Strategic Planning For An Aging Population

We are faced with a global revolution of longevity and significant wealth is controlled by seniors. In the U.S., seniors control approximately 77% of the country's wealth. Those financial professionals who have a grasp of key legal concepts affecting this segment of the population will be better able to serve their clientele. Today, I will discuss the following estate planning and elder law topics: Asset Protection Planning, Medicaid Qualification, Medicare and point out some common mistakes that I see in the estate planning arena.

THE BASICS

Every one of your clients has an estate plan whether or not they know it. Some have taken a proactive approach and retained counsel to create a plan and draft appropriate documents that express their wishes. The rest rely on the laws of the state in which they reside. The laws of intestate succession will determine who will inherit the assets. The court system will appoint an executor, trustee and guardian of minors or those who are incapacitated. Once a beneficiary reaches the age of majority (as dictated by state statute - normally at age 18 or 21), he or she will have full control over any inheritance received.

Each person needs to have the following basic documents in order to avoid this result: Will, Power of Attorney, Advance Health Care Directive and HIPAA Release Document. Since most of you are familiar with these documents, I will spend just a little time describing these basic estate planning concepts.

Will - Through a will, you can leave assets to whom you want, when you want, handled by the person you want and at the least possible cost. In some states, it is advisable to avoid probate and this can be accomplished by establishing a revocable living trust. In other states, the probate process is not so onerous; therefore, a will suffices. If a client owns property in more than one state, a living trust may be appropriate. A living trust is NOT an asset protection vehicle. There are irrevocable trusts that can be established for that purpose. Tax planning objectives can be accomplished through setting up credit shelter or bypass trusts in a will; however, that topic is beyond the scope of today's lecture.

Power of Attorney - If a person is no longer able to make decisions for himself or herself, someone needs to be able to take over the responsibility for the person's affairs. The person might be unable to make financial decisions or medical decisions, or both.

If the person has a valid Power of Attorney in effect for financial, medical and other decisions, and the individual named in it is able to act, it usually is not too difficult to have the individual begin to act.

Problems arise when the person has done no advance planning, and thus has not executed a Power of Attorney. Problems also arise if the document is older, and the individual given the power to act is no longer able or fit to act, or if the person has moved from one state to another.

If no one has the legal authority to act, for example from a correctly executed valid Power of Attorney, the courts must be asked to appoint someone to act. This type of court proceeding is called a guardianship.

A guardianship is a very serious proceeding, sometimes requiring more than one court hearing. Notice must be given that someone is asking the court to appoint a guardian. The person who allegedly needs a guardian has an attorney who may be appointed by the court to help him or her through the proceedings, and may be at the court hearing unless the Court decides that this is not necessary. The person also has the right to present witnesses, and to cross examine witnesses.

Guardianship can be an expensive and complicated process. It is easy to avoid if proper planning is done while a person is still able to make his or her own independent decisions. Having properly drafted and executed Powers of Attorney and Living Wills now can avoid the necessity for guardianship later.

We often refer to the Financial Power of Attorney as a General Durable Power of Attorney. Durable means that it remains effective after the onset of a disability. Most Powers of Attorney drafted by my office are effective immediately upon execution. However, an option is a springing Power of Attorney which takes effect only upon disability. The person acting under the document is referred to as either an "agent" or "attorney in fact" depending upon the laws of the state in which you reside.

Advance Directive - Any written instructions, recognized by the laws of the state in which you live (usually a Living Will or Health Care Power of Attorney or both) which appoints an individual to make medical decisions on your behalf. The document may also describe the types of health care the individual wants or does not want if he or she is not able to make health care decisions.

If you have not given someone the legal authority to act, then your loved ones will not have direction as to your wishes. Furthermore, they may need to resort to the courts in order to obtain the authority to make decisions on your behalf.

HIPAA - On April 14, 2003, the privacy provisions of the Health Insurance Portability and Accountability Act, affectionately dubbed HIPAA, went into effect. The regulations have caused much turmoil amongAcovered entities@ (e.g., doctors, hospitals, nursing home facilities, and insurance companies), as they are now. For the first time, health care providers are subject to federally imposed sanctions and monetary fines for unauthorized disclosure ofAprivate health information.@ The law has caused many providers to clamp down on the release of medical records and other health care information to anyone other than the patient. By the way, many clients tell me that they have already signed "HIPAA papers" at their doctor's office. Generally, those releases simply authorize the physicians to disclose medical records to the insurance provider so that they can get paid. In any event, that release would be effective only with respect to that particular medical provider.

