The Connecticut Elder Law Blog

What are Your Odds of a Future Nursing Home Placement?

 

Whenever I sit down with clients to plan ahead for Medicaid eligibility we spend a lot of time walking through the worst-case scenario of permanent nursing home placement, thereby triggering approximately $12,000 per month in nursing home fees (Connecticut is the 2nd most expensive state in the U.S. when it comes to nursing home care).  But it's also important to at least consider the possibility that the client will never actually need to be placed in a nursing home. 

 

There is no "crystal ball" to use and nothing can be guaranteed but there are factors to consider when trying to determine the odds that you will need permanent nursing home placement at some point in the future.

 

Is there a history of dementia and/or Alzheimer's Disease in family?  It seems like these are the types of conditions that most often trigger the need for long-term, permanent nursing home placement and they are very hereditary.  Other issues like diabetes, a heart condition, a bad hip etc. can usually be handled adequately at home.  

 

Do children, grandchildren and other family members live nearby or are they beyond driving distance from your home?  The larger the local support network (usually a family-based network) the less likely that you will need to be permanently institutionalized.  

 

How extensive are your liquid assets?  Even if you don't have long term care insurance in place, the more you have in investments, bank accounts, retirement accounts, etc., there is a greater possibility that you will be able to provide yourself with home health care and/or companionship to keep you in the community.

 

I always advocate for planning for the worst (in this context, permanent nursing home placement) and hoping for the best.  However, you need to realize that future nursing home placement is not a "given", and if the chances of requiring institutionalization are remote based on your own set of personal circumstances then you should factor that into your planning. 

 

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

 

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"Should I Gift My House to the Kids?"

Right off the bat, let me give you a warning that you will be disappointed by this post.  You probably Googled the above question and stumbled upon this post with the expectation that you will find a definitive "yes" or "no" answer.  Unfortunately, as simple as the above question sounds, the legal analysis used to come up with an answer to the question is lengthy enough that I would probably be committing legal malpractice by even suggesting that there is a universally applicable answer to the question about whether to gift the house to the kids. 

 

There.  Now that I got that out of the way, here's what you will learn from this post:  as self-serving as this may sound, in order to find a good answer to this question, you need to sit down with an experienced elder law attorney who can walk you through all of the pro's and con's of transferring ownership of the house to the kids (or someone else) in order to avoid the need to sell the house and spend the proceeds down on the nursing home at some point in the future. 

 

And here is a non-exhaustive list of all the issues to consider:

• Gift tax.
• Capital gains tax.
• The dreaded "5-year look-back" period for Medicaid.
• Will the kids turn evil someday (perhaps they already are evil?!) and try to evict you from the house?
• Will this transfer result in an unintended distribution of your estate upon your death?
• Will one of the kids get sued someday, resulting in a lien being slapped on the property?
• Will one of the kids get divorced someday, subjecting the house to a divorce settlement process?
• Are one of the kids getting asset-tested government benefits?
• Should you retain a "life use" (a.k.a. "life estate") in the property?  It could be helpful tax-wise, but it could be problematic for Medicaid eligibility.
• Will you lose a senior or veteran real estate tax credit that you currently enjoy?
• What are the odds that you (based on your health, family medical history, level of local family support) will need permanent nursing home placement in the future?

In short, whether to gift the house to the kids is a short and simple question.  But settling on the answer to that question is a complicated process with a lengthy list of issues to consider.  And since every family is different, there is no one-size-fits all answer to this question.  In other words, just because your neighbor three doors down the road gifted the house to his kids does not necessarily mean that you should too. 

 

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

 

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CT Legislative Alert!

CT bill HB 5324 is related to Medicaid eligibility.  It would increase the minimum amount that a community spouse can keep from $23,449 to $50,000.  This is a pretty big deal in the world of Connecticut Medicaid and it apparently has a chance to pass.  

So, please take the time to contact your state represnetatives and senators and ask them to support the bill.  Click here to find your legislators.

Study: Daughters Provide More Basic Care

This is something that I have observed with my own clients over the past 16+ years, but this is the first study that has backed it up with statistics:  daughters of the elderly tend to provide the hands-on basic care.  I'm sure there are all sorts of theories to explain this, none of which I am qualified to blog about.

My wife and I have three sons and no daughters, so I guess we're in serious trouble.

Click here for the full MetLife study results.

Shocker: You May NOT Need a Living Trust

Today's take-home lesson:  In Connecticut, the only genuine benefit of a revocable living trust is probate avoidance.

To be fair, I will also mention that there is a privacy benefit as well; living trusts generally do not become public record, in contrast to wills.  However, in my own 16+ years of law practice there have been very few clients who have cared deeply about about the privacy issue.

In any case, it's important to keep in mind that nearly all of the living trust benefits your neighbor has told you about is not true.  More specifically, they do not lower your probate court fees, and any estate tax liabilty you have can be addressed just as easily in wills or by other means.

That's correct.  The probate court fee assessed on your estate is based on the size of your estate, which includes probate AND non-probate assets.  Contrary to common sense, it is not based on how many of your assets go through the probate process.

