Monday, December 02, 2013
14 Costly Misconceptions About Planning for Your Senior Years
A Minneapolis Estate Planning and Probate Lawyer Discusses Estate Planning Issues Specific to Seniors
Misconception #1: Most seniors move into nursing homes as a result of minor physical ailments that make it hard for them to get around. Wrong! A large percentage of admissions to nursing homes is because of serious health, behavior, and safety issues caused by Alzheimer’s disease and dementia.
Misconception #2: Nursing home costs in Minnesota average $1,500 to $2,500 per month per person. Hardly. Current nursing home charges for one resident typically run $6,000 per month, or $72,000 per year, which does not include prescription drugs -- and those costs continue to rise.
Misconception #3: Children can care for a parent with Alzheimer’s disease at home, without the need for nursing home care. Not true! Many patients with Alzheimer’s disease end up in nursing homes because children are simply unable to provide the level of care their parent needs. In most cases, the children want to care for their parents. But, as a practical matter, they simply can’t. Moving a parent into a nursing home is an intensely personal issue and should not be labeled as a right or wrong decision. In many cases, it’s the only realistic option. The rare exception is when the family has enough money to pay for skilled nursing care at home.
Misconception #4: Standard legal forms are all you need for a good estate plan. Not true. A competent estate plan begins with clearly defined goals, supported by well-drafted legal documents, and the repositioning of assets, as needed, to protect your estate from taxes, probate costs, and catastrophic nursing home costs. But you MUST PLAN EARLY.
Misconception #5: Your child will never move you into a nursing home. Wrong. Most children consider all options before moving a parent into a nursing home. But, sadly, children usually find they have no other alternative. As a result, parents who never expected to live in a nursing home soon discover that a nursing home is the only place with the staff and equipment to provide the care they need.
Misconception #6: As payment for nursing home care, the government will take your family home. Not true, if you plan ahead. Many people fear that the government will take their home in exchange for nursing home care, but you can avoid this with proper planning. You’ll be glad to know there are some ways you can protect your home so it won’t be taken.
Misconception #7: You will never end up in a nursing home. That’s hard to predict. Your odds are roughly 50/50. Of Americans reaching age 65 in any year, nearly half will spend some time in a nursing home. And a surprising number will require care for longer than one year. That means every year, tens of thousands of seniors will face costs of $48,000 or more ($60,000 in Minnesota), which does not include the cost of prescription drugs.
Misconception #8: If your spouse enters a nursing home, all of your joint savings will have to be spent on his or her care. No. With proper planning you can keep half of your combined “countable” assets up to approximately $103,000 (increasing each year). In some circumstances, you may be able to protect nearly all of your life savings. In fact, it is often possible to protect much more than the $103,000 maximum. “Countable” assets are those assets such as cash, checking accounts, savings, CDs, stocks, and bonds that the government considers available to be spent on the cost of nursing home care.
Misconception #9: Legally, you can give away only $14,000 to each of your children each year. Not true. You can give away any amount, but you have to report to the IRS gifts in excess of $14,000 per recipient per year ($28,000 if both husband and wife make a gift). However, there is no requirement that you pay any gift tax unless you have exhausted your lifetime exclusion amount, which is currently set at $2,000,000 for an individual. But, there is a "look back" period so you must work with a qualified attorney before gifting away any assets as you age.
Misconception #10: You can wait to do long-term planning until your spouse or you get sick. Yes, to some degree. However, you and your spouse will be much better off if you have taken important planning steps in advance, before a crisis occurs. What stops most people from being able to effectively plan when they are in the middle of a crisis is that the ill person is unable to make decisions and sign the necessary legal documents.
