Long-Term Care and Asset Protection

Long-Term Care and Asset Protection

Read Part I here in the article series by Joanne Seminara, Esq. 

Seniors and persons with disabilities are justifiably concerned about the cost of long-term care, that is, long-term home care and nursing home care not covered by traditional health insurance, such as Medicare or other insurance. If you have been diagnosed with a long-term illness for which you will need care, the prospect of spending most or all of your hard-earned savings paying for this care, or worse, going without needed care, can be terrifying.

The cost of home care is catastrophic, especially for those who need full-day or 24-hour care.  Even more worrisome is the high cost of nursing home care, which can easily cost $15,000 to $18,000 per month and quickly wipe out a lifetime of careful savings. Then, there is the unsettling possibility of a lien being placed on your estate or your home for Medicaid services provided during your lifetime.

Enter the Medicaid Asset Protection Trust:
Medicaid is a government-funded program through which you can receive care at home or in a nursing home.  Applying for Medicaid is a complex process requiring extensive documentation of assets and income that can be very difficult to navigate. An experienced Elder Law attorney can protect your assets using a Medicaid Asset Protective Trust, or can suggest other ways to protect your assets.

A properly drafted and funded Trust can provide many benefits while helping you obtain the long-term care you may need.

For many people the home that they own and live in is their most valuable asset.  In transferring your home to a Medicaid Asset Protective Trust you can preserve your and your spouse’s exclusive lifetime residential rights and protect the home from a lien for Medicaid services.  If you place this asset (or any other assets) in this kind of Trust, the transfer of assets starts the Medicaid 5 -year “look- back” period which affects the timing of your eligibility for nursing home care.

This Medicaid Asset Protection Trust can also manage bequests to your loved ones for example, by providing specially tailored protections for a beneficiary who is disabled; a beneficiary who is irresponsible with money; and a beneficiary who is a minor.   If you have a beneficiary who is being sued, is in debt, or in the middle of a divorce, this Trust can provide these further protections.  Moreover, if properly drafted by an experienced attorney, a Medicaid Asset Protective Trust can:

  1. Provide significant capital gains tax savings compared to transferring the title to your home directly to family members during your lifetime;
  2. Name Trustees to manage your Trust assets for you;
  3. Provide that such assets not be distributed until after your death; and
  4. Act as a Will substitute and allow your estate to avoid probate

Caution:There is a 5-year period, starting from the date you transfer assets to the Medicaid Asset Protective Trust, which governs whether a penalty period will affect your eligibility for Medicaid-covered nursing home care. Thus, it is best to create and fund this kind of Trust more than 5 years before you are likely to need nursing home care.  In contrast, there is only a one-month penalty period for transfers of assets in connection with applications for Medicaid home care.

Because the law has many nuances and pitfalls, you are well advised to seek the advice of an Elder Law Attorney before creating a Medicaid Asset Protective Trust or any other kind of Trust, transferring assets or making a Medicaid application. An Elder Law attorney can accurately answer all your questions and assist you with a strategy to meet your individual needs.

Additional resources provided by the author

Joanne Seminara
March 30, 2017

GRIMALDI & YEUNG LLP:
Phone: 718-238-6960
Brooklyn and Manhattan Offices:

9201 4th Ave, 6th Floor
Brooklyn, NY 11209

546 Fifth Avenue, 6th Floor
New York, NY 10036

This post is made available by the lawyer for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this site you understand that there is no attorney client relationship between you and the lawyer. The post should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. ATTORNEY ADVERTISING.

When a Trust is a “Must” – Part 1

When a Trust is a “Must” – Part 1

Part 1 in a series of articles written by Joanne Seminara, Esq.

When a famous person dies, the public often learns little about what was left in their estate.  Sometimes, however, all the messy details wind up in the press. As a practical matter, whether or not an estate story becomes public knowledge may depend on whether the celebrity settled his or her estate with a Will or with a Trust.  Trusts are almost always private documents. Wills often require more notification to others and must be filed in Court.

Does that mean only celebrities need Trusts to protect their privacy?  Even if the newspapers do not care about what’s in your estate and what you left to whom, your family members likely will care, especially if they were left out.  How will they find out?  Well, if your estate will be distributed through a Will, the law says that anyone who might be in line to inherit has to be notified so that they have an opportunity to object to the Will.  Thus, anyone who values their privacy in this regard can benefit from a Trust.

