Compare Long Term Care Costs Across the United States

I recently discovered a very helpful website run by Genworth, an insurance company that offers long-term care insurance as part of its products.

On the site, you can simply click on your location (state or city) and immediately see the current cost of long-term care per week, month, or year. The figures are averages, of course, and any particular facility may charge more (or less). Genworth’s figures are based on surveys of over 15,000 locations.

Click here to go to the site: https://www.genworth.com/about-us/industry-expertise/cost-of-care.html

 

I’m on the John Stossel Show on Fox TV!

I was invited to be a guest on the John Stossel Show, which aired on the Fox Business Network TV station. My segment was recorded on March 17, 2010. They flew me in and put me up in a hotel next to the TV studio, and the timing was great because it was also St. Patrick’s Day, so I got to see the huge parade down Fifth Avenue.

Here’s the segment I appeared on:

The overall topic of the hour-long show was on how to pay for the government benefits such as Social Security, Medicare, and Medicaid. Since my book (“How to Protect Your Family’s Assets from Devastating Nursing Home Costs: Medicaid Secrets”) explains how to save the most possible money by understanding the Medicaid rules, John wanted to explore some of the techniques mentioned in the book and on the website that advertises the book.

My segment was introduced by John saying something like, “Next, how some attorneys are advising people how to cheat the government!” Of course, I would never advise anyone how to cheat the government! Utilizing exemptions that are specifically set forth within the federal law is certainly not cheating. I mentioned on the show that if you go to a tax accountant, you fully expect that you will be advised how to take advantage of every deduction and loophole in the tax code, and that my advice is no different.

John said something like, “Yes, but with saving taxes, you’re keeping more of the money you earned, whereas with Medicaid planning you’re asking the government to pay your bills in the nursing home.” I don’t see a real difference in effect between these two: in both cases you are increasing the burden on taxpayers to pay for government programs. With tax savings, are you “selfish” for trying to keep more of the money you earned, at the expense of increasing everyone else’s taxes?

As the great Judge Learned Hand famously said in the case of Helvering v. Gregory (1934), “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes. . . . Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.”

The United States Supreme Court reinforced this sentiment in affirming the above ruling: “The legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them, by means which the law permits, cannot be doubted.”

I see no difference in trying to save the money you earned by use of proper and legal planning techniques that are permitted by the federal government, so that part of the burden is shifted to the Medicaid program.

If lawyers had to decide whether such planning techniques best served the overall good of the nation, they would be part of the legislative process, not attorneys who are required by law to be “zealous advocates” for their clients. As I mentioned on the show, there are some attorneys who simply refuse to assist people with this type of planning. But if every attorney did so, then people who are legally entitled to these benefits would be shut out from the very benefits the legislation entitled them to. When a law is passed allowing people to claim a certain benefit, the legislators must certainly assume that some people will actually do so–and that it is not wrong to do so!

How to Set Up a Caregiving Agreement

Caregiving agreements can be excellent vehicles for Medicaid planning (see pp. 94-97 of the 2010 edition of “How to Protect Your Family’s Assets from Devastating Nursing Home Costs: Medicaid Secrets”). I recently came across a very helpful online article that discusses the practicalities of such agreements, here.

Note that in some states, you cannot charge for future care, in a lump sum payment, but in others, it is perfectly legal to do so. Needless to say, you will need an elder law attorney to draft the agreement for you, as the Medicaid rules of your particular state must be carefully followed.

Also, don’t forget there are income tax consequences, so you’ll want to be sure to report the transaction to your accountant.

Common Law Marriage: Be Careful!

Back in the early days of our country, when justices of the peace and clergy were harder to find and the population more spread out, there arose the concept of a “common law” marriage. The basic idea was that if a man and a woman held themselves out to the community as married, and considered themselves to be husband and wife in all their dealings with the public and themselves, then the law would recognize them as such.

At the present time, only about a dozen states still recognize a common law marriage formed under their own laws. However, under the U.S. Constitution’s “full faith and credit” provision, a common law marriage valid in any one of these dozen states will be recognized as a legal marriage in all of the other states.

Unfortunately, because there is no piece of paper to point to, whether a couple will be recognized as married for purposes of state law (and hence federal law, which follows state law on this determination) is a facts and circumstances test.