Misconception #11: All General Durable Powers of Attorney are created equal. Completely false! A General Durable Power of Attorney is a highly customized legal document -- and NOT a form! Most Durable Powers of Attorney don’t contain even the most basic gifting authority. Without a gifting power, your agent is usually limited to spending your money on your bills and selling your assets to generate cash to pay your bills. Some Durable Powers of Attorney contain a gifting provision, but the Minnesota Statutory Power of Attorney it is limited to $10,000 per year. This is particularly concerning for unmarried couples as the IRS considers ANY exchange of money/assets between them to be a gift. The annual limit of $10,000 is too small for effective asset protection planning, and relates to a completely different type of federal estate and gift tax issue. Unique Estate Law has created an enhanced power of attorney to get around that limit.
Misconception #12: Since you are married, your spouse will be able to manage your property and make financial decisions without a general durable power of attorney. Not true. If you become incapacitated and your spouse needs to sell or mortgage the family home -- or gain access to financial ac-counts that are in your name only -- your spouse will need a general durable power of attorney. Without one, your spouse will have to go to Court and get the judge’s permission to act on your behalf by way of a conservatorship proceeding.
Misconception #13: You can hide your assets while you become eligible for Medicaid (Known as Medical Assistance in Minnesota). False! Intentional misrepresentation in a Medicaid application is a crime and can be costly. The IRS shares any information concerning your income or assets with the local Medicaid eligibility office. You -- or who-ever applied for Medicaid -- may have to repay Medicaid to avoid prosecution.
Misconception #14: Medicaid rules that applied to your neighbor when he went into a nursing home will also apply to you. Maybe not. Medicaid rules change. Don’t assume the law that applied to your neighbor will also apply to you. In addition, there may have been facts about your neighbor’s situation that you just don’t know.
Monday, September 30, 2013
12 Problems That Could Cost Your Family a Fortune – and Their Solutions
Minnesota Estate Planning Attorney Discusses Frequent Issues/Concerns that Arise When Handling Someone's Estate
Problem #1: Probate. Probate is the Court-supervised process of passing title and ownership of a deceased person’s property to his or her heirs. The process consists of assembling assets, giving notice to creditors, paying bills and taxes, and passing title to property when the judge signs the order. Probate can cost your loved ones a sizeable portion of your estate. The biggest portion of the costs are the fees charged by attorneys and personal representatives for their services for the estate, in addition to filing fees, costs of publication, fees for copies of death certificates, filing and recording fees, bond premiums, appraisal and accounting fees, and so on. Often the fees of attorneys and personal representatives are based on a hourly rate, and while they can tell you what their hourly rate is, they cannot tell you the number of hours their services will take, so they cannot tell you what their total fees will be. Like surgery, probate can be simple and easy, but frequently probate can have very drastic and damaging results. Accordingly, like surgery, because of its uncertainty in terms of both the potential for problems and high costs and fees, probate is something best to prepare for if you can. You can avoid a substantially larger probate process by having an estate planning lawyer set up and fund a Revocable Living Trust. Since the Trust actually owns your assets, no significant probate of the estate will be required, saving your family many thousands of dollars.
Problem #2: Lawsuits and Creditors. Protect the property you leave to your partner/spouse and children from the claims of their creditors, ex-spouses, and the IRS. This can best be done with proper creditor protection provisions in a Revocable Living Trust.
Problem #3: Estate Taxes. For married couples, protect your assets from state and federal estate taxes by setting up and funding a tax-saving Credit Shelter Trust. Under current law, a Credit Shelter Trust will completely protect your assets from estate taxes for estates valued up to a certain amount will have to pay federal estate taxes. What is that amount? No one knows right now. The current exemption is $5,000,000 a person or $10,000,000 for a married couple.
Further, in Minnesota, the estate limit is $1,000,000 so your estate will pay taxes TO THE STATE for anything over $1,000,000. The tax rates generally comes out to 10% of the assets over that 1,000,000 mark.
Most couples don’t realize that the value of their estate for purposes of determining estate taxes includes their life insurance death benefit proceeds. Your estate includes EVERY asset you own at the time of death: real estate; cash, stocks, bonds, life insurance, retirement accounts, automobiles and personal property. It is not difficult to reach the $1,000,000 mark once all these assets are added up.
