How Will You Pay for Nursing Home Costs?

How can a person pay for nursing home care without depleting all of their assets, or without the state taking their home after they die? Those are critical questions, and the lack of the right information could cost a family more than $1 million.

If you’re eligible for Social Security, you probably know it. If you’re eligible for Medicare, you probably know it. But what about Medi-Cal? How will you pay for the costs of nursing home expenses? Could you be eligible for Medi-Cal to pay those costs and not know how to qualify and protect your assets? Have you planned ahead to protect your family’s assets? Are you aware that nursing homes in the Bay Area charge $11,000 to $12,000 a month? Yes, it’s true, and how will you pay for it?

Many people have long term care insurance and think they’ll be okay, but they don’t realize that their insurance plan isn’t sufficient to cover all of the costs. Will your plan cover $350 or $400 per day? Most plans won’t, and most people don’t know how much their plan will pay.

One of the greatest failures I see as an Elder Law Attorney and Medi-Cal Planning Attorney is the general lack of awareness of what can be done to protect a family if you use proper planning. I recently read an article written by a nationally renowned estate planning attorney who said, “If the elder law attorney can advise clients early enough, . . . they can alleviate later problems.” But a lot of people don’t plan properly, and then I see the family disasters after it’s too late to correct.

The average length of stay in a nursing home is 30 months. That’s 2.5 years. That puts the total cost of an average stay at about $350,000, but what about all the people who end up staying much longer? Can you afford that? How will it affect your spouse and family? How can we protect your money?

70% of individuals are impoverished within one year of entering the nursing home. 50% of all couples are impoverished within one year of one spouse entering the nursing home. It’s expensive. What can be done to protect your assets and establish some level financial security?

Federal law permits Medi-Cal planning, and people who plan ahead can protect their assets for their families. What about the families who think that the parents’ home will go to the kids when both parents die, but the home later must be sold to satisfy the debt to the State of California? Why does this happen? Two reasons: (1) lack of knowledge, and (2) not having the proper legal documents put in place by a knowledgeable Elder Law Attorney who specializes in the financial side of Medi-Cal Planning and Eligibility for clients.

Lack of proper planning can cost a family hundreds of thousands of dollars.

A local woman came to me recently because her long-term friend had died six weeks earlier. He had gifted her 50% of his home four or five years ago, and the other 50% of the home was held in his trust to be distributed to her following the man’s death. The problem was that the attorney who prepared the trust wasn’t familiar with elder law rules and Medi-Cal, so now the State of California will seek repayment of his Medi-Cal bill. He had been in the nursing home for about five years prior to his death, so his debt back to Medi-Cal will be around $500,000 to $600,000. The woman who was to get the home will now have to pay the debt to the state if she wants to keep the home for herself. Neither the woman, nor the friend who died, were ever advised that there could be a problem with her getting the rest of the home upon the man’s death. Sad result.

Don’t leave your future to chance and hope. Take care of yourself and your loved ones. Make sure that you work with a qualified elder law attorney and have a quality estate plan in place.

 

 

 

 

Do you need a Trust or a Will?

Some people are confused by the difference between a Trust and a Will. Which should you have? Which is best for you?

If you have a home or other significant assets, you probably want a Trust. If you’re married or have children, you probably want a Trust. A good Trust will protect your assets from going through Probate, and it will prevent the need for a Conservatorship if you’re incapacitated and can’t handle your own affairs. It also sets out the distribution upon your death, and it makes rules for the distributions, such as your grandchildren don’t have control until they reach the age of 30 years.

Once you sign your Trust, it has legal meaning from that moment. On the other hand, a Will has no legal effect until the moment of death.

If you only have a Will and you become incapacitated, the Will does nothing to allow other people to act for you to take care of you or your spouse or loved ones. A good Will can set out the distribution of your assets, and it can make distribution rules, but nothing can be done to protect you or your loved ones before your death. This might create the need to have you under a Conservatorship, which can be quite expensive. Having a Will also means that your assets will pass through Probate.

I was contacted last week by two women who were both recently widowed. One husband got an infection and died, at age 52, within 7 days. His widow said how she wished they had come to see me a few months before. The other widow lost her husband from a sudden heart attack, and now she’s left alone with a 3 month old child and having to deal with the difficulties created by not having proper legal documents in place. Don’t let these things happen in your family.

If you don’t have the right documents in place, we can’t properly care for you if you’re incapacitated, and if you die, then you just leave behind a mess for other people to clean up. Get the right documents in place now so that you and your family are properly protected.

 

Will the State Take Your House?

