Archive for the ‘Elder Law Planning for Incapacity and Long Term Care’ category

My Spouse Has Passed Away. What Do I Need To Do?

January 28, 2011

When a spouse dies, the survivor will likely feel overwhelmed and may have a difficult time knowing what to do next.   The following is a list of basic steps that the survivor will need to take after the loss of a spouse:

Contact a funeral home immediately and arrange for the burial and memorial services.

Prepare an obituary and consider newspapers for publication.

Notify the employer of the deceased spouse.

Contact previous employers regarding possible pension or other retirement plans and to determine any survivor’s benefits.

Notify the Social Security Administration and any other benefit programs that may be making payments to the deceased spouse or that may be paying a death benefit.

Notify family members, friends and acquaintances.

Contact your financial advisor.

Contact your accountant.

Contact your casualty and liability insurance carrier (homeowner and car).

Obtain access to the deceased spouse’s safety deposit box (if any).

Contact credit card companies.

Consider payment of debts. Debts of the deceased spouse should be paid by the deceased spouse’s estate. A mortgage on a jointly owned home generally should be paid by the joint owner.

Contact your attorney. This does not have to be done immediately after the death but you should speak to an attorney within two months after the date of death to be sure that you take advantage of important post-mortem planning opportunities. It is best not to make any claims for death benefits under a life insurance policy, annuity, IRA, 401(k) or other type of retirement account before reviewing planning options with a knowledgeable attorney.

Gather the following documents:

• The original Will;

• Revocable and Irrevocable Trust Agreements (if applicable);

• Death certificate;

• Marriage certificate;

• Birth certificate;

• Military discharge documents (if applicable);

• Birth certificates of children;

• Deeds for real property;

• Statements relating to bank and investment accounts;

• Life insurance policies

• Title to any vehicles; and

• Any other information regarding assets owned by your spouse.

Your attorney will be able to guide you through the necessary steps to settle your spouse’s estate.

Posted on 1/28/2011 by Kasey S. Galner, Associate, Chipman, Mazzucco, Land & Pennarola, LLC.

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Special Needs Trusts

August 6, 2010

Trust management for the inheritance of a disabled beneficiary can be very important. In addition to providing benefits and management for the disabled beneficiary’s inheritance, the goals of such a trust usually include protection of the trust assets from the beneficiary’s creditors and exclusion of the trust assets from consideration if the beneficiary needs to apply for government aid (for example, Medicaid to pay the costs of long term care). When we refer to a Special Needs Trust, we are referring to a trust established to accomplish such goals.

As discussed here, in order for a disabled person to become eligible, and remain eligible, for government benefits like Medicaid and Supplemental Security Income (SSI), the person must meet strict income and asset criteria. The Connecticut Department of Social Services (“DSS”) takes into account all “countable assets” when determining eligibility for benefits. Even after approval for these benefits, any changes in assets or income, even from an inheritance, can disqualify the person from the assistance he or she needs.

DSS considers a trust created for general maintenance and support as a countable asset for Medicaid purposes. On the other hand, a trust created strictly for supplemental needs, if drafted properly, will not be counted and can be a way to provide additional support to family members who rely on government benefits. The main question is whether a trust is a general support trust (counted as an asset) or a supplemental needs trust (not counted).

The answer depends upon what the person who created the trust intended to create. This may sound simple enough, but even if a Will says, “This trust is intended to be a supplemental needs trust,” the court may still find that it is, in fact, a general support trust. The courts look at the language of the trust instrument in its totality to determine the testator’s intent.

The courts weigh most heavily the amount of discretion the Trustee has over trust distributions. In order for a trust to qualify as a supplemental needs trust, the Trustee must have complete discretion over the trust payments including the discretion not to make distributions to the beneficiary. Seemingly harmless attempts to include standards for the exercise of discretion can result in the creation of a general support trust instead of a supplemental needs trust. If a trust includes guidelines regarding the Trustee’s exercise of discretion, the guidelines should be merely precatory—in the nature of expressing a mere “fond hope,” “wish” or “desire.” Any guideline or instruction that is more definite may limit Trustee discretion with the result of jeopardizing the goals mentioned above.

