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Why an Inventory of Your Assets is Important for Long-Term Care Planning Purposes

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November 10, 2015

- Asset Protection, Blog, Chicago Elder Law, Chicago Elder law attorney, Chicago Illinois Hospice Care, Chicago Suburban Elder Law Attormey, Chicago Suburban Elder Law Attorney, Chicago Suburbs, Chicagoland Elder Law, Elder Law Articles, Eldercare Attorney, Estate Planning, Estate Planning Attorney, Medicaid and Paying for Nursing Home Care, Uncategorized

Installment 6 of 10

In Our Series:

“Long Term Care Costs for the Middle Class: 10 Steps to Asset Protection through Medicaid in Illinois, for Middle Class Seniors and Boomers”

Why create an inventory of your assets for long-term care planning? Often we go to the doctor thinking I feel fine. However as you are aware the doctor doesn’t take your word for it, rather the doctor will do a blood workup to see if he agrees with your assessment that you are fine. Likewise, the equivalent of a blood workup for legal and financial advisors professionals is a thorough inventory. You see, some think that by listing assets on a piece of paper that they have created an adequate inventory of what their assets are. This list certainly is a starting point for the creation of an inventory, but at this point is far from complete. And, like a doctor, your legal and financial professionals will not take your word for it when you say that you have an inventory, rather they are going to establish expectations for what that inventory should look like and what sort of information it must contain, so that they can agree with your assessment of exactly what your assets are and what can be done with them for various legal and financial reasons. A mere list of assets will not reflect all of the information that’s is needed for various professionals to make the judgments on how to best advise you. The more detail you can give a professional the more likely they will be able to interpret the positioning and nature of you assets, in order to give you guidance on planning strategies. How to create a proper inventory:  In order to create a proper inventory of assets the following parameters should be kept in mind:
  1. Ownership of assets: Husband, Wife, Joint, or Other
  2. Types of assets: cash on hand, bank accounts, certificates of deposit, money market funds, brokerage accounts, stocks, government bonds, tax-free bonds, mutual funds, individual retirement accounts (IRAs), Roth IRAs, 401(k)s, keel plans, other tax qualified plans, immediate annuities, tax-deferred annuities, life insurance policies, real estate (primary residence, other real estate), passive real estate investments (such as limited partnerships, timeshares), automobiles, interests in closely held businesses, sole proprietorships, personal and miscellaneous assets of any value, miscellaneous intangible assets, etc.
  3. Debts: mortgages on real estate, credit cards, credit lines, etc.
  4. Beneficiary designation for each applicable asset: primary beneficiary, secondary or contingent beneficiary
There are many inventory forms that are readily available by commercial producers. Our office has its own type of form that we prefer to use. Conclusion While the steps we describe above may seem rudimentary and basic to a lot of our readers, I can assure you that most of the people that come into our office with an inventory of their assets really have no idea what they own, what the nature of the asset is, and what the flow of the asset may be in the event of either disability resulting in long-term care or death. It is for this reason that we have taken the time to suggest what an inventory can look like and for what purposes it can be used. A good idea would be to start with some sort of inventory, place this in a three ring binder and document every asset that you list on this inventory with a copy of a statement or evidence of the ownership of the asset so that in the future, your heirs or professional advisors can use this compilation or inventory of assets for your benefit and the benefit of your loved ones.
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Creating a Blueprint – For Asset Protection from Long Term Care

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October 12, 2015

- Alzheimer's Care, Asset Protection, Blog, Chicago, Chicago area, Chicago Elder Law, Chicago Elder law attorney, Chicago Illinois Hospice Care, Chicago Suburban Elder Law Attormey, Chicago Suburban Elder Law Attorney, Chicago Suburbs, Chicagoland Elder Law, Elder Law Articles, Eldercare Attorney, Estate Planning, Estate Planning Attorney, Guardianships, Medicaid and Paying for Nursing Home Care, Medicaid spend down planning, Nursing Home Admissions, Nursing Home Contracts, senior estate planning, Uncategorized

Installment 5 of 10

In Our Series:

“Long Term Care Costs for the Middle Class: 10 Steps to Asset Protection through Medicaid in Illinois, for Middle Class Seniors and Boomers”

