How We Can Help Our Veterans
May 31, 2010
As we take the day to honor our Veterans, both young and old, it is a good time to take note of how many veterans are in need of assistance. It has been a while since I have featured veteran’s benefits on this blog. Today is a perfect day to remind veterans and their families that help is available.
There are a number of different VA programs, many which are not publicized. This results in many veterans and their families losing out on benefits for which they are eligible. The Aid and Attendance program is one such program. Eligible wartime veterans can receive as much as $1954 per month of tax free income.
There are income and asset limits to qualify. Single applicants can have no more than about $40,000 in assets and married applicants under about $80,000 (primary residence is exempt). The income limits are too complicated to explain in a short post such as this, but before you jump to the conclusion that you do not qualify it is best to consult with a knowledgeable elder law attorney because so often restructuring your assets can result in immediate qualification. For more information I suggest you sign up for my free e-course on VA benefits www.learnvabenefits.com/hauptman.
So, on this Memorial Day, as you salute a veteran you can also do so much more by alerting your veteran loved one that help may be available.
HOW EDNA’S ESTATE PLAN COULD DESTROY HER FAMILY
May 24, 2010
Last week we were discussing how Betty’s estate plan actually destroyed family harmony. This week I’ll share with you Edna’s mistake, one that I see so often. Edna has 3 children, all of whom she loves equally. She came to see me because she wanted to discuss her will. She owns a home and investments totaling approximately $450,000. Edna explained that she wants to leave her house (or really the proceeds from the sale after her death) to her children equally. I then asked about the rest of her assets and she said, “Don’t worry, I’ve taken care of it”.
I asked her how she had done that and she replied that she has her investments in laddered CDs naming each of her children as the payable on death (POD) beneficiary on 1/3 of the total investment so that each child will receive $150,000 when she dies. I then posed to her a number of scenarios under which that won’t happen, meaning there could very well be an uneven distribution, leading to the same problem that Betty’s family experienced.
Edna has made a common mistake I see frequently. She assumes that the amount of money she has and where she has it will remain unchanged. That is very unlikely. For example, when a CD matures she may roll it over to a new one or she may decide not to, either because she needs the money to live on or because she has decided to investment elsewhere. So what happens if the money is sitting in her checking account when she dies and that CD happened to be money that would have passed to her son, Bob? Well, Bob won’t receive that money unless he was a co-owner of the checking account. He’ll receive less than his siblings. In fact, if his sister, Mary, becomes a co-owner, because she lives nearby and pays Edna’s bills, then Mary will receive “Bob’s share”. Now, you might say that Mary can just give that money to Bob if everyone agrees that this is what Mom wanted. Yes, that’s true but assumes that everyone is aware and agrees on what Edna wanted. It also requires Mary to make a gift to Bob that may have gift tax consequences to Mary.
Perhaps a bigger concern is long term care, which Edna is completely unaware of. As she ages she may need assistance at home, in an assisted living facility or even a nursing home. If so, and she has done no planning for it, she will need to spend down huge chunks of assets towards that care. Again, that will completely destroy her nice neat division into 3. As each CD comes due and she spends it, her estate plan becomes unbalanced. And if Mary is managing Edna’s care and she happens to take one of “Bob or brother Joe’s” CDs that’s a sure way to destroy family harmony. And that’s clearly the last thing that Edna wants.
How Betty’s Estate Plan Destroyed Her Family
May 17, 2010
If I have a will does it mean my wishes will be carried out and my property will distributed exactly according to my instructions? Not necessarily. That’s because not all property is probate property, automatically passed by way of a will. And when things don’t work out the way everyone expected them to, it leads to anger, hurt feelings and the break up of families. Take the case of Betty.
Betty had two children from a first marriage. Her first husband died when her children were young. She married for a second time to Bob. Bob and Betty were married for 20 years and, by all accounts, Bob’s relationship with Betty’s children was great. Betty had gone to great lengths to set out a plan of distributing assets among her children and Bob and making that plan known to all. A large part of her assets were held in one investment account which was worth $500,000. She told her attorney who drafted her will that she wished to leave 50% of the account to her two children and the other 50% to Bob.
Betty’s attorney prepared her will exactly according to her instructions with a paragraph identifying the investment account and how it was to be distributed. But, the attorney cautioned Betty that the account needed to remain in her name alone. He told her not to put another owner on the account and not to name beneficiaries upon her death. That’s because doing either would override the will.
