by Bill Miller | Apr 24, 2018 | Estate Planning
Sometimes, we put things off too long. Marcie’s grandmother, Hazel, had talked about writing a Will for years. She even tried handwriting one herself because she refused to hire an attorney. Marcie knew she should encourage her grandmother to finalize her estate plans, but she just never got around to it. Then Marcie noticed Hazel was becoming more forgetful. By the time Hazel saw an attorney, it was too late.
Mental capacity is defined as
“sufficient understanding and memory to comprehend in a general way the situation in which one finds oneself and the nature, purpose, and consequence of any act or transaction into which one proposes to enter.”
Valid Estate Planning Issues.
For a Will to be valid in Alabama (and most other states), the person signing the Will (the testator) must be “of sound mind.” This may also be called “testamentary capacity.” The testator must understand:
- that he or she is making a Will,
- what property makes up their estate, and
- that they are disposing of their estate assets through the Will.
Marcie took her grandmother Hazel to an attorney to prepare her Will. The attorney will pay attention to whether Hazel understands the three things mentioned above. If she does not, Hazel will not be able to prepare and sign a valid Alabama Will.
Another estate planning document is the durable power of attorney. Similar to the Will, the person executing the durable power of attorney must be able to understand his or her actions. Oddly enough, one of the main reasons for signing the durable power of attorney is because it remains effective in the face of the principal’s incapacity.
In Marcie’s situation, her grandmother no longer could understand the documents she was being asked to sign. Because she had no estate planning documents, and was unable to continue caring for herself, Marcie filed a petition to become Hazel’s guardian. When Hazel dies, unfortunately her family will probably have to settle her estate through probate.
Don’t Wait to Prepare Your Estate Plan.
Estate planning documents deal with important issues in a person’s life. Understanding what a legal document does is critical. Don’t wait until you are incompetent or incapacitated to get your plan in place.
Schedule a free consultation with the attorneys at Miller Estate and Elder Law Our attorneys know how to help people like you. Just give us a call at 256-251-2137 or use our Contact Form to set up an appointment. Serving clients in the greater Anniston area, including Birmingham, Talladega, and Gadsden.
by Bill Miller | Apr 20, 2018 | Medicaid
Incapacity is tough. Medicaid eligibility rules are tougher. It seems like a never ending stream of rules and regulations. Even the jargon they use is hard to understand. For example, the Snapshot Date, Look Back Period, and Penalty Period all seem very important. But how do they relate to my Medicaid eligibility?
As many of you know, Medicaid is a program that pays certain types of health care costs for qualified individuals. Though federally-funded, the program is run by individual state agencies. Not everyone qualifies for Medicaid. The application process with its requirements and limitations can be confusing. Most people are especially confused by the Snapshot Date, the Look-Back Period, and the Penalty Period. We’ll summarize those in this blog to help you understand what they mean for you.
The Snapshot Date
Medicaid “takes a picture” (or snapshot) of a couple’s countable resources on the snapshot date. The amount of countable resources helps the caseworker determine how much the healthy spouse will be allowed to retain as the community spouse resource allowance.
What does Medicaid consider to be the snapshot date? Medicaid looks at 12:01 am on the first day of the month in which the applicant begins a period of 30 days of continuous institutional care, a nursing home for example.
The Look-Back Period
When Medicaid receives an application, they at the applicant’s financial history for the five years prior to the application date. This is the “look-back” period. During this time, the applicant’s financial transfers, including gifts, will be analyzed. The amount of the gifts and transfers may be combined to determine the applicant’s penalty period.
For example, perhaps an applicant gave his four children a total of $200,000 four years ago. Medicaid will review the transaction and decide whether the money should have been used to care for the applicant. If it’s determined the money should have been used for the applicant, the amount of the gift may make the applicant ineligible for Medicaid until $200,000 has been paid toward his care.
The Penalty Period
During the penalty period, the applicant is not eligible for Medicaid. This usually because of financial transactions and gifts within the look-back period. The length of the penalty period is determined by dividing the amount the applicant transferred by the amount Medicaid says is the average cost of a nursing home in the applicant’s state (Medicaid Divisor).
Still Have Questions About Medicaid Eligibility?
We’re not surprised. The Medicaid application process is exhausting. You need someone in your corner who understands how the system works. We are more than happy to go over any questions you may have about your medicaid snapshot date, lookback or penalty period.
