from Medicaid planners throughout the United States who belong to the
5000-member National Academy of Elder Law Attorneys (NAELA), www.naela.org.
Island, NY (5 locations)
"If an individual requires long term care and has
significant assets to protect, then a combination of outright transfers directly
to family members and assets being placed in an Irrevocable Living Trust may
Vincent Russo in a presentation titled "Irrevocable Trusts for Asset
Protection" attended at the National Academy of Elder Law Attorneys' 10th
Anniversary Advanced Elder Law Institute in Washington, D.C. from November 20 to
is the primary payer of Long Term Care. There are strict Medicaid eligibility
rules. These rules are complex and contain exceptions which allow you to protect
assets and income.
J. Russo & Associates, P.C.:
INFORMS you of the Medicaid rules
* ADVISES you on how to protect your assets
* IMPLEMENTS appropriate documents, such as the Durable Power of Attorney,
Trusts and Wills
* REPRESENTS you in a Guardianship proceeding, if needed
* PREPARES and SUBMITS your Medicaid Application
* REPRESENTS you before the local Medicaid agency
* ASSISTS in hospital discharge and nursing home placements"
Protection Trusts: Allow you to
protect your trust assets in the event you apply for Medicaid to pay for long
term care services. The funding of the trust is subject to the Medicaid lookback
and transfer penalty rules."
can play an important role in the payment of Long Term Care, but there are
restrictive eligibility requirements. You
need to understand the thirty-six month look-back period, the transfer of assets
penalty and the exceptions to the penalty, the community spouse's income and
resource allowances and the application process.
Please note that the law is complex, technical, and varies from state to
state. We can assist you in
developing sound strategies to meet your financial, health and family needs in
your advancing years."
Vincent Russo, www.russoelderlaw.com
“How to Protect Assets From Serious Illness”
What’s the fastest way for seriously ill people to shed their assets so
Medicaid pays for nursing home care? We
asked [NAELA member] Jennifer Cona, an elder-law attorney in Jericho, N.Y., to
tell us how to shift assets and speed up eligibility.
1: Determine the total value of the
person’s estate, including cash, investments and property.
2: Have the person give half the
total to heirs.
3: Divide the retained half by the
average monthly cost of nursing home care, found by calling the local department
of health. The result is the number
of months (not to exceed 36) that the person must pay for care out-of-pocket.
He or she qualifies for Medicaid after that period if no assets remain.
4: If there are assets left after
36 months, they will have to be spent prior to qualifying for Medicaid.
sure to talk to an elder-law attorney in your state before proceeding.
Digest, August 2003, Page 206
David J. Zumpano is a New Hartford, New York attorney and
CPA. He belongs to the National
Academy of Elder Law Attorneys (NAELA) according to its "consumer
registry" at http://www.naela.org/Applications/ConsumerDirectory/index.cfm
since these quotes we're compiled in December 2003, Mr. Zumpano has
removed some of the more egregious material including the references to
"Medicaid for Millionaires."
Zumpano offers a six-day training program costing $5,995 for which he claims:
"On average, program participants' confidence to do Medicaid
planning increased 2-1/2 times, and their knowledge of Medicaid planning
increased. As a result, over the course of the program their average fee
nearly tripled, their average monthly income increased 555% and their average
quarterly income increased 792%." Source:
maintains that "The Medicaid Practice Program(tm) is a meticulous,
results-oriented approach to building success in your entire estate planning
practice . . . and in your personal life as well. We will teach you the strategies that helped me triple my
revenue and double my free time in less than a year." Source: http://www.medicaidpractice.com/docs/brochure.pdf
at what creating one of each plan type can do for your practice!
. . . Total Revenue
Potential if Attorney Implements All Strategies Taught One Time.
$32,500 -$35,000." Source:
The strategies taught include a "Medicaid Spend Down Plan" with
an average fee of $2,500, a "Basic Medicaid Trust Plan" for $5,500, an
"Advanced Medicaid Plan" for $8,500, "Medicaid
Qualification" for $3,500, an "Opinion Letter" for $2,500 to
$5,000, and an "Alternative Medicaid Plan" for $10,000.
are some quotes from the Medicaid Practice System's promotional flyer at http://www.medicaidpractice.com/docs/brochure.pdf
show you how the changing Medicaid Planning landscape can create substantial
opportunity for your practice now and in the future."
shared how I was receiving fees of $5,000 to $10,000 regularly for Medicaid
planning (when I would struggle to get half that amount with typical estate
planning clients), and the clients were thanking me enthusiastically and
referring their friends."
fees paid by Medicaid planning clients often exceed what typical estate planning
clients pay, and they are much happier clients.
How am I able to do this? Because
of the way the Program is structured."
are a few things Mr. Zumpano claims you'll learn if you attend this training
program including how to do Medicaid planning for "millionaires" and
how to "influence" state Medicaid workers:
how the MPS Business Model(tm) supports a successful Medicaid practice and
your confidence and learn how to become the leading Medicaid planning authority
in your community."
how the use of unique Medicaid planning trusts, spenddown strategies and
counseling issues lead to protecting more assets and qualifying your clients
how to work with and influence your local Medicaid Department to get the answers
how to conduct a Medicaid workshop for prospective clients, or potential
referral sources, in order to generate interest in your Medicaid services."
about other planning strategies, such as Supplemental Needs Trusts, Pooled
Income Trusts and special planning for the home.
applying key Medicaid rules and principles to more advanced scenarios, including
MEDICAID PLANNING FOR MILLIONAIRES." (Emphasis added.)
how to do strategic planning using Medicaid annuities to build your Medicaid
how to utilize non-attorney personnel to do Medicaid qualification in your
office and generate significant revenue."
