Myth One: Before any benefits can be received for nursing home care, a married couple must have spent at least half of their assets and everything but $120,000. If the person receiving nursing home care is single, they must spend almost all assets on the cost of care, before they qualify for aid.
Fact: Nursing homes have no legal duty to advise anyone before or after they are admitted about this myth.
Several opportunities to spend money on items other than a nursing home include home improvements, debt retirement, a new car, and funeral prepayment. An elder law attorney will know how to use a Medicaid-compliant annuity to preserve assets, without spending them on the cost of care, depending on state law.
There are people who say that an attorney should not help a client take advantage of legally permitted methods to save their money. If they don’t like the laws, let them lobby to change them. Experienced elder law and estate planning attorneys help middle-class clients preserve their life savings, much like millionaires use CPAs to minimize annual federal income taxes.
Myth Two: The nursing home will take our family’s home, if we cannot pay for the cost of care.
Fact: Nursing homes do not want and will not take your home. They just want to be paid. If you can’t afford to pay, the state will use Medicaid money to pay, as long as the family meets the eligibility requirements. The state may eventually attach a collection lien against the estate of the last surviving homeowner to recover funds that the state has used for care.
A good elder law attorney will know how to help the family meet those requirements, so that the adult children are not sued by the nursing home for filial responsibility collection rights, if applicable under state law. The attorney will also know what exceptions and legal loopholes can be used to preserve the family home and avoid estate recovery liens.
Myth Three. We’ve promised our parents that they’ll never go to a nursing home.
Fact: There is a good chance that an aging parent, because of dementia or the various frailties of aging, will need to go to a nursing home at some point, because the care that is provided is better than what the family can do at home.
What our loved ones really want is to know that they won’t be cast off and abandoned, and that they will get the best care possible. When home care is provided by a spouse over an extended period of time, often both spouses end up needing care.
Myth Four: I love my children equally, so I am going to make all of them my legal agent.
Fact: It’s far better for one child to be appointed as the legal agent, so that disagreements between siblings don’t impact decisions. If health care decisions are delayed because of differing opinions, the doctor will often make the decision for the patient. If children don’t get along in the best of circumstances, don’t expect that to change with an aging parent is facing medical, financial and legal issues in a nursing home.
Myth Five. We did our last will and testament years ago, and nothing’s changed, so we don’t need to update anything.
Fact: The most common will leaves everything to a spouse, and thereafter everything goes to the children. That’s fine, until someone has dementia or is in a nursing home. If one spouse is in the nursing home and receiving government benefits, eligibility for the benefits will be lost, if the other spouse dies and leaves assets to the spouse who is receiving care in the nursing home.
A fundamental asset preservation strategy is to make changes to the will. It is not necessary to cut the spouse out of the will, but a well-prepared will can provide for the spouse, preserve assets and comply with state laws about minimal spousal election.
When there has been a diagnosis of early stage dementia, it is critical that an estate planning attorney’s help be obtained as soon as possible, while the person still has legal capacity to make changes to important documents.
You really should plan for the future, even if it means taking your own death into consideration.
People do not generally care to consider their own passing, so they often avoid estate planning. However, it really can be considered as a message to the future, as well as thoughtful consideration of your family, according to The Message in “Estate planning is stewardship.”
Some people think that if they make plans for their estate, their lives will end. They acknowledge that this doesn’t make sense, but still they feel that way. Others take a more cavalier approach and say that “someone else will have to deal with that mess when I’m gone.”
However, we should plan for the future, if only to ensure that our children and grandchildren, if we have them, or friends and loved ones, have an easier time of it when we pass away.
A thought-out estate plan is a gift to those we love.
Start by considering the people who are most important to you. This should include anyone in your care during your lifetime, and for whom you wish to provide care after your death. That may be your children, spouse, grandchildren, parents, nieces and nephews, as well as those you wish to take care of with either a monetary gift or a personal item that has meaning for you.
This is also the time to consider whether you’d like to leave some of your assets to a house of worship or other charity that has meaning to you. It might be an animal shelter, community center, or any place that you have a connection to. Charitable giving can also be a part of your legacy.
Your assets need to be listed in a careful inventory. It is important to include bank and investment accounts, your home, a second home or any rental property, cars, boats, jewelry, firearms and anything of significance. You may want to speak with your heirs to learn whether there are any of your personal possessions that have great meaning to them and figure out to whom you want to leave these items. Some of these items have more sentimental than market value, but they are equally important to address in an estate plan.
