I have written many times before about how the advocate for the nursing home resident-patient must know the rights of the resident. What if the nursing home staff do not listen? Is it “your word against theirs?” No.
Residents (under the Nursing Home Reform Law of 1987 the people in nursing homes are referred to as residents) have guaranteed rights. It surprises many but a resident is supposed to be able to choose his or her activities (including bedtime) and have veto power over a treatment plan. This runs counter to the common experience of institutional care that most experience. Everybody gets up at the same time. In the evening its lights out at the same time. And so on.
How does the advocate have any leverage against the institutional “system?”
The answer? Know who is the Long Term Care Ombudsman representative that covers your nursing home. Their role is to improve the quality of care and quality of life experienced by residents who reside in licensed long term care facilities. Part of that includes informing nursing homes when they out of compliance with the law and regulations concerning resident care and rights.
For example we had a situation where a shiny new nursing home proposed discharge a resident to another nursing home after he completed his post-hospital skilled care covered by Medicare. We informed the advocate that the resident had a right to stay there and apply for Medicaid. The nursing home thought they could choose who they would offer the Medicaid beds to. We had the advocate contact the Long Term Care Ombudsman’s office and the nursing home was set straight. The resident stayed.
So know who is your Long Term Care Ombudsman representative for your nursing home. Their number is 1–866-485-9393.
One might think applying for Medicaid to pay for the nursing home would be pretty straightforward. “We spent the money, so now we apply, right?” No, not right. First you have to prove you don’t have excess assets and “assets” include more than money. And then you have to prove that within the five years before applying you spent your money the way Medicaid approves. When folks learn what Medicaid calls “countable” assets and what is allowable and disallowed “spend down” they often say “That does not make any sense.”
I don’t propose to go into a list of Medicaid’s peculiarities here. Let’s go back to the basic question: Why is Medicaid so complicated?
We could say that Medicaid is the product of Congress and that says it all. That would be true but that doesn’t really answer our question.
My answer is that there are different strands running through the program, some seemingly artifacts of history (“That’s just the way it turned out, that’s all.”) and some are pursuit of different goals.
Here’s my take.
Historical:
Medicaid has a concept of “applicant.” The applicant is a person. In the nursing home program the term does not mean “family.” It does not mean “married couple.” It means the person who is in the nursing home and who has bills to pay. In fact, in the history of Medicaid spouses were, and still are in some phases of the Medicaid program, treated as separate households. For example: the day after a husband is approved for Medicaid, his wife could win the lottery and Medicaid would still pay the nursing home. (P.s., in over 20 years I never had a client win the lottery.)
Different goals. Here’s a couple examples of conflicting goals:
First goal: limit the use of trusts to gain eligibility and maintain net worth. In this arena we find the rules concerning trusts and annuities. It used to be that people could easily shelter their assets in a trust and then apply for Medicaid assistance. In 1993 Congress tried to seal that door with the trust provisions of the Omnibus Budget Reconciliation Act, “OBRA 93.” Now “Medicaid asset protection trusts” must be established more than five years before applying for Medicaid and once the money or property is in the trust “you cannot get it back.”
Second goal: protect the spouse from impoverishment. In 1988 Congress enacted the Medicare Catastrophic Coverage Act. It is known as “MCCA.” Part of the MCCA was provisions to protect spouses from being impoverished and one recognized way of protecting spouses was placing money and property in trust for their “sole benefit.” These provisions were not changed by the MCCA.
Protection of the spouse is part of the larger goal of meeting responsibilities for for dependents. Even in OBRA 93 there are provisions that allow trusts for minor and disabled persons.
Putting money in the right kind of trust is permissible “spend down” and putting it in the wrong kind of trust is “divestment.”
So here we have with two statutes that were added to the Medicaid program within five years of another. OBRA 93 tries to limit the number of people who can get Medicaid assistance the MCCA tries to expand it.
