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03/30/16 Elder Law Training for OLLI at Auburn
1. ELDER LAW
ENHANCING THE LIVES OF SENIORS THROUGH EDUCATION
PLANNING FOR WHAT COMES NEXT
JAN NEAL
1
Part I
2. OVERVIEW OF TOPICS
2
Part I
• Older Americans Act Legal Assistance
• Materials needed to plan
• Authority Issues
• Long-term care levels of care
• Payment options
• Medicaid for Long-term care
Part II
• Special Needs Planning
• Probate
• Administration of Estates
• Last Remains
• Funeral Planning
3. OLDER AMERICANS ACT LEGAL ASSISTANCE
• What the service is: counsel and advice,
representation, information and referral and public
education for persons 60+ at no cost*
• What the service is not: based on income,
representation in criminal or fee generating cases or
non-specifically designated case types
* Contributions payable to the Area Agency on Aging are accepted and appreciated
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5. OLDER AMERICANS ACT LEGAL ASSISTANCE CASE TYPES
• access to public benefits (including SS/SSI/SSDI, Medicaid and Medicare, veterans benefits
and unemployment
• advance directives for financial, routine medical and end of life decision making and simple
wills
• issues related to guardianship with a focus on representation for older persons who are the
subject of guardianship actions
• access to available housing options, including low income housing programs that allow
seniors to stay independent in their homes and communities
• foreclosure or eviction proceedings that jeopardize the senior's ability to stay independent in
his or her home and community
• access to health care and the full benefit of appropriate long-term care private and public
financing options
• maintenance of long term financial solvency and economic security
• elder rights protections for seniors in long-term care (LTC) and those transferring from LTC
facilities to home and community-based care
• consumer issues and elder abuse including consumer fraud and financial exploitation
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8. • Deeds
• Mortgages
• Property Tax Assessments
• Statements for all assets in accounts (bank accounts begin to collect back
five years and consider using online accounts to accumulate)
• All insurance policies
• Determine beneficiaries on all accounts
• Existing wills and/or trusts
• Existing powers of attorneys, living wills, advance directives for health
care
• Titles to vehicles
• Probate/administration papers relevant to any property
• All online accounts with passwords
• Income (source, gross and net amount)
PAPERS TO ACCUMULATE
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10. AUTHORITY ISSUES
• Powers of Attorney including health care directives
• Guardianships/Conservatorships
• Social Security Representative Payees
• VA Fiduciaries
• Appointment of Representative before SSA,
Medicaid, Medicare, etc.
• Sponsors
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12. LONG-TERM CARE ISSUES
• Level of care
• Independent Living
• Assisted Living (to include Special Needs Assisted Living)
• Nursing Homes
• Payment Sources
• private pay
• Long Term Care Insurance*
• VA
• Medicare
• Medicaid
*Estate Preservation: An Alabama Long-Term Care Partnership Policy is one that qualifies for asset protection for an
amount of money equal to funds paid by an insurance company for long-term care (above and beyond the resource
limit allowable). To qualify a policy must be issued on or after March 1, 2009, cover an individual who was an
Alabama resident when coverage first became effective under the policy, be a tax-qualified policy under Section
7702(B)(b) of the IRS, meet stringent consumer protection standards, and meet certain inflation requirements.
This may or may not be a benefit that can be transferred to another state, depending upon whether that state has a
comparable Long-Term Care Partnership Policy Program.
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13. 13
NURSING HOME ISSUES
• Relatives cannot be required to sign as guarantors on the bill
• Sign so that personal liability is not incurred
• Care plans are developed to determine the individual needs of
each patient; families should participate in planning
• Patients can only be discharged if the facility cannot meet the
patient’s needs, the patient is presenting a danger to himself or
others, non-payment of the bill, or the facility is going out of
business
• The use of chemical or physical restraints is prohibited except in
rare circumstances and under a doctor’s orders. If use of
restraints is suspected contact the local Ombudsman.
