Long term care in a nursing home can be very expensive. If you do not plan properly, you can lose most of your assets before Medicaid will start paying for your care. Because you do not know whether or not you will need it, planning for the possibility of long term care should be a part of your overall estate plan. You have several options to plan for long term care. In Texas, you even have a unique option that is not available in most other states.

In Texas, you can use a particular type of enhanced life estate deed known as a “Lady Bird Deed.” It gets its name as it is what former President Lyndon Johnson used for his own estate. Basically, this deed gives you a life estate in your home and the home automatically passes to a beneficiary upon your death. However, there are certain advanced features. You can still control the property and sell it without the consent of the beneficiary, which is unlike a traditional life estate. Perhaps most importantly to most people, the home is exempt from Medicaid claims during your lifetime.

A Lady Bird deed is not right in every situation. It is one tool out of many that an estate planning attorney has to assist you in planning for the eventuality of long term nursing home care.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Talking with your parents about disability planning can be almost as difficult as talking with them about estate planning, but it is just as necessary. Disability planning should be a key element in your parents’ overall estate plan. There are a number of conditions that could cause an elderly person to become disabled, but one of the most common, and dreaded is Alzheimer’s disease.

A very large percentage of people with dementia suffer from Alzheimer’s disease. Though this does not mean that one of your parents will eventually be afflicted with this disease, it does mean that it is a possibility.

One of the most important reasons why it is important to have this discussion with your parents is so that you can find out what their wishes are now, while they are still of sound mind and healthy enough to let you know what it is they want.

For example, what are your parents’ thoughts on nursing home care? What do they think about artificial life support? What resources are available to help cover the cost of long term care?

These are all very important questions that you will want answers to sooner instead of later. Waiting until it is too late to help your parents plan for disability will only put more financial and emotional strain on the entire family.

When you sit down to have this discussion with your parents, you will want to address a few specific issues. These issues include asking what your parents’ wishes are as far as long term care, what legal documentation they currently have, what their medical preferences are, as well as what their current financial situation is.

Many people believe that they already know enough about their parents that they do not really need to have this discussion, but nothing could be further from the truth. Elderly people do not always inform their children of what is in their estate plan, what their financial situation is, or how they feel about long-term care and end of life care. Even if you believe that you already know enough about your parents’ situation that the discussion is not necessary, reconsider and ask them anyway. You may be surprised to find out that you are not as well informed as you thought.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

There’s a lot of information floating around about Medicaid, particularly when it comes to paying for nursing home care. Some of the information is reliable, while some is not accurate at all. So, how do you know which information you can trust?  Get the facts from a trusted expert, like an experienced and qualified elder law attorney.  Below are three myths surrounding Medicaid, along with the corresponding facts:

1)      You can simply transfer your assets to your spouse and qualify for Medicaid.  The truth is, your spouse’s assets are counted, as well as yours, for Medicaid qualification purposes. So, signing property over to your spouse won’t accomplish much.

2)      You can give your property away to your children or others in order to qualify for Medicaid. In reality, it depends on the timing of the transfers. Certain transfers, when made within the five years before you file your Medicaid application, will result in a delay in your receipt of benefits. So, simply giving away property is likely to derail your Medicaid eligibility.

3)      You  can transfer assets to your revocable living trust to make yourself eligible for Medicaid.  For Medicaid purposes, property owned by your living trust is treated as if it’s owned by you. While a basic revocable living trust is not a great Medicaid planning tool, there are other strategies that allow you to play by the rules and qualify for Medicaid while preserving as much of your nest egg as possible.

Medicaid planning requires knowledge of the ever-changing rules that govern qualification. The best person to answer your Medicaid questions and to help you with Medicaid planning is an experienced elder law attorney.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

If you’re a disabled veteran who served at least 90 days on active duty (with at least one of those days occurring during wartime, as defined by the Veteran’s Administration), and you were discharged from the military under other than dishonorable conditions, you might qualify for Aid and Attendance (A&A) Benefits.  These benefits can help you cover the costs of in-home care or care at an assisted living facility or nursing home.

Your disability does not need to be caused by or related to your military service, so if you  have  a condition such as Parkinson’s disease or Alzheimer’s disease, among others, may be eligible for A&A Benefits, as long as:

• You need the help of another person for routine daily tasks like bathing, toileting, dressing, or feeding yourself; or
• Are in a nursing home due to a physical or mental disability; or
• Are constrained to bed because of a disability; or
• Are blind or have corrected vision of 5/200 or less in both eyes.

