Wrong Choices
Giving real estate to an adult child
One of the most common mistakes is for a parent to transfer the deed for real estate into the name of the child. There are several reasons this is not a good idea.
- There is no requirement that an adult must sell a home to pay for nursing care. In the worst case, the PA Department of Public Welfare might be able to attach a lien to recover Medical Assistance funds spent on nursing care after the death of the last titled owner of the property, assuming it was the spouse of the person who needed the nursing care.
- If the property is given to a child or anyone else within 60 months of the time of application for Medical Assistance, the transfer of ownership of the property will be determined to be a gift that will likely result in a substantial penalty.
- Divorce, bankruptcy, illness, or other unexpected events can impede a child’s ability to return the title of a transfer property to the adult. For this reason, a desire to transfer ownership from the older person who has owned and still occupies the property to another member of the family can best be accomplished by use of a trust. 4) If a child or another person is involved as a caregiver for two years before the time of nursing home admission, there is a way to transfer the deed without penalty or avoid estate recovery by PA DPW.
Gifting more than $500 per month
People often seek the advice of their accountant as to what they may do in relation to giving resources they hope not to need to their children or grandchildren. Sometimes this is in relation to a desire to help with college tuition, down payments on a house, or other situations. Accountants think about what is permitted within the context of the regulations of the Internal Revenue Service. IRS regulations presently permit gifts of up to $14,000 per person to any one individual in any one year. Therefore, an accountant is answering the question to the best of his or her ability when the accountant advises his or her client that a gift of up to $14,000 per person is “OK”. However, such a gift is not ”OK” for purposes of one’s eligibility with respect to receiving Medical Assistance. Those rules are that, in the 60 months prior to the time that one applies for Medical Assistance, there may be no month during which more than a total of $500 is gifted. The concept of gifting is complex. If a person has demonstrated historical charitable behavior, it is probable that such monthly gifting could be excluded, however, it would require expense and appeal of a caseworker’s literal interpretation of the law. Results cannot be guaranteed. Generally, it is best that no more than $500 of gifting be represented on any single bank statement. Significant cash withdrawals must be accounted for or they can be deemed to have resulted in gifts.
Basic Estate Planning Documents
Basic estate planning documents which work well for most persons do not make adequate provisions for older persons who reasonably anticipate the need to apply for government assistance to offset nursing care costs in excess of $100,000 per year. A durable financial power of attorney must have specific language in it which allows for unlimited gifting. Also, a person’s will should be altered to allow that a spouse does not receive more than the required elective share of 33%. Often, family dynamics change in such a manner that it is wise to look at provisions related to how any beneficiary would receive proceeds resulting from a will so that circumstances, such as an unanticipated gift to a minor grandchild, a gift to a child in the middle of a divorce or bankruptcy, a gift to a loved one who is receiving government assistance for a disability, or a spouse in a nursing home can be fully considered so that family assets can be protected and assigned for their intended use.
Annuities are misunderstood, not only by those who buy them, but also by those who sell them.
This is a particular problem for persons who seek to accelerate their qualification for a Veterans Administration special pension which provides assistance for care for those who need assistance with at least two of their activities of daily living (ADLs). Depending upon how an annuity is structured, it may be considered to be either a resource or source of income. In the worst of conditions, it is sometimes illogically considered to be both. Only immediate annuities which meet the very narrow requirements of the Deficit Reduction Act should be used by persons whose circumstances foreseeably could result in an application for Medical Assistance in a skilled nursing facility. Fixed annuities can be useful for persons who are planning for retirement; however, the termination penalties result in a loss of principal and should be considered carefully by persons who purchased these annuities to be in effect during a time for which it is reasonably foreseeable that they might need skilled nursing care and be unable to pay for it from their private funds.
