New York Elder Law Attorney Blog

Our New York elder law estate planning lawyers understand that handling long-term planning issues can be particularly delicate when there are second marriages involved. However, it is in these situations, with blended families, when this sort of planning is absolutely critical. Many adult children have natural concern when their parent remarries. Obviously there are inheritance planning issues, and it is vital that seniors who remarry make their wishes very clear about who they'd like to receive what. Failure to do so opens the door to strong disagreement and infighting between those involved. The family glue can come undone even among blood relatives, and there are often even less ties keeping fights in check when blended families are involved.

Beyond inheritance issues, local families should also take note of the New York elder law concerns which are implicated by second marriages and blended families. Decisions about naming a Health Care Proxy and Power of Attorney in the event of disability can present some disagreement when seniors remarry.

An article this weekend in the Laurel Leader-Call referred to another issue regarding the long-term care planning problem in the context of second marriages. The story discussed two seniors who met at an assisted living facility, fell in love, and married. Eventually one of the partners began a physical and mental decline and needed to be moved to a nursing home. The couple did not realize that Medicaid could have been applied for to help support those nursing home costs. If the partner whose health deteriorated passes away, their life savings may be entirely exhausted in providing for the long-term care. As a result, the surviving spouse is often left in dire straits when his or her own health deteriorates and they have a need for skilled nursing care. What often happens is that adult children are forced to scramble in crisis mode to figure out how to pay for the care the elder needs. A range of issues are present when those adult children are step-children who may not have as close a connection with the senior.

Blended families and second marriages raise a variety of concerns that should be accounted for by prudent families. Both estate planning and elder law issues are raised. The issues are often complex, and so professional help is always advisable. It is particularly important to ensure that the professional which is sought out has experience in both areas: elder law and estate planning. Failure to account for disability and long-term care issues may make inheritance and tax planning ineffective (and vice versa). All parts of the planning must work together to ensure that they are effective at the moment when they are needed.

See Our Related Blog Posts:

New York Inheritance Issues in Second Marriages

Surviving Spouse's Use of the Home in Second Marriages

The single most important reason to visit a New York elder law attorney is to learn about various Medicaid Strategies to protect assets from nursing home costs. No matter what one's situation in life--whether in excellent health with long-term care decades away, on the nursing home doorstep, or even already in a home--there are planning options available to assist families. In each case the assistance of professional help is essential. Mistakes could lead to Medicaid penalties that put families in difficult financial situations and eliminate any chance of leaving an inheritance.

For example, yesterday Elder Law Answers discussed a New York appellate decision that upheld a Medicaid penalty where a written agreement was missing in an asset transfer between mother and daughter. In that case, a woman was entering a nursing home. She transferred money from a revocable trust and gave it to her daughter for less than fair market value and without a written agreement providing for repayment. Medicaid investigators learned of the transfer and determined that it triggered a penalty period whereby the woman would not be eligible for benefits for nearly fifteen months. Her family will now have to come up with the resources to provide the necessary care during the penalty period.

When properly executed a "gift and loan" strategy can be used to save some of a senior's assets from being consumed by long-term care costs--even when on the nursing home doorstep. This technique involves gifting one half of assets to a loved one and then loaning the other half. The loan would take the form of a promissory note where the family member agrees to repay the loan at a certain monthly amount with modest interest. Medicaid is then applied for following the gift and the loan. The gift will trigger a penalty period based on the size of the gift amount, but the loan is ignored because it must be repaid. The loan repayment can then be used to pay for nursing homes costs during this penalty period. In this way, half of an estate may be saved as an inheritance even when little planning has been conducted prior to entering a long-term care facility.

Continue reading "Expert Advice Crucial To Avoid Medicaid Penalties For Nursing Home Benefits" »

Helping residents ensure that they receive the long-term care that they need without depleting their assets is at the core of all New York elder law services. Some reports indicate that about two-thirds of Americans who reach the age of sixty five will need long-term care at some point. Most often this constitutes specialized aid in a nursing home or related assisted-living facility. The cost of this care is high. Without forethought and planning the financial toll of these services may cause area residents to lose property and assets that they built over a lifetime.

