October 27, 2012
The Maryland legislature once again has tinkered with the law governing powers of attorney in Maryland. That law includes Power of Attorney Forms, which if used, or if one’s power of attorney is “in substantially the same form” as one of the form documents, then the law bestows certain rights on the holder of the power of attorney, namely, the right to obtain payment of one’s legal fees from the person or institution who refuses to honor the power of attorney where a legal action is taken to compel acceptance. This right to legal fees differs from the general “American rule” of jurisprudence which holds that each litigant in a legal action must pay his own legal fees.
Unfortunately, the forms in the statute are generally not sufficiently comprehensive and lack certain important provisions. Hence, many lawyers recommend using a hybrid power of attorney which incorporates the statutory form provisions, and which hybrid is designed to be “in substantially the same form” as the form of the document in the statute. That way, clients can have a sufficiently comprehensive power of attorney and retain the right to legal fees under the law while not using the precise form in the statute, which many lawyers have determined to be defective.
Within the past year, Maryland’s legislature, only a short time following the enactment of the original power of attorney legislation, has enacted legislation changing the language of the forms in the power of attorney statute. After the first such revision, a number of lawyers still were using the form documents from the statute before revision. I know this, having reviewed several such documents brought in by clients seeking a review of their estate plans. Generally in those circumstances I contact the lawyer who drafted the power of attorney to advise that the law has changed.
The problem is that, if a lawyer uses the statutory form from a prior version of the statute after the effective date of the statutory revision, then the client may not have a power of attorney to which the right to recover legal fees would apply. While this will not cause the power of attorney itself to be invalid, if the lawyer’s intention is to provide his client with a power of attorney that includes the right to recover legal fees, the use of the out of date form language may defeat that intended purpose.
Now, for the second time within a relatively short time, the legislature has tinkered with the statutory language in the power of attorney form set forth in Maryland’s power of attorney law. Such change deals with a technical issue relating to qualified retirement plan assets and is more in the way of notification to the person executing the power of attorney. Nevertheless, even if the power of attorney form under the prior version of the statute grants the same powers as the new revised version, using the prior form after October 1, 2012, the effective date of the new statutory revision, may be at the cost of losing the right to recover legal fees.
The Gatesman Law Office endeavors to remain on the cutting edge of the law in crafting estate planning solutions for our clients.
October 13, 2012
There are several new laws affecting probate in Maryland that became effective October 1, 2012. This article will address those statutory changes.
New Small Estate Limits
When someone dies owning property, unless such property passes to a beneficiary through a beneficiary designation, joint account designation, Pay on Death account designation, life estate deed, or by some other means, then a probate estate must be opened to administer that property and pass it to the appropriate beneficiaries. Maryland allows for a simplified Small Estate procedure if the assets are below a certain value. Effective October 1, 2012, the threshold for a Small Estate is $100,000 if the spouse is the sole beneficiary, and $50,000 if there are other beneficiaries besides the spouse.
As long as the deceased person’s assets subject to probate (not including any assets that pass outside of probate as discussed above) are equal to or less than the October 1 limits, one may utilize the simplified Small Estate procedure. If, however, the person died before October 1, then a Small Estate may be used only if the value of the assets are $30,000 or less ($50,000 or less if the spouse is the only beneficiary).
Birth by Artificial Insemination
In Maryland, creditors have 6 months from the date of death to make a claim against the deceased person’s assets (6 months from the date a Personal Representative is appointed for any state Medical Assistance claims). It is typical, but not always necessary, to wait for six months before distributing estate property to the beneficiaries of the estate. However, due to a new statutory change, effective October 1, some Personal Representatives (a Personal Representative is the person who administers the estate) may risk personal liability if they distribute property after 6 months but before 2 years following the decedent’s death.
The risk arises out of several statutory changes that allow for the use of a decedent’s genetic material (e.g. medically preserved sperm or eggs) after the death of the donor, and which statutory provisions deem that the individual who is born through the use of such genetic material after the donor’s death, in certain circumstances, be considered the deceased person’s “child” under the law governing probate estates, provided that such child is born within two years of the donor’s death.