"Stern began by raising the question of who is
wealthy. He noted that in New York
a person with $1 million is not wealthy. There
is no bright line between the wealthy and the middle class.
Most of Stern's clients are not poor, but are individuals with assets
they hope to preserve. The discussion of Medicaid may be appropriate even in the
case of individuals with more than $1 million in assets. Clients have a right to know about the options even if they
do not pursue them. A wealthy
client may be put off by a discussion of Medicaid, but this may change after he
grasps the magnitude of long-term care expenses."
Golden and Kenneth Coughlin, "NAELA Institute Meets in St. Louis," The
Elder Law Report, December 2001, pps. 1-5 summarizing a session titled
"Long-Term Care for the Wealthier Client" from NAELA's
"symposium" in early November 2001.
Session presenters were NAELA members Steven Stern of Islandia, NY and
Matthew Lefevre of Hartford, CT.
"Thank you for contacting the law firm of Wright
Abshire to assist you and your loved one in achieving nursing home eligibility
while legally protecting your assets. .
"Hundreds of families have sought the services of the
attorneys of Wright Abshire over the years, and MILLIONS OF DOLLARS HAVE BEEN
PRESERVED FOR PEOPLE JUST LIKE YOU. [Emphasis
added.] The attorneys and staff are
committed to guiding you through the complicated Medicaid maze.
You must be aware, however, that when you're dealing with Medicaid, time
is your enemy. Much of what can be
done in the area of Medicaid is time-sensitive.
This means you may need to act now.
. . .
"If you want the assistance of this firm, they will
give you the legal advice you need to preserve assets.
Usually they're able to help clients whether the family member is a few
years out, has just arrived at the nursing home, or even one who has been in the
nursing home for several years, depleting their assets.
EVEN IF A CLIENT'S ASSETS ARE SUBSTANTIAL, THE FIRM WILL IN ALMOST EVERY
CASE BE ABLE TO SUCCESSFULLY ACHIEVE A SATISFACTORY PLAN FOR THE CLIENT TO
PRESERVE ASSETS. [Emphasis added.]
"Many people believe that if they did not do something
three years ago, then there is nothing that can be done.
However, the firm will in most cases prove that this is not true.
. . . Likewise, IF THE
MEDICAID APPLICANT HAS EXCESS INCOME, THE FIRM WILL IN MOST CASES BE ABLE TO
ASSIST THE CLIENT IN THE CREATION OF A MILLER TRUST TO SOLVE THIS ELIGIBILITY
OBSTACLE. [Emphasis added.]
. . .
"Although there is not enough time to go over every
type of case involving Medicaid, it has been the experience of Wright Abshire
that they can help almost anyone who desires their assistance.
Whether your case involves a situation with one spouse going into the
nursing home and one staying at home, or both spouses going into the nursing
home at the same time, or even a single person going into the nursing home, the
firm wants to help you protect your assets.
THEY WANT TO ASSIST YOU TO OBTAIN THE BENEFITS CONGRESS INTENDED FOR YOU
TO OBTAIN WITHOUT BECOMING IMPOVERISHED IN THE PROCESS.
[Emphasis added.] . . .
"Wesley E. Wright, the firm's founder, is board
certified by the Texas Board of Legal Specialization in estate planning and
probate law. Mr. Wright and Molly
Dear Abshire are members of the National Academy of Elder Law Attorneys."
Five-and-a-half minute compact disc titled "Q:
How Can We Afford Nursing Home Care Without Losing Our Life Savings?
Medicaid Planning is the Answer" distributed by Wright Abshire at to
"Individuals and families who need not rely on the
fisc for assistance are, nevertheless, sometimes intrigued by the idea of having
their long term care expenses paid by the government, and as middle class and
even wealthy parents age and the reality of assisted care is anticipated, the
possibility of government provided care becomes a fascination.
The children of some aging adults become irresistibly attracted to the
notion -- a call to the lawyer is made to determine how this can be
arranged." (pps. 7-6 to 7-7)
"Medicaid is of interest to our wealthy clients, or,
at least should be." (p. 7-41)
Clifton B. Kruse, Jr. [past President of NAELA], "Medicaid
Considerations for Lawyers Representing the Upper Crust," 33rd
Annual Miami School of Law Philip E. Heckerling Institute on Estate Planning,
Publication 755, June 1999, Mathew Bender, pps. 7-1 to 7-44.
"Even objectively large estates can face serious
erosion after years of long-term care. Many
suggest that paying the cost of care in old age is a primary purpose of
acquiring wealth. Many others feel
resentment and a desire to protect assets."
"In most states, nursing home providers receive
substantially less monthly income for Medicaid recipients than for those who pay
the private rate. The difference
can be as much as $1,000 per month." (p.
