216 Higgins Road Park Ridge, IL, 60068 (847) 221-0154
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Filing a Medicaid application for long-term care in Chicago or any part of Illinois can be a substantial undertaking, especially when asset protection planning is involved in the process. Some nursing facilities will do it for you but they are precluded from providing any advice or implementing any legal measures designed to protect assets of the applicant or the applicant’s family. That is why most of our clients look for legal representation in the filing of a Medicaid application for long-term care so that every asset preservation advantage that is legal and ethical can be obtained in the process.
When nursing homes can cost $8000-$12,000 per month, it makes sense to be very careful and obtain the correct advice before embarking on this process. There can be a lot at stake for the applicant and also the individuals that the applicant leaves behind in his or her household such as spouse, children etc.
What can make this process especially difficult is, if the applicant is no longer able to assist you in the gathering of the below listed information, and has not designated anybody to have the authority to know where the below information can be obtained.
In understanding the scope of these tasks, below are the major areas to be focused on in preparing a Medicaid application:
  1. A Vision Meeting – with the clients so that they understand the scope of what is involved;
  2. Examine Powers of Attorney – If in existence, or reliance on the Guardianship process – to obtain the authority to act on behalf of the applicant;
  3. Inventory of Assets – must be prepared and be thorough;
  4. Existing estate planning document – must be examined and understood;
  5. Trusts and other estate planning vehicles, if any – must be examined and understood if funded;
  6. Nursing Home or other facility contract – must be examined and understood;
  7. Collection and review of documents regarding financial accounts for the last 60 months – must be thorough and complete;
  8. All Medicaid Asset Protection Strategies – must be implemented PRIOR to the filing of the Medicaid application;
  9. The Medicaid Application – must be prepared thoroughly and accurately;
  10. The Post Application Filing Audit by the Government – must be anticipated and prepared;
  11. Preparation of an Appeal of a unfavorable Medicaid decision – must be prepared;
  12. Annual Redetermination of Medicaid eligibility for the applicant – must be prepared annually.
Additional Key Points:
  • When should Medicaid asset protection strategies be undertaken? Whatever strategies are to be undertaken to preserve assets should be done in the month before the filing of the Medicaid application.
  • While there is in some cases a temporary relaxation by the State of Illinois regarding examination of underlying assets and resources due to the pandemic, no one can rely that this temporary relaxation of examination procedures will continue once the pandemic has ended.
  • What if there are no assets remaining? If there are little or no assets to protect, the task is made somewhat easier. However, if they’re are little or no assets to protect because these assets have been erroneously or unscrupulously transferred away from the applicant during the last five years to third parties without any consideration in return ( Medicaid refers to these types of transfers as “uncompensated transfers” ) then the task of obtaining Medicaid approval with such an application is made much harder. The reason is that penalties will be imposed for uncompensated transfers. And without assets to pay through the penalty period created by such transfers, obtaining eligibility will be difficult.
  • If the application is approved, are there still tasks to be performed ? Once an approval for Medicaid is obtained in a Notice of Decision it is important to be sure that the nursing home files the proper “admit” documentation in order to begin the payment stream to flow to the nursing home to be used for the care of the applicant.
  • What if the application is denied? If a denial of Medicaid is received in a Notice of Decision, then the applicant or their representative must make a prompt choice whether to appeal during that appeal time allowed (usually 60 days from the date of the notice of decision) and also whether to request a hardship waiver. Or the choice may be made to just accept the penalty or Spenddown amount that Medicaid is asserting in their Notice of Decision.
  • What if the applicant is married? If the applicant is married, all of the assets and transactions attributable to the non-applying spouse will also be subject to scrutiny in the Medicaid application for the spouse who is applying.
  • What if the applicant acquires or inherits money unexpectedly? If after an applicant is approved, the applicant acquires additional funds either through an inheritance or some other method or means, then there is required reporting by applicant about the newly acquired funds to Medicaid within 10 days of receipt. Then, serious consideration must be given to consider whether or not there are enough funds to warrant a removal of the applicant from the Medicaid system, planning again with the newly acquired assets, and then reapplying after the new planning is completed.
  • What if the applicant dies? If the Medicaid applicant should die while their Medicaid application is pending approval, please be aware that it may be necessary to continue to pursue the approval of the application to cover time periods of coverage that accrued after the filing of the application but before the applicant’s death.
Needless to say, there are numerous concerns that arise in the Medicaid Application preparation and filing process.
On behalf of your loved one, consider obtaining the necessary assistance before filing a Medicaid Application.
Anthony B. Ferraro
DiMonte & Lizak, LLC