A well-designed estate plan costing between $3,000 and $6,000 will save a significant amount in federal estate taxes. Other ways you can avoid or reduce estate taxes include setting up (1) an Irrevocable Trust for your children, grandchildren or other heirs, (2) an Irrevocable Life Insurance Trust, (which detaches your life insurance benefits from your estate), (3) a Charitable Remainder Trust, and (4) Second-to-die Life Insurance so you can pay estate taxes for pennies on the dollar.
Problem #4: Income Taxes. A family can lower its overall income taxes by setting up a Family Limited Partnership to own income-producing property. A parent can do this by setting up a Family Limited Partnership and making gifts of limited partnership interests to the other limited partners, normally their children or grandchildren who pay income tax at lower tax rates. A Family Limited Partnership is an excellent tool to shift income to partners who pay taxes at lower rates. It is also an effective way to make gifts and still keep total control of the property owned by the partnership.
Problem #5: Lawsuits. Protect your assets from lawsuits by doing any or all of the following, as appropriate: (1) purchasing an umbrella liability insurance policy, (2) setting up a Family Limited Partnership, (3) setting up a program for lifetime gifting, (4) setting up a Limited Liability Company, and (5) incorporating. Further, you can protect your children from lawsuits by putting their inheritances into a Discretionary Trust. This is especially important if your children are likely to become professionals subject to potential malpractice actions or, on the other hand, are spendthrifts!
Problem #6: Inexperienced Beneficiaries. Protect your assets from being wasted by young or inexperienced family members. Most beneficiaries spend their entire inheritances in less than two years, regardless of the size of the estate or the heir’s socio-economic background. Your lawyer can set up your Family Trust with protective provisions that provide guidance and safeguard your life savings.
Problem #7: Guardianships. Protect your assets from the high costs of incapacity by (1) setting up a Living Trust so you avoid the need for a guardianship, (2) drawing up an Advance Healthcare Directive, and (3) drawing up a Health Care Power of Attorney.
Problem #8: Nursing Home Care. Protect joint assets from the high costs of nursing home care. Buy insurance that covers nursing home care and provides a death benefit that returns the money spent on nursing home care to your heirs.
Problem #9: Unwanted Medical Care. Protect your assets from unwanted and costly medical care by having an Advance Healthcare Directive and Health Care Powers of Attorney that spell out your instructions, including which medical care, treatment and procedures you want -- and which you don’t want.
Problem #10: Unwanted Emergency Care. Protect your assets from unwanted emergency care. If you have a terminal illness, you can draw up and sign a Pre-hospital Medical Directive that will tell emergency personnel not to resuscitate you in the event of a medical emergency. This directive is often referred to as a “Do Not Resuscitate Order”.
Problem #11: Ineffective Estate Plans. Protect your assets from an ineffective estate plan. Don’t depend on pre-printed “cookie cutter” form kits or document preparation services for your estate plan. Contrary to what you may have heard or read, one size does not fit all! You may think you have precisely what you need. But you will never know -- because your family members will have to clean up the mess. You see, after you die, your family members will try to use your documents to settle your estate. And if the documents weren’t drafted correctly, they will cause additional expense and long delays because a probate will have to be done to convey title to your assets.
Problem #12: Unqualified Lawyers. Many attorneys are getting into estate planning because it’s less stressful than other areas of law. Not surprisingly, most of these newcomers focus on the needs of senior citizens and almost never deal with issues affecting young families. If you have young children, make sure you choose an independent attorney who focuses their law practice on asset protection and estate planning for young families. This will help insure that the lawyer you choose has the knowledge, skill, experience and judgment necessary to fully protect your family and your assets, and to give you advice and counsel that is in your best interests.
