Month: May 2016

Jayhawk State Has Special Estate Recovery Rules

5/31/2016A few years ago, a family got a big surprise: when their mother died, they probated her estate, and a claim was made in the estate by Medicaid for $270,000. Even though their mom hadn't been on Medicaid, their father had.

Prior to receiving any benefits from Medicaid, individuals must "spend down" their cash assets to below $2,000. Some property is termed by Medicaid officials as "exempt" property—to include one vehicle, limited life insurance, a home, a funeral plan and personal property. While such property doesn't have to be spent down, that's very misleading. You see, those limited assets may be exempt for qualifying for Medicaid, but they're not exempt after the person dies. They're subject to what's called "estate recovery."

Estate recovery is the process that allows Medicaid to recover the amounts it paid on a person's behalf from that person's estate. Kansas' Estate Recovery is a "privatized" agency which can seek repayment of Medicaid benefits against the "estate" of a deceased Medicaid recipient or—as described above—against the estate of a spouse. Kansas has what is call expanded estate recovery.

Usually when someone dies, the person's family may need to initiate probate. When the deceased had all of the property in joint tenancy with a spouse, probate isn't needed. However, if a piece of property isn't held in joint tenancy or is not otherwise automatically conveyed to a third person upon the death of the owner, then only that property will have to be probated. These items typically don't have to be probated:

  • joint tenancy property
  • property with a transfer-on-death or pay-on-death provision
  • life insurance with named beneficiaries
  • life estates

But Estate Recovery in Kansas allows an agency to bring in all of the property that an individual may have any interest in at the time of death—even though that property would ordinarily not have to go through the probate process. Hence, contrary to standard probate law, the estate can consist of joint tenancy property, property with transfer-on-death or pay-on-death provisions, life insurance payable to a third party, and life estates. It can also include property that was transferred away within one year of death. So you see that Estate Recovery has a much broader definition of what property can be included in an estate than any other creditor in the Jayhawk State.

Talk to a qualified elder law attorney who is familiar with how to plan for the possibility of estate recovery.

Reference: The Hays (KS) Daily News (April 12, 2016) "Estate recovery — an unexpected surprise"

New Hampshire Sets Up Special Prosecutor for the Protection of Seniors

5/30/2016New Hampshire will soon have a full-time lawyer to investigate and prosecute crimes against the elderly, according to a story posted on fosters.com, “NH to strengthen elder protections.” The Governor’s Executive Council voted to accept a $130,000 federal grant to fund a state Elder Abuse Protection Bureau. This new unit will be charged with the investigation and prosecution of elder abuse cases and will be a part of the Attorney General’s Consumer Protection Bureau.

The grant money will be used to pay for a temporary full-time prosecutor whose job it will be to focus on crimes and abuse against the elderly. The new prosecutor will be partnered with a victim-witness specialist, which will form—as the state says—”a unit solely dedicated to elder abuse.” The unit will also provide educational outreach to elder groups regarding the prevention and/or reporting of fraud and other forms of abuse and neglect.

The state had been looking for money to do this work, and it’s become more important since the passage last year of a new chapter in the state’s criminal code making financial exploitation of elderly, disabled and impaired people a felony.

The state says part of the new effort will be to partner with home healthcare workers, Meals on Wheels drivers, and bank tellers to get their help in watching for abuse. Seniors can be reticent to report abuse—especially when it’s relatives who are victimizing them—because they don’t want to get their kin in trouble.

One provision of the new law states that if a perpetrator knew the seniors didn’t have the mental faculties to agree to change their will or otherwise give away their assets, then the perpetrator cannot claim it was a “gift” as a defense.

Reference: fosters.com (April 10, 2016) “NH to strengthen elder protections”

Come on, Seniors, Blaze a Trail!

May is here, and in addition to celebrating the arrival of spring, this month has been designated as Older American's Month and National Elder Law Month.

6-16-2016The theme for Older Americans Month is "Blaze a Trail," which is exactly what advocates for older adults and their families are doing. The (Carlisle, PA) Sentinel's article, "Elder Care: Elder law vs. elder care," says that if you open any telephone book or do a search online, a number of attorneys will advertise the practice of elder law—often thought of as estate planning (wills and powers of attorney) and estate administration (the execution of a will and management of the financial affairs of a person who has passed away).

Many times we hear about difficult situations, resolved into neat packages that are each tied with a bow. These are the result of a plan that implements care coordination services in addition to traditional legal services. In many situations, creative thinking and planning by qualified elder law attorneys who are familiar with healthcare and support providers achieves these best possible outcomes. Flexibility and cooperation by service providers is an essential element in achieving success.

When obtaining appropriate care is combined with legal and health system knowledge, most family situations involving seniors that don't fit neatly into a category can be sorted through and resolved by an experienced legal professional. Stress is reduced, and everyone will be as comfortable as possible with the result.

Call it elder law or elder care, it often takes both to help seniors blaze a trail in their senior years.

Reference: The (Carlisle, PA) Sentinel (April 27, 2016) "Elder Care: Elder law vs. elder care"

While Not Sexy, Life Insurance can Really Help with Estate and Financial Planning

5/26/2016US News' recent article, "Pros and Cons of Whole Life Insurance," says that life insurance is often an afterthought. In reality, life insurance should be one of the first considerations when people evaluate their financial picture. Life insurance—whether term or whole life—can be used to fulfill various planning goals.

Insurance products and terminologies can be confusing, just like investing and the game of cricket. First, decide whether term or permanent insurance is for you. Term life insurance is used to cover risks over a certain period of time—like to replace your income until you retire, cover the last few years of a mortgage, or pay for the kids' college. After those are covered, you don't need that coverage anymore.

Permanent or whole life insurance is typically more expensive than term and should be used for estate planning, leaving a legacy, transitioning ownership of a business, and covering burial expenses. The amount of face value, or death benefit, might be less than term because of premium costs, but the big difference is that whole life can allow for a buildup of cash value. If it's held long enough, it can increase in value and face amount. This increase is usually tied to premium payments, dividends, and interest paid on the cash value. Life insurance can be confusing because whole-life policies can be offered in various forms by different insurance companies.

A policy owner may customize coverage and buy extra coverage. That's called a rider.

Permanent life insurance has other benefits in addition to the death benefit. Depending on how the permanent life insurance policy is designed, it could provide tax-free income in the future. In addition, cash value life insurance can have products inside of the policy that can protect the cash value against any market loss.

The goal is not to depend on life insurance in general or on any one particular type of life insurance to solve all financial planning needs. Life insurance isn't a "silver bullet" for all planning needs but is one tool among many to help people achieve their living and legacy goals.

Reference: US News (April 11, 2016) "Pros and Cons of Whole Life Insurance"