"Once admitted to the facility, and assuming that it
is a Medicaid certified facility, the individual may be neither discharged nor
transferred because of Medicaid coverage. Payment
at Medicaid rates is considered full payment and cannot be the basis of
discharge for non-payment." (23-6)
"A nursing home may not require the applicant to waive
Medicaid benefits, nor ask for an assurance of non-eligibility or that the
applicant will not apply for Medicaid benefits. It is often wise to enter a facility on a private pay basis
even if Medicaid coverage is inevitable because of individual
"A plethora of planning options exist when an
individual enters a nursing home, regardless of whether that individual is
married or single. Delineated below
are most planning options that most obviously present themselves."
"There is no prohibition against spending money."
"The most obvious example of converting unprotected,
non-exempt assets into an exempt form is the purchase of a residence.
If a residence is already owned, it can be improved or repaired.
Mortgages can be fully satisfied. A
modest residence can be sold and a new residence purchased."
"Federal Medicaid law provides that an institutional
spouse shall not be penalized when the community spouse simply refuses to spend
money on nursing home bills and other needs of the spouse in the nursing
home." (p. 23-12)
"Why consider a transfer of the residence or other
exempt assets? Virtually every
state has a state recovery plan, whereby action is taken upon the death of a
Medicaid recipient, to recover the full value of benefits paid.
If a residence is in the individual's estate, an estate claim will be
asserted. If it was lawfully
transferred out of the estate before death, the estate claim is typically
avoided." (p. 23-13)
"While enormous gifts are objectively unwise if
Medicaid eligibility is the only objective, some individuals effect major
transfers to allow for eligibility after the period of ineligibility runs its
course." (p. 23-13)
"[HCFA Transmittal No. 64] stated, in effect, that the
purchase of annuities will not be treated as a 'transfer,' and will not have any
impact on Medicaid eligibility as long as the annuity is actuarially
"[S]ome states disallow Medicaid coverage when an
individual's fixed income exceeds a state-established income cap.
In such states, one planning option is use of a trust, often referred to
as a 'Millet Trust,' that receives all income that would otherwise go to the
institutionalized individual. The
trust pays the individual beneficiary an amount of income that is under the
income cap figure. Retained income becomes a trust asset and its use is
restricted under terms of the trust."
"Medicaid planning is an integral part of the
traditional estate planning process. Its
impact can dwarf the benefits of simple reliance on revocable trusts.
Its approach to asset preservation is of relevance to most older
individuals and their families in our nation."
Gilfix [founding member of NAELA], "Emergent Issues in Elder Law Affecting
High Income Individuals and Their Families," Proceedings of the Fifty-Eighth Institute on Taxation, Volume 2, New
York University, 2000, pps.23-1 to 23-19.
"And now the issue is, well, what can we do from a
Medicaid perspective, long-term care perspective, when one of them has to go
into a nursing home? WELL THERE IS
SOME GOOD NEWS FROM AN EXEMPTION PERSPECTIVE AND THAT IS THAT WE CAN NOW EXEMPT,
WE CAN ALWAYS EXEMPT, A FAMILY BUSINESS OR A FAMILY FARM.
AND THERE IS NO LIMIT ON THE VALUE OF THAT ALTHOUGH THE VALUE IS USUALLY
NOT A BIG ISSUE. Usually these
people are not in the multi-million dollar issue; they're in a few hundreds of
thousands of dollars. But they have
the property that they really enjoyed, that they want to keep.
They don't want to lose it. So
what can you do to help them maintain this property and keep that within the
family, keep it for the spouse, and pass it on to the kids?
"The good thing is that if it can be qualified as
business property, it'll stay exempt. Now
you want to be sure to qualify it, to look at your state Medicaid manual and
your regulations to see what your state requires.
I've given you the Oklahoma manual language here [in a handout], but you
want to look at your own Medicaid manual to see what it specifically says as
required to exempt your assets. And
most of them, because of the federal law, will exempt a family farm, it will
exempt a family business, provided that one of the spouses, or the individual
has a working interest or income from that business.
Now this is when you look at the income tax return to see if the person
is reporting as income, especially earned income, the income from that family
farm, maybe even a loss. Got one
right now that has had losses the last couple of years.
BUT THAT FARM IS GOING TO BE EXEMPT FOR THE HUSBAND WHO OPERATES THE FARM
EVEN THOUGH HE OPERATES IT AT A LOSS. THE
CATTLE ARE EXEMPT. ALL THE FARM
EQUIPMENT IS EXEMPT. THE LAND IS
EXEMPT. WE DON'T EVEN HAVE TO COUNT
IT. WE GET TO KEEP THAT AS EXEMPT
RESOURCES. And that is a good
thing. We don't need to be taking
that out. (emphasis added)
"Now what we always do is look at the income tax
return to see if that has shown up on a Schedule C or E or F.
C is the business income schedule for an individual proprietorship.
Schedule E is rental income and Schedule F is farm income.
If it is on Schedule E, then it's classified as rental income and then
you are subject to that $6,000 total exemption perhaps.
If it is on Schedule E, then can you switch that over?
Is there some mistake that has been made and you can switch that back to
a Schedule C or Schedule F? And it
may be that you will have to now have them arrange to get a Schedule C or a
Schedule F before you go into the Medicaid office to get qualified and they'll
have to start treating it as earned income to exempt it.
