A simple way to avoid probate is to give away property during your lifetime.  But there can be consequences because you lose control and cannot recover the item, cash or property just by asking.  The new owner has to agree to return something to you or even use funds for your benefit.  You should only give away what you can spare. Gifting over $15,000 per person in a year requires you to file a gift tax return with the IRS.

A second thing you can do is to make an asset payable on death.  An example is life insurance, an IRA, a 401k, or an annuity.  As long as you don’t name your estate or fail to name any beneficiary the property will pass outside of probate to the person you designate.  You should name a contingent beneficiary in case the first person you select predeceases you.

Likewise you can use payable-on-death (POD) accounts.  These are also sometimes called multiparty accounts.  POD accounts do not provide the beneficiary with immediate access to your financial accounts, such as checking and savings accounts.  The funds are given to the named beneficiary after you die.  With a multiparty account the other person on the account can have immediate access while you are alive and after you die it belongs to the other person and does not pass thru probate.  This can be a useful way for loved ones to have quick access to funds to pay for funeral expenses, last bills, and even support themselves.

Similar tools are called transfer on death (TOD) accounts used for stocks, bonds and other securities.  Some states do not allow this form of designation, but South Carolina does.

Joint ownership with right of survivorship or a life estate are often used with real property, vehicles, and mobile homes to avoid probate.  These types of ownership create various rights and limitations such as needing the other owner’s permission to mortgage the property or sell it.   You need to understand the drawbacks before creating any changes to your real property.  This change in title is a gift and subject to the five-year-look-back-period for Medicaid eligibility.

Living trusts have grown in popularity because they avoid probate and let you retain control as long as you are competent.  These kinds of trusts can hold your real property in multiple states, including time shares.  Said trusts can also hold household goods, vehicles, cash, accounts, etc.  They can work in conjunction with some of ideas above.

Do not act on any of these ideas if you feel pressured by someone or are confused.  You should consult with an elder law attorney well versed in Medicaid law before gifting away property and assets, changing your beneficiaries, or even creating a living trust.

Disclaimer:  Information contained in this column is meant to be of general information on frequently asked questions concerning disability, elder law, estate planning and probate law, and does not contain specific legal advice to a client.  No attorney-client relationship is created by reading this column.

WRITTEN BY LINDA KNAPP

You may reprint this article with my permission by showing the Firm’s name and attaching my contact information. If you wish to cite the article you must give full credit to the author, Attorney Linda Farron Knapp. Nothing in this article creates an attorney-client relationship. When the article was written it was good law, that may not be situation at the time of reprint. We advise you seek competent legal advise based on your own factual situation before relying or acting on any legal material you read online.

Not necessarily. Medicare due to its privacy notice has its own form they want completed. A competent person can complete the form called 1-800-MEDICARE AUTHORIZATION to Disclose Personal Health Information. This allows the named agent to talk with Medicare, research, choose coverage, handle claims and file an appeal. Its best not to limit the information your agent might need, but you can. You can also state whether the authority is indefinite or for a specific period of time. There is NO FAX OR EMAIL SUBMISSION. You must mail the form so keep a second original at home. The individual has the right to revoke at any time in writing.
These forms are necessary even for spouses.
If the person is no longer able to give consent, then the attorney-in-fact can sign AND should attach a copy of the health care power of attorney (HCPOA). Note some HCPOAs require a doctor or two doctors’ statements to activate. Some durable powers of attorney for finance contain authority in these situations. A guardian should submit his or her certificate of authority when executing on behalf of the ward.
Once you put the initial form in place you can change, update and add Medicare representatives online through your account.
You still may not be done because each Medicare Advantage, Part D Plan for prescription drugs or supplement coverage seems to have its own form. It may be called authorization to release personal information. To complete this form check with the Plan’s member information or call a customer service representative.
Disclaimer: Information contained in this column is meant to be of general information on frequently asked questions concerning disability, elder law, estate planning and probate law, and does not contain specific legal advice to a client. No attorney-client relationship is created by reading this column.

WRITTEN BY LINDA KNAPP

You may reprint this article with my permission by showing the Firm’s name and attaching my contact information. If you wish to cite the article you must give full credit to the author, Attorney Linda Farron Knapp. Nothing in this article creates an attorney-client relationship. When the article was written it was good law, that may not be situation at the time of reprint. We advise you seek competent legal advise based on your own factual situation before relying or acting on any legal material you read online.