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Gathering the Correct Documentation – in Order to File for and Obtain Eligibility for Medicaid – Long-Term Care
The average cost of a nursing home in Chicago can range from $6,000 to $12,000 or more, in our experience.
Because of this high cost, most of our middle class taxpayer clients seek coverage in the Medicaid program to cover their long-term care costs.
One of the most vexing problems that our clients experience is obtaining and preparing the necessary documentation for obtaining Medicaid coverage for long-term care.
Below you will see a list of documents that we routinely ask our clients to pull together so that we can properly prepare a Medicaid application for their Medicaid eligibility.
It would be a good idea to start working on some of this documentation around the age of 65. This is good factual biographical documentation to keep on hand for many purposes not just Medicaid.
One of the problematic areas for our clients is gathering 60 months of statements for every account that existed during the 60 months prior to the submission of the application for Medicaid.
The easiest way to obtain the statements is to ask your bank or financial institution to print them out for you, even if it results in incurring a slight cost. Going through envelopes and trying to unfurl tri-folded statements that have been in the basement for five years is not going to enable the efficient preparation of a Medicaid application. Many clients are frustrated by the process.
The gathering of the 60 month statements is important so that a review of the statements can be made to find out if there are any inexplicable transactions, or transfers to third parties that could be considered under the Medicaid rules “an uncompensated transfer” and thus result in a penalty period for the Medicaid applicant. Generally, Medicaid will penalize you if they feel that you transferred money and didn’t get fair market value of services or goods in return. The most common cause of this sort of allegation by Medicaid is gifting to children or other third parties. Our firm generally discourages gifting to family or third parties unless it’s done in a very controlled and measurable environment with our assistance.
Please review the documentation below and determine what you can pull together for general purposes now. It’s good to have some of the biographical data on hand.
Medicaid eligibility can be a long and arduous process, but at $6,000-$12,000 a month, it is worth the effort to try to become eligible if you ever require long-term care based on your medical needs.
List of Asset and Income Documentation Needed for Medicaid Application
General Information: (for both the person seeking Medicaid, and their spouse, if any)
  • Social Security Card (or other proof of Social Security Number if card is lost);
  • Birth Certificate (if not a citizen, Naturalization Certificate or Green Card);
  • Marriage Certificate;
  • Spouse Death Certificate if applicable;
  • Medicare Card;
  • Photo ID Card;
  • Health Insurance Card and Prescription Insurance card and latest premium statement;
  • Copies of most recent utility bills (for caregiver child exceptions to establish residency);
  • Copies of any motor Vehicle Titles or registrations to show ownership;
  • Copies of Federal Income Tax Returns and schedules for the 60 month look-back period; and
  • Name of current facility applicant resides in, monthly fee and date entered.
Income Verifications: (for both the person seeking Medicaid, and their spouse, if any)
*It’s best to provide the most recent statements for any of the following income received; needs to state current year gross income, deductions and net amount:
  • Veterans Benefits;
  • Civil Service;
  • Workers Compensations;
  • Rental Income;
  • Social Security (current benefit statement showing gross income with any deductions);
  • Employee Pensions;
  • Railroad Retirement;
  • Wages;
  • Alimony;
  • Annuity Income; and
  • Unemployment.
Assets: (for both the person seeking Medicaid, and their spouse, if any)
*Please provide complete statements for current and/or closed accounts within the previous 60 months
*Please also provide copies of deposit slips and the items deposited, checks, and proof of destination of withdrawals for any transactions $1,000 or more.
  • Savings account statements or copies of passbook pages back 60 months
  • Checking account statements, including copies of checks, back 60 months
  • Bonds (U.S. Savings Bonds, Treasury Bonds, etc.) back 60 months
  • Stock statements back 60 months
  • Certificates of Deposits going back 60 months
  • IRA’s, 401(k), Keoghs, pensions, etc. back 60 months
  • Annuities going back 60 months
  • Life insurance policies and current cash surrender values of all policies
  • Pre-paid burial contracts or Mortuary Trusts and/or Burial plot
  • Guardian/Conservator documents or Durable Power of Attorney
  • Deeds of ownership of any land and buildings, most recent municipal property tax bills, and copy of homeowner’s insurance policy
  • Copies of timeshares
  • Documentation of any assets transferred, gifted, loaned, paid out, to others or closed/disposed of within the past 60 months (i.e. closed financial accounts, vehicles sold, etc.)
We hope this article is been helpful in shedding some light on the process of obtaining good documentation and the reasons for it.
Note: this article is not intended to be a comprehensive checklist of how to prepare a Medicaid application. Rather it is just a short overview. We recommend that before anyone submits a Medicaid application they confer with an elder law attorney, who focuses on Medicaid eligibility, to examine all relevant issues before submission of the application.
Next month we will show how this process will bear fruit when we start discussing strategies for asset protection when long-term care in a Medicaid facility is desired, or necessary.
You have our best wishes,
Anthony B. Ferraro