Schedule a free consultation with the attorneys at Miller Estate and Elder Law Our attorneys know how to help people like you. Just give us a call at 256-251-2137 or use our Contact Form to set up an appointment. Serving clients in the greater Anniston area, including Birmingham, Talladega, and Gadsden.
by Bill Miller | Apr 17, 2018 | Special Needs
Jackson W. worried about his daughter, Olivia. As someone with a severe intellectual disability, she needed help with all daily activities and would never be self-sufficient. Her care was expensive and life-long. As he pondered ways to provide for Olivia’s care, he wondered if a special needs trust would be helpful.
The Dilemma
Children with disabilities like Olivia often need long-term, expensive care. Parents of special needs children want to provide enough money for that care, just like Jackson.
However, sometimes giving them money actually prevents the child from receiving much-needed public benefits. And leaving the money to other children or another “trusted” adult who promises to care for the child is probably not legally binding. There is no guarantee that someone will properly care for the child when you are gone.
A Trust with a Specific Purpose
People typically establish special needs trusts for two general reasons:
- To hold and maintain funds for a disabled person; and
- To ensure those funds don’t damage the disabled person’s eligibility for public benefits.
A disabled individual may need this type of trust for long-term care planning or to deal with a large influx of money from inheritance or a civil judgment.
The Two Main Types of Special Needs Trusts:
- First-Party Special Needs Trust. Also known as a Self Settled Supplemental Needs Trust or (d)(4)(A) trust. This trust is used when the disabled individual owns assets, but expects to need Medicaid or other public benefits down the road. The disabled person uses rust assets to pay for expenses not covered by SSI or other sources. A first-party trust is different from other trusts in that:
- Historically, a parent, grandparent, guardian, or court had to set up the trust. As of 2016, the individual may do so as well.
- The trust must be irrevocable.
- The trust must be funded by the beneficiary’s assets.
- The beneficiary must be age 65 or younger at the time the trust is created.
- The trust must reimburse the state Medicaid agency upon the beneficiary’s death.
- Third-Party Special Needs Trust. What sets this trust apart is that third-parties establish and fund the trust. Many times, a donor will set up this trust as part of an estate plan. For example, Jackson may establish the trust for Olivia when he does his estate planning, or he may have the trust created by his Will upon his death. The person making the trust may have to consider the following:
- There is no age requirement or limitation.
- The trust fund is not limited in size or value.
- Trust funds can be used for almost anything.
- Assets remaining in the trust at the beneficiary’s death may pass to other beneficiaries.
- The trust assets never belong to the beneficiary, so Medicaid does not have to be reimbursed.
Benefits of Using a Special Needs Trust
When Jackson considered the merits of different special needs trusts, he chose to establish and fund a third-party trust to cover Olivia’s needs. Olivia has no assets of her own to contribute to a trust. The beneficiary cannot fund a third-party special needs trust anyway. Thankfully, Jackson can contribute as much money as he wants to the fund. The trust he sets up will not interfere with Olivia’s future need to apply for public benefits under current law. As a result, Jackson feels a great sense of relief the day he fully funds the trust.
Some Trusts Require a Little More TLC.
The attorneys at Miller Estate and Elder Law assist clients with special needs planning, as well as long-term care and Medicaid applications. For more information get a copy of our Legal Planning Guide for Children and Young Adults with Special Needs.
For a free consultation with an experienced Alabama attorney, contact us at 256-251-2137 or use our convenient Contact Form. We have offices in Anniston and Birmingham and serve clients in Gadsden, Hoover, Talladega, Vestavia Hills, and surrounding areas.
by Bill Miller | Apr 13, 2018 | Estate Planning
Anthony sighed with relief. He felt a great peace of mind the day he finally signed his estate planning documents. His Will showed how his property should be distributed in an orderly and organized fashion. The durable power of attorney he signed meant that someone would stand up for him if he was no longer after to handle his medical or financial affairs. He had even signed a Living Will telling everyone to keep the doctors from artificially prolonging his life. Then he started to wonder about his children: Anthony, Jr.; Talia, Lorraine, and Chad. They’re all adults, but Anthony wondered if they needed his help with their estate planning.
We’ve talked before in this blog about talking to your family about estate planning. But that discussion was about your estate plans. It’s time for a new discussion.
Now, it’s time to talk to your family about their estate plans.
But, how? Death and incapacity are touchy subjects.
