William M. Gatesman, Attorney at Law

William M. Gatesman assists clients in Maryland and D.C. in the areas of elder law and Medicaid planning, asset protection planning, special needs planning, estate planning, probate and estate administration, wills, trusts, powers of attorney, and health care decision making documents.  Mr. Gatesman is available to meet with clients in his offices in Rockville, Columbia, Frederick and Hagerstown, Maryland, and is available to make house calls as needed in those locations and in other areas of Maryland and D.C.

Call 301-260-0095 for more information or to make an appointment.

The purpose of this website is to educate consumers and their advocates regarding legal developments that may affect their lives. Mr. Gatesman has written the articles that follow on this website, organized by date of publication. To assist you in locating articles of interest, there is a search feature and a subject matter index in the column on the right side as you scroll down this page. You also may sign up to receive newly published articles by email in the newsletter signup box on the right.

Sheltering Assets to Maintain Housing Benefits

Various articles on this website address ways in which aged or disabled persons may protect their assets and still get government benefits such as Medicaid for long term care in a nursing home, or Medicaid for health care in the community.  By retaining accumulated assets or protecting assets one is about to inherit, an individual can ensure for herself a better quality of life, especially when the only other alternative is to fully impoverish oneself to retain government benefits.

One tool lawyers utilize to enable clients to shelter assets is a trust.  There are various types of trusts that can be employed depending on the individual’s circumstances, and each type of trust has its advantages and disadvantages.

For example, the law will allow a disabled person to keep his or her accumulated wealth to allow for a higher quality of life and to still obtain Medicaid benefits.  [Such opportunity is separate and distinct from the benefit under the Affordable Care Act which allows non-disabled people with low incomes to obtain Medicaid health insurance.  Moreover, this long-standing opportunity afforded to disabled persons likely will persist even if the President and Congress were to repeal the Affordable Care Act as they have threatened to do.]

Consider Mary, a 50 year old disabled individual, who, due to her disability, was never able to work, and who receives Supplemental Security Income (SSI) and is eligible for Medicaid benefits, both of which are means-tested programs.  Means-tested programs are benefit programs that will pay only if the recipient has very few assets, typically $2,000 or less.  Mary, who has been living with less than $2,000 is about to inherit $200,000.  Unfortunately, the deceased relative who has left such inheritance did not do estate planning to prevent such inheritance from causing Mary to lose her government benefits because she will have more than $2,000 after the inheritance is paid to her.

All is not lost for Mary, however.  Mary can work with an experienced attorney to create a special trust to hold her $200,000 inheritance in such a manner that it will not be counted as her resource for benefits purposes.  With such a trust in place, Mary will continue to have less than $2,000 in her name, continue to receive SSI (which she will spend each month for her personal needs), and continue to receive Medicaid to cover her health care needs.  Moreover, the trust assets can be used, not to make distributions directly to Mary, but rather, to pay for things Mary needs and for opportunities Mary can pursue.  One significant condition of this type of trust is that, if there are funds remaining in the trust when Mary dies, then the Trustee will repay the State for Medicaid benefits Mary has received during her lifetime.  But if the trust funds are used for Mary’s wants and needs during her lifetime, then she will have a better quality of life without losing government benefits, and if all the funds are spent for this purpose, then there will be no government payback.

The law governing the use of a trust in this manner is clear cut and well known to experienced elder law and disability law attorneys.  What is not so clear cut is whether such a trust may be used to shelter assets and still allow an individual to obtain or retain Federal or State housing benefits.  For example, if Mary, in addition to getting SSI and Medicaid, also received a voucher to enable her to pay her rent, the question arises:  Will Mary lose this benefit once she inherits the $200,000, even if she employs the type of trust discussed above?

A colleague of mine faced this very question recently and discovered that the law and regulations governing the housing benefit programs do not address whether using the trust described above, which enable Mary to shelter her inheritance for SSI and Medicaid eligibility purposes, likewise will shelter the inheritance and enable her to keep her housing benefits.

