Medicaid Frequently Asked Questions

Do I have to “spend down” the money on medical care?

No. This is perhaps one of the most often given pieces of false information. You are allowed to spend your money on reasonable personal items, home improvements, a new car, buy a house, purchase irrevocable final arrangements, and small life insurance policies.

What are the limits on purchasing personal items for Medicaid spend down?

Keep it reasonable. There is a case on the books from the east coast on purchasing a $75,000 diamond ring. That purchase was ruled as an unreasonable and perhaps fraudulent purchase of jewelry. This doesn’t mean that you can’t purchase jewelry, but keep it in the “reasonable” range. This doesn’t necessarily mean you have to buy costume jewelry.

A middle of the road funeral in this area of Arkansas will run about $9,000 pre-paid, for everything including the service, liner, opening and closing, flowers, escort, etc.

What is the limit on how much cash I can have to qualify for Medicaid?

As of August of 2015, the upper limit appears to be $119,220. But, Arkansas is a keep one-half state. For example, if Mr. and Mrs. Medicaid have $120,000, the spouse at home gets to keep $60,000 and the spouse in the home gets to keep $2,000. Then they would have to spend down $58,000.

How much cash can the spouse in the institution have to qualify for Medicaid?

This one has been firm for many years. The spouse in the institution can have $2,000. This number is the original figure and has never been adjusted for inflation.

How far back does Medicaid examine my finances?

5 years. Any gifts made in that 5 years will count against you in what is called a penalty period.

How do I know how long the penalty period is?

In Arkansas, divide the total amount of the gifts by $5,168 (as of August of 2015). That gives you months and days of the penalty period.

In Arkansas, can I get rid of the Medicaid penalty period by leaving the institution?

No. The regulation is clear that leaving and coming back does not stop the penalty period.

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How to Choose an Estate Planning Attorney

This is often stated in different ways, such as

• How to find a lawyer for a will
• How to find a lawyer for wills and estates
• How to find an estate attorney
• How to select an estate planning attorney

Here are some tips:

1. Find an attorney that practices in estate planning.  They keep up with all of the changes in the laws that can affect your estate plan.
2. Preferably, find one that is versed in elder law and Medicaid as well.  There are certain things done in an estate plan that may affect your eligibility for Medicaid if you should ever need it.
3. Find somebody you are comfortable with.  Shop around for an attorney if you need to.  But, be honest with the attorney and tell him you are shopping up front.
4. Find somebody whose fee you are comfortable with.  Fees may vary somewhat within the local attorney community.  But you can expect to pay slightly higher fees to a lawyer that practices in the area or who also adds in elder law to their portfolio.
5. All attorneys are expected to have a minimum level of competence.  But, when I took the Bar exam, estate planning was not a tested subject.  The related subject of Real Estate (Real Property) Law was tested, but not elder law or estate planning law.

Choosing an attorney is based on a trust relationship.  If you don’t feel that you can trust an attorney, then feel free to find another one.  Everything that is done is based on that level of trust and confidence in the lawyer and the lawyer’s abilities.

 

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Advantages of a Trust in Estate Planning

Trusts, both revocable and irrevocable, have many advantages in estate planning, but they also have some downfalls.

Advantages:

1. Trusts make funds and property available almost immediately to family members
2. A revocable or irrevocable trust can pay off your final expenses
3. They can pay off your creditors
4. They can create “sub-trusts” to hold money for specific purposes
5. A trust can delay the distribution of money until children reach a more mature age
6. Trusts help keep your family business private by keeping your estate out of the public process of probate
7. Special kinds of trusts (Irrevocable Life Insurance Trust – ILIT) can keep you under estate tax limits if you carry a lot of insurance

Disadvantages:

1. For Medicaid, if your home is in a revocable trust, or in a irrevocable trust for less than 5 years, the house becomes an asset that Medicaid will count against your $2,000 limit
   • The trustee actually owns title to the home
   • Even if the trustee is you, it is not considered your property, but trust property
2. With an irrevocable trust, you cannot get the property out in case of emergency.  With specially setup trusts(Intentionally Defective Grantor Trust – IDGT), you can swap property in and out, but cannot reduce the monetary value of the trust.