Monday, November 26, 2012
The ‘Sandwich Generation’ – Taking Care of Your Kids While Taking Care of Your Parents
The ‘Sandwich Generation’ – Taking Care of Your Kids While Taking Care of Your Parents
“The sandwich generation” is the term given to adults who are raising children and simultaneously caring for elderly or infirm parents. Your children are one piece of “bread,” your parents are the other piece of “bread,” and you are “sandwiched” into the middle.
Caring for parents at the same time as you care for your children, your spouse and your job is exhausting and will stretch every resource you have. And what about caring for yourself? Not surprisingly, most sandwich generation caregivers let self-care fall to the bottom of the priorities list which may impair your ability to care for others.
Following are several tips for sandwich generation caregivers.
Hold an all-family meeting regarding your parents. Involve your parents, your parents’ siblings, and your own siblings in a detailed conversation about the present and future. If you can, make joint decisions about issues like who can physically care for your parents, who can contribute financially and how much, and who should have legal authority over your parents’ finances and health care decisions if they become unable to make decisions for themselves. Your parents need to share all their financial and health care information with you in order for the family to make informed decisions. Once you have that information, you can make a long-term financial plan.
Hold another all-family meeting with your children and your parents. If you are physically or financially taking care of your parents, talk about this honestly with your children. Involve your parents in the conversation as well. Talk – in an age-appropriate way – about the changes that your children will experience, both positive and challenging.
Prioritize privacy. With multiple family members living under one roof, privacy – for children, parents, and grandparents – is a must. If it is not be feasible for every family member to have his or her own room, then find other ways to give everyone some guaranteed privacy. “The living room is just for Grandma and Grandpa after dinner.” “Our teenage daughter gets the downstairs bathroom for as long as she needs in the mornings.”
Make family plans. There are joys associated with having three generations under one roof. Make the effort to get everyone together for outings and meals. Perhaps each generation can choose an outing once a month.
Make a financial plan, and don’t forget yourself. Are your children headed to college? Are you hoping to move your parents into an assisted living facility? How does your retirement fund look? If you are caring for your parents, your financial plan will almost certainly have to be revised. Don’t leave yourself and your spouse out of the equation. Make sure to set aside some funds for your own retirement while saving for college and elder health care.
Revise your estate plan documents as necessary. If you had named your parents guardians of your children in case of your death, you may need to find other guardians. You may need to set up trusts for your parents as well as for your children. If your parent was your power of attorney, you may have to designate a different person to act on your behalf.
Seek out and accept help. Help for the elderly is well organized in the United States. Here are a few governmental and nonprofit resources:
www.benefitscheckup.org – Hosted by the National Council on Aging, this website is a one-stop shop for determining which federal, state and local benefits your parents may qualify for
www.eldercare.gov – Sponsored by the U.S. Administration on Aging
www.caremanager.org -- National Association of Professional Geriatric Care Managers
www.nadsa.org – National Adult Day Services Association
Monday, September 17, 2012
Making your home senior-proof
A Minnesota Elder Law Attorney Discusses Ways to Make Your Home Safe When Caring for an Aging Parent
Let’s face it – it’s tough getting old. The aches, pains, and pills often associated with aging are things that many members of the baby-boomer generation know all too well by now. Though you might not be able to turn back time, you can help an aging loved one enjoy their golden years by giving them a safe, affordable place to call home. If an aging parent is moving in with you and your family, there are many quick fixes for the home that will create a safe environment for seniors.
Start by taking a good look at your floor plan. Are all the bedrooms upstairs? You may want to think about turning a living area on the main floor into a bedroom. Stairs grow difficult with age, especially for seniors with canes or walkers. Try to have everything they need accessible on one floor, including a bed, full bathroom, and kitchen. If the one-floor plan isn’t possible, make sure you have railings installed on both sides of staircases for support. A chair lift is another option for seniors who require walkers or wheelchairs.
Be sure to remove all hazards in hallways and on floors. Get rid of throw rugs – they can pose a serious tripping hazard. Make sure all child or pet toys are kept off the floor. Add nightlights to dark hallways for easy movement during the night when necessary. Also install handrails for support near doorframes and most importantly, in bathrooms.