There are many other good reasons that a Trust may be the best way to distribute your estate.  In fact, depending on your relationship with the persons or organizations to whom you wish to leave assets after your death, your long-term care needs and the nature of your assets, a Trust may be a “must.”

To understand why a Trust may be a “must” you need to understand the possible pitfalls of using a Will to settle an estate in certain situations.

A Will must go through the process of “probate” in order to transfer your assets to those designated in your Will.  In probate, a Will is validated and the Executor named in your Will is appointed by Surrogate’s Court order.

Once appointed, the Executor can represent the Estate: collect and liquidate estate assets, pay debts and taxes, and eventually pay out the estate among the beneficiaries named in the Will.  But many of our clients are very surprised to learn that even the consent of, or notice to, persons who will inherit nothing under their Will must be obtained before the Court will issue an order of probate.

Before an order of probate is issued by the Court, an estate attorney must obtain the written, notarized consent to the probate of all those persons who were your natural heirs.  Natural heirs or “heirs-at-law” (or next-of-kin) are those persons that state law dictates would get your property if you had no will or died “intestate.”  That is, your natural heirs must agree with (or at least not challenge) your Will and your choice of Executor.

If you are leaving your estate to your natural heirs, say, to your spouse and children, getting this written consent will not be a problem because you are leaving your estate to the same people who would get your property if you had no Will. However, if you are not leaving property to all your next-of-kin, or in amounts less than they would get under the “intestate” law (or leaving them less than they expected) these persons may have no incentive to consent in writing to the probate.  Moreover, if they are upset to learn that you have left them nothing, things could get worse.  They could file an objection to the probate of the Will. And this is where the story gets much more complicated, lengthy and expensive.

Even if such persons have no reasonable prospect of overturning your Will they can tie up a court proceeding  for months, or even years, with one or more baseless claims about the validity of the Will.)  For example, if you are single and childless and your next of kin are your siblings or the children of your predeceased siblings and your Will does not give your assets to all these persons, (called “intestate distributees”) your Executor or her attorney must notify them of the probate of your Will, provide them with a copy, and attempt to get their consent to probate. So, first they must be located! If they cannot be found and their consent obtained then a “Citation” will have to be delivered to them to give them the opportunity to appear in Court to object to the probate.  Assuming you left your Executor the current addresses for all of these distributees, just the process of serving each distributee with a Citation and proving to the Court that this has been done can take months. (And that’s assuming you don’t have relatives who live abroad!) Then, if an objection to probate is filed by one of them it must be formally answered in Court, which could be just the beginning of years of delay, the worst case scenario being a full-blown Will contest trial.

Ever see a dilapidated empty house with overgrown weeds and boarded up windows that languish for years?  Chances are the reason it’s empty and hasn’t been sold is that it is tied up in court proceedings.

On the other hand, if you create a Trust to transfer your wealth upon death and it is carefully drafted and funded with all your assets, your estate can avoid probate.  There is no requirement to notify any persons who will not inherit your assets under your Trust.  Perhaps most importantly, a Trust, because it need not be filed in Court to take effect, is a private document shown after your death only to those persons who will receive a share of your assets. The opportunity of a challenge to your wishes is greatly reduced and the cost of settlement of your estate will likely be less. Most importantly, your assets will be distributed to your beneficiaries months or years earlier than if you passed them through the Will probate process.

This is only one reason why a Trust may be a “Must.” More reasons Trust planning is recommended in certain circumstances will be covered in future articles.

Additional resources provided by the author

Joanne Seminara
March 30, 2017

GRIMALDI & YEUNG LLP:
Phone: 718-238-6960
Brooklyn and Manhattan Offices:

9201 4th Ave, 6th Floor
Brooklyn, NY 11209

546 Fifth Avenue, 6th Floor
New York, NY 10036

This post is made available by the lawyer for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this site you understand that there is no attorney client relationship between you and the lawyer. The post should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. ATTORNEY ADVERTISING.

February 14th Sweetheart Engagement: Partner Joanne Seminara to speak at AARP Bay Ridge Chapter 3630

February 14th Sweetheart Engagement: Partner Joanne Seminara to speak at AARP Bay Ridge Chapter 3630

This Valentine’s Day, Grimaldi & Yeung LLP Partner Joanne Seminara, Esq. will speak at the Bay Ridge AARP Chapter on the topic of Elder Law and Estate Planning.

