If you missed Part 1 of this series, you can find it here.
Part of Carolina Family Estate Planning’s mission is to provide free education and resources to the community. We believe strongly that best way to help the elderly is to clear up the many misconceptions about the Medicaid program. These myths cause too many of society’s most vulnerable citizens to make mistakes that can cost them thousands of dollars or cause them to spend every last dime of their life savings before seeking help with nursing home and medication costs.
That’s why we’ve again chosen to write about the common Medicaid myths we hear in the community:
“I have to give away everything I own before I can get Medicaid”
All Medicaid recipients are able to keep some of their assets and still qualify for benefits. The key is understand what Medicaid considers an “exempt” versus a “non-exempt” asset in North Carolina.
For instance, a single person in North Carolina can keep a few items, including the house they lived in before going into the nursing home, one automobile, a specific type of pre-paid funeral plan, personal belongings and up to $2,000. The laws surrounding what a married couple can keep are even more complicated and vary depending on each individual’s specific set of circumstances.
That’s why it’s important to have an elder law attorney review your financial situation before you apply for benefits.
“I can only give away $13,000 per year or I won’t qualify for benefits”
We frequently hear from individuals who have lost the opportunity to preserve thousands of dollars because they believed this myth. In fact, the $13,000 figure is an IRS rule regarding when a gift tax return should be filed and has nothing to do with Medicaid law.
The truth is that every state has a different amount of money that seniors can give away without creating a long period in which they are ineligible for benefits. When done correctly, the state allows individuals to give away far more than $13,000 a year.
In fact, North Carolina has laws in place that allow individuals with a disabled child to give away their assets, including their home, and still qualify for benefits. But this must be done with the assistance of legal advice from a qualified elder law attorney.
“Our pre-nuptial agreement shows that everything belongs to my husband”
North Carolina does not take pre-nuptial agreements into consideration when determining Medicaid eligibility. All assets owned by either spouse are considered jointly owned and must be divided and spent-down exactly as they would if there was no pre-nuptial agreement in place. The only way a pre-nuptial agreement is effective is if the couple actually divorces.
Proper estate planning and expert legal advice can ensure that the wishes of both spouses are honored regardless of which one needs nursing home care.
Medicaid was considered a complicated program when President Lyndon B. Johnson first signed it into law at the Truman Library in Independence, Missouri, and it has grown even more complex during each of the thirty years since.
Although it is a national program, it is administered by each state. The rules and regulations are constantly changing and can vary widely from state to state. So, it’s no wonder there are many myths and inaccuracies surrounding the program.
This month, we are taking a look at the common misconceptions we hear frequently about Medicaid.
“My mother heard about someone who…”
All too often, we meet people who have heard horror stories about Medicaid from well-meaning friends or family members. These stories are often filled with inaccuracies and half-truths that frighten people into spending every last dime on nursing home care for themselves or a loved one before turning to Medicaid for help.
Similar stories have also prompted people to assume that what worked for a friend will work for them as well. So, they may give their house or all of their assets to a child in hopes that impoverishing themselves will immediately qualify them for benefits. Unfortunately, they soon find out that these transfers mean they are unable to receive benefits for several months or even years after the money is gone.
That’s why it is important to contact an attorney who concentrates his or her practice in elder law. With a clear picture of your specific situation, an elder law attorney can explain those laws that should allow an individual or married couple to preserve their house and enough of their assets to live comfortably for the rest of their lives.
“My father is already in the nursing home so there’s nothing we can do now.”
It’s true that a family can wait longer than they should to contact an elder law attorney but it’s rarely ever too late to establish a good plan. A good rule of thumb is that the earlier a plan is put in place, the more assets can be preserved.
So, when is the right time to call an elder law attorney? You should pick up the phone right now if you or a loved one does not have a Power of Attorney in place for financial and health care decisions. It’s important these documents are put in place before a gradual or sudden decline in mental competency occurs. It’s also important to make sure the financial Power of Attorney contains the right language so Medicaid planning is possible–most of the ones that we review in our office do not include the required language. If you’re unsure, you should have your power of attorney reviewed by an elder law attorney right away.
You should also call right now if you think that nursing home care will be needed by a loved one. This may be due to a diagnosis of a terminal or debilitating illness, such as Alzheimer’s, Parkinson’s or ALS. It may also be that your loved one is being discharged from the hospital and told he or she will be unable to care for themselves at home. All of these situations should be reviewed by an elder law attorney to determine what type of planning can be done.
“The Medicaid office can just give me the paperwork.”
Those who work in the Medicaid office cannot offer you legal advice. You may not learn about laws that may allow you to receive Medicaid and still keep part or all of your spouse’s income as well as your own. Nor can they represent you or give you advice on the laws that, depending on your specific situation, may allow you to keep all of your assets without spending down a single penny. Medicaid has rules and regulations in place to ensure families don’t lose everything to nursing home costs. An elder law attorney can explain how those laws may benefit you and your family.
Let’s say that you have decided to follow your Physician’s advice and complete your Health Care Directive, thus providing a clear understanding of your wishes as they relate to life sustaining measures. You understand the significance of having a Health Care Directive, but as you research the process you are confronted with a lack of understanding regarding what life sustaining measures encompass. This is a common frustration.
Life sustaining measures can be defined as, “Any medical treatment in which the primary goal is to prolong life rather than treat the underlying condition.” In such cases an individual’s own body is not capable of sustaining proper functioning on its own without medical intervention.
