Suffolk County, NY Estate Planning and Elder Law Blog

Friday, January 20, 2017

Article 81 Guardianships

Question:  My father is a widower and was recently diagnosed dementia.  I am worried he is becoming incapable of taking care of himself.  He never executed a health care proxy or a power of attorney. Can he sign them now? If not, what options do I have to get him the care that he needs?   

 

Answer:  Just because your father has a diagnosis of dementia, does not necessary mean he is unable to execute the advance directives he needs to designate you to take care of his personal and financial needs.

The capacity that your father would need to sign these documents differs depending on what document he is signing. For instance, the level of capacity your father needs to sign a health care proxy is very low. He only need know who you are and that he would like you to make medical decisions for you.  The law presumes that a health care proxy is valid unless evidence is introduced to support its invalidity. The law requires a higher capacity level for a durable power of attorney. To execute a valid durable power of attorney, your father would need to know who you are, but also have a thorough understanding of what he was signing and the implications thereof. While analyzing capacity may seem easy, it can be a tricky task. Therefore, the decision of whether or not your father has the requisite capacity should be made by an attorney who has experience in Elder Law.

Unfortunately, if your father’s dementia has progressed to a point where it is too late for him to execute advance directives the only option is to make an application to the court in the county in which your father resides to be appointed as guardian of his person and property, pursuant to Article 81 of the Mental Hygiene Law.  This involves filing of a petition with the court in support of your position that your father is incapacitated, does not fully understand or appreciate his lack of capacity and, therefore, is likely to suffer harm if you are not appointed as guardian to protect him. 


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Friday, January 20, 2017

Power of Attorney

Question: My aunt has been diagnosed with Alzheimer’s disease. She is in the early stages, can she sign a power of attorney? Who determines if she has capacity?

Answer: This is an excellent question and one that comes up often in the practice of Elder Law. The fact that your aunt has a diagnosis of Alzheimer’s disease, does not necessarily mean that she cannot execute a power of attorney. While it may seem like a decision to be made by her doctor, it is actually the lawyer who will determine if she or he feels your aunt has capacity. An Elder Law attorney has an ethical obligation to make sure that the client has the requisite ability to hire the attorney and to understand the documents that are being executed. Under New York law the standard for capacity for executing a power of attorney is defined as the “ability to comprehend the nature and consequences of the acts of executing and granting, revoking, amending or modifying a power of attorney, any provision of a power of attorney, or the authority of a person to act as agent under power of attorney.”

This means that your aunt should understand what a power of attorney is and each and every power given under the document. Therefore she must understand that the power of attorney is likely to have powers well beyond the task of collecting her income, assets and payment of bills. An experienced attorney should be capable of making that determination.


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Wednesday, January 11, 2017

Community Medicaid: Aging in Place

For many, the question of how to best care for our aging loved ones becomes a reality sooner than we think.  Most people, when given the option, would prefer to age in place, remain in their homes for as long as possible receiving the care services they need in a familiar setting surrounded by family.  For many, the Community Based Long Term Care Program, commonly referred to as Community Medicaid makes that an affordable and therefore viable option. 

Oftentimes we meet with families who are under the impression that they will not qualify for these services through the Medicaid program due to their income and assets.  In most cases, that is not the case. Although an applicant for Community Medicaid must meet the necessary income and assets levels, it is important to note that there is no “look back” for community Medicaid.  What this means is that for most people, with minimal planning, both the income and asset requirements can be met with a minimal waiting period allowing families to mitigate the cost of caring for their loved ones at home.    An individual who is applying for homecare Medicaid may have no more than $14,850.00 in non-retirement liquid assets.  Retirement assets will not be counted as a resource so long as the applicant is receiving monthly distributions from the account.   An irrevocable pre-paid burial fund is also an exempt resource.  The primary residence is an exempt asset during the lifetime of the Medicaid recipient however, where the applicant owns a home it is advisable to consider additional estate planning to ensure that the home will be protected once the Medicaid recipient passes away.  With respect to income, a single applicant for Medicaid is permitted to keep $825.00 per month in income plus a $20.00 disregard. However, where the applicant has income which exceeds that $845.00 threshold, a Pooled Income Trust can be established to preserve the applicant’s excess income and direct it to a fund where it can be used to pay his or her household bills. These pooled trusts are created by not-for-profit agencies and are a terrific way for persons to take advantage of the many services available through Homecare Medicaid while still preserving their income for use in meeting their monthly expenses.   Functionally, the way that these trusts work is that the applicant sends a check to the fund monthly for that amount which exceeds the allowable limit.  Together with the check, the applicant submits household bills equal to the amount sent to the trust fund.  The trust deducts a small monthly fee for servicing these payments and then, on behalf of the applicant, pays those household bills.  As you can see, this process allows the applicant to continue relying on his monthly income to pay his bills, and at the same time, reduce his countable income amount to the amount which is permitted under the Medicaid rules.  