Alzheimer's Care, Chicago Elder law attorney, Chicago Suburban Elder Law Attorney, Estate Planning, Estate Planning Attorney, Medicaid and Paying for Nursing Home Care, Nursing Home Admissions, Nursing Home Contracts, senior estate planning
Selecting a long-term care facility Chicago, the Chicago Metropolitan area, or the state of Illinois for that matter can be complicated. In Crisis Planning for Long-Term Care, this complexity exists whether you are considering independent living, assisted living, supportive living, memory care, or a skilled nursing care facility or a continuing care retirement community. Shopping for any service, but especially long term care services for your loved one,  requires careful shopping and a careful examination of the contract that you will be required to sign upon entering the facility.
Sometimes the contracts that facilities offer our clients are not drafted in a way that is most favorable to our clients. Rather the contract in many respects may favor the facility. As in the review of any contract for services, a thorough review is necessary. Here are some of the recurring issues that we want our clients to know about when we review these contracts on their behalf.
First, we recommend that every contract that the client signs be reviewed by our staff first, after all the contract is a binding legal commitment. Poorly drafted contracts are what lawsuits are made of.
Secondly, we recommend that only the person receiving long-term care signs the contract if at all possible. In the state of Illinois we do not have what is called a filial responsibility. This means that children do not have a legal obligation as a matter of law to support their parents while their parents are in long-term care. However children can make themselves contractually obligated by signing on as a as guarantor, responsible party, co-payer etc., simply by signing a contract that has such a liability shifting provision in it.
Third, retain a care placement firm that specializes in matching the medical needs of your loved one with the capability of the facility you’re seeking to enter. Not all facilities do everything the same. Furthermore if you find a facility that matches the medical needs of your loved one (and those medical needs can vary from person to person) then have the care placement firm that you hire review how the facility has performed in its recent state audits regarding delivery of care and safety.
Some of the other issues that we deal with when reviewing these contracts are:
  1. bed deposit requirements – CMS as indicated under certain circumstances, these are permissible.
  2. waiver of certain due process and notice requirements – these waivers should always be rejected.
  3. waiver of any personal liability on the part of the facility for causing any physical or other harm to the resident – these waivers should always be rejected as well.
  4. understanding the interwoven payment requirements when Medicare, private pay, and Medicaid are all part of the payment mix.
  5. nondiscrimination provisions should always be present in any contract.
  6. procedures regarding involuntary discharge should also be examined closely so that there is no frivolous discharge of the resident that deprives the resident of their contractual rights and rights under federal and state law.
  7. there are only certain circumstances, the most obvious one being nonpayment, upon which a nursing home can discharge a resident.
  8. guarantee of payment requirements on third parties- these are impermissible as a matter of law.
  9. paying for “bedhold”, which often occurs when a nursing home resident is hospitalized with the intent to return back to the facility- be aware that Medicaid recipients have priority for the first bed available upon return n from hospitalization thus eliminating the need for a deposit in many cases.
  10. be aware that some facilities that identify themselves as Medicaid facilities, may only be Medicaid facilities in what is called “distinct part”. Thus, only a certain portion of their available beds are certified for Medicaid and Medicare, but not all of their beds.
  11. arbitration clauses- do not believe that you must sign an arbitration clause to gain admission to the facility. An arbitration clause will force a family to litigate any controversial issues regarding payment or harm to the resident in a private arbitration forum, rather than in a court of law with a judge and jury of your peers.
There are many more issues to be concerned about. That’s why the contract must be reviewed by counsel. We tell our clients when we find a contract with problematic provisions, that they have three choices:
  1. accept the contract “as is” – not recommended.
  2. negotiate the contract – if the facility will agree to do so. (Note: we find the many facilities refuse to negotiate and refuse to allow the prospective residents attorney counsel to talk to the facility’s attorneys about the contract – unfortunate but it happens all the time).
  3. Or, if the facility is unwilling to negotiate the contract and the provisions contained in the contract are sufficiently objectionable, the family always has the ability to shop for another facility – this is called “freedom of contract” and exists for your freedom and protection in every area of law.
Two quick news items:
1. Effective January 1, 2020 Illinois has adopted the Illinois Trust Code, which is a substantial overhaul of the laws relating to the drafting and administration of trusts, revocable and irrevocable, in the state of Illinois

2. At the federal level Congress passed the SECURE Act, which is one of the largest overhauls pertaining to retirement accounts and retirement account planning in recent years.
More to come about these two large legislative developments in future issues of our Elder Law Update.
Please accept our best wishes for you and your loved ones for the new year!

