Case Studies

Case Studies are generalized situations which frequently occur in the elder law practice, although the particular client situations often differ dramatically.  The below Case Studies do not represent actual cases or clients; instead, they are illustrative of potential asset protection planning options available.  However, if you would like advice regarding your particular situation, it is imperative that you meet with an experienced elder law attorney who can speak to you regarding your specific situation and the respective asset protection options that may be available to you.

INDIVIDUALS/WIDOW(ER)S

CLIENT DESCRIPTION:    Individual with Early Onset Alzheimer’s

CLIENT CONCERN:           Protecting Their Lifesavings

After her husband passed away, Martha lived independently for years until one day, to her family’s dismay, Martha was diagnosed with early onset Alzheimer’s.  Wanting to learn as much as possible about what to expect and what can be done to “get on top” of the disease, Martha’s only son started doing some research online.  While viewing the websites of various at-home care agencies and long term care facilities, Martha’s son realized her $150,000 in lifesavings would soon be depleted and either Martha’s house would have to be sold or her son would have to pay out of his own pocket for her care.

Seeing the proverbial “writing on the wall,” Martha’s son contacted an elder law attorney to find out how best to plan for Martha’s care financially and if there were any possible ways to protect some of her lifesavings.  Through proper planning, the elder law attorney informed Martha and her son that it was possible to protect her home and as much of her lifesavings that she did not need to pay for at-home care.  Moreover, as long as she did not need to move to an assisted living facility for at least three years, she could potentially qualify for Medicaid Special Assistance which would cover her cost of care in an assisted living facility.  Martha and her son are surprised; they understood that there was a five year lookback for any gifts under Medicaid.  The elder law attorney explains that the five year lookback period applies to Long Term Medicaid which covers skilled nursing facilities, not Medicaid Special Assistance which covers assisted living facilities.  Martha and her son are delighted to hear that there are in fact some proactive planning steps that may be done during such an uncertain time in their lives and want to move forward with asset protection planning immediately.

CLIENT DESCRIPTION:    Individual with Dementia

CLIENT CONCERN:           Need for At-Home Care

Cindy was diagnosed with Alzheimer’s almost one year ago, but has managed to remain in her home, living alone to date.  Her daughter, Mary, however, realizes that this is no longer possible.  Since Cindy has no real savings, it is not possible to hire at-home care, so Mary decides to move in with Cindy to take care of her.  Mary cares for Cindy for just short of two years when she realizes that she just cannot provide the necessary care to keep Cindy safe in the home.

Knowing that there is no way to privately pay the monthly $6,000 skilled nursing facility bill, Mary meets with a Medicaid Caseworker to determine how this transfer can occur.  The Caseworker tells Mary that Cindy can move into a skilled nursing facility and be automatically eligible for Medicaid.  However, the Caseworker also informs Mary that she must put Cindy’s home up for sale and once it is sold, the sales proceeds will knock Cindy off Medicaid (because she will have more than $2,000) and she will have to spend that money on the skilled nursing facility cost of care until she is eligible for Medicaid again.

Knowing that upon the sale of the home Mary would have nowhere to live, she meets with an elder law attorney to see if there is any way to prevent this from happening.  Much to her comfort, Mary learns that with proper documentation, if she is able to keep her mom at home for a couple more months (so that she has been an in-home caregiver for Cindy for at least two years), then the home may be transferred to Mary outright and Cindy will still be automatically eligible for Medicaid.  Even though Mary may need to hire some assistance to keep Cindy in the home for a couple more months, the ability to save a home worth approximately $250,000 is well worth the expense during these last months.

CLIENT DESCRIPTION:    Veteran with Dementia

CLIENT CONCERN:           Paying for At-Home Care

Vincent served in the armed forces during World War II and was ultimately discharged, having never been injured during service.  Now, years later, Vincent is suffering from dementia and his family realizes that he can no longer live at home safely without some sort of at-home care assistance.  If Vincent does not receive this at-home assistance, Vincent’s doctor informs his children that Vincent will most likely need to enter a long term care facility.  Vincent is adamant that this not happen.

