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)
Q: My husband and I are in reasonably good health and although we are in our 60s, we have had conversations about the day when we may need to move to a nursing home facility. How can we preserve most of our assets for our children?
A: There are several things you can do before one or both of you need nursing home care. Before we begin, make a comprehensive list of all your assets, including their current value, the name of the company and/or adviser, location of the asset, legal description of any real estate, minerals, wind or water rights, how ownership is titled, and current beneficiary information. This list should include any assets that are non-income producing such as inherited mineral interests, business interests, insurance policies, etc. You will need to share this information with an experienced long-term care planning attorney for their recommendations.
Below is a list of options you may want to consider:
1. Meet with your long-term care planning attorney and accountant to discuss if your financial situation will allow you to begin transferring assets to your children now, either in part or in whole. Ideally, you would transfer as many assets to your children as possible at least five years before your admission to a full time nursing facility, as you will be penalized for any gifting done in the five years preceding an admission, which increases your overall out-of-pocket expense. Be aware that just because you gifted assets to your children with the expectation that they help with any financial problems you may encounter in your later years, they are under no legal obligation to comply. Gifting can be done to your children outright or in a trust. A trust is more costly, but gifting outright to your children means your newly-gifted assets are subject to your children’s possible divorce settlement, lawsuit or bankruptcy.
2. Continue to age at home and attempt to avoid nursing home care altogether. If you have not already developed a healthy routine of diet and exercise, begin immediately. Consult with your physician to see what suggestions they have to improve your odds of remaining independent at home.
3. When you need assistance, move in with one of your children. This may not be a popular option for either you or your child, but if you wish to preserve as many assets as possible from nursing home expenses, this strategy can be an answer. You may need to provide some fair compensation to your care-giving child, as they are taking on the additional responsibility of caring for you and will incur additional expenses and loss of personal freedom as a result. Consult with your long-term care planning attorney to structure compensation to the care-giving child so that it won’t be considered a gift and factored against you when computing your nursing home costs if that becomes necessary at a later date.
4. Depending on your age and your ability to pay, you may be able to purchase long-term care insurance. Long-term care insurance is expensive and may not pay the full amount of your nursing home care, but it can cover a large portion of the expense. Be sure to thoroughly research the insurance agent and company before purchasing any policy. Additionally, be sure to inquire about the policy’s inflation protection and waiting period you must incur prior to payment being issued to the nursing home. We advise getting 2-3 quotes for long-term care insurance to avoid an inferior product.
5. If you have a disabled child, you may want to consider making donations to fund a special needs trust on their behalf. These donations are not considered a gift when the nursing home calculates your expected expense. Donations to a special needs trust are irrevocable and cannot be used for the benefit of anyone other than the disabled individual for whom the trust was established until such time as the disabled individual is deceased.
If you and your family have questions about long-term care planning and asset protection, please contact Davis & McCann, P. A., Dodge City, KS. 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, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate Transactions, 1031 Exchanges, and related matters.
The last of the children have moved away from home. You’re officially an empty nester! If you’re like many parents, adjusting to this new found freedom and income will take some time. Here are some great tips to keep in mind as you plan for your future:
1. Schedule an appointment with a reputable financial planner or accountant to review your retirement plan and make any necessary adjustments to your savings and investment plan to accommodate the lifestyle you want to have in your post-retirement age. For example, you may want to lower your household budget because you no longer have expenses related to raising children, but possibly increase your personal spending because you would like to travel.
2. Examine your estate planning documents, old will and powers of attorney and make sure they still reflect what you want to happen if you can’t act on your own behalf. A few things you should consider: (a) Do any of your children have legal or marital concerns that might put their inheritance at risk? (b) Are any of your beneficiaries receiving government benefits, whose eligibility might be jeopardized by an inheritance from you? (c) Do you still want the same people acting as your health care or business powers of attorney? (d) If you plan to become a “snowbird” and travel out of state for extended stays, do you know if your current estate planning documents will be honored in your secondary state of residence? (e) Has your net worth increased significantly since you signed your will or trust? (f) Do you still want the same people named in your original will or trust as beneficiaries? (g) Have any deaths or births occurred within the family that would require an amendment to your will or trust? (h) Have you acquired any titled assets since you did your original estate plan (real estate, minerals, investments, vehicles, business interests, etc.)?
One of the most common concerns of our aging clients is the fear of losing their family home if they need full time nursing care. There seems to be an inclination to transfer the family home to someone else, usually a family member, as quickly as possible to keep the home from being sold. This may sound like a smart idea, but it simply doesn’t work in most circumstances.
Losing the family home is a legitimate concern but one that you should not try to address without the assistance of an experienced elder law attorney. Here are a few of the problems you can encounter if you don’t abide by Kansas law and Medicaid rules:
1. Gift Tax Consequences. Unless the appraised value of your family home is $15,000 or less (the 2019 annual gifting allowance), when you transfer your family home to someone else, you will be required to file a gift tax return and may be subject to a gift tax.
2. Medicaid Reimbursement Claim. If you require full time nursing home care and are counting on Medicaid benefits to cover the cost of your care, transferring your residence to someone else shortly before moving to a nursing home facility will likely result in a problem. Medicaid works on the theory that assets (your family home, for example) that otherwise could be used to pay for your care should not be given away within the five year period prior to requesting the government (Medicaid) pay for nursing home benefits. This period is called the five year look-back. Unless the gift recipient fits certain, clearly specified exceptions, the government will assess a penalty period before they will contribute to your nursing home care if you have made a gift within the five year look-back. During the penalty period, you will be required to private pay for the cost of any nursing home care that you receive.