14. MEDICARE PAYMENT FOR LONG-TERM CARE
• Very limited coverage
• While literature indicates payment for 100 days,
Medicare coverage usually stops after 20 days. Even if
it does not, a $161 per day copayment begins on day
21, and most supplemental policies do not pay that
copayment
• Must be hospitalized three days (inpatient, not
observation status) before being transferred to long-
term care
• Skilled nursing services must be ordered by the doctor
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15. STATE VETERANS HOMES
Bill Nichols State Veterans Home
1784 Elkahatchee Road, Alexander City, AL 35010
Phone: (256) 329-3311
Facsimile: (256) 329-3350
Floyd E. “Tut” Fann State Veterans Home
2701 Meridian Street
Huntsville, AL 35811
Phone: (256) 851-2807
Facsimile: (256) 851-2967
William F. Green State Veterans Home
300 Faulkner Drive
Bay Minette, AL 36507-1461
Phone: (251) 937-8049
Facsimile: (251) 937-2472
Colonel Robert L. Howard State Veterans Home
7054 Veterans Parkway
Pell City, AL 35125
Phone: (205) 338-6487
These facilities are subsidized by federal and state funds leaving the veteran with minimal expense (e.g.
$1500)
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16. • Application is similar to an audit in that Medicaid examines all financial
transactions for the previous five years
MEDICAID COVERAGE
• Applications cannot be pre-approved; the applicant must be residing in a
nursing home for an application to be accepted
• Medicaid eligibility varies state
to state
• Medicaid can pay three months
retroactively
• VA benefits for single veterans drop to
$90 after Medicaid is established, and
the applicant can keep that amount
plus the $30 for personal needs
• Medicaid Estate Recovery permits
Medicaid to recover fund from a
probate estate
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• For Medicaid to pay at all, a 30 day stay is required
17. 17
• Evaluation for eligibility is based on marital status due to spousal
impoverishment law designed to protect the spouse at home from complete
impoverishment.
• A single person’s gross income allowable is $2199; a Medicaid Qualifying
IncomeTrust (MQIT) is needed if income exceeds $2199; resources allowable are
$2000
• A married person’s allowable income is the same as a single person’s; only the
income of the institutionalized spouse counts, not the income of his or her
spouse at home; with spousal resources under $25,000, spouse at home keeps
all; with spousal resources over $50,000, the spouse at home can keep ½ of all
assets not to exceed $119,220; institutionalized spouse must spend down the
rest; the spousal resource determination is based on snap-shot date of when
institutionalized spouse entered long-term care (e.g. when entered the hospital if
he or she did not return home for 30 days or more); Minimum Monthly
Maintenance Needs Allowance permits the institutionalized spouse to allocate
income to spouse at home to bring income of spouse at home up to $1991. All
property of both spouses count; prenuptial agreements are not recognized by
Medicaid.