In addition to the requirements surrounding your military service and your medical condition, there are financial requirements that must be met. For example, your total household (not individual) countable income must fall below a certain limit, and your net worth can’t be too high. For 2011, the annual household income limit is $23,396 if you have one dependent (such as a spouse or a child), or $19,736 if you have no dependents. The household income limit is increased for those who have more than one dependent.

As with any other government-sponsored benefit program, the rules are quite detailed, and how they apply to you depends on your exact situation. An experienced elder law attorney can help you determine whether you’re eligible for A&A benefits, and can assist you in applying for benefits.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

If you or your spouse anticipate the need for nursing home care in the future, and particularly if you’re concerned about how you’ll finance that care, you’ll likely want to meet with an elder law attorney sooner rather than later.

Given the strict rules that govern Medicaid qualification, the absolute best case scenario is to start planning to qualify for the program at least five years before you actually need apply for benefits. Medicaid imposes a five year “look back” period, which means when you submit an application, you’re required to report any transfers of money or property you’ve made in the 60 months leading up to your application. There’s a wide variety of transactions – like the transfer of assets to your children – that can cause a delay in benefits. Planning early helps because transfers made before this 60 month period are not counted against you when it comes to qualifying for benefits. So, the earlier you get good advice and develop a plan, the more options you’ll have available to you.

That’s not to say it’s too late to talk to an attorney if you or your spouse will need to submit a Medicaid application in less than five years. The Medicaid rules do allow some “wiggle room” within the 5-year look back period, but failure to follow the rules to the letter can result in problems with your application and, ultimately, delay your benefits. That’s why you’ll want to work with an attorney who is experienced in dealing with Medicaid planning – he or she will be familiar with all the intricacies, and can help you make sure you play by the rules while preserving as much of your property as possible.

Choosing the right advisor and planning as far ahead as possible can help navigate the Medicaid rules with confidence.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

The Medicaid program is one resource available to help cover the high costs of nursing home care. It is a federally-established program designed to help people of limited means gain access to the health care they need. Although the program is established by the federal government, it is administered by the states, and each state has slightly different rules for qualifying for Medicaid.

“Countable” vs. “Non-Countable”

In order to qualify for Medicaid, an applicant must meet certain income and asset tests. If your net worth is too high, you’ll be excluded from the program. However, not all of your property is counted   for purposes of determining whether you meet the asset requirements.

When you apply for Medicaid, your assets are divided into two categories; “countable” and “non-countable.” The following are examples of assets that are considered “non-countable” and are therefore not included in your net worth for Medicaid eligibility purposes.

Examples of Non-Countable Assets

• Your primary residence (up to $500,000 in equity)
• Term life insurance or burial insurance, as long as it has no cash value
• A whole life insurance policy owned by you, as long as it has a face value of $1,500 or less
• Your car
• $2,000 worth of your household goods and personal items
• Livestock held for consumption or for business purposes
• A burial plot held for you or your family members

Medicaid eligibility rules are convoluted, and it can be tricky to determine whether or not you fall within the requirements. It’s best to consult with an experienced elder law attorney who can help you determine whether you qualify. If you don’t meet the requirements, an elder law attorney can guide you in taking the necessary steps to qualify for coverage.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

An increasing number of adult children – more than 2 million here in Texas – are caring for their elderly parents and, while few of them would complain about helping their parents in this way, the costs to these caregivers can be significant. Many caregivers reduce their employment hours and experience pay cuts in addition to expending money out-of-pocket to meet their parents’ needs.

On the other side of this scenario are elderly parents who recognize the impact of the services their care giving child provides, and who also may need to spend down assets in order to qualify for Medicaid or to meet other estate planning goals. A good solution for some of these families is a caregiver agreement.

Q: What is a caregiver agreement?

A: A caregiver agreement is a contract between an elderly parent and the child who is caring for him or her, pursuant to which the child is compensated for the services he or she provides to the parent.

Q: How do you decide on compensation?

A: Compensation for a caregiver depends on a number of factors, and arrangements vary from family to family. Factors to consider include the exact services the child provides and the value of those services, the financial status of the parent, and the needs of the care giving child.

Q: What are the options for paying a caregiver?

A: Arrangements for paying a caregiver should be made in a way that works for you and your family. Some families opt for an hourly wage arrangement, others choose a weekly or monthly salary, and still others arrange for a caregiver to be compensated in the form of a larger inheritance.

Q: What types of information should be included in the agreement?

