FAQ
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Financing Nursing Home Care Financing Nursing Home Care1. Will Medicare pay for the cost of my care if I need nursing home care? No. Medicare will only pay for a maximum of 100 days in the skilled nursing facility if you meet certain requirements. You must have moved to the nursing home within 30 days of the hospital discharge and the hospital stay must have lasted at least three (3) days. Also, if you receive a skilled level of care, Medicare will pay completely for the first twenty (20) days. For days twenty-one (21) through 100, they will pay less a co-payment, which is set each year. In most situations, people receive less than the full 100 days of benefits. After that point, you either have to pay privately with your own funds or obtain Medicaid eligibility. 2. If my spouse requires Medicaid, will I lose all of my assets? No. Medicaid will allow a spouse living in the community to keep their home and a modest amount of the couple?s savings. However, Medicaid does cap the amount of assets the spouse in the community can keep regardless of whose name the assets were in when the couple first applied. For this reason, it is critically important for a couple to speak with an elder law attorney to ensure that the assets are protected. 3. Will my homestead declaration protect my house if my spouse or I need Medicaid benefits? No. A homestead declaration filed with the Registry of Deeds offers no protection in the Medicaid context. 4. If I give away my assets, will this make ineligible for five (5) years? Perhaps. With careful planning, it is possible to shorten the ineligibility period so that it is less than five (5) years. In addition, there are many exceptions to the Medicaid rules. Where there is no transfer penalty imposed by Medicaid, however, you need to work with a qualified elder law attorney to identify these planning opportunities. Durable Power of Attorney and Health Care Proxy1. Does everyone need a power of attorney and health care proxy? Absolutely. These documents allow you to designate who will make decisions for you should you become incapacitated. Without them, it may be necessary for your family to become your legal guardian to the probate court which can be time consuming and expensive. 2. Could I be held liable for my actions as attorney-in-fact? Yes, but only if you act with willful misconduct or gross negligence such as stealing money from your principal. If you do your best and keep your principal?s interest in mind as the basis of all your actions, you will not incur any liability. 3. When does the power of attorney take effect? Unless the power of attorney is ?springing?, it takes effect as soon as it is signed by the principal. A ?springing? power of attorney takes effect only when the event described in the instrument itself takes place. Typically, this is the incapacity of the principal as certified by one or more physicians. Section III of your power of attorney indicates whether it is effective immediately or is springing. In most cases, even when the power of attorney is immediately effective, the principal does not intend for it to be used until he or she becomes incapacitated. You should discuss this with the principal so that you know his or her wishes. 4. What if there is more than one attorney-in-fact? Depending on the wording of the power of attorney, you may or may not have to act together on all transactions. In most cases, when there are multiple attorneys-in-fact they are appointed ?severally?, meaning that they can each act independently of one another. Nevertheless, it is important for them to communicate with one another to make certain that their actions are consistent. 5. Can I be fired? Certainly. The principal may revoke the power of attorney at any time. All he or she needs to do is send you a letter to this effect. The appointment of a conservator or guardian does not immediately revoke the power of attorney. But the conservator or guardian, like the principal, has the power to revoke the power of attorney. 6. What kind of records should I keep? It is very important that you keep good records of your actions under the power of attorney. That is the best way to be able to answer any questions anyone may raise. The most important rule to keep in mind is not to commingle the funds you are managing with your own money. Keep the accounts separate. The easiest way to keep records is to run all funds through a checking account. The checks will act as receipts and the checkbook register as a running account. 7. Can I be compensated for my work as attorney-in-fact? Yes, if the principal has agreed to pay you. In general, the attorney-in-fact is entitled to ?reasonable? compensation for his or her services. However, in most cases, the attorney- in-fact is a family member and does not expect to be paid. If you would like to be paid, it is best that you discuss this with the principal, agree on a reasonable rate of payment, and out that agreement in writing. That is the only way to avoid misunderstanding in the future. 8. What is a health care proxy? A health care proxy is a document executed by a competent person (the principal) giving another person (the agent) the authority to make health care decisions for you if you are unable to communicate such decisions yourself. 9. Why have a health care proxy? In case you ever become incapacitated, it is important that someone has the legal authority to communicate your wishes concerning medical treatment. This is true especially if you were to disagree with family members about your treatment. By executing a health care proxy, you ensure that the direction that you have given your agent will be carried out in the event of such disagreement. 10. Who should I appoint as my agent? Since your agent is going to have the authority to make medical decisions for you in the event you are unable to make such decisions yourself, it should be a family member or friend that you trust will follow your wishes. Before executing a health care proxy, you should talk to the person that you want to name as your agent about your wishes concerning medical decisions, especially life sustaining treatment. 11. Should I have a medical directive (Living Will)? A medical directive provides your agent with instructions on what type of care you would like. If you wish, you may include a medical directive in your health care proxy. It may include specific instructions concerning the initiation or termination of life sustaining treatment or a more broad statement granting general authority for all medical decisions that are important to you. 12. When does a health care proxy take effect? A health care proxy takes effect only when you require medical treatment and are unable to communicate your wishes concerning your treatment. 13. What if I become able to communicate my own decisions? If you become able to express your wishes at any time, you will be listened to and the health care proxy will have no effect. 14. Who should have a copy of my health care proxy? Your agent should have the original document. You should have a copy and your physician should have a copy with your medical records. 15. How can I get a health care proxy? Contact an attorney who is skilled and experienced in this area. The Probate Process1. What is the probate process? Probate is the process supervised by the probate court by which a deceased person's property, known as the "estate," is passed to his or her heirs and legatees (people named in the will). The entire process usually takes about a year. However, substantial distributions from the estate can be made in the interim. 