Additionally, wonderful things like credit shelter trusts, general support trusts for young or problematic beneficiaries (or young AND problematic beneficiaries!), special needs trusts, spendthrift trusts, etc. can all be incorporated into your wills; you don't necessarily need revocable living trusts to include these in your overall estate plan.

Please note that the concept of avoiding probate is nothing to scoff at!  The probate process can be (but isn't always) a lengthy process and an administrative headache.  Particularly if you have real estate located somewhere outside of Connecticut.

However, you should keep in mind that you probably have some assets that are already designed to avoid probate upon your death, regardless of whether you have a living trust or not, such as beneficiary-driven assets (e.g. life insurance, annuities and qualified retirement accounts) and joint assets.

So...before you sign up for a revocable living trust, which is typically double the cost of a simple will package, make sure your attorney walks you through your "probate exposure".

The all-important disclaimer:  This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

 

Strategic Planning and the Glastonbury Chamber

I recently wrapped up my two-year stint as Chairman of the Board of Directors for the Glastonbury Chamber of Commerce, capping off many enjoyable years as a member of the Chamber's leadership.

Here I am sharing my thoughts on long-term strategic planning for the Chamber.  I'm a big fan of the GCC and what it does for the local business community.  I'm confident that this is going to be a successful and dynamic organization for many years to come!

  

Gifting with a POA

Not surprisingly, I am not a big fan of fill-in-the-blank estate planning documents that you can get online or from an office store.  There are many reasons for that, but one big reason is that online forms for a durable power of attorney (POA) often do not offer a "gifting" provision.  Or they do offer such a provision but there is no advisor involved to explain the benefits (or occassional pitfalls) ofincluding such a provision in your POA.

The take-home lesson for today is this:  An agent under a POA cannot gift assets on your behalf without express authorization to do so in the POA document.

At first glance, this may not seem like a big deal.  But it certainly becomes a big deal if/when transferring assets out of your name for Medicaid or tax purposes becomes highly advisable.  

In the context of a Medicaid application, the State of Connecticut will most likely pretend that such a gift (made by a POA agent without authorization) didn't happen and treat the gifted asset as an "available asset" for the Medicaid applicant.

For real estate title purposes, if a POA agent transfers property without express authorization in the POA document then title to the property has not been effectively transferred.

These are just two examples of BIG problems that can occer when your POA document does not have adequate gifting language.

Of course, having said all of that, there can be good reasons to NOT include gifting powers in a POA, depending on the circumstances.  The point is that this particular POA issue should be discussed with an experienced estate planning and/or elder law attorney.

The all-important disclaimer:  This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

Income Tax Deduction Limits for Long Term Care Insurance

I generally consider comprehensive long term care insurance as "Plan A" when it comes to protecting your assets from a future nursing home placement.  One benefit of this approach which is often overlooked is the ability to deduct the premium payments for income tax purposes...to a point.

Here are the 2014 income tax deduction limits for long term care insurance premiums:

Age 40 or less:     $370

Over 40 but not over 50:    $700

Over 50 but not over 60:    $1,400

Over 60 but not over 70:    $3,720

Over 70:    $4,660!

Is it a "Conservatorship" or a "Guardianship"?!

This has become a common question among my probate clients who have a loved one who can no longer manage his personal and/or financial affairs.  If the appropriate estate planning documents are not in place then the matter oftentimes ends up in the local probate court.  Then we need to know what to call the matter...a "conservatorship" or a "guardianship".

As you can see, it's a legal question.  This means, by definition, that it does not have a straight answer.

I will spare you all the legal citations.  The answer can best be summarized as follows:

*  If your loved one is under the age of 18 then it is a "guardianship".

*  If your loved one is intellectually disabled (the term "mentally retarded" is no longer appropriate) then it is a "guardianship", regardless of age.

*  If your loved one is over the age of 18 and NOT intellectually disabled, then it's a "conservatorship".  This is most often a case of dementia, Alzheimer's disease, bi-polar disorder, schizophrenia or a traumatic brain injury.

*  If your loved one is an adult and intellectually disabled but only needs help with financial management, then it's a "conservatorship of the estate".  Not a "guardianship".

Oh, and by the way...

A conservatorship that deals with financial matters is a "conservatorship of the estate".

A conservatorship that only addresses personal affiars is a "conservatorship of the person".

A guardianship that encompasses all of the individual's matters is a "plenary guardianship".

A guardianship that only covers some of the indiviual's affairs is a "limited guardianship".

I suppose the obvious follow-up question is why Connecticut law doesn't use just one term, either "conservatorship" or "guardianship", regardless of age or the reason why your loved one is incapable.

Answer:  Your guess is as good as mine!

 

Start Your Engines!

Keenan Law, LLC was a proud sponsor of the Pinewood Derby Races for Scout Pack 356 this past weekend at Nayaug Elementary School here in town.  The event, as always, was a LOT of fun.  

A big thank-you to one of the pack leaders, Jeff Duby, for putting together this rather slick car for the law practice.  I call it "Will on Wheels".  I think it came in dead-last in the sponsors' race, but no matter...sometimes speed isn't everything!