For example, if you have a son or daughter who deploys to Afghanistan for military service, and that child of yours preserved his or her genetic material to be used by your child’s spouse to create a baby should your son or daughter be killed, the following possibility might arise. Your son or daughter may predecease you and you may not have been informed about the arrangement your child had with his or her spouse.
You also may have prepared a Will that divides your property among your children, but if one of your children predeceases you, then that child’s share would be distributed to his offspring. If such predeceased child had no offspring, however, then your estate would be divided among your surviving children.
In that event, under the example set forth above, suppose that you die, and your child who deployed overseas had predeceased leaving no living children. Suppose also that you have no living spouse and only one other son, who is the Personal Representative under your will.
The usual practice would be for your Personal Representative to wait out the 6 month creditor’s claims period before distributing the estate to the beneficiaries. In this instance, by all appearances, your Personal Representative ascertains that he is the only beneficiary of your estate because your other child died with no offspring.
Suppose also that your surviving child had lost his job and is in arrears on his mortgage. So, after 6 months following your death, he, as Personal Representative distributes the entire estate to himself as sole beneficiary and uses the funds to bring his mortgage current. By doing so, he has none of the inherited funds left over.
For a death prior to October 1, 2012, this would not have been a problem for your surviving son. Now, however, there is a risk. Suppose, in the example above, that the spouse of your predeceased child decides to use the medically preserved genetic material to become pregnant and give birth. If such event occurred more than six months following your death, your Personal Representative would not have known about the situation when he distributed the estate to himself. But if such birth occurs within two years following your death, then, under your will, and through the application of the new statutory provisions, there now exists a grandchild who is entitled to share in your estate.
Unfortunately, because your surviving son distributed the entire estate to himself (as was proper and prudent under pre-October 1 law), he now stands personally liable to pay the share of your estate that your new grandchild is entitled to receive. In the example above, however, your surviving son used the entire inheritance to bring his mortgage current and has insufficient assets to pay the bequest to the new grandchild. This is a problem.
This new statute injects uncertainty into the process of closing out a probate estate in a timely manner. William M. Gatesman has been working with other Maryland lawyers to urge the state legislature to revise this new law to require that any person who might use such genetic material provide notice to the Personal Representative of an estate within 6 months of the date of death, and in the absence of such notice, any child born from such genetic material after such 6 month period would not be an eligible beneficiary of the estate.
It is likely that such revision of the law will be made within the coming year. In the meantime, however, estate planning lawyers must consider whether to add a clause to the Wills they draft for clients specifically excluding those persons born of a deceased person’s genetic material more than 6 months after death as beneficiaries in the estate. And probate lawyers must exercise caution when advising Personal Representatives about making distributions to beneficiaries within the two years following the decedent’s death.
William M. Gatesman stands ready to assist clients as they attempt to navigate the potential minefield imposed by the new genetic materials law.
May 24, 2012
Father, who had been enjoying late middle age, had a brain aneurysm and now is in a permanent coma. Unfortunately, he did not have a power of attorney or advance directive, so his adult son could not access his bank account, in which he had $20,000. He has no other assets. Father’s hospital and nursing home bills now exceed $300,000.
Son applied for Medicaid for his father but was denied benefits because Medicaid will not be allowed if Father has more than $2,500. Unfortunately, without a power of attorney, no one has the authority to spend the funds in Father’s bank account so that he can get Medicaid benefits.
I filed a guardianship petition in which Son is seeking to be appointed guardian of the person and property of Father. At the court hearing, I requested that the Court make a finding of fact that no one had access to Father’s bank account, and make a legal ruling that, as a consequence the funds in such bank account were not an available resource for Medicaid eligibility purposes.
I asked the court to take judicial notice of a particular provision in the Medicaid rules, that is, asked the court to consider the rule without having to put on a formal proof process to show that the rule exists. The Judge accepted my request, however, the Judge asked me why that was necessary.
The Judge reasoned that once Son is appointed guardian, he could get access to the funds in Father’s bank account, prepay Father’s funeral and pay the balance of the funds to the nursing home. After making such payments, son could reapply for Medicaid, and Medicaid would be approved because Father then would have less than $2,500.