Handlebars next to toilets and in showers are essential for senior safety. Use traction strips in the shower, which should also be equipped with a seat and removable showerhead. To avoid accidental scalding, set your hot water heater so that temperatures can’t reach boiling. You may also want to consider a raised seat with armrests to place over your toilet, to make sitting and standing easier.
This applies to all other chairs in the house as well. Big, puffy chairs and couches can make it very difficult for seniors to sit and stand. Have living and dining room chairs with stable armrests, and consider an electronic recliner for easy relaxation.
To keep everyone comfortable and help avoid accidents, store all frequently used items in easily accessible places. Keep heavy kitchen items between waist and chest height.
Even with appropriate precautions, not all accidents can be avoided. Purchasing a personal alarm system like Life Alert can be the most important preparation you make for a senior family member. If they are ever left alone, Life Alert provides instant medical attention with the push of a button that they wear at all times.
Amidst all the safety preparations, remember that it’s important to keep the brain healthy, too. Have puzzles, cards, large-print books and magazines, computer games, and simple exercises available to keep seniors of healthy body and mind.
These simple preparations can not only help extend the life of your loved one, but help to make sure their remaining years are happy and healthy.
Thursday, August 30, 2012
Minnesota Asks Federal Government for Medicaid Waiver in Attempt to Save Millions m
Gov. Mark Dayton is seeking a waiver from the Federal Government that will allow Minnesota to put into place its own bipartisan plan that should make it easier to connect people to services, steering them out of institutions and into home-based care. In seeking the wavier, the state asserts that instead of paying the astronomical cost of institutional care, the ability to go into a Medicaid recipient's home and install ramps, or bring in home-care workers who could allow the person to stay at home comfortably and will provide services at a more affordable price for the state. Rather than waiting until a worker loses a job because of a disability, the reforms would allow the state to reach out to employers and craft a plan to keep them working.
The Governor feels that this reform could save the state $151 million over the next five years. Minnesota estimates it could save another $9.2 million over the next five years by giving families more options for home-based care, and $15 million by expanding counseling and other support to people faced with a choice between expensive nursing home care and more affordable home care. At the center of the waiver request is the state's plan to offer incentives to health care providers that make preventive care available to Minnesotans on Medicaid.
The U.S. Department of Health and Human Services will respond to the state's proposal after a 30-day public comment period. If approved, the reforms would go into effect in 2014.
Monday, August 13, 2012
Estate Planning for Unmarried Couples
A Minneapolis Estate Planning Attorney Examines the Importance of Estate Planning for Unmarried Couples
Estate planning is important for everyone. We simply don’t know when something tragic could happen such as sudden death or an accident that could leave us incapacitated. With proper planning, families who are dealing with the unexpected experience fewer headaches and less expense associated with managing affairs after incapacity or administering an estate after death.
If a person fails to do any planning and becomes involved in a debilitating accident or passes away, each state has laws that govern who will inherit assets, become guardians of minor children, make medical decisions for an incapacitated person, dispose of a person’s remains, visit the person in the hospital, and more. In some states, the spouse and any children are given top priority for inheritance rights. In the case of incapacity, spouses are normally granted guardianship over incapacitated spouse, though this requires a lengthy and expensive guardianship proceeding.
In today’s world, increasing numbers of couples are choosing to spend their lives together but aren’t getting married, either because they aren’t allowed to under the laws of their state, such as in the case of gay and lesbian couples, or simply because they choose not to. However, most states don’t recognize unmarried partners as spouses. In order to be given legal rights that married couples receive automatically, unmarried couples need to do special planning in order to protect each other.
