PRESENTED BY

Legal and Financial Issues for Caregivers

PLANNING DYNAMICS FOR AGING

Aging may bring chronic health problems Need help with tasks, self-care

May be too proud, embarrassed to get help May resist loss of independence in making decisions Caregivers may push to take over decisions

Confused or unable to make financial or health decisions May let difficulty prevent good decision-making May rely too much on others to make decisions

THREE THINGS TO AVOID

Change

Conflict

Loss of Control

CONCERNS AS WE AGE

Control over their own decisions about Living arrangements Finances Health-care

Financial security and asset protection “Saving my assets from the nursing home”

Disposition of assets to family Probate avoidance Family Dynamics (disputes; dysfunctional

children; disparate needs)

DECISION-MAKING - HEALTHCARE

Older Types - Voluntary

“Living Will” – limited purpose (no life support if terminal illness); repealed in 1998, but still valid for limited purpose

Durable Power of Attorney for Healthcare – repealed in 1998, but still valid if valid when done

DECISION-MAKING – HEALTHCARE

Newer Types - Voluntary

Advance Healthcare Directive (AHCD) – Four sections Section 1: Names agents; immediate or “springing” Section 2: End-of-life, other directions Section 3: Doctor contact info (optional) Section 4: Organ donation (research or transplant)

Download at www.ElderLawMS.com Forms page

DECISION-MAKING – HEALTHCARE

Newer Types - Voluntary

HIPAA Authorization (April 2005) Privacy Rule (45 CFR §164.502(a)) requires “covered

entity” to disclose Personal Health Information (PHI) to individual on request

§164.502(g) requires covered entity to treat “personal representative” same as individual if designated by “written authorization”

§164.508(c) states requirements for written authorization Should be drafted by knowledgeable attorney

Separate document for access by another to medical information; include in AHCD

DECISION-MAKING – HEALTHCARE

Healthcare Surrogate – if NO written authorization, another can make medical decisions if (in priority): Spouse, if not legally separated Adult child (or majority of children) Parent Sibling A person who shows care and concern and is willing to

make decisions based on values of incapacitated person

Provider can require written evidence of authority We have “Declaration of Healthcare Surrogate” No liability for refusal to honor decision

DECISION-MAKING – HEALTHCARE

Family Communication is essential Healthcare document alone not enough Terry Schiavo – no conversations

We have tools to help clients select best agent communicate personal values help agent make decisions

DECISION-MAKING – FINANCIAL MATTERS

Durable General Power of Attorney – Voluntary

Control even after incapacity (“second set of keys”) Select decision-maker(s) Checks/balances and Rules for Agent

Prior consent of others to gifting, sale of property Prohibit loans, gifts Right of third party to receive/review accounts,

statements Name your own conservator (if one required later)

Should be personalized, not “cookie cutter” forms Institutions likely to refuse unless POA contains express

authority Must name non-spouse agent for homestead transactions

DECISION-MAKING – INVOLUNTARY

Conservatorship – Involuntary

Test is “inability to manage” personal or financial affairs

Petition filed, 5 days notice to incapacitated person, notice to another family member, hearing in court (“rush to court”)

Insurance bond for conservator OR prior court approval of disbursements, moving ward

Must file inventory of ward’s assets, annual accountings Conservator has priority over POA agent, can revoke POA

May be used to transfer joint assets of incapacitated person to spouse for asset preservation

Spouse does estate planning for both

DISPOSITION OF ASSETS

Gifting Pros:

Asset to intended recipient Asset removed from giver’s estate for tax purposes

Cons: Giver loses control of asset Assets subject to debts, liabilities of recipient Gifts cause Medicaid ineligibility if file w/in 5 years Recipient gets giver’s tax basis (capital gain on sale)

Outright Gift vs. Irrevocable Trust

DISPOSITION OF ASSETS

Joint Ownership Pros:

Asset passes automatically to surviving owner Avoids probate Joint owner can control if elder becomes incapacitated Survivor gets “stepped-up” tax basis (less capital gain when

sell)

Cons: Any joint owner may be able to withdraw asset Subject to debts, liabilities of each joint owner Asset passes to survivor with no requirement to share All owners must sign to sell or mortgage (problem if one

incapacitated) Medicaid still counts FULL value of asset for either owner

DISPOSITION OF ASSETS

Last Will and Testament - Voluntary Written instructions about what happens with

your stuff when you die Must have “testamentary capacity” to execute Can designate persons to receive assets at death Can leave assets in Trust for minor, spendthrift or

incapacitated beneficiaries Create “special needs trust” for incapacitated

spouse that will not disqualify for nursing home Medicaid

Requires probate to pass clear title to assets Authorized signer + Probate may solve joint

ownership with one child

DISPOSITION OF ASSETS

Revocable Living Trust A “Will substitute” that holds assets while

Grantor living, states how they will pass at death Must re-title assets into Trust name as owner No probate for assets in trust Useful if own land in different states (avoid

probate in each state) All trust assets are countable for Medicaid

purposes (including residence) Can name successor Trustee to take over if

Grantor becomes incapacitated

DISPOSITION OF ASSETS

Irrevocable Trust Trust owns assets while Grantor living, provides

for family or others at death No probate for assets in trust Removes assets from Grantor’s estate for estate

tax, VA benefits, Medicaid recovery purposes Funding of trust is transfer for VA, Medicaid

purposes Should name independent trustee Can pay income to Grantor (“income-only”

trust)