I hope this helped you out.  If you have any questions or want an appointment to discuss this more, contact the DeWitt Law Firm.

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What is Elder Law?

I’m often asked what elder law is.  So here is a little more information.

One of the better articles I’ve read is located here at Wikipedia.

Elder law consists of 3 major areas:

1. Medicaid and Medicaid planning issues
2. Estate planning and administration
3. Guardianships

Very related to Elder Law are Elder Rights.  These are the rights of the elderly, who are not a Constitutionally protected class.

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Medical Estate Planning and Records

In this day of electronic records, it is still a good idea to track what medicines you take currently, and have taken in the past as part of your medical estate planning.

It is actually a simple task to create a spreadsheet in Google or Excel to track your medicines, how much, when, and who prescribed it.

Here is a sample of my tracking spreadsheet.  Notice that it has the medicine, how it is taken, the dose and units of dose, when, who ordered it, their speciality, the time of day and reason it is being taken.

Medicine	Route	Dose	Unit	Timing	From	To	Ordering Physician	Specialty	Timing	Reason
Oxygen	canula	2	liters	sleeping			Fomin, Dimitry	Neurology/Sleep	PM	sleep apnea
CPAP	nasal	6 to 10	cm H20	sleeping			Fomin, Dimitry	Neurology/Sleep	PM	sleep apnea
Tramadol	PO	50	mg	1 or 2 PRN			James Blankenship	Neurosurgeon	PRN	pain

Also, I have a separate worksheet in Excel that has the medicines I have taken in the past so I have a history.

Then, you should create another spreadsheet that has your procedures in it with as so:

Procedure	When	Who	Where	Why
Remove transverse process from T1	5/15/1985	Dr. Carry Couch	Stillwater, OK	Alluvial fracture of spinous process of T1
Rhinoplasty	12/20/1997	Dr. Fincher	Fayetteville, AR	Deviated septum. Left side of nose unusable

Now, when you go to see a new doctor, you don’t have to take all those bottles or try to remember everything.  Just print out the spreadsheets and voila, you are ready.

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No Kids? You Still Need an Estate Plan

For people without children, a will is important for ensuring your wishes are fulfilled. As the adage goes, you can’t take it with you. Whether you want to spend your last dime or leave it all behind when you go, creating a comprehensive plan for your estate begins earlier than you might think. If you don’t have children or obvious heirs, documenting your wishes and making them accessible will help ensure those wishes are fulfilled should something happen to you. “If today were your last day on earth, who would get your stuff?” says Jean-Luc Bourdon, a certified public accountant in Santa Barbara, California, and a member of American Institute of Certified Public Accountants’ personal financial planning executive committee. It’s a question he poses to all of his clients, especially those without kids . While parents may think their children are the answer, Bourdon says people without children need to plan more carefully. “When it comes to what you’ll leave behind, there are only three buckets: Uncle Sam, charity or individuals,” he says. “Generally speaking, Uncle Sam is the least appealing.” Many people with children create a will to ensure their children are cared for, and in the absence of a will, next of kin are the obvious heirs. But for people without children, a will can be just as important, and it can easily be overlooked. “It’s important to check all the estate planning documents,” Bourdon says. “Having a family creates more of an urgency in making sure […]

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Wills

Who should have a will?

Anybody and everybody.

What is a Last Will and Testament?

A will is instructions on how to pay the final expenses, who should take care of wrapping everything up, and who gets your stuff.

A Last Will and Testament is only one of the many estate documents of a complete estate plan. If you die without a will or trust, you are said to have died “intestate.” The state will determine who gets what in that case. You really want to put your plan in place of the default state plan.

When should I have a will drafted?