With a home and over $200,000 in lifesavings, his children determine Vincent is not eligible for any Medicaid programs that would cover his cost of at-home care.  Remembering their father’s service, Vincent’s children also contact their local veterans service office to see if there are any benefits available through the Veterans Administration, but are again told that Vincent as too high a net worth to qualify for any benefits.

Having exhausted all the resources they could identify, Vincent’s children visited an elder law attorney.  Much to their relief, the attorney informed them there was a way to protect Vincent’s assets while still getting him a veteran’s benefit that would pay him over $1,500 per month to assist in the payment of his at-home care expenses.

CLIENT DESCRIPTION:    Individual with Late Stage Alzheimer’s

CLIENT CONCERN:           Protecting Their Home

After suffering from dementia for years, it became evident to Thelma’s children that she would no longer be able to stay in her home alone safely.  Thelma decided it would be best to sell her home and move to a long term care facility.  After the house had sold for approximately $200,000, Thelma moved into a long term care facility and her children applied for Medicaid on her behalf.

Upon application for Medicaid, Thelma and her family learned from the Medicaid Caseworker that she would not qualify for Medicaid until she spent down all of her money to less than $2,000.  Furthermore, the Caseworker indicated that all of her money should be spent down on her cost of care in the facility (although there are permissible alternatives to spending all the money on care, which Medicaid may not inform you).  Upon hearing this information, the family speaks to friends who tell them Thelma should have transferred the home to her children years ago to prevent this situation and there is nothing to be done at this point.

Distraught, the family seeks the advice and guidance of an elder law attorney who reassures them there is still an opportunity for some asset protection planning.  With proper planning, it’s possible to save at least half of the sales proceeds of the home, and even more (depending upon some other criteria), and still qualify for Medicaid.  The only difference from the Caseworker’s suggestion which depleted Thelma’s money to less than $2,000 is that, with an elder law attorney’s guidance and proper planning, Thelma’s children can preserve over $100,000 of her assets, set aside in a special bank account in their names, while Thelma is still eligible for and receiving Medicaid.  During this time, Thelma only pays her monthly income to the long term care facility (which is almost always much less than the private pay rate) and Medicaid covers the cost of her care beyond that amount.

Because the attorney does not want to cause the family any additional distress, she does not tell the family that if they had come to her earlier, prior to the sale of the home, the attorney could have safeguarded the home altogether–Thelma’s children could have legally protected the home and inherited it upon her passing (free of any Medicaid liens).

CLIENT DESCRIPTION:    Parent of a Special Needs Child

CLIENT CONCERN:           Ensuring Payment of Long Term Care needs for Both

Many years ago, Betty and her husband were delighted to find out, much to their surprise, that they were expecting their third child.  When the child was born, Betty and her husband were overjoyed; the fact that the child suffered from some learning disabilities simply made their boy that much more special.  As their son matured, it became evident that his Autism would prevent him from ever being able to live alone.  After her husband’s passing, Betty became the sole caregiver for her son, Johnny.

Since Betty was so busy doting upon Johnny, and was in good health herself, she never worried about who would take care of Johnny when she passed away.  Sadly, one day Betty suffered from a devastating stroke which left her partially paralyzed and unable to speak.  It was clear to Betty’s older children that she would not be able to return home and would be unable to care for their younger brother.

Worrying about how to pay for their mom’s long term care facility bills while also paying for Johnny’s special needs care and assistance, Betty’s children visited an elder law attorney to discuss their options.  Betty’s children were delighted to hear that, if properly structured, it would be possible to safeguard all of Betty’s money for the care of Johnny while also getting Betty eligible for Medicaid immediately.

MARRIED COUPLES

CLIENT DESCRIPTION:    Husband with Early Stage Alzheimer’s & Wife at Home

CLIENT CONCERN:           Planning to Protect Home and Savings

Fred and Betty worked all their lives to retire with a home owned outright and savings of $100,000.  Shortly after retirement, Betty is diagnosed with early stage Alzheimer’s disease.  Coping with the fact that there is a very real possibility that she will need to enter a long term care facility at some point in the future, Fred and Betty devise a plan to gift $13,000 to each of their two daughters each year, with the understanding that the daughters will safeguard that money to be used for Fred’s bills when Betty enters a long term care facility and needs to apply for Medicaid.

