses to the applicant. To prevent this from happening to you, we’re sharing some things to consider:
Now that you are armed with more knowledge, remember to consult with an experienced elder law attorney should you need to file for Medicaid benefits in the future. More than one client has told us after we corrected an inaccurately filed Medicaid application, “I wish I would have just come to see you first!”
If you have questions about Kansas elder law or Medicaid planning, contact Davis & McCann, P.A., Dodge City, Kansas at 620-225-1674. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and the National Academy of Elder Law Attorneys (NAELA). We focus our practice on providing clients with the best legal advice on Estate Planning, Medicaid and Long-term Care Planning, Special Needs Planning, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate, 1031 Exchanges, and related matters.
Q: My brother-in-law told me that his assets are safe from any Medicaid claims that he might encounter in the future for nursing home care because he has a Revocable Trust. I also have a Revocable Trust, but I didn’t think it protected my assets from Medicaid claims. Who is correct?
A: You are. A Revocable Trust does NOT protect your assets from a Medicaid recovery claim against you. A Revocable Trust allows the creator/grantor (you) to make any changes to the Trust at any point in their lifetime, as long as they are competent. Because you have so much control over a Revocable Trust and are the beneficiary of the trust during your lifetime, Medicaid law allows for a claim to be made against assets held in a Revocable Trust just as they could make a claim over assets owned in your individual name. If you or your brother-in-law are concerned about protecting your property and/or other assets from future Medicaid claims related to nursing home or hospital expenses, you need to visit with an estate planning attorney well versed in elder law matters.
Generally speaking, if you want to protect certain assets from creditor claims, including Medicaid, your assets must be owned by an IRREVOCABLE Trust, which CANNOT be controlled by you in any way. There are Irrevocable Trusts designed specifically for individuals who are concerned about protecting family assets, such as farm and ranch property that has been in the family for generations, and minimizing the risk of losing those assets to pay for long-term nursing home care. Be aware that this type of planning typically involves making a gift and triggering the 5-year look-back for Medicaid eligibility, so time is of the essence. Postponing planning until it appears that long-term nursing home care is inevitable can significantly decrease your ability to protect many of your assets. However, if you are currently in such a situation where you are facing immediate nursing home admission, don’t despair, there may be other options available to you.
If you have questions, it is critically important that you seek out an attorney who understands the Medicaid system as it relates to elder care matters in your State. If you have questions about any estate planning or Medicaid planning matter in Kansas, contact Davis & McCann, P.A., Dodge City, Kansas at 620-225-1674. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and the National Academy of Elder Law Attorneys (NAELA). We focus our practice on providing clients with the best legal advice on Estate Planning, Medicaid and Long-term Care Planning, Special Needs Planning, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate, 1031 Exchanges, and related matters.
Q: My mother is a relatively healthy 80 year old. A neighbor suggest that we transfer her home to me and have her retain a life estate interest, so she could avoid losing out on benefits from Medicaid, should she need nursing home care in the next few years. I am an only child and my father passed away years ago. What do you think about this idea?
A: If the life estate deed is recorded at least five years before your mother requires a full-time nursing home care, this transfer should not bar her from Medicaid qualification. The rules on Medicaid qualifications for this type of situation are complicated to say the least. However, an overly simplified answer would be that her life estate interest will not be counted as a resource for KanCare (Medicaid program in Kansas) qualification purposes.
Maintaining your mother’s home while she is in the nursing facility could potentially strain your finances. If she uses a life estate deed, there are other issues you both should consider, including:
1. Sale. If you plan to sell your mother’s home while she is alive, be aware that selling the house will require your and your mother’s consent. Your mother’s life estate interest has a value and such interest likely will then disqualify her from receiving KanCare benefits for a period of time, during which she will have to private pay for her nursing home care.
2. Gifting and Capital Gains Tax. Remember, that even though you don’t have a tangible asset yet due to your Mom’s life estate interest, you have still been gifted the residuary value of the home. Property that is gifted during your mother’s lifetime does not get a step-up in basis at her death, meaning you will likely have to pay capital gains tax on the property if you sell it. The tax you will owe after the sale could be substantial and will depend on factors such as what your mother paid for the property when she purchased it and what you sell the home for. Additionally, this will result in a penalty if your mother goes into a nursing facility and needs to become Medicaid eligible within 5 years of making the gift.
3. Death of Residuary Owner. What happens if your mother gifts you her home, maintains her life estate and then you die before she does? The property would then go to your estate, which may not be what your mother would want.
Instead of deeding the house to you and having your mother retain a life estate interest, your mother may want to consider creating an irrevocable trust and deeding the house to the trust. This gives you a lot more flexibility. The trustee could sell the house and the sale proceeds would not disqualify your mother from KanCare benefits. If the house is not sold, then when your mother passes away, the trust could be set up in such a way that you would receive a “stepped-up basis”, resulting in no capital gains taxes if and when you sold the house.
Be aware, that this type of trust is very complicated and not something that should be attempted on your own or without expert guidance. Please see an experienced long-term care estate planning attorney to determine the best course of action for your mother’s unique situation.
For more information on Real Estate and Medicaid planning, contact Davis & McCann, P. A., Dodge City, KS. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and focus our practice on providing clients with the best legal advice on estate planning, Medicaid and Long-term Care Planning, Special Needs Planning, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate, 1031 Exchanges, and related matters.
