December 1, 2015
It is a well established principle of the Maryland Medicaid rules that certain jointly owned assets such as stocks or real property will not be counted as available resources to a nursing home resident who applies for Medicaid benefits if the other joint owner refuses to participate in a sale of the property.
For decades, such assets have been disclosed by nursing home residents on their Medicaid applications and such assets have been valued at zero for purposes of determining Medicaid eligibility.
Recently, however, a Medicaid applicant was denied Medicaid coverage for nursing home care because the applicant owned stock, in certificate form, with her son in joint ownership, even though the son had refused to participate in a sale of the stock. Ordinarily, such a denial by a Medicaid caseworker would be overturned when the case was appealed to an Administrative Law Judge, but in this case, the Administrative Law Judge ignored the specific regulation in the Maryland Medicaid Manual that explicitly states that jointly owned stock should not be a countable asset where the joint owner refuses to sell.
Such denial has implications, not only for the particular individual whose Medicaid application was denied, but for Medicaid applicants statewide. Indeed, this case has been appealed to the Circuit Court of Maryland where a senior Assistant Attorney General, representing Maryland’s Medicaid authority, the Department of Health and Mental Hygiene, essentially has requested the Circuit Court to issue a decision that radically revises the long standing Medicaid policy concerning such jointly owned assets.
If the Circuit Court were to uphold the decision of the Administrative Law Judge in this particular case, then it would shroud the process of dealing with jointly owned assets in a cloud of uncertainty. No longer would Medicaid applicants and their advisers be able to act with certainty regarding jointly owned assets, as there would exist the possibility that Medicaid caseworkers could arbitrarily ignore the applicable rule on the strength of judicial precedent.
This is not the proper way for the Medicaid authorities to change their policy. The proper way is to propose rule changes, either by changing the Code of Maryland Regulations, or by changing the Maryland Medicaid manual. Simply leaving a rule in place that exempts joint assets from consideration, but then attacking such an arrangement by imposing Medicaid ineligibility on a case-by-case basis on unsuspecting Medicaid applicants is bad public policy.
The State’s efforts to deny benefits in the case under discussion in this article is an example of such bad public policy.
William M. Gatesman is following the progress of this case closely and will inform the readers of this website of any new developments as they arise.
In the meantime, Mr. Gatesman stands ready to assist clients with prudent Medicaid eligibility and asset protection planning in the context of a changing landscape.
August 20, 2015
Mother dies with a will leaving all of her assets to her three children in equal shares. One of her adult daughters receives Medicaid benefits because her assets are less than $2,000 and she has a very low income due to a disability. Such daughter is expected to receive a distribution of $25,000 from mother’s estate. This will cause daughter to lose her public benefits, which will be disastrous for daughter given the very high costs of her medications.
While daughter could petition a court to create a special type of Supplemental Needs Trust, known as a “d4a trust” and once she receives the distribution from the estate, deposit the funds into such trust, there are significant costs to establishing such a d4a trust, and there are administrative burdens associated with such trust, including annual reporting to the State Medicaid authority. Moreover, a d4a trust requires payback to the state for any Medicaid benefits if there are funds remaining in the trust when the trust beneficiary dies. Given the amount to be distributed, one must weigh whether it is worth the cost of setting up a d4a trust if there are other less costly alternatives.
Fortunately, Maryland law provides an opportunity for a trust to be created in a simpler way. Under the Maryland Discretionary Trust Act, a trust may be established for a beneficiary, and the assets in the trust will not be considered to be available resources for Medicaid purposes. Moreover, unlike a d4a trust, there is no requirement to pay back Medicaid for benefits received during lifetime after the beneficiary dies.
While Mother in her will could have provided for a Maryland Discretionary Act trust for daughter, she failed to do so. Nevertheless, the Maryland Discretionary Trust Act provides that “any person having a right to transfer property to another person may create a trust as a transferor under [the Maryland Discretionary Trust Act].” Under this law, the term “person” includes any legal entity, and a probate estate is a legal entity.
William M. Gatesman presently is working with clients to come up with creative solutions to allow estate beneficiaries to retain their essential public benefits where the decedent’s will did not provide for asset protection in light of those public benefits. Establishing a Maryland Discretionary Trust Act trust is one of the tools in Mr. Gatesman’s tool kit to achieve the objective of protecting a beneficiary’s eligibility for public benefits.
August 6, 2015
Some workers who have received judgments in their favor from their former employers for work related disease or injury, such as asbestos related injuries or coal mining related diseases, find that the judgments are paid out over time, sometimes in the form of small amounts paid now and then over a period of many years. Some of these individuals have died and their probate estates have been wrapped up and closed. Then, out of the blue, another check arrives with a payment on the injury or disease settlement.
Once such check arrives, notice must be given to the Register of Wills in the county in which the estate had been opened, a supplemental inventory and account filed, and distribution made (with the payment of an additional probate fee in some circumstances). If a lawyer assists with this process, there will be legal fees as well. This is a cumbersome and costly endeavor, sometimes for a very small amount of money.
This continuous process of reopening the estate each time a settlement check arrives can be avoided with the proper assignment of future settlement payments to the beneficiaries of the estate when the final estate administration account is filed and the estate closed. Such assignment can grant the Personal Representative of the estate continuing authority to transact checks to make the distributions to the beneficiaries.
The Gatesman Law Office assists clients with the process of simplifying life for estate beneficiaries by arranging for the distribution of such settlement awards that might be received after an estate is closed without the necessity of continually filing supplemental inventories and accounts year after year.
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.
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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.
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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.
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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.
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.
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.
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