Before implementing their plan, Fred and Betty decide to meet with an elder law attorney to make sure they have the right plan in place.  Much to their dismay, the attorney explains to them that there is a difference between (1) the gift amounts that are allowed each year without incurring gift tax liability and (2) the gift amounts that are problematic for Medicaid eligibility.  The attorney goes on to explain how, although Fred and Betty can gift $13,000 (up to $26,000, since they are a couple) to each of their daughters without liability for gift taxes, Medicaid views these same gifts very differently.  If Fred and Betty were to apply for Medicaid within the next five years, Medicaid would add up the total value of the gifts given prior to applying.  For each $5,500 given away (or any portion thereof, pro-rated accordingly), Medicaid will asses a one month sanction penalty of ineligibility.  Once calculated, the sanction penalty period does not begin until Betty is actually living in a facility and out of money.  Due to the gifts, Betty must find a way to privately pay, or have others pay for her care, until the penalty sanction time period is over.

Acknowledging that their plan will not work the way they thought, Fred and Betty ask the attorney if there is anything they can do to protect their lifesavings.  The attorney assures them there are still some asset protection steps that can be taken to save a sizeable portion of their estate (if not all of it) and still qualify for Medicaid when the time comes.  The plan may involve transfers of money for value received (e.g. a care coordination agreement, irrevocable burial contract, etc.) and it may involve gifts (so long as they do not contravene federal law or Medicaid rules).  The specifics of the plan will be determined by Fred and Betty’s specific assets held and situation at the time of the planning.

CLIENT DESCRIPTION:    Veteran with Dementia & Spouse

CLIENT CONCERN:           Paying for At-Home Care

Vincent served in the armed forces during World War II and was ultimately discharged, having never been injured during service.  After being discharged, he married his high school sweetheart, Cindy, and they lived together happily for many years and two lovely children to show for it.  Now, years later, Vincent is suffering from dementia and his family realizes that Cindy can no longer continue to care for him at home without some sort of at-home care assistance.  If Vincent does not receive this at-home care assistance, much to Cindy’s reluctance, Vincent will most likely need to enter a long term care facility.

With a home and over $200,000 in lifesavings, his family determines Vincent and Cindy are not eligible for any Medicaid programs that would cover his cost of at-home care.  Remembering their father’s service, Vincent’s family also contacts their local veterans service office to see if there are any benefits available through the Veterans Administration, but are again told that Vincent as too high a net worth to qualify for any benefits.

Having exhausted all the resources they could identify, Vincent’s family visited an elder law attorney.  Much to their relief, the attorney informed them there was a way to protect Vincent’s and Cindy’s assets while still obtaining a veteran’s benefit that would pay them almost $2,000 per month to assist in the payment of Vincent’s at-home care expenses.  Cindy is delighted, with this extra money each month, she will be able to continue to have her beloved husband at home, but will also receive assistance from others to continue to care for him in this setting.

CLIENT DESCRIPTION:    Late-Stage Alzheimer’s & Spouse at Home

CLIENT CONCERN:           Paying for Long Term Care

George and Martha were married shortly after graduating high school and have lived in the same town all their lives.  When George was diagnosed with Alheimer’s, it broke Martha’s heart and she vowed to care for George as long as possible.  Martha cared for George into his late stages of Alzheimer’s, when Martha unfortunately suffered a stroke and it was evident to her and their children that she could no longer provide the care George needed.

George entered a skilled nursing facility shortly thereafter and Martha applied for Medicaid on George’s behalf.  The Medicaid Caseworker informed Martha that because they owned a home and had approximately $100,000 in savings, George was not eligible for Medicaid.  The Caseworker explained that Martha would need to spend approximately half of their savings on George’s cost of care at the facility before George could become eligible for Medicaid.

When Martha informed her children what she was told, they just knew there had to be some way to avoid spending so much of their parents’ lifesavings.  After all, Martha was still going to be at home and needed that money to pay her bills.  Martha and her children visited an elder law attorney who was able to provide a couple of different options that would allow Martha to keep all of their lifesavings (without spending a dime on the cost of George’s care) while still obtaining Medicaid eligibility for George immediately.

Contact Four Pillars Law Firm for compassionate, personal, experienced assistance and guidance with your estate planning and administration, asset protection, veterans benefits and elder law and long term care planning needs.

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