2. What property is subject to the probate process? The probate estate includes all property held in the decedent's name. Certain kinds of property, such as property owned jointly by the deceased and another person, life insurance, and property held in trust, are not part of the probate estate and are not subject to the probate process. For example jointly owned bank accounts pass automatically to the surviving joint owners upon the death of one of the owners without going through probate. The non-probate property, however, is part of the decedent's taxable estate (see below). 3. How is the probate process started? First, a petition for probate of the will must be filed with the probate court, along with the original will and a certified copy of the death certificate. Notice must be mailed to all of the decedent's heirs at law (usually the surviving spouse, children and children of any deceased children), to those named as beneficiaries in the will, and, if a charity is involved or there are no heirs at law, to the Attorney General. Notice must be also published in a local newspaper. If no one objects by a deadline set by the court, the executor named in the will is appointed by the court. 4. What does the executor do? The executor is responsible for collecting the probate property and for paying any debts of the estate. The executor must file with the probate court an itemized list, known as an "inventory," of the probate property, including the value of each item. The executor must file an estate tax return within nine months of the date of death. This is true even if no estate tax is owed, if the decedent owned real estate or the executor wants his or her final accounting (see below) allowed by the probate court. Creditors of the estate have one year to bring claims against the estate. Executors generally wait until this claim period has expired to complete distribution of the estate according to the terms of the will. As his or her final responsibility, the executor must file an accounting with the probate court showing the income and expenditures of the estate administration. Supplemental Needs Trust1. What is a supplemental needs trust? Supplemental needs trusts (also known as "special needs" trusts) are drafted so that the funds 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. These trusts are designed not to provide basic support, but instead to pay for comforts and luxuries that could not be paid for by public assistance funds, such as education, recreation, counseling, and medical attention beyond what is required simply to maintain an individual. 2. Who can create a supplemental needs trust? Very often supplemental needs trusts are created by a parent or other family member for a disabled child (even though the child may be an adult by the time the trust is created or funded). But the disabled individual can often create the trust himself or herself, depending on the program for which he or she seeks benefits. Medicaid is the most restrictive program in this regard, making it difficult for a beneficiary to create a trust for his or her own benefit. But even Medicaid has a "safe harbor" allowing for the creation of a supplemental needs trust with a beneficiary's own money if the trust meets certain requirements. This is sometimes called a "(d)(4)(A)" trust, referring the authorizing statute. 3. Must the supplemental trust be irrevocable? Yes, if it is created and funded by the person seeking public benefits himself or herself. No, if it is created and funded by someone else for the benefit of person receiving or seeking public benefits. 4. Are there restrictions on how the funds in the supplemental needs trust may be spent? Yes and no. Yes, 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, the beneficiary would lose a dollar of SSI benefits for every dollar paid to him or her directly. In addition, payments by the trust for food, clothing or housing for the beneficiary are considered "in kind" income and, again, the SSI benefit will be cut one dollar for every dollar of value of such "in kind" income. Some attorneys draft the trusts to limit the trustee's discretion to make such payments. Others do not limit the trustee's discretion, but instead counsel the trustee on how the trust funds may be spent, permitting more flexibility for unforeseen events or changes in circumstances in the future. The difference has to do with philosophy, the situation of the client, and the amount of money in the trust. Guardianship1. What is guardianship? Guardianship is a legal relationship whereby the Probate Court gives one person (the guardian) the power to make personal and financial decisions for another (the ward). A guardian may be appointed when a Probate Court determines that an individual is unable to care for herself and her estate by reason of mental illness, mental retardation, or physical incapacity. 2. When is a guardianship appropriate? Guardianship is appropriate when impaired judgment or capacity poses a major threat to a person's welfare. A medical evaluation by a licensed physician is necessary to establish the proposed ward's condition. However, only a court can determine the need for a guardian. 3. How can I become a guardian? Assuming that a physician is prepared to attest to the proposed ward's incompetence, a petition must be filed with the Probate Court requesting the appointment of a guardian. Two petitioners must sign the petition and the proposed guardian must file a bond with the court. Then, the court directs that the heirs of the ward and the ward herself receive notice of the filing of the petition for guardianship. The court sets a date by which anyone wishing to object may do so, including the proposed ward. Then a hearing is held where a judge decides whether a guardian should be appointed. 4. How long does this appointment last? A temporary appointment can last 90 days. A permanent appointment may last until the death of the ward or the guardian, until the ward is able to establish that she is competent, or until the guardian resigns or is removed by the Probate Court. 5. What authority does the guardian have? Unless limited by the court, the guardian has total control over the finances and the personal decisions of the ward. This includes deciding where the ward will live, determining how the ward's funds will be spent and making routine medical decisions for the ward. For medical decisions involving extraordinary medical care, the administration of anti-psychotic drugs, commitment to a mental health facility or the sale of the ward's real estate, the guardian has to seek the approval of the court in a separate proceeding 6. What are the responsibilities of the guardian? In addition to those concerning authority to consent to medical treatment, the guardian must account carefully for all of the ward's income and any expenditures made on this or her behalf. This is accomplished by the guardian filing an inventory listing the ward's assets with the court as of the date of appointment and by filing annual accounts with the court detailing all the income and expenses the ward has. A final account must be filed when the guardianship is terminated. The guardian is liable for her acts until the court allows (approves) the account. 7. What are the alternatives to guardianship? There are several less restrictive alternatives to guardianship. These include the durable powers of attorney, representative payees, trusts and health care proxies. Each of these options may avoid or delay the need for a guardian. These documents need to be executed before the individual is incapable of doing so due to mental impairment. |