"One of my clients had some property right at the edge
of town and fortunately, they had been operating, they had two pieces of
property, one, they had a family farm that the wife had inherited and she's
operating this family farm and she has cattle there and she was filing a
Schedule F because she had the cattle out there. THE HUSBAND HAD HIS OWN BUSINESS AND WAS DRAWING A SALARY.
THE WIFE WAS WORKING IN THE BUSINESS, ALSO DRAWING A SALARY.
AND BOTH THE FAMILY FARM WAS EXEMPT AS FARM AND THE FAMILY BUSINESS WAS
EXEMPT BECAUSE THE WIFE WAS DRAWING A SALARY OUT OF IT.
In fact, the husband still drew a salary out of it even though he had
become incapacitated because they had continued paying him a consulting fee
without any Medicaid aspects involved. They
were just doing that. And he still
had mental ability but he didn’t have physical ability to work.
But they were still paying him and still consulting with him so he still
drew a salary and that exempted the farm, that exempted the business property,
the land on which the business property was operated, although it was owned
individually and the business was operated in a corporation, and all of those
assets were exempt. (emphasis added)
"So you need to look carefully at what comes in your
office to see if you can qualify as exemptions. If you can't, then you need to see if some planning can be
done to exempt assets by getting them into the business. WE HAD A CLIENT A COUPLE YEARS AGO THAT THE HUSBAND WAS
OPERATING THE FARM AND HE ALSO HAD A SMALL BUSINESS WITH A PARTNER AND WE GOT TO
LOOKING AT IT AND WE WERE ABLE TO EXEMPT HIS SMALL BUSINESS THAT HE HAD WITH A
PARTNER BECAUSE HE HAD INCOME FROM THAT. WE
EXEMPTED THE BANK ACCOUNTS THAT THE PARTNERSHIP HAD. WE EXEMPTED THE FARM BECAUSE HE WAS FARMING.
WE EXEMPTED ALL OF THE EQUIPMENT. HIS
WIFE WENT INTO THE NURSING HOME AND WAS QUALIFIED FOR MEDICAID.
"Now if it had been a reverse situation, if he had
been the one who had gotten sick and needed to exempt assets for him because he
was in a nursing home, we would have had a tougher situation.
IF THEY HAD BEEN TO ME FIVE OR SIX YEARS BEFORE AND SAYING, YOU KNOW,
'WHAT SHOULD WE DO HERE?,' I PROBABLY WOULD HAVE SAID YOU MIGHT OUGHT TO GET
LONG-TERM CARE INSURANCE ON THE HUSBAND BECAUSE IF HE GETS DEMENTIA, HE CAN'T
WORK AND SO FORTH, YOU'RE GOING TO LOSE THE BUSINESS, YOU'RE GOING TO
POTENTIALLY LOSE THE EXEMPTIONS, BUT IF THE HUSBAND STAYS HEALTHY AND THE WIFE
BECOMES DEBILITATED, WHICH HAS HAPPENED IN THIS PARTICULAR CASE, YOU DON’T
NEED TO PLAN FOR LONG TERM CARE FROM THE STANDPOINT OF BUYING INSURANCE ON THE
WIFE BECAUSE ALL OF YOUR ASSETS ARE EXEMPT.
So those are aspects that you need to take into consideration in
considering the plan. (emphasis
"I don’t know about the rest of you, but we keep
having problems with people coming into my office about long-term care
insurance. And I don’t know why
it’s happening, but I guess maybe it is because I do elder law work.
But I've had some bad situations come in where people have been told they
needed long-term care insurance and they didn’t need it.
One client came in and she had $700,000 of cash assets and over $3,000 a
month of retirement income and she was told by two different insurance agents
that she needed long-term care insurance. AND
SHE FIRST TOLD ME SHE HAD $300,000 OF ASSETS AND I SAID, 'YOU DON’T NEED
LONG-TERM CARE INSURANCE. $3,000 A
MONTH MORE THAN PAYS FOR YOUR NURSING HOME CARE IN OKLAHOMA.'
I don’t understand this. And
she said, 'would it make a difference if I had $500,000?'
And I said well that's even more reason you don’t need long-term care
insurance. You buy insurance to
shift the risk. You don’t need to
shift any risk. And so she said
'would it make any difference if I had $700,000?'
I said you have $700,000? She
said 'yeah.' And she said why do
these two insurance agents say I need insurance?
And I said, aha!, commissions. OK?
"But literally, bad situations, I don't know if you're
seeing these types of situations or not, but I am. So, you know, it’s not good, but on the other hand there
are people out there of my clients that we counsel with to buy insurance when
it’s necessary and when it’s advisable, when they can and when it works and
when they have the income to pay for it. But
we have to counsel with our clients extensively as an objective person as
opposed to a salesman that's getting a commission off of it.
The same thing in planning for your family business, your family farm.
You've gotta be careful as to whether or not they need it and they can
afford it and whether or not it’s going to work.
"NOW IN DOING YOUR PLANNING . . . WITH YOUR PLANNING
ASPECTS, YOU WANT TO BE SURE THAT IF YOU'RE GOING TO NEED TO EXEMPT ASSETS,
REMEMBER THEY COULD BUY CATTLE, THEY CAN CONSUME ASSETS, EXEMPT ASSETS, BY
BUYING CATTLE AS AN EXAMPLE, IF THEY ALREADY HAVE A FARM OPERATION.
