Client Meetings and Social Distancing

In a time of crisis, people may wonder how they can address urgent legal needs with the least risk to themselves when governments are calling for avoiding large gatherings of people and other forms of “social distancing.”

For years, William M. Gatesman has given people the opportunity to engage in free initial consultations by means of telephone conferences and email exchanges. People have welcomed these methods, some because they are busy and appreciate the convenience of such meetings, others because they have found that some lawyers insist on high-cost meetings just to get the ball rolling, and still others for any number of other reasons.

In addition, William Gatesman has worked with clients by sending draft documents by mail or email, or both, and has addressed client questions and concerns by telephone and email. Video conference also may be used to facilitate the representation.

Often, Mr. Gatesman will wrap up the engagement with a single meeting with the client, once the preliminary matters have been addressed in the manner discussed in the paragraphs above, and sometimes, if necessary, there will be multiple additional meetings, but only if those are needed to meet the client’s needs. Some engagements, however, may be completed entirely through remote communications.

While some law firms now are struggling to try to figure out how to meet a client’s needs with less face to face interaction, the Gatesman law office has years of experience in meeting clients’ needs through various forms of communications, including face to face meetings, telephone and email consultations, and other means.

William M. Gatesman stands ready to assist you and your loved ones with your legal needs even where social distancing is the order of the day.

Please feel free to contact Mr. Gatesman by telephone at 301-260-0095, or by email at contact@gatesmanlaw.com

Making a Claim in a Decedent’s Estate

When making a claim in a decedent’s estate, may the claimant rely on information provided by the Register of Wills through it’s online website? Or is such reliance risky?

It is important that one who seeks to make a claim in a decedent’s estate do so within 6 months following the decedent’s death, and that the claimant follow all the rules for making such a claim. Unfortunately, there is a risk in relying on the information provided by the online estate docket for a particular estate published by the Registers of Wills in Maryland. A recent case handled by William M. Gatesman illustrates this point.

In that case, the State of Maryland filed a $120,000 claim in a decedent’s estate for Medicaid benefits paid by the State of Maryland for the nursing home costs of the decedent before she died. The rules of court governing such claims require that, if the claim is filed with the Register of Wills, it must also be sent to the Personal Representative of the estate.

In this particular case, however, the Personal Representative never received a copy of the claim, and so, she denied the claim. Maryland petitioned the probate court for allowance of the claim. During the court hearing, evidence was presented that the State of Maryland had relied on the Register of Wills web page which, at the time the claim was made, listed a particular post office box address as the address of the Personal Representative. However, that address was incorrect – apparently the Register of Wills clerk made a typographical error when entering the address on the online docket page.

The question boiled down to this: even though the State of Maryland as claimant did not send a copy of the claim to the Personal Representative at the Personal Representative’s actual address, could the claim nevertheless be valid under the rules governing claims in a decedent’s estate because Maryland sent a copy of the claim to the address of the Personal Representative shown on the Register of Wills web page pertaining to the particular estate? In other words, could the claimant rely on the information set forth on the online estate listing published by the Register of Wills?

The resolution of that question depended on a thorough analysis of the statute and rules applicable to claims in an estate, and to a review of case law regarding statutory requirements of delivery of claims in contexts other than decedent’s estates (there being no law directly on point with respect to such estates). At the probate court hearing, William M. Gatesman was prepared to present such an analysis.

In the end, the probate court ruled that Maryland failed to meet the requirement that it deliver a copy of the claim on the Personal Representative of the estate, and the Personal Representative’s denial of the $120,000 claim was upheld (i.e. Maryland was not allowed to collect on its claim).

What this story reveals is that there are technical requirements a claimant must meet in order for such claimant to collect funds owed to the claimant from a decedent’s estate, and that reliance on information published by the Register of Wills may lead to the claimant losing its opportunity to collect on its claim.

William M. Gatesman stands ready to assist clients, either as claimants in an estate, or as Personal Representatives seeking to defend an estate against claims that are not properly submitted.

Medicaid Asset Preservation with IRAs

 

Spousal Protection Trusts  A very powerful asset preservation tool William M. Gatesman employs with married couples are Wills with Spousal Protection Trusts, a planning tool developed by Mr. Gatesman. With this tool, both spouses prepare a Will in which there is a trust for the benefit of the surviving spouse. Such trust is designed to be funded, not with assets passing through the estate, but with assets passing outside of probate, through pay on death accounts, beneficiary designations, life estate deeds, and by other means.

 

Protecting the Surviving Spouse  By using such a Spousal Protection Trust, spouses can set up their affairs such that, after the first of them dies, all the assets are set aside in the trust, available without restriction to the surviving spouse, but fully protected should the surviving spouse require long term care in a nursing home. Moreover, if such trust is properly implemented, the surviving spouse would be able to qualify for and obtain Medicaid benefits for long term care without delay if and when such spouse falls ill and requires nursing home care. In this way, all of the couple’s assets, to the extent not used by the surviving spouse prior to admission to a nursing home, would be preserved for future generations, and thereafter, all care costs would be covered by Medical Assistance. This is a very powerful planning strategy, but care must be taken to ensure that the plan is properly implemented.

