On Sunday, September 25, 2016, Moonan, Stratton & Waldman, LLP participated in the Rhode Island Alzheimer’s Associations’ Walk to End Alzheimer’s at Roger Williams Park in Providence by sponsoring a team to raise money for this worthy cause. It was a great success and we are looking forward to our continued active participation in the future!
Medicaid has strict asset rules that compel many applicants to “spend down” their assets before they can qualify for coverage. It is important to know what you can spend your money on without endangering Medicaid eligibility.
In order to be eligible for Medicaid, applicants must have no more than $2,000 in “countable” assets (the dollar figure may be slightly more, depending on the state). In addition, Medicaid also has strict asset transfer rules. If an applicant transfers assets for less than market value, the applicant will be ineligible for Medicaid for a period of time. Applicants for Medicaid and their spouses may protect savings by spending them on non-countable assets.
A Medicaid applicant can spend down money on anything that would benefit the applicant. Following are examples of what a Medicaid applicant may be able to spend money on:
- Prepay funeral expenses. A prepaid or pre-need funeral contract allows you to purchase funeral goods and services before you die.
- Pay off a mortgage, car loan, or credit card debts. You can pay off the debt fully or make partial payment.
- Make repairs to a home. Fix the roof, make the house handicapped accessible, buy new carpet, etc.
- Replace an old automobile. This can be useful for the healthy spouse.
- Update your personal effects. Buy household goods or personal comfort objects. Buy a new wardrobe, electronics, or furniture.
- Medical care and equipment. Purchase items that aren't covered by Medicare or Medicaid. See a dentist or get your eyes checked if those items aren't covered by your insurance.
- Pay for more care at home. Make sure you get any caregiving agreements in writing, especially if family members are providing the care.
- Buy a new home. A home can be an exempt asset, so it may be possible to purchase a new home.
In the case of married couples, it is often important that any spend-down steps be taken only after the unhealthy spouse moves to a nursing home if this would affect the amount of money the community spouse would get to keep, called the community spouse's resource allowance.
Each state has different requirements for spend down. Before making any spend down plans, consult with your elder law attorney.
Caring for an elderly parent can be stressful for families. Siblings may disagree over how to provide care or where a parent will live, and if these squabbles escalate into a guardianship battle, it can cost the family thousands of dollars. To avoid this, lawyers have begun drafting sibling agreements (also called family care agreements).
If a parent becomes incapacitated and can no longer take care of him- or herself, questions can come up between siblings over where a parent should live, who should manage the parent's money, or who will assume primary caregiving duties. A sibling agreement can address these issues and provide consequences if the agreement is not followed.
Sibling agreements are not meant to replace a trust or a power of attorney. Instead the agreement can complement these valuable estate planning tools by providing guidance for the trustee or the holder of the power of attorney. The following are some examples of topics an agreement might cover:
- Which sibling has primary care of a parent and how caregiving duties will be divided among siblings
- Whether a sibling will be reimbursed for caring for a parent
- Where the parent should live — with a child, in assisted living, in a nursing home?
- How to decide whether a parent should move into a nursing home
- How the parent's money will be managed
- Whether the siblings will contribute financially to the parent's care
If the siblings can't reach an agreement, a geriatric care manager or mediator can help draft the agreement. Mediators can also help if one of the siblings breaches the agreement. Consequences for breaching a sibling agreement could be losing a power of attorney or a reduction in inheritance.
To draft a sibling agreement, talk to your attorney.
If you own property — whether houses, bank accounts, or vehicles — in more than one state, do you need estate planning documents for each state? The answer is probably no, but you need to do some planning if you want to avoid going through probate in each of the states.
A lawyer can generally draft a will that is generic enough to be probated in any state except Louisiana, which has very specific rules. However, real property in another state is subject to probate in that state even if you don't live there. If you aren't careful, your estate may have to go through probate in every state you have property in.
To avoid multiple probate actions, you may want to use probate avoidance techniques for the property that is out of state. If your estate is under the estate tax limit and you don't have family complications, you may hold your property jointly with your spouse. Joint property will pass to your spouse without going through probate. If holding property jointly won't work, you can put your property into a revocable trust. Property in a revocable trust will pass to whoever is named in the trust. It does not come under the jurisdiction of the probate court and its distribution won't be held up by the probate process.
A power of attorney — which allows a person you appoint to act in your place for financial purposes if you ever become incapacitated — is an important estate planning document for anyone, including individuals with property in multiple states. One power of attorney should work in multiple states as long as it is written generally enough, but states may have different rules for what makes a valid power of attorney. State laws usually recognize a valid power of attorney created in another state, but you should check with an attorney in the state to make sure it will be recognized. Even if the power of attorney complies with state law, a bank may not accept it. You should let the bank know about your power of attorney and make sure there are no specific forms that the bank requires.
Contact your attorney to make sure your estate planning documents will work in multiple states.