Once again, why Guardianship should be avoided if possible
I just returned from court trying to do very simple, very acceptable gifting technique between a spouse not in the nursing home and a spouse in the nursing home and on Medicaid and over which there is a guardian. The hearing did not go well.
If you have read my posts for any length of time, you know that a common technique is to transfer the home from both spouses to the well spouse to protect it, to allow the well spouse to sell and to go to the heirs if the well spouse dies first with a properly worded last will and testament. We do it routinely by having the spouse in the nursing home sign or using the Power of Attorney to sign the deed for the transfer.
However, Arkansas law says that every financial transaction has to be approved by a judge. Arkansas law also says that transfers or gifts of property can only be done if it is advantageous to the ward (person who is incapacitated). I could not apparently argue sufficiently that this transfer to the spouse was advantageous to the ward. Now, the house will sit for the use of the well spouse. If he chooses to sell the property, we will need court approval and the judge will then make sure that the sale is for full fair market value and I am not sure what the judge will do with the proceeds of the sale. This is not a good place to be.
Non-elder law attorneys will suggest a guardianship at the first mention of any problems with an elderly person. However, in many instances, there was no need for a guardianship if there was a Power of Attorney in place. We do Powers of Attorney for the purpose of having a method to take care of business when the person becomes incapacitated. By doing a Power of Attorney, it saves a tremendous amount of time, effort and expense and not doing one could cause you to lose your entire estate. Please seek the advice of a competent attorney that understands all of the issues with guardianships and their full implications before utilizing that option.
Justin Elrod is now a Certified Elder Law Attorney
The Elder Law Practice is very proud to announce that Justin Elrod, partner in the firm, is now a Certified Elder Law Attorney as certified by the National Elder Law Foundation.
With Justin attaining this designation, there are now 4 Certified Elder Law Attorneys in the State of Arkansas and two of them work for the Elder Law Practice of Whatley Elrod, PLLC.
Our goal is to provide the very best of legal services to our current clients and to anyone that contacts our office. Our passion is Elder Law and our dedication to seek certification shows that we are going above and beyond what is required to meet that goal.
Good job Justin, we are proud of you.
What seems to make sense when buying things for your parents can cause problems
A number of times over the last few weeks, I have run into a recurring problem. Mom and dad do not have a debit card and they don’t get out much so the child or children do the shopping for mom and dad. The child then adds up the expenses and then mom and dad write a check to the child to cover all those expenses plus a little for “gas and inconvenience”.
This makes total sense and is a very convenient way to handle the business UNTIL we have to apply for Medicaid during the next five years. As I have talked about on numerous occasions, gifting is a huge issue with Medicaid. They look for gifts and will pretty much consider any check written to the child as a gift regardless of the reason.
My suggestion in these situations is to have mom and dad pay directly for any expenses with a check or preferably with a debit card (which is just as safe as a credit card when run as a credit – see this article):
http://www.foundationsu.com/articles/article/contentname/foundationsu-the-basics-of-your-debit-card
By doing this, the DHS caseworker will have very little reason to suspect anything is up and it avoids the need to explain and backup all those checks to the children.
Elder Law has a rising star!!!!!
The Elder Law Practice of Whatley and Elrod is proud to announce that Justin Elrod was recently named to the list of Rising Stars in the area of Elder Law by the publication Super Lawyers, Mid-South 2012 Edition. He was one of only three attorneys named to this list in the area of Elder Law, and was the only attorney from Arkansas to make the list in this area. Congratulations Justin.
http://www.superlawyers.com/arkansas/lawyer/Justin-Elrod/028d7623-d250-403c-abbd-f0f29c601839.html
4 Essential Questions for the New Year
So, how are the New Years resolutions going? I heard the fourth week of the year is the hardest since the new resolution is getting a little old and many people don’t continue. If you haven’t done well with your resolutions, or even if you have, here are four very important questions to ask yourself or to ask your aging parent to start off the new year right. If you answer “no” to any of these questions, give us a call.
Four Essential Questions
Elder Law is a broad field with a vast number of issues. However, it seems that, with very few exceptions, the majority of the consults handled by Elder Law attorneys focus on addressing one or more of four essential questions.
1. Is someone appointed to handle your business if you can’t do it yourself?
The attorneys at our firm strongly believe that a thorough durable power of attorney is the most important estate planning document a person can have, whether you’re 18 or 80. It is through the durable power of attorney that you nominate someone to handle your business for you in the event you are not able to do so yourself. The durable power of attorney is the number one tool for avoiding guardianship proceedings in the event of a medical emergency.
2. Are your healthcare documents in order?
We recommend three separate healthcare documents. First, the healthcare power of attorney, like the durable power of attorney, appoints someone to handle your affairs if you’re unable, except this document deals specifically with healthcare matters. It is what authorizes doctors and nurses to speak with your representatives about your diagnosis and treatment when you are unable to manage your healthcare on your own, and it is another valuable tool for staying away from guardianship proceedings. Second, it is wise to execute a HIPAA release form that complies with the federal act governing the release of medical records to ensure your loved ones are not denied access to your medical information. Third, depending on your wishes regarding end of life care, a living will might be appropriate. This document puts in writing the wish held by many individuals that they not be left on life preserving machines if they have been diagnosed as being in a permanent vegetative state. It is not enough that you simply tell your loved ones your opinion on the matter.