Here are some of the factors that judges have looked at in making a determination that a couple were married at common law:

• living together
• holding themselves out as married to the general community
• exchange of wedding rings
• attending holiday celebrations and family gatherings together
• traveling together
• filing income taxes marked as married individuals
• completing medical records as married
• sharing domestic responsibilities

Here are some factors that weighed against a couple being considered in a common law marriage:

• the female’s reference to her partner as her “boyfriend” or “partner” to emergency medical personnel
• failure of one partner to indicate she was married when applying for a mortgage
• holding themselves as married only to a small circle of friends and co-workers but not the general community

Because tax returns are signed under the penalties of perjury, they are particularly persuasive to a court in making this determination.

Why is this important? There are many legal consequences, rights, and responsibilities that depend on a determination of marital status. For example:

• A surviving spouse is entitled to a certain percentage of a deceased spouse’s estate if the spouse died with no will; if declared to be unmarried, that surviving “spouse” gets nothing.
• A surviving spouse is entitled to a certain percentage of a deceased spouse’s estate if the spouse had a will but omitted or left little to the other “spouse”; this is called an “elective share” and could be as much as 50% of the deceased spouse’s estate.
• With larger estates, only a legal spouse can claim the unlimited marital deduction, saving thousands of dollars in estate taxes.
• Only legal spouses can file income taxes as “married filing jointly.”
• Only a legal spouse would have certain rights and access to medical records under federal and state laws.
• Only a legal spouse is entitled to the Social Security payments of a deceased spouse.

Sometimes it’s actually better not to be determined to be married. For example, a healthy spouse’s own assets must be “spent down” on a disabled spouse residing in a nursing home, before Medicaid coverage of the nursing home costs will be allowed. If the couple is not married, then only the nursing home partner’s assets are counted, protecting an unlimited amount of assets of the healthy partner.

As you can see, important monetary and other benefits turn on the legal determination of whether there was or was not a common law marriage. In most cases there are benefits to the spouse; in some cases there are disadvantages. In any case, this should be thought through by the couple so that they do not get caught unaware! If in doubt, the couple should go downtown and sign that little piece of paper indicating they are officially married. That would end all questions!

Setting Up a Special Needs Trust for a Disabled Relative

Many of us have a family member or close relative with a disability. We’d like to leave a portion of our estate to help this family member but are unsure how best to do this. Should we just make an outright gift? What about a trust? Let’s take a look at some of the options.

The simplest method of assisting the family member is an outright gift, either during lifetime or via our will. However, if the disabled individual is already receiving government benefits such as SSI (Supplemental Security Income) or Medicaid, additional assets could cause them to become disqualified from those programs. On the other hand, some programs such as SSDI (Social Security Disability Insurance) are not “means tested,” i.e., are not affected by the assets or income of the recipient.

Since a person may not need to receive “means-tested” benefits today but may require them in the future, the safest route is to leave them your gift inside a trust. The trustee of the trust will hold your money, invest it, and distribute it to your intended beneficiary as needed, without causing disqualification from government benefits.

Such a trust is called a Special Needs Trust or Supplemental Needs Trust, since it is designed to supplement—and not replace—government benefits. It can be created today and funded with money or other assets now. Such a trust is called an “inter vivos” trust. You can serve as the trustee or permit someone else to serve as trustee; the trust can be revocable or irrevocable; and you can retain power to change the ultimate distribution of the trust assets or not. All of these decisions affect the income tax and estate tax treatment of the trust. If you choose to make the trust irrevocable, then it will have its own federal tax i.d. number and can be set up to be taxed either to you, the trust itself, or to the beneficiary.

You can also set up the trust within your will, to be funded upon your death. Such a trust is called a “testamentary trust.” In this case, you will not have a separate trust document, since the terms of the trust will be contained within the will itself.

Because the rules of each state vary as to whether the terms of the trust will cause or not cause disqualification, you really must work with an experienced estate planning or elder law attorney to draft this trust for you. The attorney will be familiar with both the federal and state programs that might be of benefit at some point to your family member, what the rules are under both federal and state benefits laws, how trusts work, the different income and estate tax ramifications of each trust option, and how best to achieve your objectives.

Examples of distributions that will not cause the beneficiary to lose or have reduced government benefits:

• new car
• attorney/accounting services
• alternative health treatments
• TV, DVD player
• public transportation pass
• camera
• computer hardware, software, internet fees
• courses and classes
• dental work not covered by Medicaid
• fitness equipment
• musical instruments
• non-food grocery items
• physician specialists not covered by Medicaid
• utility bills
• physical therapy not covered by Medicaid
• vacations

The above is by no means an exhaustive list, but is only intended to give you some idea of what your gift via trust can be spent on to make your family member’s life so much better, without causing disqualification. As you can see, your gift will have wide-ranging benefits for your family member and will improve their quality of life for many years.