Artificial nutrition and hydration are utilized when an individual is not receiving the nutrients necessary for health and well being. Artificial nutrition (tube feeding) requires a tube be placed into the stomach or the upper intestine. Hydration (fluid replacement) involves tube placement intravenously (IV) via a needle.
Cardiopulmonary resuscitation (CPR) is used when an individual’s heart beat and/or breathing has stopped. CPR includes treatments such as mouth-to-mouth resuscitation, chest compressions, electric shock and/or drugs to restart the heart. CPR can be life saving, however, there is a risk of broken or cracked ribs, punctured lungs and death.
Mechanical ventilation supports a person’s breathing when they can no longer breath on their own. In this situation a machine called a ventilator forces air into the lungs via tubing in the mouth or nose.
Dialysis is the artificial process by which waste products and excess water are removed from the blood. It’s used when the kidneys are no longer able to do this adequately.
These examples of life sustaining treatments are just a few of the more common measures taken to continue life when one or more body systems are not working properly. Deciding what, if any, treatments are right for you should depend on several factors:
Does the treatment relieve suffering, restore functioning, or enhance the quality of life? If so, these would be some of the benefits of treatment.
Conversely, a treatment may be considered problematic if it is painful, prolongs the dying process or negatively effects the quality of life.
Other questions to ask yourself might be: What are my values as they relate to life prolonging measures? Who will carry out my wishes should I become incapacitated? If I start treatment and it does not improve my status will I want to continue that treatment? If so, when? (It should be noted that it is ethically and legally acceptable to discontinue a treatment that is no longer of benefit. It is the disease not the withdrawal of treatment that causes death.)
How you choose to complete your Health Care Directive and what measures you choose to take are up to you.
Talk to your doctor and don’t be afraid to ask questions if you find the terminology confusing or you simply don’t understand.
Ultimately understanding your Health Care Directive and the medical terminology associated with it will enable you to communicate your wishes to those providing your health care and increase the likelihood that your wishes will be honored.
If there is an organization or charity that you support financially, as a Cary trusts lawyer, I would urge you to consider setting up a charitable trust. A charitable trust allows you to give money to an organization whose work you admire and support, but there is also an additional benefit in that you may be able to reduce your estate taxes.
One way that people use charitable trusts is to set aside assets to produce income while they are alive, with the remainder going to charity when they pass away. This allows them to receive tax benefits while they are still living from a gift that will be made when they die. In this scenario, both the donor and the charity will benefit.
There are two main types of charitable trusts. They are:
- Charitable lead trust. You can use a charitable lead trust to make a series of payments to a charitable organization while you are alive. At some point in the future the remaining assets in the trust either given back to you or transferred to someone that you select as beneficiary. In a way, the donor is lending the assets to the charity for a period of time during which the charity can use the income produced by the assets.
- Charitable remainder trust. In this type of trust, you set up two sets of beneficiaries called income beneficiaries and remainder beneficiaries. The income beneficiaries, typically the trust owner and/or his or her family, receive income from the assets in the trust during their lifetimes. When the beneficiaries pass away, all remaining assets are given to the charity who is the remainder beneficiary. This option has the added benefit of missing estate taxes entirely.
The rules for these types of trusts are very complex. If you are interested in charitable trusts, I encourage you to seek out a qualified trusts attorney and tax advisor who can guide you through the process.
I hear the same excuse over and over….
I don’t have an “estate.”
I have more debt than assets.
The only thing I have is my home.
As you may have guessed, these are excuses that people make for not preparing an estate plan. These people are sadly misinformed. They think estate planning is only about money. Estate planning does take care of financial issues, but the way I see it, the most important reason for doing an estate plan is for the benefit of the people that you leave behind.
Estate planning is essential for senior citizens who are concerned about the well-being of their loved ones. No matter what your level of wealth happens to be, there are decisions that will have to be made if you become incapacitated or when you pass on. If you don’t leave detailed instructions for the type of medical care you want or what to do with your things, you will be putting those you love most in the position of being a mind-reader. They will have to do their best to figure out what you would have wanted and then deal with the consequences such as unhappy family members who disagree with them. Do you really want to cause this type of stress for them at a time when they are already upset and mourning? I doubt it.
I realize thinking about these things is not easy or fun, but approaching it in an organized manner may help. Here’s a list of things to consider when planning your estate:
- Talk to close family members and let them know how you would like to handle the dispersal of your assets and sentimental items. Also, talk to them about the type of medical care you would like to receive should you become incapacitated. Chances are, if everyone knows your plans ahead of time, there will be fewer arguments and a lot less stress.
- Prepare a list of all of your assets including your home, your financial accounts, insurance policies and any personal possessions.
- Make a list of everyone that you would like to be a beneficiary of your estate. You may also want to include organizations that are meaningful to you, such as charities, churches, schools or universities or civic organizations.
- Plan for how you would like your pets cared for if something should happen to you.
- Make a list of passwords, PIN numbers and other codes that someone might need and store them in a secure place (be sure someone know how to access).
- Think about who you would like to put in charge of your medical care and who you would like to oversee the dispersal of your assets. You can appoint different people for these critical jobs.
- Consult with an experienced estate planning attorney who can offer advice about how to arrange your estate so that the person you put in charge of your financial and medical decisions will have the fewest complications.
These steps alone will go a long way in reducing the stress that your loved ones will experience. Isn’t their well-being enough reason to do an estate plan?
If you answered “yes,” then be sure to give our office a call at (919)443-3035 and ask to schedule a Peace of Mind Planning Session.
