Frequently Asked Questions: Disability Planning

“What is a power of attorney?”

A power of attorney is a document in which you empower a person or bank to handle your affairs for you. For example, to conduct banking and legal transactions on your behalf, obtain professional services, buy or sell property, get insurance, or do any of the things you might do in managing your day-to-day affairs.

“Are there different types of powers of attorney?”

Yes. A durable power of attorney is a document that can be effective immediately or effective only when disability occurs. The document specifically lists which powers it gives to the agent. For it to have validity, you must sign before you become incapacitated. You should consult with an attorney to decide which type of power of attorney is right for you.

Frequently Asked Questions: Estate Planning

“What is an estate plan?”

Estate planning is creating a plan for managing your assets while you are alive and then distributing them after your death.

“What is the reason for creating an estate plan?”

People commonly create an estate plan to specify how their property should be distributed after their passing. Of equal importance is the desire to structure the assets—through the use of appropriate legal instruments and forms of ownership—so as to maximize their value and minimize the amounts of legal fees, costs, and especially federal and state taxes.

“What does estate planning consist of?”

Typically, we will review the way assets are titled (i.e., different forms of ownership such as joint ownership, etc.) Then we write a will specifying how the different assets are to be distributed. In many cases, we also create a trust which can reduce the amount of taxes that the estate must pay, as well as advanced directives such as durable powers of attorney and living wills.

Frequently Asked Questions: Medicaid

“Can someone engage in Medicaid planning if he or she is already in a nursing home?”

Yes, this is possible. It is never too late to begin Medicaid planning. There are legitimate avenues available to preserve part or most of the assets of a nursing home resident, even if a loved one is already in a nursing home, or nursing home care is imminent.

“What happens if someone is hospitalized and unlikely to return to a residential situation?”

Frequently the physician will order a stay at a nursing home for rehabilitation. If the doctor, who is monitoring the situation, decides that the patient needs skilled care, then up to 100 days of the stay can be covered by Medicare. If the patient no longer needs skilled care before the 100 days is reached, or in any case after 100 days, then the Medicare payments terminate. If your spouse or parent (or other loved one) is in such a situation, contact us immediately. We will work to obtain Medicaid coverage which can in many cases begin the day that the Medicare payments end.

“Is it true that assets cannot be transferred within five years of application for Medicaid?”

Not at all. The law requires that transfers made within five years must be disclosed as part of the Medicaid application process, but you may still be able to receive benefits. Depending on the amounts and timing of the transfers, it is possible to preserve a substantial portion of the assets. Please consult us to review how this should best be done.

“Do you need to be a lawyer to help someone get Medicaid benefits?”
No, in fact anybody can call himself a Medicaid planner. Often this is a title used by people who are in actuality sales people for financial instruments such as annuities. As elder law attorneys, normally we will try to minimize use of annuities because they are costly and can reduce the monthly benefits. Of course, brokers who sell annuities may not share this concern. In addition, the comprehensive asset preservation plans that we produce typically involve trusts, deeds, and wills. These require specialized legal education and licensing.

“What is Medicaid?”

Medicaid is a program mandated by the federal government and administered by each state for the benefit of individuals and couples that meet prescribed limitations for income and assets. Unlike Medicare, Medicaid will cover almost every expense associated with nursing home care.

“What does Medicaid coverage include?”

Medicaid coverage includes room and board, nursing services, drugs, durable medical equipment, medical supplies, and transportation for needed medical services. Medicaid also covers speech, physical, and occupational therapy.

“What are the limits for Medicaid eligibility?”

They vary by state. You are limited both as an individual and as a couple in the amount you can possess of different types of assets. These include cash, your homestead, personal property, vehicles, cash value life insurance, prepaid funeral contracts and cemetery plots, and income-producing property. There are also limitations on your income in the form of gross income reduced by certain expenses such as an allowance for personal needs, medical insurance premium payments, and conservatorship expenses. In the case of a couple, there are certain allowances for the spouse. And income attributable solely to the spouse is excludable. Please contact us to discuss these limitations, as their application can be quite complex. However, we are very familiar with the way they work and will be happy to explain them to you in light of your own particular situation.

“How difficult is the Medicaid benefits application procedure?”

While the mechanics of applying are not difficult, there are challenges and pitfalls in meeting the requirements at the same time one tries to preserve the maximum assets of the person or couple involved. For this reason we urge you to contact us to review your individual needs and to discuss some of the issues you should be aware of. Mistakes can be very costly, and in some cases can have long-term consequences that can drastically alter the outcome of the process.

