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Medicaid in Elder Law

Medicaid is a government program that provides health coverage to low-income and disabled individuals. Even though they have similar names, Medicaid and Medicare are distinct from one another. For example, all people age 65 and older are eligible for Medicare, while only those with low-income and a limited number of assets may qualify for Medicaid. Funding for Medicare comes 100% from the federal government. However, each state develops its own Medicaid program following federal guidelines and splits their program’s costs with contributions from the federal government. As a result of this setup, the rules governing Medicaid differ from state to state.

According to a 2015 Star Tribune Article, Minnesota has surpassed one million Medicaid enrollees. This means that one in every five Minnesotans is now covered by public health care. In Minnesota, Medicaid is a jointly run federal-state program called Medical Assistance (MA). This large number may be attributable to the fact that Medicare DOES NOT cover long-term care facilities like nursing homes, which forces elderly individuals covered previously by Medicare to shift to Medicaid for coverage. Understanding how to qualify for Medicaid/MA and the role that estate planning plays in doing so is becoming more and more important.

The typical process for an individual to qualify for Medicaid involves two parts: medical and financial. On the medical side, a county employee who works for the applicant’s home-state Medicaid program evaluates the potential beneficiary’s medical situation. If the potential beneficiary meets the state’s standards for the minimum level of medical care needed, or if the potential beneficiary is already in a nursing home (a typical qualifier in most states), then the county employee signs off on the medical portion of the Medicaid checklist.

The financial side of qualifying for Medicaid can be a bit trickier. In most states, single recipients of Medicaid may have no more than $2,000 in assets to their name (In Minnesota the asset limit is $3,000). However, if there is a married spouse still living outside the nursing home or not receiving care funded by Medicaid, he or she is subject to an asset cap, as well. This cap is why it is crucial to discuss your situation with an Elder Law Attorney. Gifting your assets or transferring these assets to a trust in most cases disqualifies you from some or all of your potential Medicaid funding in Minnesota, even if your total assets are below the maximum value allowed in your state. There is also a five year look back period in the Medical Assistance application process.

An Elder Law Attorney who is versed in your state’s laws will know how to help you carefully begin to re-situate assets for a Medicaid application that will best preserve these assets for your future use.

What are the differences between a Will and a Revocable Trust?

Many people have heard of both Wills and Trusts, but do you understand what makes them distinct from each other? As with numerous estate planning topics, it is sometimes difficult to distinguish what the differences between the two are and when one is more appropriate than the other in your estate planning. Depending upon your individual situation, the combination of a Will and a Trust may be the best way to ensure that your assets are protected and transferred in the manner of your choice.

Wills and Trusts are both useful estate planning tools because they allow assets such as money and property to be transferred to other people or organizations. Perhaps the biggest difference between the two is the respective timelines for distribution of assets. A Will distributes your assets at your death. Trusts, on the other hand, can distribute assets before your death, upon your death, or even for a period of time after your death, depending on the language governing your particular trust.

Another major difference is the process under which a Will and a Trust distribute assets. Wills go through a court controlled process called probate, while Trusts generally operate outside of the court’s supervision. During the probate process, the court verifies the legality of the Will and oversees the distribution of the estate according to the written wishes of the deceased. From an economic standpoint, the creation of a Trust is more expensive initially, where probating a Will takes time and money later. If privacy is a concern, another difference is that the terms of a Will become public record, while Trust terms are not openly shared.

If properly drafted, Trusts generally do not go through the probate process. This is because the property that you transfer into a Trust becomes the property of the Trust itself, therefore, no longer being titled in your name. For example, a house that Jane Doe transfers into a Trust is subsequently owned by the Jane Doe Trust, not Jane herself. If the house was left in Jane’s name alone, the house would pass through probate and be directed by Jane’s Will. While living, Jane retains access to the house in the Trust as long as the trust parameters grant it to her. During the Trust drafting period, Jane determines how she wants house in the Trust to be used during her life, as well as how they are to be treated after her death by selecting beneficiaries to receive the house. When Jane passes away, with the house in the Trust, there is technically no change in direct ownership of the house. Through the use of specific distribution and beneficiary language, an Elder Law Attorney could counsel Jane on how to create a trust that allows the house to benefit numerous people for a period of time that extends beyond her own life. This is a unique concept created through Trust law, as a Will generally does not offer the ability to exercise long-term control after one’s death.

This information is meant to provide a quick and basic summary of Wills and Trusts. Despite being different from an operational standpoint, it is important to note that Wills and Trusts often work in tandem by holistically supporting the various goals of an estate plan. Each state has unique laws, and there are many different ways to implement Wills and/or Trusts into your individualized planning. Be sure to consult with an Elder Law Attorney to learn more about the options that best effectuate your wishes.

Capacity to Sign Estate Planning Documents

One of the largest challenges in the modern practice of elder law and estate planning consists of issues surrounding capacity to sign documents. Our population is living longer than ever before and we now have one of the largest senior populations of all time. This number is expected to exponentially grow as the Baby Boomers enter retirement and technology/ health care continue to advance. Some health care professionals see these factors coming together to create a potential “dementia epidemic”. For an Elder Law Attorney, it is important to create and execute legal documents before advanced health conditions affect an individual’s ability to understand what he/she is signing.

In deeming a person to be competent or to have capacity, lawyers and judges apply various legal thresholds on a case-by-case basis. Even though the specific descriptions of legal capacity vary from state to state, the typical requirement is that the person signing the instrument must understand the purpose of the document and be able to make a rational decision in regard to the document at the specific time they sign them. In the case of a Will for instance, a person should be able to understand generally what assets he/she owns and who would naturally receive these assets upon the person’s death. If a person lacks this generalized level of capacity, he/she may not be able to make a Will. The level of capacity is different for signing contracts, transferring property, getting married or divorced or even driving a car.

Those who have loved ones with Alzheimer’s or other types of dementia know that they go through good days and bad days. This is one of the most important areas of capacity to understand; it is not “all or nothing”. While bad days are expected in such situations, a person suffering from dementia or Alzheimer’s can still experience times of absolute clarity. Merely suffering from such a disease does not permanently take this person’s capacity to make legally binding decisions away from them. Therefore, a person may lack capacity to sign a document one day and regain lucidity another. In fact, in Minnesota an adult is presumed to have mental capacity until a court determines otherwise.

If you are in a situation where your loved one has diminished capacity and needs to sign estate planning documents, NEVER do so without consulting an Elder Law Attorney. An Elder Law Attorney has the knowledge and experience to work through such a situation in a way that is more likely to lessen the chance of litigation and avoid other legal pitfalls. If you have questions about your loved one’s capacity to move forward with the estate planning process, contact the office of a local Elder Law Attorney for information relevant to your particular situation.

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