What is Medicaid Asset Protection Planning for Seniors?

Asset protection planning helps plan for how to pay for long term care. The national average cost of a nursing home is over $6,000 per month. Nursing home costs generally exceed the average person’s ability to privately pay, and approximately 60% of nursing home residents use Medicaid to pay for their care. Because of the high cost of long term care, Medicaid planning recognizes that an individual may need at some point to try to qualify for Medicaid to pay for long term care in a nursing home. Medicaid is a needs-based program with its own current and ever-changing requirements. To financially qualify for Medicaid, a person is permitted to have $2,000 in assets and may keep only $40 of income. A person may be penalized for gifts or transfers made for less than fair market value. For each approximately $6,000 gift during the five year period immediately prior to any Medicaid application, Medicaid will impose a one month penalty. There are complicated planning techniques to help put individuals in a better position to qualify when they need long term care in a nursing home. Careful planning can also help to protect the person’s estate, whether to provide for a spouse or for children.

Written by Heather W. Winter, Esquire

What is a Special Needs Trust and Why is One Important?

Sometimes referred to as a supplemental needs trust, a Special Needs Trusts (SNT) may be created to benefit a family member or close friend who has a disability.  The trust is set up for a person with special needs to supplement any benefits the person with special needs may receive from government programs. Any funds in a SNT will not be counted for purposes of qualifying and maintaining eligibility for certain governmental benefits programs. Governmental programs that require the protection of a special needs trust such as Supplemental Security Income, Medicaid, and Veterans Benefits, are needs-based programs and the person who you want to provide for may be disqualified from these programs if the person held the assets or funds directly.

Programs like SSI and Medicaid only meet basic needs such as food and housing. The SNT can give the means to provide the disabled person with an enhanced quality of life. The trust pays for supplemental and extra care over and above what the government will pay. The trust funds are disbursed to third parties who provide goods and services for use and enjoyment by the disabled person. The person who manages the trust assets, called the trustee, is able to purchase things like a phone, a computer and electronics, a television, a vehicle, cable and internet services, clothing, tuition, books, travel, entertainment, household furnishings and furniture, special accommodations for housing, and other items that allow the beneficiary a richer life.

If the trust is funded during the lifetime of the person who established the trust, it is effective immediately, and other family members, including grandparents, aunts, uncles, brothers, sisters, or friends can give money to the trust either by writing a check or by naming the trust as a beneficiary in their will. A parent of a disabled child may also choose to purchase a life insurance policy payable to the trust.

The person making the trust may attach an optional letter of intent, which is a letter expressing their wishes on how the funds should be used, along with special notes about the disabled person’s preferences.

The trust is beneficial to families and friends of disabled people receiving government benefits who want to enhance that person’s quality of life. Even if a disabled person is not currently receiving government benefits, the trust protects public benefit eligibility in the future or offers a way to assist in managing the assets of a special needs person.

Written by Heather W. Winter, Esquire

What is an Advance Medical Directive and Why Should I Have One?

An advance medical directive is a written document that names an agent or agents to make health care decisions for him or her in the event that they are incapable of making an informed decision. The document can also include what’s called a “living will,” which states what kinds of treatment you would want or would not want for life-prolonging treatment if you are diagnosed with a terminal condition and are unable to express your own wishes. Everyone should have an advance medical directive, no matter their age or health. The advance medical directive helps to plan for uncertainty in the future, such as an illness or car accident. Of course, the document does not take away your ability to act. You can still make health care decisions for yourself until it is determined you cannot make decisions. The document states your choices for health care or names someone to make those choices for you if you are unable to make decisions about your medical treatment. It is also a good idea to update who you name as agent in the event of a separation or divorce. There is no automatic revocation of the advance medical directive upon separation or divorce.

Written by Heather W. Winter, Esquire

What is a Power of Attorney and Why Should I Have One?

