No one likes to think about the possibility of their own disability or the disability of a loved one.  However, statistics are clear that we should all plan for this possibility.

The US Department of Health and Human Services estimates that 70% of Americans age 65 or older will need long term care during their lifetime.  Not surprisingly, the likelihood of needing long term care increases with age. This is significant because Americans are living longer and care costs can quickly consume financial resources. A recent Harvard University study indicates that 69% of single people and 34% of married couples would exhaust their assets after just 13 weeks in a nursing home.

There are four ways to pay for long term care:

• Private pay. Though not realistic for everyone, this option offers the greatest number of choices in care.
• Long term care insurance. If medically eligible and able to afford premiums, this is a good way to pay for some or all long term care costs.
• VA Benefits. Many veterans and their spouses are unaware that pension benefits (including “Aid and Attendance”) may be available to them. Benefits may not cover the entire cost of care, but can help significantly.
• Medicaid. While not accepted by every care provider, Medicaid benefits can cover the entire cost of care for those who qualify. Always consult an experienced elder law attorney before beginning a Medicaid “spend-down.”

Here’s what you can do to be prepared:

1. Discuss options and plan early (while capacity is not an issue) so you and your loved ones can have peace of mind knowing they are prepared for whatever disability may come.
2. Be aware of heightened health risks for those who work long hours caring for a spouse or family member, and include a paid care provider if possible.
3. Investigate insurance and VA benefits options that may be available.
4. Consult an experienced elder law attorney, who will create a plan to safeguard personal wellbeing and property in the event of disability, and to allocate and protect assets that may be at risk of being depleted by out-of-pocket health care costs.

Click here for additional information about this topic.

Christopher Young
The Pixton Law Group
503-968-2020
www.PixtonLaw.com

There are more than 25 million veterans alive in the United States. There are more than 9 million surviving spouses of veterans currently living in the United States. Many of these veterans and surviving spouses receive long term care or will need some type of long term care soon, and the Veterans Administration (“VA”) has funds to help pay for that care. Unfortunately, many qualified people have no idea that benefits exist for them or that an attorney can help them become eligible.

Benefits Available

There are three types of benefits available that provide a monthly cash payment to veterans who have long term health care needs. Below is an overview of the three benefits, and more detail will be provided on each benefit in the following paragraphs.

Service Pension. The VA provides a monthly cash payment to wartime veterans who meet active duty and discharge requirements, who are either 65 or older or disabled, and who have limited income and assets. Service pension is also available to a surviving spouse of a wartime veteran. An unmarried veteran can receive up to $985 per month, a married veteran can receive up to $1291 per month, and a surviving spouse can receive up to $661 per month (with additional payments available if dependent children are present in the home).

Pension with Housebound Allowance. A slightly higher monthly payment is available to wartime veterans (who meet the same service requirements as Service Pension) but who are confined to their home for medical reasons. An unmarried veteran can receive up to $1204 per month, a married veteran can receive up to $1510 per month, and a surviving spouse can receive up to $808 per month (with additional payments available if dependent children are present in the home).

Pension with Aid and Attendance. The highest monthly benefit is available when a wartime veteran or surviving spouse requires the assistance of another person to perform activities of daily living, is blind or nearly so, or is a patient in a nursing home. This benefit, often referred to simply as “Aid and Attendance” is the most widely known and talked-about benefit as it offers the highest possible monthly payment. An unmarried veteran can receive up to $1644 per month, a married veteran can receive up to $1949 per month, and a surviving spouse can receive up to $1056 per month (with additional payments available if dependent children are present in the home).

Planning Note: While Aid and Attendance is the most popular VA benefit, it is important to remember that Service Pension is available to wartime veterans or surviving spouses who do not require assistance with activities of daily living but are either disabled or 65 or older.

Prerequisite to Benefits

Wartime Service. As noted above, a veteran must first meet certain service and discharge requirements before being considered for any type of pension benefit. A veteran must have served 90 days of active duty with at least one day beginning or ending during a period of war. After September 1, 1980, the active duty requirement increases to 180 days. In addition, the veteran must have been discharged under circumstances other than dishonorable.