When is a Person Too Incapacitated to Sign a Will, Trust, or Power of Attorney?

As an elder law attorney I am frequently faced with adult children who realize that they simply have to take over for an aging parent. Maybe the parent is falling behind on bills or has trouble dealing with the medical establishment. It is always hard for a “child” to become the caretaker of the once-powerful and dominant parent.

Unfortunately, the parent may be reluctant to sign a power of attorney empowering the child to make legal decisions for the parent, since that act is frequently seen as an admission that the parent may actually need such help. Combine that with the child’s reluctance to bring up the subject for fear that it may anger the parent, and you have a recipe for procrastination. Hence the all-too-common situation where the attorney has to decide if a parent (or spouse) is too incapacitated legally to sign a will, trust, or power of attorney.

Let’s start with wills. Many people are surprised to find out that a person with Alzheimer’s or under a guardianship may still be legally competent to sign a will. That’s because under the laws of most states, a person is legally competent to sign a will if at the time of the signing he or she meets the following tests:

• knows the natural objects of his bounty (i.e., is aware of his spouse and children, if any)
• comprehends the kind and character of his property (i.e., knows approximately his net worth and what kind of assets he owns)
• understands the nature and effect of his act (i.e., realizes that it is indeed a will he is signing, and what that means)
• is able to make a disposition of his property according to a plan formed in his mind

Thus, the lawyer must meet with the parent or spouse and try to discern the above. In some cases, the lawyer may decide that the individual is too incapacitated and thus the lawyer must refuse to prepare a will.

A slightly different test is involved for signing a power of attorney. Here, the individual must be capable of understanding and appreciating the extent and effect of the document, just as if he or she were signing a contract. Thus, the parent may be competent to sign a power of attorney, but not competent to sign a will.

A trust is sometimes deemed to be more like a contract than a will, so that the necessary mental capacity needed to sign a trust may be less than that needed to sign a will. Recognizing that in today’s world living trusts are most often utilized as “will substitutes,” some recent state statutes have made the test for a trust the same as that set forth above for a will.

The mental capacity to sign the document should not be confused with the physical ability to sign one’s name. The law will permit a person to sign an “X” (known as a “mark”), that, so long as properly witnessed, will suffice just the same as a signature. In addition, if even a mark is not possible for the individual to make, then the individual can direct someone else to sign on his or her behalf.

Of course, the best advice is not to wait until it may be too late, but to have those conversations with family members while they are still competent and able to comprehend exactly what they’re signing and why.

I Don’t Have a Will – Do I Really Need One?

A common question estate planning and elder law attorneys often get asked is “Do I really need a will?” (The next question is always, “How much does it cost?” but we’ll discuss that another day!)

Most people would assume that an estate planning attorney would always answer “Yes, of course,” but such is not the case. Many people simply have no need for a will. But let’s take a look at why you may indeed want to have a will.

First, only in a will can you name the person(s) whom you would prefer to handle your estate after your death. Such person is called the “Executor” in some states, the “Personal Representative” in others. In any case, this person is the one who files the original will in court (usually with the help of an attorney), gathers and protects all your assets, pays all your debts, files the estate tax return (if necessary), and distributes your property in accordance with your directions as set forth in the will.

With no will, someone still has to go to court to get the legal authority to deal with your property and do the same tasks as the Executor, but this time it is up to the probate court judge who that person is. Since you left no indication whom you wanted, a battle could ensue. A will solves that problem, since it is rare that the court will not appoint the person(s) you named as Executor in your will.

The second big reason to have a will is if you wish to distribute your property in a way that differs from the default rules of your state. Every state has a statutory will, essentially, for those who did not write their own will. This scheme of distribution is called “intestacy” (“testate” means will, so “intestate” means with no will). For example, most state intestacy laws say that upon your death all of your money, assets, and real estate pass to your surviving spouse, if any, then in equal shares to your children, outright.

So a good reason to have a will would be any of these reasons:

• You don’t want to leave everything to your spouse.
• You want to leave more to one child than another.
• You have minor children and want to hold back their access to your money until they are at least age 25 or 30.
• You’d like to leave $10,000 to your alma mater or your church or temple.
• You want to “cut out” one of your children.
• You’d like to leave money to a family member in a way that is protected against lawsuits, creditors, and divorcing spouses.
• You’d like to leave a small sum to each of your grandchildren or a daughter-in-law.
• Your parents are living, you have no spouse or children, and you want your assets to go to your siblings and not your parents.