Fortunately, a professional in this area can share information on New York Medicaid strategies to protect one's estate. Usually the best options involve use of long-term care insurance or creation of a Medicaid Asset Protection Trust (MAPT). The insurance option is generally the most preferable, because it pays the cost of having caretakers come into a senior's home to provide necessary assistance. This allows residents to "age in place" without the need to leave their own dwelling.

Earlier this month the Daily Star reported on the immense benefit that comes with long-term care insurance for those who are capable of buying coverage. Not surprisingly, timing matters when it comes to this insurance. The younger one is when they begin the policy, the more affordable the premiums. A Wall Street Journal article recently explained how an average policy for a 45-year-old would be around one-third the yearly cost that a 65-year-old would pay for the same coverage.

As with all types of insurance, a variety of forms can be purchased depending on the needs and desires of the beneficiary. One must choose between 'indemnity" and "reimbursement" policies, the amount of coverage to take out, whether there will be an "elimination" period, and similar details. Many families may also chose to pair the insurance with the creation of a MAPT.

Unfortunately, depending on one's age and medical condition, some find it difficult to purchase this insurance in any form. In those cases, other options exist, like the MAPT or the "Gift and Loan" strategy for seniors on the nursing home doorstep.

Continue reading "Long-Term Care Insurance is Key Medicaid Strategy to Protect Assets & Allow Home Care" »

Many New Yorkers will one day be called to help care for their elderly parents. The majority of those caregivers report that the complexities and challenges of the process cannot be fully grasped until one experiences them firsthand. There is often no easy way to handle the emotional and financial toll incurred while helping an elderly loved one when they need it most. Our New York elder law lawyers know well the challenges so that many local families face as they work through this experience.

A new book released last week by New York Times reporter Jane Gross offers a first-hand look at how her own New York family struggled through the process of helping their elderly mother. In "A Bittersweet Season" the writer shares the tumultuous way in which she tried to navigate the eldercare system. She reports on her family's confusion with Medicare and Medicaid programs and other problematic parts of the American health-care system as it relates to the elderly. The book also shares the impact that the time had on her mother's finances. An itemized ledger is revealed which imparts the true monetary cost incurred by her loved one throughout this time in her life.

In the new volume the author explains how her family was unprepared for the experience. In some aspects the main take-away from book is summarized by Ms. Gross when she writes that "being clueless--utterly clueless--is the central and unavoidable part of this experience." As difficult as the process is on many families, there are resources available to ease that uncertainty. In fact, a main lesson from the book is the need for families to do what they can to prepare for the process ahead of time.

Continue reading "New York Writer Releases New Book Explaining Complexity of Elder Care System" »

by Michael Ettinger, Esq.

I am unsure how many of you have run into this scam. I have seen it off and on for the last few years and think all should know about it. These companies that flog Medicaid annuities have a deal going with assisted living facilities that essentially says this. We will advertise and promote VA benefits to seniors. When they call us we will refer them to your facility provided you recommend our services, for people who come to you, in assisting them in the VA application (free of charge) and for financial planning. The company is actually in the business of selling Medicaid annuities and they give out Medicaid advice consistent only with the one product they have to sell.

Here is what happened in an actual case in my office recently. Client was told by the assisted living facility to contact the VA assistance company to help "expedite" the process. Company told the client it would take three months to get benefits. It is now nine months and nothing has been received by the family. Client was also told that they did not have to do anything now to protect assets because they could purchase a Medicaid annuity if and when she had to go into a nursing home. Turns out that client has rallied nicely and will be staying in assisted living for the foreseeable future. Family is now setting up a Medicaid Asset Protection Trust (MAPT) but nine months later than they should have but for the poor advice received by the annuity floggers. But also consider this: had the client needed nursing home care, it turned out that the HCFA life expectancy was only 5.5 years which the client, in this case, might have well outlived. The client was never told about the requirement that the annuity be actuarially sound (i.e. all the money had to be paid back to her within the 5.5 years) and what that meant or what the alternatives were. Client, in this latter case, would have been better off with a gift and loan strategy.

The client will be meeting with the assisted living facility next week and sharing this information with them but the lesson for all should be that a New York Elder Law attorney should be consulted when disability occurs or is threatened in order to get all of the options on the table.

