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.
October 28, 2009
The “Secret Handshake” refers to that gesture known only by the select few who are allowed access to an exclusive club. I use that as the title to this post because the State of Maryland has adopted policies that make it hard for people who do not have “inside information” to make good informed decisions regarding their financial planning should nursing home care loom on the horizon.
Read the rest…
July 1, 2009
Some lawyers belong to an association that provides them with form legal documents. One such form is the “Loving Trust”. Within such document, there is an indication that the term “Loving Trust” is a certified trademark. The trademark does not belong to the lawyer who “prepared” your trust. Rather, it belongs to the company that provides the trust form to the lawyer.
Loving Trusts can be problematical. A typical Loving Trust has provisions relating to “community property.” Community Property is a special class of marital property with respect to which spouses have certain statutorily defined rights — but such is the case only in so-called “community property states” such as California. Maryland is not a community property state, and a trust by a Maryland resident that has community property provisions at best is confusing and at worst could cause unintended consequences.
But there is a more serious problem with the Loving Trust. The Loving Trust is a joint trust created by a husband and wife. Only the husband and wife may modify or revoke the trust. The trust may not be modified or revoked by the agent under a power of attorney for either husband or wife. Moreover, once one spouse dies, the trust may not be revoked.
This is a problem because trusts can cause one to be ineligible for Medicaid. If the trust is revocable, and the trust beneficiary requires nursing home care, then the trust can be revoked and the problem resolved. If one is the beneficiary of a Loving Trust, however, and the spouse has died, then such trust may not be subject to revocation. As a consequence, such trust may cause Medicaid ineligibility, or may prevent the surviving spouse from preserving assets.
And for estate planning purposes, because estate tax law has been fluctuating in recent years, it does not make sense to draft a trust that will become irrevocable and unmodifiable after one’s spouse dies. Such trust cannot be changed to respond to changes in the estate tax law. As a consequence, using a Loving Trust may result in the payment of estate taxes that otherwise could have been avoided.
Beware the Loving Trust.
June 26, 2009
In Maryland, one is ineligible to receive Medical Assistance, or Medicaid, for long term care in a nursing home if one gives property away, or transfers property for less than full value. Since 2006, this period of ineligibility does not begin to run until the gift giver resides in a nursing home and is out of money.
The period of ineligibility is determined by dividing the amount of the gift (or the aggregate amount of all gifts) by the penalty divisor. The penalty divisor has been $4,300 for many years. For Medicaid applications filed on or after June 1, 2009, the penalty divisor will be $6,800. Using the new divisor, a gift of $68,000 will cause a Medicaid ineligibility period of 10 months, six months less than the penalty that would have been imposed using the old divisor.
Please contact the Gatesman Law Office to learn more about how this change may affect you.
June 11, 2009
I stumbled upon a blog written by Trevor Rosen that provides invaluable information for people seeking to do legal research in Maryland. For example, his May 2, 2009, blog post gives guidance on how to obtain legislative history for Maryland statutes. Lawyers use legislative history to ascertain the lawmakers’ intentions when passing legislation. Legislative history is important if a law is not clear, or if the meaning of the law is in dispute and the matter must be decided by a court. When courts interpret statutory law they frequently refer to the legislative history.
Rosen provides many other resources to assist lawyers and others who seek to research Maryland law. I have placed a link to Trevor Rosen’s blog in the Web Links section of this webpage. To see Rosen’s blog, click on the words “Researching Maryland Law” in our Web Links.
June 4, 2009
The Gatesman Law Office works with personal injury lawyers to assist their clients in protecting the assets they recover for their clients. Sometimes, it is prudent to utilize a special trust to protect any public benefits the injured party may be getting. If, for example, the client is eligible for Supplemental Security Income (SSI) and Medicaid, using such a trust is essential. Without the trust, the client will lose both SSI and Medicaid.
Read the rest…
April 26, 2009
A lawyer who is doing Medicaid planning for a client asks: “The Medicaid caseworker has requested to see my client funds account records. Must I give her this information? Is this a problem?”
This inquiry reveals one of the many pitfalls of Medicaid asset preservation planning.
Read the rest…
March 15, 2009
Traditional Medicaid Asset Preservation Planning enables the well spouse to protect some or all of the assets while allowing the spouse in the nursing home to obtain Medical Assistance to pay the cost of nursing home care. Post-Medicaid eligibility planning techniques enable the well spouse, should she predecease the spouse in the nursing home, to pass all of the assets to children without having to pay back any of the nursing home costs.
This type of traditional Medicaid planning, however, does nothing to preserve assets for the well spouse should the well spouse also require long term care in a nursing home sometime in the future. Indeed, many of the powerful asset preservation tools available to a married couple cannot be used to preserve assets for a single person seeking Medical Assistance benefits to cover nursing home costs.
Consequently, even where a couple has done asset protection planning when one of them enters a nursing home, after that individual has died, the well spouse remains at risk to lose all of her assets in the event she should require long term nursing home care.
William M. Gatesman has been a leader in developing asset preservation techniques for individuals and families facing the possibility of high long term care costs. Mr. Gatesman’s latest development in long term care asset preservation strategies is the Spousal Asset Preservation Trust.
Read the rest…
March 1, 2009
In January, 2009, the Maryland Medical Assistance program revised it’s income and asset thresholds. For 2009, the maximum spousal resource allowance is $109,560, and the minimum allowance is $21,912. Remember, however, that the spouse whose partner is in a nursing home may not be able to retain the maximum resource allowance depending on how much money the couple had when one of them entered the nursing home. To see how one might take action to ensure that the spouse at home can keep the maximum, you can read the article I have written on the subject by clicking -HERE-.
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January 13, 2009
Ever since the implementation of the Deficit Reduction Act of 2005 (”DRA 2005″) elder law advisors have been informing clients that Medicaid asset preservation planning using gifts to family members has become more complex. While many people believe that DRA 2005 was the death knell for such planning, in fact one may still preserve assets using a gift giving strategy.
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