So who does not need a will, then?

• Your estate is relatively small and you’re happy with how your estate would be divided and distributed under your state’s intestacy laws.
• You’ve completely avoided probate by using “P.O.D.,” “T.O.D.,” joint ownership with right of survivorship, a trust, or beneficiary designations on all your assets.
• You’re content having all your assets be immediately distributed to your heirs, regardless of their age or ability to handle money.
• You’re not overly concerned with who will handle the affairs of your estate after your death.

Finally, before you consider the cost of a will, consider the real cost if your wishes were not carried out because you needed a will but did not have one. Sometimes even the simplest will is better than no will at all!

How To Choose A Good Nursing Home

With nursing homes costing anywhere from $3,500 to $10,000 per month (depending on your state), and with the average stay about 2 1/2 years, the total cost of a typical stay in a nursing home can be between $100,000 and $300,000. However, family members should not focus only on the cost but also on the care of their parent or spouse. How do you go about finding a good nursing home, one which will properly care for the emotional as well as physical and medical needs of your family member?

A good place to start would be the Consumer Reports Nursing Home Guide (you can find this online). This in-depth site is completely independent of the nursing home industry and can be relied on for giving you objective information. Here you can learn not only what to look for in evaluating nursing homes, but also review a state-by-state “Quality Monitor” that lists recommended homes and those to avoid. These lists are far from complete, but the general information on the site is very helpful.

Medicare itself has published a four-page checklist on its excellent website www.Medicare.gov that you would take with you when visiting a nursing home. One of the most important items on the list is whether or not the facility is “Medicaid-certified.” Most people don’t realize that many nursing homes do not accept Medicaid; if you think you may be applying for Medicaid at some point, then you probably should start out placing your family member in a Medicaid-certified facility, so that once your private pay money stops you won’t have to move your family member, which can be very traumatic.

Another great resource is the Nursing Home Inspector at www.CarePathways.com, where for a small fee you can search their database of over 44,000 nursing homes and obtain detailed information about the performance and characteristics of every Medicare/Medicaid certified nursing home in the US.

Finally, you should check out the free reports available at www.MyZiva.net. MyZiva.Net claims to be a free, objective and easy-to-use nursing home resource for prospective residents, caregivers and healthcare professionals that can help you find and compare nursing homes. You simply enter the zip code of the area you are considering, and a comprehensive chart pops up from which you can link to reports on the facility’s main focus, survey results, quality measures, and staffing. You can also check several facilities you are interested in and obtain a side-by-side comparison.

In all cases, you will have to follow-up any online research with phone calls to the facility and finally an in-person visit. Try to get a tour that takes you “behind the scenes.” Does the staff look harried? Are the hallways cluttered? What about the food? You might consider having a meal there, yourself, with the residents. Bring your checklist and don’t be shy about asking tough questions.

Moving a loved one to a nursing home can be an emotionally draining experience not just for the one having to move there, but for the entire family. A spouse of 65 years, separated for the first time; a parent who’s always been there for you, that you now must take care of; the solid father and grandfather who now looks shriveled and worn–all these can exact an emotional toll on the family. Accordingly, you want to do your best job in locating a facility that you can feel confident about, and that will be a comfort and aid to your spouse or parent during the remaining years of their life. Hopefully the resources discussed above will assist you with that task.

A recent additional resource, The Baby Boomer’s Guide to Nursing Home Care, explains the many laws protecting nursing home residents and provides advice on obtaining the best nursing home care possible. It is intended for use by residents and their family members and friends, but also is a worthwhile reference for nursing home operators, attorneys, social workers, and others with a personal or professional interest in nursing home care.

For a different point of view on nursing home placement, see There’s No Place Like (a Nursing) Home: 4 Powerful Steps That Will Change Your Life.

Selecting a nursing home for a loved family member can be a very difficult decision. However, once you are armed with the information from the above resources you should find this burden to be much less onerous. In any event, good luck!

Medicaid and the Living Trust

You’ve probably gotten a postcard or seen an ad for a seminar on “Living Trusts” and all the benefits they supposedly offer you. Basically, a Living Trust is a trust you create and fund during your life and which you retain the ability to change and revoke at any time. They have their place and can be quite useful, in the right circumstances, but the question of today is whether they are useful if you may be applying for Medicaid.