But you have to be careful. You
don’t want to throw money away. You
don’t want to just go throw money into the deal in order to make it exempt if
you are going to lose more than you save in the long run.
So in doing your planning you have to analyze the whole picture. Also, you have to look in Oklahoma and I don’t know about
other places, but there's a lot of federal programs that'll pay you to not plant
crops. And those farms, now it’s
rental property, and won't be exempt. So
you have to look and see what the situation is with your farm and whether or not
you can exempt all the property or just part of it. (emphasis added)
"THE OTHER PLANNING OPPORTUNITIES THAT YOU HAVE TO
LOOK AT ARE WHETHER OR NOT YOU CAN HAVE A FAMILY MEMBER IN THE BUSINESS, OR
WHETHER OR NOT YOU CAN HAVE A HUSBAND AND WIFE IN THE BUSINESS TO EXEMPT IT IF
YOU HAVE A HUSBAND AND WIFE, BY HAVING THEM START DRAWING A SALARY.
ONE PLANNING OPPORTUNITY MIGHT BE, AS AN EXAMPLE THAT I GAVE HERE IN THE
OUTLINE, IS YOU HAVE A HUSBAND AND WIFE SITUATION AND THEY'VE GOT TOO MUCH
ASSETS TO QUALIFY FOR MEDICAID. THE
SON HAS A BUSINESS AND THE MOM HAS BEEN WORKING IN THE BUSINESS.
THE SON'S BORROWED MONEY FROM THE BUSINESS.
MOM HAS THIS CASH MONEY THAT BASICALLY IS GOING TO BE SPENT AT THE RATE
OF 3 OR 4 OR 5 THOUSAND DOLLARS A MONTH, BUT MOM COULD INVEST THAT MONEY IN THE
SON'S BUSINESS, CONTINUE TO DRAW HER SALARY AND THAT INVESTMENT WOULD BE EXEMPT.
"Now that is good planning. These people have worked all their lives, making a dollar,
two dollars, five dollars an hour to accumulate a little bit of money.
She's still not wealthy. But
we need to protect what we can so she can have a fair standard of living.
One of the things that you and I are seeing all the time are people
coming in and the husband has had problems, the wife has had problems, and the
well spouse is 70 years old or 65, 70, 80 years old, still extremely active,
still going to have a life expectancy of 10, 20, 30 years and we need to protect
their dignity by protecting assets for them.
And that's the way we do it by helping them to conserve assets because
someone who has $100,000 or $200,000 is not wealthy or $300,000 or $400,000.
Steve [Stern, his co-presenter] was telling me about a judge in New York
that said, hey, having a million dollars, you're not wealthy, takes that much to
retire on. WE THINK ABOUT A MILLION
DOLLARS, THAT THAT PRODUCES $50,000 OR $60,000 A YEAR AND THEY MAY HAVE $800 OR
$900 OF SOCIAL SECURITY, THEY'RE NOT WEALTHY.
It costs that much for our families to live now.
And we don’t want to have people in poverty.
So in planning with your people, you want to be sure that you take all
these things into consideration and try to help that family to preserve some
assets." (emphasis added)
of a presentation titled "Planning for the Small Business or Family
Farm," presented at the 2001 Symposium on Elder Law in Vancouver, British
Columbia on April 20, 2001, NAELA Fellow and founding member Lee Holmes.
"What do we do with people who come to us seeking
Medicaid in nursing homes? WE HELP
THEM PLAN FOR ELIGIBILITY. This is
the same population. We're just not
making them go into nursing homes. So
the planning opportunities are substantially the same.
Because all of the financial eligibility rules were included in this
program, all of the EXEMPT TRANSFERS, all of the EXEMPT TRUSTS, the use of
ANNUITIES, all of these are viable in the waiver program just like for nursing
homes. HALF-A-LOAF . . . still
effective. Spousal impoverishment
rules . . . still in effect, though I want to point out because of the potential
issues where you have what would otherwise be an institutionalized spouse going
into an assisted living facility where we do have the issue of the income cap
you may need to be cognizant of that particular issue so you may want to focus
on reducing the institutionalized spouse's income below the 300 percent to avoid
the income cap effect which means maybe using BALLOON ANNUITIES rather than
normal annuities. You may want to
look at purchasing better health insurance to reduce income below the 300
percent cap. I mean these are just
some things that pop up as you're going through it.
The snapshot for home care, when we can finally figure out when it's
taken, you're going to still want to make sure that the assets are maximized at
the time of the snapshot so if the clients want to buy a car, you tell them to
BUY WITH A NOTE that you pay off after the snapshot not before in cash even
though that's the way they've always paid for things all their lives.
You still want to do, if you are in a state as Maryland is where there is
very active recovery, liens and recoveries, but only off of probate assets, you
want to make sure that the community spouse's assets will avoid probate, will
AVOID [MEDICAID ESTATE RECOVERY] CLAIMS. And
. . . you want to make sure that the community spouses are aware of and avail
themselves of POST-ELIGIBILITY GIFTING. . . .
I urge all of you to get out there and advocate for these programs.
