Estate & Medicaid Planning for Individuals with Alzheimer's Disease

transcript

HEFFNER & ASSOCIATES ELDER LAW

Mark B. Heffner, Esq. , CELAHeffner & Associates

615 Jefferson BoulevardWarwick, Rhode Island

401-737-1600mheffner@hefflaw.com

www.hefflaw.com

Estate & Medicaid Planning for Individuals with Alzheimer’s

Disease

Disclaimer

•Materials are for general education and should not be substituted for consultation with a competent estate planning attorney in your state

•Materials presented from the perspective of Rhode Island

•Rules and practice vary significantly from state to state and are subject to change

Lifetime Planning: Health Care Decisionmaking

Advance Directive

Durable Power of Attorney for Health Care

Living Will

Selection of Agent

Selection of Successor Agent

Lifetime Planning: Financial Decisionmaking

Joint accounts: Be careful!

Durable Power of Attorney for finances

Determination of Powers to provide

Again, selection successor Agent

Selection of Agent (aka, “Attorney in fact”)

Ex: Gifting and Estate planning?

Lifetime Planning: Financial Decisionmaking

Revocable Trust, aka, “Living Trust”

Avoids/Reduces “Push-Back” of Institutions with use of Durable Power of Attorney

Selection of Trustee & successor Trustee critical

Provide no protection for assets for nursing home cost

Instead, would need Irrevocable Trust

Planning for post-death

Will—requires probate

Selection of Executor—same person generally as agent under financial DPOA

Revocable Trust—if “funded” will avoid probate for those assets

Note: Need to check beneficiary designations (IRAs, life insurance, annuities), joint titling, as general “trump” Will or Trust

provisions

What happens if long-term care needed?

Medicare--limited long term care (LTC) coverage 20 days full payment, up to 80 additional days with co-pay ($157/day)

Medicare LTC coverage initially applicable if individual has a three day prior hospital

admission & continues to require skilled care

After that….

Private Pay costs for nursing home care

What is the average monthly cost of a nursing home in Rhode Island (according to the Rhode Island Department of Human Services)?

$9,113/month (approx $290/day)

Actual costs range from approximately $7,500/month ($240/day) — $10,800/month ($360/day)

Public benefits available for long-term care

Medicare: (limited) skilled nursing home & (potentially unlimited) home care

Medicaid: pays for skilled nursing home and (limited) home & community-based services

Veterans benefits: (limited) nursing home and Aid and Attendance benefits

What is Medicaid?•It is not Medicare!

•Medicaid: in addition to general criteria (age, blind, disabled) & needing a level of care, must also fall within financial criteria (assets, income, transfer restrictions)

•Medicare: insurance model; no asset or income qualification requirements

•Substantial state to state variations

Resources

Excluded (Single Person)•Home (equity value limit: $552K) if “intent to return”

•Household goods & personal effects( no value limit, unless exceptional)

•Vehicle (limit: $4500, unless used for transportation to medical appts)

•Life Insurance ($4000 face limit)

•Irrevocable Burial Contract, or funds set aside for burial ($1500)

•Funds otherwise available (limit: $4000)

Available

EVERYTHING ELSE

Resources

Excluded (Married Couple)

•Home: no equity limitation if residence of “Community Spouse” (CS)

•Vehicle: if used by CS, no limitation on value

•CS retains “Community Spouse Resource Allowance” (CSRA)

Transfers of Assets

Any transfer occurring on or after February 8, 2006 is subject to five year lookback period

Q: What types of transfers fall within lookback period?

A: Uncompensated (UV) transfers--i.e., those for which fair market value (FMV) not received by applicant or the applicant’s spouse Parent gives adult children each $10,000

Uncompensated transfer: $30,000

Medicaid Planning Techniques

Highly individualized—one size definitely does not fit all!

• Spenddowns—debts, taxes, burial contracts.

• Specialized annuities—married couples only

“Crisis planning” techniques include:

• “Reverse half a loaf” planning

• Many more opportunities exist for married couples; however still “never too late” for single individuals

Medicaid Planning Techniques

Non-crisis, or “pre-crisis” planning techniques include:

• Make transfers, incur five year lookback period

• Transfers—must be mindful of tax implications, creditors—grantor Irrevocable Trusts useful device.

• Durable Powers of Attorney with estate and Medicaid planning authority provided to agent

• Again, highly individualized as to what techniques to use & timing of use of techniques

How to get started

Arrange for consultation with competent elder attorney

Preparation: provide elder law attorney with individual family, financial and health information

Initial meeting should be at least an hour

Expect fee for initial consultation

National Elder Law Foundationwww.nelf.org

Locating competent elder law attorney

Certified Elder Law Attorney

Provides interactive state map of Certified Elder Law Attorneys (CELA) in each state

Mark B. Heffner, Esq. , CELAHeffner & Associates

615 Jefferson BoulevardWarwick, Rhode Island

401-737-1600mheffner@hefflaw.com

www.hefflaw.com