Getting a Money Settlement While on Government Benefits (Part 3)
The past 2 weeks I outlined for you the problem of what to do with a money settlement that is received by someone currently on Medicaid. A special needs trust is the solution most often recited. But what choices does Joe have? He is the 70 years old client currently in a nursing home receiving Medicaid benefits that I mentioned last week. If Joe has any child that have been deemed disabled by Social Security then an outright transfer to that child or to a trust for the sole benefit of that child can be made. This transfer will not carry a Medicaid penalty because it falls within the exceptions to Medicaid’s transfer penalty rules. From there the money can be placed in a trust and used for Joe’s benefit. What if Joe doesn’t have a disabled child? Then he will need to spend the money down but cannot simply transfer it out of his name. He must spend it on product or services for himself (not others). There isn’t much he can spend it on in a nursing home but depending on his mental and physical capabilities a cell phone, computer or motorized wheelchair are some common expenses.
Getting a Money Settlement While on Government Benefits (Part 2)
Last week I outlined for you a common call I receive from attorneys who have successfully obtained money recoveries for clients who are currently receiving or may in the future need government benefits. Special needs trusts have become more widely known in recent years and recognized as “the solution”. However, as I wrote last week that isn’t always possible or even desirable. Let me explain. A special needs trust – or more specifically – one type of a special needs trust is a possible solution. A first party special needs trust, also known by reference to the specific federal statute that authorizes it, a “(d)(4)(a) special needs trust, is funded with the beneficiary’s own assets. This is to be distinguished from a third party special needs trust which is funded not with the beneficiary’s own assets but rather a third party’s assets. This is commonly the case with parents who set up an SNT to receive the inheritance they intend to leave for a disabled child as part of their estate plan. There are some important requirements that must be satisfied in order to set up a first party SNT. First is that the beneficiary must qualify as a
Getting a Money Settlement While on Government Benefits – Part 1
We get quite a few calls from attorneys who have settled cases or obtained judgments in favor of their clients to compensate them for pain and suffering resulting from slip and falls, car accidents, medical malpractice etc. The amount recovered might be small – say $10,000. In other cases it could be substantial – $1,000,000 or more. In each case the attorneys have brought the matter to a successful conclusion – no doubt getting the very best result they can for their clients. So, why are they reaching out to me? The reason is that in many cases their clients are receiving needs based government benefits. Receipt of the settlement proceeds will in each case cause their clients to lose those benefits. Often the attorney has no idea this could be an issue when he/she took the case. Now the client is understandably concerned about losing the benefit which just might have a major impact on his/her well being. What if anything can we do? Placing the proceeds in a special needs trust may be the solution but that won’t work for everyone and even if it is a possible answer it still may not be desirable or necessary.
Solving Only One-Half of the Problem (Part 2)
Last week I was telling you about a very typical call in our office. Joe and Mary went to see an attorney to get their affairs in order when they learned that Mary had dementia. It was a little more than 3 years later - when he could no longer care for Mary at home - that Joe called me, panic stricken, when he learned what it would cost to place Mary in a facility. Joe took care of his estate planning need – what happens when he and/or Mary dies. But he didn’t address the problem of what happens if they live and one or both of them need long term care at a cost of as much as $11,000 to $13,000 a month. It’s what I call the “second-half” of the problem. What Joe and Mary needed 3 years ago was a long term care asset protection plan which would enable them to pay for the care that Mary needs but allow them to qualify for Medicaid in the event Joe had to put Mary into a facility - without putting Joe in the poorhouse. Had they placed assets into an asset protection trust then, Mary could
Solving Only One-Half of the Problem
Joe called me because the hospital social worker suggested it. His wife, Mary had been in the hospital but was now ready to be discharged. However, Joe was just now coming to the realization that Mary can’t go home. He just is not capable of caring for her any longer. While he is the healthy spouse of the two he is 85 and physically can’t continue to be Mary’s caregiver. Mary is 83. Joe told me that in recent weeks her dementia has progressed. She needs assistance with at least 3 of the activities of daily living. She can’t bathe, dress or go to the bathroom on her own. She is also having balance issues and often needs assistance walking. The social worker suggested he look at long term care facilities. That’s when Joe got a bit of sticker shock at the cost. His call to us was a cry for help. Joe told me Mary began experiencing the signs of dementia about 3 years ago. That’s when he said he went to an attorney to get his affairs in order. I asked him what he understood that to mean. Joe then explained to me that he wanted to
New Jersey Courts Decide Case Involving Estate Recovery and Elective Share (Part 2)
Last week I told you about a case that was just decided by a New Jersey court in which a family tried to avoid the impact of New Jersey’s elective share as it relates to Medicaid. (See 1/30/17 post for an explanation of the elective share and Medicaid estate recovery). Here are the basic facts. Arthur Brown had been receiving Medicaid benefits for almost 5 years until his death in 2013. Following his death, the State of New Jersey, under Medicaid estate recovery rules sought reimbursement from his estate of $167,000 in benefits it paid out during his lifetime. The State determined that its lien attached to Arthur’s 1/3 elective share interest in his wife, Mary’s estate. Mary had died in 2010. Before her death she executed a will which left her estate to her 3 children, leaving nothing to Arthur. When Arthur was approved for Medicaid in 2008, under Community Spouse Resource Allowance rules Mary was able to keep the couple’s home (Arthur transferred his interest to her) and approximately $70,000. This is essentially what was left in her estate when she died. Mary’s son, Thomas as Executor of her estate notified Medicaid of her death and advised