Tell Them About Your Experience
Maybe you have always wanted to take care of your legal matters but kept putting it off. Then, one day, you took a big step and called an attorney to talk about making a Will. Your attorney explained how necessary estate planning is and helped you come up with a plan that meets your needs. Better yet, you now know how much the estate plan will help your loved ones adapt after you’re no longer there to help them. Finish off by telling them what a great sense of relief and peace of mind you have now.
Tell Them What You’ve Learned About Estate Planning
Especially tell them what happens when you don’t have any plans in place.
- Probate without a Will is more difficult and expensive.
- Precious time is lost trying to settle an estate without an instruction book (your estate plan).
- Your family may pay more taxes than necessary because you didn’t plan.
- Your family may receive less of your estate than you intended because of attorney’s fees and court costs.
- Medical providers will need someone to make medical decisions, but who?
Lay Out the Arguments for Estate Planning
If they have kids, start there. Your children need to understand what happens when a good Will is not in place.
Most estate plans include a durable power of attorney to address incapacity issues. Not signing one makes a serious situation so much more stressful.
Do you really want your family to struggle making end-of-life decisions for you because you didn’t leave a Living Will? Or worse, do you want a court to do so?
Estate planning is your voice, after you can no longer communicate. It’s a way of showing extreme love for your family, both now and later.
And you don’t have to be old or wealthy to have an estate plan. Everyone needs one!
Set a Good Example
There are many reasons to put together an estate plan. Here’s another one: You’ll be setting a good example for your children, no matter how old they are.
Help Your Kids Help Themselves
We are assuming that you have already done your estate planning. If you haven’t, this is the time.
Schedule a consultation with one of our attorneys. They have the experience and skills to listen to your concerns and put together a complete estate plan. Our phone number is 256-251-2137, or you may want to use the Contact Form on our website. We have office in in Anniston and Birmingham and assist clients in communities like Hoover, Vestavia Hills, Irondale, Gadsden, Pell City, Leeds, Trussville and Calera.
by Bill Miller | Apr 10, 2018 | Medicaid
Nursing homes are expensive, even if Medicaid benefits are available. It’s especially difficult when a married couple is split up. The emotional toll is great, but there’s also the problem of providing for expensive residential care for one person while maintaining quality of life for the other. Medicaid offers a way that may prevent the spouse from becoming impoverished.
What is a Community Spouse Resource Allowance?
This is an allowance of resources for the husband or wife of a Medicaid recipient (the community spouse). Resources includes money and other assets. The allowance means the community spouse gets to keep a certain amount of resources instead of spending them down to qualify.
Though based on the value of the couple’s resources at the time of admission, the community spouse resource allowance is usually applied after admission. The community spouse resource allowance in Alabama is equal to ½ of the total non-exempt assets with a maximum of $123,600. So, if a couple has $500,000 in non-exempt assets, they will have to spend those assets down until there are is only $123,600 left for the community spouse!
According to Medicaid rules, the community spouse is the spouse who is not entering a nursing facility. The community spouse is allowed to retain the following exempt assets:
- The family home if the community spouse is still living there,
- Furnishings and other personal belongings,
- One automobile,
- Pre-paid burial plans,
- Life insurance policies, as long as the face value is below the allowed limit.
- The community spouse’s retirements accounts, and
- The Community Spouse Resource Allowance that is ½ of the total assets up to $123,600. Of non-exempt countable resources.
What does “spending down” have to do with my Community Spouse Resource Allowance?
Sometimes the value of an applicant’s income and resources exceeds Medicaid’s limits.
Medicaid will first add together the couple’s countable resources. Then the amount the community spouse is allowed to keep, generally 50% of the assets up to $123,600, is subtracted from the total, along with a small sum for use by the Medicaid applicant ($2,000). Sometimes the remaining amount is more than Medicaid’s limit. In this situation, the applicant will have to spend down their resources to get down to the level where they are eligible for Medicaid benefits.
Have questions or concerns about Medicaid?
Talk to people who know the Medicaid system. We have worked with many families just like yours to help them navigate the Medicaid maze and saved them thousands of dollars. The attorneys at Miller Estate and Elder Law can help you with eligibility planning, applications, and asset protection. For a free consultation, contact us at 256-251-2137 or use our convenient Contact Form. We have offices in Anniston and Birmingham and we assist clients in the Gadsden, Leeds, Hoover, Talladega, Vestavia Hills, and surrounding areas.