Anthony B. Ferraro
An Elder Law, Estate & Trust and Asset Protection Lawyer
A Lawyer for Aging Boomers and Seniors
Di Monte & Lizak, LLC
216 Higgins Road 
Park Ridge, Illinois 60068
phone 847-698-9600
fax 847-698-9624
email: Anthony Ferraro – aferraro@dimontelaw.com

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Why is it necessary to correct your estate plan on the eldercare journey?
Because most people’s estate plans plan for death. Most attorneys will draft these plans well and accomplish the goals of asset transferring upon death. However when you’re on the eldercare journey, and death is not imminent but you face long-term care and the costs of $5,000 to $15,000 a month (in a facility located in Chicago and the surrounding Chicago suburbs and Chicago metropolitan area in general), estate planning documents that serve you well at death may not serve you so well when the healthy spouse may unexpectedly may die before an ill spouse who is residing in an Illinois nursing facility.
So the question remains how do we correct your estate planning documents when you begin the eldercare journey?
First we make sure that upon death assets do not go directly from the predeceasing spouse to the surviving spouse. Rather, upon death, assets are transferred from the predeceasing spouse to supplemental needs trust (SNT) for the benefit of the surviving spouse. Please note that the supplemental needs trusts for spouses must be found in the will of the predeceasing spouse. So instead of doing pour- over wills where assets controlled by the will pour -over to the trust, we do the reverse: assets controlled in the trust pour – back to the will, where the supplemental needs trust are found for the benefit of the surviving spouse.
Why is it advisable to do this as couples age?
Because if at the time of the death of the predeceasing spouse, the surviving spouse finds themselves either in a long-term care facility or soon to enter a long-term care facility, we are not enriching the surviving spouse directly and causing more potential costly spenddown. Rather, we are leaving assets in a supplemental needs trust for the surviving spouse so the surviving spouse can apply for governmental benefits to cover the devastating cost of long-term care ( $5000 to $15,000 per month in Chicago and the Chicagoland metropolitan area and in other parts of Illinois as well), while at the same time having the benefit of the assets and the inheritance left by the predeceasing spouse to be found in supplemental needs trusts left for their benefit.
Don’t fall into two traps of erroneous thinking!
First, don’t fall into the trap of thinking that if one spouse becomes ill, the couple can leave assets directly to the children. This is a formula for disaster because it may create immediate ineligibility for any governmental benefits related to long-term care under the Medicaid rules. Medicaid will not permit you to do this.
Second, don’t fall into the trap of thinking that if one spouse becomes ill, we must completely disinherit that spouse or watch a complete spend-down without any assets being left for the surviving spouse. That is not true either. The reason is spouses are allowed to leave assets for each other in supplemental needs trusts (SNTs) as described above. Thus, there is no need to completely disinherit your loved one, you can leave them assets (in an SNT) that will improve the quality of their life if they need institutional care but at the same time allow them to remain eligible and qualify financially for governmental benefits because the assets that you left for them are not left directly in their ownership, but rather in a special needs trusts that I described above, which is perfectly permissible under the Medicaid rules.
Sounds complicated?
It is not complicated. It’s just different than what you have most likely done with your “traditional” estate planning in the past. As we start approaching our senior years at around age 60-65, in addition to looking into Social Security and Medicare and other related topics for seniors, couples that are concerned about the devastating cost of long-term care you should consider correcting their estate documents so that assets are not left directly from one spouse to the other, but rather, transferred to supplemental needs trusts as described above. This type of planning can save assets by properly relying on rules left for the benefit of aging spouses by Congress in its legislation of the current Medicaid laws that have provisions intended specifically to help avoid this type of spousal impoverishment.
Take advantage of these generous Medicaid provisions and correct your estate plan documents as you begin the eldercare journey around age 60 to 65. Note: If there is a diagnosis of illness prior to age 60 sometimes it is prudent to do this type of planning even earlier.
And once again, this is not the kind of drafting that one will try on their own, rather you need to seek elder law counsel to draft these documents because these documents will be closely scrutinized by governmental agencies.
Best to you and your loved ones,
Anthony B. Ferraro
PS: in the month of May 2019 we have presented at least six times to various audiences on the issues pertaining to Elder law and Elder care. Please contact our offices if you would like to become aware of future speaking engagements that you may wish to attend.
Also please be aware that it is our practice that before clients retain us that we offer them a free 15 minute telephone consultation before they even have to come into our office. If this will help you or one of your loved ones please feel free to take advantage of it by calling our offices.