MEDICAID INCOME AND RESOURCE LIMITS
18. 18
HOW TO VALUE PROPERTY
• Real property is the value of the tax assessor’s appraised value, less any indebtedness on property. If the
property cannot be sold for an amount equal to that value, the property value can either be reassessed by the
county or, if the appraised value is over one year old, a commercial appraisal can be used to establish value
• Joint Accounts are considered the property to the applicant up to the full value unless proof can be provided
that funds were deposit by the joint owner
• Annuities are considered transfers of assets unless highly specific rules are met; lump sum annuities that can be
sold will be considered a resource in the amount of the current value of the annuity
• Life Insurance - The cash surrender value of any life insurance policy owned by the applicant/recipient is a
countable resource
• Trusts - whether the principal of a trust is a resource to the applicant/recipient depends on its availability to the
applicant/recipient by the terms of the trust instrument itself
• Promissory Notes, Loans, and Property Agreements (Mortgages) are considered resources, if the owner has the
legal right to sell them. If so, the resources should be counted in the amount of the outstanding principal
balance
• Stocks, Bonds, and Mutual Fund Shares are considered countable liquid resources according to their market
value
• Retirement accounts are the value of accessible funds less taxes owed on same
19. EXCLUDED RESOURCES
• The home if the spouse resides there (a lien cannot be taken and should be transferred to spouse at home)
• One vehicle with a value not exceeding $4,500 (may exceed that value if necessary to take nursing home
resident or spouse to receive medical care
• Burial space items including casket, vault, burial space, marker, opening and closing the grave, and cremation
container
• Up to $5000 cash value in life insurance or $5000 in a designated fund (not counting space items excluded) or
prepaid funeral contract
• Life Estates
• Personal property
• The home if a dependent relative other than a child under 21, blind or disabled lives there (a lien may be
taken)
• The home if a dependent child who is under age 21, blind or disabled lives there (no lien may be taken and
property may be transferred with no penalty)
• The home if a sibling with an equity interest lives there and was lawfully residing in the home for at least one
year immediately poor to the claimant’s admission to the nursing home (no lien may be taken and property
may be transferred with no penalty)
• The home if the claimant has a reasonable intent to return home (if claimant does return home, lien dissolves)
• Real property on which a joint owner lives for whom sale of the property would cause a loss of housing (a lien
may be taken)
• Rental property up to $6000 in value (a lien may or may not be taken)
• Real property the applicant is making a bona fide effort to sell (a lien will be taken)
• Property held in a Special Needs Trust
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20. 20
EXEMPT TRANSFERS
• The home to the spouse
• The home to a child under 21, blind or disabled for use as his
or her home
• The home to a sibling who has an equity interest and who was
residing in the home for at least one year immediately before
the admission to long-term care
• The home to a son or daughter who has lived with the
applicant for two years prior to the institutionalization who
provided care which allowed the claimant to live at home
rather than in an institution (if not transferred may be treated
as property excluded on which Medicaid takes a lien)
21. 21
• Gross income
• Minus $30 for personal needs allowance
• Minus funds to pay for unreimbursed medical expenses (e.g. Medicare Part B
premium)
• Minus Minimum Monthly Maintenance Allowance payable to spouse
= Personal Liability from income payable to nursing home
Difference in personal liability and nursing home charges is what Medicaid pays
During the wait for application approval, the personal liability must be paid, and
when approved Medicaid will pay back to the eligibility date
Medicaid is payor of last resort so do not pay the nursing home if the resident is
eligible for Medicaid or Medicaid may not pay when approved
POST ELIGIBILITY PERSONAL LIABILITY CALCULATION
22. 22
• For every $5800 transferred within five years of Medicaid application one month of penalty is
assigned
• A month of penalty means no eligibility is possible
• The penalty begins to run when the applicant would otherwise be eligible for Medicaid (in
other words, when the person is institutionalized and out of money)
• Do not confuse allowable $14,000 gift tax gifts with Medicaid gifting
• Application timing is important when gifts have been made to keep from triggering penalties
(do not let nursing home pressure you into premature filing of application)
• Sometimes planning involves gifting money, applying and being approved subject to the
penalty and paying with the gifted money during the penalty period
• Be aware of the fact that paying relatives to provide care can be considered a transfer of
assets unless specific caregiver agreements are established
• While spouse outside nursing home should leave nothing in will to institutionalized spouse, if
spouse at home dies, the omitted spouse who is a Medicaid recipient must claim up to
$15,000 for homestead exemption, $7,500 for personal property exemption and $15,000 for
family allowance (total $37,500) and elective share (about ⅓) or failure to claim is considered
a transfer of assets
TRANSFER OF ASSETS
23. 23
EXAMPLES OF MEDICAID APPLICATION
TIMING ERRORS
• Mrs. Jones transferred $200,000 to her children in January 2011. She
entered the nursing home September 2015. The nursing home told
her that the penalty on the transfer was only 34.48 months and she
should be in the clear now, so she applies. Because she applied during
the five years prior to application the penalty is triggered, and she
won’t qualify for Medicaid until 34.48 months from 09/15,
approximately August 2018. If she had waited to apply until February
2016, there would have been no penalty at all.