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REGISTER HERE for LONG-TERM CARE PLANNINGPower of Attorney
A Power of Attorney can be used to give another person the right to sell a car, home, or other property in the place of the maker of the Power of Attorney. A Power of Attorney might be used to allow another person to sign a contract for the maker of the Power of Attorney (the person who makes a power of attorney is called the “principal”). It can be used to give another person the authority to make health care decisions, do financial transactions, or sign legal documents that the principal cannot do for one reason or another. With few exceptions, Powers of Attorney can give others the right to do any legal acts that the makers of the Powers of Attorney could do them themselves. A General Power of Attorney gives the “power of attorney Agent” or simply “Agent” (the legal name of the person who is authorized to act for the principal) very broad powers to do almost every legal act that the principal can do. When Elder Law Attorneys draft general Powers of Attorney, they still list the types of things the Agent can do but these powers are very broad. People often do general Powers of Attorney to plan ahead for the day when they may not be able to take care of things themselves. By doing the General Power of Attorney, they designate someone who can do these things for them.
Normal Powers of Attorney terminate if and when the principal becomes incompetent. Yet many people do Powers of Attorney for the sole purpose of designating someone else to act for them if they cannot act for themselves. It is precisely when persons can no longer do for themselves that a Power of Attorney is most valuable. To remedy this inconsistency, the law created a Durable Power of Attorney that remains effective even if a person becomes incompetent. The only thing that distinguishes a Durable Power of Attorney from a regular Power of Attorney is special wording that states that the power survives the principal’s incapacity. Even a Durable Power of Attorney, however, may be terminated under certain circumstances if court proceedings are filed. Most Powers of Attorney done today are durable.
Yes. At the time the Power of Attorney is signed, the principal must be capable of understanding the document. Although a Power of Attorney is still valid if and when a person becomes incompetent, the principal must understand what he or she is signing at the moment of execution. That means a person can be suffering from dementia or Alzheimer’s Disease or be otherwise incompetent sometimes but as long as they have a lucid moment and are competent at the moment they sign the Power of Attorney, it is valid even if they do not remember signing it at a later date. At the time it is signed, the principal must know what the Power of Attorney does, whom they are giving the Power of Attorney to, and what property may be affected by the Power of Attorney.
Any competent person eighteen years of age and older can serve as an agent. Certain financial institutions can also serve. There is no course of education that agent must complete or any test that Agent must pass. Because a Power of Attorney is such a potentially powerful document, agents should be chosen for reliability and trustworthiness. In the wrong hands, a Power of Attorney can be a license to steal. It can be a big responsibility to serve as an agent.
For Medicaid
Medicare is health insurance and covers medical services such as physician appointments, therapy, blood tests, x rays, medical procedures and hospitalization. Medicare will sometime pay for rehabilitation in a long-term care facility for a period of 20 to 100 days, but not longer. In long-term care, Medicaid covers the cost of ongoing support services for daily functioning, such as room and board in a nursing home.
Medicaid is a federal program that is overseen by the Center for Medicare and Medicaid Services (CMS). In Pennsylvania, Medicaid is called Medical Assistance and is administered by the Department of Human Services (DHS).
In Pennsylvania, Medicaid funds are not available to pay for assisted living or personal care.
For Medicaid to pay for care in a nursing home, an individual recipient must be determined to need a nursing home level of care by a physician and the local Office of Aging. An individual whose income is not greater than three times the poverty level may keep up to $8,000 of total resources, but may otherwise keep only $2,400. The cash value of life insurance counts as a resource, but one car and a residential home does not count as a resource.
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Empowering Clients with Holistic Planning at
Keystone Elder Law
At Keystone Elder Law, we believe that the physical, social, legal, and financial considerations of our clients all intertwine. We utilize an interdisciplinary approach to evaluate each area, which allows for the creation of a plan that addresses the concerns of the individual as a whole as well as the family. To this end, our model of practice includes a Care Coordinator (usually a nurse or social worker), whose expertise complements our team of attorneys.
When the road of life is smooth, decisions about legal and financial matters are easy to push aside for “a rainy day.” Planning ahead, however, will allow for more options as you view the map of where you’ve been and where you want to go. Don’t let a crisis limit your choices or derail your plans.
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