Significant Language in Power of Attorney Regarding Primary Residence
Prior Post 11 discussed the advantages of a jointly-held residence being transferred to the community spouse for Medicaid purposes. The general idea presented was that after the applicant receives Medicaid, the community spouse would be free to sell the residence and the funds received would not be part of the Medicaid “pot.”
Therefore, a power of attorney must currently include language that indicates that if an individual enters a nursing home, the residence should be transferred to the community spouse. Such language should be in the power of attorney currently.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #38
Thursday, May 28, 2009
Tuesday, May 26, 2009
Transfer of Home to Caretaker Child - Revisited
Transfer of Home to Caretaker Child - Revisited
Post 6 stresses that property owned by applicant residing with a caretaker child is to be transferred at time of application for Medicaid. The article suggests that a current power of attorney be drafted so that if the applicant is incompetent at the time of application, a power of attorney can be used to transfer the residence to the caretaker child.
This is an example of tailoring the power of attorney for a client in an elder law situation.
That is, the power of attorney should be provide that in the event an applicant is in a nursing home and an application for Medicaid is submitted, approval by the Medicaid authorities that the child has provided the requisite care for two years is necessary before the property is transferred.
If the applicant is incompetent at the time, the power of attorney can accomplish this result.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #37
Post 6 stresses that property owned by applicant residing with a caretaker child is to be transferred at time of application for Medicaid. The article suggests that a current power of attorney be drafted so that if the applicant is incompetent at the time of application, a power of attorney can be used to transfer the residence to the caretaker child.
This is an example of tailoring the power of attorney for a client in an elder law situation.
That is, the power of attorney should be provide that in the event an applicant is in a nursing home and an application for Medicaid is submitted, approval by the Medicaid authorities that the child has provided the requisite care for two years is necessary before the property is transferred.
If the applicant is incompetent at the time, the power of attorney can accomplish this result.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #37
Friday, May 22, 2009
Sale of Remainder Interest
Sale of Remainder Interest
The technique discussed in this article is another planning idea for a single individual owning a home and living with a child. However, the child has no special status such as having provided care or being dependent. The potential applicant has been advised to have private funds approximating one year’s nursing home costs to provide flexibility in choice of facility. Protection of the home is desired.
Recommendation: Remainder interest should be sold to child. The tables for determining the remainder interest can be obtained from your Medicaid office.
The transaction results in the parent having retained a life interest in the property and the child having purchased the remainder for an assumed amount of $60,000. Consequences are as follows:
A. there will be no transfer penalty;
B. applicant will be eligible when resource requirement is met;
C. eligibility can be accelerated by the payment of debts and the acquisition of excludable resources;
D. the retained interest of the parent (i.e. life estate) has special administrative treatment by the State of New Jersey (no value assigned to retained interest, retained interest not subject to Medicaid lien).
Note: If remainder interest were deeded to a “protected transferee,” there would be no period of ineligibility with respect to the transfer (see Post 6).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #36
The technique discussed in this article is another planning idea for a single individual owning a home and living with a child. However, the child has no special status such as having provided care or being dependent. The potential applicant has been advised to have private funds approximating one year’s nursing home costs to provide flexibility in choice of facility. Protection of the home is desired.
Recommendation: Remainder interest should be sold to child. The tables for determining the remainder interest can be obtained from your Medicaid office.
The transaction results in the parent having retained a life interest in the property and the child having purchased the remainder for an assumed amount of $60,000. Consequences are as follows:
A. there will be no transfer penalty;
B. applicant will be eligible when resource requirement is met;
C. eligibility can be accelerated by the payment of debts and the acquisition of excludable resources;
D. the retained interest of the parent (i.e. life estate) has special administrative treatment by the State of New Jersey (no value assigned to retained interest, retained interest not subject to Medicaid lien).
Note: If remainder interest were deeded to a “protected transferee,” there would be no period of ineligibility with respect to the transfer (see Post 6).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #36
Monday, May 18, 2009
Property Owned Jointly With Other Than Spouse
Property Owned Jointly With Other Than Spouse
Applicant may own property jointly with a person other than a spouse. Typical events that give rise to joint ownership would be inheritance or acquisition of such joint property.
Joint property with right of survivorship with a caretaker child has been discussed in Post 23.
Generally, the two types of joint tenancy are joint ownership with right of survivorship (interest passes to survivor by operation of law upon death of co-owner) and tenancy in common (interest passes under person’s will). The administrative regulations provide that co-ownership will not preclude eligibility if the property cannot be sold because of the refusal of the co-owner to liquidate and is deemed to be an inaccessible resource. (N.J.A.C. 10:71-4.4(b)6.)
