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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

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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.

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.

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.

Installment 2 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 10 installment series I would like to discuss when it is necessary to invoke the services of a physician in the estate planning, long-term care planning and eldercare journey. Obviously if there are immediate health concerns a physician should be contacted straightaway, before legal counsel is sought. However, there are circumstances where, in the process of delivering not only medical services, but also in the process of offering legal services, that we discover that the involvement of a physician is necessary. This generally arises in cases where clients come in to execute powers of attorney for property and powers of attorney for healthcare. In cases such as this, generally speaking,  most clients will be able to walk into my office, introduce themselves to me explain to me what they wish to request from our law firm regarding services and engage us for those services. However there are instances in dealing with aging seniors and disabled adults where it becomes clear to me, as a lawyer, that I cannot be sure that the prospective client has full mental capacity. Sometimes, diminished capacity manifests itself by being unable to express your thoughts, comprehend thoughts that are presented, or formulate judgments based on facts that are presented. As a lawyer, it is my duty to suggest that the client be evaluated to determine the level of their capacity when I suspect that a potential client may not have the ability to comprehend what I am recommending to them. This is unfortunate, because sometimes the physician will give an opinion that indicates that the potential client no longer has the ability to make sound decisions or comprehend matters set before them. When that happens, I, as a lawyer, cannot present a document, such as powers of attorney, to such a client for signature, because I may be asking them to sign something they do not understand— which is prohibited under the professional rules of conduct for lawyers. The client’s inability to sign these documents will often result in the failure to do further planning and may create the need to seek a guardianship through the court process so somebody can act as a surrogate decision-maker for this person who has now lost their cognitive capacity. Thus, it is my recommendation that you seek counsel as early as you can in your life to obtain and put in place documents that will reflect your choice of surrogate decision-maker so that if you can no longer make decisions for yourself, your choice will prevail. Unfortunately, many of our clients do not come into our office and request powers of attorney and other advanced directives, so that later on they are left to request the court system to assist them in surrogate decision matters through a full-blown guardianship proceeding. This is very expensive, time-consuming and impersonal. Conclusion Don’t leave your decision-making authority to the court system unless it’s an absolute last resort, because this is a very expensive and impersonal process. You are better off putting in place powers of attorney for healthcare, powers of attorney for property and other advanced directives that will allow the person you choose to seamlessly proceed to make decisions for you pursuant to the guidelines you have set forth. Don’t wait until it’s too late. Coming up in our future blogs in this series:
  1. Revise Powers of Attorney – See Previous Article
  2. Contact a Physician – See Above
  3. Seek Guardianship
  4. Revise Old Wills and Trusts
  5. Create a Blueprint
  6. Inventory Assets
  7. Seek Placement in a Facility
  8. Select a Strategy
  9. Prepare and File the Medicaid Application
  10. Prepare for the Post Application Audit

Installment 1 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”

Problem: We had six families of aging seniors come in to our office this week all of which had powers of attorney that amounted to nothing more than a simple document that would be much more appropriate for clients who are 25 years old. This is a devastating problem that I can correct if the aging Senior has the requisite mental capacity to execute new documents. If, however, the Senior has diminished capacity, then we are left with these almost worthless powers of attorney that do not permit any repositioning of assets in order to properly plan for long-term care, and a path to Medicaid to fund such long-term care. Solution: Revise Any Powers of Attorney and Healthcare That You Currently Have, and While You Can. Powers of Attorney for Property:  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. Your power of attorney for property must permit, at a minimum, the following powers:  the transfer of assets to family members and nonfamily members, with or without compensation being received in exchange; the transfer of the personal residence; the creation, funding, and revision of revocable and irrevocable trusts; the authority to apply for various governmental benefits, including Medicare, Medicaid, VA benefits and other benefits; and the ability to change beneficiary designations on various assets. This is only a small list of must-haves in your power of attorney for property.  To give you an idea of the importance of this, we attach an additional five pages of these types of powers so that every client we have has a full toolbox of resources available to carry them through their maturing years and senior years. These tools are most often needed in the senior years when long-term care planning is a necessity so as to avoid having our seniors rendered penniless due to the devastating costs of long-term care. Be careful about selecting an effective date for your power of attorney. Remember you can sign a power of attorney today that either (1) takes effect today, or (2) takes effect upon a future event, such as when your doctor determines you are unable to make financial decisions for yourself.  The approach you select will depend on your particular circumstances and your family composition. Remember, anyone can create a document, but correct elder law counseling about that document will help you achieve the best results. Contact your Chicago elder law attorney or Illinois elder law attorney today to discuss this. Powers of Attorney for Healthcare:  In January 2015, the State of Illinois legislature enacted a new power of attorney for healthcare.  However, some bar associations have found this version of the power of attorney to be ineffective in five or six important areas. As of this moment, these defects are being cured through pending legislation in the Illinois General assembly. The healthcare power of attorney is your authority to express your wishes about your care and your end-of-life wishes. Please keep your eyes peeled to this blog for an update on the changes that are forthcoming to make this important document better in the future. Summary: I hope this gives you a simplistic view about the importance of powers of attorney in the state of Illinois.  These documents are critical to enable your agent to use Medicaid asset protection strategies to qualify you for Illinois Medicaid should you need institutionalized care. Remember, most of our clients are trying to preserve some assets for a “rainy day fund” in their senior years, and they are entitled to do so as a matter of exercising their civil rights so long as they do this legally and ethically. This planning is not done by wealthy individuals, as those persons 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 will 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, to use some of their own assets for their cost of long-term care, but also to enable them to preserve some of their assets, so that 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. Coming up in our future blogs in this series:
  1. Revise Powers of Attorney – See Above
  2. Contact a Physician
  3. Seek Guardianship
  4. Revise Old Wills and Trusts
  5. Create a Blueprint
  6. Inventory Assets
  7. Seek Placement in a Facility
  8. Select a Strategy
  9. Prepare and File the Medicaid Application
  10. Prepare for the Post Application Audit