Q. My Mother just inherited $60,000. She owns her own home and has a modest income. She has few other assets. She had a stroke and now requires help to oversee her medicine, prepare meals and she no longer drives. Will she qualify for Medicaid?

A. Medicaid is a federal program with some state variables. It has medical, income and asset qualifications. Likely your Mother will qualify with some careful planning, but not at present. It’s not even clear if she meets the level of care requirements. Facts and figures drive all Medicaid application situations. I can’t give you specific advice even in my office without knowing the details and your Mother’s goals and preferences.
The attorney will both know the law, options available and focus on your mother’s best interests. Professional long-term care planning tools include: personal dependency, medical deductions, home transfers after accounting for basis and capital gain issues, annuities, converting interest income, domestic help, sale of property, sale of the home, owner financing, purchasing a new home or condo, commercial and family held reverse mortgages, owner occupancy rules and using a Medicaid waiver on the back side, partial sales, gift tax rules, life estates, private pay using long-term care insurance and other options, Medicare, Veterans Benefits, Medicaid, dozens of spend-down strategies, promissory notes, life insurance loans and cash ins, legal separations and divorce, QDROs, bankruptcy, income trusts, special needs trusts, housekeeping and caregiving contracts, and various asset transfer options including special consideration for IRAs, 401K, deferred pension plans and other retirement plans. One plan does not fit all situations.
I can tell you, do not listen to the common knowledge on the street from friends and family or even nursing home staff, if you are looking at placement. Get competent legal advice from someone that focuses on Medicaid, Veterans Affairs benefits and long-term care planning. This is money well spent as just one month of private pay nursing home care in South Carolina averages $6,500. The national average is $8,000 plus.
Consider just these five common myths.
1. There is a five-year look-back period. If you have given away anything in the five years preceding an application for nursing home Medicaid you will be denied. Yes, there is a five-year look-back period but it is not the same as a penalty period. A person could be disqualified for 60 months or one month. Don’t you want to know if it’s one month or sixty?
2. One has to get rid of all assets to qualify to receive Medicaid. No. A single person can have $2,000 in countable assets, but every asset is not counted toward eligibility. There are different rules for married couples, who are able to protect more assets. Provide the details and ask an expert.
3. If I qualify everything I own is safe from a Medicaid lien when I die. No, there is another set of rules when the receptant dies. You need to know present and future consequences of any financial actions you opt to take.
4. Planning isn’t possible once the crisis hits and someone is already in a nursing home. Not true. Options might be limited, but we frequently can save a family money even after admission.
5. I am over the income limit so I will never qualify. Not true. Income over the limit can be allocated into an irrevocable Medicaid Income Trust. Any monies remaining after the person dies become the property of the State. Typically these accounts are set up with just a few hundred dollars with pension, RMDs and possibly Social Security being directly deposited each month.

These strategies are legal.

Not all attorneys that advertise elder law offer Medicaid asset preservation or applicant processing services. Some firms focus more on nursing home abuse litigation and traditional estate planning.

Disclaimer: Information contained in this column is meant to be of general information on frequently asked questions concerning disability, elder law, estate planning and probate law, and does not contain specific legal advice to a client. No attorney-client relationship is created by reading this column. 1/2021

WRITTEN BY LINDA KNAPP

You may reprint this article with my permission by showing the Firm’s name and attaching my contact information. If you wish to cite the article you must give full credit to the author, Attorney Linda Farron Knapp. Nothing in this article creates an attorney-client relationship. When the article was written it was good law, that may not be situation at the time of reprint. We advise you seek competent legal advise based on your own factual situation before relying or acting on any legal material you read online.

Q. My elderly father is often confused and agitated. I am concerned because he has loaded guns in the house. What can I do?

A. Short of bringing a protective or guardianship action, I suggest you consider addressing the matter with your father’s doctor. Possibly you have a health care power of attorney for your Dad that would allow you to speak with the doctor directly, but if not write the doctor a letter about your concerns. HIPPA laws may prevent the doctor and his or her staff from talking with you, but he/she is not restricted in receiving information on his/her client from an outside source.