• Same scenario except this time Mrs. Jones did wait until February 2016
to apply. She marked the box indicating that she requested assistance
retroactively three months, and the full penalty was triggered because
she requested assistance during the five year look back. She requested
Medicaid for November 2015, establishing the look back to November
2010.
25. ELDER LAW
ENHANCING THE LIVES OF SENIORS THROUGH EDUCATION
PLANNING FOR WHAT COMES NEXT
JAN NEAL
25
Part II
26. SPECIAL NEEDS PLANNING
• Special Needs Trusts: Trusts created for disabled
persons to permit the set aside of funds to pay
for special needs without loss of public benefits.
Often used when personal injury proceeds are
received by person on public benefits but may
also be used for a spouse’s special needs rather
than spending down the share attributable to the
institutionalized spouse (e.g. to pay for private
room, sitters). Usually requires a Medicaid pay
back clauses
• ABLE Accounts: Accounts created to help pay
for disability-related expenses for persons who
became disabled prior to age 26 without loss of
public benefits. Limited to $14,000 contribution
yearly. Accumulation up to $100,000 permitted
before loss of SSI; accumulation up to $235,000
to $452,210 (depending on the state) before
loss of Medicaid.
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28. SETTLING ESTATES:
WILLS,TRUSTS, GIFTING,
ASSET TITLING
• It is important to understand the distinction between the probate estate and the non-probate estate
• Property in the probate estate requires court action to transfer property
• Through planning a person can decide whether to make property part of the probate estate or not
(trusts, asset titling, beneficiaries, life-time gifts)
• A will determines who takes the probate property
• The law of intestacy determines who takes the probate property in the absence of a will
• Often the will of the first spouse to die does not need to be probated, but the will of the last spouse
to die usually does need to be probated
• Plan for the liquid cash your estate will need (attorneys fees, out of pocket expense, home expenses
while property is being sold or estate is in the six month claim period)
• Estate tax becomes an issue only for estates passing $5,450,000
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29. 29
AVOIDING PROBATE:
HOW TO KEEP PROPERTY OUT OF YOUR PROBATE ESTATE
• Living Trusts are an option for property in different states, but all property must
be titled to the trust, and property encumbered by a mortgage usually cannot be
titled to a trust
• Life Gifts (e.g. transfer of home while retaining a life estate)
• Joint Ownership
• joint bank accounts
• joint tenants with right of survivorship on deeds (not transfer on death deed)
• Payable on death designations on bank accounts
• Transfer on Death (TOD) registration for securities
• Affidavit for Assignment of Title for a Vehicle from a Deceased Owner Whose
Estate Does Not Require Probate (Alabama Department of Revenue MVT 5-6) for
paid off vehicles
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HOW PROBATE PROPERTY IS DISTRIBUTED WITHOUT
A WILL
• If there are no children and no parents, all to the spouse
• If there are no children, but there are parents, first $100,000 plus ½ of balance over $100,000to the
spouse and ½ of the balance over $100,000 to the parent or parents
• if there is a spouse and a child or children by a pervious relationship, ½ to the spouse and ½ to the child
or children by the previous relationship
• if there is a spouse and a child or children by the surviving spouse, first $50,000 to the spouse plus ½ of
the balance over $50,000 to the spouse and ½ of the balance over $50,000 to the child or children by
the surviving spouse
• if there is no surviving spouse, then distribution in the following order:
• all to the child or children
• all the the parent or parents
• all to the siblings
• all to the grandparents
• all to the aunts and uncles
• all to the cousins
31. PROBATE PROCESS:
PASSING PROPERTY WITH A WILL
• Wills must be probated within 5 years of death
• A will may or may not need to be probated depending on the need to pass property
• A trust can be established in a will and is called a testamentary trust
• Procedure includes
• file the will and death certificate asking court to issue Letters Testamentary appointing Personal
Representative (Executor), along with proof of notification of next of kin and persons named in will
• if all parties sign waivers and will is self-proving, no hearing required