In general, unmarried individuals need three basic documents to ensure their rights are protected:
A Will – A will tells who should inherit your property when you pass away, who you want your executor to be, and who will become guardians of any minor children. These issues are all especially important for unmarried individuals. In most states, an unmarried partner does not have inheritance rights, so any property owned by his or her deceased partner would go to other family members. Also, in the case of many gay and lesbian couples, the living partner is not necessarily the biological or adoptive parent of any minor children, which could lead to custody disputes in an already very difficult time. Therefore, it’s critical to nominate guardians for minor children.
A power of attorney – A power of attorney (for financial matters) dictates who is authorized to manage your financial affairs in the event you become incapacitated. Otherwise, it can be very difficult or impossible for the non-disabled partner to manage the disabled partner’s affairs without going through a lengthy guardianship or conservatorship proceeding.
Advance healthcare directives – A power of attorney for healthcare, informs caregivers as to who is responsible for making healthcare decisions for someone in the event that a person cannot make them for himself, such as in the event of a serious accident or a condition like dementia. Another related document is a HIPAA waiver, which allows the persons named to discuss your care with a doctor BUT not to make decisions.
A fourth document to consider is the use of a revocable living trust. A trust document is nothing more than a set of instructions you leave to instruct your trustee on how, when and to whom to distribute your assets. There are numerous advantages to a trust that are especially appliable to unmarried couples:
It's private unlike a will at probate
You can determine where any remaining assets may go at your partner's death
Avoids court intervention if you're incapacitated
Beyond these documents, it is also critical that you check your beneficiary designations to ensure that the proceeds of your life insurance, retirement accounds, CDs, moneymarket or bank accounts go to your loved one. While your partner may still be able to inherit even without those designations, it will take time and effort to prove to a court that he/she is entitled to the benefits.
Estate planning is undoubtedly more important for unmarried couples than those who are married, since there aren’t built-in protections in the law to protect them and their loved ones. It’s imperative that unmarried couples establish proper planning to avoid undue hardship, expense and aggravation.
Thursday, June 28, 2012
Minnesota Sees Increase in Number of Those Needing Medicaid
An article in the Star Tribune reported today that the number of Minnesotans on Medicaid - called Medical Assistance in Minnesota - shot up at nearly twice the national rate over the past two years, while state costs increased by 40 percent. The total number of Minnesotans enrolled in the state-federal health insurance program increased by 125,000 in the last to years to reach a total of about 733,000.
The National Governors Association and the National Association of State Budget Officers issued a report this week stating that the growing Medicaid budget - approximately $450 billion this year - will place a large burden on sates trying to climb out of the most recent recession.
A large part of the rise in Minnesota's portion of the cost -- from $2.9 billion in 2011 to an estimated $4.05 billion this year -- is due to two things: 1) enrollees who transferred into Medicaid and out of programs that were funded solely by the state; and 2) the end of the federal government's economic stimulus package, which for a time raised the federal Medicaid match from about 50 percent to 60 percent.
Medicaid was set up by Congress in 1965 to provide health care to low-income adults and children, including some people with disabilities; it also covers about two-thirds of people in nursing homes who have outlived their savings. While low-income families represent the majority of people on Medicaid, most of its outlays go to long-term care for the elderly and disabled.
Minnesota's program is expected to add another 60,000 people by the end of 2014 with further expansion of the federal Affordable Care Act, if the law's expansion of Medicaid rolls survives the recent Supreme Court challenge.
In 2014, Minnesota's Medicaid costs are expected to rise by about 10 percent, surpassing $4.4 billion, while the federal share is forecast to soar 23 percent to $5.1 billion with the program's expansion.
In many states, Medicaid is the largest single portion of state spending, at nearly a quarter of state budgets, and some states are struggling to control costs by cutting provider payments, drug costs and other benefits, the report said,
With all this uncertainty, people should think about the possible long-term care needs not just for themselves but for parents or even grandparents. We can't rely on government programs to be there 2, 5 or 10 years from now. I meet people weekly who are having to make decisions on what to do for Dad or Mom - in some cases a spouse - when they can no longer care for themselves and neither can the family. Please plan now.