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Friday, January 6, 2017

2017 Medicaid Financial Levels

Question:  My husband may require care in a Nursing facility.  I was considering applying for Medicaid but I have heard that we could lose everything if we accept assistance through the Medicaid program.  Is this correct?

Answer: No, however this is a common misconception.  Medicaid is a means tested program and accordingly applicants must meet certain income and asset requirements.  Rest assured, despite these requirements, there are protections for spouses who remain in the community.  In 2017, applicants for Chronic Medicaid (this is the program which will assist in paying for Nursing Home Care) may have up to $14,850.00 in resources in order to be eligible.  In addition, the applicant may have qualified (retirement) accounts in any amount assuming distributions are being taken on a monthly basis based on the life expectancy table used in the specific county you are applying in.  Finally, an irrevocable pre-arranged burial account in any amount is an exempt asset.  Federal guidelines permit community spouses to retain up to $120,900.00 in assets plus a primary residence with a maximum value of $828,000.00.  Assuming your husband has assets which exceed the allowance; these assets can be transferred to you to bring him below the Medicaid threshold amount.  However, New York’s spousal refusal provisions provide even more protection in that a community spouse can elect to sign a document which allows them to retain assets in any amount, including assets which were previously in the name of the spouse that requires care in a nursing facility. 

Income is treated a bit differently.  An applicant for Chronic Medicaid may only retain income in the amount of $50.00 per month, everything in excess of that must be contributed to the cost of his care.  Where there is a community spouse that spouse is entitled to keep the greater of: (1) all of her income, or (2) her income plus enough of her spouse’s income to bring her to a total income of $3,022.50. 


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Friday, December 30, 2016

Using Pooled Income Trusts in Home Care Medicaid Planning

Question:  My parents are in their late 70’s. My mother is in good health, but my father has suffered a series of strokes over the past years which have left him weak and in need of some assistance with his daily activities.  As a family we feel strongly about keeping Dad at home, however we are concerned about Mom’s health as she is his primary caretaker these days.  Mom and Dad own their home and each receive social security and a pension.  Other than that, they do not have much in savings.  I have heard that Medicaid will cover this type of care so long as the recipient is under the income and asset limit set by Medicaid.  Is there a way to preserve Dad’s income for Mom and secure services for him at the same time?

Answer: Yes. The situation that you have described is a situation in which many elderly couples find themselves.  The good news is that an elderly person’s high income does not automatically disqualify them from receiving Medicaid Homecare Benefits.  With careful planning and the use of a Not-for-Profit Pooled Income Trust many elderly persons are able to age in place, get the homecare services that they need, and preserve their monthly income for payment of household bills.  For starters, in order for a person to be eligible for Medicaid Homecare services they must be over 65 and disabled.  In addition, because Medicaid is a means tested program, the homecare applicant must not exceed certain income and resource thresholds.  For 2017, a Homecare Medicaid Applicant is permitted to keep $825.00, plus a $20.00 disregard (totaling $845.00) of his income and remain eligible for Medicaid services. Typically, Medicaid would be entitled to any income received by an applicant in excess of this amount as a reimbursement.  For many couples like your parents who rely on their entire income to live, turning over this “excess” income would leave them impoverished and for that reason, Medicaid does not seem like a viable option. 


