by Bill Miller | Oct 18, 2021 | Estate Planning, Medicaid, Medicaid Planning, trust
Studies have shown that almost 70% of adults turning 65 will need long-term care at some point during their lifetimes. While long-term care is an amazing resource to many Americans and their families, it is also extremely expensive and can cost around $266/day in the state of Alabama. However, if you are eligible, Medicaid can help pay for long-term care. While Medicaid’s income and asset restrictions are strict, there are estate planning tools—like the Medicaid Asset Protection Trust—that can help you qualify for Medicaid, while also preserving your life savings.
What is a Medicaid Asset Protection Trust?
A Medicaid Asset Protection Trust (MAPT) serves to protect your assets if you or your spouse needs long-term care. A MAPT is designed to help you avoid draining your assets if you don’t have long-term care insurance, but need to pay for nursing home care.
Medicaid pays for long-term care, but it can be difficult to qualify…which is where the MAPT steps in to play. To qualify for Medicaid, the state will generally look at your income and assets. If you’ve worked hard to obtain a healthy savings account and own your home, you may not qualify, unless you spend down your assets. A MAPT, however, allows you to avoid that potential scenario.
How Does a Medicaid Asset Protection Trust Work?
A MAPT is a type of irrevocable trust, which means that once you place your assets in the trust you cannot take them back out. The type of assets you can include in a MAPT are:
- Savings Account
- CD’s
- Investments accounts
- Cash value life insurance policies
- Your primary home and other real estate
Benefits of a MAPT
The main benefit of a MAPT is that it protects those assets placed into the trust so they are exempt when you attempt to qualify for Medicaid. When a couple has to spend-down their savings and assets, this can shrink the size of the estate that is left to a surviving spouse or family members. Selling off assets can also have certain tax implications if you’re required to pay capital gains on the sale. A MAPT allows you to avoid these situations.
Special Considerations to Keep in Mind
While MAPTs are put in place to help you protect your assets in order to qualify for Medicaid, it’s important to remember the look-back period. The look-back period for Alabama is 60 months prior to your Medicaid application date. So, if you want to use a MAPT to protect your assets, then it’s wise to create one sooner rather than later.
Another important consideration is that this type of trust is irrevocable, which means that once assets are placed in the trust, they cannot be taken back. It is vital to ensure that you are comfortable with the permanent transfer of your assets into this trust.
Talk with an Estate Planning Attorney
Everyone has a unique financial situation and estate planning needs, so it is extremely important to talk to an estate planning attorney who can help you understand all of your options, and which may be best for you, your family, and your assets.
If you have questions about creating a Medicaid Asset Protection Trust—or an estate plan altogether—we encourage you to contact Miller Estate & Elder Law at (256) 251-2137 or register for one of our free estate planning workshops.
Contact Miller Estate & Elder Law
by Bill Miller | Sep 30, 2021 | Estate Planning
When most people set up their estate plan, they do so with the intention of making sure their assets are “passed down” to friends and family members in alignment with their wishes. However, there are several critical (yet easy-to-make) mistakes that could derail the entire estate planning process and leave your loved ones scrambling through a time-consuming—and oftentimes costly—probate process.
Here are 4 estate planning mistakes you’ll want to avoid:
#1. Failure to Create a Plan in the First Place
By most estimates, 50-60% of Americans do not have a last will and testament in place. While thinking about how you would like your assets distributed after you die is uncomfortable at best, it is necessary. If you die without a last will and testament, neither your family nor the courts will know how you want your assets distributed. Your estate will have to be probated using estate administration, which can be stressful, time-consuming, and costly for your family members, and your assets will be distributed following the state’s intestacy laws rather than your own wishes. As a result, your assets could go to heirs that you do not want to receive them!
#2. Lack of Communication
Communicating with your family and loved ones about the wishes and intentions outlined in your estate plan can eliminate surprise and hurt feelings later. Not explaining your plan could create a rift between your family and friends after you die, especially if the estate plan is not what they expected. Even though open communication may be uncomfortable at first, it can mitigate any negative feelings and allow for a much smoother transfer of assets when the time comes. No one wants their legacy marred by drama or altercation, and clear communication can prevent that from happening.
#3. Overlooked Essentials
One of the most common mistakes made in regard to estate planning is overlooking important tax implications. Consulting with an estate planning attorney or financial advisor can help you make decisions that will ultimately prevent your family from owing hefty taxes at your death.
#4. Setting it and Forgetting it
Another common estate planning mistake is forgetting to update your estate plan. Just because you created an estate plan doesn’t mean that the work is done. When life changes occur—whether that be divorce, the addition of a new family member, a family member struggling with addiction issues, etc.—you should make it a priority to update your estate plan to reflect those changes. Having an ex-spouse inherit your hard-earned assets after a tragic accident would only add insult to injury. We recommend an annual review of your estate plan.
If you have questions about your own estate plan or are interested in starting your own, we encourage you to contact Miller Estate & Elder Law at (256) 251-2137 or register for one of our free estate planning workshops using the brief form below:
by Bill Miller | Sep 21, 2021 | Medicaid, Medicaid Qualification
Medicaid is an excellent resource that helps cover the costs of long-term care for those who are eligible. However, applying for Medicaid and being eligible can be a difficult process. After you apply for Medicaid, there is a 60-month look-back period where your finances are reviewed. In order to apply for Medicaid, the applicant’s monthly income must not exceed $2,349 and cannot have more than $2000 in non-exempt assets.
What is the Medicaid Look Back period?
The Medicaid look-back period is 60 months prior to your Medicaid application date. The purpose of the look-back period is to keep people from qualifying for Medicaid unfairly and to ensure there were no assets transferred or given away in order to fall under the asset cap of eligibility. If transfers are made during the look-back period then it could trigger a penalty and you could be disqualified from receiving Medicaid for a certain period of time.