While the drafters of this federal statute were well intentioned in attempting to prevent the unauthorized release of private medical information and records, this restriction on access to medical information and records has made it more burdensome, and sometimes impossible, for the agents under Advance Health Care Directives/ Durable Power of Attorney for Health Care and the trustees under Revocable Living Trusts to carry out their duties. For example, the progression of Alzheimer=s Disease had made it impossible for an elderly woman to continue to manage her financial affairs and so family members sought to have the successor or incapacity trustee appointed under the woman=s Living Trust take over management of her trust assets. However, due to the lack of the proper HIPAA documentation authorizing the release of the woman=s protected health information, the family was not able to get her doctors to issue a letter certifying the elderly woman=s mental incapacity. This was because the doctors felt that providing a certification letter without a HIPAA Authorization would violate the provisions under HIPAA. This placed the family members and the successor trustee in aACatch-22@ B the woman did not have the mental capacity to execute a HIPAA Authorization form authorizing the release of her medical information, but without the form the doctors would not issue letters certifying the woman=s incapacity so that the successor trustee could take over the management of her affairs. This dilemma forced the family members to petition the Probate Court to have the successor trustee appointed. The delay and cost of this probate court proceeding could have been avoided easily had an executed HIPAA Authorization form been available to give to the doctors.

As part of our estate planning "package" we suggest that our clients execute a HIPAA Authorization form.

The following are a few of the common mistakes that I routinely see in estate planning documents:

1. Inadequate Power of Attorney

Some may be tempted to download a power of attorney from the internet. We recommend against it. Anyone going to the Internet and typing "power of attorney" will find any number of websites with standardized forms for sale or right there for download. It sounds perfectly easy, but don't be misled.

The boilerplate power of attorney documents found on the internet and used by many attorneys often do not cover the very specific issues you may have in mind. Medical powers of attorney are not always included, nor are clauses about gifting, real estate transactions or the ability to make asset transfers to affect Medicaid eligibility. If the appropriate clauses are not included, a guardianship proceeding may be necessary to that the agent may take action that needs to be taken.

2. Inappropriate Tax Allocation Clause

One of the most important provisions in a will is the tax allocation clause, which allocates a decedent's estate or inheritance tax burden among the estate beneficiaries by specifying the source or fund from which the death taxes are to be paid. The allocation of taxes among beneficiaries of an estate is generally governed by the terms of a testator's will, a nontestamentary instrument passing nonprobate property or the default rules under applicable state law. Despite the importance of tax allocation clauses, which can dramatically alter the dispositive provisions of a client's estate plan, many practitioners rely on general "boilerplate" tax clause provisions for all clients without fully examining the impact that such clauses have on the plan. Generally, a tax clause contained in a will charges the estate's tax burden to the residuary estate or apportions the tax burden among the estate beneficiaries in proportion to their share of the estate tax liability. Often, a "boilerplate" tax allocation clause commonly found in wills charges the testator's residuary estate under the will with the burden of all taxes imposed on both probate and nonprobate property. An example where a tax allocation clause resulted in a presumably unintended result involved the estate of Charles Kuralt. His 1994 will provided that all estate, inheritance and other death taxes imposed by reason of death would be paid, without apportionment, by his residuary estate. The residuary beneficiaries included his surviving spouse and two children. Shortly before his death, he prepared a handwritten codicil (which was ultimately admitted to probate) that devised his Montana ranch to his longtime companion. Since the terms of Kuralt's will provided that the taxes were to be paid from the residuary estate, the residuary beneficiaries (his wife and kids) bore responsibility for payment of taxes attributable to the property that passed to the companion.

3. Failure to establish Special Needs Trust

When doing your estate planning, consider establishing a special needs trust if one of your potential beneficiaries is entitled to government benefits such as SSI or Medicaid. Direct receipt of funds will cause the individual to be disqualified which means that the funds will need to be spent down before requalification for the benefits. This result is particularly harmful for those who incur substantial medical expenses each month.

By way of example, consider a situation in which Mom and Dad have three children, one of which is disabled. The parents are killed together in an accident and don't have wills. In most states, the children will be entitled to receive the inheritance in equal shares. Since the disabled child's share is not diverted to a special needs trust, the result will be disqualification from the entitlement program that he or she may have been otherwise eligible until the funds are spent.