This lack of clarity is not new.  William M. Gatesman faced the same situation more than a decade ago.  Then as now, the law was not clear and the regulations did not adequately address the situation.  But a client needed to know, because she depended on her housing subsidy and losing it would have negative consequences for her.

That being the case, Mr. Gatesman researched the housing subsidy rules and called the director of the government office that administered the Federal/State housing subsidy program.  Gatesman found support in one of the housing department’s publications, which publication arguably suggested that using such a trust would allow his client to keep the inheritance and still get the housing subsidy in the same way that she, like Mary discussed above, could keep her SSI and Medicaid benefits.

Mr. Gatesman argued his case in a telephone call and a letter to the Director of the Rental Assistance Division of the Housing Opportunities Commission of Montgomery County, Maryland, which administered the housing benefit programs affecting his client.  As a consequence of that advocacy, the Director issued an Opinion Letter that concluded that Mr. Gatesman’s client could retain her housing benefit because the assets in the trust will not be counted as available to Mary for housing subsidy eligibility purposes.  Indeed, the Opinion Letter advised further that, except in certain circumstances which did not apply in the case at hand, the existence of the trust and the trust assets need not even be disclosed when applying to obtain  the housing subsidy.

One can read that opinion letter by clicking this highlighted text.  As is evident from this Opinion Letter, this issue was addressed a long time ago, in 2004.  Benefits law and practice is not a stagnant thing, and much has transpired over the past 13 years since the Housing and Opportunities Commission issued it’s Opinion Letter.  That being the case, one seeking to shelter assets and maintain eligibility for housing benefits needs to consult with qualified counsel to ascertain whether this Opinion Letter would still be applicable at this time and in the particular circumstances faced by the individual.  Nevertheless, this Opinion Letter serves as an historic legal determination that should be significant for lawyers who assist clients in preserving assets and in obtaining and maintaining eligibility for public benefits.

As a courtesy to my colleagues, for a limited time, I will include links below to other relevant documents.

Housing Opportunities Commission Opinion Letter

Text of Letter Soliciting HOC Opinion

Exhibit Attached to Solicitation Letter

The Secret World of Medicaid Regulation

Potential clients sometimes ask William Gatesman whether they can pursue their legal matters themselves.  Often, the advice in response to such an inquiry is that the client would obtain a more favorable outcome using the services of a knowledgeable lawyer.  A key component of that advice is that the lawyer should be knowledgeable.

Unfortunately for the general public, when it comes to applying for Medicaid benefits, there is a limited pool of lawyers in Maryland who can be viewed as being truly knowledgeable about all of the nuances in the Medicaid eligibility rules.

This should not be the case.  Maryland law, and in particular, the Maryland Administrative Procedures Act, mandates that the rules governing such matters as the Maryland Medicaid program be promulgated and implemented through a transparent public process.  Through that process, such rules are to be disclosed and maintained in a manner to make them easily accessible to the public.

Unfortunately, with respect to the Maryland Medicaid program, some of the rules are complex, hidden, and accessible by only a few who know where and when to look for them.  One of the problems arises because Medicaid is a joint Federal and State program.  Notwithstanding that, the rules as they apply in Maryland (Medicaid rules vary state by state) should be put in place in accordance with the Administrative Procedures Act, however, the Maryland Administrative Procedures Act routinely is disregarded.  Indeed, a senior Medicaid official recently advised William Gatesman that there is an administrative freeze by the Maryland Governor that prohibits any action toward implementing new regulations.

So, then, how do Medicaid lawyers in Maryland know what are the rules that apply to their clients?  Sadly, sometimes the answer to that question is that some of those lawyers don’t know.

Consider the following case in point.  Some disabled individuals who have too many assets can still qualify for Medicaid if they use a certain type of trust to hold those assets.  This type of trust is referred to as a “d4a” trust.  Previously, such trust could only be created by the Medicaid recipient’s parent, grandparent, court appointed guardian, or by a court (in which case, creation of the trust could be costly).  This requirement imposed an unreasonable burden on competent adult disabled persons – why did the law not allow them to create their own d4a trusts?

