Presentation on theme: "Estate Planning, Medicaid and Veteran’s Benefits Todd Whatley, CELA Certified Elder Law Attorney Attorney at Law, LL.M. Elder Law VA Accredited Attorney."— Presentation transcript:
Estate Planning, Medicaid and Veteran’s Benefits Todd Whatley, CELA Certified Elder Law Attorney Attorney at Law, LL.M. Elder Law VA Accredited Attorney
Last Will and Testament Tells the Court what to do with your property as it goes through Probate Does NOT avoid probate In most situations, should NOT give everything to your spouse
Revocable Living Trust Avoids probate unlike a will Allows someone to manage your affairs before death and after death with no court involvement Distributes your property very quickly and cheaply Can protect your children’s inheritance from Creditors, Lawsuits and Divorces
Power of Attorney THE Most important document you can do Allows someone else to help with your affairs when you can no longer do it Allows for Medicaid planning Avoids Guardianship
Health Care Power of Attorney Allows someone else to talk to the hospital staff regarding your care You pick who makes those decisions Allows them to override the physicians during end of life situations
Living Will This is the end of life document Tells the health care staff what to do if you are terminally ill or permanently unconscious Refers back to the Health Care Power of Attorney for the ultimate authority
HIPAA Release Health Insurance Portability and Accountability Act Allows your medical information to be released to health providers and insurance companies Without this release, great possibility of your family not being able to know your medical condition Necessary for Health Care Power of Attorney
Used for a beneficiary that has a disability and is on or may be on Public Benefits Needs to be a separate trust from the testamentary trust Facilitates approval Allows others to add to it also Avoids the pitfalls of leaving the money to another child
Most People don’t know about VA Benefits What Benefits are Available Improved Pension Housebound Aid and Attendance
Requirements for Improved Pension Benefits Served 90 days active service, 1 day during time of war Discharged other than dishonorable Limited Income and limited assets Permanent and total disability at the time of application Disability was caused without willful misconduct Sign and submit an application
Asset Requirement The Claimant must have “less than sufficient means to pay for their own care” Typically for a younger elder (65-70) this means $80,000 (more realistically: $30,000) Income Requirement Gross income is reduced by the unreimbursed medical expenses paid by the Claimant.
Low Income Pension Very simple: how much is your income? Veteran with no dependents: $958/mo Veteran with one dependent: $1291/mo Widower(er) with no dependents: $661/mo
Homebound Benefit Veteran or widow(er) disabled and essentially confined to the home Single permanent disability rated as 100% disabling under the VA schedule and confined to the dwelling OR 100% disability with another 60% disability, regardless of whether or not the person is confined to a dwelling
Homebound Benefit Veteran with no dependents: $1204/mo Veteran with one dependent: $1510/mo Widow(er) with no dependents: $808/mo
Aid and Attendance Claimant is blind Claimant is living in a Nursing Home Claimant is unable to: Dress/undress or keep self clean and presentable Unable to attend the wants of nature Has physical or mental incapacity that requires assistance on a regular basis to protect Claimant from daily environmental hazards
Aid and Attendance Veteran with no dependants: $1644/mo Veteran with one dependant: $1949/mo Widow(er) with no dependants: $1056/mo
Protecting the Elder’s Right to keep his money The Rules allow for it. Everything you will see today strictly follows the Arkansas and/or Federal Rules Your Health and Safety spouse will suffer at home rather than go broke
Federal program for medical assistance to eligible, needy persons Federal and state funds State administration Department of Human Services
Who is eligible? United States citizen or qualified alien Arkansas resident Aged, blind, or disabled Meet financial needs criteria of state Medicaid program
Financial Needs Criteria Resource: Any property held for more than 30 days. Countable resources must be ≤ $2,000 Income requirements Money that comes in either periodically or lump sum NOT VA Aid and Attendance ≤ $2022 (year 2011)
Medical necessity Need of long term/nursing home medical care 30 consecutive days in licensed facility participating in Medicaid program (hospital and/or nursing home)
Income Requirements “Cap” state Income definition Receipt of assets Lump sums or one time payments counted in month of receipt Exclusion – VA aid and attendance payments If over “cap”, Miller Trust is the answer
Non-Countable Resources The Home and Land on which it is located $500,000 One automobile
Non-countable Resources Burial spaces for individual or members of the immediate family Burial fund of $1,500 in cash OR Irrevocable policy-unlimited Personal property $2,500 Non-home incoming-producing property Inaccessible assets Land owned with others who refuse to sell CS Qualified Retirement Plan
The Federal Rules are clear that the Qualified Retirement Plan (401K, IRA) of the Community Spouse should NOT be counted. - I am about to pursue this vigorously. - If you know a situation where this is a problem let me know.