Another situation that I have handled involved a client in a nursing home, the costs of which are being covered by Medicaid. A family member passes away, leaving the ill person an inheritance. Again, the ill person is disqualified from Medicaid. This means that he or she must pay the nursing home bill directly (at a rate of $5,000 to $9,000 per month - depending on the locale) until only $2,000 remains.

4. Failure to plan for state estate tax

Since the state death tax credit was repealed at the Federal level through the 2001 Tax Act, many states have imposed their own estate tax. (You need to know that an estate tax differs from an inheritance tax. Some states have both and some states have neither.)

The planning focus is often on the Federal estate tax and many erroneously believe that tax planning is no longer necessary in light of the current Federal estate tax exemption of $2,000,000. The state estate tax can be avoided in many cases at least for married couples. Therefore, your clients need to take a proactive approach with respect to this issue.

5. Failure to update documents on a regular basis

When important changes occur in our lives, we need to revisit our wills and beneficiary designations to make sure that our current intent is expressed. Major events that may motivate you to take a look at your will are: 1) Marriage 2) New Life Partner; 3) Divorce; 4) Birth of a Child; 5) Change of mind as to who will inherit your assets; 6) Change of mind as to who should handle your estate after your death.

Many have failed to update their documents since enactment of the Economic Growth and Tax Reform Reconciliation Act of 2001 (EGTRRA). This mistake has caused many surviving spouses to unnecessarily incur state estate tax liability at the death of the first spouse. Most states that have passes estate tax legislation require the computation of the State estate tax in accordance with the Federal estate tax in effect through 12/31/2001. In other words, the exemption for state estate tax purposes is be $675,000.

a. Where the share/exemption plan was drafted solely with respect to the Federal Estate Tax exemption or even with respect to the FET exemption and the state death tax credit or deduction may result in State Estate Tax Liability, depending on the terms of the exemption share trust.

b. Example: John and May Jones have accumulated an estate with a value of $2,000,000. In 1996, they engaged an attorney to plan their estate. They divided their assets equally and the plan was designed to take full advantage of their respective Federal exemptions which was $600,000 at that time. If either spouse, passes away this year, the credit shelter trust may be funded with $1,000,000 which will result in a current state estate tax liability.

MEDICARE: WHAT YOU NEED TO KNOW

Medicare is the largest health insurance program in the country and is administered by the Centers for Medicare and Medicaid Services (CMS). Medicare is an entitlement program for which an individual can qualify if he or she falls into certain categories. Under the program, 41 million Americans are insured and $213 billion is spent on care.

Medicare covers acute care which is interpreted to be care that is reasonable and is necessary to diagnose or treat an illness or injury. It is does not cover preventative or chronic health care.

Medicare Part A covers hospital care, skilled nursing facilities, home health agencies and hospice.

The major point that I would like to make with respect to Medicare Part A is that there are serious limits with respect to skilled nursing facilities since Medicare Part A is not intended to cover palliative care. Medicare will pay up to 100 days of skilled nursing care per "spell of illness". The patient is not responsible for any co-pay the first 20 days, however, there is a $124.00 a day co-pay during days 21 - 100 which a may be covered by a medigap policy. In order for Medicare to pay for the above the following requirements must be met:

·Enter nursing home no more than 30 days after a hospital stay that lasted at least 3 days (not counting day of discharge)

·Care in nursing home for same condition as hospitalization

·Skilled level of care

A skilled level of care is care ordered by a physician and delivered by or under the supervision of a professional and is delivered on a daily basis. Few nursing home residents receive this level of care and coverage of care will end when the facility determines that the patient is no longer receiving a skilled level of care. However, coverage is often terminated prematurely for care received at a skilled nursing facility. Medicare coverage should be available if skilled care is needed to maintain the patient's status. The standard is not progress toward recovery. In addition, Medicare coverage should be available if treatments require skilled supervision even if a skilled nurse does not carry out the treatments. Once a facility determines that benefits should no longer be available, a notice of non-coverage is issued by the nursing home; however, the nursing home bill can be sent to Medicare despite the assessment of the nursing home. The patient should request review by a fiscal intermediary, which is available at no cost. The client has the right to appeal to an administrative law judge and has subsequent appellate rights as well.