A Kaiser Foundation Health News investigation done with PBS News Hour published a report in 2017 that covered over 100 cases in the US since 2012 in which people with dementia used guns to kill themselves or others. Shooters often acted during bouts of confusion, paranoia, delusion or aggression – common symptoms of dementia. Children, spouses and caregivers were killed in addition to unintentional self-harm and a large number of suicides.

This is a highly political issue and some people feel they have a right to live life on their own terms or opt to die rather than suffer mental regression or acute, chronic pain. While there may be no reason for a doctor to address gun ownership, loaded guns matter with someone fully competent, if a diagnosis of dementia or poorly controlled mental illness is suspected, just some minor questions investigating simple safety issues might provide enough red flags to justify a written diagnosis and further action as part of a probate court or DSS protective action.

People with dementia typically lack insight into their problems. It’s not just lack of memory, but also sound decision-making. Cognitive problems are not an inherent part of aging. Adult children are often uncomfortable with role reversal and are reluctant to take the initiative in dealing with a parent by taking away the car keys, removing ammo from loaded guns, locking guns in a gun safe with a combination, and addressing a parent’s depression. If confronted your Father may state, “I have never misused my firearms … It’s not a problem.” But he is remembering his past history, he can’t predict the future and does not recognize his current unstable behavior. Sometimes it is helpful to talk to the parent about “retiring or gifting” their guns, as opposed to taking them away. You may be acting against the parent’s will, but it has to be done for the parent’s safety, the safety of others and everyone’s peace of mind. The web has story after story of a husband or father holding himself up in a locked room with a loaded gun not recognizing the other people in the house as family, actually shooting spouses and other family members.

It is not always just a matter of gifting a gun to another family member. Some states have very strict laws on gun conveyance. And of course felons and those on probation cannot possess guns

If a person in South Carolina has been adjudicated as in need on a guardian or conservatorship or a mental defective or committed to a mental institution, then it is unlawful for that person to ship, transport, possess or receive a fire arm or ammunition. A petitioning family member will be provided with a written copy of this law at the hearing when he or she is appointed as guardian or conservator. Part of your responsibility and obligation to protect your love one requires you to remove the ammo and guns from the ward’s access. In addition to being found guilty of a felony, there is a mandatory fine and possible jail time. If necessary said fire arms and ammunition can be confiscated and delivered to the chief of police or local sheriff’s department.

The Alzheimer’s Association recommends removing the guns from the home, not just locking up the ammo separate from the guns. It’s no different than taking away the car keys when a parent is no longer safe to drive. The NRA Institute for Legislative Action has information on each state’s law.

Disclaimer: Information contained in this column is meant to be of general information on frequently asked questions concerning disability, elder law, estate planning and probate law, and does not contain specific legal advice to a client. No attorney-client relationship is created by reading this column. 1/2019

WRITTEN BY LINDA KNAPP
You may reprint this article with my permission by showing the Firm’s name and attaching my contact information. If you wish to cite the article you must give full credit to the author, Attorney Linda Farron Knapp. Nothing in this article creates an attorney-client relationship. When the article was written it was good law, that may not be situation at the time of reprint. We advise you seek competent legal advise based on your own factual situation before relying or acting on any legal material you read online.

Q. Can I pass my retirement assets by will?

A. Maybe, but are you sure you want to?

If you are talking about a pension probably not because it is governed by a contract and very likely federal laws. Distribution on death is limited to the choice you selected at retirement and usually further limited to a surviving spouse and possibly dependent children.

Most of your assets, such as a house, a car and a checking account were purchased or acquired with after-tax dollars. Traditional IRAs, 401(k) s and similar retirement plan accounts are made from pre-tax dollars so year after year contributions and interest grow tax free. When distributions are made to the participant they are taxed as income. When a participant dies leaving retirement assets, the assets are subject to income tax when distributed and possibly probate fees, if proper planning does not happen.

Your will usually does not determine who receives your retirement assets, rather these assets pass under a contract for which you hopefully named a beneficiary. The beneficiary form may also allow you to select alternate beneficiaries. This form could be the most important component of your estate plan, yet few individuals even know if they signed it, where a copy is, and who they selected as primary beneficiaries, much less alternate beneficiaries. Failure to properly designate a beneficiary for a traditional IRA or 401k or other retirement account can result in acceleration of the required minimum distributions so that either full distribution must be taken immediately or within five years, and this often results in a higher percentage of taxes being paid by the receiptant.