3. Do you have an estate plan and does it do what you intend for it to do?
In its most basic sense, an estate plan is simply anything you do to make sure your assets go where you want them to go when you die in the manner in which you want them to go there. I have emphasized in a number of consultations that having a will does not avoid probate; instead, a will is a set of instructions for the probate judge to follow as your estate passes through the court probate process. A trust is like a will, in that it contains your instructions for what is to happen after your death, but a trust does not have to go through probate. I have noted that lifetime deeds can be utilized to avoid probate, but only if they are worded just right – the absence of a few magic words can throw your estate back into probate. And we often advise clients of potentially adverse tax consequences associated with lifetime deeds as compared with inheritances received through a will or a trust.
4. Have you done anything to plan for the high costs of long-term care?
The average cost of a nursing home in Arkansas is just under $5,000 per month. Medicare and private health insurance do not pay for long-term care in a nursing home. Long-term care insurance is an option if you purchase a policy before any major health issues have been diagnosed, but it can be very expensive. Help in affording the high costs of long-term care is also available through a couple of government programs. Veteran’s benefits are available for those who served on active duty during a time of war, or for his or her surviving spouse, if the veteran is deceased. Medicaid is available to veterans and non-veterans alike. However, both of these benefits require some planning, because they both include income and asset restrictions.
Many people think that if they have their assets in a trust, those assets can’t be touched by a nursing home or the state if long-term care is needed. However, if the trust is a standard revocable living trust, nothing could be further from the truth. Assets in a revocable living trust do count against you for both VA and Medicaid purposes. On the other hand, there are certain types of specialty trusts you can use for sheltering assets from the high costs of long-term care. The key is to have accurate information and to plan ahead.
About Justin Elrod
Justin Elrod is a partner of the Elder Law Practice of Whatley and Elrod, and the Managing Attorney of the Bryant and Hot Springs Village, Arkansas offices, serving the legal needs of the elderly in Central and South Arkansas. Justin Elrod has been working in elder law field since 2006, and became Arkansas’ fourth certified Elder Law Attorney in 2012. The Elder Law Practice of Whatley and Elrod is focused on the legal needs of the elderly and their families. Justin Elrod is a regular speaker for Continuing Legal Education seminars teaching other attorneys about elder law and is frequently on radio shows answering live questions about Elder Law.
About the Elder Law Practice of Whatley and Elrod:
The Elder Law Practice of Whatley and Elrod is Arkansas’ largest Elder Law practice, with four locations through the state of Arkansas, in Bryant, Fort Smith, Springdale, and Bella Vista. Todd Whatley and Justin Elrod, the managing partners at the Elder Law Practice, are committed to serving the legal needs of the elderly in Arkansas. Their services include estate planning, creating wills, trusts, avoiding probate, special needs trusts, Medicare, Medicaid, and more. The Elder Law Practice of Whatley and Elrod also focuses in VA benefits, assisting Arkansas veterans in getting the benefits and assistance that they have earned during their time spent serving our country.
Some Good News for Arkansas Residents (especially if you are married)
Granted, most of my posts here are generally not very positive when it is dealing with the Arkansas Department of Human Services (DHS). I don’t see myself as a pessimist but more of a realist. I tell things as they are and try not to candy-coat things.
There have been three really good cases that have been settled over the last month or so. One deals with the qualified retirement plan of the spouse not in the nursing home (Community Spouse, CS), one dealing with using assets to increase the income of the CS and then one where DHS was looking at the length of time between a gift and a payback of that gift. I will go into each one separately.
The first case is a case where Justin Elrod, a partner in our firm, took at case to circuit court making DHS follow Federal law regarding the qualified plan of the CS. Federal law is clear that the IRA or 401K of the CS should not be counted in the assets of the spouse going into the nursing home (Institutional Spouse, IS). Another way to say this is that the amount of the IRA should not go into the snapshot mix at all just like the house, car or household furnishings. However, DHS has been counting that and therefore making that amount either be spent or counted in the CS’s 1/2 of the assets they get to keep. We have tried to fight this a number of times but our clients don’t want the fight or the assets were not enough really go through the process. However, Justin had a client that wanted to fight and we went through the process for them and won. We now get to exclude that amount from the mix of assets and only divide the amount of assets not counting the IRA or 401K meaning the CS get to keep that PLUS half of the other assets. We are very glad to have this win since it really does make a difference for spouses and it does follow Federal law.