When
Tuesday, February 14, 2:30pm

Where
Shore Hill Community Center
9000 Shore Rd, Brooklyn, NY 11209
(91st Street between Shore Road & Colonial Road)

Topic
Elder Law, Estate Planning

Joanne Seminara, Esq.
Partner
GRIMALDI & YEUNG LLP
9201 Fourth Avenue, 6th Floor
Brooklyn, NY 11209
Tel:   718-238-6960
Fax:  718-238-3091
jseminara@gylawny.com

The “Power” Behind The Power of Attorney

The “Power” Behind The Power of Attorney

An excerpt from the book
5@55: The 5 Essential Legal Documents You Need by Age 55.


Television shows or movies often use a deceased’s will in the plot (there have even been commercials featuring the reading of the will) so everyone is pretty much familiar with wills. And while there’s no doubt that having a will is very important, let’s face it, a will only comes into play after you’re no longer in the picture. If things don’t work out right at that point, how concerned are you going to be? But there are lots of things that can happen to you while you’re still alive and kicking (even if only barely) that can render you incapacitated or unable to act. For example, you are on a cruise, the ship’s engine catches fire and you’re stuck in the middle of the ocean for a week. It has happened. In the meantime, your son gets arrested and you want to arrange bail for him but you’re thousands of miles away stranded on a boat that’s bobbing on the deep blue sea. Or maybe you were due to sign papers to refinance your mortgage and your failure to sign will result in having to pay a higher interest rate. The only thing that might save the day in such situations is to have a duly appointed agent in a legal document called a Power of Attorney.

Some people think lawyers are too pushy when it comes to the subject of the Power of Attorney but if you heard the horror stories that lawyers encounter, from inability to access funds, having a house go into foreclosure, cars being repossessed, the inability to pay for nursing home care or home care, all because available funds were out of reach, you’d be pushy too.

Picture a wife testifying in court. The judge is asking her all sorts of personal questions. As she answers, tears are streaming down her face. Her husband is in the hospital, very ill and unable to communicate. She has two young children at home. Most of their money is in accounts that are only in her husband’s name and she needs access to their funds to pay their bills. Her husband never signed a Power of Attorney….and he was a lawyer!

And here’s another case. Sally is single, childless, 80 years-old, retired 15 years, living in her own co-op in Brooklyn. Her only relatives were two nephews who lived out of state, children of her deceased brother, Mike. They visited her several times a year and called her once every couple of months.  Sally has few friends and showed signs of dementia.  One day she rang her neighbor’s bell dazed and confused, possibly after suffering a stroke. The neighbor calls EMS and Sally ends of up in the hospital for four weeks. Since the hospital can’t locate any relatives or paperwork and she can’t live at home on her own, the hospital sends her to a nursing home.

Her nephews try contacting her but she doesn’t answer her phone and they have no way of finding her. Finally, after several months, they track her down at the nursing home. They immediately engage a lawyer to visit Sally at the nursing home to make a POA so they can help Aunt Sally. When the lawyer goes to see her she discovers that Sally is no longer able to understand the nature of her actions and so can’t sign any documents. The lawyer also reports back to the nephews that an institutional Guardian was just appointed by the court at the request of the nursing home which is seeking payment of its monthly charges. This Guardian, who doesn’t know Sally, is now in charge of all her affairs and will be making health care decisions for her, without the input of her family members. The nephews are devastated upon hearing this news. They can spend a lot of money going to Court to try to overturn the Guardianship, but more often than not, given that Sally never signed any papers and now isn’t physically up to it, the Courts won’t grant such a request. Because Sally did no legal planning, her co-op will be sold and its contents emptied without the opportunity to pass on her precious valuables to her loved ones. A Power of Attorney appointing a nephew or good friend could have given them the authority to make decisions for Sally.