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In most people’s experience the creation of an asset inventory is nothing more than creating a list of assets, account numbers and account balances as of a beginning date.
It is a good practice to maintain an asset inventory for yourself and update it periodically.
Some Issues that can Complicate Your Asset Inventory
When someone is ill, and we are looking to establish eligibility for Medicaid for long-term care in either a supportive living facility or a skilled nursing facility, asset inventory issues become complicated in some cases.
In ALL cases:
1.  In cases involving individuals who are applying for Medicaid, their asset level must be down to $2,000 of assets as described above. Quite often the easiest way to get to those lower asset limits is to liquidate assets and convert to cash. However, in doing so, various issues arise that we will describe below.
2.  First, please recall that any liquidation of any tax qualified retirement account such as a tax qualified annuity, 401(k), IRA etc. will trigger tax, except for a few exceptions.
3.  In the payment of debts prior to the filing of the Medicaid application care, must be given regarding the order in which debts are paid. Sometimes certain creditors have priorities over other creditors.
4.  In the liquidation of assets, sometimes there are penalties associated with liquidation , depending on the time that you liquidate. For example, annuities can have early withdrawal penalties and surrender charges.
5.  Payment of outstanding debt such as credit card debt, mortgages and HELOC (home-equity) loans, may become an important part of your overall strategic spend-down plan when you’re seeking governmental benefits.
6.  Long Term Care Insurance: This can and should be considered an asset and income source for certain governmental benefits, but make sure when and where the policy terms will make payment available.
7.  Prior transfers or gifts and other uncompensated transfers of cash or property that were made before the date of filing a Medicaid application, to individuals or charities, in the past 5 years can be a liability when you look for Medicaid eligibility for long-term care.
8.  Homes unless occupied by certain allowable individuals such as adult disabled children, spouses, or minor children, may need to be listed for sale when an individual seeks Medicaid eligibility. Business assets may also need to be listed for sale.
In SPOUSAL cases : 
1.  As stated above, any liquidation of any tax qualified retirement accounts such as a tax qualified annuity, 401(k), IRA etc. will trigger tax except for a few exceptions. In a spousal case,  if we are going to apply for Medicaid for an ill spouse, then the ill spouse may have to liquidate or change the form of ownership of certain tax qualified assets such as IRAs and 401k.
Note: In order to accomplish this, it is sometimes necessary to open a limited guardianship proceeding in court. However, with IRA’s and other tax qualified retirement accounts we do not want to trigger the payment of taxes sooner than is necessary since the ill spouse may still be residing either at home or in a facility that does not take Medicaid or where no Medicaid eligibility is possible. Thus, why pay tax to the IRS earlier than you need to? Eventually however you may begin the process of transferring the IRA from the ill spouse to the healthy spouse with the assistance of the guardianship court and suffer the triggering of the tax (for example say, 20%) in order to save the bulk of the IRA account for the healthy spouse who is likely still living in the community.
Remember also that because many IRAs are structured as an “IRA annuity” by your financial adviser, there may be penalties and surrender charges on the transferring of such IRA annuity or the cashing out of such an IRA annuity
2.  Illinois Medicaid regulations provide that if the community spouse can remain living in the family home, then the community spouse is entitled to retain $109,560 of the couple’s nonexempt assets in addition to the family home, an automobile, personal and household effects, and Medicaid compliant prepaid burial arrangements. Because of these asset limitations, which can be exceeded with careful planning that is authorized under the Medicaid regulations, it is crucial that you be thoughtful in transferring assets from one spouse to the other and be careful about the timing of such transfers.
As we indicated at the outset, the task of preparing an asset inventory should not in and of itself be that complicated. The difficulties come in when one seeks to re-position or transfer certain assets that are found in your inventory. Many assets have contractual constraints, deferred tax implications built into them, or problems with access before the assets can be freely used for the benefit of you and your loved one.
Be complete and seek guidance if you must to deal with any complicated assets in your asset inventory while you are on the eldercare or long- term care journey.