 Why create a Blueprint (Medicaid asset protection letter) for your asset protection planning? Just like in building a home, you don’t hire a contractor to start slapping bricks together until you have decided on the number of rooms, type of rooms, location of the rooms, etc. Likewise, many are quick to suggest creating a will, trust, powers of attorney, perhaps an irrevocable trust, or an annuity, etc. This can be very costly and foolish. How can you create a plan consisting of various documents that are supposed to protect you without a design in mind? Mindlessly putting together layers of documents accomplishes nothing except large bills. Before our clients create any legal documents we suggest to them that they do a blueprint, which is in effect a Medicaid asset protection letter. In that letter we outline the following:
  1. Planning strategies that can be done in preplanning mode, or crisis mode, depending on where you are in the long term care journey.
  2. Planning strategies available for single individuals, or the community spouse when an ill spouse is going into a nursing home.
  3. An outline of the current status of the law as it relates to Medicaid eligibility.
  4. Finally, planning recommendations that are broken down into things that you must do immediately and things that you may be able to defer until later.
Below are some examples of our final recommendations in our Blueprint: Immediate Action
  • Creation of powers of attorney for healthcare and powers of attorney for property. However, our powers of attorney have many more powers and are more substantial than the average power of attorney that most people have.
  • Creating wills and trusts that have special needs trusts built into them for a surviving spouse or a minor or adult disabled child. This takes advantage of certain relief that Congress intentionally placed into the Medicaid laws.
Deferred Actions
  • The purchase of a Medicaid compliant annuity or a Medicaid compliant promissory note.
  • Our office files a Medicaid application.
Conclusion As you can see from the above, there are strategies that we rely on that result in the savings of a lot of assets for middle class seniors and boomers who are going into long-term care. However, because these measures are complicated, it makes sense to have a blueprint laid out describing them in detail using your asset and income numbers before actually engaging in these actions. We want our clients to go into strategies and solutions with eyes wide open. The only way that can be accomplished in most cases is to create blueprint that lays out all of the Medicaid asset protection planning strategies in the form of a letter that the client can study, and ask questions about. We usually resolve all of the questions the client may have at our subsequent “Design Meeting.” Make sure you look before you leap.
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When to Revise Old Wills and Trusts and How?

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September 14, 2015

- Blog, Chicago, Chicago area, Chicago Elder Law, Chicago Elder law attorney, Chicago Illinois Hospice Care, Chicago Suburban Elder Law Attormey, Chicago Suburbs, Chicagoland Elder Law, Elder Law Articles, Eldercare Attorney, Estate Planning, Estate Planning Attorney, Medicaid and Paying for Nursing Home Care, Medicaid spend down planning, senior estate planning

Installment 4 of 10

In Our Series: “Long Term Care Costs for the Middle Class: 10 Steps to Asset Protection Through Medicaid in Illinois, for Middle Class Seniors and Boomers”

In this part of our ongoing series of how to deal with the looming crisis associated with long-term care costs for the middle class, I would like to talk about when it may be necessary to revise wills and trusts.  Also, what should newly restated revised wills and trusts look like? First of all, we should remember that during our maturing years, most people, especially those with children, will prepare wills and trusts that deal with what happens to their assets upon death. This is a very understandable and laudable goal, especially for those people that are afraid of leaving small children behind. However, as we go beyond our maturing years and start focusing on our senior years, the focus is no longer “what happens when we die,” the focus now changes to “what happens if I don’t die and I need long-term care for a long period of time.” When that becomes the concern of someone going into their senior years, wills and trusts must be modified in few different ways.
  1. For single persons, there needs to be the ability to withdraw assets from a revocable living trust, or various types of asset management accounts, like pay on death accounts at a bank, transfer on death accounts at a brokerage firm, and IRA accounts. The reason for this additional withdrawal power is so assets can be withdrawn from these repositories and used elsewhere in accordance with planning techniques designed to preserve assets so that eligibility for Medicaid long-term care benefits, such as nursing home cost coverage, can be achieved. This would be a satisfactory result.
  1. In the case of married individuals, it becomes very important to be able to not only withdraw assets from various places, but also redirect assets in the event of the death of one spouse. Specifically, if we have two spouses, but one is in a nursing home, and the other spouse, who is otherwise healthy, should die unexpectedly, the assets of the deceased spouse will be transferred to the surviving spouse and those assets could be subject to a complete Medicaid required spend down for nursing home costs. This unfortunate circumstance can be avoided if the couple restates their wills and trusts. Rather than transfer assets to the surviving spouse directly, assets can be transferred to certain special needs trusts that are created for the surviving spouse who is residing in a nursing home. This type of special transfer will allow the surviving spouse to continue to receive benefits from Medicaid for their long-term care, and at the same time enjoy the inheritance left behind by the predeceasing spouse. This would also be a satisfactory result.
These types of more favorable results don’t happen automatically. They require very careful drafting by elder law attorneys who have familiarity with the Medicaid statutes and regulations. Careful drafting can allow people who need Medicaid for long-term care to, some extent, retain assets that can act as their lifetime “rainy day fund.” Again, this is planning that is done not for wealthy people, but rather  is done for middle-class individuals who have few remaining assets and would like to preserve them to elevate the quality of their life should they be in long-term or nursing home care for an extended period of time. Remember Medicaid does not cover the cost of the television, hearing aids, eyeglasses, certain podiatry care and other essentials that add to a senior’s quality of life. That is why the planning for the creation of a “rainy day fund” for this type of circumstance is so crucial. Caution: This type of planning must be done while you are able to do it. It cannot be done once you have diminished mental capacity to the extent of not being able to make financial decisions for yourself all. Start your planning now!
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Guardianship – The Last Resort