By law only people or a qualifying trust can be designated a beneficiary. Your general estate is not a person or a trust, therefore not a proper legal beneficiary for a retirement asset. You could create a testamentary trust in your will that names a trustee to receive a retirement asset for a specific beneficiary. This is done to protect some or all of the asset from a second spouse, the beneficiary’s creditors, a minor child, or from reckless spending by the beneficiary him or herself do to a history of financial misuse or lack of savings of their own funds for their own retirement, or perhaps due to drug and/or alcohol abuse. Usually separate trusts are used for each beneficiary.

When retirement benefits pass by contract and not by a will, they are not part of the probate estate. This is a good thing because probate can result in probate fees, time delays and become expensive.

People generally understand that the income tax consequences of a retirement asset can be deferred. For example a spouse can roll an IRA and receive benefits for many years after the participant’s death based on his or her own life expectancy. And a spouse might even be able to minimize the payout to just the required minimum distributions (RMDs) so that the bulk of the asset is later available to children and even grandchildren. Leaving an inherited IRA to a trust is different from putting other assets into a trust after death, but there could be a back-up option that allows a spouse to legally disclaim the IRA within 9 months from the participant’s date of death in order to let the spousal portion go into a pre-drafted testamentary trust.

There are no fixes for mistakes by the grantor or the drafter. Estate planning requires informed choices. Choose wisely who will explain your choices to you and who will draft your documents.

Disclaimer: Information contained in this column is meant to be of general information on frequently asked questions concerning disability, elder law, estate planning and probate law, and does not contain specific legal advice to a client. No attorney-client relationship is created by reading this column. 2018

WRITTEN BY LINDA KNAPP
You may reprint this article with my permission by showing the Firm’s name and attaching my contact information. If you wish to cite the article you must give full credit to the author, Attorney Linda Farron Knapp. Nothing in this article creates an attorney-client relationship. When the article was written it was good law, that may not be situation at the time of reprint. We advise you seek competent legal advise based on your own factual situation before relying or acting on any legal material you read online.

My father named my mother, then me as his attorney-in-facts in a financial power of attorney. Both my parents are now in care facilities and not competent. Am I automatically in charge or does something more need to be done?

That depends on the terms set forth in the document itself, but even if no stated triggers are mentioned before you can serve as alternate agent, like a doctor’s letter, I suggest you obtain a letter from her physician that your mother is unable to handle her own financial affairs and those of another. Then meet with a knowledgeable attorney and get an Affidavit prepared declaring the power of attorney your father signed naming you as attorney-in-fact is still in full force and effect. Further state that your mother is unable to serve because of her declining health and permanent admission to a nursing home or perhaps dementia, if that is her diagnosis, and you are now acting as your father’s duly appointed attorney-in-fact. Take the original letter and notarized Affidavit and the original of the power of attorney and have them recorded at the same county office where deeds are recorded. A similar procedure is used if the primary attorney-in-fact dies, only you’d use a certified copy of a death certificate instead of an original letter from a doctor with the Affidavit. A certified copy of what you just filed is presented every time you present the power of attorney.

Affidavits are reasonably priced and can be quickly prepared. Nearly all powers of attorney provide for reimbursement to the attorney-in-fact for reasonable expenses, therefore Dad’s money can be used to reimburse you for the legal fees and recording costs.

Disclaimer: Information contained in this column is meant to be of general information on frequently asked disability, elder law, estate planning and probate law, not specific legal advice to a client. No attorney-client is created by reading this column.

WRITTEN BY LINDA KNAPP
You may reprint this article with my permission by showing the Firm’s name and attaching my contact information. If you wish to cite the article you must give full credit to the author, Attorney Linda Farron Knapp. Nothing in this article creates an attorney-client relationship. When the article was written it was good law, that may not be situation at the time of reprint. We advise you seek competent legal advise based on your own factual situation before relying or acting on any legal material you read online.

What is a life estate deed?

The short answer is a life estate deed separates ownership of real property between two different parties. Often, but not always, the parties are the parents or one parent, and a child or more than one child, and sometimes grandchildren. One party gets life time use of the property and the other receives the property immediately at death of the life tenant effectively bypassing probate.