If you’re age 65 or older, issues like retirement and long-term care planning are probably becoming more frequent topics of conversation. Even if you’re not in this population group, chances are you know and care for someone who is. Research from the U. S. Department of Health and Human Services suggests that if you are age 65 or older, you’re most likely going to need long-term care at some point in your life. Unless you are sufficiently wealthy or exceptionally poor, it is wise to do some advanced planning to cope with the increasing health care costs that will accompany long-term care stays.
Options you may want to investigate include, but are not limited to:
1. Long-term Care Insurance. The older you are and the longer you wait to obtain insurance, the more expensive it will become. Costs for long-term care insurance (LTCI) tend to be expensive and premiums will most likely rise over your lifetime. With average premiums running at $2,700 per year (according to industry research firm, LifePlans), many seniors may find LTCI too cost prohibitive to be a realistic option. Additionally, your age or current health condition may disqualify you from obtaining this type of insurance.
2. Life Insurance. Some insurance companies offer life insurance with long-term care riders. With this type of policy, your beneficiaries may still receive a death benefit even if you use long-term care rider benefits. With traditional LTCI, there is no death benefit paid to your beneficiaries after your death.
3. Family Members. Your immediate or extended family members may be able and willing to care for you or pay for your health care costs. However, with annual nursing home costs running an average of $89,000 annually, according to a 2018 Genworth study, few families can afford to cover these costs for a year, let alone for multiple years.
4. Medicare. Many people do not realize that Medicare does NOT cover long-term care expenses for patients requiring full nursing home care, except for very limited circumstances and for short periods of time.
Attorney Megan L. McCann, partner at the Law Office of Davis & McCann, P. A., Dodge City, Kansas, recently completed a specialized Medicaid planning course focused on solutions for individuals and families.
The course, offered by Mike Anthony, JD, CMP of Edgentus, covered an extensive review of government benefits provided by Medicaid, the rules and regulations governing those benefits, and specific techniques available to attorneys to assist clients in maximizing the protection of personal assets during the Medicaid application process. Anthony is one of the foremost experts on the subject of long-term care planning in the U. S. He also is the author of the “Medicaid Planning Guidebook,” the largest textbook on the subject of long-term care Medicaid planning.
“As baby boomers enter their advanced senior years, we’ve seen a spike in the need for assistance with long-term care planning and Medicaid applications. It’s our goal to provide affordable, high-level legal care to our clients, without them having to drive halfway across the State to receive the advice they need. We’ve offered more basic long-term care planning services for the past 2-3 years, but we believe advanced training such as this, although a sizable investment for our boutique law firm, ensures we can fulfill that commitment to our clients,” McCann says.
As elder law and estate planning attorneys, Davis & McCann, P. A. provides legal services in the areas of estate planning, long-term care planning, Medicaid planning (advance planning and crisis), and special needs planning, among others. Specialized training in these areas of law is required to provide competent service to clients and ensure proper implementation of legal strategies. The advanced training acquired by Davis & McCann, P. A. will allow them to address more advanced and complicated long-term care plans for their clients. Davis & McCann are members of Wealth Counsel, a national consortium of Estate Planning Attorneys. McCann also is a member of National Academy of Elder Law Attorneys (NAELA), one of the best professional associations that educates and trains lawyers and others on elder law matters and special needs planning.
In addition to long-term care planning and Medicaid planning, Davis & McCann, P. A. offers services in simple and complex estate planning, business and farm succession planning, business formation, probate, trust administration, real estate and more. The firm represents clients in most of the counties in Western Kansas.
Providing a copy of the following items during the estate planning process will assist your attorney in determining which estate planning options would best match your goals and budget. Similar to a medical professional needing access to your complete medical history, your estate planning attorney must have a complete picture of your asset holdings before he/she can make a good recommendation for your estate plan. In addition to the following list of items, you should inform your attorney if you are a current or future beneficiary of any Trust, a party in a litigation matter, or if you anticipate a substantial inheritance in the foreseeable future.
Current Estate Planning Documents:
• Copies of any currently existing estate planning documents, including any powers of attorney for financial or medical, living wills, Last Will and Testaments and any trust documents.
• Copies of your most recent statements for all checking, savings and money market accounts.
• Copies of certificates of deposit.
Investment and Mutual Fund Accounts:
• Copies of your most recent statements for all investment and mutual fund accounts.
Stock and Bond Certificates:
• Copies of all stock certificates.
• Copies of all bonds.
Because November is Long-term Care Awareness Month, for the past few weeks we’ve been talking about Medicaid planning. Those of us who work with Medicaid planning and elder care services know what Medicaid planning can and cannot do for a person, but do you?
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 the 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, you should not need to sell assets in order to pay for your long term care. If you have a spouse, with Medicaid planning you may be able to preserve income for your spouse rather than paying it to the nursing home in certain circumstances.
Long-term Care (LTC) broadly refers to medical and social services designed to support the needs of people living with chronic health problems that affect their ability to perform everyday activities. Long-term care services include traditional medical services, social services, and housing. Odds are, the majority of people over the age of 65 will need LTC at some point, but most people don’t plan for it. Sure, people think about and plan for retirement, but rarely are LTC costs factored into such a plan. If you require nursing home care, in our experience, your costs could be as much as $84,000.00 or more a year. For one person in western Kansas—that can be quite the unexpected expense.
What are some ways you can pay for LTC should nursing home care be required?
Sometimes our best laid plans simply don’t work. We typically don’t plan on illness, being in an accident, or early on-set Alzheimer’s. When life doesn’t happen like we plan, we need to be able to talk to someone well-versed in long-term care planning who can help develop a new plan that accomplishes our goals.
Long-term care crisis planning can mean many things, but ultimately it is based on the notion that a major, unplanned life event occurred, and you need to figure out how to move forward with care and address the costs of such care.
Here are a few of the ways we can help you:
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