DISPOSITION OF ASSETS

Special Needs Trust (SNT)

Holds assets for benefit of disabled spouse, child or grandchild

Trust not countable by SSI or Medicaid if properly drafted Spouse or child can get Medicaid benefits and SNT

pays other needs SNT can avoid conservatorship for incapacitated spouse No Medicaid recovery claim against SNT funded by

parent, spouse, third party But, Medicaid recovery claim against SNT funded by

beneficiary’s own assets (inheritance, lawsuit settlement, guardianship assets)

MEDICAID HCBS WAIVER GROUPS

Elderly and Disabled (respite, adult day care, meals, homemaker)

Independent Living (personal care attendant) Intellectually Disabled/Developmental

Disability (respite, attendant care, day-habilitation, speech/PT/OT)

Assisted Living (homemaker, attendant care, Rx supervision, transportation)

TBI/SCI (attendant care, nursing care, respite) Same financial eligibility as LTC group

LONG-TERM CARE MEDICAID

Single Person eligible if: Countable income < $2,130 (but more if use

income trust) Countable resources < $4,000

Married Person eligible if: Applicant spouse eligible as single person Community spouse countable resources <

$115,920 CS keeps IS income to reach $2,898 income

MEDICAID TRANSFER PENALTY

Deficit Reduction Act of 2005 changed the rules

Now 5 year “look-back” period from date of application

Transfer penalty = total amount of gifts during look-back period ÷ $5,700 monthly divisor ($4,600 pre-2011) $46,000 gift 8/1/10 – apply for M/C 8/1/2014 =

10 months not eligible for M/C payment to NH

No Transfer Penalty for Disabled Child at Home, Poverty-level programs, DHS programs

MEDICAID TRANSFER EXCEPTIONS

No Penalty for transfer of residence to: Spouse; child under 21; blind or disabled child

of any age; sibling with equity interest who lived there 1 year prior to NH entry; child who lived there and provided care at least 2 years prior to NH entry

No Penalty for transfer of other assets to: Spouse; child under 21; blind or disabled child;

third party for sole benefit of spouse or self; trust for sole benefit of a minor, blind or disabled child; trust for benefit of a disabled person under 65; “payback” trusts established per 42 USC § 1396p(d)(4)

SCENARIO – DISABLED SPOUSE

Harry Smith and Martha SmithMartha has progressive dementia Harry not sure he can care for Martha at home Harry worried about having enough money to pay her nursing home costs, his living expenses, and pass some inheritance to his childrenThey own their home and 150 acre farm as joint tenants with rights of survivorship

Planning: Put all assets in Harry’s name and get Martha on MedicaidWhat about the house?

SCENARIO – OPTIONS

Option 1: Leave the home in joint ownership. If Harry dies first: Pros: Home not countable for Martha’ s Medicaid

Cons: Medicaid’s claim at her death could cause the sale of the residence Conservatorship required to sell home after Harry’s death (if Martha has no DPOA)

Option 2: Harry’s Will leaves everything to Martha at his death Pros: Financial assets can be sold to pay for Martha’s care

Cons: Financial assets left to Martha disqualify her for Medicaid Court-supervised conservatorship may be required to manage assets

SCENARIO – SOLUTION

Option 3: Get home in Harry’s name only Harry does new will with Special Needs Trust

for Martha Pros: Home is not countable for Martha’ s Medicaid, can be sold or mortgaged by Harry if he needs to move or get money. Pros: Harry can name trustee in his Will to manage assets after his death for Martha’s needs, avoiding conservator for her. Pros: The testamentary special needs trust will not be countable Medicaid asset for Martha, so she can get nursing home benefits paid.

Pros: The trust will not be Martha’s asset at her death - Medicaid will not have any repayment claim against the trust assets at her death The trust remainder can be distributed to the kids or remainder beneficiaries

RETROACTIVE BENEFITS

Medicaid benefits will be paid for up to 3 months prior to month of application if the applicant was eligible in those monthsIn a nursing home or disabled at homeIncome within limitCountable resources within limits

Medicaid will allow up to 90 days to re-allocate resources between spouses

MEDICAID ESTATE RECOVERY

Per MCA § 43-13-317 Medicaid must seek recovery from “estate” of deceased recipient of LTC or HCBS services after age 55

“Estate” = probate estate (non-probate assets not subject to claim)

Medicaid must be noticed as creditor of estate Claim waived if surviving spouse, minor, blind or

disabled child MS Medicaid waives if caregiver family member

lived in home 1 year, or family income source Possibly no claim against homestead valued <$75k

(Darby case)

THANK YOU

4400 Old Canton Road ▪ Suite 220 ▪ Jackson, MS 39211Tel: 601-987-3000 ▪ Fax-601-987-3001

www.ElderLawMS.com