If a will is what you want, then immediately.

When should I have a will updated?

Anytime you have a major life change such as the birth or adoption of a child, buying or selling real estate, major inheritances, etc.

Why have a will?

Answer these 3 questions and you will have a good idea of what your estate plan needs to be:

1. Who should get my stuff?
2. How much should each person get?
3. When should they get it?

Making a will, even a “simple will” is better than nothing in making your wishes known.  At the very minimum everybody should create a will.  Creating a will is not the hard task you may think it is if you keep the 3 questions in mind.  However, writing your own will is not suggested as legal wills are complex legal documents in the area of estate law.

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Revocable trust is important estate planning tool

(Photo: Desert Valley Times) The use of a revocable trust (sometimes referred to as a “living trust” or “family trust”) to plan one’s estate has become very popular. Despite the popularity of the revocable trust, revocable trusts are not without their potential problems. First, it is important to understand that there is no definitive answer as to whether a trust is necessary. Another estate planner explained that asking whether a revocable trust is good or bad is like asking whether a wrench is good or bad. It depends on what you are trying to accomplish. A trust is just an estate planning tool. Whether it is good or bad depends on your needs and desires. Although there are many factors to consider in determining whether a revocable trust is right for you, here are a few of the more significant factors: Avoiding Probate It is true that a properly funded trust avoids probate. If the goal of the client is to avoid probate, it is critical that the trust be properly funded. To “properly fund” a trust, title to all assets and beneficiary designations for insurance policies and retirement accounts must be reviewed. A properly funded trust avoids probate because the owner of the assets (generally termed the trustor, settlor, grantor or trustmaker in the trust document) conveys ownership from him or herself (in his or her individual capacity) to him or herself as trustee of his or her trust. Probate is avoided because for “probate purposes” the deceased […]

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Fill-in-the-blank estate planning is playing with fire

(Photo: Special to the Statesman Journal) This summer, Oregon saw more forest fires and smoke than any other year in recent memory. Families and towns were evacuated, and some did not have homes to go back to. Like a forest fire, an estate plan with a will or living trust that is poorly developed often goes up in smoke along with your family relationships. Putting time and thought into your will or living trust is time well spent. In general, a will transfers an estate after death to beneficiaries through court probate. A will also names guardians for children. A living trust is often the heart and soul of an estate plan. A trust contains instructions for your care during disability and enables named trustees to handle your finances. A trust transfers assets after your death, avoiding court probate. By developing these legal documents beyond filling in the blanks on forms, your estate plan can incorporate your goals, wishes and values into a plan for the benefit of you and your family. The following planning considerations will help preserve family values and alleviate any sparks that could ignite family relationships after you are gone: For children, consider a plan that does not pay outright but provides them with guidance on how to spend inheritance (for example, for college or retirement). Without guidance, most inheritance is spent within 18 months. For nonprofits, consider setting up a charitable fund with as little as $25,000 that continues for generations. Oftentimes, parents are […]

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Sibling Rivalry Complicates Estate Planning

When a parent dies, siblings may battle for years over their inheritance. For example, a sibling of the late guitarist Jimi Hendrix and a company affiliated with another sibling recently reached a tentative settlement in a suit involving the Hendrix estate. Their father, Al Hendrix, died in 2002 and left Jimi Hendrix’s estimated $80 million estate under the sole control of one of the siblings. Jimi Hendrix died without a will in 1970. For estates of all sizes, many of these sibling battles can be avoided, estate lawyers and financial advisers say. That can require more than simply writing a will. Leaving detailed instructions regarding jewelry and other family valuables, appointing a professional fiduciary as executor and communicating your wishes before death are a few ways to prevent your heirs from battling it out once you’re gone. Battling over a $15 watch Fights over Mom’s or Dad’s possessions—whether it is a prized watch, lucky five iron or wedding ring—is a common area of conflict in estate settlements, advisers say. Even if the object isn’t of great financial value, the emotional attachment can make it priceless in the eyes of heirs. Parents should anticipate that heirs may have sentimental attachments to certain objects, and they should plan ahead to smooth over conflicts and right any perceived wrongs. Michael Wernersback, regional estate-settlement manager for Wells Fargo Private Bank in Bay St. Louis, Miss., recalls a particularly ugly example of two sisters who fought over their late mother’s jewelry—specifically a $15 watch […]

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Life Plans

In life, you make many plans and probably have:

• Marketing plans
• Business plans
• Financial plans
• Retirement plans
• Vacation plans

But, do you have an estate plan?