I agreed with the Judge’s analysis; however, I pointed out to her that such reasoning only addresses half of the problem — that is, Medicaid eligibility for future months. The reason I wanted a ruling from the Judge that the $20,000 was an unavailable resource (pointing out that there was language in the Medicaid regulations to support such treatment) is that the previously filed Medicaid application had been denied and such denial was based upon a determination that the $20,000 was an available resource. That denial of Medicaid benefits meant that Medicaid was not willing to pay the outstanding $300,000 medical bill.
Therefore, if the judge did not make the ruling I had requested, then Father would be left with $300,000 in unpaid medical expenses. Upon hearing that, the judge again reviewed the Medicaid rules I had presented to her, and after a few minutes stated that she saw the merit to my argument.
In the end, Son was appointed guardian for his Father, and the Court ruled that the $20,000 had been an unavailable, and hence exempt resource for Medicaid purposes, thereby paving the way for Son to appeal the denial of Medicaid benefits. Better yet, with that court order in hand, I instructed Son to request that the Medicaid caseworker rescind her denial of benefits thereby making a Medicaid appeal unnecessary. On the strength of that court order, Medicaid benefits have been granted to pay the entire $300,000 outstanding balance as well as Father’s future medical costs.
As this case shows, just having the Son appointed guardian for Father would not have gone far enough in resolving this family’s difficulties.
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William M. Gatesman is well versed in tax law, estate planning, guardianship law, Medicaid law, fiduciary law, and numerous other related areas. He was able to bring this broad level of experience to bear to bring about a positive outcome in today’s guardianship case, the story of which is related above.
February 10, 2012
Mr. GoodSon is in a bind. His mother has been in a nursing home for over a year. He applied for Medicaid when mother first entered the facility, and although the Medicaid caseworker indicated to him that the application was fine, she ultimately denied the Medicaid application because mother had a few hundred dollars too much in her bank account. So GoodSon reapplied for Medicaid. This time, he could not get all the bank statements requested by the Medicaid caseworker from the bank. GoodSon again got the message not to worry about it, but in the end the Medicaid application was denied for failure to submit all the requested information
You’ve heard the old adage, “the third time is a charm”. So it was in this case, too. However, while the third Medicaid application was successful and Medicaid was granted, it was granted with a 6 month penalty period, or period of Medicaid ineligibility as a consequence of mother having made gifts to family members in the years prior to entering the nursing home.
By the time Medicaid started to pay, there was well over $100,000 in outstanding charges at the nursing home, and mother had no money to pay it. Mr. GoodSon is retired with only his house and barely adequate retirement savings. Nevertheless, the nursing home sued both mother and Mr. GoodSon. However, it is GoodSon who is at risk of losing everything — mother already is destitute.
To make matters worse, Mr. GoodSon did not seek my assistance until a few days before the court was to enter summary judgment — in other words, the nursing home was about to get a judgment against mother and Mr. GoodSon for the outstanding debt because Mr. GoodSon had been pursuing his legal defense without a lawyer.
We quickly ascertained that GoodSon had a number of defenses to the lawsuit, and we were able to defeat summary judgment notwithstanding the short time I had to do so. We next educated the lawyer for the nursing home about the reasons his client could not collect the entire outstanding balance from Mr. GoodSon. Indeed, Medicaid and nursing home collection law is highly complex. Having done so, we were able to persuade the nursing home to settle the matter for a fraction of the outstanding balance.
Fortunately for Mr. GoodSon, he sought out competent legal assistance not a moment too soon. Had he not done so, he could have suffered financial devastation.
While Mr. GoodSon and his mother are an extreme case, many people find themselves paying tens of thousands of dollars more than they have to by attempting to navigate the complex matter of paying for nursing home care without proper guidance.
Don’t let yourself fall into the trap that caught Mr. GoodSon — seek out competent counsel as soon as possible if you or a loved one will require nursing home care.
January 3, 2012
William M. Gatesman is licensed to practice law in Maryland and the District of Columbia, where he advises clients concerning wills and trusts, medical and financial powers of attorney, estate planning, probate and estate administration, Medicaid planning, disability planning, and asset preservation planning. Mr. Gatesman practices law as the Gatesman Law Office and, in western Maryland, as part of the law firm of Michael G. Day & Associates. Each month, Mr. Gatesman writes an article on this website concerning these practice areas. Our most recent articles are shown below.