A power of attorney is a written document that allows you to appoint another person that you trust to act on your behalf in financial matters. Additionally, the power of attorney allows you to choose who your agent will be and what their powers will be. Of course, you do not lose the right to make those financial decisions for yourself. There are many reasons why a person, even if they are young and healthy, should have a power of attorney. A power of attorney appoints someone to manage your financial affairs, which is important if you ever are unable to manage your affairs or if you become temporarily or permanently incapacitated. If an emergency happens, there is someone with authority to make decisions. The future is unpredictable, and it’s a good idea to have this document in place to avoid the need to petition the court to have a guardian and/or conservator appointed for you. A power of attorney is also less expensive and less time consuming than having to go through guardianship and conservatorship proceedings. It is also a good idea to update who your agent will be in the event of a separation or divorce. The act of filing for divorce will terminate the agent’s authority if the named agent is your spouse, but it is a better idea to execute new documents and revoke the spouse’s authority as agent.

Written by Heather W. Winter, Esquire

Why you should use a personal property list when you make your will

     When you make your will, you plan what each person will receive at your death. While you may know what you want to do with the main part of your estate when you see a lawyer about writing a will, you may not have decided how you would want certain items of your tangible personal property such as your jewelry, furniture, tools, household goods and personal effects or certain precious memorabilia to go, or you realize that you may change your mind about these things over time as your circumstances or desires or the ages and circumstances of your loved ones change.

     Recognizing this, the Virginia legislature passed a law that lets you use a separate written and signed list and change it from time to time as you wish. In that way you do not have to list all your tangible personal property in  your will, and you can change the list whenever you want to without changing your will. This applies only to tangible personal property and not to money or investments. In other words, if you want to change who receives the monetary items, you must change your will. If you want to change who receives the specific items of tangible personal property on your list you need only change the list.

     It is important to remember that you do need to make a will. Just because you promise to give a child or someone you love your ring or your watch or certain pieces of furniture when you die, that verbal promise does not have any legal effect, and you must provide for the gift in a properly executed will or have a provision in your will that refers to your leaving a list signed by you stating who is to receive tangible personal property.

     If you make a list, you do not have to include everything on the list - just tangible things that you want to name specifically for certain people. Other things can just pass generally under your will to whomever your will designates to receive your tangible personal property, without specific items being listed.

Making it easier for an Executor or Trustee from another state to transfer real estate located in Virginia

When a non-resident of Virginia dies owning real estate in Virginia, it is now easier for the person who qualifies as executor or trustee in that other state where the will is probated to transfer property in Virginia to the beneficiary named in the will. The out-of-state Executor or Trustee will need to have an authenticated copy of the will admitted to probate in the Virginia county or city where the real estate is located, but if they meet the requirements of the new Virginia statute, they will not have to qualify again as Executor or Trustee in Virginia. This helpful new law is effective July 1, 2012.

Veteran's Benefits: A Window of Opportunity

Veteran’s benefits for Aid and Attendance (known as "pension") can be invaluable for a qualifying veteran or the widow of a qualifying veteran. This benefit can be up to $1,949 a month for a married veteran, and up to $1,644 per month for a single veteran, up to $1,056 per month for a surviving spouse. The program currently has very favorable terms for a person seeking to qualify for this benefit. However, this window may close at some time in the not too distant future. The General Accounting Office (GAO) has released a report suggesting that Congress should make changes to this program. The suggested changes include establishing a look back and penalty period for claimant who gift assets in order to qualify, similar to Medicaid rules. Currently, the VA rules are much less strict. Veteran’s benefits for Aid and Attendance can be particularly helpful to someone requiring care in an assisted living facility or when receiving expensive care at home. As elder law attorneys, we can help a veteran or a surviving spouse determine if they are eligible for such a benefit and what they can do to become qualified. Anyone who thinks they might be able to qualify for such a benefit would be wise to look into this promptly while the law is still very Veteran- friendly.