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August 12, 2015

- Alzheimer's Care, Blog, Chicago area, Chicago Elder Law, Chicago Elder law attorney, Chicago Illinois Hospice Care, Chicago Suburban Elder Law Attormey, Chicago Suburbs, Chicagoland Elder Law, Elder Law Articles, Eldercare Attorney, Estate Planning, Estate Planning Attorney, Guardianships, Probate, Estate, and Trust Administration, senior estate planning, Uncategorized

Installment 3 of 10

In Our Series: “Long Term Care Costs for the Middle Class: 10 Steps to Asset Protection Through Medicaid in Illinois, for Middle Class Seniors and Boomers”

Many people ask, “What is guardianship in the state of Illinois?” Simply put, guardianship is the process of applying to a court to be able to legally assist an individual over the age of 18, if the person has a disability. A disabled person, for purposes of guardianship laws, is someone who cannot make basic life decisions or manage their own property or money. Due to the participation of the court system and the attorneys’ fees involved, this process is an expensive proposition and should be avoided at all costs, if possible. Guardianship is avoided by using other methods of surrogate decision making for disabled individuals such as powers of attorney, trusts, the Health Care Surrogate Act, and other related surrogate roles. Unfortunately, many people wait too long and do not have the authority to execute powers of attorney, trusts, etc. because they are incapacitated. In such cases, we are grateful that the guardianship court exists. Guardianship is achieved to the following general steps:
  • Filing of a petition for appointment of a guardian to be determined at a court hearing
  • Issuance of service of summons;
  • Appointment of a guardian and guardian ad litem, an unrelated individual who will be the eyes and ears of the judge in understanding the circumstances;
  • Obtaining the necessary physician’s report establishing that the individual does not have decision-making authority, and;
  • Giving notice to all spouses, children, siblings and agents under power of attorney so that they can concur or object with the guardianship itself.
The benefits of guardianship are that the day-to-day management of financial affairs can be handled by the guardian of the estate, and the day-to-day management of health matters can be accomplished by the guardian of the person. Sometimes the same individual is the guardian of both the estate and the person and sometimes different persons are appointed to these roles because of their different skill sets. Guardianship can consist of both:
  • Uncontested guardianships: when everybody agrees with the process of the person selected, or
  • Contested guardianships: when the Ward (the person that is the subject matter of the guardianship process) or someone known to the Ward may object to the guardianship, in which case the guardianship process becomes what is called a contested guardianship (which results in expensive litigation)
The guardianship process is a last resort when people have not taken time to do the appropriate estate planning. I recommend that people get powers of attorney for property and powers of attorney for healthcare in place at age 18, in order to avoid guardianship in the event they become incapacitated. Remember, at age 18, you are an emancipated adult and you can make decisions for yourself and nobody else can make decisions for you, unless you authorize them to do so. It is for this reason we recommend powers of attorney whenever we can. Don’t allow your personal and health matters to fall into guardianship. We are grateful that guardianship exists for tragic situations where proper planning has not taken place. But, now that you know that you can avoid guardianship through proper estate planning, prudence would indicate that you take the steps to do such planning.
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Afraid of Long Term Care Costs in the Middle Class? Seek Asset Protection Through Long Term Care Planning in Illinois, for Middle Class Seniors and Boomers

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May 21, 2015

- Blog, Chicago, Chicago area, Chicago Elder Law, Chicago Elder law attorney, Chicago Illinois Hospice Care, Chicago Suburban Elder Law Attormey, Chicago Suburbs, Chicagoland Elder Law, Elder Law Articles, Eldercare Attorney, Estate Planning, Estate Planning Attorney, Medicaid and Paying for Nursing Home Care, Probate, Estate, and Trust Administration, senior estate planning, Uncategorized