July 12, 2011
Some people require skilled care services even at a young age. For example, some people in their early 50′s with advanced Parkinson’s Disease or Multiple Sclerosis find that the only way to afford needed services is to reside in a nursing home where Medical Assistance will cover the costs of care.
Unfortunately, while such people need intensive physical care, they often do not suffer from dementia and are decades younger than most other nursing home residents. Consequently, a nursing home would not to be the most appropriate care environment from a socialization point of view.
The good news is that in Maryland and other states, the Medicaid program sometimes will waive the requirement that one reside in a nursing home to obtain Medicaid benefits for long term care costs. These programs are known as Medicaid Waiver programs. However, there is a vast waiting list for the Medicaid Waiver program in Maryland, and it can take three or four years before one’s name rises to the top of the list.
Fortunately, there is a shortcut to the top of the Medicaid waiver waiting list. If an individual is receiving long term care in a nursing home and applies for and is awarded Medicaid, for which there is no waiting list, then, once Medicaid is established, such person could transfer to assisted living, or even return home and receive home care, and have the Medicaid dollars follow him out.
In other words, the Medicaid eligible nursing home resident can move to another care environment and immediately qualify for the Medicaid Waiver program, bypassing the waiting list altogether.
Thus, relatively young people who suffer from advanced debilitating disease may be able to obtain Medicaid dollars to cover the care costs in an appropriate care setting. However, such person may first have to undergo a less appropriate nursing home stay in order to secure such benefits.
The Gatesman Law Office assists clients in obtaining public benefits to cover essential and prohibitively expensive health care coverage which otherwise would be unavailable.
March 14, 2011
William M. Gatesman and the Michael G. Day Law Office recently assisted a client in the following situation. During her husband’s lifetime, the client and her husband transferred their real estate to various trusts using deeds that identified the trust as the recipient or grantee of the property, specifically using the name of the trust without including the name of the trustee.
Deed to Trust Must Name Trustee
Under current Maryland law, such a deed would be effective to convey the property to the trust. However, at the time the deed was signed, Maryland law required that the trustee of the trust (i.e. an actual person) be listed as the grantee in order for the deed to be effective. Listing the trust itself as grantee without also listing the trustee by name was ineffectual. Consequently the client’s deeds were not effective and there was a “cloud on title”, meaning that the property could not be sold until the problem was resolved.
In this case, because the original deeds to the trusts were not effective, we needed husband and wife to sign confirmatory deeds that included the name of the trustee as grantee. However, because husband had died, he could no longer sign a confirmatory deed. And even though his wife held his power of attorney, a power of attorney is no longer effective when the principal dies.
Ancillary Probate
To complicate matters further, while the real property is located in Maryland, the couple had since moved to another state. Since all of their other property had effectively been conveyed to the trusts, no probate proceeding was necessary in such other state even though their wills were on file with the court in that state.
Typically, in cases were an individual is domiciled in another state and dies owning real property in Maryland, one first opens an estate in the state of residence and then undertakes a streamlined “ancillary administration” in the Maryland probate court.
No Clear Procedure
While our office resolved this matter some time ago, it is evident from inquiries by other probate lawyers in an email discussion forum that some lawyers wonder whether a Maryland probate can be opened to address such an issue if there is no probate in the state of domicile.
In fact, Maryland’s rules of procedure and the statutes addressing the jurisdiction of Maryland’s probate court do allow a family member to open a probate estate in Maryland in such circumstance. On that basis, we were able to have a Personal Representative appointed in Maryland for husband’s estate for the sole purpose of executing the confirmatory deed which wife also signed. In this way, we were able to remove the cloud on title that affected the marketability of the properties.
This is one example of the type of complex situation we are called upon to resolve on behalf of our clients on a day to day basis.
October 6, 2010
As of October 1, 2010, there is a new law governing Powers of Attorney in Maryland. In order to be effective, any power of attorney executed in Maryland after October 1, 2010, must be signed by two witnesses and notarized. The notary may be one of the witnesses.
Moreover, if one uses one of the form powers of attorney set forth in the statute and a financial institution refuses to accept the power of attorney, one could sue the bank and, contrary to the usual rules of court, get a court order commanding the bank to pay your legal fees.
