What is Elder Law?
Elder Law is an area of law concentrating on the legal needs of the elderly and special needs clients. A well-rounded Elder Law attorney will address a client’s general estate planning issues while also advising them on planning for incapacity and possible long-term care needs, including nursing home care. Additionally, they will have knowledge of Veteran’s Benefits, Medicaid (MO HealthNet), and other government benefit programs to assist with paying for long-term care and skilled nursing care.
Do you have to give your financial institution a copy of your trust?
Any financial institution where you are naming a trust as the owner or beneficiary on the death of an account will ask you for a copy of your trust. You may refuse to give them a copy of the full trust, but you will still have to furnish the main terms of the trust document by providing a Certification of Trust based on requirements set forth in Section 456.10-1013 of the Revised Statutes of the State of Missouri. An attorney can assist with drafting a proper Certification of Trust.
What does it mean to be “durable”?
A Power of Attorney should be “durable” which means that it will be valid even after a person is determined to be incompetent or unable to be located. In Missouri, to be considered durable, the Power of Attorney must state something equivalent to: “THIS IS A DURABLE POWER OF ATTORNEY AND THE AUTHORITY OF MY ATTORNEY, IN FACT, SHALL NOT TERMINATE ON MY BECOMING DISABLED OR INCAPACITATED OR IN THE EVENT OF LATER UNCERTAINTY AS TO WHETHER I AM DEAD OR ALIVE.”
Why Create a Special Needs Trust?
The primary purpose of the Special Needs Trust or Supplemental Needs Trust is to keep the disabled or special needs person eligible for government programs while providing a mechanism to shelter resources to pay for their additional needs. The Special Needs Trust can be used to maximize the use of government-provided services while enhancing the comfort and enjoyment of life for the disabled or special needs beneficiary. The Special Needs Trust is drafted so that the funds kept in trust will not be considered to belong to the beneficiary in determining his or her eligibility for public benefits such as Medicaid, Supplemental Security Income (SSI), or public housing. The funds held in trust are not designed to provide basic support but are instead used for comforts and luxuries such as education, counseling, recreation, and entertainment. Each public benefits program has restrictions that must be complied with in order not to jeopardize the beneficiary’s continued eligibility for public benefits. For instance, payments by the trust for food or housing would cut SSI benefits dollar for dollar. The trustee must be very careful with spending funds from the Special Needs Trust and make sure expenditures are limited only to the comfort and luxury expenses when public benefits are involved.
How does an Irrevocable Medicaid Asset Protection Trust work?
Medicaid, known as MO HealthNet in Missouri, has a 5-year look-back period for gifting. That means if you gift away all of the assets today, in five years you would qualify for Medicaid to assist with paying for a nursing home without being penalized for the previous gifting of assets. With proper planning, it would give a person the ability to shelter their assets for their family instead of paying for all long-term care costs themselves. However, there are other valid planning techniques, and irrevocable trusts are not always desirable to some people. When you gift assets to a Medicaid compliant irrevocable trust, it works similarly to simply gifting assets away to another person. You would lose control of the assets. The trustee or trustees of your trust would have sole control. Placing assets in an irrevocable trust does have benefits over a direct gift to a person due to the creditor protection clauses contained in the irrevocable trust which most likely would shield the assets from the creditors and bill collectors of the beneficiary (until such time as the assets are transferred out of the trust directly into their individual name). Also, trusts allow for multiple trustees to have shared control which can create more protection for the assets.
How to Save the Family Farm?
One of the most popular assets to protect is the family farm. Most people do not wish to use a family farm to fund their retirement or long-term care and instead intend to leave it for future generations. The thought of transferring ownership to an Irrevocable Medicaid Asset Protection Trust does not bother most parents since they did not truly consider the farm as their personal asset anyway. The primary issue to keep in mind is that the owners of the farm need to have 5 years pass between the transfer of the farm and an application for nursing home Medicaid benefits. Planning ahead becomes more important in regard to an asset such as the family farm because of this reason.
How to Spend Down Assets?