In the case of Zeoli v. Commissioner of Social Services, the Court held that the Trustee had “absolute and uncontrolled discretion,” over any and all distributions. As a result, the trust assets were not countable in determining eligibility for aid. In more recent decisions, like the decision in Rome v. Wilson-Coker, the Court seemed to suggest that “unfettered” should be added to the “absolute and uncontrolled” standard the Zeoli court used.

For instance, whenever a trust has only one beneficiary and the instructions provide that distributions are to be made for the beneficiary’s “best interest and general welfare” or that the trust assets may be used to support the beneficiary in “reasonable comfort,” the Court may hold that the Trustee’s discretion is not unlimited and that it would be an abuse of discretion for the Trustee to withhold payments when needed for general support. In that case, the trust would fail to achieve the intended goals. This was the approach taken by the Rome Court.

Unlike the Rome case, the Zeoli case involved a trust with more than one beneficiary. Its holding suggests that a Special Needs Trust should include multiple trust beneficiaries while giving the Trustee the ability to benefit one beneficiary and exclude others. The beneficiary’s case is even stronger if the terms of the trust provide that the trust is intended to be a supplement to, rather than a substitute for, other resources.

A Special Needs Trust for a surviving spouse must be established under the terms of a Will (not a revocable trust). Even if the trust for the surviving spouse satisfies all the requirements suggested by the Zeoli and Rome cases, if the trust is established under the terms of the revocable trust agreement of the deceased spouse (instead of under the terms of the Will of the deceased spouse), the trust will be considered a countable asset and disqualify the surviving spouse for Medicaid benefits to pay the costs of long term care. Accordingly, if the goals of a Special Needs Trust for the benefit of a surviving spouse are to be achieved, the trust must be established under the terms of a Will; the Probate Court and the probate process must become involved.

Unfortunately, many people have been frightened into believing that the probate process is something that must be avoided at all costs. As a result, they have used revocable lifetime trusts as the primary vehicle for disposing of their assets at death. If the intention of the revocable trust is to create a Special Needs Trust for the benefit of a surviving spouse, however, it will fail to accomplish the intended goals.

A Special Needs Trust can be an essential tool to enhance the life of its disabled beneficiary who is relying on government assistance programs.  If drafted improperly, trust assets may be depleted rapidly leaving the beneficiary completely dependent upon an impersonal welfare system which is vulnerable to change at any time.

Posted on 8/6/2010 by Kasey S. Galner, Associate, Chipman, Mazzucco, Land & Pennarola, LLC.

Elder Law—Basics of Planning for Incapacity

January 5, 2010

Caution: The following applies to residents of Connecticut and reflects the law as it exists on January 1, 2010. The law relating to long term care frequently changes. Before any planning decisions are made and implemented, it is important to consult with a professional who keeps current on changes in the law and policies of the agencies that administer long term care programs.

Delegating Authority to Caregivers

If you become incapable without the necessary documents in place, the court will have to become involved and appoint someone to act on your behalf. Three documents can minimize the need for court involvement when you are no longer able to make decisions for yourself.

1. Durable Power of Attorney

The durable power of attorney is a document in which you designate one or more people to act as your agent (to pay your bills, manage your finances, etc.) if you become incapacitated. It is important to note that even if you already have a durable power of attorney in place, banks and financial institutions may be hesitant to accept old documents. Therefore, you should re-execute your power of attorney every couple of years to ensure it will be effective when you need it.

2. Health Care Instructions (“Living Will”)

Your Health Care Instructions (frequently called an Advance Directive or “Living Will”) is a document in which you designate someone to make health care decisions on your behalf if you become incapacitated. It can include instructions about life support, end of life decisions, and organ donation.