Estate Planning

Call today at (479)717-6300 to set your free 30 minute appointment.

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Estate Planning: Getting the Conversation Started

A trust is created to avoid conflicts that all too often tear even the most close-knit families apart. Often, the issue isn’t even money.

Source: Estate Planning: Getting the Conversation Started

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Financial Advisor IQ – The Best Estate Plan Is Worthless If It Can’t Be Found

Do your clients hide documents a little too well for their own good?

Source: Financial Advisor IQ – The Best Estate Plan Is Worthless If It Can’t Be Found

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Trusts

Who should have a revocable trust or irrevocable trust?

• Anybody that wants to avoid probate (but there are other ways too…)
• Anybody that is receiving certain government benefits and is expecting an inheritance or settlement
• Anybody with young children (say under 30) and want to continue to control the money.

What is a Trust?

A trust is a “fictional” legal person that holds title to your property.  The trustee controls decisions for the property in the trust.  If you are confused, then I can’t blame you.

Think of a trust as a bucket that you put your stuff into.  Then somebody, called the trustee, has control over the stuff in the bucket.  Later the bucket gets poured out to the people you name in the trust.

A revocable trust may be dissolved during the settlor’s lifetime by the settlor.

An irrevocable trust continues to exist until the termination conditions spelled out in the trust are met. It is possible to set these up to where property can be exchanged in and out of the trust, but the trust itself cannot be revoked or modified by the settlor.

Why have a trust?

• Do you want to avoid probate?
• Do you want to minimize estate tax?
• Do you want your assets protected if you can’t protect them?
• Do you want to spread out your gifts to your children until they are more wise and mature?
• Do you want to continue to have control over your stuff?
• Do you want to protect your stuff from a spouse’s next spouse and their children?

DeWitt Law Firm, Estate Planning

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Special Needs Planning

Who Needs to Do Special Needs Planning?

• Anybody that receives or is about to receive public benefits
• People that have loved ones with an obvious need
• Anybody that may receive public assistance after a settlement
• People with needs that are about to receive an inheritance or settlement

What is Different about Special Needs Estate Planning?

People with special needs need special planning in order to qualify for, or to continue to qualify for public benefits.  Too much money on hand can be a bad thing unless it is protected in certain ways.

Also, you need to carefully consider a guardianship for people with needs.  If they are over 18 and cannot manage their own affairs, you need to look into a guardianship.

When Should You Do Planning?

• When you have a loved one that receives or is about to receive public benefits
• When there is an obvious need
• When you may receive public assistance after a settlement
• When you are about to receive an inheritance or settlement

Why do Planning for People With Special Needs?

1. Without special handling of the money, an inheritance can wipe out a person’s public assistance benefits
2. People may need somebody to manage their affairs for them with a guardianship

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Guardianships

Who should nominate a guardian?

• Anybody that is concerned about who will care for them.
• Anybody that has children under 18.
• Anybody that has a special needs child that cannot make their own decisions.

What is a guardianship?

A guardianship is a court decision appointing somebody to manage the affairs of a person.

When should you nominate a guardian?

If you have young children, very soon.
If you are worried about who cares for you, even sooner.

Why nominate a guardian?