Giving Up Control 

There are many people who absolutely refuse to consider signing a POA because they are afraid of giving up control of their financial matters. They fear that doing so will allow the person they name as their agent, behind their back, to perhaps rob them or maybe just have the temerity to look at his or her financial records. The person they would make their agent is more often than not a close relative, a spouse, son or daughter, but that doesn’t seem to allay their basic fear. The idea of giving up control is just too scary. If this relative being named agent had a criminal record, this fear would certainly be justified. In fact, if all your relatives, friends and acquaintances are ex-cons than yes, maybe you shouldn’t have a POA because who could you trust as your agent? But even parents who have absolute confidence in their offspring will often come down with a serious case of “Fear of POA.”

When it comes to POAs there are too opposing forces: the possible trouble caused by not having a POA vs. the fear that a POA will be abused. So how do you navigate these tricky waters? Taking an assessment of the risks that might apply to your life is part of the answer. But before you begin that analysis, it is helpful to know a bit more about POAs.

Protections You Can Add to a POA

A POA may include restrictive language that clearly expresses your wishes and sets limits. For example, it could state that your agent must keep precise records and that these records must either be shown to you, or to someone else you designate, such as a monitor. When asking for any such records kept by your POA agent, make sure to do it in writing, and to keep a copy of the letter. If you have suspicions that your agent has been acting in an inappropriate manner, then send this letter so that you get a signed receipt, via certified mail. If you end up having to go to court to try and get back money that you feel has been misspent by your agent, having a paper trail will give more credence to your case than saying that you asked for an accounting verbally. A written request will also give you proof of exactly when you asked for this accounting so that any transactions that took place after the fact might look all the more suspicious.

In New York State you may also name more than one person to be your power of attorney representative. If you have two children, they can both be named, and you can decide whether they both need to act together or whether only one of them can sign documents like withdrawal slips and checks. If you require two persons to act together, this would serve as a check on each of the agents. (Of course having two agents could also result in conflicts between them as well as inconvenience since they must always act in unison.)  Another possibility is to have the two agents act in sequence, so that one is really the primary agent but the other could still fill in.

Another option is to appoint different agents for different purposes. For example, if you are unavailable to sign documents for the sale of your house on a certain date you could appoint a limited agent for only this purpose to expire by a certain date. Then you could appoint a general long-term agent for other purposes. All these options should be discussed with your attorney.

If you’re extra cautious, you could have the POA drafted and signed but kept in your possession, or maybe kept with your lawyer. Then, if the time arose when the agent was needed, he or she could be called upon. By holding back the delivery of the POA to the agent at least you’d know that the powers you’d granted couldn’t be used until the POA document was in your agent’s hands. You would want to make sure you don’t put it somewhere so safe, like in a bank vault, that your agent couldn’t use it.

You could also choose a professional you already have a relationship with in connection with your financial matters, such as an accountant, financial adviser or lawyer to be your POA. But these individuals will likely charge you for their services, and if the job becomes time-consuming, the cost might become more than you can afford. While a family member or friend might receive some compensation, it won’t likely amount  to what a professional would likely charge.

Please note, if your POA is old, or your life circumstances have changed through divorce, death or disability, it might be time to update your POA, not just because you want to change the agent or the terms, but because New York State has updated its POA  forms in the last decade. While it might not mean that your old POA is invalid, it might add a layer of complication to have an outdated version of the document at the time it was needed.

The Power

What can your agent do with a POA? That’s up to you. You can give very broad powers, allowing your agent to do virtually anything you could do, or you could place limits on the agent’s authority. Let’s say you owned a second home in another state, you could give someone a POA just for the sale of that property. Other common powers include some or all banking transactions, paying bills for your care, handling legal matters, gaining entry to safe deposit boxes, dealing with retirement and insurance benefits, preparing and filing tax returns, exercising stock holder rights, taking care of Medicare planning, making gifts, changing the beneficiaries on your retirement accounts, re-titling bank accounts as joint accounts and borrowing. And a POA doesn’t have to be limited to personal finances. It can cover both finances and legal rights.  If you own your own business, you might need an agent to handle those affairs, for example, sign your payroll checks if you couldn’t do it.

Most POAs become valid on the day they are signed, and all POA signatures must be witnessed by a notary public. But you could have a POA that wouldn’t become valid until either a particular day or a point in time when you were incapable of acting for yourself, as certified by a doctor. This is called a “springing” POA.