Medicaid Supervisor for Ettinger Law Firm, Elizabeth Schalk, has been reviewing Medicaid applications for over fifteen years. Having worked in this capacity for a nursing home and an elder law estate planning law firm, Schalk has gained valuable insight and experience from counseling New York State residents in various counties about receiving Medicaid assistance.

"The most frequent thing I see is when someone's mom or dad is sick and s/he knows it will be a short time before his/her parent will have to go into a nursing home. All of a sudden, money gets transferred out of the sick parent's resources. The thinking behind this is that that this will make his or her parent eligible for Medicaid to pay for nursing home costs. Nothing can be further from the truth. In fact, these kinds of "gifts" can cause a delay in Medicaid benefits."

When a person transfers assets and then receives or applies for Medicaid-covered nursing home services, the local New York Department of Social Services ''looks back'' at financial transactions made within 60 months or five years from the first date on which the person was subsequently institutionalized and applied for Medicaid coverage.

A person in a nursing home or receiving equivalent services in a hospital is made ineligible for Medicaid coverage for a period of time after a gift or transfer of resources by the person or his or her spouse.

The person is ineligible for a period equal to the value of the resource divided by the average cost of nursing facility services to a private patient in the community.

The penalty period is based on the total amount of transfers and/or gifts divided by the New York State Regional rate set for each county by the NYS Department of Health in January of each year. The length of the ineligibility period is calculated by dividing the total, cumulative, uncompensated value of the transferred assets by the average monthly cost to a private pay patient of nursing home care in the applicant's geographic area as of the date of the application for Medicaid.

In New York City the average cost for nursing facility services for 2011 is presumed to be $10,579.00 per month. In Dutchess, Orange, Putnam, Rockland and Westchester counties it is $10,105.00. In Albany and surrounding counties it is $8,323.00.

If gifts are made into a special needs trust, an applicant may be exempt from the five year look back period penalty. Or, if gifts are a normal gifting pattern such as the same gifts each year for Christmas and written verification can be provided prior to the look-back period, these kinds of gifts often cannot be counted as a transfer for Medicaid purposes.

Before gifting or transferring money out of an estate, and especially if a nursing home is imminent, consulting an experienced New York elder law attorney with an on-staff Medicaid supervisor may assist in avoiding unnecessary delays in receiving state assistance.

written by A.K. Lehmann, ABA Paralegal

by Bonnie Kraham, Esq.

Most of us don't want to end our days in a nursing home, and would rather "age in place," so it's important to become familiar with available home health care services.

There are three major ways to pay for home health care: self-pay, long-term care insurance, or Medicaid, which is government provided health insurance for those whose assets have been depleted. Medicare, which is government provided health insurance for the elderly, only has limited community home health care. A New York elder law attorney can help to decide which one is the best option.

In general, "community" Medicaid programs, for home care, do not have a "look-back period," that is, Medicaid does not "look back" to see if any transfers (gifts) were made which would make the person ineligible for a certain period of time. Therefore, assets can usually be transferred before applying for community Medicaid without penalty, unlike the rules for "nursing home" Medicaid.

If you meet the asset and income rules, following is a list of some of the home health care services covered by Medicaid:

Personal Care Aide Program. Agencies, paid by Medicaid, employ aides who give custodial level services based on the Activities of Daily Living (ADL's) - feeding, toileting, grooming, bathing, ambulating and transferring. A patient must need help with at least two ADL's.

Consumer-Directed Program. The services are the same as above but the patient, or adult family member, selects the aides, rather than going through an agency. The home attendant cannot be an immediate family member.

Certified Home Health Aide Services. This program usually covers the cost for 45 days after hospitalization. The aide performs health care under the supervision of a registered nurse or licensed therapist. The covered activities include the ADL's and possibly skilled services such as special meals, and tube feedings if the patient is self-directing.

Lombardi Program. Also referred to as the "nursing home without walls," this is the long-term home health care program, the equivalent of a nursing home level of care. The cost for the care cannot exceed 75% of nursing home costs. Availability is limited. The Lombardi program and other similar programs have a five-year look-back period for any asset transfers which would create a "penalty period," or period of ineligibility for Medicaid.

To find other home health care services, contact your county's Office for the Aging for a list of local providers. Orange County (845-615-3700) or Sullivan County (845-807-0241) and Ulster County (845-340-3456)

by Michael Ettinger, Esq.