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In the previous installment we mentioned how important it is to begin senior estate planning or traditional estate planning with the execution of powers of attorney for both property and healthcare matters. Quite often we take for granted the notion that these documents will be something that are easy to have signed.
However with diminished mental capacity, sometimes it is difficult and sometimes impossible to have such documents executed by a patient, resident, loved one or client due to the fact that they no longer possess the required cognitive capability to legally and ethically sign documents.
This is an impediment, even if we know that the documents would be good for them to have. But because cognitive capacity may not exist, the documents cannot be signed, legally or ethically, even if the individual is capable of going through the physical motion of signing their name. This is because even though they may be able to sign their name, they may not understand what it is that they are signing.
Sometimes circumstances are very clear-cut as to whether mental capacity exists, but sometimes the facts surrounding the behavior of a loved one are not so clear or not so well understood.
What can be done then?
In situations where it is not clear as to whether or not your loved one has mental capacity, the attorney involved may need to seek consultation from a medical professional or mental health expert.
If a formal assessment is desired, the attorney usually attempts to obtain the consent and cooperation of the client, if that is possible. Sometimes this can be upsetting or embarrassing to a client. Nevertheless, the determination of mental capacity is something that must be established before other matters that are encountered on the Elder Care Journey are confronted.
Assuming that either the consent of the client is obtained, or perhaps the client cannot consent, then who does the lawyer look to as a referral for consultation on matters of diminished mental capacity?
If the patient, resident, loved one or client is fortunate enough to have a physician regularly attending to them, then reaching out to that physician may be the first order of business. Sometimes however, primary care physicians may decline as they may feel that they are not trained sufficiently to administer psychiatric and psychological assessment tests.
If the attending physician will not undertake the assessment, you may look to other geriatric assessment professionals that can often take a multidisciplinary approach to determining mental capacity.
Keep in mind that the determination of mental capacity is sometimes complicated by the fact that mental capacity can vary from day to day and can often be task specific. This means that an individual can have the capacity for one type of task, for example, the execution of a power of attorney for healthcare, but may not have sufficient capacity for the execution of a power of attorney for property that has gifting and asset repositioning authorizations written into the document.
Why the difference?
The reason is: The former task (executing a power of attorney for healthcare) has a lower cognitive capacity standard or threshold that must be met in order to establish capacity. The latter task (executing a power of attorney for property) has a higher cognitive capacity standard that must be met, which standard is, for example, closer to the standard that must be met to knowingly execute a contract.
These varying degrees of capacity are why it’s important to select professionals that are trained to parse the levels of capacity needed based on the specific tasks that are being contemplated. As you can see this can become complicated.
The Takeaway: Obtain and sign powers of attorney for healthcare and powers of attorney for property, as well as any other estate planning documents that you need for either senior estate planning or traditional estate planning, as soon as possible. Waiting till one reaches the later stages in life creates the risk that in those later stages, you may not have the requisite mental capacity to execute the documents that you need.
The problem that arises: If you do not have the requisite mental capacity to legally and ethically execute documents, it may be necessary to engage in a protective action such as a expensive guardianship proceeding in the State of Illinois. Let’s assume the senior resides in the City of Chicago, at this time, in the Circuit Court of the County, the waiting period for a hearing on a guardianship petition can take as long as 4 to 6 weeks due to tremendous case backlog in Cook County. This creates unnecessary expense and time delay that can be avoided with the timely execution of estate planning documents such as powers of attorney for property and powers of attorney for healthcare.
In our office we recommend people execute powers of attorney when they are 18 years of age! Obviously the type of power of attorney that an 18-year-old may need will be quite different than that of a 88-year-old, but the point is you need to get these documents in place sooner rather than later.
Don’t fall into the trap of helplessness that diminished mental capacity can create, and possibly be permanently locked out of your constitutional right to self determination, regarding your own health needs, property matters, estate plan, and other related matters.