Disability. To qualify for any type of pension benefit, a claimant must also be 65 or older or be permanently and totally disabled. A claimant is the individual filing for benefits – either a veteran or surviving spouse. Permanent and total disability includes a claimant who is:

• In a nursing home;
• Determined disabled by the Social Security Administration;
• Unemployable and reasonably certain to continue so throughout life; or
• Suffering from a disability that makes it impossible for the average person to stay gainfully employed.

Asset and Income Requirements
The financial eligibility requirements of any pension benefit address a claimant’s net worth and income. A married veteran and spouse should have no more than $80,000 in countable assets (less for a single veteran or surviving spouse), which includes retirement assets but excludes a home and vehicle. However, the $80,000 limit is a guideline only – it is not a rule set by the VA. The VA looks at a claimant’s total net worth, life expectancy, income and medical expenses to determine whether the veteran or surviving spouse is entitled to special monthly pension benefits.

Planning Note: Many times the most difficult task in this area is to reduce a claimant’s assets down to the applicable level (or what one hopes will be acceptable to the VA). The assistance of legal counsel is important to ensure the right strategies are used with minimal impact on Medicaid in the future.

Read the full article about available veterans benefits.

Please contact us with further questions.  Either our firm or one of our affiliates would be happy to assist you or a veteran you may know, or to speak to your organization.

Tom Pixton
tom@pixtonlaw.com

Christopher Young
chris@pixtonlaw.com

THE PIXTON LAW GROUP
503.968.2020
www.PixtonLaw.com

What is a negative inheritance? That’s what happens when the amount your children pay to provide for your care exceeds what they will inherit.

If your assets may not cover the cost of care, that may mean your family pays out of their own pockets. They may be willing to do so, but you may want to minimize that cost.

When a family comes to our elder law office with a health care crisis, our first approach is to carefully manage both resources and care. Usually the goal is to stay safe at home. That may mean a team approach involving an elder law attorney, a geriatric care manager and/or a financial planner. Here are some options, among many, that the health care team might consider:

• Restructure your investments for maximum income, not growth. Now is the time you need to “cash in” on that investment and riskier growth investments are no longer appropriate.
• Reverse mortgage. If you are over 62, you can tap most of the equity in your home;terms have become very competitive and government regulated for safety.
• Care agreements to pay children for providing care. These should be carefully drafted with legal advice.Sale of the family home and a move into more financially sustainable or more safe and comfortable quarters — thus freeing some of the assets tied up in home equity.
• Long-term care insurance. The combination of marketplace dynamics and government regulation have worked to improve the quality of insurance policies. We recommend that buyers look into the policies in their 50s, not their 80s. If you are insurable but unable to afford premiums, it might make sense to have your children pay the cost of long-term care insurance. After all, it is their inheritance that you are trying to protect.
• Legacy trusts. Under certain circumstances it may make sense to transfer a portion of your assets to your children now if you are certain you can manage your care for at least 5 years into the future.
• Medicaid. Your long term care management team may help you position yourself to qualify for Medicaid sooner rather than later with significant savings to the family. Oregon’s long-term care Medicaid program covers care at participating nursing homes (skilled nursing facilities) as well as participating community based care facilities such as assisted living facilities, foster homes, residential care facilities and limited in-home care.

We may be able to help you protect your children’s inheritance from going negative — all the while focusing primarily on your care and quality of life.

Tom Pixton
The Pixton Law Group
503-968-2020
www.Pixtonlaw.com

As published in The Retirement Connection Guide:
Can Mom Give Me A Power of Attorney?
Diagnosis of Dementia May Not Preclude Signing POA and Health Care Directive
Article provided by: Tom Pixton, wwww.PixtonLaw.com

“I need to get a power of attorney for my mother. She’s in an Alzheimer’s unit and she can’t take care of her finances or make medical decisions any more.”

That is the most common first call we get. A caller has been told by a friend or a case manager the nursing home that a power of attorney is required, and that it will take a lawyer to write one up for them.