There are other assets to address: life insurance policies, annuities, IRAs and other retirement plans, along with pension accounts. Note that these assets likely have a beneficiary designation and they are not distributed by your will. Whoever the beneficiary is listed on these documents will receive these assets upon your death, regardless of what your will says.
If you have not reviewed these beneficiary designations in more than three years, it would be wise to review them. The IRA that you opened at your first job some thirty years ago may have designated someone you may not even know now! Once you pass, there will be no way to change any of these beneficiaries.
Work with an experienced estate planning attorney to create your last will and testament. For most people, a simple will can be used to transfer assets to heirs.
Many people express concern about the cost of estate planning. Remember that there are important and long-lasting decisions included in your estate plan, so it is worth the time, energy and money to make sure these plans are created properly.
It will most likely be difficult or impossible to complete the tasks, if all the facts are not available.
When you go to visit an elder law estate planning attorney, it is important to tell the truth about all aspects of your family members and other potential heirs. If not, it is possible the estate plan may need to be revised or recreated, your assets may not go where you would like and conflicts can arise in the family, according to the Times Herald-Record in “What you need to tell the elder law estate planning attorney.”
Elder law is all about planning for disability and incapacity, to include identifying the people who would make decisions for you, if you become incapacitated and protecting your hard-earned assets from the cost of nursing home care.
Estate planning is focused on transferring assets to the desired people, the way you want, when you want, with minimal court costs, taxes, or unnecessary legal fees and avoiding disputes over an inheritance.
Here are some of the things your attorney will need to know, with full disclosure from you:
Family dynamics. If you have a child you haven’t seen in years, you need to discuss the child. They may have a legal claim to your estate, and that must be planned for. Perhaps you want to include the child in the estate, perhaps you don’t. If you disinherit a child in a will and you die without a plan, that child becomes a necessary party to probate proceedings and has the right to contest your will.
Health issues are important to disclose. If you don’t have long-term care insurance, you need five years to protect assets in a Medicaid Asset Protection Trust (MAPT). Therefore, now may be the time to start a plan. If you have a child who is disabled and receives government benefits, you can leave them money in a Special Needs Trust (SNT).
Full disclosure of all your assets, income, how assets are titled, who the beneficiaries are on your IRAs, 401(k)s and life insurance policies, are all the kinds of information needed to create a comprehensive estate plan. Keeping secrets during this process could lead to a wide variety of problems for your family. Your entire estate could be consumed by taxes, or the cost of nursing home care.
There’s no doubt of the seriousness of these issues. You or your spouse may experience some strong emotions, while discussing them with your attorney. However, creating a proper estate plan, preparing for incapacity and loved ones with special challenges will provide you with peace of mind.
A will can prevent a tough situation from occurring.
There is a type of estate scenario that is described in the My San Antonio article, “Using power of attorney in daughter’s estate,” that demonstrates the importance of having a will, no matter how old you are. The challenge is untangling a house title, a mortgage and the taxes. Having a will would have prevented the entire situation from occurring.
Further details: the 19-year-old grandson’s mother died when he was 15. He has made his grandfather power of attorney. The house is not in the grandson’s name, nor is it in the grandfather’s name. The mortgage company won’t talk to either of them, since they are not owners of the home.
Does the grandfather need to be on the deed to the house before the mortgage company will talk to him? Why are the taxes in the grandson’s name? The mortgage has the home listed under the daughter’s estate.
When a person dies without a will (known as “intestate”) the state’s law determines who inherits their property. The law outlines the ownership, starting with the surviving spouse. Assuming that the daughter was not married, her son is second in line to inherit her assets.
The grandson needs to take the steps to get the deed to the house into his name. He will need the help of an experienced estate planning attorney. There are a few options, depending on state law: he can use an affidavit of heirship, a small estate affidavit, or do a determination of heirship in court. Depending on some complex details, which the estate lawyer will be able to help him with, the title to the property will be changed, when the correct legal documents are filed with the county clerk.
Once the deed is in his name, the mortgage company will recognize him as the legal owner of the property. They likely have a lien against the house, and mortgage payments must be made current. The mortgage company is required by law to allow the grandson, once he is the legal heir of the house, to continue paying on the loan.
As for that power of attorney — stop! Do not name the grandson as agent, nor should the grandson name the grandfather as agent. Revoke it or be certain that it was never signed. The attorney will also be able to help you with this. The grandfather has no authority over the daughter’s home, so the grandson as agent would have no authority either. He must act for himself to fix the deed issue.