After many years since d4a trusts became a possibility, Congress finally, in December, 2016, passed a law that allows competent adult disabled persons to create their own d4a trusts.  Notwithstanding that change in law at the Federal level , William Gatesman was concerned that competent adult disabled persons in Maryland might be snared in a trap if they sought to create such a trust themselves and then apply for Maryland Medicaid.  The reason for this concern is that the Federal rule change allowing self-created d4a trusts  has not, since the passage of  the law more than six months ago, been implemented in Maryland in any manner whatsoever – not by the passage of a regulation, not by the amendment of the Medicaid caseworker’s procedure manual, and not in any other manner.

That being the case, Mr. Gatesman  asked a group of Maryland elder law lawyers if they, too, were concerned about their clients getting “snared in a trap” by creating their own d4a trusts.  That inquiry sparked a discussion that revealed just how obscure are the Medicaid rules, even for lawyers who practice Medicaid law.  Some of the lawyers involved in the discussion were not aware of the rule change.  One sought out the Federal statute and discovered that, although the December, 2016, rule change is reflected in a published Public Law that is not easy to find, it is not yet reflected in the compiled statutes of the United States (at least those that are available online).

The discussion revealed further that, within the past week, more than six months following the passage of the law, the Federal agency charged with administering the Medicaid program sent a letter to State Medicaid regulators advising them of the new law and instructing them as to how to comply with that law.   That being the case, not only was it Maryland elder law lawyers (with the exception of a small number of them) who were not aware of this important change in the Medicaid rules, but it was the regulators of the Maryland Medicaid program themselves who only recently had become aware of the change.  Consequently, it was prudent for William Gatesman to be cautious lest his clients get snared in the trap of relying on a Federal law change before the State regulators were in a position to allow actions based upon such change.

It was during that discussion that a senior Maryland Medicaid official revealed, in an informal correspondence to a select few lawyers, that, due to the Governor’s administrative freeze, no Maryland regulation would be implemented with respect to this rule change, suggesting also that such administrative freeze would prevent the Medicaid regulator from revising its procedural manual utilized by Departments of Social Services who evaluate Medicaid applications and private Medicaid lawyers alike.  Instead, the only change that will be made is to list “the disabled individual himself” as one of the possible creators of a d4a trust on a checklist that is used when such trusts are evaluated.  This is hardly clear, bright line guidance to lawyers who advise clients concerning Medicaid eligibility issues, much less to the public.

There are other, equally obscure, or even more obscure, important Medicaid rules that have significant bearing on whether individuals will qualify for Medicaid in Maryland.

William Gatesman maintains relationships with other professionals and monitors significant changes in the law to stay abreast of the current operative rules and regulations, no matter how obscure they might be.

Don’t Let the Notary Public Skip a Step

Many legal documents, such as deeds, trusts, powers of attorney, and contracts, either require, or are made more legitimate, by having a notary public sign the document. This is referred to as “notarizing” the document.

In Maryland, a person who is a Notary Public must obtain a license, must be sworn in by an officer of the Circuit Court, and must follow certain rules in the exercise of the Notary Public’s powers. A Notary Public must ensure that she knows the person who is signing the document. This usually is accomplished by the Notary Public reviewing that person’s driver’s license or passport.

Then, after witnessing the individual sign the document, the Notary Public will complete what is known as a Notary Jurat, which is a section of the legal document in which the Notary Public enters certain information, including the expiration date of the Notary Public’s license, signs the document, and affixes his or her seal to the document, which seal often takes the form of a special ink stamp on the document page.

In addition to those actions, the rules governing the actions of a Notary Public require that the Notary Public maintain a “fair register” of all of the acts undertaken by the Notary Public. This is one step that often is overlooked. There are lawyers who also are licensed Notary Publics who will witness a client’s signature to a document but might overlook recording the action in a Notary Public fair register. Indeed, I have encountered some lawyer-Notary Publics who were unaware of the requirement to maintain a contemporaneous fair register.