However, the form documents provided by the statute are woefully inadequate for some purposes, particularly for those people who wish to ensure that appropriate asset protection planning can be accomplished should they ever require long term care in a nursing home.
While the statute allows for powers of attorney with added provisions to be considered statutory forms with the same benefits as the bare-bones form set forth in the law, Maryland estate planning lawyers have been struggling for months with how to devise powers of attorney with significant additional provisions that nevertheless comply with the new law.
The Gatesman Law Office has developed just such a Power of Attorney. For a limited time, we will offer to our existing clients a special discount to obtain the new power of attorney plus get a complimentary review of their estate plan in light of their current situations.
I am pleased to offer the same discount to readers of this website who contact us by October 31, 2010. Be sure to mention this offer when you call or email us. To reach us, simply click Contact Us for further instructions.
July 7, 2010
The entire east coast is undergoing a severe heat wave, with record setting temperatures and code red air quality for days on end. It is important that every person, and especially seniors, take steps to ensure that they are not overcome by a heat related illness.
The following tips from Dr. Robert Luchi, a Professor of Medicine-Geriatrics, and from About.com can help seniors beat the heat:
* If you don’t have air conditioning head to to the shopping mall, senior center, library, movie theater, or place of worship, and plan to spend some time there in the cool air.
* Cool baths or showers can provide relief. Ice bags and wet towels are also helpful.
* Beware of dehydration. Drink water before outdoor activities and drink water at regular intervals during the day, even if you are not thirsty. Avoid beverages with caffeine or alcoholic beverages because such drinks can lead to dehydration.
* Curtail physical activity during extremely hot weather. Activity adds to heart strain. If you must do something outside, take frequent rest breaks, preferably in the shade. Try to schedule outdoor activities for cooler times of the day–before 10 a.m. and after 6 p.m.
* Avoid heavy meals. Limit salt use.
* Wearing loose fitting, lightweight clothing will allow for good air circulation around your body.
* Use a hat or umbrella to protect your head and neck from sun exposure and be sure to use sunscreen with an SPF of 15 or greater anytime you go outside.
* Take the heat seriously. Dizziness, rapid heartbeat, diarrhea, nausea, headache, chest pain, mental changes or breathing problems are warning signs that you should seek immediate medical attention.
* If you have a chronic medical problem, talk with your doctor about additional precautions you should take to prevent heat related illness. Some conditions and medications may place you at higher risk.
* If you show any signs of heat related illness try to get to a cooler place as soon as possible, sip some cool fluids and sponge yourself off with with lukewarm tap water.
The Gatesman Law Office wishes you a safe and healthy summertime.
January 17, 2010
Mother has a stroke and moves in with you to live in the in-law suite in your home. Mother pays you each month to cover her share of the utilities and to pay for the separate phone line installed in her room, which line is included on your own personal telephone account.
Some time later, Mother needs long term care in a nursing home. Unfortunately, she has only $1,000 in the bank and has been subsisting month to month on her income. So you help your mother to apply for Medicaid benefits to cover her nursing home costs.
The Medicaid caseworker accepts your application and does nothing for several months. The nursing home, knowing that you have applied for Medicaid, requires that your mother only pay her income to the nursing home per month, which she must do in order to get Medicaid. However, such payment is substantially less than the $8,500 per month the nursing would cost without Medicaid.
Five months after filing the Medicaid application, which is a typical application processing period, the caseworker informs you that mother’s contributions to the household expenses and the telephone bill will be treated as gifts to you, causing your mother to be ineligible for Medicaid. In response, the nursing home sends you a bill for $40,000 for five months of care and will start billing $8,500 per month for future months.
“That’s outrageous,” you exclaim, “my mother simply paid for the cost of heating and cooling her living space and for her private telephone line! Those were not gifts to me!”
Outrageous as that may seem, it is true that the Medicaid rules penalize that type of cost sharing unless it is supported by a contract between you and your mother.
For this reason, any time a senior family member is contemplating entering into a financial transaction or co-living arrangement with another family member, it is wise to seek competent legal counsel. Indeed, seemingly commonsense actions could have far reaching adverse consequences if nursing home care ever becomes a necessity.
The Gatesman Law Office stands ready to assist your family in doing appropriate planning to ensure that such surprises do not occur in your life or the lives of your parents.
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