Life estates can be effective planning tools for several purposes including Medicaid. However there are strict Medicaid rules for transferring any assets or interests. The five-year-look-back period and transfers for fair market value rules apply. When a parent buys a life estate interest in a child’s home there is a one year from date of purchase requirement for the senior to actually live in the home and the parent must also pay the fair market value for the life estate as established by DHHS life expectancy regulations. This is not the same life expectancy percentages as used by the IRS for tax purposes. The entire value of the life estate is included in the donor or transferor’s estate for IRS tax purposes, but is not listed on the short form Inventory for South Carolina probate purposes and is not subject to the donor’s creditors at death.

The life tenant can retain a homestead and residential tax exemption. The life tenant is responsible for all taxes and upkeep on the premises. The life tenant can rent the property and receive the rents therefrom. Rules regarding timber cutting and distribution of the funds on real property held in a life estate is beyond the scope of this brief explanation.

There can be draw backs when the bulk of a person’s estate passes to non-probate beneficiaries as in the case of a remainderman of a life estate. One problem is lack of liquidity to pay decedent’s debts which can force the sale of other probate assets. A second problem can occur if a named remainderman dies before the donor. The donor or life-tenant could have created unintended beneficiaries, resulting in assets passing outside the family to an in-law. Additionally, there could be minor or incompetent beneficiaries as remaindermen that require court approval to sell. Thirdly, there is loss of control for the donor to easily use the real property for an equity line of credit or for reverse mortgage purposes.

A life estate should be part of a well-crafted estate plan where all potential issues such as health of the parties, their financial situations, marital stability and loyalty are explored with the donor(s) prior to conveyance, because once created the remainderman does not have to give back the gift.

Some states allow something called the enhanced life estate deed or Lady Bird Deed, named in honor of First Lady, Lady Bird Johnson. The Lady Bird Deed not only has transfer on death provisions built in but allows the life tenant to sell the property without notifying the remaindermen, (which normally is not allowed) and if the life tenant does not sell before he or she passes then the house or real property will go directly to the named remaindermen without going through probate. South Carolina does not recognize the Lady Bird Deed. Texas, Ohio, Florida and Kansas and several other states now accept this form of conveyance.

Disclaimer: Information contained in this column is meant to be of general information on frequently asked questions regarding disability, elder law, estate planning and probate law, and is not specific legal advice to a client. No attorney-client relationship is created by reading this column.

WRITTEN BY LINDA KNAPP
You may reprint this article with my permission by showing the Firm’s name and attaching my contact information. If you wish to cite the article you must give full credit to the author, Attorney Linda Farron Knapp. Nothing in this article creates an attorney-client relationship. When the article was written it was good law, that may not be situation at the time of reprint. We advise you seek competent legal advise based on your own factual situation before relying or acting on any legal material you read online.

Things are changing for my parents and I feel I need to address early care and monetary issues with my siblings when they visit from out of state at Christmas. How do I begin?

I am a big advocate for elders maintaining independence and acting on their own as long as possible. However, some elders delay taking action and there are times when children need to intervene. Nevertheless be mindful of your parents’ feelings when discussing and making plans concerning them.

Holiday get-togethers are a good opportunity for adult children to observe first-hand the changing health situation for elderly parents and perhaps to discuss larger family financial issues, but these conversations can be fraught with minefields. Too often care giving responsibility and money issues tear families apart because of misunderstandings, jealousy, feelings of unfairness and outright greed. There is no reason for a child serving alone as a regular caregiver to his or her parent(s) not to be compensated in some way, but this should be discussed.

A recent Pew Research survey asked about the specific types of support adults provided to their aging parents in the past 12 months. Six in ten children say they have helped with errands, housework and home repairs. Only 14% reported having to provide actual personal care, such as dressing or bathing. About 28% reported having to help financially. Of those who helped 88% say it’s rewarding and 32% said it was stressful. And 66% felt their parents expect the right amount of support from them.