Can our caller “get” a power of attorney for her mother? Not exactly. Only her mother can “give” a power of attorney and her mother will need to make the decision herself – and she may (for whatever reason) refuse.

There is a lot of understandable confusion about powers of attorney, guardianship and conservatorship. It is important to understand the difference between them. A competent adult may sign a power of attorney giving another person the authority to make financial decisions. But once an individual has lost mental capacity to understand the nature of the power of attorney itself, it is too late to sign the document. At that point it will be necessary to have a court appoint a conservator to manage her finances and a guardian to manage her health care with authority to make a placement in a nursing home, a memory care unit or administer medications.

A “diagnosis” of Alzheimer’s may be confusing. It is often described as a “diagnosis of exclusion” because it is impossible to definitively diagnose during life. Instead, the physician must rule out the other possible causes of dementia before settling on Alzheimer’s. But the precise diagnosis is less important for our legal purposes – a diagnosis of dementia of any type has the same legal effect. It may raise concerns about capacity, but it primarily serves as a cue to the lawyer to ask more searching questions, testing for consistency and true understanding.

So, just because a diagnosis of dementia has been made, it does not necessarily follow that the patient can no longer make legal decisions. In our experience, in fact, most patients with recent diagnoses of dementia may still be able to discuss a power of attorney and health care directive (and other estate planning options, like wills and trusts) – perhaps for years. The legal issue is whether the person understands the effect of the documents he or she is signing. The level of capacity required to sign a power of attorney or health care directive is not terribly high, unless there are complicating circumstances in an individual case.

We can usually help the caller who asks for a power of attorney – by showing them how to cope with their legal issues. But it may not be as simple as having the family member sign a power of attorney.

Tom Pixton
The Pixton Law Firm
503-968-2020

ANSWERS to Common Medicaid QUESTIONS

Q: Medicare paid for Dad’s hospital after his stroke. Won’t Medicare pay for nursing home, too?

A:  No. Medicare and Medicaid are two different programs. Medicaid may pay for long term care if your dad qualifies. Medicaid rules are complicated and change over time.

Q: Mom can’t take care of Dad at home anymore. To qualify for Medicaid, will they have to sell their house and spend down all their investments?

A: Your parents residence is exempt, so they can keep the house. Depending on the value of their investments, your parents may have to “spend down” some assets. They can spend down “dumb” or they can spend down “smart.”  With help from an experienced elder lawyer, they can spend down “smart” or even avoid a spend down entirely.

Q: Will Medicaid take my parents’ house or put a lien on it?

A: No. Medicaid does not put a lien on the house. However, Medicaid may make a claim against your Dad’s estate for payback after he passes away.  An experienced elder lawyer may help your parents with legal ways to avoid a claim entirely or at least delay the claim until after your Mom passes away.

Q: Is it legal for Mom and Dad to retitle or transfer their property to me so they will qualify for Medicaid?

A: Actually, it is perfectly legal, but it must be done very carefully, because Medicaid recipients will face a “period of ineligibility” based on the timing and the amount of the gift.  There is a 5 year “look back” that applies in ways you may not expect. Don’t try this at home.

Q: Mom and Dad had their wills done years ago. Is there anything else they should do to plan ahead for long term care?

A: Yes. Here is their homework assignment:

• Get a durable power of attorney from an experienced elder lawyer so Mom and Dad can legally sign documents for each other. For transactions to obtain Medicaid eligibility down the road, special provisions are required. A cheap power of attorney from the stationery store may be “legal,” but it may not work.

• Get an advance directive so Mom and Dad can legally make end-of-life health care decisions for each other.

• Consider long term care insurance.

• Plan ahead with an experienced elder lawyer to preserve their assets for their care.