Therefore, any type of joint ownership will not preclude eligibility. However, as discussed in Post 23, the three inter-related goals of Medicaid planning are to establish Medicaid eligibility, avoid disqualification after eligibility and to avoid the Medicaid lien after the death of the recipient of benefits.
Although a joint tenancy or a tenancy in common will not affect eligibility, the other goals of avoiding disqualification after eligibility and avoidance of the lien after the death of the recipient of benefits are not accomplished by co-ownership. With respect to disqualification after eligibility, if the owner of a survivor interest predeceases a Medicaid recipient, the decedent’s interest will pass by operation of law to the recipient and will then constitute an “available resource.” Therefore, eligibility would be lost. If the recipient predeceased, recipient’s one-half interest would be subject to the Medicaid lien.
With respect to tenancy in common, the death of the co-tenant would sever the ownership of the property so that it would no longer be held jointly and the applicant’s interest would disqualify the applicant from Medicaid. If the applicant predeceased, the applicant’s one-half interest in the tenancy in common would be subject to the Medicaid lien.
A sale of either type of tenancy would result in one-half the cash proceeds passing to a Medicaid recipient, which would then disqualify the individual from Medicaid.
As in prior posts (for example Post 6), I have used the word “protected transferee” to mean an individual who can be gifted an applicant’s home without transfer penalty. Another category of protected transferee is a sibling (i) who has an equity interest in the home; and (ii) who was residing in the home for at least one year prior to the date of institutionalization. The situation usually arises when sibling is joint owner of a two-family dwelling. The need to avoid the Medicaid lien is not as compelling in this situation as in the circumstance of joint ownership with a child.
An interesting point regarding any form of joint ownership discussed in this article is the concept that a Medicaid recipient must use recurring monies to defray Medicaid’s outlay (i.e. the Medicaid reimbursement rate). Included in this contribution is one-half the property owned with the other individual. For these purposes, hypothetical deductions such as depreciation are not considered. The contribution to be made by the Medicaid recipient (assuming the house is rented) is one-half the net rental proceeds.
Conclusion: Although ownership of property with another will not preclude Medicaid eligibility, it can result in disqualification from eligibility or be subject to the Medicaid lien. Some, but not all, of those results have been discussed above.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #35
Applicant may own property jointly with a person other than a spouse. Typical events that give rise to joint ownership would be inheritance or acquisition of such joint property.
Joint property with right of survivorship with a caretaker child has been discussed in Post 23.
Generally, the two types of joint tenancy are joint ownership with right of survivorship (interest passes to survivor by operation of law upon death of co-owner) and tenancy in common (interest passes under person’s will). The administrative regulations provide that co-ownership will not preclude eligibility if the property cannot be sold because of the refusal of the co-owner to liquidate and is deemed to be an inaccessible resource. (N.J.A.C. 10:71-4.4(b)6.)
Therefore, any type of joint ownership will not preclude eligibility. However, as discussed in Post 23, the three inter-related goals of Medicaid planning are to establish Medicaid eligibility, avoid disqualification after eligibility and to avoid the Medicaid lien after the death of the recipient of benefits.
Although a joint tenancy or a tenancy in common will not affect eligibility, the other goals of avoiding disqualification after eligibility and avoidance of the lien after the death of the recipient of benefits are not accomplished by co-ownership. With respect to disqualification after eligibility, if the owner of a survivor interest predeceases a Medicaid recipient, the decedent’s interest will pass by operation of law to the recipient and will then constitute an “available resource.” Therefore, eligibility would be lost. If the recipient predeceased, recipient’s one-half interest would be subject to the Medicaid lien.
With respect to tenancy in common, the death of the co-tenant would sever the ownership of the property so that it would no longer be held jointly and the applicant’s interest would disqualify the applicant from Medicaid. If the applicant predeceased, the applicant’s one-half interest in the tenancy in common would be subject to the Medicaid lien.
A sale of either type of tenancy would result in one-half the cash proceeds passing to a Medicaid recipient, which would then disqualify the individual from Medicaid.
As in prior posts (for example Post 6), I have used the word “protected transferee” to mean an individual who can be gifted an applicant’s home without transfer penalty. Another category of protected transferee is a sibling (i) who has an equity interest in the home; and (ii) who was residing in the home for at least one year prior to the date of institutionalization. The situation usually arises when sibling is joint owner of a two-family dwelling. The need to avoid the Medicaid lien is not as compelling in this situation as in the circumstance of joint ownership with a child.
An interesting point regarding any form of joint ownership discussed in this article is the concept that a Medicaid recipient must use recurring monies to defray Medicaid’s outlay (i.e. the Medicaid reimbursement rate). Included in this contribution is one-half the property owned with the other individual. For these purposes, hypothetical deductions such as depreciation are not considered. The contribution to be made by the Medicaid recipient (assuming the house is rented) is one-half the net rental proceeds.