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Do you have powers of attorney in place?
I know it sounds simplistic, and we have all heard this before, but perhaps the most important document that you can have upon beginning the long term care journey is the power of attorney. This is the first matter we suggest to our clients in the Chicago and Park Ridge metropolitan areas who are on the long term care journey.
Why is the power of attorney so important?
Because a power of attorney is a legal document where one person called the “principal” legally authorizes another person called the “agent” to act on their behalf with regard to either financial or health related decisions.
Without these powers of attorney in place, no one has the legal authority to act on another’s behalf and therefore we may have to resort to a court guardianship proceeding where a person appointed by the court, usually a family member, called the “guardian” has the power to make personal decisions for another usually called the “ward”. Guardianship’s are expensive, require the testimony of physicians, the appointment of a Guardian “ad litem” to investigate and protect the ward’s interest, and many other formalities have to be observed, all in the interests of protecting the ward.
These court efforts are all well and good, but if you can avoid all of this by simply having created valid powers of attorney for property and finance and healthcare matters (this may not be possible in all cases), you can streamline matters during your long-term care journey, later on.
How many different types of powers of attorney are there?
In Illinois we have two types of powers of attorney one for health and one for property (and financial matters). Sometimes these documents are called statutory powers of attorney and at other times these documents are called durable powers of attorney. The difference lies in the type of form selected to draft the power of attorney. Most of the time we recommend you stick to the statutory form power of attorney because this is the one the doctors, other health providers, nursing homes, assisted living facilities banks and financial institutions most readily recognize.
Can I create my own powers of attorney?
Yes you can, however they will not contain the necessary language that Elder Law Attorneys put into such documents such as: the power to make gifts to family members and others in order to qualify for Medicaid eligibility, the power to remove and add assets to a trust, and the power to apply for public benefits and then appeal any decision on public benefits. Unfortunately your standard power of attorney forms do not have these provisions built into them. Worse yet, if these additional powers are not built into the power of attorney, then you cannot engage in these powers under the power of attorney. They must be expressly listed in the power of attorney.
What’s the take away?
Get powers of attorney in place immediately. You could wait until later when you I need them, however if you lose the cognitive capacity to legally and ethically execute documents like these, then you may never be able to have these types of documents and hence we are left pursuing an expensive and complicated guardianship process.
Get your powers of attorney in place now.
How old should you be when you start executing powers of attorney?
18 years of age. Most people don’t realize that at 18 they cannot make either financial or medical decisions for their children. But that is in fact the law, because at 18 children have reached the age of majority and without legal authorization nobody can make decisions for them as they are now adults.
Ask your adult children to have their powers of attorney done now, as well.

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Do you have the right kind of trust?

Many of our clients come into our office with trusts. Most of the time these trusts are what are called revocable living trusts (RLTs). These types of trusts offer no asset protection even though seniors are often ready to conclude that they have protected their assets with such a trust.

Only certain types of irrevocable living trusts (IRTs) provide asset protection for long-term care. Irrevocable trusts, if drafted properly, may be considered a complete gift by the senior to the beneficiaries of the IRT, and thus out of the senior’s estate permanently. If, however, the senior has any access to principal in the IRT, then the IRT will not provide any asset protection from the costs of long-term care.

It is possible to allow seniors to maintain an income interest in the IRT, as opposed to an interest in the principal of the IRT, but this creates a more complicated audit process if and when the senior ever needs to look to the Medicaid program to pay for the costs of long-term care.

About 66% of all US citizens will be looking to the Medicaid program if long-term care is needed. Therefore, it is increasingly important to properly draft an IRT and also understand the time of the creation and funding of the IRT so that the creation of the trust will not interfere with a possible application for Medicaid to cover the costs of long-term care.

Seniors also have to keep in mind that there are significant issues in the drafting of an asset protection trust that deal with the following:
  • Income tax issues
  • Gift tax issues
  • Estate tax issues
  • Medicaid eligibility issues
  • Issues about the right beneficiaries, receiving the right assets, at the right time
  • Trustee issues
  • Using the IRT in a period of health for the senior versus a health crisis for the senior
  • Issues regarding selecting the right assets to place in the IRT

So you see, asset protection trusts are essential for many seniors, because they may be the only way assets can be protected, not only from the cost of long-term care but also the predators and creditors of their beneficiaries. But the drafting of an IRT is much more complex than the drafting of an RLT and seniors need to make sure that they retain an elder law attorney to maximize the chances that their trust is the right trust for them at that point in their life.

