Question: Having enjoyed reading your Flying Solo column for years, my wife and I are very pleased that you began NextSteps in order to provide much needed information. I am 52 years of age, and my wife is 50, and our children are grown. Our parents are in their mid-70's. Although we are all in good health, we recently began talking about the need to plan for our future health and long-term care. When should the planning process begin, and what should be done?
Answer: Assuming you subscribe to the view that planning should begin while you have the greatest number of options available, then the health care and long-term care planning process should start as early as possible --- especially if: 1) you are over age 40; 2) you have parents who are age 62 or older; 3) you live in one of the 29 states that makes children responsible for their parents' medical care; 4) you have a disabled child; 5) you are divorcing; 6) you are divorced and are paying long-term support to a former spouse; 7) you are over age 45 and are remarrying; or 8) you have a history of Alzheimer's Disease, stroke, or other chronic illness in your family.
What should you do? Understand that the only ways to pay for long-term care are 1) out of your pocket, 2) long-term care insurance, or 3) Medicaid after you have become impoverished. Understand that if you remarry and have a premarital agreement that says you are not responsible for your spouse's obligations, this agreement is not binding on third persons -- meaning that if your spouse enters a nursing home, your assets can be tapped for this care. And understand that if you are over age 65, Medicare will only pay for nursing home care in limited circumstances for a limited period of time.
You and your family members should seek the advice of a qualified attorney in your state who can explain to you the rules in your state and, at a minimum, you should sign appropriate durable powers of attorney, durable health care powers of attorney, and wills that are designed for your specific circumstances. We do not suggest that you rely on forms, kits, or computer programs for documents that are this important. And, lastly, we suggest that you look into long-term care insurance as a way to either fully or partially fund long-term care.
Question: My father, now age 81, was in a nursing home for nearly three years as a private pay patient before my mother could get him qualified for Medicaid by "spending down" to $75,000, her house, some old furniture, and a car. During the course of his illness, she spent in excess of $150,000. Not wanting the rest of her property to go to the nursing home, my mother went to a lawyer who prepared a will excluding Dad from her estate and leaving everything to me, my brother, and my sister. When mother died earlier this year, we admitted her will to probate, sold her house, and had begun distributing the funds when we were told by the State that that Dad's Medicaid was being terminated because he was entitled to one-third of my mother's $300,000 estate, and did not make a claim for his share. Although our lawyer says he can fight the decision, it appears to me that we will be spending good money after bad -- even though I still don't understand how this system works. Can you explain what happened here?
Answer: Even though your mother thought she was "cutting your father out," as a married individual, your father has a statutory right to elect against the will and take one-third of your mother's estate. In the eyes of the Medicaid folks, the decision of your father -- or his guardian -- not to file this claim to one-third of your mother's $300,000 estate is treated as if your father had received the $100,000 and then gave it away -- thus disqualifying him from Medicaid benefits. In other words, if there are assets to which an individual is entitled but does not receive because of action or inaction on his part, he or she is deemed to have received the asset and then given it away.
While we agree with your assessment that you should not fight a battle you can't win, it seems to us that 1) your mother should have been informed of the probability of this result by the lawyer who prepared her will, and 2) your mother should have sought advice about how to avoid this most unintended result by using a special needs trust in her will. And if you or one of your siblings has your father's power of attorney, you might be able to avoid this disqualification based on the advice of a qualified elder law attorney in your state.
Jan Collins is an award-winning writer and editor. Jan Warner is a matrimonial, elder, and tax attorney. Both are based in Columbia, South Carolina..
Please e-mail your questions to janwarner@flyingsolo.com or by mail to P.O.Box 11704, Columbia, SC 29211.