The fair register is an important record because, if a client ever requested it, the Notary Public has an obligation to provide such client with a certified copy of the record of the act that was notarized. For example, some years after a legal document is signed, if there is a question as to the legitimacy of the signature, a party to the legal document may seek out the Notary Public to request a certified copy of the fair register entry memorializing the execution of such legal document. If the notary public did not make an entry in a fair register and did not maintain that fair register as required under the law and regulations governing Notary Publics, then it would be impossible to obtain such a certified copy at some future time.

Knowing these rules, a client who signs a document requiring notarization could make an appropriate inquiry with the Notary Public if the Notary Public did not ask the client to sign Notary Public’s fair register.

William M. Gatesman is both a lawyer and a licensed Notary Public, and is available to assist clients in both capacities.

Are You Paying Too Much to Apply for Medicaid?

The requirements imposed upon individuals seeking Medicaid benefits to pay nursing home costs have become less onerous in recent years.  For many years, Medicaid applicants were required to submit monthly statements for every bank and investment account for every one of the 60 months preceding the filing of the Medicaid application.  Under that regime, someone with only 4 bank accounts would have to submit 240 individual account statements.  Then, once those statements were submitted, they were reviewed by a Medicaid caseworker who was on the lookout for any “questionable” transactions.

“Questionable” transactions include unexplained deposits and substantial expenditures.  Therefore, unless the source is obvious from the account statement, any deposit showing up on those 240 statements would be questioned by the Medicaid caseworker seeking to ascertain the source of the funds deposited, and any payment of $1,000 or more likewise would be called into question.  The problem is magnified if the applicant or the applicant’s spouse had any additional bank or investment accounts.

That being the case, in order to be prepared to address a Medicaid caseworker’s questions, lawyers assisting Medicaid applicants under the old system would review all of the bank statements and seek explanations from the applicant or applicant’s family for any transactions that likely would be questioned.  That process could be time consuming, and, if the law firm performing such review billed the client on an hourly basis, then the legal fees to pursue the Medicaid application would be high.

In recent years, however, the Medicaid application process has been streamlined.  No longer is a Medicaid applicant required to submit 60 individual account statements for each of the 60 months preceding the month the Medicaid application is filed.  Now, applicants need only submit a few statements for the most recent months, and then a single statement for a particular month for each of the preceding five years.  Hence, under current practice, rather than submitting 60 statements for each account, an applicant only has to submit 8 statements, and it is only those 8 statements that will be scrutinized by the Medicaid caseworker.   Thus, for a Medicaid applicant with four accounts, the number of statements needed to be submitted for scrutiny was reduced from 240 to 32.

If one were to continue to operate under the old system and submit 60 monthly statements for each account, and then spend the time to closely scrutinize each of those statements and any transactions that might be called into question, then such person would  be doing extra work for little or no added benefit.

Click here to read the rest of the story…

Medicaid Updates Transfer Penalty Rule

If one applies for Medicaid to pay for long term care in a nursing home, the state will look to see if the applicant made any gifts in the five years preceding the Medicaid application. If so, then (with some exceptions addressed in various articles on this website) a period of Medicaid ineligibility will be imposed.

For many years before 2014, the period of ineligibility was determined by dividing the amount of the gift by $6,800, which amount was supposed to be the average monthly cost of care in a nursing home. In July, 2014, that number was changed to $7,940. Medicaid has again updated the divisor to take into account Nursing Home care cost inflation.

Effective July 1, 2016, the divisor to determine the number of months of Medicaid ineligibility for gift transfers is $8,684, which means that one would be ineligible for one month for every $8,684 in gifts made during the five years preceding the Medicaid application.

Bear in mind that the term “gift” means any transfer of resources with respect to which the transferor did not receive full value. Thus, if a person sold her house for less than it’s fair market value (Medicaid uses assessed value or an appraisal to determine fair market value), then Medicaid will treat the difference between the sales price and the deemed fair market value to be a gift transfer even if such sale was made to a third party in a bona fide arms length transaction.

We at the Gatesman Law Office endeavor to stay at the cutting edge of new developments in Medicaid law and policy.