Hospice is an underutilized benefit. The benefit is available whether offered at a hospice care facility or at a hospital, nursing home or residence. The benefit covers physician services, nursing care, drugs for symptom management and pain relief, homemaker and home health aide services, counseling and spiritual care and bereavement services, and a one-time educational consult by hospice physician to terminally ill patients not yet in hospice. The hospice care benefit is designed to make the patient more comfortable and is not designed to offer a cure. In order to obtain hospice care benefits under Part A the individual must (1) be entitled to Part A, (2) have a certification of life expectancy of less than 6 months (after the initial certification period, unlimited number of 60-day periods), (3) sign a statement electing hospice benefit and agreeing to forego curative treatment since the patient will receive only palliative care.

It should be noted that the patient can revoke the benefit and re-elect it later. The individual is not required to be home bound, and may continue with their personal physician.

Medicare Part B covers the following:

·"Out patient" care

·Office visits

·Ambulance transportation

·Physician visits to hospital

·Out patient therapies prescribed by physician

Medicare Part A recipients are automatically enrolled in Part B unless they opt out. The monthly premium is $93.50. You must enroll once you become eligible or a penalty will be assessed. For example, a five year delay will result in an increased 50% premium.

MEDICARE PART C

Medicare Part C was enacted as part of the Balanced Budget Act of 1997. It was designed to keep Medicare solvent through 2007 and provided expanded alternatives to traditional Medicare. Medicare Part C plans (known as Medicare Advantage Plans) are actually Medicare HMOs that provide basically the same coverage as the original Medicare program with the exception that the participant is restricted to network doctors and hospitals. Some Medicare Part C plans may offer additional benefits such as eyeglasses.

The factors to be looked in determining whether to enroll in a Medicare Advantage Plan are:

· Accessibility of doctors or hospitals

· Extra benefits

· Cost (premiums and co-payments and deductibles)

· Quality and reputation

· 11% of Medicare recipients are enrolled

ASSET PROTECTION STRATEGIES FOR THE ELDERLY IN THE AFTERMATH OF MEDICAID REFORM

I want to spent some time on basic Medicaid concepts. Medicaid is a needs based program (as opposed to Medicare). Some qualify for Medicaid due to their eligibility for SSI. Others qualify since they are in need of long term care. Under this program (which is the focus of this portion of my presentation), the recipient must be age 65 (or older) or disabled or blind and meet certain asset and income limits. The program is a Federal/state partnership. The most recent Federal legislation came into effect on February 8, 2006 under the Deficit Reduction Act. Some states have promulgated regulations pursuant to the law; most have not.

As an elder law attorney, my goals are to establish eligibility for a client, avoid subsequent disqualification and avoid estate recovery.

The qualification rules differ depending upon whether the applicant is married or single.

As a single person, you are entitled to retain a minimal amount of assets. In most states, this threshold is as low as $2,000. There are certain assets that are exempt: Reasonable prepaid funeral, burial plot and headstones, wedding band and engagement ring, personal effect, life insurance policies with a total combined "face" value of $1,500.00 or less.

A Community Spouse is permitted to keep the residence and an automobile as well as the assets that may be retained by a single person. In some states, the IRA or other qualified retirement plan of a Community Spouse is also exempt. The Community Spouse is also allowed to retain the lesser of $101, 640 or 50% of the couple's assets determined as of the first day of the first month of the date of the Institutionalized Spouse's entry into a long term care facility (subject to a minimum of $20,328). This is known as the Community Spouse Resource Allowance (CSRA).

All other assets must be "spent down". One technique is to convert countable assets into exempt assets. For example, a Community Spouse may purchase a bigger home or do home repairs.

When representing a couple, a standard technique is to immediately retitle all of the couple's assets into the name of the Community Spouse and to draft a will under which the healthy spouse disinherits the ill spouse. Then, if the healthy spouse predeceases the ill spouse, at least two thirds of the assets will pass to the couple's beneficiaries - thereby protecting them from being spent on nursing home costs. (Failure of the ill spouse to take the "elective share" - which is 1/3 in most states - will be characterized as an uncompensated transfer of assets.) In most states, a prenuptial agreement will not protect the well spouse's assets.

The most well publicized change in the law is that the "lookback period" for uncompensated transfers has been increased from three years to five years. Before enactment of the Deficit Reduction Act, a technique known as "half a loaf" transfers was utilized to protect assets. As you will see in a moment, that technique is no longer available. However, there are two new strategies that are being tried throughout the country - the "reverse half a loaf" and "promissory notes".