Problem: We recommend that our clients seek to purchase long term care insurance. But, what happens if it cannot be purchased either due to unaffordable costs or underwriting prohibitions? Solution: Medicaid is the only federal governmental program that will pay for long-term care. This will require using some of your own funds in order to properly pay your way at a long term care facility, but if planned for properly, will not result in the use of all of your funds. Therefore, in order to access the Medicaid program in Illinois, one must take some of the following steps in order to become eligible. Be aware, this is a very complex area of planning, but these initial steps should be an overview of what you need to do to begin the process. You would be wise to consult with an Illinois elder law attorney who focuses in this type of asset protection work.
  1. Revise Powers of Attorney
First, revise any powers of attorney for property and health care that you currently have. Most of the powers of attorney that we see in our office, while valid, are inadequate to allow the necessary repositioning and reclassification of assets to gain eligibility to Medicaid, VA, and other governmental benefits.
  1. Contact a Physician
If the senior has mental competency issues, then perhaps contacting a physician to determine whether or not the senior has the requisite mental capacity to execute new estate planning documents is essential. It is unethical to have a senior sign anything that they don’t have the capability of understanding.
  1. Seek Guardianship
This step is a last resort, but may be necessary in some cases, if no powers of attorney can be executed due to diminished mental capacity.
  1. Revise Old Wills and Trusts
Revising old wills and trusts is also essential. Most wills and trusts are nothing but death plans. But, when you’re looking to gain eligibility for Medicaid for long-term care, the documents must reflect the authorization of handling long-term care planning matters rather than just distribution of assets and a death.
  1. Create a Blueprint
The next step, which is useful to seniors, and the family members that are supporting them, (and boomers that are beginning to ponder the long-term care journey), is to create a blueprint.  This blueprint will consist of breaking down considerations into life’s 3 main phases: preplanning, wait-and-see planning, and crisis planning. Preplanning is done when there is plenty of time to plan, wait–and-see planning is done when there is a diagnosis, but you are not forced to leave home for long-term care, and crisis planning is when you must seek a higher level of care in an institutional facility of some type. Quite often, after the blueprint is done and steps one through four are completed, there is nothing further to do until the situation becomes more escalated and a higher level of care may be needed by the senior or boomer, who may migrate to a crisis planning stage.
  1. Inventory Assets
Assuming that we need a higher level of care, we need to continue the work that we did in steps one through five and take the next step, which is set up work necessary to inventory assets and get an understanding of asset ownership, beneficiary designations, and ability to convert to cash in order to pay for long-term care expenses, at least for some period of time.
  1. Seek Placement in a Facility
The next step, assuming that a higher level of care is to be delivered, is to seek placement in a facility. There are many kinds of facilities, such as, independent living facilities, assisted living facilities, supportive living facilities, and nursing homes, and continuing care retirement communities (CCRC’s). I am pleased to say that, for the most part, we see these business entities delivering good care to most of our seniors. Like any other business entity some of their business contracts are fair and others are unscrupulous. It is necessary for you to have a lawyer familiar with these types of contracts to be sure that, from a legal standpoint, whatever you are signing is acceptable. Remember, some of these contracts can require you to pay $10,000 a month and may unnecessarily impose financial liability on children and other signers of these contracts.
  1. Select a Strategy
The next task is to select a strategy which will allow the senior or boomer to legally and ethically reposition his or her asset(s).  This opens up eligibility for the Medicaid benefit in Illinois without spending down to the paltry statutory level of $2,000 of assets. Remember without further planning, Illinois expects you to rely on $2,000 for the rest of your life. This is impossible because some of our seniors enter long-term care at the age of 67 and may remain in long-term care for the next 20 years. It would be nice to have more than a mere $2,000 to buy the TVs, radios, bathrobes and slippers, hearing aids, and eyeglasses that make life more tolerable.
  1. Prepare and File the Medicaid Application
The next step is to prepare and select a time, after the implementation of all asset protection strategies, to file the actual Medicaid application, which fully documents all transactions over the last 60 months. In some cases this can be very demanding task as some seniors lose documentation and forget about transactions and assets.
  1. Prepare for the Post Application Audit
The next step is to prepare for the post application audit by the State of Illinois staff members and be ready to file an appeal in the event the state objects to anything you have presented in the application. Also be ready on an annual basis to respond to the state’s request in what is called their annual redetermination process (REDE). Summary: I hope this gives you a simplistic view about how to qualify for Illinois Medicaid while using Medicaid asset protection strategies. Most clients are trying to preserve some assets and they are entitled to do so as a matter of exercising their civil rights as long as they do this legally and ethically. This planning is not done by wealthy individuals, as they can pay their way through any costs associated with long-term care. Rather, this planning is best done by middle class individuals who have worked to accumulate some savings only to find that the cost of long-term care make their life’s work disappear in no time. Our goal, as asset protection attorneys for the middle class, is to allow seniors to gain access to the Medicaid program. Although this requires clients to use some of their own assets for their cost of long-term care, it also enables them to preserve some of their assets.  Therefore, in their senior years, after a lifetime of work, they are entitled to some dignity and some resources to make a life in a nursing home more livable. Anthony B. Ferraro BS-MSTax-CPA-JD
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Steps to Take When Discharged from a Hospital to a Nursing Home