Tuesday, May 15, 2012
What is a Conservatorship?
The Basics of Conservatorships
Sometimes, bad things happen to good people. A tragic accident. A sudden, devastating illness. Have you ever wondered what would happen if a loved one became incapacitated and unable to take care of himself? While many associate incapacity with a comatose state, an individual, while technically functioning, may be considered incapacitated if he cannot communicate through speech or gestures and is unable sign a document, even with a mark. In some cases, an individual may have no trouble communicating, but may not be able to fully appreciate the consequences of their decisions and hence may be deemed to lack capacity. With proper incapacity planning which includes important legal documents such as a durable power of attorney, healthcare proxy and living will, the individuals named in such documents are empowered to make necessary financial and medial decisions on behalf of the incapacitated person without obtaining additional legal authorization. Without proper incapacity planning documents, even a spouse or adult child cannot make financial and healthcare decisions on behalf of an incapacitated individual. In such cases, a conservatorship (or guardianship) proceeding is necessary so that loved ones are able to provide for their financial and medical healthcare needs.
A conservatorship is a court proceeding where a judge appoints a responsible individual to take care of the adult in question and manage his or her finances and make medical decisions. The court appointed conservator will take over the care of the conservatee (disabled adult). When appropriate, the court may designate an individual “conservator of the estate” to handle the disabled person’s financial needs and another person “conservator of the person” to manage his healthcare needs. One person can also serve as both. If you are planning to serve as someone’s financial conservator, be prepared to possibly post a bond that serves as a safeguard for the conservatee’s estate. Individual states have their own guidelines for conservators, so check your local rules for more information.
To minimize the incidence of mismanagement or fraud, the court holds the conservator legally responsible for providing it with regular reports, called an accounting. Additionally, the conservator may not be able to make any major life or medical decisions without the court’s approval and consent. For example, if you have been named the conservator for a relative, you may not be able to sell his or her house without the approval of the court.
The best safeguard to avoid going through court to get a conservatorship, however, would be to establish a durable financial power of attorney, a power of attorney for healthcare, each authorizing a family member or trusted individual to act on your behalf in case of incapacity. While your agents have a legal obligation to act in your best interest they won’t have to post an expensive bond either. Make sure the power of attorney clearly states that it will be effective even if the principal becomes incapacitated.
Wednesday, April 04, 2012
Guardianships & Conservatorships and How to Avoid Them
Guardianships & Conservatorships and How to Avoid Them
If a person becomes mentally or physically handicapped to a point where they can no longer make rational decisions about their person or their finances, their loved ones may consider a guardianship or a conservatorship whereby a guardian would make decisions concerning the physical person of the disabled individual, and conservators make decisions about the finances.
Typically, a loved one who is seeking a guardianship or a conservatorship will petition the appropriate court to be appointed guardian and/or conservator. The court will most likely require a medical doctor to make an examination of the disabled individual, also referred to as the ward, and appoint an attorney to represent the ward’s interests. The court will then typically hold a hearing to determine whether a guardianship and/or conservatorship should be established. If so, the ward would no longer have the ability to make his or her own medical or financial decisions. The guardian and/or conservator usually must file annual reports on the status of the ward and his finances.
Guardianships and conservatorships can be an expensive legal process, and in many cases they are not necessary or could be avoided with a little advance planning. One way is with a financial power of attorney, and advance directives for healthcare such as living wills and durable powers of attorney for healthcare. With those documents, a mentally competent adult can appoint one or more individuals to handle his or her finances and healthcare decisions in the event that he or she can no longer take care of those things. A living trust is also a good way to allow someone to handle your financial affairs – you can create the trust while you are alive, and if you become incompetent someone else can manage your property on your behalf.
