A Big Thanks Doug Chalgian, one of Michigan’s best elder law litigation attorneys, who commented a court case, LaForest vs. Swiss, that otherwise may have passed unnoticed. More on this thanks later.
Let me relay two stories of a daughter who has a mother in a nursing home..
First Daughter.
The court case tells us of a lady in a nursing home. She had six children. One daughter handled all of her affairs. She was Mom’s agent under a power of attorney and the trustee of her trust. Mom went into a nursing home and the daughter hired an elder law attorney to engage in Medicaid planning. She saved virtually everything Mom owned from the nursing home. There were three major asset transfers. In chronological order:
The result of this daughter’s transactions was that she ended up with ALL of Mom’s assets. She claimed that her mother wanted her to have everything. The siblings took her to court and won.
Conclusion: This is clearly the case of a greedy daughter who used her power to get the property of her vulnerable mother.
Second Daughter.
This court case involves a daughter’s mom who was in a nursing home for 11 years. In all of those years some of her children visited once. Or, perhaps twice. The dutiful daughter, who was also responsible as her agent and trustee, visited her every day of those 11 years. The daughter, hired an attorney to engage in “Medicaid planning.” The attorney concluded that Mom, his client, wanted the dutiful daughter to have her property. One could understand if Mom felt she had been abandoned by her other children. Perhaps she was angry? We don’t know. The court does not say. She had a condo, a car and cash in the bank. These were transferred to the daughter. All of the transactions were allowable under the Medicaid rules. Of course, when Mom died the other children were there looking for their inheritance that the dutiful daughter preserved.
Conclusion: This is clearly the case of greedy children who cannot be bothered to help their mother while she was in a nursing home but have no bother at all helping themselves to “their inheritance.”
There is a relationship between the two daughters. They are the same person.
The Case
The court case is the Michigan Court of Appeals decision in LaForest vs. Swiss. It is an unpublished decision that might have otherwise gone unnoticed but for Doug Chalgian’s January 9th blog post Tangled Webs. Doug’s commentary is certainly worth a read and contemplation.
I would like to offer another take on the case. I work in the realm of government benefits, e.g. Medicaid, and not litigation. I am much more likely to see a child helping a parent through the nursing home Medicaid morass than I am to see children who never visit their parent. How does a child follow a parent’s intention? How does an attorney know and effect a clint’s intentions? LaForest gives some guidance in such situations. Here are a couple of pointers:
The take away from LaForest is that the “story” is not enough. The legal procedures to effect the parent/applicant/client’s wishes must be followed lest the law will impose its own solution. I’ll be writing more about those procedures in later posts.
Moral: Do The Right Thing, The Right Way.
Jim
[responsive_vid] Do you need an attorney to help you file an application for Medicaid? Sometimes the answer is a clear “yes,” a clear “no” and “maybe.” Let’s talk briefly about these and some of the pitfalls and traps for the unwary.
A Michigan Medicaid application looks deceptively simple. It is only four pages long. The trap comes in the proof of every item that is written. The Michigan Department of Human Services does not take the applicant’s word for anything. You must prove everything. For example you will need a birth certificate for date of birth, social security card for the number, the “award letter” to state the amount of the monthly check and Medicare card to prove coverage. There is much more.
The application must disclose the applicant’s complete financial status. This includes the obvious such as bank accounts, CDs, safe deposit box contents, savings bonds, annuities and IRAs. There are what we might call “hidden assets” such as cash value of a life insurance policy or stock ownership in the company. The ownership and value of all of these must be proven and if spent then the amount received and what it was spent on must be proven by paper. One of the indicators for hiring an attorney is if you are not sure of the applicant’s financial state. This often happens when a parent is in a nursing home and the children, who are handling the application, do not know their parent’s financial affairs. It is better to have an attorney do it right the first time than risk a denial with the possibility of unpaid nursing home bills. Some nursing homes sue children who do not get Medicaid to pay the entire bill.
Failure to have paper proof for every statement is cause for application denial.
There are some times when you can be sure you don’t “need” an attorney to handle the application. For example you have have handled all a parent’s finances for years and are confident that everything is spent down. Of course, even in this case you could hire an attorney for the convenience of not having to deal with the Medicaid office.
One large area of “Yes, you need an attorney” is the realm of having a spouse at home. If the couple has more than $25,000 in savings the elder law attorney can help the at home spouse retain the savings for his or her future needs. Your attorney will save you much more than you spend plus you will have the convenience of not dealing with the Medicaid office.
Another situation of “Yes, you need an attorney” is when the applicant’s financial affairs are complicated. He or she may own many parcels of real estate, may have many accounts at banks and credit unions. The Medicaid office will require proof of how much was in each account and where the funds went. The extra real estate may need asset protection strategies to save it.
And for now, the final category of “Yes, you need an attorney” is when there is a large amount of money that will have to be spent down. An attorney can always help you save a portion of countable assets.
With the average monthly cost of a nursing home near $8,000 per month, the stakes are sky high. It is only prudent and good sense to have an experienced elder law attorney review a Medicaid application be fore filing even if there is no money to save – you don’t want to be stuck with a huge bill.
