Legal and Financial Issues for Caregivers

1. Legal and Financial Issues for Caregivers PRESENTED BY

2. Planning Dynamics for Aging • Aging may bring chronic health problems • Need help with tasks, self-care • May be too proud, embarrassed to get help • May resist loss of independence in making decisions • Caregivers may push to take over decisions • Confused or unable to make financial or health decisions • May let difficulty prevent good decision-making • May rely too much on others to make decisions

3. THREE THINGS TO AVOID • Change • Conflict • Loss of Control

4. Concerns As We Age • Control over their own decisions about • Living arrangements • Finances • Health-care • Financial security and asset protection • “Saving my assets from the nursing home” • Disposition of assets to family • Probate avoidance • Family Dynamics (disputes; dysfunctional children; disparate needs)

5. Decision-making - Healthcare Older Types - Voluntary • “Living Will” – limited purpose (no life support if terminal illness); repealed in 1998, but still valid for limited purpose • Durable Power of Attorney for Healthcare – repealed in 1998, but still valid if valid when done

6. Decision-making – Healthcare Newer Types - Voluntary • Advance Healthcare Directive (AHCD) – Four sections • Section 1: Names agents; immediate or “springing” • Section 2: End-of-life, other directions • Section 3: Doctor contact info (optional) • Section 4: Organ donation (research or transplant) Download atwww.ElderLawMS.com Forms page

7. Decision-making – Healthcare Newer Types - Voluntary • HIPAA Authorization (April 2005) • Privacy Rule (45 CFR §164.502(a)) requires “covered entity” to disclose Personal Health Information (PHI) to individual on request • §164.502(g) requires covered entity to treat “personal representative” same as individual if designated by “written authorization” • §164.508(c) states requirements for written authorization • Should be drafted by knowledgeable attorney • Separate document for access by another to medical information; include in AHCD

8. Decision-making – Healthcare • Healthcare Surrogate – if NO written authorization, another can make medical decisions if (in priority): • Spouse, if not legally separated • Adult child (or majority of children) • Parent • Sibling • A person who shows care and concern and is willing to make decisions based on values of incapacitated person • Provider can require written evidence of authority • We have “Declaration of Healthcare Surrogate” • No liability for refusal to honor decision

9. Decision-making – Healthcare • Family Communication is essential • Healthcare document alone not enough • Terry Schiavo – no conversations • We have tools to help clients • select best agent • communicate personal values • help agent make decisions

10. Decision-making – Financial Matters Durable General Power of Attorney – Voluntary • Control even after incapacity (“second set of keys”) • Select decision-maker(s) • Checks/balances and Rules for Agent • Prior consent of others to gifting, sale of property • Prohibit loans, gifts • Right of third party to receive/review accounts, statements • Name your own conservator (if one required later) • Should be personalized, not “cookie cutter” forms • Institutions likely to refuse unless POA contains express authority • Must name non-spouse agent for homestead transactions

11. Decision-making – Involuntary Conservatorship – Involuntary • Test is “inability to manage” personal or financial affairs • Petition filed, 5 days notice to incapacitated person, notice to another family member, hearing in court (“rush to court”) • Insurance bond for conservator OR prior court approval of disbursements, moving ward • Must file inventory of ward’s assets, annual accountings • Conservator has priority over POA agent, can revoke POA • May be used to transfer joint assets of incapacitated person to spouse for asset preservation • Spouse does estate planning for both

12. Disposition of Assets • Gifting • Pros: • Asset to intended recipient • Asset removed from giver’s estate for tax purposes • Cons: • Giver loses control of asset • Assets subject to debts, liabilities of recipient • Gifts cause Medicaid ineligibility if file w/in 5 years • Recipient gets giver’s tax basis (capital gain on sale) Outright Gift vs. Irrevocable Trust

13. Disposition of Assets • Joint Ownership • Pros: • Asset passes automatically to surviving owner • Avoids probate • Joint owner can control if elder becomes incapacitated • Survivor gets “stepped-up” tax basis (less capital gain when sell) • Cons: • Any joint owner may be able to withdraw asset • Subject to debts, liabilities of each joint owner • Asset passes to survivor with no requirement to share • All owners must sign to sell or mortgage (problem if one incapacitated) • Medicaid still counts FULL value of asset for either owner

14. Disposition of Assets • Last Will and Testament - Voluntary • Written instructions about what happens with your stuff when you die • Must have “testamentary capacity” to execute • Can designate persons to receive assets at death • Can leave assets in Trust for minor, spendthrift or incapacitated beneficiaries • Create “special needs trust” for incapacitated spouse that will not disqualify for nursing home Medicaid • Requires probate to pass clear title to assets • Authorized signer + Probate may solve joint ownership with one child

15. Disposition of Assets • Revocable Living Trust • A “Will substitute” that holds assets while Grantor living, states how they will pass at death • Must re-title assets into Trust name as owner • No probate for assets in trust • Useful if own land in different states (avoid probate in each state) • All trust assets are countable for Medicaid purposes (including residence) • Can name successor Trustee to take over if Grantor becomes incapacitated