Resources Countable resources Real property other than home Cash Bank accounts (checking, savings, CD) Promissory notes/mortgages Stock, bonds, mutual funds Trusts Automobiles Life Insurance with cash value *****
Pre-nuptial Agreements DON’T work. Revocable Living Trusts DON’T work. Bank accounts with just the well spouses name on it DON’T work.
Income Rules The Community Spouse gets to keep their income regardless of amount If that amount is not $1822/month, we can pull from the Institutionalized spouse’s income to get them to that amount. That minimum amount can be raised for exceptional situations
An Application should be approved, denied or withdrawn within 45 days. - we have done over 2500 applications and less than 5 have been approved in less than 45 days. - The delay in approval is causing severe problems with the family, the facility and our office - Now pursuing action to make DHS follow their own rules and act on an application within 45 days.
Community Spouses Maximum Resources Snapshot Date: 1 st day of 30 in a facility Lesser of $109,560 or spousal half of resources (1/2 total countable resources held by both IS and CS) Greater of above figure or $21,920 (minimum) Can be increased but not likely
Mistake by DHS: “They must spend down to $3,000.” That is when both spouses are in the facility Incorrect computation of the “Snapshot” First day of 30 consecutive days, NOT Date of Application Three Fair Hearings done recently on this very issue
Rule allows the CS to keep at least One Half of all Countable Resources up to $109,560 CS gets to keep $21,920 (plus <$2,000 for the IS) Probably need to do a new will – Why?
Gift = Transfer for less than Fair Market Value 60 Month lookback is only for gifts Not purchases The total amount of the gift will be divided by the average cost of nursing home care ($4657) = penalty period of ineligibility. Rule change: Feb. 8, 2006
Period of ineligibility No limit Begins on first month in which the applicant is otherwise Medicaid qualified: In the facility (and medically qualified to be there) Has less than $2,000 in assets Date of Application
Exempt if transferred: “Not for the purpose of qualifying for Medicaid” – they are ALL for this purpose! From Spouse to Spouse To blind or disabled child solely for the benefit of that child or to trust for benefit of child (real estate) To trust established solely for benefit of disabled individual under 65
What is new: DHS at this time allows us to credit any payback of a gift against the total penalty of that gift. This is beneficial because we can minimize old gifts with new gifts. Example: $50,000 gift = 10 months penalty - pay back $5000 for a month of NH, get a credit for reducing the gift. Month two, do this again. - when we are half-way through this penalty, the penalty is over. DHS is now wanting to change this to not allow a reduction for partial gifts. This is devastating!!!!
Sale for Fair Market Value Can be to anyone including family Can be for less than appraised value but at least County assessed value
Jointly owned property DON’T SELL!!!!! DON’T GIVE AWAY!!!!! Since it is owned by another person, it is a non-countable asset and will go to the survivor upon death
- Mom owns a house worth $100,000. She now wants to move in with the daughter. - What usually happens? Mom sells the house and then sits on the money until she goes into the nursing home. - The daughter of course would never charge mom rent. - When mom goes into the facility, she now has $100,000 that has to be spent before she can qualify.
Purchase of Real Estate Example: Mom buys a interest in daughter’s home. A $200,000 house, Mom pays $100,000 to daughter for joint interest. The $100,000 payment is not a gift, but a purchase
IS spends his half of the money for Non-Countable assets Equipment for the IS Repair the home New vehicle for spouse (not for children!!!!!) Household furnishings for the spouse Pre-pay burial
Purchase of a very specific annuity that converts the excess resources to a stream of income to the Community Spouse Must list the State as the second beneficiary after the spouse Must pay out within life expectancy Must not be able to be liquidated, terminated or transferred
Person has $100,000 in assets, $1,500 in income each month. NH = $4,000/mo This would last for 40 months just paying. A gift would create a 21.5 month penalty. Family pays $2,500/month back = keeping $40,000. Gift and Annuity lets them keep $62,700.
- A Waiver Program - A DHS nurse must evaluate the client for medical need, if over 65 - If under 65: must have a physical disability or be reviewed by the Medical Review Team - A Miller Trust is allowed, the only Waiver Program where it is allowed.
Helps to offset the cost of long term care I recommend enough to cover the balance between your income and the cost of an above average facility. Be sure to get a “qualified” plan.
Qualified Plan If the plan is “qualified” then the beneficiary/Medicaid recipient will get to keep in resources what the policy pays out. Example: Your policy pays $100/day for 1095 days (3 years) you will get to keep $109,500 in assets!
4 office through Arkansas: Bryant: 501-847-1311 Springdale: 479-750-1101 Fort Smith: 479-434-3531 Bella Vista: 479-750-1101