There are two mistaken beliefs about a person’s house when they go on Medi-Cal to pay for their nursing home cost. The most common misbelief is that the state will take your home when you die. That’s wrong if you plan properly. The second misbelief is that the home is an exempt asset, and therefore you can get Medi-Cal to pay for the nursing home even if you have own a residence. This belief is part true and part false. The residence is an exempt asset, but the state wants to recover their payments after the elder’s death by placing a lien upon the residence so that the get paid. This action is called “estate recovery.”

Medicare is what you get when you turn 65 years of age. Medi-Cal requires that you meet certain financial eligibility rules. There are thousands of people statewide in nursing homes with their monthly bill being covered by Medi-Cal, but to be eligible for Medi-Cal to pay for the nursing home, they can only have a maximum of $2,000 of countable assets in their name. There are two ways to do this. First, you could spend all of your money on care and then become eligible, or second, you could work with a qualified elder law attorney to protect your assets with a plan that’s allowed by California law.

The sad cases are when people come to me too late and tell me, “We just finished spending the last of Dad’s $400,000 on the nursing home payments, and we don’t know what to do next.” The families in those cases are always stunned to find out that the elder’s money could have been protected. They look at me and ask, “Why didn’t anyone tell us about this three years ago?”

Medi-Cal is California’s name for Medicaid, and our laws here are different than the laws in the other 49 states. Our laws allow people to protect their residence, vacation homes, rental properties, farms, and other financial assets, . . . but only if they plan properly.

Don’t lose your hard-earned money to nursing home payments, and don’t let the state recover costs against the elder’s residence. Plan ahead by working with a qualified elder law attorney.

Gilroy Attorney asks – Do You Have the Right Trust?

Do you already have a Trust? Is it a Living Trust or Revocable Living Trust or a Family Trust?

If you already have a Trust, you then need to answer the following questions:

How old is it?

Do you have signed copies?

Is it up to date?

Does it consider the current tax laws?

There was a major tax law change at the beginning of 2012, and many people with older Trusts aren’t aware that their Trust may not be appropriate for their current family situation. You need to have a professional Estate Planning Attorney read your Trust together with you and explain how it will work when you’re incapacitated or die, and how the tax law changes may make your current Trust obsolete.

You need to think about who will be making the decisions for you if you’re incapacitated, and who will make the decisions for your estate after you die. Have you named the right people? Are they likely to outlive you? Have you named alternates in case those people can’t act for you? I frequently have people coming to me with complaints about an older Trustee who is making poor decisions and won’t resign. What does your family do then? Go to court? Needlessly spend thousands of dollars on a legal dispute?

Did you lend $50,000 or $100,000 to one child who has never paid it back? Does your Trust document consider this to make sure that your wishes are known? When the son of one my clients found out what his father’s Trust said, he shredded all of the documents so that he wouldn’t have to pay back the debt and he would receive much more than his brothers and sisters. Since we keep copies of our clients’ documents, we just provided a copy set to the family and the son wasn’t allowed to “double dip” from his parents’ wealth.

If you have a Trust, make sure you know what it says, and make sure that it’s the right Trust for you.

 

 

 

How will you handle nursing home costs?

Most of the nursing homes in Santa Clara County currently charge residents $11,000 to $12,000 per month. Are you prepared for that cost? How long will you or your loved one be there? Two months? Ten months? One year? Five years?

The longest stay I’m aware of is over 20 years. That’s a huge expense.

How will you pay? Private pay? Long term care insurance? Medi-Cal?

What most people do not know, is that there are elder law attorneys who specialize in Medi-Cal planning to protect the family assets. Those of us who practice in this area work to make the clients eligible for Medi-Cal benefits and protect the family assets so that they can be used for the benefit of the other spouse and then eventually pass to the heirs of the ill person.

Yes, it’s true that Medi-Cal will cover your long term care costs in a skilled nursing facility even if you own your house, but if you own the house at the time you die, the State of California will seek repayment of your benefits by placing a lien on your house. The residence is still protected after the Medi-Cal resident’s death if the surviving spouse is living there, but the State of California has been sending out “voluntary liens” to the surviving spouse. If he or she is confused after the death of their spouse, and they happen to sign the lien without a full understanding of the result, the house will be encumbered with a lien from the state.

If you have a family member or close friend in a nursing home, or you think that a nursing home may be in their future, get some expert legal advice for proper planning. In one case I handled, the entire value of the house would have gone to the state, and now it will pass to the two children of the nursing home resident.

Know your rights and seek proper legal expertise to help guide you in establishing the right estate plan for your family. Your family will be grateful you did.