Powers of attorney can be very valuable tools. If the situation were different, for instance, if the grandson was older and more knowledgeable and needed to help the grandparent, the grandparent could sign a legal document that would name the grandson as power of attorney. However, these documents should be prepared by a lawyer and they must be filed with the county clerk, only when the agent uses the power to sign a document that must be recorded with the county clerk.
An estate planning attorney can advise you in creating an estate plan that fits your unique situation and help prevent difficult situations from developing.
That doesn’t mean to say that the IRS scam isn’t still around. The IRS lists the “imposter calls” as one of its dirty dozen scams. Scam artists are flexible and quick to adapt to changing circumstances and trends.
More than 76,000 reports about fake Social Security calls were made in the twelve months ending in March, with reported losses of $19 million. That’s according to the Federal Trade Commission (FTC), which investigates consumer fraud.
By comparison, consumers reported $17 million in losses to the IRS scam during its peak time, the twelve months that ended in September 2019. This information comes from the FTC’s Consumer Sentinel Network database, a pool of millions of consumer complaints.
The typical loss to an individual consumer is about $1,500. However, those are only the people who have contacted the FTC to report their situation.
In most cases, the criminals are aggressive and try to scare their targets into action. The caller tells the person that their Social Security number has been suspended, because it has been involved in a crime or due to suspicious activity. The caller often asks the victim to confirm their Social Security number. They tell their victims that they must act fast and that their bank accounts will be frozen if they don’t act quickly.
Some people, especially seniors, are scared into action. However, the calls are not real.
The Social Security Administration does not make phone calls to individuals out of the blue. Don’t reveal or confirm your Social Security number to anyone who calls.
Don’t trust the number that appears on your caller ID. Thieves use technology to make it appear that the calls are coming from a government agency, but they are not.
In April, the inspector general of Social Security warned consumers that fake calls had spoofed the agency’s own fraud hotline number. That number will never appear on a consumer’s phone, as it is never used to make outgoing calls. The best thing to do is hang up.
If you are concerned that the call might be real, call the agency directly yourself, using a phone number that you have found and not the number given to you by the scammer.
Older adults are more vulnerable to these calls, because they have access to their lifetime savings and they often exhibit behavior that puts them at risk. During a study of scam awareness, more than three fourths of seniors did not recognize the number but still took the call.
A “cost of care” survey reveals high annual expenditures for care.
People are often unaware of the fact that health insurance and Medicare will pay little, if any, of the costs of long-term care, according to the New Hampshire Business Review in “The dilemma of long-term care.”
Some families may try to care for a loved one at home, but this is stressful and often becomes unmanageable. Assisted-living facilities can be wonderful alternatives, if the family can afford them. Long-term care insurance is considered one of the important financial protections as we age, but relatively few people have it.
A growing problem with Medicaid-paid care, is that it can be hard to find a facility that accepts it. Not to mention that the loved one’s assets have to be down to $2,500 (note: this number varies by state), which requires advance planning or becoming impoverished through the cost of care.
Most people have no idea how this part of healthcare works, and then when something occurs, the family is faced with a crisis.
The Department of Health and Human Services projects that as many as 70% of Americans age 65 and older will need long-term care during their lives, for roughly one to three years. Yet little more than a third of all Americans age 40 and older have set aside any money to pay for that care.
There are ways to pay for long-term care, but they require planning in advance. This is something people should start to look into, once they reach 50. The top reason to do the planning: to take the burden of care off of the shoulders of loved ones.
Families pay for long-term care with a mixture of assets:
Personal savings provide the most flexibility. This is not an option for many, as one half of American households with workers 55 and older had no retirement savings.
Veterans disability benefits can be used for long-term care services, but the non-disability benefits available to veterans are more limited. They may cover in-home services and adult day care, but not rent at an assisted living facility.
If a loved one owns a home, they can take out a reverse mortgage and use the lump sum or monthly payout for long-term healthcare needs. The money is repaid, when the home is sold or passed on to an heir.
Medicare will pay for some long-term care, but only under very limited conditions. It may cover skilled nursing care in a facility but not the care for daily living activities, including toileting, dressing and others. Coverage is all expenses for the first 20 days in a facility and then there is a daily co-pay of about $170 for the next 80 days, when all coverage stops.