The Durable POA

A general, “durable” Power of Attorney provides the most protection. The durable POA  “survives throughout your incapacity” meaning that you’ve appointed someone who will be able to take care of your affairs until you die, even if you become mentally ill or disabled.  Without it, family members might have to make a court application to be appointed your Guardian. This is a time-consuming, emotionally draining and costly court process. If you don’t have close family members, it is important that you appoint a friend, colleague or professional you trust.

One noteworthy power a POA does not have is the power to make your will. That can only be done by you, and you have to be of sound mind to do so. Some people who have dementia wait too long and can no longer make a will. However, bear in mind that dementia can take a long time to render a person unable to sign legal documents. Just because a person can’t remember certain things doesn’t mean they are not legally capable of executing a POA or a will. An attorney asked to create such documents will always make sure that a person is of sufficiently sound mind to sign legal documents and the attorney can later certify as to the will maker’s mental capacity if anyone brings a challenges.

The most important decision in drafting a POA is to choose the right agent. If you have at least one person in your life that you can trust implicitly, then you won’t have any potential problems with a POA unless that person becomes unable to act. It is always best to choose a primary agent and one or two alternate agents. If everyone who comes to mind has more minuses than pluses, then you need to keep seeking out a responsible person who is willing to act for you. The vast majority of people are well served in having an agent to protect them in case of an emergency.

 

Joanne Seminara, Esq.
Partner
GRIMALDI & YEUNG LLP
9201 Fourth Avenue, 6th Floor
Brooklyn, NY 11209
Tel:   718-238-6960
Fax:  718-238-3091
jseminara@gylawny.com

Procrastination, Turning 55 & the Essential Legal Documents in Between

Procrastination, Turning 55 & the Essential Legal Documents in Between

Procrastination: A Hidden Trap
by Joanne Seminara, Esq.

When you were young and one of your teachers gave you an assignment that was due in two weeks, did you rush home to complete it? Or were you more likely working to finish it late on the night before it was due?

We all procrastinate. Ok, maybe not when your boss says “I want this on my desk in an hour.” But if no one is looking over your shoulder, it’s a task that requires a certain amount of effort and there’s a cost involved, so it’s easier to say “I’ll get to it later.”

As a lawyer I’ve seen this to the extreme. One week I met two women, both over 100 years old, who both indicated they were in no rush to prepare a Will. That’s a great story to tell over cocktails but I’ve also seen the pain and suffering that comes when tragedy strikes while someone was procrastinating. For example, one day in court I watched a woman crying to the judge because her husband was incapacitated, had never made a Power of Attorney (which meant  that she didn’t have any access to their money) and she was about to lose their house. And her husband was a lawyer.

The most common problem that walks through the door of my office is a family with an elderly mother or father who has to be put into a nursing home. Because they’ve done no planning, rather than have Medicaid foot the bill, $15,000 or more a month is going to have to come out of the elderly person’s assets.  While we can provide some help at this “11th hour,” planning this late results in unavoidably greater cost in terms of stress, finances and delay.  This is a situation that could have easily been prevented with the earlier help of an experienced elder law attorney. But because there’s a “five-year” transfer or “look back” period which can lead to the imposition of a Medicaid penalty period, the necessary legal work must be completed years before nursing home care is required.  And so, due to no planning, family members who would have inherited substantial estate assets pay the high price of procrastination.

Sadly, dementia, often caused by Alzheimer’s disease, is on the rise. Once a dementia sufferer reaches a certain level of cognitive decline, she or he can no longer sign legal papers. And that often means that procrastination will claim financial victims, who are often the spouse or children of their incapacitated loved one, as well.

One reason that people procrastinate in making these plans is that, in our society, we are ill prepared to deal with the concept of death. Death is inevitable and because planning for it requires facing its inevitability many people prefer to push anything having to do with death aside. Which is one reason I wrote “5@55: The Five Essential Legal Documents You Need By Age 55.” 55 is an age when thoughts of dying are probably dim enough not to frighten you away from protecting yourself.

If you’re 55 years of age or older and don’t have a Will, Health Care Proxy, Living Will, Power of Attorney and Digital Diary, I urge you to stop procrastinating in order not to become a victim of Father Time.

 

Joanne Seminara, Esq.
Partner
GRIMALDI & YEUNG LLP
9201 Fourth Avenue, 6th Floor
Brooklyn, NY 11209
Tel:   718-238-6960
Fax:  718-238-3091
jseminara@gylawny.com