 

 

 

 

 

Oxygen and Dementia

Over the last 10 to 15 years, there seems to have been a real burst of products to swallow and games to play to try and strengthen our memory skills. Do they work? The Institute of Medicine has cautioned consumers to watch out for phony products or poorly tested products that claim to “prevent, slow, or reverse the effects of cognitive aging.”

What about exercise? Brain exercise is one thing, but what about overall body exercise? Several studies have shown that the more you exercise, the more you reduce the risk of developing dementia. Some studies suggest that high levels of exercise might reduce the risk of Alzheimer’s by 30 to 40%. That’s significant.

Games, friendly conversations, food choices, and purposeful living all seem to help age-proof your brain, but physical exercise leads them all as far as effectiveness. And for many people, starting a mild exercise routine isn’t all that difficult. A simple daily walk can make a big difference. Check with your doctor and try getting more exercise.

Have you ever known an elder person who had a serious mental decline shortly after an injury that limited their mobility? I’ve seen this several times. In some cases there is no sign of dementia before the injury, and in other cases there is mild dementia, but the individual is coping well. Then, following the loss of mobility, there is a significant loss of mental ability.

I deal with dementia issues weekly whether it be for a client, the client’s spouse, or the client’s parent. It’s a complicated subject.

Aging well involves taking care of yourself. What about your legal documents? Do you have the right documents in place to allow others to care for you if the need arises? Make sure that you have an estate plan, and make sure that it’s up to date.

When Are You Planning Your Next Stroke?

I recently got a call from a daughter telling me her father just had a major stroke. Why didn’t they get his documents in place before the stroke? Well, even though he’s in his 80s and had already experienced two minor strokes, they “just figured that he’d probably be okay.” Really? For how long? Forever?

A stroke is generally considered to be a “sudden disabling attack” or loss of consciousness caused by an interruption in the flow of blood to the brain. It’s a sudden event. A stroke is a medical emergency. It’s essentially a “brain attack.” Estate planning needs to be done before the stroke. There might not be a chance to do it after the stroke.

About 75% of all strokes occur in people over the age of 65, but a stroke can happen at any age. I know a local man who recently died about two weeks after having a stroke, and he was only in his late 40s. It happens.

The chances of having a stroke can be greatly reduced by healthy living. The CDC (Centers for Disease Control and Prevention) gives stroke prevention guidelines for diet, weight, and physical activity, and you should read them and take them to heart. The guidelines for reducing the chances of a stroke are similar to other guidelines for better health. You should know them and keep them in mind.

A man came to meet with me recently to discuss the estate plan that was prepared for him and his wife a few years back. His wife is now in the memory care unit at an assisted living facility and she is doing well there despite being in the early stages of Alzheimer’s disease. The gentleman provides a lot of the companionship and care for his wife, and he also manages all of the family finances. He recently reviewed his old estate plan and was fairly certain that it wasn’t right for them, but he figured that he could manage things okay the way they were ­­— until he had a minor stroke himself! He’s lucky that it wasn’t a major stroke, but it woke him up to the fact that if something happens to him and he can’t manage their affairs and help take care of his wife, they will both suffer tremendously, and so will their children and grandchildren.

Lao Tzu, the ancient Chinese philosopher, said it simply: “Anticipate the difficult by managing the easy.” I apply this idea to estate planning because getting a proper estate plan put into place now to protect yourself, your spouse, and your heirs is easy. Doing anything after a stroke can be difficult or impossible, and trying to navigate through the legal system without the proper legal authority can be daunting or impossible. The lack of proper decisions today can mean that certain options are closed to you and your family in the future. Get it done. Make a plan to protect yourself and your family. Make sure that you have the right estate planning documents in place for when they might be needed.

You can take steps to help prevent a stroke, but you can’t time when a debilitating stroke might occur. Work on improving your health to prevent a stroke, and get the proper estate planning documents in place while you’re still able to do so.

How High Does Your Number Need To Go?

What’s your number? What about your mother? What about your father?

Here, I’m asking how much you’re willing to be scammed out of, or willing to have an elder parent scammed out of, before you take some protective action? Do you have the legal documentation in place for someone else to take over?

Here are a few recent stories reported by elder law attorneys:

1. The scammers told the woman that they were officers investigating her bank for misappropriating her funds, and they needed her assistance to execute a sting operation. They told her that she would have all of her funds returned to her after the sting was completed. After transferring nearly all of her liquid assets, she sold most of her stocks and transferred that money too. She lost over $1,000,000 and now owes the IRS over $200,000 for capital gains tax on the sale of the stock.

2. An elderly client’s spouse has fallen prey to the Jamaican lottery scam and refuses to disengage. The one is convinced that it’s real, and keeps going around the other to send more and more money to the scammers in Jamaica.

