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Who Decides/Planning Ahead: Legal and Financial Issues for Dementia Caregivers

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Title: Who Decides/Planning Ahead: Legal and Financial Issues for Dementia Caregivers


1
Who Decides/Planning Ahead Legal and Financial
Issues for Dementia Caregivers
  • PRESENTED BY

2
Planning Dynamics for Elders
  • Part of the Greatest Generation
  • Family is key support system
  • Want to make own decisions (independence)
  • Want to trust others to have integrity
  • Simple, positive messages resonate
  • Family
  • Faith
  • Friendship
  • Financial security
  • Family, others, messages may be harmful

3
Planning Dynamics for Elders
  • 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

4
THREE THINGS TO AVOID
  • Change
  • Conflict
  • Loss of Control

5
Elders Concerns
  • 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)

6
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    if terminal illness) repealed in 1998, but still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    repealed in 1998, but still valid if valid when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

7
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

8
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

9
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

10
Decision-making Healthcare
  • Family Communication about healthcare desires
    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

11
Decision-making Financial Matters
  • Durable General Power of Attorney Voluntary
  • Maintain control even after incapacity (second
    set of keys)
  • Select own decision-maker(s)
  • Checks and balances on agent
  • Prior consent of others to gifting, sale of
    property
  • 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

12
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 wards 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

13
Disposition of Assets
  • Gifting
  • Pros
  • Asset to intended recipient
  • Asset removed from givers 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 givers tax basis (capital gain on
    sale)
  • Outright Gift vs. Irrevocable Trust

14
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

15
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

16
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 (but will have
    probate for assets left out of 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

17
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 Grantors 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)

18
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 beneficiarys own assets (inheritance, lawsuit
    settlement, guardianship assets)

19
FUNDING SPECIAL NEEDS TRUSTS
  • THIRD PARTY TRUST
  • Gifts from family, others
  • Fund-raisers
  • Bequests in wills and living trusts
  • Life insurance
  • Retirement accounts (as beneficiary)
  • SELF-SETTLED TRUST
  • Litigation settlement (lump sum, structured
    annuities)
  • Inheritance
  • Life insurance benefit
  • Personal assets
  • Guardianship/conservatorship assets

20
MEDICAID COVERAGE GROUPS
  • Qualified Medicare Beneficiary (QMB)
  • Medicaid as Medicare Supplement
  • Eligible for Medicare Part A
  • Income lt 1,008 (958 FPL 50 disregard) or
    1,343 for couple
  • No resource limit
  • Pays Medicare Part B premium (104.90 in 2013),
    deductibles and co-payments
  • Specified Low-Income Medicare Beneficiary (SLMB)
  • Same as above, but 1,343 single/1,795 couple
    income limit, and only pays Part B premium

21
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

22
LONG-TERM CARE MEDICAID
  • Single Person eligible if
  • Countable income lt 2,130 (but more if use income
    trust)
  • Countable resources lt 4,000
  • Married Person eligible if
  • Applicant spouse eligible as single person
  • Community spouse countable resources lt 115,920
  • CS keeps IS income to reach 2,898 income

23
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

24
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)

25
MEDICAID and ANNUITIES
  • Annuities purchased by applicant transfer
    unless
  • Purchased with assets of qualified retirement
    account and State is named first beneficiary (or
    can name community spouse or blind/disabled child
    as primary), OR
  • Medicaid-qualified annuity (fixed, immediate,
    irrevocable, non-transferable, actuarially sound)
    and names State as first beneficiary
  • Annuity purchase by Community Spouse transfer
    unless State is named first beneficiary for
    payments to CS nursing home

26
MEDICAID PLANNING
  • Transfer countable resources to exempt trust
  • Irrevocable and actuarially sound sole benefit
    trust for spouse, disabled child or disabled
    person under age 65
  • Self-settled special needs trust for Medicaid
    applicant under age 65
  • Purchase Medicaid-qualified annuity creates
    income from resources

27
SCENARIO DISABLED SPOUSE
  • Harry Smiths wife, Martha, has progressive
    dementia, and Mr. Smith is uncertain whether he
    can continue to care for his wife at home due to
    his own health condition. He is worried about
    having enough money to pay her nursing home
    costs, his living expenses, and pass some
    inheritance to his children. Through some elder
    law planning, including putting all non-home
    assets in Harrys sole ownership, it will be
    possible to qualify Martha for Medicaid to help
    pay her nursing home costs. They own their home
    and 150 acre farm as joint tenants with rights of
    survivorship.

28
SCENARIO BAD OPTIONS
  • Option 1 Leave the home in joint ownership. If
    Harry dies first
  • Pros Home not a countable resource for
    Martha s Medicaid. Home can be sold to pay for
    Marthas care if necessary.
  • Cons Medicaids claim against the home and farm
    at her death for repayment of all nursing home
    costs paid by Medicaid, and could cause the sale
    of the residence.
  • Option 2 Harrys will leaves everything to
    Martha at his death
  • Pros Financial assets can be sold to pay for
    Marthas care
  • Cons Financial assets left to Martha disqualify
    her for nursing home Medicaid until all spent on
    her care Court-supervised conservatorship may
    be required if she lacks capacity to manage those
    assets (Medicaid counts assets in a
    conservatorship)

29
SCENARIO SOLUTION
  • Option 3 Get home ownership in Harrys name
    only Harry does new will with Special Needs
    Trust for Martha
  • Pros Home is not a countable resource for
    Martha s Medicaid. Home can be sold or
    mortgaged by Harry if he needs to move or get
    money.
  • Pros Harry can name capable trustee in his Will
    to manage home and other assets after his death
    for Marthas needs, avoiding need for conservator
    for her.
  • Pros The testamentary special needs trust will
    not be a countable Medicaid asset for Martha, so
    she can get nursing home benefits paid.
  • Pros The trust will not be an asset of Marthas
    estate at her death, so Medicaid will not have
    any claim against the home and farm at her death
    for repayment of nursing home costs paid by
    Medicaid. The trust remainder can be distributed
    to the kids or named remainder beneficiaries.

30
RETROACTIVE BENEFITS
  • Medicaid benefits will be paid for up to 3 months
    prior to month of application if the applicant
    was eligible in those months
  • In a nursing home or disabled at home
  • Income within limit
  • Countable resources within limits
  • Medicaid will allow up to 90 days to re-allocate
    resources between spouses

31
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
  • No claim against homestead valued lt75k, will
    pass to surviving spouse/child/grandchild(ren)
    (Darby case)

32
THANK YOU
  • 4400 Old Canton Road ? Suite 220 ? Jackson, MS
    39211
  • Tel 601-987-3000 ? Fax-601-987-3001
  • www.ElderLawMS.com
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