I think you can see from the above why we say we “save you money, you don’t have to deal with bureaucratic hassle when you least need it and we give you peace of mind.
Give us a call at 248-356-3500. We’re friendly and helpful <G>
Jim
[responsive_vid] Spend down is the process/method a Michigan Medicaid nursing home applicant becomes financially eligible for assistance. An applicant may have $2,000 in “countable” assets. We might say there are two categories of assets for Medicaid: Exempt or “Excluded Assets” and “Countable Assets.” There are other asset rules such as the “community spouse” allowance, rules for treatment of joint property, business assets and “unavailable assets.” These later rules deal with whether any particular asset will be countable and subject to spend down or not.
Excluded or exempt assets are not subject to spend down and include:
A residence where the applicant has lived, value limited to $536,000 unless spouse lives there then no limit;
A motor vehicle, no stated limit;
$1,500 in face value life insurance and funeral preparations;
Prepaid funeral, limited to approximately $11,700 if paid for by cash and $9,400 if paid for by life insurance;
Burial space including cemetery plots.
“Countable assets” includes any other asset that may be reduced to cash and used for spend down. This category includes:
A. Money in:
1. Cash, savings and checking accounts, credit union share and draft accounts
2. Certificates of deposit
3. U.S. Savings Bonds
4. Individual retirement accounts (IRA), Keogh plans, (401Ks, 403Bs)
5. Nursing home trust funds
6. Prepaid funeral contracts which can be canceled
7. Trusts (depending on the terms of the trust)
B. It also includes non-cash assets that could be sold. These include equity in:
8. Real estate
9. second motor vehicle, boats or recreational vehicles
10. Stocks, bonds and mutual funds
11. Land contracts or mortgages held on real estate sold
Spend down does not mean that all the money goes to the nursing home. As a broad rule of thumb, the applicant may spend on things for himself or his property. For example, he may pay for clothing and a funeral for himself . Or he may pay for repairs or improvements to his home. He may repair his car or buy a new car. All of these purchases will be reviewed by the Medicaid office and so prudence must be exercised.
An applicant may also spend down by transfer of countable assets to a spouse or disabled child.
There are many strategies that maximize savings by planned spend down such as divestment of assets combined with a Medicaid annuity.
The best plan for strategic spend down that results in the maximum of savings is to hire an experienced elder law attorney.
Got a Michigan Medicaid problem? Just give me a call and let’s get started,
Jim
[responsive_vid]
(Caution: this is a complicated are of law filled with rules and exceptions. If this is your situation see an elder law attorney about a caregiver contract.)
Can a child be paid for helping an aging parent? General Michigan law and the Michigan Medicaid program presume that a child renders all services to a parent for free. That means the services are of NO legal value, unless there is a contract between the parent and child to pay for the service.
Example: Mom has died and Dad cannot live at home anymore due to dementia, it might be Alzheimer’s. The family finds that senior living communities will only take him on an “assisted living” basis. The cost is in the neighborhood of $4,000 per month. So what if the oldest daughter offers to have dad move into her home? It often happens that a child takes care of a parent for some years before the parent must go to a nursing home. Suppose she takes good care of him for years. But then he fell and broke his He has a fall and breaks his hip. He is discharged to a nursing home. He cannot return to daughter’s home. She got to the point where she can no longer take care of him 24 hours a day. They are distressed to see that she took so much better care of him than they do in the nursing home. After the Medicare skilled days are over they are shocked to learn the nursing home will charge $8,000 per month. Dad will rapidly run out of money. The family asks: “Can Dad now pay daughter for those years of excellent care?”
The surprising answer is “No.”
Unless Dad agreed to pay for daughter’s service under a contract the law will presume all service was rendered for free. If the family now tries to take payment out of his savings they could be charged with elder abuse and when they apply to Medicaid to pay the nursing home, Medicaid will be denied due to the “divestment” of money.
Under general Michigan law the presumption of gratuitous service may be rebutted by proof of an agreement to pay. If it is not in writing it can be oral but proof of that may be difficult with a key party in a nursing home with advanced dementia. Michigan Medicaid requires additional steps including a doctor’s finding that the services are necessary to keep him out of a nursing home. The program also has other requirements and limitations that are discussed separately.
Under general Michigan law there is a limited exception to the rule of “no contract, no pay” and that is the theory of “quantum meruit.” Where the proof can be made that a person received a product or service that was of significant commercial value and where the receipt implied, but did not prove, an understanding that there should be payment then the law will make the party pay the fair commercial value for the product or service. In Michigan “quantum meruit” has been applied to family situations. A lawyer is needed to prosecute a claim under this theory. However, the Michigan Medicaid program does not recognize “quantum meruit” as a valid reason for payment and if such claim were to be made it would likely be resolved in court on an appeal of a denial of Medicaid.
In a second video I explain what Michigan Medicaid requires of contracts for family care.
Got a question, give us a call! 248-356-3500,
Jim