Income & Asset Caps for Married Couples
If you are married and your spouse is going into a long-term care facility, it is critical that you understand the income and asset restrictions for married couples. If your spouse is going into the nursing home, , all of their income must go towards their care. You can keep all of your income. You can also keep a maximum of one-half of the total assets up to $128,640.
The Bottom Line
Once you are under the income and asset limits, you can apply for Medicaid. Medicaid can be a confusing maze with many different twists and turns throughout the process. If you have questions about your Medicaid eligibility, we encourage you to contact Miller Estate & Elder Law at (256) 251-2137 or register for one of our free estate planning workshops.
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by Bill Miller | Sep 13, 2021 | Blog, Medicaid, Medicaid Planning, Medicaid Qualification
If you or a family member have ever needed long-term care, then you probably understand the importance of Medicaid, especially Medicaid asset protection. While neither Medicare nor health insurance will cover the cost of long-term care, Medicaid will. However, to qualify for this prodigious benefit, one must meet the income and asset restrictions.
Medicaid Asset Protection Trust Defined
A Medicaid asset protection trust is an irrevocable trust that is designed to hold assets so that they are no longer countable if you have to apply for Medicaid. This type of trust allows you to pass assets on to your children and grandchildren because they are not counted for Medicaid purposes and therefore do not have to be “spent down” to qualify for Medicaid. A Medicaid asset protection trust should be established at least 60 months before your application date, so it’s critical that you take advantage of Medicaid planning before the need arises.
Why You Need One
If you ever have to go into long-term nursing home care, the assets in the Medicaid asset protection trust are not considered by Medicaid as long as they’ve been held in the trust for at least 60 months. What this means is that even with your money and assets in this trust, no one can touch or move your assets.
For people who are trying to protect their assets from long-term care costs, a Medicaid asset protection trust is a great option. This is also a much safer option than giving away your assets to your children, because your assets are protected and not at risk to your children’s creditors – such as divorce, tax liens, lawsuits, bankruptcies, etc.
With the Medicaid asset protection trust, you get the benefits of having your children managing your assets without risking your assets to their creditors and predators. If protecting your assets is important to you then we highly recommend medicaid planning as part of your estate plan.
If you would like to explore the option of a Medicaid asset protection trust, then contact Miller Estate & Elder Law at (256) 251-2137 or register for one of our free estate planning workshops.
by Bill Miller | Sep 7, 2021 | Elder Law, Estate Planning, Uncategorized
A power of attorney is one of the most critical documents you can have. A recent study showed that only 33% of Americans over the age of 55 have a durable power of attorney in place. Tragedy or illness can strike at any moment. Obtaining a power of attorney—or POA as it is often called—is a proactive way to save you and your family a lot of stress and heartache in the event that you become incapacitated, or otherwise unable to make decisions for yourself.
A POA allows you to designate an individual—or several individuals—who could take control of your assets, conduct legal transactions, and make decisions on your behalf if you were unable to do so. However, without this document in place, things can quickly become complicated in the event that you become incapacitated.
Your Family May Have To Apply for Guardianship of Your Children
Without a proper POA in place, your family (yes, even your spouse) may have to apply for guardianship with the courts in order to make decisions on your behalf. This can be a costly process, and could take several months to complete. However, time is often of the essence in situations where a parent becomes incapacitated. You can avoid a problematic situation by having the proper documents in place.
You Could End Up With Major Financial Problems
Having the proper POA in place would allow you to designate an individual to step in and handle your bills—such as your mortgage, insurance, etc.—on your behalf. Without a POA in place, bills could potentially go unpaid, which could result in bad credit, lapse of insurance coverage (which is needed more than ever during these times), foreclosure, and even being forced into bankruptcy.
You Could Be Denied Medicaid
If you are being sent to a nursing home in need of long-term care, it is imperative that you have Medicaid in place to help pay for care. Nursing home care in Alabama costs, on average, $266/day. If you are incapacitated and unable to make medical decisions for yourself—and have not already applied and been accepted to receive Medicaid—it is vital that you have a POA in place. The Medicaid application requires copious amounts of documentation and records. A POA will grant a trusted individual with the permission they need to access these documents and records. If no one is able to access these important documents and records, your application to Medicaid may be denied..
Your Loved Ones Could Be Unable to Access Your Medical Records
In order for your designated POA to gain access to your medical records, you will need the POA to include an authorized Health Insurance Portability and Accountability Act (HIPAA) form. With a HIPAA authorization on file, your named POA will be able to obtain all of your medical records, as well as oversee your treatment and care. This can be critical when needing to transfer medical records to new providers or specialists. However, without this form, not only would the designated POA be unable to receive your medical records, but some doctors will refuse to release sensitive medical information, even with a POA in place!
You May Not Be Able to Transfer Assets
There are several circumstances where an estate planning attorney may recommend transferring assets out of an incapacitated person’s name. For example, if you are incapacitated and in the nursing home for an extended period of time, and your designated POA is applying for Medicaid on your behalf. If you have a POA in place, he or she can transfer assets as recommended by your estate planning attorney in order to prepare your estate for the Medicaid application. However, without this POA in place, no one would be able to transfer assets, and—therefore—your Medicaid application could be denied.
While many of the situations that require a power of attorney are less than ideal and can be stressful in and of themselves, having a plan in place before it’s needed can make the process much easier on your family and friends.
If you have questions about a Power of Attorney or want to include one in your estate plan, then contact Miller Estate & Elder Law at (256) 251-2137 or register for one of our free estate planning workshops.