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Wednesday, December 21, 2016

Why Do I Need a Will?

Question: I am a married with two grown children.   I want my wife to inherit all of my assets so why do I need a Will?

Answer:  While many people assume that their spouse will automatically inherit their assets if they die, this may not be the case.  If you die without a Last Will and Testament, your assets will be distributed according to the Laws of Intestacy.   If you die intestate in New York State, your wife would only be entitled to the first fifty thousand dollars ($50,000.00) and one half of your residuary estate.  Your residuary estate will consist all of the assets left in your sole name without a beneficiary designated after your debts have been satisfied. The other one half of your estate will be divided between your surviving children.  

    Accordingly, if all your assets are jointly held with your spouse or if you have named your spouse as a beneficiary, there may indeed be no need for a Will. This is because you would have no “estate” for probate purposes. All of the assets would automatically pass to your surviving spouse. However, there are many assets which cannot designate a beneficiary the way an insurance policy or retirement account can. For instance, if you own a business or real property in your sole name, those assets would be part of your residuary estate. Without a Will directing that these assets pass to your spouse, she would be forced to share these assets with your children. Despite your intention, this could potentially force the liquidation or sale of your assets, leaving your wife to face financial hardship upon your death. 



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Monday, December 19, 2016

Advance Directives

Q:  I don’t have a lot of money to leave behind to my family, do I still need estate planning?

A:  Regardless of the dollar amount of assets you have or you plan to leave behind, it is important to speak with an estate planning attorney.  The conversation with the estate planning attorney should be to discuss documents you can sign that not only refer to what happens when after your death, but also refer to situations that may arise while you are still alive. 

Specifically, you should ask your attorney about advance directives, including a health care proxy and a living will, and a power of attorney.  Advance directives are documents that you sign to state your wishes regarding your healthcare so they can be followed if you become incapacitated.  Incapacity can include short-term situations such as being under anesthesia or long-term situations such as a decline in mental faculties due to dementia or other illnesses. 

The health care proxy is signed by you in front of two witnesses who sign their name and state their address.  It states who you would like to make your medical decisions for you if you are unable to make them for yourself because you have been deemed incapacitated by a doctor.  You can name multiple persons to act as your agent but they must be in order of preference with only one acting at a time.  The health care proxy should state that your agent knows your wishes and can make decisions regarding artificial nutrition and hydration.  It is important that your agent be able to make these types of decisions which can be end of life issues and often arise at a time when you may not be able to speak for yourself. 

The other document you should consider signing in advance of needing it is a living will.  The living will states your wishes regarding the withdrawal of treatments.  Some living will documents say that you direct your doctor to withdraw certain treatments if they are serving to prolong your life without any reasonable expectation of recovery and allow the administration of certain painkillers that may hasten your death.  The other option is for the document to give the decision to the agent that you named in the health care proxy.  If you give your agent the right to direct the administration or withdrawal of certain treatments, then you can have conversations with your agent while you are still able that would help them make the right decision in the moment, the decision that you would make yourself if you had the ability to process the information and prognosis. 


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Monday, December 12, 2016

Estate Closure and Fiduciary Liability

Q: I am the Executor of my mother’s estate. I have collected the assets, paid her expenses, and am ready to close the estate. Can you advise me on how to proceed?

A: Once you have collected the assets of the estate, paid the expenses, debts, and taxes you are ready to begin the closure of the estate. In order to close the estate you should prepare what is known as an accounting. This accounting is meant to show the beneficiaries what you collected, what you paid, and what is left to be distributed.

            In this accounting you will also compute what you are entitled to receive in commissions for your service as executor. In New York, an executor is entitled to commissions as follows: 5% of the first $100,000, 4% of the next $200,000, 3% of the next $700,000, 2.5% of the next $4,000,000 and 2% of all sums over $5,000,000. The executor is entitled to commissions on the probate assets and not on assets that were held in a trust, jointly with another person, or that had a named beneficiary.

            As executor you can take the entire commission, you can waive the commission, or take some amount in between. This commission is income taxable, so you should consult your tax advisor before making a decision. You cannot actually pay yourself the commission until your accounting has been approved by all of the beneficiaries of the estate.

