Blog : Estate Planning

How can we preserve some of our life savings and still pay for the nursing home?

The No. 1 question we hear from people who need to obtain Medicaid assistance in order for their spouse to stay in a nursing home is: How can we preserve some of our life savings and still pay for the nursing home?  Most people do not know that Michigan Law allows a married couple to keep 100% of their assets and still qualify for Medicaid assistance.

The Elder Law team at Parmenter O’Toole is committed to educating our community about the programs and services available to nursing home patients through Medicaid.  To learn more about Medicaid Planning visit our website at https://www.parmenterlaw.com/services/elder-law/medicaid-planning/.

Estate Administration

Beneficiary Designation

We understand that losing a loved one can be extremely difficult.  In addition to being emotionally and physically draining, you suddenly have the responsibility of finalizing your loved one’s estate.  The concept of “estate administration” can be overwhelming and it is difficult to determine what to do first.  The information contained in this brochure may be helpful as an initial guideline.

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What is Estate Planning and Why is it Important

Estate planning is the process of placing your wishes down on paper to ultimately dispose of your property either during your lifetime or after your death. Estate planning is important to avoid probate of your estate, to maintain family harmony, and to transfer your property according to your desires. The ultimate goal is to find the simplest and most effective manner possible to dispose of your property.

Any person over 18 years old, including a person with a developmental disability, can prepare an estate plan as long as they know who their heirs are and the general nature of their property. The most common estate plan documents prepared are a Will, a Trust, a Durable Power of Attorney for Financial Matters, and a Durable Health Care Power of Attorney.

A Will is a document that directs distribution of your property upon your death. A Will controls disposition of your property not effectively disposed of by will substitutes. An example of a Will substitute is a beneficiary named on your insurance policy. If the named beneficiary dies before you and you do not change the beneficiary, the insurance would be transferred according to your Will.

A Trust is a document that can be used as a will substitute to avoid probate, provide for management of your property for minor children, and to save taxes.  A Durable Power of Attorney for Financial Matters is a document that gives another person the power to act on your behalf while you are alive. It provides for management of your property in the event you become incompetent or otherwise unable to manage your estate.

A Durable Health Care Power of Attorney is a document that expresses your wishes regarding use of artificial life support to prolong your life. It also may appoint a person to make your health care decisions if you are unable to do so.

Estate planning is not the same for all people. Each person’s needs and problems must be approached on an individual basis. As an estate planning attorney my job is to help you understand the options available to you so that you can dispose of your property as you choose.  Parmenter O’Toole can help you with your individualized estate plan.

* Nancy Ann Hornacek is an attorney with Parmenter O’Toole, PLC in Muskegon, Michigan. The comments in this article are not intended to be a substitute for legal guidance or advice for a specific situation.  You should obtain informed legal counsel to assist in your decisions relating to any issues which may be raised in this article.  For additional information regarding the above topic, Nancy can be reached at Nancy Ann Hornacek or 231.722.5406.

Wills and Trust Planning

Beneficiary Designation

Many people believe that only a valid will transfers assets at their death. In reality, much of your estate may pass to your family by some form of will substitute. A will substitute transfers property without the necessity of probate court.

One common example of a will substitute is to own property with rights of survivorship. When property is owned by two or more persons, it can be owned in a few different ways. One way to own real estate is a life estate deed. A life estate deed allows the owner of the real estate to retain control for his or her lifetime, and at death the real estate transfers automatically to the named survivor without the necessity of probate court.

A life estate deed also allows you to retain the homeowner’s principal residence exemption or “homestead exemption” for property tax purposes on your principal residence during your lifetime. Michigan law requires the heirs of your estate to file a rescission of your homestead exemption with the assessor within 90 days of your date of death. The homestead exemption remains in effect until December 31st of the year of your death but will be removed for the following year. In order to qualify for the homestead exemption in the following year, the beneficiary of your property may then file for their own homestead exemption as long as they occupy the property as their principal residence.

The filing of the rescission of your homestead exemption will result in an increase in the real property taxes for the property. Failure to file the rescission may result in interest and penalties charged against your estate commencing the 91st day after the date of death, up to $200.

Property that passes by will substitutes includes all types of assets, such as stocks, bonds, and bank accounts. Parmenter O’Toole can help you with your estate plan using will substitutes to ensure that your assets transfer to your loved ones at your death.