16. Disposition of Assets • Irrevocable Trust • Trust owns assets while Grantor living, provides for family or others at death • No probate for assets in trust • Removes assets from Grantor’s estate for estate tax, VA benefits, Medicaid recovery purposes • Funding of trust is transfer for VA, Medicaid purposes • Should name independent trustee • Can pay income to Grantor (“income-only” trust)

17. Disposition of Assets • Special Needs Trust (SNT) • Holds assets for benefit of disabled spouse, child or grandchild • Trust not countable by SSI or Medicaid if properly drafted • Spouse or child can get Medicaid benefits and SNT pays other needs • SNT can avoid conservatorship for incapacitated spouse • No Medicaid recovery claim against SNT funded by parent, spouse, third party • But, Medicaid recovery claim against SNT funded by beneficiary’s own assets (inheritance, lawsuit settlement, guardianship assets)

18. MEDICAID HCBS WAIVER GROUPS • Elderly and Disabled (respite, adult day care, meals, homemaker) • Independent Living (personal care attendant) • Intellectually Disabled/Developmental Disability (respite, attendant care, day-habilitation, speech/PT/OT) • Assisted Living (homemaker, attendant care, Rx supervision, transportation) • TBI/SCI (attendant care, nursing care, respite) • Same financial eligibility as LTC group

19. LONG-TERM CARE MEDICAID Single Person eligible if: • Countable income < $2,130 (but more if use income trust) • Countable resources < $4,000 Married Person eligible if: • Applicant spouse eligible as single person • Community spouse countable resources < $115,920 • CS keeps IS income to reach $2,898 income

20. MEDICAID TRANSFER PENALTY • Deficit Reduction Act of 2005 changed the rules • Now 5 year “look-back” period from date of application • Transfer penalty = total amount of gifts during look-back period ÷ $5,700 monthly divisor ($4,600 pre-2011) • $46,000 gift 8/1/10 – apply for M/C 8/1/2014 = 10 months not eligible for M/C payment to NH • No Transfer Penalty for Disabled Child at Home, Poverty-level programs, DHS programs

21. MEDICAID TRANSFER EXCEPTIONS • No Penalty for transfer of residence to: • Spouse; child under 21; blind or disabled child of any age; sibling with equity interest who lived there 1 year prior to NH entry; child who lived there and provided care at least 2 years prior to NH entry • No Penalty for transfer of other assets to: • Spouse; child under 21; blind or disabled child; third party for sole benefit of spouse or self; trust for sole benefit of a minor, blind or disabled child; trust for benefit of a disabled person under 65; “payback” trusts established per 42 USC § 1396p(d)(4)

22. SCENARIO – DISABLED SPOUSE • Harry Smith and Martha Smith • Martha has progressive dementia • Harry not sure he can care for Martha at home • Harry worried about having enough money to pay her nursing home costs, his living expenses, and pass some inheritance to his children • They own their home and 150 acre farm as joint tenants with rights of survivorship • Planning: Put all assets in Harry’s name and get Martha on Medicaid • What about the house?

23. SCENARIO – OPTIONS • Option 1: Leave the home in joint ownership. If Harry dies first: • Pros: Home not countable for Martha’ s Medicaid • Cons: Medicaid’s claim at her death could cause the sale of the residence • Conservatorship required to sell home after Harry’s death (if Martha has no DPOA) • Option 2: Harry’s Will leaves everything to Martha at his death • Pros: Financial assets can be sold to pay for Martha’s care • Cons: Financial assets left to Martha disqualify her for Medicaid • Court-supervised conservatorship may be required to manage assets

24. SCENARIO – SOLUTION • Option 3: Get home in Harry’s name only • Harry does new will with Special Needs Trust for Martha • Pros: Home is not countable for Martha’ s Medicaid, can be sold or mortgaged by Harry if he needs to move or get money. • Pros: Harry can name trustee in his Will to manage assets after his death for Martha’s needs, avoiding conservator for her. • Pros: The testamentary special needs trust will not be countable Medicaid asset for Martha, so she can get nursing home benefits paid. • Pros: The trust will not be Martha’s asset at her death - Medicaid will not have any repayment claim against the trust assets at her death • The trust remainder can be distributed to the kids or remainder beneficiaries

25. RETROACTIVE BENEFITS • Medicaid benefits will be paid for up to 3 months prior to month of application if the applicant was eligible in those months • In a nursing home or disabled at home • Income within limit • Countable resources within limits • Medicaid will allow up to 90 days to re-allocate resources between spouses

26. MEDICAID ESTATE RECOVERY Per MCA § 43-13-317 Medicaid must seek recovery from “estate” of deceased recipient of LTC or HCBS services after age 55 • “Estate” = probate estate (non-probate assets not subject to claim) • Medicaid must be noticed as creditor of estate • Claim waived if surviving spouse, minor, blind or disabled child • MS Medicaid waives if caregiver family member lived in home 1 year, or family income source • Possibly no claim against homestead valued <$75k (Darby case)

27. THANK YOU 4400 Old Canton Road ▪ Suite 220 ▪ Jackson, MS 39211 Tel: 601-987-3000 ▪ Fax-601-987-3001 www.ElderLawMS.com