That’s just the way things go,
All the best,
Jim
Everybody wants their children to inherit their property and have no problems after they die. And, that’s why they want to avoid probate. They hear it is always slow, complicated and expensive. While I note that description is not true, there are simple mistakes that guarantee it will be slow, complicated, expensive and many times, nasty.
Here are the Ten Mistakes, plus a bonus 11th!
1. The Oral Will
Everybody expects Mom and Dad to leave things to all children equally. But, sometimes a son or daughter will say “Dad/Mom said I should get this.” For example, let’s say Dad had a workshop so the son moved all of his power equipment and tools to his house. Maybe its Dad’s truck. The value is in the thousands of dollars. The other children object.
2. Joint Account in Name of One Child
The law says that the surviving joint owner owns the entire account. It does not matter if the parent has a Will that says everything to be shared equally. A variation of this one is that Mom says to another child, “Your sister will share the account with everybody after I die. I put her on it to help pay my bills.” It will take a court order to solve this one.
3. Beneficiary Designations That Do Not Match the Will.
Most Wills say all property should be split equally. But, some parents have beneficiaries on life insurance policies or annuities that do not name all children. It does not matter if “Dad had that policy to pay for his funeral.” The those policies will go to the beneficiaries and the Will will not matter. And, not only do they receive the policy proceeds they will still get an equal share of everything else.
4. Lifetime Gifts or Unpaid Loans
Often parents help children out either in time of need or just to be helpful, such as giving money for a down payment for a house. If a parent does not give the same amount to all children, their will be fights over whether the gift child’s share should be reduced.
5. Late in Life Will or “Estate Plan”
If a Will, or a joint account, or beneficiary on a policy, is made late in life when a parent needs help, and if the plan benefits a child who has been caring for the parent over the other children, chances are high that it will be contested in court.
6. Failure to Update a Will after a Child Dies
Many people have Wills that say if a child predeceases their share is split among the surviving children. But what about their children, Mom/Dad’s grandchildren? They will be left with nothing regardless of their relationship with their grandparent.
7. Naming Minors Beneficiaries
A minor can own property but cannot manage it. If a minor child inherits money or property and the gift is not in trust, the probate court must appoint a conservator to manage the property until the child is 18. Then they get it all. A trust is a better option to hold the property.
8. Trying to Force Children to Get Along
Often a parent is very distressed that the children do not get along. They sometimes try to fix that by making them joint owners on property. Or they make them both the personal representative of the estate. It doesn’t work. The children will have something new to fight over.
9. Naming the Wrong Person to Administer Estate
Suppose Mom names her oldest son the personal representative or successor trustee of a trust of her estate. But, he is too busy with his job to work on the estate. So a year later the other children are tired of waiting and go to probate court when he does not resign.
10. Second Marriages with children of prior marriage
It often happens that folks in a second marriage try to treat it like their first. They leave all their property to their spouse after they die. What about their children? Years later when the spouse dies they get nothing.
11. Failing to Provide for Children Who Cannot Have Money
As we all know there are adults who have a need to have their property managed. It might be because a child was born with a disability and will lose her government benefits if she inherits. It might be because the child is addicted to drugs or alcohol. “Momma didn’t want her money to go to drugs.” Some children have problems with IRS tax liens, bankruptcy or divorce. These cases are best resolved with trusts, otherwise the only option is to try and fix the problem in probate court.
Conclusion
There are other mistakes that can require the probate court to solve the problem. The best way to avoid these is to speak to an expert who knows “what can go wrong.” I like to think we are such experts.
And, I should recognize that there are other reasons for estate planning. Some folks want to minimize taxes. For example they may want to leave large IRA to a low income child and investments to a high income child. Some want to keep a cottage, farm or business in the family, but they see that all their children will not benefit from the property equally. Some may use the cottage and some may not. Some may work in the business and others not.
You have your unique concerns. Give us a call to come on in and get things set up so that life will work out smoothly after you go to your great reward.
Wishing you all the best,
Jim
What is “half a loaf”? And why not keep the “whole loaf”?