You’ve just come from taking your elderly mother to her doctor and learned that she needs to be admitted to a long-term care facility. Your mother isn’t a wealthy woman and you have no idea how she is going to pay for long-term care. This would be a good time to consult an elder law attorney and here’s why:
A good elder law attorney can help you devise a plan to pay for your mother’s long-term care, make suggestions on ways your mother can preserve some of her assets and which assets need to be liquidated, sold, etc. If your elder law attorney determines that your mother will immediately qualify for Medicaid benefits, she will need to provide the following information as part of the Medicaid application process:
1. Non-Financial Documents
a. Identification – picture ID (driver’s license, state ID)
b. Social Security card(s)
c. Birth verification (birth certificate, baptismal certificate or school record with date of birth)
d. Marriage license or death certificate/divorce decree of spouse
e. Health Insurance Identification Card (for all insurance coverage including Medicare, Medicare Supplemental, etc.)
f. Military discharge records including original Form DD-214
g. Names, addresses, phone numbers of all children
h. Listing of assets sold or given away in the last 5 years
2. Legal Documents
a. Most recent Health Care Power of Attorney, Living Will, General Durable Power of Attorney, Will
b. Trust documents
c. Business entity/partnership agreements
d. Resident admission agreement (if in assisted living or nursing home)
Rumors, gossip and hearsay are your worst enemy when it comes to long-term care planning. Many people delay planning because they hear one thing or another from a family member or friend, but they never take the time to investigate whether the information is accurate or if it even applies to their own situation. Before you assume you won’t qualify for Medicaid benefits for nursing home care, or wouldn’t benefit from long-term care planning, do yourself a favor and visit an experienced elder law attorney to get the FACTS. In the meantime, here are a few common long-term care misunderstandings held by many clients:
1. To qualify for Medicaid benefits, I must get rid of all my assets. False. In Kansas, although you’re not allowed more than $2,000 in “countable assets” to receive Medicaid, not all of your assets are counted toward computing your eligibility. For example, in Kansas, your house is an exempt asset so long as your spouse resides there or there is a chance that you will return home. Other exemptions include assets that can’t be converted to cash, burial plots, business or income-producing property, household furnishings, personal property, pre-paid funeral plans and a vehicle. Further, if you are married, your spouse (a/k/a well-spouse or non-applicant) may keep a portion of your countable assets as his/her “community spouse resource allowance”. However, something everyone should keep in mind, is that many of the aforementioned assets lose their exempt status after death.
Dementia is a frightening diagnosis for any family.
The life expectancy for an individual with dementia can vary greatly depending on the exact diagnosis but patients routinely live more than five, eight or even 12 years after they first begin to require full-time care. These numbers vary depending on the individual and advancing treatments but they give you a better idea of what you might expect should you or a family member receive a dementia diagnosis.
Even with the best of intentions to receive care at home, very few family members are equipped to provide the health and safety needs of a patient with advanced dementia. As a result, most dementia patients end up needing full-time nursing home care. Will you be financially able to pay for that care?
In Kansas, the average annual cost for around-the-clock care in a nursing home, with a semi-private room, is a little over $65,000, according to a 2019 Genworth report. This means that an individual needing eight years of full-time nursing home care would pay more than $520,000 over that time period. For many families, this equates to most or all the wealth they have accumulated over their lifetime.
Medicare does NOT pay for long-term care in a nursing home. It will cover some expenses related to temporary admissions, but not long-term care. Medicaid is the State agency that provides payment for long-term care but only individuals who have less than $2,000 in countable resources are eligible. The application process for Medicaid can be confusing and time consuming. That process is even further complicated if you feel you have been unfairly denied Medicaid assistance (a common event, even for clearly qualified applicants).
If the task of helping your parents coordinate medical services, home repairs, caregivers, and legal and financial consultants has fallen to you, below is some important information you might need.
As your parents’ physical and/or mental health declines, they may require skilled nursing home care. If this is necessary, you will need to be aware of your parents’ financial information to determine if they will have enough to pay for their care versus if you will need State assistance. Similarly, you should have a comprehensive knowledge of their medical needs and treatments to ensure adequate health services will be provided to your parents. If your parents are agreeable, begin to accumulate this information now before you are faced with an emergency nursing home admission or a death. Gathering this information while your parents are alive and able to advise you on the location of assets, names of advisers, etc. will save you countless headaches - trust us!
What’s the easiest way to gather this information? Your parents can most easily assemble the necessary documents and contact information, if they are in good health and willing. If they struggle with their health or organizational skills, they could legally appoint you to serve as an immediate Power of Attorney for their financial and health care matters, to help them with this process. These Powers of Attorney would allow you to communicate with any business or health care agent working with your parents even if your parents still have capacity. You could also make decisions on their behalf, should that become necessary. As a legally appointed Power of Attorney, you can pay their bills, sign contracts, make investments, etc… Be aware, however, with this power comes greater legal responsibility. Your decisions must be beneficial to your parents and be in keeping with their standard practices. You will be held to a higher standard by the Court if it is determined that you acted against your parents’ best interests.
Family gatherings, holidays and special events are perfect opportunities to check in on your aging loved one’s health and well-being. If you suspect your loved one may be struggling with their mental health, here are a few signs you can watch for at your next visit:
1. Confusion, or increased problems with decision-making.
2. Loss of weight and decrease (or abnormal increase) in appetite.
3. New complaints of fatigue or insomnia.
4. Difficulty managing finances or calculating numbers.
5. A noticeable change in personal hygiene, appearance, or home maintenance.
6. Memory loss, especially short-term memory issues.
7. Depression symptoms lasting more than a few weeks.
8. A change in social habits; withdrawal from events and people they normally enjoy.
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