William M. Gatesman has joined the law firm of Michael G. Day & Associates, which firm serves clients in western Maryland. Mr. Gatesman will continue to serve clients in other parts of Maryland and in the District of Columbia through the Gatesman Law Office.
When people think about using Medicaid to pay for nursing home care, they generally think that the program will pay only after most of their assets are gone. However, there are little known rules that allow people to keep certain substantial assets and still get Medicaid for nursing home care. Some of these rules apply only if there is a spouse living at home, and others apply even if a single person is seeking Medicaid benefits.
Some families make large gifts to family members — to enable a child to purchase a house, for example, or to assist a grandchild by paying college expenses. Others make the conscious choice to make a large gift of assets to their children to ensure that those funds will stand in the place of an inheritance should the parents ever require long term care in a nursing home. Without such large gift, those funds might otherwise be depleted by high nursing home costs.
Considering Future Medicaid Eligibility
When making such gifts, seniors must pay close attention to the affect such gifts would have on their ability to obtain government benefits to pay for future nursing home care. As long as sufficient time passes from the time of the gift and an application for Medicaid benefits, those assets will be protected and the gift-giver’s children will not be required to pay back the gift to cover the gift-giver’s care costs.
We have added a page to our website to provide our clients with forms they may need to facilitate our representation. You may access that page by clicking on the word “Forms” in the menu at the top of this page.
One of the documents in the Forms directory is a Memorandum listing the items one needs to provide to us to support a Medicaid application .
Schoukroun v. Karsenty (Md. App. December 11, 2007). A Technical Article for Maryland Elder Law and Estate Planning Attorneys
The Maryland Court of Special Appeals, in a seismic shift to the estates and trusts law of Maryland, issued an opinion on December 11, 2007, imposing augmented estate rules on the State of Maryland. This decision has significant consequences affecting Medicaid asset preservation planners, estate planners, family law practitioners and CPAs.
Prior to this decision, the Maryland legislature, despite years long advocacy by some members of the Estates and Trusts section of the Maryland State Bar Association, refused to add augmented estate rules to the estates and trusts law of Maryland.
Many seniors have heard that giving assets to one’s children is a way to safeguard those assets so that they will pass on to the younger generation upon the senior’s death even if nursing home care is required. However, the law governing Medicaid has changed and it now appears that Medicaid will not be available to those who make such gifts.
Nevertheless, while the strategy of making gifts to children in anticipation of requiring nursing home care is much more complex under the new law, it still may be possible for you to preserve assets in this manner.
A technical notice for Maryland elder law professionals.
When a homeowner executes a deed retaining for himself a life estate, such action will be considered a transfer of resources for Medicaid eligibility purposes. However, the homeowner has not given away the entire property. What the homeowner has given away is a remainder interest, that is, the right to own the property after the homeowner dies.
The value of the transferred remainder interest depends on the age of the homeowner who retains the life estate. Maryland uses a table, Schedule MA-7, to assign value both to the transferred remainder interest and to the retained life estate. You may view that table by clicking here: Life Estate and Remainder Interest Table.
Medicaid law allows an individual whose spouse needs nursing home care to keep as much as $101,640 in 2007, as well as the house, a car, certain life insurance policies and a few other assets. But this rule is misleading. Consider the following example.
Husband and Wife own a house, a car, and $100,000 in investment assets. Suppose that Husband needs to go to a nursing home. One would think he could get Medicaid immediately because there is only $100,000. However, the rule says that the spouse in the community can keep half of the total assets (the house and car are exempt and not included in this computation) but not more than the maximum amount, or $101,640.
In other words, in this example, Medicaid will not pay the nursing home costs until the couple has spent $50,000 because Wife is allowed to keep only half of the $100,000 they had when Husband entered the nursing home.
Is this the end of the story, or can Wife do something to enable her to keep the whole $100,000?
Many of you have heard the clarion call – “You need a revocable trust!” This cry emanates from the full page newspaper ads touting the one-day seminars on revocable trusts. This cry emanates from the 60-second spots on the radio informing you that your estate plan is not complete without a living trust. Such marketing tactics might lead one to believe that everyone should use a revocable trust. But is it a good idea for you?
While revocable trusts can be good estate planning tools, they are not for everyone. Any advertisement that implies this is misleading. Indeed, by using a revocable trust, seniors can lock themselves out of a powerful asset preservation strategy. Before reviewing that strategy, however, lets take a closer look at revocable trusts.
A technical article for Maryland elder law professionals.
Another lawyer called recently and asked me how to resolve a problem faced by one of his clients. When I told him what to do, he remarked: “You’re making that up!” He was right about my “making that up” because my solution involved employing a fiction to obtain the desired result.
There are two ways an asset preservation planner may use fiction to help a client to qualify for Medicaid benefits. The first is getting a court order nunc pro tunc, and the second is to use a special power of attorney.
Loading ...