Conclusion: Although ownership of property with another will not preclude Medicaid eligibility, it can result in disqualification from eligibility or be subject to the Medicaid lien. Some, but not all, of those results have been discussed above.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #35
Monday, May 11, 2009
Caretaker Child Revisited
Caretaker Child Revisited
In a prior Post 6, I discussed in some detail the rationale for preparing a power of attorney for a potential applicant that allows the residence to be transferred to the child who provided care (i.e. “protected transferee”) if appropriate for Medicaid planning purposes. However, it is important to discuss the type of evidence to be adduced at the County Board of Social Services to influence the Board to make a decision that the child provided the requisite care so that the transfer can be made at that time either by the applicant (if competent) or under the power of attorney if applicant is then incompetent. I have found that two documents provided to the Board are sufficient for establishing the requisite care for the two-year period and the fact that such care permitted the individual to reside at home rather than go into a nursing home.
Firstly, an affidavit prepared by the child discussing the care provided (with any necessary documentation) is most helpful. In the simplest situation, I had a case in which a nurse of a prominent nursing home retired to take care of her mother at home. Obviously this is not the typical case but is an extreme example. The usual case involves a child living in the parent’s home who is working and provided certain elements of care. To prepare a proper affidavit inquiry should be made with respect to the following areas: whether the child worked near the residence of the applicant, to what extent did the child provide medicine which the applicant could not self-administer, whether the child was available during the day to immediately go home and take care of the potential applicant if necessary, how much time did the child spend with the potential applicant during non-working hours, to what extent the child would go on vacation (going on vacation is not fatal since I believe that intermittent care by another would not ruin the “protected transferee” status), to what extent the child helped the potential applicant with basic physical care needs such as cleaning, etc., the child’s role in providing transportation and coordination of care with the parent’s physicians, did child directly provide any basic medical care on a regular basis such as taking blood pressure. The list of such inquiries is infinite but the key is to show that but for the care of the child, the parent would need to go into a nursing home.
Secondly, it is recommended that a letter from the potential applicant’s physician stating to the best of his/her knowledge the child provided the necessary care to allow the potential applicant to remain at home. This letter should be brief and to the point. In my experience, I have not requested an affidavit from a physician since I feel it would be inappropriate.
Such an approach should get the desired result (transfer of home to child).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #34
In a prior Post 6, I discussed in some detail the rationale for preparing a power of attorney for a potential applicant that allows the residence to be transferred to the child who provided care (i.e. “protected transferee”) if appropriate for Medicaid planning purposes. However, it is important to discuss the type of evidence to be adduced at the County Board of Social Services to influence the Board to make a decision that the child provided the requisite care so that the transfer can be made at that time either by the applicant (if competent) or under the power of attorney if applicant is then incompetent. I have found that two documents provided to the Board are sufficient for establishing the requisite care for the two-year period and the fact that such care permitted the individual to reside at home rather than go into a nursing home.
Firstly, an affidavit prepared by the child discussing the care provided (with any necessary documentation) is most helpful. In the simplest situation, I had a case in which a nurse of a prominent nursing home retired to take care of her mother at home. Obviously this is not the typical case but is an extreme example. The usual case involves a child living in the parent’s home who is working and provided certain elements of care. To prepare a proper affidavit inquiry should be made with respect to the following areas: whether the child worked near the residence of the applicant, to what extent did the child provide medicine which the applicant could not self-administer, whether the child was available during the day to immediately go home and take care of the potential applicant if necessary, how much time did the child spend with the potential applicant during non-working hours, to what extent the child would go on vacation (going on vacation is not fatal since I believe that intermittent care by another would not ruin the “protected transferee” status), to what extent the child helped the potential applicant with basic physical care needs such as cleaning, etc., the child’s role in providing transportation and coordination of care with the parent’s physicians, did child directly provide any basic medical care on a regular basis such as taking blood pressure. The list of such inquiries is infinite but the key is to show that but for the care of the child, the parent would need to go into a nursing home.
Secondly, it is recommended that a letter from the potential applicant’s physician stating to the best of his/her knowledge the child provided the necessary care to allow the potential applicant to remain at home. This letter should be brief and to the point. In my experience, I have not requested an affidavit from a physician since I feel it would be inappropriate.
Such an approach should get the desired result (transfer of home to child).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #34
Thursday, May 7, 2009
The Problem of the Working Spouse
The Problem of the Working Spouse
On many occasions an institutionalized spouse will have a community spouse who is still employed. The earnings of the community spouse when added to pension and social security of both parties prevents Medicaid eligibility. The solution to such a problem is as follows:
1. Keep in mind that the resources of the community spouse after the applicant receives Medicaid are not considered as a factor in continuing eligibility.