A: A caregiver agreement should be very carefully written and should include, among other things:

• A “job description” for the caregiver that spells out what services will be provided
• Provisions for respite care or other “breaks” for the caregiver
• If applicable, a doctor’s statement detailing the type of medical care needed, as well as the value of that care
• The amount of compensation to be paid, as well as the form of payment and a payment schedule
• Most importantly, a caregiver agreement should be in writing.

Q: Who should know about a caregiver agreement?

A: A caregiver agreement should be shared with the larger family so that there’s transparency when it comes to both the services being provided by the child and the payments being made by the elderly parent. Openness about the agreement can go a long way toward avoiding family conflict, and may even help to avoid estate litigation.

In order to make sure that your caregiver agreement functions the way that you intend it to, it’s a good idea to consult with an experienced elder law attorney in formalizing the agreement.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

How do you ensure that your farm or ranch remains an active operation and stays in the family after you’ve passed away? Perhaps the best way is to have an estate plan, including a succession plan, in place far in advance. It’s also important to include your family members in the planning process.

What happens without a plan? Simply put, without a plan, the future of your family farm is at risk.  For example, as the older generation ages, the need for long-term care becomes an ever-increasing possibility. Many farm families simply don’t have the cash to pay for expensive nursing home or assisted living care. While the farm or ranch ledgers might indicate a high net worth, that money is generally tied up in non-liquid assets like land and equipment.  With no plan in place, paying for long-term care often means selling off farm assets and jeopardizing the ability to continue to operate.

What about when the older generation passes away? With no plan, it can be a struggle for the children to keep the farm or ranch operational, especially if some siblings work on the farm and others don’t.  Where there’s no clear plan for who will take over, it’s not unusual for no one to take over. Instead, the farm is sold and the children take the cash and move on with their lives.

These are not situations any farm family wants to face. Fortunately, having a workable plan in place before any of these issues arise can be key to the survival of the family farm.  With the help of an experienced estate planning attorney, alternatives can be found for paying for long-term care. The older and younger generations of the family can cooperate to establish a detailed plan for who will take over when the time comes, including provisions for each family member’s responsibilities and compensation. Plus, any number of potential arguments can be headed off – or at least resolved while everyone is alive, healthy, and able to deal with the issues.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Americans are living longer and healthier lives than ever before. And while this is true, it’s also true that more of us than ever before will need some form of long-term care. This fact changes the way we look at both retirement planning and estate planning.

There are three main ways to pay for long-term care:

1. Pay out-of-pocket through savings or by selling off assets. This method of paying for care requires advance planning and may have a great effect on the size and type of inheritance you can leave to your loved ones when you pass away.
2. Pay using long-term care insurance. If you intend to use insurance to pay for your long-term care needs, you’ll need to engage in some planning, since this type of insurance generally does not become effective immediately, and because policies are more affordable the further in advance they’re purchased.
3. Pay using Medicaid. Planning is required here, as well, because the Medicaid program has strict eligibility requirements and you may need to “spend down” your assets in order to qualify for benefits.

The first step toward including your long-term care needs in your retirement and estate planning is to have an idea of what those needs will be. You can get an idea of the costs of different types of long term care in your specific area by using this calculator. Your estate planning attorney can suggest strategies for balancing long-term care costs with your other estate planning goals and needs.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Part of making a comprehensive, effective estate plan is figuring out how best to pay for long-term care, should the need arise, while preserving your savings and other assets for your loved ones. Medicaid is a common option for covering the expense of long-term care, but for many people, qualifying for Medicaid takes some careful planning.

So, what exactly is Medicaid?

Medicaid is a need-based government health insurance program. It’s federally-established, but it’s administered on the state level, which means that Medicaid rules vary from state to state. So, Medicaid planning strategies that worked for your sister-in-law in Ohio might not be effective here in Texas.

The Medicaid program offers far-ranging health coverage, including both inpatient and outpatient services, and prescription drugs. You can be covered by Medicaid and Medicare at the same time. In many ways – especially when it comes to long-term care – Medicaid picks up where Medicare leaves off. In fact, Medicaid can pay your Medicare premium and deductibles.

In order to qualify for Medicaid, you have to meet certain income and asset requirements – in short, you can’t earn or own too much. This doesn’t mean, however, that you have to be completely destitute in order to qualify for Medicaid. And, if you work with an experienced attorney and start planning far enough in advance, it’s possible to qualify for Medicaid while still providing for your family members.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.