• Obtain a tax ID number for estate and pay any taxes
• gather and take possession of the assets
• notify known creditors and advertise for unknown creditors
• wait six months to give creditors an opportunity to file claims and settling debts of the estate
• pass property to beneficiaries named in the will (sometimes involves selling property after the claims
period has run)
• Medicaid estate recovery requires Medicaid to be notified as a creditor in cases where the decedent
received Medicaid benefits
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32. 32
SMALL ESTATE DISTRIBUTION
FOR ESTATES NOT EXCEEDING $28,052 IN 2016
• No real estate can be passed
• Petition under oath filed by spouse or distributees entitled to personal
assets of the estate in the Probate Court of the county where decedent
lived prior to death
• Provide death certificate
• If will existed, provide to court
• Provide names, addresses and ages of surviving spouse,
children,distributees
• Provide details concerning any debts, funeral expenses and a value of
each asset
• Publish at the instruction of the court
34. ADMINISTRATION OF ESTATES
WHEN YOU DIE WITHOUT A WILL
• File a petition in the Probate Court where the decedent lived at the time death asking that
the petitioner be named the Administer of the Estate and that Letters of Administration be
issued giving him or her power to act for the estate; give notice to the next of kin
• Hearing required unless all interested parties waive further notice
• Be bonded in an amount equal to the value of the personal property of the state plus one
year’s estimated income
• Gather the assets after Letters of Administration are issued
• Inventory the estate and file with the court within two months
• Give notice to known creditors and advertise for unknown creditors
• Wait six months and satisfy or dispute all claims
• Divide estate after the claims have been satisfied
• Probate court must approve administrator fee unless all interested persons agree and
consent
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35. 35
DISPOSITION OF REMAINS
• Specific burial or cremation wishes can be included
in a will, but such an arrangement has limited value
when you consider the immediate need to make
burial arrangements
• Code of Alabama 34-13-11 permits the making of an
affidavit naming a particular person to handle funeral
arrangements with specific instructions
• An affidavit may be useful in situations involving
second marriages where the deceased wished to be
buried beside first spouse
37. FUNERAL PLANNING
• The Federal Trade Commission (FTC) Funeral Rule requires open disclosure of costs in selling funeral
services and requires a generalize price list (GPL) be provided. You have the right to purchase only what you
want rather than being required to purchase a particular plan
• The Alabama Preened and Funeral Act of 2002 (Amended 2008) requires those who sell funeral or cemetery
merchandise pursuant to pre-need contracts to obtain a Certificate of Authority with reporting obligations
and requirements to set aside or purchase insurance to cover a portion of contract payments. Alabama
Department of Insurance monitors compliance.
• Cemetery operations remain largely unregulated in Alabama
• Pre-need policies freeze the cost of funeral services at today’s prices and avoid purchase decisions being
made during the time of funeral arrangements following death
• Whole life insurance can be assigned to the funeral home to defray the cost of a pre-need plan
• A price list will show the amount spent for space items vs non-space items which is important for Medicaid
eligibility
• Any amount may be spent on space items (casket, cremation container, vault, burial space, marker, opening
and closing the grave). All other pre-need plan items should total $5000 or less. When this is not the case it
is usually transporting the body out of state for burial that makes for higher costs
• Embalming is not required by law except in unusual circumstances such as shipping the body out of state
• Alabama has no restrictions on disposition of ashes (though a particular venue may have restrictions)
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39. ADDITIONAL RESOURCES
National Academy of Elder Law Attorneys: https://www.naela.org
Elder Law Answers: http://www.elderlawanswers.com
Special Needs Answers: http://specialneedsanswers.com
Alabama Benefit Checklist: http://www.slideshare.net/jan_neal/2016-m4a-alabama-benefit-checklist
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