PROTECT FAMILY ASSETS WITH REVERSE HALF A LOAF

DEFICIT REDUCTION ACT: RESTRICTIONS ON GIFTING

The Deficit Reduction Act (DRA), which took effect on February 8, 2006, eliminated many of the asset protection strategies available under prior law. We previously counseled our clients on transfer techniques which allowed them to save up to one half of their assets even after entering a nursing home.

Under the "half a loaf" strategy, we would counsel a Medicaid applicant to give away approximately half of his or her assets. It worked this way: before applying for Medicaid, the prospective applicant would transfer half of his or her resources, thus creating a Medicaid, "penalty period" or period of ineligibility. (Congress has established a period of ineligibility for Medicaid for those who transfer assets. This period of ineligibility is determined by dividing the amount transferred by what Medicaid determines to be the average private pay cost of a nursing home - which is deemed to be $6655 in the State of New Jersey, every state has its own divisor.) The applicant who was often already in a nursing home, then used the other half of his or her resources to pay for care while waiting out the ensuing penalty period. After the penalty period expired, the individual could apply for Medicaid coverage.

Under prior law, the penalty period began on the first day of the month of the transfer. Example: Mrs. Smith had savings of $66,555. The average private pay nursing home rate in New Jersey is $6655 per month. When she entered a nursing home in August of 2007, she transferred $33,278 to her son. This created a 5 month period of Medicaid ineligibility ($33,278 )$6655 = 5). During these 5 months, she used the remaining $33,277 plus her income to pay privately for her nursing home care. After the five month Medicaid penalty period has elapsed (January 1, 2008), Mrs. Smith would have spent down her remaining assets and be able to qualify for Medicaid Coverage as of January 1, 2008.

However, the DRA has severely limited Medicaid eligibility for residents of long term care facilities who have transferred assets during the prior five years.

Now, the period of ineligibility for an asset transfer begins the later of the date of the transfer or "the date on which the individual is eligible for medical assistance under the State plan and would otherwise be receiving institutional level care described in subparagraph (c) based on an approved application for such care but for the application of the penalty period,..."

Therefore, under the above example Mrs. Smith's period of ineligibility would not begin until January 1, 2008. This means that she would be required to private pay (presumably out of the gifted funds) from January 1, 2008 through May 31, 2008 which would result in no savings whatsoever.

THE REVERSE HALF A LOAF: LEGAL BASIS

A careful study of the new law reveals at least one asset preservation opportunity that may be achievable through the use the "Reverse Half a Loaf" strategy. (The application of this technique is described below in great detail.)

The legal basis is found in HCFA Transmittal 64.

Section 3258.10C provides "...a penalty for transferring an asset for less than fair market value is not assessed if... "All of the assets transferred for less than fair market value have been returned to the individual..." The section provides "guidelines" which state "When only part of an asset or its equivalent is returned, a penalty period can be modified but not eliminated. For example, if only half the value of the asset is returned, the penalty period can be reduced by one-half."

CASE STUDY

Mrs. Jones is a widow with 2 children. She unfortunately has dementia and entered a nursing home a week before her children visited our office for a consultation.

Financial Picture:

Cost of Facility: $8,000 per month.

Income: $1,345 per month

Assets: $66,555

Under this scenario, Mrs. Jones has a monthly shortfall of $6,655 per month which means that her assets will be depleted in approximately 10 months without engaging in asset protection planning.

LEGAL ANALYSIS: Our recommendation is to make a gift of $66,555 (resulting in a 10 month penalty period) to Mrs. Jones' two children which leaves her with no assets. Applying the DRA to this scenario. Medicaid will begin to assess a period of ineligibility for the gift when her assets are less than $2,000.

At this point, our office submits a Medicaid application on Mrs. Jones' behalf, which will be denied on the basis of the gift. Her children will then retransfer $33,278 to Mrs. Jones which shortens the penalty period by a 5 month period. Mrs. Jones would be ineligible for benefits for a period of 5 months. During this period, she will utilize her fixed monthly income of $1345 per month and the "retransferred" funds to pay the cost of the nursing home. At the expiration of the five month period, we will submit another Medicaid application and hope for a favorable decision.

The potential savings is approximately $33,278. The foregoing example is based upon minimal assets. The greater a family's assets, the potential exist for greater savings.

While we believe that The Reverse Half a Loaf is a legally sound concept; it remains largely untested in many states. For those who face the loss of all of a significant portion of their assets to the cost of long term care, we believe that this new technique is worth a try!