In addition to establishing durable powers of attorney and advanced healthcare directives, it is often beneficial to apply for representative payee status for government benefits. If a person gets VA benefits, Social Security or Supplemental Security Income, the Social Security Administration or the Veterans’ Administration can appoint a representative payee for the benefits without requiring a conservatorship. This can be especially helpful in situations in which the ward owns no assets and the only income is from Social Security or the VA.
When a loved one becomes mentally or physically handicapped to the point of no longer being able to take care of his or her own affairs, it can be tough for loved ones to know what to do. Fortunately, the law provides many options for people in this situation.
Tuesday, January 03, 2012
Joint Bank Accounts and Medicaid Eligibility
Joint Bank Accounts and Medicaid Eligibility
Like most governmental benefit programs, there are many myths surrounding Medicaid (called Medical Assistance in Minnesota) and eligibility for benefits. One of the most common myths is the belief that only 50% of the funds in a jointly-owned bank account will be considered an asset for the purposes of calculating Medicaid eligibility.
Medicaid is a needs-based program that is administered by the state. Therefore, many of its eligibility requirements and procedures vary across state lines. Generally, when an applicant is an owner of a joint bank account the full amount in the account is presumed to belong to the applicant. Regardless of how many other names are listed on the account, 100% of the account balance is typically included when calculating the applicant’s eligibility for Medicaid benefits.
Why would the state do this? Often, these jointly held bank accounts consist solely of funds contributed by the Medicaid applicant, with the second person added to the account for administrative or convenience purposes, such as writing checks or discussing matters with bank representatives. If a joint owner can document that both parties have contributed funds and the account is truly a “joint” account, the state may value the account differently. Absent clear and convincing evidence, however, the full balance of the joint bank account will be deemed to belong to the applicant.
Friday, November 04, 2011
Minnesota Seeks Federal Approval of Medicaid Changes
I have recently been approached by several people seeking assistance on an increasingly common situation: what to do with a parent who suddenly needs living assistance. One thing to note for these clients is that they are not alone. According to the statistics related by the department of human services, 557,000 Minnesota residents received Medical Assistance (Minnesota’s Medicaid program).
In the past Medicaid assistance has meant receving money to put a loved one into institutionalized care. Originally, Medicare would not pay to keep someone out of instituionalized care. But that is changing as people seek to care for loved ones in a more familiar environment. Recognizing this trend, Minnesota’s Human Services Commissioner, Lucinda Jesson, is set to requestapproval from the federal government for large scale changes - a so called "global waiver" - that would allow the state to have increased flexibility in how it can spend federal human-services funds.
In a recent interview, Ms. Jesson stated that the waiver would allow Minnesota to use Medicaid funds to pay for home and community-based services first. She believes that people would rather stay in their homes and communities than go to a facility. While there is currently a system of exceptions that allow members of certain populations to remain in their homes or communities, it is very difficult to determine which programs cover what population. Ms. Jesson feels that, if given the chance, Minnesota could design a better system.
The hope is that under a new program, the Minnesota Medical Assistance program would have the ability to serve people at their level of need by offering more services overall. For instance, offering Meals on Wheels or personal care attendants to seniors instead of requiring that the person needing such services be institutionalized. Ms. Jesson predicts that these changes would, ultimately, save Minnesota money as it costs 3 times more to have someone in a nursing home than to care for that person in his or her home.
The DHS plans to have its proposal ready to submit to the federal government in early 2012. If this is of interest to you, please note that there will be a public comment period later this fall.
From within Hennepin County Unique Estate Law represents estate planning and elder law clients throughout Minnesota, including Minneapolis, Edina, Bloomington, St. Louis Park, Minnetonka, Plymouth, Wayzata, Maple Grove, St. Paul, and Brooklyn Park. The Minnesota law firm of Unique Estate Law focuses on all aspects of estate planning, including specialized wills, trusts, powers of attorney and medical directives for married couples, young families, blended families, single parents, gay families and those going through a divorce. Unique Estate Law also handles probate administration, asset protection, Medical Assistance planning, elder law, business succession planning, adoptions and cabin planning.