2. In the hypothetical, but for the earnings of the community spouse, which were used to fund nursing home costs, the individual would be eligible for Medicaid.
3. Arrangements should be made for the community spouse to cease working for a limited period of time to eliminate the continuing flow of income from her earnings.
4. Medicaid eligibility, particularly giving consideration to the community spouse resource allowance, the current maximum being $109,560, should be an uncomplicated procedure.
5. The spouse should make arrangements that after the applicant receives Medicaid, the community spouse commences work and again her resources are not limited.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #33
On many occasions an institutionalized spouse will have a community spouse who is still employed. The earnings of the community spouse when added to pension and social security of both parties prevents Medicaid eligibility. The solution to such a problem is as follows:
1. Keep in mind that the resources of the community spouse after the applicant receives Medicaid are not considered as a factor in continuing eligibility.
2. In the hypothetical, but for the earnings of the community spouse, which were used to fund nursing home costs, the individual would be eligible for Medicaid.
3. Arrangements should be made for the community spouse to cease working for a limited period of time to eliminate the continuing flow of income from her earnings.
4. Medicaid eligibility, particularly giving consideration to the community spouse resource allowance, the current maximum being $109,560, should be an uncomplicated procedure.
5. The spouse should make arrangements that after the applicant receives Medicaid, the community spouse commences work and again her resources are not limited.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #33
Tuesday, May 5, 2009
The Need for a General Durable Power of Attorney
The Need for a General Durable Power of Attorney
One of the most important aspects of Medicaid planning is that there be access to assets of the applicant. If the applicant is incompetent, the power of attorney should be used to have access to these assets. The word “durable” refers to the fact that the power of attorney must have special language so that even if the applicant is incompetent, the assets can be used or liquidated.
Reference is made to Post 20 which indicates that a typical applicant might have bank accounts, securities, E bonds, IRA’s, life insurance policies and/or a residence. It is my practice to reference any type of asset an applicant may have to make sure the power of attorney can be used to liquidate such asset. However, not all companies will require that the power of attorney have language relating to the specific asset.
If an individual is not competent and there is no power of attorney or the power of attorney is not deemed to have access to the asset, a costly guardianship is required.
The power of attorney should not be pro forma (i.e. standardized). Particularly in the elder law area, the individual’s situation is to be considered in drafting the language for a power of attorney. This will be discussed further in future posts.
Generally, only a copy of a power of attorney is necessary except for real estate transactions. Also, the County Board of Social Services asks for a power of attorney as part of the application process.
It is important that the power of attorney be done as soon as possible, particularly if the individual is failing. A power of attorney can only be done if the individual is competent.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #32
Friday, May 1, 2009
The Problem of Recurrent Disqualification
The Problem of Recurrent Disqualification
A. A Medicaid recipient may be entitled to monies on a recurring basis, which will raise continuing disqualification problems.
1. For example, an individual may be entitled to several payments due to an asbestos class action recovery.
2. Such funds received during a given month not expended by the “first moment of the first day” of the subsequent month will result in disqualification if the resource requirement is exceeded.
B. Planning in advance may avoid disqualification.
1. Possible uses of such funds received on a recurrent basis are funeral expenses, clothing and outstanding medical bills.
2. If the Medicaid recipient has a caretaker agreement (see Post 17), which allows the recipient to reimburse a child or relative for prior services rendered by such individual, payments made under the agreement could solve the problem. Also, exempt transfers such as to a “disabled” child will ameliorate the problem.
3. All bills and expenses should be paid immediately. If receipt of the money causes the Medicaid recipient to exceed the resource requirement on the first of the next month, private payment must be made even if the monies available on the first of the month exceed the resource requirement by even a minimal amount.
4. Prepaid burial costs can be increased.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #31
A. A Medicaid recipient may be entitled to monies on a recurring basis, which will raise continuing disqualification problems.
1. For example, an individual may be entitled to several payments due to an asbestos class action recovery.
2. Such funds received during a given month not expended by the “first moment of the first day” of the subsequent month will result in disqualification if the resource requirement is exceeded.
B. Planning in advance may avoid disqualification.
1. Possible uses of such funds received on a recurrent basis are funeral expenses, clothing and outstanding medical bills.
2. If the Medicaid recipient has a caretaker agreement (see Post 17), which allows the recipient to reimburse a child or relative for prior services rendered by such individual, payments made under the agreement could solve the problem. Also, exempt transfers such as to a “disabled” child will ameliorate the problem.
3. All bills and expenses should be paid immediately. If receipt of the money causes the Medicaid recipient to exceed the resource requirement on the first of the next month, private payment must be made even if the monies available on the first of the month exceed the resource requirement by even a minimal amount.
4. Prepaid burial costs can be increased.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #31
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