I can tell you flatly as it comes to Medicaid waivers and our clients,
God is on our side." (Emphasis
from a program by Attorney Jason Frank titled "Advocacy and Planning
Opportunities: The Maryland
Experience with the Medicaid Home and Community Based Services Waiver"
delivered at the NAELA 2001 Elder Law Symposium held April 18 to 21, 2001 in
Vancouver, British Columbia.
"I'd like to talk about using the family business as
an exempt resource for Medicaid eligibility.
Now we have some new regulations…which really helped to exempt the
family business from being a countable asset for Medicaid eligibility.
Currently, you can exempt the entire family business plus other related
assets and these assets will not be counted to Medicaid eligibility…
"The new [Social Security] amendments took effect May
1, 1990 and they totally discontinued the limitation on the value of property
used in a trade or business for a countable resource. So now there is an unlimited exemption for property used in a
trade or business…. We don't have
any limit so it really doesn't matter about the value of the property.
It's exempt. We find the instructions for how to define this property in
what we call the POMS or the Program Operations Manual System, which is put out
by the Social Security Administration…
"The POMS lists categories of property that are
excluded from countable resources in accordance with the regulations.
Income producing property used in a trade or business is excluded
regardless of its value or its rate of return.
There is no limit on this…
"For a family farm or family ranch, things that can be
excluded: well, obviously the
property; obviously, the land; also, buildings, if you have farm buildings, you
have barns, you have storage facilities, sheds, those can be excluded; if you
have vehicles, trucks, things like that as long as they're used in the business,
doesn't have to be exclusively used in the business, you can exclude those.
All inventory can be excluded. If
you have an inventory of crops, the value of those crops can be excluded.
If you have livestock such as cattle, sheep, whatever, the entire value
of the cattle and sheep, livestock is excluded.
If you have a retail business, obviously the structure and the land is
going to be exempt. Also your
inventory and your equipment used in that retail business.
If you have a warehouse or an additional facility, that can be excluded
also. The only criterion is that
all this property be in current use. If
it's not in current use at the time, there must be a reasonable explanation and
assurances that the use will resume…
"There is an unlimited exemption for liquid resources
used in a business. It can be very,
very significant, especially if you have a seasonal business…a farm or ranch
where your crops are harvested only certain times of the year or you only sell
livestock for a certain time in the year. So
you have to--as of necessity-- have a lot of cash on hand, because you are not
in a retail business where you are selling stuff every day…
"Now as I told you, there is no monetary limit on the
liquid resources. There is no
amount of money that above that you cannot exempt…
"[The business] is supposed to be intended for a
profit, but it does not have to show a profit…
"Property that is used by an individual as an employee
is exempt… Now anything you use
as an employee can be exempt. You
have a computer. You have any type
of equipment. It may not be
required by your employer, but if you use it for your business, it's exempt.
So it's a lot less restrictive and you can exclude a lot more property
that way. Again, we do have the
current use criterion that the property does have to be in current use.
If not in current use, you can have a twelve month grace period in which
to put the property back in current use and this can be extended for another
twelve months if the problem is that the person is under a disability and that
is why the property is not in current use…
"I'd like to go to a hypothetical case study…and
basically this is based on an actual case that I did in Colorado…
H is institutionalized in a nursing facility and W is living at home in
the community. The home is located
in the city and is not part of the farm or ranch property.
But H and W do jointly own a cattle ranch with 800 acres with a value of
$450,000. Buildings are on the ranch plus fencing, equipment, water
pumps and wells with a value of $10,000. Livestock
on the ranch is valued at $50,000…. Liquid assets of $200,000 are in joint tenancy between H and
W…. H's income is $600 of Social
Security, $83 income from leased land. W's
income is $200 Social Security and $83 from leased land.
What I've done is list all the exempt assets which is a good way to sort
of begin for your clients, you know, to put down everything that is exempt.
The home obviously is exempt under a different exemption. The ranch land, all improvements and all equipment, valued at
$480,000…. Lease land, argue that
it is part of the business and thusly it should be under the unlimited
exemption. Liquid resources
$27,000…add that to the CSRA [community spouse resource allowance] and you get
$149,960. Now I have calculated the CSRA. You
want to argue that the entire $200,000 in liquid resources should be used as an
aggregate. In Colorado, we can give
the community spouse the maximum. We
don't have to split the resources in half and we do allow the maximum of
$81,960. Then you need to add on to
that the $27,000 for operating expenses. This
would be a total of $108,960 in exempt liquid assets.
I've calculated that a monthly income allowance for the community spouse,
using the $1,357 minimum, it calculated a shelter allowance of $359.90 or $360,
you need to add that to the minimum and you get a total of $1,770, minus their
income, you get $750 that W needs additionally to get her MIA of $1,770.
So what I've done is increase the CSRA to give W her allowable MIA and
what I've done is use $41,000 of liquid assets at an interest rate of 6% a year
and added that on to give the total liquid asset exemption as $149,960. And I totaled up the total exempt assets and in this
example it's $737,960 [presenter giggled at this point] of exempt assets.