Medicaid is the source of last resort, but what many families eventually turn to.
There are reasons for a will to be contested and one is the mental capacity of the client.
The best way to avoid a will contest, is to have a well-written will prepared by a qualified estate planning attorney, who can help avoid legal contests. It is also important the client be of sound mind and body. However, there are times when this is not the case and a challenge may occur, according to The Huntsville Item in “Legal Corner: Will contests while rare are messy.”
A will is contested, when the person challenging the will believes that it does not represent the true intent of the testator to pass the estate to the people he wanted.
A will must be written in the correct form and executed according to the law in order to be valid. This is why it is necessary to work with an estate planning attorney to create a will. A person may try to do it on their own, typing it out, downloading a form or copying a form, but because the law is very strict about the form and execution, many of these do-it-yourself wills end up being deemed invalid by the courts.
When the will is not valid, the laws of intestate are applied to the person’s estate. This is rarely in accordance with the person’s wishes, but at this point, it’s too late.
To make a will, the person must have “testamentary capacity.” That means that he or she knows what they are doing, what their estate includes and who the recipients of the estate will be. They also must not have been subject to undue influence. That means that the person making the will is so controlled and dominated by another person, that they were not able to make the will that they wanted.
When the sad day comes that a loved one passes, the family grieves. Each member will deal with the loss in their own way. For some people, the intense level of emotions can bring about conflicts. Sometimes these are the result of old battles that were never resolved. Sibling rivalry that’s been simmering for decades can emerge.
One of the goals of a properly prepared will, is to prevent any family fights after a loved one has passed.
Studies have found that the struggle over mom’s necklace or dad’s watch are not about the material items themselves, but over the symbolic meaning of those items. When families fight over inheritances, it’s rarely because of the actual item or even the money.
As the family’s older member, you want to do anything you can to avoid fracturing the family after you’ve gone.
Unless you take the steps to create a will and a strong estate plan, your loved ones could be entrenched in a long inheritance conflict that lasts years and consumes more resources than anyone can spare. However, with careful planning, you can avoid inheritance conflicts. After all, estate planning is more for those you love than for you.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances.
Some are created by the operation of a will. They are known as testamentary trusts—meaning that they came to be via the last will and testament. Another way to view trusts is in two categories: revocable or irrevocable. As the names imply, the revocable trust can be changed, and the irrevocable trust usually cannot be changed.
A testamentary trust is a revocable trust, since it may be changed during the life of the grantor. However, upon the death of the grantor, it becomes irrevocable.
In most instances, a revocable trust is managed for the benefit of the grantor, although the grantor also retains important rights over the trust during her or his lifetime. The rights of the grantor include the ability to instruct the trustee to distribute any of the assets in the trust to someone, the right to make changes to the trust and the right to terminate the trust at any time.
If the grantor becomes incapacitated, however, and cannot manage her or his finances, then the provisions in the trust document usually give the trustee the power to make discretionary distributions of income and principal to the grantor and, depending upon how the trust is created, to the grantor’s family.
Note that distributions from a living trust to a beneficiary other than the grantor, may be subject to gift taxes. Those are paid by the grantor. In 2019, the annual gift tax exclusion is $15,000. Therefore, if the distribution is under that level, no gift taxes need to be filed or paid.
When the grantor dies, the trust property is distributed to beneficiaries, as directed by the trust agreement.
Irrevocable trusts are established by a grantor and cannot be amended without the approval of the trustee and the beneficiaries of the trust. The major reason for creating such a trust in the past was to create estate and income tax advantages. However, the increase in the federal estate tax exemption means that a single individual’s estate won’t have to pay taxes, if the value of their assets is less than $11.4 million ($22.8 million for a married couple).
Once an irrevocable trust is established and assets are placed in it, those assets are not part of the grantor’s taxable estate, and trust earnings are not reported as income to the grantor.
The downside of an irrevocable trust is that the transfer of assets into the trust may be subject to gift taxes, if the amount that is transferred is greater than $15,000 multiplied by the number of trust beneficiaries. However, depending upon the size of the grantor’s estate, larger amounts may be transferred into an irrevocable trust without any gift tax liability to the grantor, if the synchronization between gift taxes and estate taxes is properly done. This is a complex strategy that requires an experienced trust and estate attorney.