The problem with Living Trusts for someone applying for Medicaid is that everything titled in the name of the Living Trust is considered an available asset, even if it was exempt outside of the Living Trust. For instance, your home is exempt (a single person’s home is almost always exempt up to at least $500,000), but if you deed it into your Living Trust, it suddenly loses its exemption. That alone can cause you to become ineligible for Medicaid, forcing you to deed your house out of the Trust back into your own name. The same would be true of your car or even your other personal property.

Now bank accounts and investments can certainly be titled in the name of the Living Trust, since such assets are countable whether they are titled in your name or in the Trust’s name. However, if you are single, you will have to spend down those assets in any case, in order to qualify for Medicaid, so that’s a dubious benefit.

Since you basically have to withdraw all the Trust assets and retitle them back into your own name, as you can see it makes absolutely no sense to pay an attorney to create a Living Trust for you if you are single and facing long-term care, and if you think that you may need or want to apply for Medicaid at some point.

If you are married, it is possible for the Community Spouse (i.e., the spouse not in the nursing home) to have assets titled in the name of a Living Trust, but there is usually little advantage to doing so if you reside in a state like Colorado which has relatively inexpensive and simple probate procedures.

As a matter of fact, there is a type of trust that the Community Spouse can set up to be funded after the death of the Community Spouse, which can hold assets for the benefit of the nursing home spouse yet not count against that spouse’s Medicaid eligibility. However, such a trust cannot be used in a Living Trust and can only be used in a Will.

So the lesson of all this is that Living Trusts may be useful for general estate planning purposes but are inappropriate–or worse–in a Medicaid planning situation.

I Can’t Afford an Elder Care Lawyer…Can I?

Many of us are worried about the high cost of lawyers, and feel that we can now go online and find all the free forms and free advice we need. While it is admirable to arm oneself with information, the field of elder law and Medicaid planning is not a do-it-yourself project!

One simple example: You find a form for a power of attorney online and then sign it, or have your parent sign it. It was either free or $10, so you feel pretty good about it. After all, didn’t you just save a big legal fee? But what you failed to notice is that several critical provisions were omitted from this “generic” power of attorney form, and when the time comes that you need to use the form, it’s too late to get it fixed. Your mother may now be incapacitated and unable to sign a new power of attorney form, forcing you to hire an attorney to represent you in a guardianship/conservatorship proceeding. So now you’re faced with spending thousands of dollars, while the attorney’s fee for preparing his top-of-the-line durable general power of attorney may have been only $150 or so.

Another example is with Medicaid planning. You heard or read somewhere that it’s a good idea to have your father gift away his assets, so he’ll be “poor” when he applies for Medicaid, thus protecting his money. But you didn’t know about the recent change in the federal laws regarding calculation of penalties. So now your father is disqualified from Medicaid eligibility for many months or years, when through proper and careful planning by a Medicaid specialist attorney he could easily have saved half if not all of your father’s money!

Attorney Billing Methods

It should be noted that not all elder care attorneys charge the same amount or even use the same method to calculate their fees. First, there’s the traditional method of billing, which is to charge by the hour. Most attorneys charge in 1/10 of an hour increments x their hourly rate. Be aware that although an inexperienced attorney will usually have a lower hourly rate than one who has spent many years concentrating in this area of the law, the inexperienced attorney will undoubtedly take a lot longer to figure out what to do and do it. So the fees may not be much different at the end of your case, and you will have paid for the education of the less experienced lawyer.

A second billing method is to charge a flat fee for a given project. The advantage to the client is that she knows up front what the cost will be and does not have to watch the clock as carefully. The advantage to the attorney is that he may be able to be rewarded for efficiency and hopefully be compensated for the many unpaid hours spent crafting effective forms that solve his client’s problems.

A third approach combines the two, so that the arrangement is $X for the following documents or legal work, which includes a maximum of Y number of hours. The idea here is that if something comes up after the project gets started, or the client is extremely demanding, requiring multiple changes to documents, asking a zillion questions, etc., the attorney won’t get stuck working for free.

In any case, you as the potential client have every right to ask the attorney you are considering hiring what the cost might be for your legal work. Since the facts of every case differ, it may be impossible for the attorney to give you an exact figure, but you should at least find out the hourly rate and what other similar cases have cost. Again, take into consideration the experience and expertise of the attorney you are considering. It’s no bargain if you saved $1,000 in legal fees if a less-than-optimal document or plan winds up costing you $10,000 several years from now!