So this can really help you out if you have a client who has especially a
ranch or farm with a lot of land that is worth quite a bit of money but not a
lot of income. People who are
resource rich, income poor. It helps a lot. What
you want to do after you've successfully completed the Medicaid application,
gotten the institutionalized spouse on Medicaid is to work with this property so
that it is always exempt. Now there
is no current prohibition on the transfer of exempt resources…
So you want to think about that. You
want to think about transferring this business because it is exempt and there is
no prohibition against doing that. You
also want to think about capital gains taxes.
If you do an outright gift with highly appreciated property such as real
estate, you may have some problems. You
may not want to do that. What I've
suggested is a joint tenancy which would help somewhat with capital gains or a
life estate…. You might also look
into a trust, transferring property that way.
But, as long as you don't do an outright gift, I think you will not run
contrary to the intent of the exemption and you'll be all right…
"In conclusion, I'd like to say that this is a very
little-known exemption. You may not
use it very much. You may only use
it once or twice, but if you can use it it's going to really help your clients
Q and A:
"The question was:
can you just buy a business, an ongoing business or a ranch, keep it for
a year and then have it excluded under these rules and I think the answer is yes
as long as you've operated that business, your family's operated that business
for a year. That is the only
"The question was:
can the property be in a living trust and still be exempt.
What the regulation says is property of the individual so if the trust
owns it, yeah, I think we have to wait until we get this exemption for the
institutionalized spouse and then go ahead and put it into a trust afterwards
for the wife…
"The question was:
did I have a case where the husband and wife were not supported by the
income producing property, but the children were. I have had cases where all three of them were supported by
it. I think just as long as
somebody's getting some kind of income from it, I would think that for the
intent of the exemption to work, husband
and wife should have some kind of a little bit of income
from it, just because of the intent. But
I've only had cases where the entire family was receiving income and it didn't
matter how much it was. If the son
was getting a lot more, they didn't care…
"The question was:
the mother gave the children money to open up a pet grooming store, is
that exempt? It depends on if the
mother retained any kind of an interest in that business, if they can add her
on, and if she is getting as a result of her ownership interest, income.
Then, you're OK."
of excerpts from a presentation by Medicaid planner Rebecca Shandrick of Denver,
CO titled "Using the Family Business as an Exempt Resource" delivered
at the 1999 National Academy of Elder Law Attorneys (NAELA) Symposium
"Elder Law Litigation: The
Next Frontier" in San Diego, CA.
"Nursing home care may be paid for by the individual,
through long-term care insurance benefits or, if the person qualifies both
medically and financially, by Medicaid. Medicaid
is a Federal program that is run, and partially funded, by each state.
"Although eligibility for Medicaid includes very
restrictive financial requirements, there are ways that an individual or couple
can, and should, protect some assets. In
cases where one spouse enters the nursing home and the other spouse remains at
home, there are many ways to protect assets to prevent the community spouse from
becoming impoverished. Although
some Medicaid planning may be possible on short notice, being prepared and
planning well ahead of a crisis will allow for the protection of assets and give
peace of mind. Asset protection and
financial planning in anticipation of nursing home care is a very complex area
of law and the services of a knowledgeable elder law or estate planning attorney
should always be utilized."
Academy of Elder Law Attorneys (NAELA) board member Joyce M. Collins,
"Estate Planning for the Elderly," National Council of Jewish Women
Journal, Vol. 22, No. 2, Summer 1999.
"You may have been told by facility managers or others
that you have no choice but to pay those nursing home bills 100 percent with
your own savings or through the liquidation of other family assets.
Before you begin depleting your own resources to pay those nursing home
bills, please take the next hour to watch this tape. . . .
"The success record of [company name] has been nearly
100 percent in assisting ill or disabled individuals and families to obtain
ongoing nursing home care for an ill loved one virtually free for life.
In fact, [company name] guarantees its results. . . .
"They offer some excellent options to help you obtain
nursing home care for your ill family member while spending little or no money
out of your own pocket. It may
sound too good to be true, but it is not. . . .
"Did you know that you can own a home, have money in
the bank, and other assets and still be eligible for nursing home care at little
or no ongoing cost for life. . . .
"[Company name] has helped thousands obtain nursing
home care at little or no cost. . . .
"In our worst case scenario, on a respirator . . .,
you could be at $45 or $50 thousand a month for every month you're under that
respirator. You could eat up a
family with a half million or million dollar stake in a matter of less than a
year. . . . A million dollars
doesn't go very far anymore. . . .
"Your living trust won't protect you.
Medicare won't protect you. Supplementary
insurance won't protect you. LONG-TERM
CARE INSURANCE [emphasis added] won't protect you.
Even riches alone won't protect you. . . .
"With our assistance, long term care is available at
minimal or no cost for anyone needing care.
inset on screen]
"[Company name] can assist you in obtaining nursing
care at little or no ongoing cost without continuing to pay for long-term care
"In my opinion, it [LTCI] is not worth the paper it is
written on. . . .
I don't believe in long-term care insurance.
I think for the most part it's worthless. . . .
[Text inset shows amounts saved under pictures of (company
name) clients who saved the money while obtaining "nursing home care
virtually free for life"] "Saved
$199,000. Saved $220,000.
Saved $230,000. Saved
$257,000. Saved $400,000. Saved
$401,200. Saved $418,000." . .
"You don't need to spend thousands of dollars out of
pocket on nursing home care. A vast
number of individuals in skilled nursing care are needlessly spending their life
savings. In the process, their
families face the prospect of staggering bills and financial ruin.