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Applying for Medicaid for long-term care in a nursing home is a complicated matter. This article will limit itself to describing the basic eligibility requirements. The eligibility requirements break down into four categories:
  1. Medical Eligibility
This requires a demonstration of meeting the determination of need score, also known as the DON score, which is applied to decide whether or not someone is ‘needy’ enough, from a care standpoint, to be eligible to qualify for long-term care in a nursing home. This assessment may be administered by Catholic charities, nursing homes, and many other organizations.
  1. Income Eligibility
The income eligibility requirement is to ensure that the amount of income that a person has does not exceed the private cost of care. For example, if the private cost of care in a nursing home is $8,000.00 a month and your income is also $8,000.00 a month, you have no need for Medicaid because your income will pay the monthly nursing home costs. Alas, for most middle-class Americans, there is not enough monthly income to meet an $8,000.00 a month nursing home bill, and therefore Medicaid eligibility is a necessity. Please note, income eligibility varies depending on whether or not someone is single or married.
  1. Resource Eligibility
Resource eligibility requires an examination of all of the assets that you have had over the last five years, but focuses on what there is at the time of the application. At that point, Medicaid will break assets down between exempt assets and countable assets. Exempt assets are those that applicants are allowed to keep, such as the $30.00 a month resource allowance, personal belongings, life insurance that has no cash surrender value, life insurance that has a face value of no more than $1,500.00, automobile, etc. On the other hand, countable assets are everything else that is considered to be nonexempt. However there is a limitation on the amount of countable assets one is allowed to have—that limit is $2,000.00 a month for a single individual, and $109,564.00 for a married couple, where one spouse is in a nursing home and the other spouse can continue to remain in the community. Please note, there are many exceptions to this general rule and it’s important that you find a law firm, like ours, that is well-versed in these exceptions in order to preserve as many assets as you can.
  1. Penalty Eligibility
Penalty ineligibility arises from what are called ‘uncompensated transfers’ by the Medicaid applicant. Uncompensated transfers are those where the individual made a transfer but did not receive a transfer of equal value in return. Gifts are the simplest example of an uncompensated transfer – the applicant gave something away but did not get something back in return. Also, there are penalties associated with uncompensated transfers, and the penalties are not imposed, or do not begin, until the applicant is in a nursing home or at least five years have passed since the uncompensated transfer. Medicaid audits all transactions during the prior five year period, thus there is a five-year audit that is quite substantial. If all of this seems confusing, it’s because it is. Qualifying for Medicaid for long-term care in order to cover nursing home costs is very complex and requires the expertise of an elder law attorney who focusing focuses on Medicaid asset protection planning and eligibility.

Installment 8 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”

Picking a strategy is not something one can easily do on their own. Selecting strategies in order to minimize the cost of long-term care requires an understanding of both the requirements of sophisticated estate planning and access to governmental benefits. However in order to provide an overview of how strategies are selected, you must understand that strategies will vary depending on whether or not the senior is in one of the following phases:
  1. Preplanning Mode
  2. Wait-and-See Mode
  3. Crisis Mode
Preplanning can be done when there is no threat of a long-term care stay that is imminent.  Wait-and-see mode exists when there is a diagnosis but the senior will not be leaving home in the near term, and crisis mode is when the senior is in a nursing home or soon to be in a nursing home. In preplanning, because time is on our side, we can engage in such strategies as looking for long-term care insurance to cover all, or part of, the cost of long-term care. Perhaps a long-term irrevocable trust that will put assets outside of the estate may be useful. Sometimes purchasing certain types of assets that are exempt non-countable is advisable. In wait-and-see mode, because there is often a diagnosis, good powers of attorney for health and property and the preparation of wills and trusts that bypass the ill senior are essential. Also, changing the beneficiary designations on various assets so that they do not pass automatically on the death of the healthy spouse to the ill spouse is another consideration. It may be even possible, at this point, for the healthy spouse to obtain long-term care insurance. In a crisis mode, it is essential that the ill senior be made eligible for Medicaid in order to cut the costs of long-term care. The only way a senior can be eligible is to be an asset level of no more than $2000, exempting non-countable assets like prepaid burial arrangements, personal effects, very small life insurance policies, and limited other resources. All other assets must be converted to a non-countable status. This is not always possible, so quite often it is necessary in crisis mode to transfer assets from the senior. You must understand that this will result in a period of ineligibility for the senior. However, with the assistance of competent elder law counsel who specializes in Medicaid asset protection planning, it is possible to transfer assets while at the same time retaining enough assets in a form that will allow the penalty period to be paid down and the transferred assets to be protected. Selecting a strategy for asset protection planning in long-term care is not an easy matter, but with the proper planning our office does it all the time. It is essential that Medicaid rules be followed strictly. This sounds like a heavy task, and it is, but the alternative of not selecting a strategy to protect assets from long-term care costs results in the impoverishment of seniors at a time in their life when they should not be destitute for such simple quality of life items, like hearing aids, eyeglasses, podiatry care, medications and certain therapies not covered by Medicaid. Plan ahead, it’s your quality of life that is at stake in your senior years.