            In order to have the beneficiaries approve your actions as executor you would present them with an accounting and a release. This release would essentially say that the beneficiary reviewed your accounting, accepts it as a final accounting, approves your commissions, and releases you from liability as executor. This release should be signed and notarized by all beneficiaries of the estate and returned to you before any checks are issued to the beneficiaries or to yourself as a commission.


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Wednesday, December 7, 2016

In Terrorem Clauses

In Terrorem is a term derived from Latin which translates to “in fear”.  An In Terrorem provision in a Decedent’s Last Will and Testament “threatens” that if a beneficiary challenges the Will then the challenging beneficiary will be disinherited (or given a specified dollar amount) instead of inheriting the full gift provided for in the Will.  An in terrorem clause is intended to discourage beneficiaries from contesting the Will after the testator’s death.  New York law recognizes in terrorem clauses, however, they are strictly construed.  

An example of an in terrorem clause might read as follows:

"If any person shall at any time commence a proceedings to have this Will set aside or declared invalid or to contest any part or all of the provisions included in this Will they shall forfeit any interest in my estate.


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Monday, December 5, 2016

Mortgages and Irrevocable Trusts

Question: Am I able to obtain a mortgage on my real property if it is owned by an irrevocable Medicaid trust? Can a bank demand that an existing mortgage be due in full if I transfer my property to an irrevocable Medicaid trust?

Answer: It depends on what kind of financing you are looking to obtain. Unfortunately, most banks will not offer traditional mortgages or home equity lines of credit against real property owned by an irrevocable trust. Luckily, in New York State an irrevocable Medicaid trust can be revoked, meaning you can remove a property you wish to mortgage from the irrevocable Medicaid trust so long as you obtain the consent of all those who are beneficially interested in the trust. This should always be done with the help of an attorney as the consent must comply with strict requirements.

Keep in mind that if you remove a property from an irrevocable Medicaid trust to obtain financing, and later transfer the property back to the irrevocable Medicaid trust, it will re-start the look-back period.


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Wednesday, November 23, 2016

Gifting and Medicaid

Question: My mother is widowed and is beginning to decline in health.  I have four siblings.  We know that in order to qualify for Medicaid, Mom cannot have more than a certain amount of assets in her name.  She rents a house, but has approximately $150,000.00 in various CD accounts.  A friend of hers told her that she can give up to $14,000.00 to each of us annually without penalty and still qualify for Medicaid if she needs it in the future, she would like to give these gifts before the year end so that she can gift again in 2017, is this advisable?

Answer: NO!  We often see clients who believed this to be true, and thinking that they were doing the prudent thing did exactly this sort of gifting, resulting in long periods of ineligibility when the time came to apply for Medicaid. To begin with, what your friend is likely referring to is the $14,000.00 gift exemption under the Internal Revenue Code.  Under the Code, all gifts made in any given year are subject to a gift tax.  However, the first $14,000.00 gifted to each individual in any given year is exempted from the gift tax, and for that reason, for many individuals, gifting during lifetime is a way to distribute wealth and reduce their taxable estate at death.

Oftentimes, seniors and their children believe that this same exemption holds true for Medicaid eligibility, and that gifting this amount of money away annually will not affect them should they need to apply for Medicaid benefits in the future. Medicaid requires that all Medicaid applicants account for all gifts and transfers made in the five years prior to applying for Institutional Medicaid.  These gifts are totaled, and for each approximately $12,633.00 that was gifted, one month of Medicaid ineligibility is imposed.  It is also important to note that the ineligibility begins to run on the day that the applicant enters the nursing home rather than on the day that the gift was made. 


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Nancy Burner & Associates, P.C. has offices in Setauket, Westhampton Beach, and Manhattan New York.
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12 Research Way, East Setauket, NY 11733 | Phone:631-941-3434
82 Main St., Westhampton Beach, NY 11978 | Phone: 631-288-5612
1115 Broadway , Suite 1100, New York, NY 10010 | Phone: 212-867-3520

Attorney Website Design by
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