3. Designation of Conservator

If, for any reason, the previous two documents are deemed invalid, the court will look at your Designation of Conservator to see whom you have chosen to be the agent of your property and your person when you are incapacitated.

Planning for Long Term Care Costs

Most U.S. residents will need home care or nursing home care (or both) during the course of life. Many people, however, are unaware of the actual cost of long term care services. For instance, the average monthly cost for nursing home care today is $9,959 ($119,508 annually). The actual costs of more desirable nursing homes will be quite a bit more. Without proper planning, you may find yourself in a difficult situation when you or your spouse need long term care.

1. Medicare (Not a Solution)

A common misconception is that Medicare will cover the cost of long term care. While Medicare will cover some nursing home care (up to 100 days only) and home care for acute needs, it will not cover you indefinitely. After 100 days in a nursing home or after your acute needs are met through home care, you will have to find another way to pay for your long term care needs.

2. Medicaid (Provider When Assets Exhausted)

Another common misconception is that when you need long term care you can qualify for Medicaid (sometimes referred to as Title XIX) relatively easily. However, it is not easy to become eligible for Medicaid. The Department of Social Services (“DSS”) has strict asset and income guidelines that an applicant must meet before qualifying for benefits.

For example, a single individual applying for Medicaid home care benefits can have a maximum of $1,600 in assets (DSS excludes certain assets such as the value of the home) and a monthly income of $2,022 and still be eligible. If both spouses are applying for Medicaid home care benefits, they can each keep $1,600 in assets ($3,200 total plus the home) and a combined monthly income of $4,044. If the actual income exceeds the income limits, trust arrangements can be made to assure eligibility while protecting the interests of the state.

If an unmarried individual needs long term care in a facility, the monthly income maximum drops to $69 (with certain exceptions). For married couples, if only one spouse is applying for benefits, the other spouse (the “community spouse”) may be able to keep additional assets of up to $109,560 plus the home and a monthly income of at least $1,821.25 and as much as $2,739 (adjustments may be obtained through the Fair Hearing process).  If the actual income exceeds the income limits, excess income will be applied to the cost of nursing home care.

DSS not only looks at your assets as of the date of your application, but it also looks at any transfers you have made for less than fair market value within the last five years. This includes transfers to a trust (with some exceptions), the purchase of certain annuities, and gifts to your children. Any such transfer will result in a period of disqualification (a “penalty”) from Medicaid eligibility, based on the value of the property you transferred. The penalty period does not begin to run until you have met the asset and income requirements, at which time you will be required to cover the cost of care until the penalty period ends.

Anyone who may need Medicaid to cover long term care services within the next five years should be aware of these transfer rules before making any gifts. Certain transfers, if well-planned, can be made without causing a penalty.

Keep in mind, if you or your spouse may need Medicaid to cover your long term care needs you should re-examine your Wills and any beneficiary designations you may have on life insurance policies or other accounts. Once you have qualified for Medicaid, any assets you receive (through inheritance or otherwise) could disqualify you.

3. Long Term Care Insurance

Many people think that long term care insurance is unnecessary or not worth the expense. However, long term care insurance, while not suitable for everyone, can be extremely beneficial. People with middle-incomes, who might otherwise spend down their assets to apply for Medicaid, may find long term care insurance is a worthwhile alternative.

Connecticut has created the Connecticut Partnership for Long Term Care whereby private insurance companies sell state-approved insurance policies that cover long term care costs (both home care and nursing home care). A key feature of this program is the built-in Medicaid asset protection that applies if you ever need state assistance. The Medicaid asset protection allows you to qualify for Medicaid benefits without meeting the usual asset limitations (stated above). DSS allows you to keep one extra dollar of assets for every dollar that your policy has paid for your long term care. This can protect a large portion of your assets that you would have otherwise spent down to become eligible.

Posted on 1/4/2010 by Kasey S. Galner, Associate, Chipman, Mazzucco, Land & Pennarola, LLC.


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