It is certainly better to undertake planning with a Suffolk or Nassau County elder law attorney long before you need acute medical and personal care assistance. You don’t want to start your planning as your health begins to decline and you feel less and less well. Of course, each person ages differently: some people are chronically ill at 60, and others are well at 90. Although, as a rule, you should be doing your estate planning once you retire, it is never too late or early to set up an estate and Medicaid plan, provided you have mental capacity.
Whether it is ever “too early” to do this sort of planning depends on your comfort level with giving up some control. You need to give up some degree of direct control to protect your assets, by definition. Of course, there are techniques and provisions that we utilize within the construct of a trust that will allow you to have virtually unfettered indirect access to your assets for the duration of your life. However, even with this indirect access, there is a certain degree of technical control that must be sacrificed to do most forms of asset protection. It really will depend on the comfort level that an individual has with that sacrifice.
So, I don’t believe it is ever too early to do this planning. However, most people don’t want to give up control too early. This is why most people will meet with an elder law attorney as they near or enter retirement and begin to plan the next stage of their lives, often being the most fun loving and productive of times.
What Core Planning Documents Should Be A Part Of Every Long-Term Care Plan?
There are several planning documents that should be a part of every long-term care plan. To begin with, it must be mentioned that long-term care is about lifetime planning. It’s not just planning for death: it is planning for what happens during your lifetime that is most important.
In order to avoid the need for any kind of a guardianship proceeding, you will want to make sure you have your basic estate planning documents in place. These include:
- Powers of Attorney
- Healthcare Proxy
- A Will
- A Living Will
However, if you are talking about long-term care, then you are talking about asset protection, and the documents associated with it. If you are not ready to do the asset protection portion of your estate planning, you should make sure that the documents you prepared will enable your agents to do that planning for you in the event circumstances arise that mandate last minute action.
The fact is, even though there are look back periods for both the Community and Chronic Care Medicaid programs, which by definition require advance planning, we can still protect between 40% and 60% of what you own in last minute planning. This assures you and your spouse have access to funds, albeit, indirectly to meet those needs that may not be met by Medicaid. Advisedly, with a more aggressive and strategic plan put in place at an earlier date, we can protect virtually all that you own from the cost of long term care. Consequently, doing advance asset protection does necessitate the client being comfortable giving up some level of control.
When individuals have not prepared their basic estate planning documents, such as powers of attorney, health care proxies and living wills, and have lost mental or physical capacity, their family will be placed in the unenviable position of petitioning the Supreme Court for Guardianship to address their personal care and property management needs. If long term care is involved, then the family will be further requesting authority to undertake a Medicaid plan. Interested family members will have to be served, including the alleged incapacitated family member. The alleged incapacitated family member will be interviewed by a Court Evaluator and may also have to appear in court, if able, unless the proceeding continues to be virtual. Even after you have successfully obtained a Commission to act as Guardian, the guardianship will continue to be subject to often protracted and ongoing oversight by the Court.
The bottom line, simply preparing powers of attorney and health care proxies, would have avoided the need for the Guardianship in the first place.
When it comes to long-term care planning, it is also often helpful to set up the Medicaid Asset Protection Trust and to put the associated paperwork and documentation in place. The Medicaid Asset Protection Trusts have been tested in New York Courts. Approximately 20 years ago, their viability was challenged by the Department of Social Services as an asset protection tool. Since the trust may be amended or revoked, provided its beneficiaries and the creator of the trust so agree, its assets could be made available and therefore, countable by Medicaid. The Court did not agree and the protection these trusts provide continue to be supported by the law and are viable. It is now commonplace to use this irrevocable income-only trust to protect your resources. In fact, using this type of trust is one of the most popular techniques to create Medicaid eligibility without completely spending down an individual’s estate, in order to meet his long-term care needs.
What Kind Of Crisis Planning Should A Person Do In Case They Become Suddenly Incapacitated?
You may undertake crisis planning if a parent or other individual suddenly becomes incapacitated. As I mentioned before, if we are talking about last-minute Medicaid planning, we can protect between 40% to 60% of the applicant’s resources. That might involve last-minute gifting and the preparation of a promissory note. These steps involve planning in intricate detail.
Will The Party Experiencing A Medical Crisis Be Applying For Medicaid? Where Will The Medicaid Applicant Be Placed?
You must specifically plan around what type of home or facility care the Medicaid applicant will require, and what the cost of that care will be. You must know his exact income and resource levels, and allocate for that in the planning. Once you have those figures, you may arrange for the party or his agent to make a transfer to a trusted borrower-recipient. A portion of that transfer will be a loan— evidenced by a promissory note—that will be signed so that the borrower who receives those assets can “pay it back” over a period of time. The period of time in question will be determined by the calculated “penalty period” associated with the amount of the transfer that represents the gift. The loan along with the party’s income will now help pay for the cost of the facility in which the party resides.
To illustrate this point about crisis planning, let’s use the following example. Let’s say you own $300,000 of resources. You have two choices. You may spend down that sum to $15,900 to meet the 2021 Medicaid threshold here in New York, or you may choose to protect between 40-60% of that $300,000 by gifting a part of it away. If you choose to gift a portion away, that portion incurs a penalty period, during which time the Medicaid applicant would have to privately pay for his care in the nursing home. Let’s say that the Medicaid applicant gifted $150,000.00 which incurs an 11 month penalty period and the nursing home cost is $18,000 per month. The Medicaid applicant’s liability will be $198,000 for 11 months. That care will actually be “paid for” by the other part of that transfer ($150,000) which is a loan with a 11 month pay back requirement ($13,636.63±), which along with his social security ($2,000) and his pension ($2,000). The sum of these figures nearly covers the monthly $18,000.00 cost of care in a nursing home which will be paid for a penalty period of 11 months.
Be aware that an Elder law attorney will ensure that the payments do not meet or exceed the private pay rate of $18,000/mo. After that penalty period, Medicaid will pay for his care and he will have preserved $150,000 of his resources in last minute planning.
For more information on Meeting With a NY Elder Law Attorney, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (631) 800-0472 today.