PROTECT FAMILY ASSETS WITH A PROMISSORY NOTE

THE PROMISSORY NOTE: LEGAL BASIS

Another asset preservation opportunity may be achievable through the use the use of a specially designed promissory note under which the parent will make a loan to children of a portion of the assets. (The application of this technique is described below in great detail.)

The legal basis is found in Section 6011 (c) of the DRA which provides that the purchase of a note, or any loan or mortgage, will be treated as a transfer subject to a penalty, unless the following conditions are met: (1) The repayment terms must be actuarially sound; (2) Payments must be made in equal amounts during the term of the loan with no deferral of payments and no balloon payments; and (3) The note, loan or mortgage must prohibit cancellation of the debt upon death of the lender.

In designing the note, we must first focus on the amount that the child will pay to the parent on a monthly basis since we have taken the conservative position that the parent's total income should not exceed the Medicaid reimbursement rate or the parent may be disqualified from receiving Medicaid benefits. (The Medicaid program pays each nursing home an amount for each of its residents who receive Medicaid benefits. This amount is known as the Medicaid reimbursement rate.)

Both the Reverse Half a Loaf and Promissory Note strategies will no doubt be subject to future litigation.

OTHER TECHNIQUES

By the way, transfers to a spouse or transfers to a blind or disabled child are exempt transfers. In addition, transfer of a residence to a child under age 21, to a caregiver child or to a sibling with an equity interest in the property who has resided in the home for at least one year are also exempt transfers.

The DRA also limits the amount of noncountable equity in a residence to $500,000; however states can increase this amount to $750,000. The limit does not apply if any of the following are residing in the home: spouse, child under age 21, disabled or blind child.

A technique that had been used in the past was to protect the funds in excess of the CSRA amount by converting them into a permissible income stream through purchase of an immediate annuity for the Community Spouse. The new law provides that the following elements must be satisfied: 1) irrevocable; 2) non-assignable; 3) actuarially sound (term certain no longer than the actuarial life expectancy of the community spouse); 4) equal payments/no balloon; 5) state must be named the primary beneficiary or the annuity must be purchased with funds in a retirement account. This technique has been accepted in some states. However, other states take the position that the annuity is countable since it is saleable on the secondary market. This issue will certainly be the subject of litigation.

The DRA allows Continuing Care Retirement Communities (CCRCs) to require residents to spend down their declared resources before applying for medical assistance. In addition, provisions in CCRC contracts restricting transfers of assets are enforceable. The CCRC entrance fee may be considered an available resource.

Another provision in the DRA worthy of note is that the funds utilized to purchase a life estate in the home of another by a Medicaid applicant will be considered to be a countable assets unless the purchaser resides in the home for at least one year after the date of the purchase. However, if this standard is met, the funds will be protected.

Another technique that is being used to protect assets is to compensate children for services performed by them. The services could include financial management, direct care, care coordination or even running errands. The agreement must be written and the services performed must be documented. The payments would constitute taxable income to the recipient. If the income is in excess of $1,500 in a year, withholding requirements for Social Security and Medicare would apply. FUTA withholding comes into play if the quarterly income is in excess of $1000.00.

DISQUALIFICATION

It is very frustrating when a client becomes qualified for Medicaid and subsequently receives an inheritance or other sum of money (such as through a tort recovery) which renders them ineligible for benefits. Any individual who has a family member receiving benefits should review their estate planning documents to make sure that they have not named that person as a direct beneficiary.

ESTATE RECOVERY

A Medicaid recipient who dies owning property may be subject to estate recovery in most states. Each state has its own definition of what property is subject to this process. Some states have limited estate recovery to those assets that are part of the probate estate. Others have an expanded concept which applies to other property as well including life estate interests and the like. The two most common circumstances that I see are: 1) A single client owns a home and becomes eligible for Medicaid since the liquid assets are below the asset limit. A liquidation agreement is executed under which a commitment is made to sell the home. The client passes away before the home is sold, having collected significant benefits. The state will have a lien on the property. 2) A person becomes entitled to an inheritance which is not received until after the person passes away. These funds are subject to estate recovery. By the way, an executor is responsible for identifying the estate recovery issue and will be liable if assets are distributed to beneficiaries prior to satisfying the lien even if he or she is not aware of the issue until after distribution of the assets.

The laws affecting seniors have become increasingly complex and it is up to the client to seek appropriate advice at an early date. I hope that you have found this information to be worthwhile.