3. A client’s parents lost $350,000 to a scam about the Canadian lottery, another $450,000 to the overseas family of a former caregiver, and another $200,000 as an “investment” to a neighbor with a failing business.

So, I ask again — How much money are you willing to lose before someone steps in to stop the fraud? Have you had open discussions on this with family or friends? It isn’t always easy, but those discussions, accompanied by the right legal documents, can help to prevent someone from getting scammed out of thousands of dollars.

Elder financial abuse is on the rise.

Make sure that there’s a system in place for a trusted person to be checking on the accounts of elders on a regular basis. Yes, that means the elder gives up a bit of their privacy and freedom, but in many cases it’s well worth it.

Is Your Estate Plan Current?

Most people don’t have an estate plan in place — period. That type of procrastination can cause a LOT of problems for the individual and their family. Costs. Delays. Unintended distributions. Other unintended results.

And for those who do have a plan in place, take a look to see if your documents are valid. It isn’t just a matter of who gets your assets upon death. It’s also a matter of who will take care of you if you need care, how your assets will be used for your care, and whether we can take special steps to preserve assets to go to your spouse and family following your death.

If you already have a plan in place, you are to be congratulated for doing so. Now you have to make sure that your plan will still work for you. Will your documents provide the intended result?

Families regularly rely upon legal documents for years only to find out later that the documents weren’t signed properly, that the documents don’t comply with the needs of an elderly or mentally incapacitated person, or that the documents were written under a prior estate tax law that has changed so much that the documents should have been changed as well. Don’t let this happen to you or your family.

It’s not uncommon for people in their 60s, 70s, or 80s to have lost one of their children, and maybe even a spouse. What about the share of your assets that was to go to that child? Do your documents clearly state your wishes as to whether it should go to the deceased child’s spouse, their children, or their siblings? I’ve had many clients who are shocked to learn what the result would be from their current documents.

Remember, it isn’t just about who gets your assets when you’re gone. It’s also about who will make decisions for you while you’re alive, how your assets will be used for your benefit while you’re living, and then how your assets will pass after your death. Do yourself and your family a huge favor by making sure that you have the right legal documents in place now, and that they accurately represent your wishes. Don’t wait!

When is Estate Planning Appropriate?

I recently read an article written by a nationally renowned estate planning attorney who said, “If the elder law attorney can advise clients early enough, . . . they can alleviate later problems.” Yes, that’s true, and we often see the problems of people who don’t get it done right.

A local woman came to me recently because her long-term friend had died six weeks earlier. He had gifted her 50% of his home four or five years ago, and the other 50% of the home was held in his trust to be distributed to her following the man’s death. The problem was that the attorney who prepared the trust wasn’t familiar with elder law rules and Medi-Cal, so now the State of California will seek repayment of his Medi-Cal bill. He had been in the nursing home for about five years prior to his death, so his debt back to Medi-Cal will be around $500,000 to $600,000. The woman who was to get the home will now have to pay the debt to the state if she wants to keep the home for herself. Neither the woman, nor the friend who died, were ever advised that there could be a problem with her getting the rest of the home upon the man’s death. Sad result.

Estate planning and elder law planning are not the same thing. You need to have an estate plan that is prepared with an eye towards elder law needs so that you are protected in the event that certain circumstances arise. It’s like buying your granddaughter a car that has seatbelts and multiple airbags. You hope that the lifesaving features are never needed to save her life in an accident, but you also hope that they’re always working and she’ll be protected in the event of an emergency. That’s why we use those things.

If you drive year after year and never have an accident, then you didn’t need to be wearing your seatbelt all that time. But we wear seatbelts whenever we’re in a car simply because it provides that needed protection “just in case,” and we never know when that just in case event may occur. Do you know of anyone younger than you who had a stroke or suddenly died? It happens, and many people aren’t prepared for it.

Do you have proper estate planning documents in place? Will they work when you need them to work?

A very experienced financial planner called me recently with a serious problem. He had confirmed a few years ago that his client had an estate plan, but the client, now age 82, recently suffered a serious stroke and the documents wouldn’t work as the elder had planned. Stanford Hospital was refusing to release the man to return to his assisted living facility because the elder’s documents were not in order and the elder wasn’t able to make decisions for himself. The elder was being kept at Stanford Hospital and paying the bill there while he was also paying the bill at his assisted living facility. The lack of proper documents left him trapped, and three other attorneys that the financial planner consulted were unable to help the elder.

Don’t leave your future to chance and hope. Take care of yourself and your loved ones. Make sure that you have a quality estate plan in place, and make sure that you understand it.