Tom Pixton
The Pixton Law Firm
503-968-2020
“Easing the Burdens of Aging”
www.PixtonLaw.com

1. Transferring all assets to children or other relatives. This almost always results in a penalty period of ineligibility that begins after application for Medicaid and other public assistance. Tax consequences can be significant. Make gifts only with legal counsel.
2. Selling the family home to pay for nursing home costs. This is often not required, yet many still believe that the home must be sold to pay for care.
3. Relying only on a will or living trust. A will has no effect until approved in probate proceedings after death. A living trust is preferable in most cases, but generally does not protect assets from government claims for payback.
4. Relying on Medicare or health insurance. Neither one pays for the cost of long term care in a nursing home or assisted living. Monthly costs typically run between $5000 and $6000 and most families will quickly run through their life savings.
5. Putting a family member on accounts as a joint owner. This subjects the account to the risks associated with the joint owner’s life – divorce, bankruptcy, lawsuit. This can also result in disqualification periods for Medicaid eligibility. There are better ways to avoid these legal problems.
6. Using a pre-printed form for power of attorney. These documents may be useful for small accounts and simple transactions but usually lack the express language needed for more complex affairs and for Medicaid eligibility transactions. Have one prepared for your situation by an elder law specialist.
7. Using a form will or living trust. These are cheap and available from bookstores and internet. But they are almost always not suitable or correct for your situation. Lawyers earn substantial fees “fixing” these do-it-yourself wills and trusts.
8. Purchasing a “Medicaid annuity” or other financial products to shelter assets. Use caution when relying on the advice of “senior advisors” who may not understand your situation.
9. Applying for a guardianship or conservatorship. These proceedings to handle a person’s incapacity are costly, time-consuming and restrictive. With proper planning, these can be avoided in most cases.
10. Ignoring Medicaid estate recovery. The state can and does proceed with liens and other proceedings to recoup benefits paid out on your elder’s behalf. In appropriate circumstances, this can be avoided with proper planning.

Laws governing Medicaid eligibility, Medicaid asset recovery and estate preservation are complex and vary between states. A qualified Elder Law Attorney can help you avoid these common mistakes.

Source: J. Thomas Pixton of The Pixton Law Firm, 503-968-2020

Copyright © 2008 RetirementConnection.com. All rights reserved.

You have worked a lifetime creating a legacy you hope to share with your children and future descendants. You have met with your attorney and asked him to develop what you hope will be a fair and well-designed distribution plan that will pass the maximum financial assets to your heirs, and perhaps carry out philanthropic wishes as well.

You have determined which of your heirs shall be included, and “the how” and “when” the assets are given. You may have set up a Family Dynasty Trust, Qualified Personal Residence Trusts, and a Charitable Trust, along with your Revocable Trust.

You may or may not be treating your children equally in the distribution of the estate. Perhaps one child will inherit a business outright, and the other child will inherit via a lifetime trust. The two legacies left for them may not be of similar value.

All of this is okay. Whatever you wish to do is okay. But think about how you do it, and then spend some time talking with your children while you are able to do so.

In years of assisting families with their planning, I have grown to understand that those families who talk about their planning have the most success of leaving behind much more than just financial assets; they leave less emotional turmoil, fewer family squabbles, and less indecision.

What should you talk about and when? If only we knew how long we would be on this earth, the questions could be easily answered. Think about your health, your age and your children’s maturity. When a parent experiences a sickness or near death incident, they tend to recognize the need to involve their children.

How you involve your children may evolve over time. One family I guided never discussed any of these issues with their children. Their intent was not to disclose the specifics of their estate, but they decided it was time to review generally what they had put in place. They were unsure of how their two children would handle this discussion, and were nervous since the father had just battled cancer. A plan was put in place and the time scheduled. To their amazement, this family meeting lasted hours. They were pleased with how the children accepted the parents’ planning. The parents found themselves reviewing every detail of their assets, their values, and the way in which they hoped their children would carry on their legacy. They no longer worried about whether their plan was appropriate and whether it would continue in place after their death without disrupting the family harmony.

Openly discussing issues with your advisors and your family will assist in the process of updating your planning as well.

Only you know your children, their capabilities, strengths and weaknesses.

Do your children know what’s important to you in passing on the family legacy? Sharing your estate planning with your children must be done. The only question is when and how. Please take advantage of this opportunity, experience tells me you will not regret it.