For over twenty years, [company name] has provided customized financial
solutions to the problems in obtaining nursing care at little or no cost to
thousands of families and individuals. Don't
unnecessarily deplete your life savings paying for skilled nursing care.
Instead, have a legacy to pass on to your loved ones. . . .
"We have to have the wherewithal, and the ability, and
the flexibility to take advantage of those rules that are available to us to
protect the home, to protect the income, to protect the savings . . ..
"A single elderly person can get long-term care; they
can have a home; they can have cash, but they have to know how to do that.
Unfortunately, the way the system is designed they're not going to tell
them. If they get the kind of
advice that is generally floating out there, they're going to be told to spend
everything they've got. If they go
to someone else, they'll end up buying that policy for insurance that won't be
of any value. . .."
"What does the asset picture look like.
Do they own a home? Do they
own two homes? . . .
Do they have savings, stocks, bonds?
All of those variables have to be looked at. The portfolios have to be looked at. And the common goal is to get long-term care that is
permanent for that person, permanent meaning one year if you need it for one
year or twelve years if you need it
for twelve years, and still not use the very assets that we started talking
about. . . .
"Most people don’t realize that it is never too late
to get help to cover the cost of nursing care.
Even if a loved one is already in a nursing home, or if funds are
currently being spent for their care, you can still get relief from monthly
nursing care bills by contacting [company name] for solutions.
Don't wait until there is nothing left.
[company name] can help you or a loved one obtain nursing home care they
deserve at little or no ongoing cost for life.
We guarantee it. . . .
"Even many professionals in nursing care such as
social workers, registered nurses, attorneys and CPAs call us for assistance and
solutions when a patient is facing a serious and lengthy illness. . . .
Like the professionals do, call [company name] for assistance."
"I WOULD SAY THE BULK OF OUR CLIENTELE IS IN THE $500
TO $900 THOUSAND DOLLAR RANGE [emphasis added]. And then we get a lot of clients in that $100 to $150
thousand dollar range. They have a
home. They have a little bit of
savings. They've worked hard all
their lives. . . .
"Everyone is entitled to and deserves quality nursing
home care at virtually no ongoing cost to them. We can help them. . . .
"People don't ever come walking into our doors and go
'I'll be sick next month.' They
come in after the fact. Everything
is already falling apart and our goal is to get them immediate benefits,
immediate care, which we can do. We
can do it in a week or less."
titled "How to Obtain Excellent Nursing Home Care at Minimal Costs"
produced and distributed by Medicaid planner and NAELA member Zoran Basich.
See www.nhscare.com to order a free
copy. Although this videotape never
once mentions Medicaid, a brochure that accompanied it makes clear that the
magic wand permitting free nursing home care for life is the Medicaid program (Medi-Cal
in California). The brochure
proudly proclaims the company has "20 years of experience" and
"has helped thousands of families receive virtually Free [sic] nursing home
care and keep their home and savings while getting help from Medi-Cal."
A related flyer says "We work throughout the USA.
Our services have spanned Florida to Hawaii."
Grand Junction, CO
“The cornerstone of...long-term care
planning is gifting ....to remove 'countable' assets from [individuals'] names
to plan for long-term care eligibility under the Medicaid program.
The primary motive for gifting...is to maximize the amount of assets that
are available to pass on to the transferor’s heirs….
Of course, individuals don’t have to
incorporate gifting into
[a]...long-term care plan.... [I]ndividuals
can choose to private pay or purchase long-term care insurance to cover the cost
of care.... The statutes and
regulations governing Medicaid eligibility encourage, rather than discourage,
the gifting of assets.”
NAELA member Baird Brown, “The Art of Gifting,” NAELA Quarterly,
Vol. 11, No. 3, Fall 1998, p. 21.
"If you or your spouse enters a nursing home the cost
of the nursing home may wipe out your life's savings. With proper planning you may be eligible for Medi-Cal.
(California's version of Medicaid). If you or your spouse qualifies for
this public benefit, Medi-Cal will pay for the high cost of nursing home
"If you do not meet the eligibility requirements,
there are certain planning strategies that our office may be able to assist you
with in order to qualify for Medi-Cal.
"One of the most powerful planning strategies to
qualify for Medi-Cal involves a Court Order.
This planning strategy is very effective for married couples when one is
in a nursing home. A document known
as a Petition is filed with the Court. The
Petition asks the Court for an Order directing the spouse in the nursing home to
support the spouse at home. The
Court may order the spouse in the nursing home to transfer assets and/or income
to the spouse at home. This
procedure may enable the spouse at home to retain all of his or her assets
and/or income and qualify the spouse in the nursing home for Medi-Cal.
"Our office may also guide you through other planning
strategies to qualify for Medi-Cal. These
other planning strategies include but are not limited to: permissible spending
of money, converting non-exempt assets to exempt assets, repairing or improving
exempt assets, paying off debts, etc.
"In order to qualify for Medi-Cal you will need to go
through an involved application process. Our
office can assist you in this often complicated application process."
quoted text comes from the web site of Medicaid planner and National Academy of
Elder Law Attorneys (NAELA) member Alice Salvo at www.salvolaw.com