Trusts are also used to address charitable giving and generating current income. These trusts are known as Charitable Remainder Trusts and are irrevocable in nature. There is a current beneficiary who is either the donor or another named individual and a remainder beneficiary, which is a qualified charitable organization. The trust document provides that the named beneficiary receives an income stream from the income produced by the trust assets, and when the grantor dies, the remaining assets of the trust pass to the charity.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and may include one or more trusts.
A recent case that best illustrates a predatory marriage: a 47-year-old caregiver is riding in a car to the funeral home with the sons of the man she has been taking care of, until he died at age 100. She announces that she and the man were married in secret a year ago.
This is not an easy case to deal with, because of a defect in the law. In New York, there is a “right of election” statute that permits a surviving spouse to claim a share in the estate of a deceased spouse, even if he or she was left nothing, as long as they were married on the date of the decedent’s death. Originally meant to shield a surviving spouse from being left nothing, this law is now being used by unscrupulous people to take financial advantage of the elderly.
Dishonest individuals marry mentally incapacitated seniors and then claim their right of election share.
These sham marriages can still result in the person receiving a share of the estate because there’s a flaw in this law. The elective share can only be barred, if there was a judgment declaring that the marriage was annulled in effect at the time of death of the spouse. If the predatory marriage is detected before death and a court order voids the marriage, only then can the elective share be denied. If the judgment of nullification is made after death, the surviving spouse can make a claim.
Like most scams, the person pursuing the predatory marriage will work hard to ensure that no one learns about the marriage, until after the person dies.
In contrast, there is a Mental Hygiene Law in New York State that authorizes the court to revoke any previously executed contract, if the court finds that the contract was made while the person was incapacitated. Marriage is treated as a contract under Mental Hygiene Law and a judgment declaring a marriage void can be issued even after death.
In the case of the 47-year-old woman who hoodwinked the elderly man, the family fought back in court and her claim was denied. Based on the evidence, the court found that she knew the man was mentally incapacitated and entered into the marriage to obtain monetary benefits.
A bill has been introduced in the New York Assembly and Senate that would amend the law to allow the courts to declare a judgment of annulment before or after the death of the spouse, thereby voiding the marriage and disqualifying the surviving spouse from claiming the elective share.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances.
The difficulty of selling a parent’s home after their passing, depends to a large degree on what kind of advance planning has taken place. Much also depends on the heir’s ability to ask for help and working with the right professionals in handling the sale of the home and managing the estate. The earlier the process begins, the better.
Parents can take steps while they are still living to ward off unnecessary complications. It may be a difficult conversation but having it will make the process easier and allow the family time to focus on their emotions, rather than the sale of property. Here are a few pointers:
Make sure your parents have a will. Many Americans do not. A survey from Caring.com found that only 42% of American adults had a will and other estate planning documents.
Be prepared to spend some money. Before a home is sold, there may be costs associated with maintaining the property and fixing any overdue repairs. Save all receipts and estimates.
Secure the property immediately. That may mean having the locks changed as soon as possible. Once an heir (or someone who believes they are or should be an heir) moves in, getting them out adds another layer of complications.
Get real about the value of the property. Have a real estate agent run a competitive market analysis on the property and consider an appraisal from a licensed appraisal. Avoid any accusations of impropriety—don’t hire a friend or family member. This needs to be all business.
Designate a contact person, usually the executor, to keep the heirs updated on how the sale of the house is progressing.
The biggest roadblock to selling the family house is often the emotional attachment of the children. It’s hard to clean out a family home, with all of the mementos, large and small. The longer the process takes, the harder it is.
This is not the time for any major renovations. There may be some cosmetic repairs that will make the house more marketable, but substantial improvements won’t impact the sale price. Remove all family belongings and show the house either empty or with professional staging to show its possibilities. Clean carpets, paint, if needed and have the landscaping cleaned up.
Keep tax consequences in mind. Depending on where the property is, where the heirs live and how much money is being inherited, there can be estate, inheritance and income taxes. It is usually best to selling an inherited property, as soon as the rights to it are received. When a property is inherited at death, the property value is “stepped up” to fair market value at the time of the owner’s death. That means that you can sell a property that was purchased in 1970 but not pay taxes on the value gained over those years.
Talk with an experienced estate planning attorney about what will happen when the home needs to be sold. It may be better for parents to create a revocable trust in advance, which will direct the sale, allow a child to continue living in the home for a certain period of time, or instruct the one child who loves the home so much to buy it from the trust. Trusts are typically easier to administer after parents pass away and can be very helpful in preventing family fights.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances.