Because the form documents are not sufficiently comprehensive, lawyers, including William M. Gatesman and Michael G. Day & Associates, with whom Mr. Gatesman is associated, have created Powers of Attorney that are sufficiently comprehensive and which also are “substantially in the same form” as the statutory document. These Powers of Attorney are designed to be comprehensive enough to meet the client’s needs and to also qualify for the attorney’s fees remedy provided for in the new law.

Perhaps to keep everyone on their toes, but in fact to remedy a significant omission in the statutory form, Maryland’s legislature has amended the new Power of Attorney law in recent months. This amendment changes the “Banks and other financial institutions” section of the Personal Financial Power of Attorney form in the statute, which now reads, in pertinent part, as follows:

Banks and other financial institutions – With respect to this subject, I authorize my agent to: continue, modify, transact all business in connection with, and terminate an account or other banking arrangement made by or on behalf of the principal; establish, modify, transact all business in connection with, and terminate an account or other banking arrangement . . . .

Therefore, in order to have a Power of Attorney for which one may rely on the legal fees remedy in the statute after the effective date of the recent amendment, the Power of Attorney should have the language quoted above in the “Banks and other financial institutions” section of the Power of Attorney.

Please contact us for a complimentary review of your existing Power of Attorney.

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.

Nevertheless, the personal representative of the estate did not want to pay the claim because one of mother’s daughters, who is not disabled, but is an underemployed single mother making $5,000 per year, cannot afford another place to live. So the personal representative of the estate denied the claim, and Medicaid filed a petition in the Orphan’s Court to have the claim allowed.

Maryland regulations allow the state, in its discretion, to elect not to pursue a claim in cases where a dependent child of a Medicaid recipient is living in the home. However, the state is required to forego the claim only if such child is disabled, and such was not the case in this instance.

Based on the facts, it appeared that the claim would be affirmed. Nevertheless, William M. Gatesman persuaded the Orphan’s Court that the Medicaid department should have given the personal representative an opportunity to appeal. Because it had not, the court reviewed the statutory criteria upon which the state could have forgiven the repayment obligation and concluded that the circumstances warrant letting mother’s adult child live in the house. On that basis, the Orphan’s Court denied the claim.

While the state could have appealed the Orphan’s Court decision and might have argued that no such appeal right existed, it did not do so. Consequently, we were successful in eliminating the $65,000 payment obligation for mother’s estate.

While it is more typical for lawyers to assist clients in asset preservation strategies before death, this case illustrates an unusual circumstance in which intervention by legal counsel resulted in a substantial savings to the client when, at first blush, all appeared lost.

A durable power of attorney is a power of attorney that grants authority to an agent and such agent’s authority continues even when the principal becomes incapacitated and unable to manage her affairs. If a power of attorney is not durable, the agent’s authority ceases upon the disability of the principal.

Unfortunately, the new power of attorney law eliminated the presumption of durability for those certain specialized types of powers of attorney that were not governed by the new law. However, many believe that the legislature did not intend to eliminate the presumption of durability for such specialized powers of attorney.

For seniors, lending money in this way could be a recipe for disaster. If a parent loans money to a child, or to any other person, without documenting such loan with a promissory note, such loan may foreclose the opportunity for such parent to obtain Medical Assistance if future nursing home care should be required.

Even if the loan is memorialized with a promissory note, Medicaid ineligibility still may arise. This is because the Medicaid rules impose strict requirements on the structure of a loan and on the form of a promissory note in order for the note holder to obtain Medical Assistance.

An example of how this might affect a married couple is instructive. Jenny, a single mother with two small children, suffered a reduction in hours at work and needed help with her house payment. Jenny’s parents, Bob and Mary, helped Jenny by loaning her $10,000 to tide things over until she could find another job. Two years later, while Jenny is now able to make her mortgage payments, she has not been able to save enough money to repay the loan.

Bob and Mary have fallen on lean times themselves. They own a house and $20,000 in the bank. Bob has a stroke and now must reside in a nursing home for the remainder of his life. Under the Medicaid rules, Bob and Mary can keep about $20,000. They also can make home improvements and can prepay their burial costs. If you count the loan to Jenny as one of their assets, Bob and Mary have $30,000 in assets, $10,000 of which they can use to improve their house or prepay their burials. Or Mary can use an annuity to save the entire amount. After making such payments, Bob would meet the financial eligibility requirements for Medicaid so that his nursing home costs could be paid by the state.

As long as the loan to Jenny is properly documented, Medicaid would be allowed. If it is not, however, then the $10,000 transferred to Jenny two years ago will be treated as a gift causing Bob to be ineligible to receive Medicaid benefits for one and a half months. The tragedy of the situation is that Bob and Mary will be required in that instance to spend about $12,000 of their saved funds to pay the nursing home for that one and a half month period thereby substantially depleting their meager savings.

The way to avoid such dire consequences is to structure the loan so that it complies with the Medicaid rules. Such loan must be “actuarially sound”. While that word as used in the Medicaid rules is somewhat nebulous, it presently is applied so as to require that the term of the loan must allow for full repayment within the life expectancy of the lender. Life expectancy is determined by using standardized life expectancy tables set forth in the Medicaid rules.

In addition, such loan must provide for equal, regular, periodic payments, and there must be no deferral of payments. Also, the promissory note must specifically state that the loan is not cancellable at death. Unfortunately, most promissory notes prepared by lawyers and most preprinted promissory note forms do not prohibit cancellation at death. Indeed, under general commercial law, a valid promissory note, even if it does not expressly prohibit cancellation at death, would nevertheless survive the death of the borrower. In other words, there would not be an automatic cancellation of the note. This legal principle, however, is not sufficient to salvage a promissory note in the eyes of the Medicaid rule makers who will look to see whether the promissory note specifically prohibits cancellation.

As is the case in many areas of life, when seniors enter into financial arrangements with family members or others, great care must be taken to ensure that such arrangements do not have unintended adverse consequences or prevent future eligibility for public benefit programs.