A family meeting should be structured to ensure the right amount of seriousness and time is applied, while still having sufficient time to enjoy the family get-together and so family members don’t walk away murmuring over how you destroyed their children’s holiday. Discussions must be segmented so that younger family members are not involved in adult topics. Grandchildren of suitable age could be involved. Keep your mental agenda very short. I suggest you call or write each sibling in advance and tell them briefly what you are concerned about. Ask them to make their own evaluation of a parent’s declining abilities during their visit. If appropriate parents should be consulted with and share their own concerns whether they are willing to accept various kinds of help, such as meals, housecleaning, running errands, rides to the doctor or hairdresser, home improvements or assistance with paying the bills. For parents that have financial needs gift certificates to their hair dresser or grocery store, coupons for time or rides, or even paying the electric bill make great gifts without embarrassment to a proud parent.

Parents should also be asked to identify what planning they have done, such as creating estate documents naming who they want to handle financial and health care matters. The contents of wills and trusts do not have to be disclosed. If no planning has occurred the children may want to offer to pay the cost for parents to meet alone with an attorney knowledgeable about estate planning, asset preservation and competency issues.

Be aware all feelings and ideas expressed at your family meeting may not have value and can even trigger old hurts. This first meeting may not solve much if you and your siblings have no history of working together on projects, but that’s not a reason not to get started. Being forthright and honest in sharing information will help establish your leadership, if this is a role you are willing to assume.

Since you mention your siblings live out of state be realistic about what they are able and willing to undertake. Running errands on a weekly basis is unrealistic, but spelling you so you can take a vacation or do things with your husband and children several times a year might be possible. Sometimes out of state siblings have special skills needed at this time such as a nursing or accounting or carpentry or other construction trade backgrounds needed to make a house safe for Mom and Dad. Of course one or more siblings may refuse to do anything, but this should not deter you from making suitable plans to ensure your parents are well cared for.

You might want to visit Elder Care Matters at eldercarematters.com, AARP Caregiving Resource Center at aarp.org/caregiving, the US Department of Veteran Affairs VA Caregiver Support at us.caregiver.va.gov/index.asp, ARCH National Respite Network at archrespite.org/respitelocator and our own local Lower Savannah Council of Governments at www.agingcare.com or call 803-649-7981, to figure out how to locate services in your state and community that may help your family.

Disclaimer: Information contained in this column is meant to be of general information on frequently asked questions regarding disability, elder law, estate planning and probate law, and is not specific legal advice to a client. No attorney-client relationship is created by reading this column.

WRITTEN BY LINDA KNAPP
You may reprint this article with my permission by showing the Firm’s name and attaching my contact information. If you wish to cite the article you must give full credit to the author, Attorney Linda Farron Knapp. Nothing in this article creates an attorney-client relationship. When the article was written it was good law, that may not be situation at the time of reprint. We advise you seek competent legal advise based on your own factual situation before relying or acting on any legal material you read online.

How can one pre-plan for long term care?

There is an old Chinese saying that the best time to plant a tree for shade is 20 years ago. The second best time is now. There are two kinds of planning for long term care – pre-planning and crisis planning.

Pre-planning is when the client has no need of any immediate long term care services, and is not anticipating long-term care needs for some time. Usually these clients will plan with some kind of Long-Term Care Insurance (hereinafter LTCI). If purchased when young or still middle aged and healthy, the insurance company assumes the risk and the cost is usually lower. You may be able to deduct part of the cost of these premiums on your income taxes if you itemize medical expenses. There are some very good policies out there and they are designed for multiple circumstances, such as both spouses sharing one policy or a policy that doubles as life insurance and/or long term care insurance so no premiums are wasted. Some LTCI policies are available as riders on annuities. I suggest you get several quotes and be sure to talk with your financial planner, not just the life insurance agent, to be sure your goals are being adequately met at a price you can afford.

From an attorney standpoint we need to look at the whole picture – all assets and how they are titled, not just insurance, plus the client’s liabilities and goals. A solid estate plan is a first step. Some of traditional estate planning techniques like joint with right of survivorship deeds and payable on death accounts do not work in most long-term care scenarios. When there is enough time an attorney can guard against losing assets by utilizing irrevocable trusts.

Crisis planning happens when long-term care services are already being discussed due to a diagnosis or services are expected to be provided in the next five years due to advanced age or services are actually being provided and either no or inadequate pre-planning happened.