First off, “half a loaf” is a nursing home Medicaid spend down strategy where approximately half a person’s money can be saved. The basic idea is that half of the applicant’s money is “divested” or given away. The other half purchases a “Medicaid annuity” to provide payment to the nursing home while Medicaid will not. For example let’s say Mrs. Smith has sold her home and has $150,000 in the bank. She is in a long term care nursing home. If she does nothing she will spend all $150,000 on nursing home bills. If she gives half of it to her children and purchases a Medicaid annuity with the other half, she will have saved half of her money.
Now let’s be clear, this post is not all about the moving parts of the “half a loaf” strategy. There are many. This post is about raising the question “Can I do better than the “half a loaf”? The short answer is “Yes, much better.”
It puzzles me why so many “elder law” attorneys use the strategy as their main approach to Medicaid eligibility. Under their strategy the nursing home will be paid by the applicant for months and sometimes years!
The problem I have with that is that my clients are hard-working folk who saved instead of squandering the money they earned. They paid taxes on it too. At age 90 many have been taxpayers for more than 70 years! They have a right to say what are the provisions in the Medicaid program that will allow me to have the taxes I paid all these years pay the nursing home? We all know President Trump brags about paying little or no taxes because he has “smart lawyers.” Why shouldn’t you have a “smart lawyer?”
Here’s my point. In the Mrs. Smith example above we could help her save the “whole loaf” (minus modest attorney fees).
So if you know anybody who has seen an “elder law attorney” who recommends a “half a loaf” strategy, give us a call for a consultation to see if you cannot do much, much better.
It may surprise some, but many post-death probate court battles between children begin with the parent. Perhaps the most common reason for disputes is unequal distribution of property including complete disinheritance. This may or may not be intended by the parent.
A common reason for unintended inequality is trusting a child to share with the others. For example a child may be joint on a bank account with Mom and after she dies the child decides to keep the entire account. Many people are surprised to learn that even though a Will calls for equal distribution of property, a child may keep a joint account. The law allows a survivor of joint property to be the sole owner of the property free to do whatever he or she wishes with the property including keeping all of it. This result happens because a parent failed to make clear his or her intentions when the joint ownership was set up.
But let’s look at intended inequality of gifts.
There are many good reasons why a parent may decide to give one child more than others. One child may be very successful in life and another is plagued by poor health. Sometimes a child had an unsuccessful marriage and is left with little money and no career. In the field of elder law, a caregiver often gives years of support to a parent while other children give little. In these cases the parent’s reason is understandable, but that does not mean there will be no court contest. Any Will, trust or deed can be contested on grounds of fraud, mistake, coercion or undue influence.
The best advice – no surprise – is to have a lawyer carefully setup your distribution plan. If the client is elderly or has serious medical issues that may question the person’s decision making ability, the lawyer will take steps to ensure that a plan is not the result of fraud etc. Sometimes the lawyer recommends a medical exam to verify that the client is competent to understand the results of the distribution plan.
But, here is one more item to consider.
It is absolutely true that a parent may give property to anybody he or she pleases and does not have to ask permission. But, consider this tip: is it not wiser to tell the kids your thinking yourself? Don’t let your Personal Representative or Successor Trustee be the bearer of bad news. Every lawyer who has been consulted about a Will with unequal distribution has heard a child say “Mom would never do that! My sibling must have forced her.”
So, why not tell them yourself? “I have decided to give your sister a bigger share because she has been so helpful to me for years. Without her I would not have been able to stay in our home. I may have had to go to a nursing home.” Or, “I am so proud of what you accomplished in life. But I have considered how poorly life has gone for your brother. I feel it is my parental duty to help him, just as when you were children I had to help some of you more than the others.”
If any children think your decision is the result of fraud or coercion etc. then the time to raise that concern is now. If there is fraud, coercion, mistake or whatever, it can be fixed now instead of waiting for the damage to be done both financially and to your family. Once children engage in battles in court, they are enemies forever.