 

Implementing the Plan with Tax Deferred Assets Often, when using this tool, the largest assets passing into such spousal protection trust are IRAs and other tax advantaged retirement plans. When this type of asset passes to a beneficiary – and the Spousal Protection Trust would be the beneficiary – special rules apply to continue the income tax deferral that is the hallmark of such investments. But the traditional method of preserving the tax deferred status of such accounts – by making regular required minimum distributions to the individual beneficiary – can reduce the primary benefit of using a Spousal Protection Trust, which is to protect all of the couple’s wealth if and when the surviving spouse requires long term care in a nursing home, which care could be paid for by the Medicaid program.

 

Asset Preservation with Tax Deferral  With proper guidance, however, a married couple can implement a plan that allows them to get the best of both worlds, that is, to prolong the income tax deferral on IRAs and qualified benefit plans for the longest time possible, on the one hand, and to prevent distributions of income and principal to the surviving spouse if and when such spouse might require long term care in a nursing home, on the other hand, thereby maximizing family wealth preservation.

 

Tax Planning Component of the Spousal Protection Trust  The key to obtaining “the best of both worlds” as discussed above is to structure the spousal protection trust as a retirement plan “accumulation trust.” Typically, estate planners will have clients utilize what is known as a “conduit trust” as the beneficiary of an IRA or other tax deferred retirement plan to ensure continued income tax deferral. However, while a properly drafted conduit trust will ensure continuing income tax deferral because such trust mandates that the retirement plan annual minimum distributions be paid from the trust to the surviving spouse, using a conduit trust for Medicaid asset preservation planning is counterproductive because all such minimum distributions received by the surviving spouse would be required to be paid to the nursing home as part of the surviving spouse’s contribution to her cost of care even after she would qualify for Medicaid benefits. [To be sure, the surviving spouse still could get Medicaid for nursing home care, however, the distribution of the required minimum distribution from the conduit trust to such spouse is a waste of assets because, with proper planning, such payments can be avoided.]

 

Putting it All Together  The way to continue the income tax deferral and to maximize income and asset preservation is to employ an accumulation trust in the Spousal Protection Trust. With an accumulation trust, the required minimum distribution from the retirement plan is distributed to the Trustee, but the Trustee is not required to pay such amount to the surviving spouse. Nevertheless because of the nature of the trust, the income tax deferral will continue to be allowed. This is easier said than done, however, because the tax law governing accumulation trusts for IRAs and other tax deferred retirement plans is intricate and complex.

 

Choosing the Right Advisor  Is it important, therefore, that the advocate you choose to assist you with your asset preservation estate planning be well versed in all aspects of law that would affect your situation, including estate planning, income tax planning, IRA planning, Medicaid planning, and other areas.

 

Qualifications  Before he studied law, William M. Gatesman obtained a Masters Degree in Accountancy with a focus on tax planning, and before becoming a lawyer, Mr. Gatesman worked as a tax consultant with a major CPA firm, and as a tax accountant in a major corporation. Mr. Gatesman has spent his career as a lawyer working in the area of estate planning and Medicaid planning, and related areas. Mr. Gatesman has the education, knowledge, and experience in all the areas of law that must be considered when doing asset preservation planning, and Mr. Gatesman relies on this background when he assist clients in employing Spousal Protection Trusts that include accumulation trusts as recipients of IRA and other retirement plan assets.

 

Maximizing Wealth Preservation  All of this knowledge and expertise enables William M. Gatesman to utilize sophisticated legal tools, such as the Spousal Protection Trust, which trust allows clients to maximize wealth preservation if a surviving spouse should require nursing home care in the future while still allowing such spouse to prolong the income tax deferral afforded by the inherited IRA or other retirement plan for as long as possible.

What is Medicaid Planning?

Our website has a new look! I hope that you enjoy the refreshing update to the Maryland Elder Law website. As part of our website update, we have added a new page that answers the question, “What is Medicaid planning?”

 

To find out the answer to that question, you may click on that question in the black bar at the top of this page if you are viewing this page from your computer. Or you may simply click on the question that follows: “What is Medicaid Planning?” and the page that answers that question will open in a new browser window. Call us at 301-260-0095 for more information.

 

Applying for Medicaid Gives State Access to Bank Records

In order to combat fraud and abuse, Congress passed a law in 2008 (referred to in this article as the “Asset Verification Statute”), which law just now is being implemented in Maryland, directing States to impose an electronic asset verification process to facilitate asset disclosure relating to Medicaid applications for long term care.

When Disclosure is allowed.  In most instances, under Federal law, banks may not disclose one’s financial records to the government except where there is a valid law enforcement or judicial subpoena or summons, or a search warrant.  However, that same federal law allows the account holders themselves to authorize such disclosure through a written instrument.

The Asset Verification Statute directs that States that provide Medicaid benefits to aged, blind or disabled persons to cover the costs of long term care in a nursing home, or care in assisted living or at home, require the applicants for such benefit programs to provide written authorization to the State to obtain documentation from banks and other financial institutions for accounts owned by the applicant or by any other person (such as the applicant’s spouse) whose assets are considered when one applies for such benefits. Continue reading “Applying for Medicaid Gives State Access to Bank Records”

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.] Continue reading “Sheltering Assets to Maintain Housing Benefits”

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. Continue reading “The Secret World of Medicaid Regulation”

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.

Continue reading “Are You Paying Too Much to Apply for Medicaid?”

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. Please be aware that this number is revised from time to time. Please contact us to find out the current divisor amount.

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