There are various crisis planning strategies, the use of which is dependent upon the client’s assets, income, and marital status. A married couple may have more options available as they are allowed to keep more in countable assets and still receive SC Medicaid. Spend-down and converting countable assets like a money market account to an exempt assets such as a preneed funeral trust or making a home repair are just two possibilities.

It is not too late to do something even if it’s just a few days before a Medicaid application is filed.

I do not recommend planning on your own or with the social worker at the nursing home. This is truly an area where someone with legal training needs to look at the situation and give advice. The cost of an elder law consult is inexpensive when compared to a home or all or your life assets being spent for end of life care.

Disclaimer: Information contained in this column is meant to be of general information on frequently asked questions concerning disability, elder law, estate planning and probate law, and does not contain specific legal advice to a client. No attorney-client relationship is created by reading this column.

WRITTEN BY LINDA KNAPP
You may reprint this article with my permission by showing the Firm’s name and attaching my contact information. If you wish to cite the article you must give full credit to the author, Attorney Linda Farron Knapp. Nothing in this article creates an attorney-client relationship. When the article was written it was good law, that may not be situation at the time of reprint. We advise you seek competent legal advise based on your own factual situation before relying or acting on any legal material you read online.

I got a lot of phone calls about long term care planning after an article on Medicaid planning I ran a month or so ago. There were common areas of concern from spouses, parents and children caring for loved ones about the nature and range of financial planning options for long term care so here goes my top five tips.

Tip #1 Long term care includes nursing home care, assisted living, adult day care, respite care, and home health care. By age 85 nearly 55% will require some form of long-term care and approximately 44% will require nursing home care after age 65. These numbers do not reflect the millions of younger disabled persons that need long-term care at some point in their life. Caregivers report endless frustration, severe emotional stress and lose billions of dollars a year in lost wages trying to deal with bureaucracy. A knowledgeable professional should be able to review everything in an hour or two and give you a solid plan that suits your family situation and personal needs. Working with a professional will give you peace of mind and you will spend much less up front and save tens of thousands of dollars and endless hours of trying to learn everything on your own.

Tip #2 Purchase long term care insurance, if you can afford it. Many policies use to be for only 3 years, now you will see five year plans and more affordable spousal options. Nevertheless, shorter plans can still be good deals and useful planning tools if you have family support for home care.

Tip #3 Professional long-term care planning tools include: personal dependency, medical deductions, home transfers after accounting for basis and capital gain issues, annuities, converting interest income, domestic help, sale of property, sale of the home, owner financing, purchasing a new home or condo, commercial and family held reverse mortgages, owner occupancy rules and using a Medicaid waiver on the back side, partial sales, gift tax rules, life estates, private pay using long-term care insurance and other options, Medicare, Veterans Benefits, Medicaid, dozens of spend-down strategies, promissory notes, student loan forgiveness, life insurance loans and cash ins, legal separations and divorce, QDROs, bankruptcy, income trusts, special needs trusts, housekeeping and caregiving contracts, and various asset transfer options including special consideration for IRAs, 401K, deferred pension plans and other retirement plans. One plan does not fit all situations. Be wary of the source of your legal information. I’ve had the family insurance man cost clients $8,000 on a preneed burial, an elder’s home sold when a lawyer gifted it to a son who then lost his job and declared bankruptcy, and an entire estate gobbled up by listening to the next door neighbor.

Tip #4 Consider a caregiver contract with children or others where you pay for necessary services. Such contracts need to be in writing and comply with all aspects of the law including state and federal earned income rules and mandatory withholdings.

Tip #5 Disability and long-term care needs can come at any age, this is not just a senior issue, and therefore having good legal documents is the foundation of any plan. All powers of attorneys and wills should be reviewed for adequacy. Often old documents or those prepared by non-elder law or estate planning specialists fail to include language to deal with the IRS, gifting, specifics on the description of real property that may be sold or financed that a title insurance company may prefer, and have accounting provisions to safeguard your financial assets.

1Long-Term Care Insurance or Medicaid: Who Will Pay for Baby Boomers’ Long-Term Care? American Council of Life Insurers Research Findings, 2005.

Disclaimer: Information contained in this column is meant to be of general information on frequently asked disability, elder law, estate planning and probate law, not specific legal advice to a client. No attorney-client is created by reading this column.

WRITTEN BY LINDA KNAPP
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