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
Showing posts with label Power of Attorney. Show all posts
Showing posts with label Power of Attorney. Show all posts
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
Thursday, April 2, 2009
Importance of Liquidating Assets in the Medicaid Planning Process
Importance of Liquidating Assets in the Medicaid Planning Process
Reference is made to Post 12 that discusses basic planning situations referred to as “bread and butter” planning techniques. With respect to investments, the value fluctuates from day-to-day. Therefore, if we have a basic situation with an applicant without a community spouse (although would apply to a community spouse situation), the existence of investments precludes an exact determination of resources on the first day of any given month.
Therefore, as part of the pre-Medicaid plan, it is necessary that such assets be liquidated and the capital gain considered in the prepayment of taxes (if applicable).
Such rationale would also apply to assets such as IRA’s with investments within the IRA. Of course, the liquidation of the IRA gives rise to income tax consequences.
Also, it is necessary to prepare a power of attorney for the potential applicant. This is necessary for numerous reasons. However, with respect to an application for Medicaid, it is necessary that the assets of the applicant be “accessible” in the event liquidation is necessary and the applicant is not competent as Medicaid approaches.
In an ideal “bread and butter” situation, it is important to limit the factors to be considered in projecting the date of eligibility for Medicaid. Such factors would include the resources of the client, the individual’s pension and/or social security payments and the monthly cost of the nursing home (including extras). This matter becomes complicated if there are assets subject to fluctuation.
The following is the simplest form of the projection problem:
Applicant (single individual) has bank accounts of $40,000. Monthly social security checks are $1,000. Assume monthly nursing home charges of $6,000. Applying the social security payments against nursing home costs results in a “net” monthly cost of $5,000. Therefore, Medicaid eligibility is anticipated in eight months ($40,000 bank accounts divided by
$ 5,000 “net” monthly cost)
Of course, the above example is markedly simplified. Prior blogs have discussed issues that complicate the eligibility process such as payment of debts, liquidating resources, income tax liabilities, prepaid burial arrangements, life insurance, the handling of pension and social security payments and the recommended priority of payment of debts and expenditures.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #20
Reference is made to Post 12 that discusses basic planning situations referred to as “bread and butter” planning techniques. With respect to investments, the value fluctuates from day-to-day. Therefore, if we have a basic situation with an applicant without a community spouse (although would apply to a community spouse situation), the existence of investments precludes an exact determination of resources on the first day of any given month.
Therefore, as part of the pre-Medicaid plan, it is necessary that such assets be liquidated and the capital gain considered in the prepayment of taxes (if applicable).
Such rationale would also apply to assets such as IRA’s with investments within the IRA. Of course, the liquidation of the IRA gives rise to income tax consequences.
Also, it is necessary to prepare a power of attorney for the potential applicant. This is necessary for numerous reasons. However, with respect to an application for Medicaid, it is necessary that the assets of the applicant be “accessible” in the event liquidation is necessary and the applicant is not competent as Medicaid approaches.
In an ideal “bread and butter” situation, it is important to limit the factors to be considered in projecting the date of eligibility for Medicaid. Such factors would include the resources of the client, the individual’s pension and/or social security payments and the monthly cost of the nursing home (including extras). This matter becomes complicated if there are assets subject to fluctuation.
The following is the simplest form of the projection problem:
Applicant (single individual) has bank accounts of $40,000. Monthly social security checks are $1,000. Assume monthly nursing home charges of $6,000. Applying the social security payments against nursing home costs results in a “net” monthly cost of $5,000. Therefore, Medicaid eligibility is anticipated in eight months ($40,000 bank accounts divided by
$ 5,000 “net” monthly cost)
Of course, the above example is markedly simplified. Prior blogs have discussed issues that complicate the eligibility process such as payment of debts, liquidating resources, income tax liabilities, prepaid burial arrangements, life insurance, the handling of pension and social security payments and the recommended priority of payment of debts and expenditures.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #20
Monday, March 2, 2009
Property Owned by Applicant Residing with Caretaker Child
Property Owned by Applicant Residing with Caretaker Child
The transfer rules do not apply to the transfer of the home to designated individuals. The materials refer to such individuals as “protected transferees.” For the purposes of the following discussion, the “protected transferee” is assumed to be a child of the individual who provided care to the individual at home.
A. The child must have (i) resided in the home for at least two years prior to institutionalization; and (ii) provided care which permitted individual to reside at home rather than go into a nursing home.
Note: The statute is silent as to the permissible time of transfer.
B. The subjective determination of whether a child has provided the requisite care is made by the County Board upon application for Medicaid. An unfavorable determination by the Board results in a denial of eligibility and a substantial period of ineligibility.
Planning Point: The request for protected transferee status should be made in conjunction with the application for Medicaid. This approach avoids the risk of a period of ineligibility. If the applicant is incompetent, seek court approval for the transfer in a guardianship proceeding and incorporate the written approval by the County Board in your papers.
Planning Point Before Medicaid Application Process: Counsel will often be presented with situation in which a child is residing with applicant in applicant’s residence and applicant-client desires Medicaid planning and does not desire to transfer the home (or counsel is of the opinion that home should be transferred as part of the Medicaid application process). Counsel should incorporate language in potential applicant’s power of attorney that allows residence to be transferred to child if appropriate for Medicaid planning purposes.
C. If protected transferee is one of several children who are equal beneficiaries under the applicant’s will, arrangements should be made by the children to avoid litigation. However, the transfer should be made solely to the child with protected status. Written approval to the transfer from the other children should be obtained if transfer is being made pursuant to a guardianship proceeding.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2009, Post #6
The transfer rules do not apply to the transfer of the home to designated individuals. The materials refer to such individuals as “protected transferees.” For the purposes of the following discussion, the “protected transferee” is assumed to be a child of the individual who provided care to the individual at home.
A. The child must have (i) resided in the home for at least two years prior to institutionalization; and (ii) provided care which permitted individual to reside at home rather than go into a nursing home.
Note: The statute is silent as to the permissible time of transfer.
B. The subjective determination of whether a child has provided the requisite care is made by the County Board upon application for Medicaid. An unfavorable determination by the Board results in a denial of eligibility and a substantial period of ineligibility.
Planning Point: The request for protected transferee status should be made in conjunction with the application for Medicaid. This approach avoids the risk of a period of ineligibility. If the applicant is incompetent, seek court approval for the transfer in a guardianship proceeding and incorporate the written approval by the County Board in your papers.
Planning Point Before Medicaid Application Process: Counsel will often be presented with situation in which a child is residing with applicant in applicant’s residence and applicant-client desires Medicaid planning and does not desire to transfer the home (or counsel is of the opinion that home should be transferred as part of the Medicaid application process). Counsel should incorporate language in potential applicant’s power of attorney that allows residence to be transferred to child if appropriate for Medicaid planning purposes.
C. If protected transferee is one of several children who are equal beneficiaries under the applicant’s will, arrangements should be made by the children to avoid litigation. However, the transfer should be made solely to the child with protected status. Written approval to the transfer from the other children should be obtained if transfer is being made pursuant to a guardianship proceeding.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2009, Post #6
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