Should you have any questions as to how this new policy might affect you or a loved one, please contact us by clicking the Contact link on this website.

Bill Gatesman

A People’s Lawyer

A client recently posted a review of my services on AVVO, the independent legal resource website. You may CLICK HERE to read the review.

This client referred to me as “A People’s Lawyer,” and wrote the following:

William Gatesman assisted me in having my father’s trust terminated and the trust assets distributed to me and the other beneficiaries of the trust before the time that those assets were supposed to be distributed. We did this with a petition to the circuit court and the court allowed the distribution without holding a hearing based upon Mr. Gatesman’s written petition. And, while I engaged Mr. Gatesman to obtain this result, he went a step further and negotiated with the Trustee’s attorney to get the trustee to reimburse me for expenses I had paid relating to my father’s death, something I had been trying to do without success. Finally, Mr. Gatesman proposed and worked out an arrangement whereby the other trust beneficiaries agreed to reimburse me for a portion of my legal fees.

I am very pleased with Mr. Gatesman’s representation. He was easy to work with, he got me the result I had requested, and he made suggestions for other ways I could benefit from the representation and succeeded in obtaining those results. I highly recommend William M. Gatesman.

When a Parent Dies Owning a House with a Mortgage, May the Children Inherit the House Without Getting a New Mortgage?

When a parent dies owning a house that is subject to a mortgage, the question arises whether a child or other beneficiary of the parent’s estate can inherit the real property without obtaining a new mortgage by simply continuing to make the payments on the existing mortgage.

In general, mortgages are subject to a “due on sale clause,” which is a term in the mortgage agreement that allows the lender to accelerate the loan (that is, immediately collect the balance due) upon the transfer, or retitling of the real property to another person. However, under Federal law, there are a number of transfers that may be made without triggering a due on sale clause, including a transfer of the property to a relative of the deceased owner as a consequence of the owner’s death.

That Federal law is known as the “Garn-St Germain Depository Institutions Act of 1982”, which is codified at 12 USC 1701j-3.

Click here to read the rest of the story…

Beware the Revocable Trust Creditor Trap

In Maryland, creditors may not make a claim against a deceased person’s estate once six months have passed since the person’s death. What that means is that a creditor seeking to assert a claim six months or more following someone’s death will not be allowed to collect the debt.

One exception to this rule is that a creditor who has a secured interest, for example, a bank that holds a mortgage on the deceased person’s real property, will still be able to collect against the proceeds of the sale of such real property, and retains the right to foreclose on the real property if the mortgage payments are not being made. However, such bank would be precluded from collecting more than the sales proceeds if the house sells for less than the mortgage loan balance if the bank did not make a claim in the estate of the deceased person within six months following that person’s death.

Click here to read the rest of the story…

Circuit Court Upholds Decision to Eliminate Exemption for Joint Assets

On December 1, I wrote an article, Medicaid Exclusion for Joint Assets Under Attack. That article addresses an instance where the State of Maryland Medicaid authority reversed its long time practice of disregarding jointly owned stock where a co-owner who is not the Medicaid applicant refused to sell such stock.  This exclusion is based upon a provision of the Maryland Medicaid Manual that allows for such treatment.

The matter was appealed and an administrative law judge upheld the decision of the Medicaid regulator, so the individual appealed to the Circuit Court of Maryland.  That court has now issued its opinion upholding the decision of the Administrative Law Judge.

My December 1, article concluded that: “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.”

Now that the Circuit Court has upheld the Administrative Law Judge’s decision, there is great uncertainty as to how jointly owned assets will be treated if one of the joint owners refuses to participate in a sale of such property.  If the Circuit Court ruling were to be treated as binding, then such exemption may no longer be in force, however, there still is a rule in the Medicaid Manual that allows such exemption.

William M. Gatesman stands ready to assist clients in navigating the troubled waters of the Medicaid rules in light of rapidly changing currents, the most recent being the Circuit Court decision eliminating the exemption for joint property where there is a refusal to sell by a co-owner.

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