1. Do you have a plan in place that will safeguard your children if you can’t make it in time to pick them up from a daycare or school?  Did you know that they may have to call the authorities if you are too late?
2. Do you have a plan in place in case you don’t make it home in time for the sitter.  Will the sitter end up having to call the authorities?
3. Do you know what will happen to the house and money if your spouse should not make it?  This is especially true in a marriage where the house was owned by one spouse before the marriage.
4. Did you know that without legal documents, you can’t make medical or financial decisions for your spouse legally? This may place you and your children at risk if your spouse is incapacitated even for a short period of time.
5. If you and your spouse can no longer care for your children, who will raise your children?

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Mid-America Accessibility Summit

Having a great time meeting all these great people.





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Powers of Attorney

Who should have a power of attorney?

Everybody.  Seriously.  You never know when fate will strike and you can’t make decisions for a few days.
People going to boot camp should have a temporary power of attorney so somebody can pay their bills while they are away.
People going to a nursing home should also have a power of attorney.

What is a power of attorney?

A power of attorney means that you have signed a paper giving somebody else the right to make decisions and sign for you.  No matter what you have heard, they do not remain active past death.

When should you have a durable power of attorney drawn up?

Now.  As soon as possible.  Like insurance, if you have it you’ll probably never need it…

Why have a power of attorney?

• Who do you want making decisions if you are unable?
• What kind of decisions do you want them to make?

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How Much Does Estate Planning Cost?

Here is the truth, estate planning attorney fees will seem high, but you need to compare them to the cost of NOT planning before you make a decision.  Below are some representative numbers for this firm.

How Much Does Estate Planning Cost?

How much do I save by making an estate plan?

If you have an estate worth say $300,000, it could cost you up to $18,000 (or more) to have that estate settled with only a will or without a will.  This isn't including money spent by family or people close to you to go to court to get things like a guardianship or permission to make medical decisions for you.  This isn't including estate taxes, paying off creditors, donations, final expense, and so forth.

How much does a lawyer charge for a will?

A basic will is going to start around $600.  But a basic will is just that, very basic.  First time marriage, few children, easy distribution, no tax worries, etc.

How much does a revocable living trust cost?

Like the will, the trust will start around $600 for a basic trust.  Again, first time marriage, few children, easy distributions, no tax worries, etc.

How much does a living will cost?

They are free.  Just go to your doctor's office or hospital and ask for one.  Follow the instructions, have the witnesses sign it, and then file it with the hospitals and doctors.

How much does a will and trust cost?

When you get both documents together, the price actually drops some because the information for both documents is the same...

How much does a complete estate plan cost?

A complete estate plan, including medical estate planning and handling Medicaid and elder law worries starts around $1,500.  This does not include deeds or moving assets to any trusts created.  The pricing for that depends on how much is done.  Also, complete nomination of temporary and permanent guardians for your children is extra.

What is the Price of NOT Planning?

Your Estate Plan

If you have not made your own estate plan, the state has written one for you and you might not like the results.  Your plan stands in place of the default state plan and you get to make the decisions.

Estate Administration

Estate administration will be done by a court appointed personal representative, not necessarily who you would have picked

Final Arrangements

Your final arrangements will be made by somebody else.  They might not be what you wanted.  For example, burial vs. cremation, flowers vs. donations, wake vs. viewing, etc.

Estate Settlement and Probate

Your estate will be settled at around 5.5% to 6% of its value at a minimum.  Take that $300,000 estate and there is $18,000 gone that won't go to your children.

Medical Decisions

Final medical decisions will have to be made by a guardian.  A guardian is appointed by the court.  The court process can cost from $1,500 upwards.

Organ Donation

Unless you have otherwise made your choices known, you won't be a donor.

Estate Taxes

If you are one of the fortunate few who have more than $5.43 million (in 2015), you need to worry about minimizing estate taxes.

Guardians for Your Children

Finally, do you want to be able to name who you want to raise your children, or do you want people to fight over it and drag your children through a long court struggle.

I serve people in all of Northwest Arkansas including Fayetteville in the areas of probate, estate planning, and  elder law.