Archive for the 'Special Needs Planning' Category

Avoiding Probate vs Avoiding Taxes vs Medicaid Eligibility

This morning’s post is kind of a follow up to one of yesterday’s posts where I tried to elucidate the differences between planning to avoid probate and planning to “avoid” taxes.  I was inspired this morning to write this brief follow up by Michael J. Keenan of the Connecticut Elder Law Blog and this post of his from this morning where he writes:

Regardless of whatever your neighbor may have told you, if you divest yourself of assets thereby benefiting someone else (with a couple of exceptions) then it’s a gift and it will trigger a period of ineligibility for Medicaid if it falls within the look-back period.  Whether the money goes outright to someone or into a trust for their benefit the State is going to treat it the same way.

He goes on to, he says,  plug himself and I write to congratulate him on both his post and his “plug.”  Not all estate planning attorneys (those who plan for taxes and probate avoidance) are similarly skilled in the area of Medicaid Planning or other aspects of elder law.  This subgroup of specialized planners is also not to be confused with special needs planners (like myself, my dad and our partners Mike and Sam).  If you need some planning and are getting up there in years, I would contact an estate planning attorney first…  Not everyone needs Medicaid planning so don’t seek that first until and unless you’re sure you actually do need it.

The situation Mr. Keenan addressed in this morning’s post is as follows:

They also told me that they wanted the gifting to go into a trust for their kids’ benefit instead of giving the money outright to the kids, and they wanted to do this for two reasons…

First, they were concerned that their kids would waste the money and/or their kids’ creditors would end up getting the money.  They heard that a trust was a great way to handle this situation, correct?  “Absolutely true,” I said.

Second, they didn’t want to worry about Medicaid’s five-year look-back period regarding gifting and they heard that this was a great way to avoid it, correct?  “Absolutely not true,” I said.

Thanks again Mr. Keenan.

Reverse Mortgages, Probate Liquidity and Medicaid Eligability

One of my favorite bloggers, Joel A. Schoenmeyer of the Death & Taxes Blog writes here about “the reverse mortgage probate problem and liquidity.”

A reverse mortgage results from a home owner age 62 or older converting the equity in their home into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. The reverse mortgage is aptly named because the payment stream is “reversed.” Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to you. It can be especially useful for the home owner but, as Joel points out, a real headache for their heirs after they pass away. The payments can be used to support a standard of living – which is nice – but I think the most powerful benefit from the reverse mortgage is that the income stream is not necessarily a countable resource for Medicaid eligibility.

Joel writes:

I’ve encountered this situation in the probate context a few times recently: mom dies, reverse mortgage is now due, and guess what? The house can’t be sold because of the bad real estate market.

The bigger problem, of course, is one of estate liquidity. When a person dies, there are bills that have to be paid. Some of those bills are small, and some of them can be avoided. But certain bills can’t be avoided, and are going to cause a real headache for your survivors if you’ve left them with no liquid assets.

Which is all well-observed… Its a cost-benefit analysis really, done with the help of your financial planner and an attorney experienced in probate and Medicaid eligibility that can help determine if its a good fit for your situation. Its risky, but it may be worth it near the end.

Thanks Joel.

List of Worst Nursing Homes in U.S. Released by Feds

A few days ago Michael J. Keenan of The Connecticut Elder Law Blog posted this story pointing to a list of the worst nursing homes in the US by the federal government’s Center for Medicare and Medicaid Services (CMS).

The homes in question are among more than 120 designated as a “special focus facility.” CMS began using the designation about a decade ago to identify homes that merit more oversight. For these homes, states conduct inspections at six month intervals rather than annually.

With only 120 on the list its a pretty exclusive club. And thankfully not a single facility in Ohio ‘made the cut.’

This list is available here.

A Grass-Roots Effort to Grow Old at Home

The New York Times today has an interesting piece about a group of home-owners in Washington State who are banding together as “part of a movement to make neighborhoods comfortable places to grow old, both for elderly men and women in need of help and for baby boomers anticipating the future.”

Their group has registered as a nonprofit corporation, is setting membership dues, and is lining up providers of transportation, home repair, companionship, security and other services to meet their needs at home for as long as possible.

Urban planners and senior housing experts say this movement, organized by residents rather than government agencies or social service providers, could make “aging in place” safe and affordable for a majority of elderly people. Almost 9 in 10 Americans over the age of 60, according to AARP polls, share the Allens’ wish to live out their lives in familiar surroundings.

Many of these self-help communities are calling themselves villages, playing on the notion that it takes a village to raise a child and also support the aged in their decline. Some are expected to open this fall on Capitol Hill; in Cambridge, Mass.; New Canaan, Conn.; Palo Alto, Calif.; and Bronxville, N.Y.

I sympathize with them and wish them all the luck in the world!

MetLife Surveys The Cost of Assisted Living

Deidre Watchbrit previously posted to tell us about MetLife‘s annual efforts to track the cost of assisted living across the severl states. Performed by the MetLife Mature Market Institute® “the numbers can be helpful for families planning to provide for a person with developmental disabilities who may not be able to live without 24 hour care.”

The study is available for download here:pdf_icon.jpg

Special Needs Trusts by Thomas J. Bonasera & Michael A. Renne

This article is currently being updated but I thought to post it anyways now and supplement it later. Tom Bonasera and Mike Renne regularly speak all over Ohio on the topic of special needs trusts and special needs planning and they freely give this article out for educational purposes. I am posting it here for the same reason.

I have seen firsthand the good that these trusts can do and, though most of the special needs planning practitioners in the country appear to be elder law specialists, our unique skills at fiduciary representation and estate planning give us a different and useful perspective.

  • Download a PDF copy pdf_icon.jpg
  • From the article:

    In 1993, as part of the Omnibus Budget Reconciliation Act of 1993 (OBRA ‘93), Congress addressed how self-settled trusts are to be treated in determining Medicaid eligibility. Congress mandated that an individual’s assets held in trust are to be counted as resources in determining his or her eligibility for Medicaid. This mandate includes irrevocable trusts if there are any circumstances under which payment from the trust could be made to or for the benefit of the individual. These laws are codified at 42 U.S.C. 1396p(d). Congress created exceptions to these rules for three types of trusts, one of which has come to be known as a “special needs trust.”