A valuable planning strategy after a person has already entered the nursing home is to spend down resources to purchase allowable items (known as exempt assets) before applying for vendor MO HealthNet (nursing home Medicaid) benefits. If a person has not yet purchased an irrevocable pre-need funeral/burial plan or irrevocably assigned a life insurance policy to a funeral/burial plan agreement, they can do so without penalty by following special Medicaid guidelines. The purchase of an automobile (or upgrade of current automobile) may be made. It is possible that a wheelchair accessible automobile would be necessary for transportation to and from medical appointments. If a healthy spouse will remain in the home, money may be used on home improvements and upgrades. Payment of debts is an additional way to spend down assets.
For married couples, how can the assets be protected for the healthy spouse?
The assets of both the husband and the wife are counted for purposes of qualifying for vendor MO HealthNet (nursing home Medicaid). Therefore, placing assets in only one of their names will not shelter those assets. For married couples where one spouse is remaining in the home, only a certain amount of the assets may be kept by the healthy spouse. The remaining assets would have to be strategically spent down using qualified exceptions to the Medicaid rules. Sometimes this is accomplished by turning assets into income. An Elder Law attorney can usually assist a spouse in protecting nearly all of the assets in most circumstances.
How do you determine whether a person is in need of a Guardian and/or Conservator?
The probate court will not appoint a Guardian and/or Conservator unless it is proven that a person does not have the capacity to handle their own affairs. In order to establish in court that a person is incapacitated and cannot manage their own affairs, you will be required to provide a letter or other proof from a licensed medical doctor stating the nature of their patient’s medical condition with an opinion that their patient lacks the capacity to meet certain required needs. To prove the need for a Guardian, the doctor would need to state that the person lacks the capacity to meet their essential daily living requirements for food, clothing, shelter, safety or other care such that serious physical injury, illness or disease is likely to occur because of their physical or mental condition. When requesting the appointment of a Conservator, the doctor would need to state that the person lacks the ability to manage their financial resources without supervision because of their physical or mental condition.
What are the downsides to filing for Guardianship and Conservatorship?
The biggest complaint of family members filing for a Guardianship and Conservatorship is that the court must approve all expenditures of money. The family member appointed in charge usually prefers to be able to spend money for whatever they feel is best for the disabled or incapacitated adult they are charged with caring for. However, the court actually makes the final decision on what is best for the person and how best to spend their funds. In cases where the adult still has the capacity to make some financial decisions for themselves, a General Durable Power of Attorney may still be capable of being signed which would avoid the necessity of a Conservatorship, making a Guardianship all that would be necessary. In that case, the court would no longer be in charge of making the determination regarding how to spend the disabled or incapacitated adult’s money.
What if the estate is worth less than $40,000.00?
When there are less than $40,000.00 of assets to probate, a Small Estate can be filed with the Probate Court. Any heir can take on the responsibility of asserting that all outstanding debts have been paid and then declaring who is legally entitled to the property. The process of filing a Small Estate is swift and relatively inexpensive. Also, unlike a full probate estate, a Small Estate can be filed after the one-year time limit from the date of death. If a spouse or minor children have survived the deceased, they can file a Refusal of Letters with the court. It is essentially a document stating that the estate is small and the spouse or minor children would be entitled to all of the assets and it should be automatically given solely to them without opening up a probate estate.
What if the estate is worth MORE than $40,000.00 and probate was not properly opened within the one-year time limit from the date of death?
If no estate is opened prior to the one-year time limit, a suit can be brought for a Determination of Heirs, or if the only asset is real estate an Affidavit of Heirs can be recorded. A Determination of Heirs is obtained by petitioning the probate court for an order setting forth who is entitled to the property. If there was a Will, it will not be followed since to be effective it had to be admitted to probate prior to the one-year time frame. The court will follow Missouri law to determine the names of the heirs and their ownership percentages. Only in regard to real estate can the probate suit be avoided; with real estate, an Affidavit of Heirs can be recorded with the recorder of deed’s office in the county where the property is located stating the names of the heirs of the property based on Missouri law.