Frequently Asked Questions: Medicare

“What is Medicare?”
Medicare is a health care insurance program administered by the states for people aged 65 or older. Younger individuals also may be eligible if they have certain qualified disabilities.

“What is Medicare Part A?”
Medicare Part A is insurance that helps pay for inpatient hospital care, a stay in a skilled nursing facility, hospice care, and some home health care.

“What is Medicare Part B?”

Medicare Part B is insurance that helps pay for medically necessary covered services and supplies including doctor services, outpatient hospital care, and some other medical services.

“Does Medicare pay for nursing home care?”

Medicare pays only for skilled nursing facility care following a three day hospital stay due to accident or illness. This coverage includes a semi-private room, meals, skilled nursing, and rehabilitative services and supplies. It does not pay for long-term nursing home care.

Frequently Asked Questions: Nursing Home Planning

“What is nursing home planning?”
This means creating a plan that provides for a loved one’s nursing home care while preserving his or her assets for either their spouse’s use or their estate.

“What options are available to pay for nursing home care?”

There are four principal ways to pay for nursing home care:

Private Pay: Using one’s own assets to pay for all nursing home care.
Long Term Care Insurance: Using a long term care insurance policy—issued by certain insurance companies—to pay the nursing home.
Medicaid:< A program mandated by the federal government and administered by each state for the benefit of individuals and couples that meet prescribed limitations for income and assets.
Medicare: A government entitlement program that pays for up to 100 days of skilled nursing home care. However, there are certain prerequisites to Medicare coverage and there is a co-pay for days 21 through 100.

Proper nursing home planning will consider each of these methods of payment for nursing home care.

“When should you plan for payment of nursing home care?”

It is never too late for this. Whether you are already in a nursing home, or expect to be in a nursing home, you can take steps that can potentially greatly reduce your cost for this care.

“How can assets be legally preserved?”

The law lets those who need nursing home care transfer their assets using a variety of legal means. The principal can be protected and can create income that can then be used to pay for the person’s care.

Frequently Asked Questions: Probate and Wills

“What is probate?”

Probate is the process of actually carrying out the directives of a will or trusts following the death or incapacity of the property owner. The process is carried out according to the laws of the state where the individual resided in specific ways that vary in detail from state to state.
“What is living probate?”

This is the term used for probate while the property owner is living, in a situation of mental or physical disablement. Guardianship is a probate procedure in which someone designated as a “guardian” is selected to manage all of an individual’s personal affairs. Conservatorship is another form of probate whereby someone is selected by the court to control only one’s assets. In either case the process is very closely supervised by agents of the court who are held to very strict requirements for reporting and accounting to the court periodically. Either process is cumbersome and expensive. Also, in these cases the proceedings are a matter of public record.
“What is death probate?”

This is when the property owner dies and his or her assets are transferred according to the terms of a will or trust. The steps followed are:

File with the court and appoint an executor or administrator.
Notify those owed money by the decedent.
Itemize and appraise the decedent’s assets.
Pay taxes, debts, and obligations of the property owner.
Distribute the remaining assets.
Close the estate.
“What costs are associated with probate?”

Probate costs vary depending on the complexity of the estate. Requirements for assessment of businesses or other assets of unclear value can be complex and costly, however, in New Jersey and Pennsylvania, for the average estate, probate should generally be an inexpensive process.
“How long does probate take?”

Anywhere from four or five months to a year, depending again on the complexity of the estate and the number and form of the assets held.
“How can probate records be kept private?”

They cannot; probate proceedings are in the public record. Anyone can review a probate file and the details of the person’s estate.
“If assets are owned jointly do they have to be included in probate?”

Assets owned jointly by a married couple will pass to the surviving spouse when the first spouse dies, but then they will become “sole” assets and they will be subject to probate when the surviving spouse dies.
“Is probate required when there is a will?”

Yes, probate is the process by which the terms of a will are administered.

“What is a will?”

A will is a document one creates to specify how his or her property will be distributed upon death. Wills can be changed or revoked anytime one is alive and capable. Major changes in asset ownership, birth or death of family members, changes in marital status and other life events are frequently reasons for changing a will.

“What is in a will?”

A will typically will contain the following items:

A formal declaration that this is a will and that previous wills are void
Naming of an administrator or executor to carry out the will’s provisions upon death
Specific provisions for distributing named assets and remaining unspecified assets
Naming a guardian for a minor child
Naming of a trustee for a trust created by will
Miscellaneous provisions

“What is a living will?”

The term “living will” does not refer to distribution of assets. A living will provides precise medical instructions for an agent to act under a medical power of attorney. Basically, a living will states an individual’s wish not to be kept alive by “heroic” or artificial means when recovery from physical or mental disability cannot reasonably be expected.