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April 20, 2015

- Chicago, Chicago Elder Law, Chicago Elder law attorney, Chicago Illinois Hospice Care, Chicago Suburban Elder Law Attormey, Chicago Suburbs, Chicagoland Elder Law, Elder Law Articles, Eldercare Attorney, Estate Planning, Estate Planning Attorney, Medicaid and Paying for Nursing Home Care, Medicaid spend down planning, senior estate planning

During your stay in a hospital, your doctor and the staff must work with you to help plan for discharge from the hospital.  Your input is an important part of creating a comprehensive plan for what happens after you leave the hospital setting and enter long term care.  The following questions come from a document called “Your Discharge Planning Checklist” from the Centers for Medicare and Medicaid Services.  We recommend using this and other checklists in working with the hospital’s staff before discharge. During your stay in a hospital, your doctor and the staff must work with you to help plan for discharge from the hospital. Your input is an important part of creating a comprehensive plan for what happens to you after you leave the hospital setting and enter long term care. The following questions come from a document called “Your Discharge Planning Checklist” from the Centers for Medicare and Medicaid Services. We recommend using this and other checklists in working with the hospital’s staff before discharge. The following questions are important considerations as you prepare to leave the hospital:
  •  Where will you receive care after discharge?
  •  Who will be helping you in the transition from the hospital to long-term care?
  •  What is the current status of your health? What can you do to improve it?
  •  What potential problems should you be aware of with regards to your health? Is there someone you could call if these problems do arise?
  •  Do you need medical equipment (like a walker)?
In addition, we strongly recommend doing the following in preparation for discharge from the hospital:
  •   Create “My Drug List” to write down any prescription drugs, over the counter drugs, vitamins, and herbal supplements that you need to take, along with the dosage and other pertinent information.
  •  Ask for written discharge instructions and a summary of your current health status. Bring this information, along with your complete “My Drug List” to follow up appointments.
  •  Talk to a social worker or a representative from your health plan to determine what your insurance will cover and how much you will have to pay.
  •  Talk to an elder law attorney if you do not know how your long term care will be covered:
        -Long Term Care Insurance? Not many people have it.
        -Private Pay? This can cost over $8,000 a month!
        -Medicare? Does not cover long term care in a nursing home or assisted living facility.
        -Medicaid? This covers long term care, but you must take planning steps to qualify based on your assets and income.
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For your information, Anthony B. Ferraro was elected President of the Illinois Chapter of NAELA, the National Association of Elder Law Attorneys. Congratulations to him.
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What does hospice do, and when should you call it in? | Chicago Estate Planning Attorney Anthony B. Ferraro

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September 26, 2012

- Chicago Illinois Hospice Care

Hospice delivers a wide range of care and support for individuals with terminal illness; it also serves these individuals’ family members. Hospice is a holistic approach to pain and symptom management through physical, emotional and spiritual means. The main focus of hospice is to keep levels of dignity and quality of life as high as possible throughout the end of life. Caring measures are not meant to cure a person. Instead, it is palliative care that is intended to relieve or reduce discomfort. A physician can call in hospice once he or she determines a patient has six months or less to live. Hospice will go wherever the person is — to a long-term care facility, home, etc. Some long-term care facilities have their own hospice programs and should be considered. A standard plan of care typically stops once hospice is called in. Treatments such as radiation would cease, for example, and palliative care would take over. A hospice team would then create a new care plan. The patient’s physician coordinates care with hospice. A hospice team generally consists of a social worker, chaplain, certified nursing assistants, registered nurse and a medical director. Some hospice agencies deliver bereavement care to family members for several months after a loved one’s death. Hospice is a wonderful service and is highly recommended for your ones’ care, should it ever be needed.
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