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November 4th, 2009

How can disabled friends help?



Sanfor Altman, Esq.

Question

: My mother was recently admitted to the hospital after a stroke and we were told that she would need to enter a nursing home once released from the hospital. She has always said that, if nothing else, she wanted to make sure that her home was left to her family. Admittedly, we have done no advance planning. Is there anything we can do at this late stage?

Answer

: Even at this late stage, there are some steps that can be taken to preserve your mother’s assets although, certainly, not as much as if you had planned in advanced. This is, of course, why I urge all of our readers to contact an elder law attorney well before they reach such a crucial point. Any funds expended are ultimately made up many times in both savings and peace of mind.

Having said this, even at such a late date, all is not lost. As those of you who have read my column over the years are aware, in general, if you transfer your assets to someone else, there will be a penalty period or waiting period until you can get nursing home medicaid. Depending upon the value of the assets transferred, this penalty period can be many months or even years. However, there are certain transfers that are considered "exempt," that is, you can make these transfers without any penalty period. Two such exempt transfers are to disabled individuals.

The first in this category is a transfer to a child of the medicaid applicant who is blind or disabled regardless of age. The idea here is to transfer the home to the blind or disabled child and then apply for the medicaid. The plan here may be to then transfer the home from the disabled child to the remaining siblings. There are several things to watch out for in utilizing this technique. The main item to remember is that the blind or disabled child may already be or potentially be a medicaid participant. Home ownership, especially if he or she does not reside in the home may result in losing his or her medicaid (as well as other benefits such as SSI). If the home is then transferred from the child, this may bring about a penalty period for the child’s medicaid. In appropriate circumstances, a Supplemental Needs Trust may be created as a solution. In short, use of this technique must be approached very carefully considering the legal impact on both parent and child.

The second exempt transfer to a disabled individual is utilized much less often because the recipient does not even need to be a family member. In order to be exempt, the transfer must be to a Trust established solely for the benefit of an individual under 65 years of age who is disabled. Clearly, this provision is meant for individuals other than the child of the medicaid applicant. For a child, there are neither age restrictions nor requirements that transfer be to a Trust. Once again, here, the Trust of choice would be a Supplemental Needs Trust. However , because the transfer is not to a child of the applicant, it is seldom used, but in the right circumstances, it can be a life saver. In fact, in all of the years that I have been practicing elder law, I have only utilized this technique once. In that case, even the medicaid office to which we were applying had never encountered it and thought it may not even be legal. Fortunately, they checked with their attorney and found that it was. What was the circumstance? The elderly man who was about to enter a nursing home had no spouse or family. His younger but disabled neighbor was his primary caregiver for years and thus was designated beneficiary of his sizeable annuity. In order to help carry out his wishes and not have to cash in the annuity to pay for the nursing home, we created a Supplemental Needs Trust for the neighbor. We then transferred the annuity into the Trust. In this manner, our elderly client was able to receive medicaid, pay for the nursing home and still reward his well deserving neighbor for all the care that he received over the years.

As you can see, both of these techniques are complex and require the assistance of an attorney extremely well versed in elder law planning. Nonetheless, even at the last minute, the amount of assets which may be preserved in the face of the potentially huge nursing home expense makes such efforts extremely worthwhile.

Sanford R. Altman is an Elder Law Attorney with a firm in Orange, Dutchess and Sullivan Counties, a member attorney of the AARP Legal Services Network, a member of National Academy of Elder Law Attorneys (NAELA), and frequently writes on Elder Law issues for local publications. He may be reached at the following number (845) 778-2121. Please note that while this column is intended to give general legal information, everyone’s circumstances differ. This column is not a substitute for obtaining legal advice directly from an attorney which will address your particular circumstances.

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