The second case was a case that I was lead attorney and Melissa Burton assisted me. We had a client that deeded her house to her son since it was in Oklahoma and she would never qualify if she had kept the house and applied for Arkansas Medicaid. The gift was made, we applied and then hoped that the house would sell fairly quick to allow us some money to cover the penalty. However, the house did not sell for quite some time. The son then paid out of his pocket to the nursing home (which was a return of the gift) while we were waiting on Medicaid to approve or deny the case. Also, we put mom’s name on son’s house which is a gift back from the son to the mom eliminating the gift penalty. DHS recognized the money transfer and decreased the penalty by the amount of the check but they did not decrease the penalty for the son deeding his mom a portion of his home. The reason for the denial by DHS was that “the length of time was too long between the gift and the return of the gift”. There is nothing in DHS policy that requires the gifts to be simultaneous to return a gift. The check was not that much different time-wise than the deed, but they simply liked one and disliked the other. We took this to court and won. The judge did not see any difference between the gift being done early or later, it was a return of the gift. This situation comes up periodically, so we are glad to have this case to refer back to.
Another big case, is a case done by Attorney Chad Oldham in Jonesboro. He pursued a case through the Federal Court system twice to get this victory. Federal law allows for the CS to take money that has to be spent down by the IS in order to qualify for Medicaid, to be converted to an income stream to the CS. In other words, whatever money has to be spent in order to qualify, can be put into a very specific annuity to create an income stream to the CS. Normally, the CS can keep all of his or her income. If his or her income is not $1,891/month, we can get enough from the IS to get up to that amount.
That is normally the max the IS gets to keep since both spouses income is barely over that amount. I think anyone would agree that $1,891 is not that much income. We can drastically increase that income by using an Annuity that meets the DHS guidelines and essentially use the assets saved for a lifetime as income for the spouse for a limited amount of time. Obviously, DHS did not like this federal law but it is the law. Mr. Oldham took the State to Federal Court and won (twice). We are thankful for his hard and long work on this case.
Therefore, with these wins, the spouse that has to face the horrible decision to put a spouse into a nursing home, now doesn’t have to worry about the financial aspect of this decision. As I always tell my clients, do what is best for the sick spouse AND what is best for the “well” spouse. Don’t let your decision be based on the incorrect assumption that you will lose everything when you put someone into a nursing home. Do what is best, and let us deal with the money issues and allow the “well” spouse live comfortably while the “ill” spouse is getting the care they need. Feel free to call our office if you have any questions.
Elder Law Practice of Whatley and Elrod is Arkansas’ largest Elder Law practice, with five locations through the state of Arkansas, in Bryant, Hot Springs Village, Fort Smith, Springdale, and Bentonville. Todd Whatley and Justin Elrod, the managing partners at the Elder Law Practice, are committed to serving the legal needs of the elderly in Arkansas. Their services include estate planning, creating wills, trusts, avoiding probate, special needs trusts, Medicare, Medicaid, and more. The Elder Law Practice of Whatley and Elrod also focuses in VA benefits, assisting Arkansas veterans in getting the benefits and assistance that they have earned during their time spent serving our country.
Something to think about this weekend.
I’ve seen this a few different places by different “cab drivers” so I doubt it’s true, but that really doesn’t matter. It is a great story and will help put things in perspective and maybe help us slow down a little bit and do something truly important this weekend and over the next couple of days. Have a good weekend.
http://www.personalgrowthcourses.net/stories/nerburn.cabride
A Question about Deeding a home to children
I think you talked about this before but I want to make sure that my home is protected from probate and Medicaid. I’ve been told to deed my house to my children now. Is that a good idea? Elizabeth
Elizabeth, this is probably one of the top five questions we get and we don’t mind discussing this as many times as it take to get the word out. The answer to your question is NO!!!!! It is not a good idea for a number of reasons. First, the house becomes the child’s house and therefore subject to their legal problems such as divorce, bankruptcy and lawsuits. If that child has any legal problems, then you can lose your house. Also, I have had a few rare occasions when the child forcibly removed the parent from the home. Second, you are missing out on tax savings. Your child will no longer get the homestead exemption nor the freeze in property taxes you are getting if you are over the required age. Also, when you sell, you will get to protect up to $250,000 in gain on the property. However, when you give it to your child, you lose that exemption which is 27% of the value of the gain. Third, you will be penalized for the full value of the transfer by Medicaid if you need to apply within the next 5 years. There are much better options to get the property to your children. Make sure you get good solid advice before you do any type of deed on your home. Make sure the person knows the tax and public benefits before doing your deed.
About the Elder Law Practice of Whatley and Elrod:Elder Law Practice of Whatley and Elrod is Arkansas’ largest Elder Law practice, with five locations through the state of Arkansas, in Bryant, Fort Smith, Springdale, and Bentonville and Hot Springs Village. Todd Whatley and Justin Elrod, the managing partners at the Elder Law Practice, are committed to serving the legal needs of the elderly in Arkansas. Their services include estate planning, creating wills, trusts, avoiding probate, special needs trusts, Medicare, Medicaid, and more. The Elder Law Practice of Whatley and Elrod also focuses in VA benefits, assisting Arkansas veterans in getting the benefits and assistance that they have earned during their time spent serving our country.