Well, you can imagine what happened. Betty died several years later. She didn’t change her will but when her children sat down with Bob they got the shock of their life when they learned that the account was no longer just in Betty’s name. It was now a joint account with right of survivorship. That means Bob is entitled to 100% of the account and Betty’s kids get nothing, unless Bob decides to honor Betty’s wishes.
Of course, that’s if it still was Betty’s wish to split the account 50/50. Maybe it was, maybe it wasn’t.. Only Betty could say for sure and, of course, she could no longer say. The children suspected that Bob had Betty change the account, although Bob swears that wasn’t the case, that he doesn’t even recall when she made the change. Imagine how uncomfortable the family situation is now. The children are talking about filing suit and Bob doesn’t know what to do.
Just another example of how poor planning can really destroy family harmony and cause a whole lot of pain.
Can I Be Paid to Provide Care for Mom? (Part 2)
May 10, 2010
So, we were talking last week about a recent New Jersey case in which Daughter and Mom entered into a life care contract for Daughter to provide personal care services to Mom. Mom then applied for Medicaid and her application was denied. Mom appealed that decision and lost at the first level of appeal and just lost again on the next level. Why did this happen and what can we learn from their case that would help us avoid the same result?
A big problem with this contract was the fact that it was a lump sum payment. Daughter was paid $56,000 before she even performed a single hour of services. Now, this was necessary in order to spend down to below $2000 for Mom to be under the asset limit. And, every attempt was made to calculate an amount that was based on fair market rates. In fact, the rate was at the low end of that scale.
However, there were other parts of the contract that the court found objectionable. For example, the contract stated that the caregiver was not obligated to devote full time to care since Daughter had a career and family to attend to. She would devote as much time as she could to providing care. The contract anticipated the average amount of time would be 15 hours or more. The contract also stated that the $56,000 due under the contract was not dependent on the exact amount of time Daughter worked and that if Mom canceled the contract Daughter would be paid under the assumption she had worked 15 hours per week.
The court found the contract to be one-sided. Daughter was not obligated to perform any minimum amount of services. Her compensation was not tied to actual performance. In the normal commercial transaction would anyone pay for something without being sure what they were going to receive? And, although the court didn’t specifically mention it, I think the fact that Mom was in a nursing home and not at home receiving care may have also had something to do with it’s decision. The nursing home was providing 24/7 care so what Daughter would provide in the way of services was even less certain.
So, does this mean that a child can’t be paid for providing care to a parent? Absolutely not. But, the line between what works and what doesn’t isn’t a black and white one. That’s why cases like this help us define it with a bit more clarity so that we, as elder law attorneys, can help our clients decide what the best course of action is in their particular situation, as we guide them through what we call the elder care journey.
Can I Be Paid to Care for Mom?
May 3, 2010
In times of crisis, families pull together. Long term care is no different. So much of the care is administered by family members. And it doesn’t take too long before the question is asked. “Can I be paid to care for my mom or dad?” A recent New Jersey case decided by the appellate court makes it clear how tricky that can be.
Mom was 97 years old and in a nursing home. Daughter entered into a caregiver contract with Mom to provide care and was paid the sum of $56,000. This amount was based on daughter performing 15 hours a week at a rate of $25 per hour for 2.9 years, the life expectancy of a 97 year old. The payment was made and within 5 years of that payment Mom applied for Medicaid. The State denied her application, counting the $56,000 as a transfer for less than fair value, not a payment for fair value received.
We use life care contracts often in the cases in our office. But, we also know that the State will scrutinize those contracts very closely because when the payments are going to family members the State assumes that these transfers are “for less than fair value”, what most people would call gifts. They will then impose a penalty period, or period of ineligibility.
For example, the contract can’t be retroactive. If I have been caring for Mom for the last 2 years and now we decide that it would be a good idea for her to pay me for that care, Medicaid will flag that transfer. I had no expectation that I would be paid when I performed the services so I can’t change that now. There must be a contract in place going forward. I also can’t be paid an outrageous sum of money. Mom can pay me no more than what are fair market rates for the services I will perform.
So why didn’t our 97 year old Mom get Medicaid? We’ll explain that in next week’s post.