Long-term care insurance (LTCI) and the Medicaid Asset Protection Trust (MAPT) are often thought of an alternatives to each other. They are not. While LTCI is both a shield and a sword, the MAPT is a shield only.

LTCI protects your assets and income from the costs of care. But it has a positive effect (the sword) in that it actually pays for someone to come into your home and care for you there. The MAPT protects assets, like your home and your life savings, but it does not protect your income (pensions, social security, interest, dividends, etc.). The MAPT has no positive effect in terms of providing care. It is solely a defensive tactic. That being said, in the event LTCI is unavailable to the client for medical or financial reasons, the MAPT is a wonderful tool. And there is truth in the saying that a good defense is the best offense. With the MAPT in place five years ahead of time, the client's assets are protected and Medicaid will pay for the cost of care, over and above what your income provides. If you have a spouse at home, they may keep about $3,000 per month of the couple's combined income and sometimes more.

Our stated preference for clients is LTCI, if available. Most clients would prefer to "age in place" or, in other words, stay in their own home and receive home care if needed. Here, the LTCI stretches your dollars, to allow you to remain in the home for years more than you might have been able to afford otherwise. If your spouse is unable to care for themselves, it allows you to call in extra help so that you do not wear yourself out acting as a caregiver in your later years.

Some clients have adopted a hybrid approach when it comes to LTCI and the MAPT. They purposely underfund the LTCI, say taking a $200/day benefit ($6,000/month) instead of a $400/day benefit ($12,000/month). They also establish the MAPT and transfer their assets to the trust. The thinking is that the $200/day will pay for the home care that they may need and want, at half the cost of the full policy. On the other hand, if they end up in a nursing home, they won't lose their assets due to the $6,000/month they may be short, and Medicaid will pick up the difference.

There are no right and wrong answers in deciding which is the best avenue to take when considering protecting your assets from the high costs of long-term care. We have found, however, that an open discussion between the client and the experienced elder law attorney, with all of the facts and circumstances on the table, often yields the most satisfactory result.

by Michael Ettinger, Esq.

What do you do when a client comes in to see you and says that his mother is going into a nursing home and she has $300,000 in assets. In fact, mom scrimped and saved all of her life to have this nest egg and now she desperately wants to see her children get an inheritance.

Although you may protect all of your assets by planning five years ahead of time with a Medicaid Asset Protection Trust, all is not lost if nothing has been done and the client finds herself on the nursing home doorstep.

The advanced elder law technique, used to protect assets at the last minute, is called "half-a-loaf" planning. Here's how it works. Let's assume, for the purposes of our example, that the nursing home costs $10,000 a month. When mom goes into the nursing home, we gift one-half of the nest egg, in this case one-half of $300,000, or $150,000, to her children. Then we lend the other $150,000 to the children and they execute a promissory note agreeing to repay the $150,000 in fifteen monthly payments of $10,000 per month, together with a modest amount of interest. Now we apply for Medicaid benefits. Medicaid will impose a penalty period (i.e. they will refuse to pay) for 15 months on the grounds that the gift of $150,000 could have been used to pay for mom's care for 15 months. Medicaid ignores the loan since it was not a gift. It is going to be paid back, with interest, according to the terms of the promissory note. What happens is that the fifteen loan repayment installments will be used to pay for mom's nursing home care during the penalty period. Just when the loan repayments are finished, the penalty period expires and Medicaid begins to pick up the tab. Lo and behold, the children get to keep the $150,000 gift and mom has saved some of the inheritance for her children.

Also known as the "gift and loan" strategy, half-a-loaf planning has been approved by New York State Department of Social Services.

And of course everyone knows what half-a-loaf is better than, right?

by Michael Ettinger, Attorney at Law
The Medicaid Asset Protection Trust (MAPT) is a technique commonly used by elder law attorneys. It consists of an irrevocable trust, usually set up by a parent of parents sixty-five and older. One or more of the adult children are named as "trustees" to manage the trust for the benefit of the "beneficiaries" who remain the parents during their lifetimes. For example, the parents retain the right to the exclusive use and enjoyment of the home and the income from all of the trust assets. The establishment and "funding" of the trust, i.e. retitling the home and the investments in the name of the trust, starts the five year look-back period running. After five years, those assets become exempt and are protected from the costs of long-term care.