* Nancy Ann Hornacek is an attorney with Parmenter O’Toole, PLC in Muskegon, Michigan. The comments in this article are not intended to be a substitute for legal guidance or advice for a specific situation.  You should obtain informed legal counsel to assist in your decisions relating to any issues which may be raised in this article.  For additional information regarding the above topic, Nancy can be reached at Nancy Ann Hornacek or 231.722.5406.

Elder Care Administrators

Long Term Care Planning

We have heard the reports . . . we are living longer than our ancestors. Unfortunately, we cannot guarantee good physical and mental health as we age. The thought of losing our independence because our body is frail or our memory is gone is frightening. Too often we ignore that which may be unpleasant to discuss. Ignoring minor, major or long term disability jeopardizes your well being and is a hardship for your family. Now is the time to plan. Whether you are the one who is aging or the child who is concerned about his or her parent.  Download our paper for some steps to get you started.

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Long Term Care Definitions

Medicare

Federal government health care program for those age 65 or older and for some disabled individuals. Medicare has many parts: Part A -” hospital coverage and Part B -” physician and outpatient coverage and Part D -” prescription coverage. There is limited coverage for skilled nursing home and in-home care. It does not cover assisted living.

Medicaid

Federally funded but State administered medical and long-term care assistance to the poor. You must meet asset and income limits to qualify. It pays for nursing home care. It does not cover assisted living.

Medicaid In-Home Wavier

Limited program wherein Medicaid pays for in-home care for those who would otherwise qualify for nursing home care. You must meet income and asset limits to qualify.

Skilled Care

Rehabilitation or other treatment by a skilled professional.

Custodial Care

Basic care; room and board.

Long Term Care Insurance

Private insurance obtain to pay for long term care needs ranging from skilled nursing home care to assisted living and in-home care.

Aid and Attendance Pension

Program through the Veterans Administration that provides financial assistance for medical needs of certain veterans and surviving spouses of veterans. Income and assets requirements must be met along with military service requirements. Assisted living is covered. There is a maximum monthly amount that is available to the veteran or surviving spouse.

Medicaid Planning

Enactment of Medicaid Estate Recovery Program – July 25, 2008

By Nancy Ann Hornacek

As an estate planning attorney, I am aware that changes in the law impact a client’s estate plan. The purpose of this article is to familiarize you with Michigan’s recently enacted Medicaid estate recovery program.

Estate recovery is a program by which the State of Michigan collect monies from a decedent’s estate to reimburse the State of Michigan for certain Medicaid services provided to the decedent. The Michigan Department of Community Health (“MDCH”) is responsible for tracking the assets and services of Medicaid recipients subject to estate recovery. Michigan’s Medicaid estate recovery law provides that the assets which may be recovered by the State are the assets of a Medicaid recipient’s “estate.” Under Michigan law, an “estate” includes real and personal property that pass from a deceased person to his or her heirs through probate administration. Examples of real and personal property that are not part of a person’s “estate” and are conveyed without probate administration are jointly owned property, property owned by a trust, property subject to a life estate, and property that passes to a beneficiary under a transfer on death instrument, such as a life insurance policy that names beneficiaries.

Michigan’s estate recovery program only affects people who began receiving Medicaid long-term care services after September 30, 2007. Federal law also limits estate recovery to persons who receive Medicaid services after age 55 or who are permanently institutionalized, regardless of their age.

The timeline when estate recovery takes place is based on the Medicaid recipient. If the Medicaid recipient was single, estate recovery takes place after he or she dies. If the Medicaid recipient was married, no estate recovery takes place during the lifetime of a surviving spouse. And if a Medicaid recipient left a surviving child who is under age 21 or a child who is blind or permanently disabled, as determined by the Social Security Administration, no estate recovery occurs.

There are circumstances when Michigan will not seek estate recovery from a person’s homestead. For instance, if the Medicaid recipient has a surviving spouse or a child who is under age 21 living in the home, then estate recovery of the homestead will not take place.

In addition, there are situations when property is exempt from estate recovery. Under Michigan’s estate recovery law that part of the value of a person’s homestead that is equal to or less than 50% of the average price of a home in the county where the homestead is located, as of the date of the Medicaid recipient’s death, is exempt from estate recovery. Michigan’s estate recovery law also exempts the portion of an estate that is the primary income-producing asset of survivors, including, but not limited to, a family farm or business.

At this time it is uncertain when Michigan will begin its estate recovery program. Before the estate recovery program is implemented the MDCH must establish policy and procedures for estate recovery activities and obtain the federal government’s approval of its program. MDCH must also prepare materials for Medicaid applicants to explain the estate recovery program.

One thing that is certain is you should understand the estate recovery program and how the estate recovery program impacts you.