Once the MAPT is established, there are certain things the parties can and cannot do. Below are a list of the "Do's and Don'ts" concerning the MAPT.

Do make all transfers to your trust, as advised by the law firm, in a timely manner.
Do use trust assets for repairs or improvements to the home or other property in the trust.
Do use trust assets for payment of real estate taxes and homeowners insurance.
Do take dividends and income on trust assets on at least a quarterly basis.
Do call the law firm when you wish to make a gift from the trust to any of your beneficiaries.
Do call the law firm when a Grantor needs Medicaid benefits or dies.
Do call the law firm when personal or financial circumstances change significantly.
Do call the law firm if you wish to change trustees or break the trust.
Do provide your homeowner's insurance company with the "letter of instruction" and a copy of the trust for real property transferred to the trust.
Do provide your CPA or tax preparer with the "letter of instruction" regarding the trust tax return
and the "letter of instruction" tax deductibility of legal fees.
Do choose your trustee carefully to avoid the expense (and unpleasantness) of changing
the trustee.
Do call the law firm if you want to take out a reverse mortgage on the property in the trust.

Don't use trust assets to pay telephone or utility bills.
Don't use trust assets to pay personal expenses.
Don't use trust assets to purchase an automobile.
Don't take principal or capital gains from trust assets.
Don't transfer IRA's or 401(k)'s to the trust.
Don't allow beneficiaries to return to the trust or the Grantor any gifts made from trust assets.
Don't make additional transfers to the trust without advising the law firm.

by Michael Ettinger, Esq.
"Spousal refusal" is a legally valid Medicaid planning option in just three states: New York, Florida and Connecticut. By way of background, certain income and assets are exempt from Medicaid if there is a spouse. Generally, the spouse at home, known as the "community spouse" may keep about $3,000 per month of the couple's combined income and about $100,000 of the assets or "resources". Not included in those figures are any other exempt assets, such as a home and one automobile. The spouse who is being cared for in a facility is known as the "institutionalized spouse".

Many a spouse has advised us that they simply cannot afford to live on the allowances that Medicaid provides. This is where spousal refusal comes in. We start by shifting excess assets into the name of the community spouse. He or she then signs a document which the elder law attorney prepares and files with the Department of Social Services (DSS) indicating that they refuse to contributed their income and assets to the care of the ill spouse since they need those income and assets for their own care and well-being. Note that you may not refuse your spouse's own income over the $3,000 per month exemption as it is not coming to you.

Once the community spouse invokes their right to refuse, an option granted to New Yorkers since 1998, and all of the other myriad of requirements of the Medicaid application are met, the state Medicaid program must pay for the care of the institutionalized spouse.

After Medicaid has been granted, DSS may institute a lawsuit seeking to recover the cost of care from the refusing spouse. Nevertheless, there are a few reasons why spousal refusal make sense, even in light of this risk. First, in many instances, DSS never invokes this right. Secondly, these lawsuits are often settled for significantly less than the cost of care provided. Thirdly, the payment to the county can sometimes be deferred until the community spouse dies. As one county attorney told us when agreeing to such an arrangement, "the county is going to be around for a long time". Finally, even though the county may seek recovery, it is only for the Medicaid reimbursement rate and not the private pay rate. For example, if the private pay rate is $12,000 per month, which is what you would have to pay, the amount Medicaid has to pay is much less in most cases. So the Medicaid rate at the same facility may be only $8,000 to $9,000 per month. The county may only pursue you for the amount they actually paid. Worst case scenario then, if you had to repay the county, is that you would still be saving $3,000 - $4,000 per month for the cost of your spouse's care.

Spousal refusal is an excellent option for spouses who find one of them on the nursing home doorstep. Far better however, is to plan ahead with long-term care insurance or, where such insurance is not available for medical or financial reasons, consider setting up a Medicaid Asset Protection Trust (MAPT) at least five years ahead of time to protect your home and life savings.

The viability of spousal refusal as a Medicaid planning option in the future remains in doubt. On at least two occasions the state legislature has sought to abolish the technique, only to be rebuffed by strong lobbying. However, in times of mounting deficits, New York's liberal traditions in this regard may not be sufficient to save spousal refusal in the future.