Elder Law Web Hotline

Welcome to the Elder Law "Web Hotline"!

To assist baby boomers who are caring for their parents with the numerous and complex elder law challenges, GDGC is pleased to announce the launch of our Elder Law Web Hotline as a public service.  Every week, GDGC will post a question posed by a member of the community along with our attorney’s answer to the legal problem.  Please scroll down for this week's Q&A.

Questions can be submitted by clicking here or e-mailing directly to WebHotline@genserlaw.com.  Please indicate your name and hometown.  Only first names will be posted.

We receive hundreds of questions from baby boomers and family members regarding crisis planning and how to protect their family’s assets when long term care is needed.  With the speed and easy access to the internet via computer or cell phone, we are encouraging those with spouses, elderly parents or other loved ones to send us their specific questions regarding any Elder Law issues.    For more information, click here to see GDGC's Web Hotline press release.


Q:  My parents have been self pay for their nursing care for the last 10 years.  They have spent over $700,000 and have about $300,000 left. The money is in trust funds to their four children. Is there a way to prevent them from spending their last bit of money on their care?  They both are in full nursing home care at this time.

-- Mary

A:  The answer depends largely on the kind of trust your parents have.  If your parents have a revocable trust, which means they have access to principal and income from the trust, then they can save approximately half of the remaining $300,000 by promissory note planning (see Web Hotline Question from March 8th).  They should do this planning immediately as time is money when it comes to Medicaid planning and every month that passes will mean that less than half can be protected, to the tune of about $11,000 per month.

If the trust is irrevocable, then the assets in the trust may be protected, depending on when the trust was established and what rights your parents have to the principal.  If the trust was established five (5) or more years ago, then the look-back on the trust assets will have expired and those assets will be free and clear to pass to the four children, provided your parents had no right to the principal.

Q:  My elderly mother has about $200,000 in savings and rents her apartment.  She has just finished rehab and we have been advised that she will need to stay long term in the nursing home.  Is there any way we can protect some of her assets or is it too late?

-- Steve L., Dix Hills

A:  It is not too late.  You will be able to protect about one-half of your mom’s assets, even though she is already in a nursing home, by planning with a promissory note.

The promissory note strategy works as follows:  your mom will transfer all of her funds, less the permissible resource allowance (currently $13,800) to you (and/or other individuals).  You will sign a note promising to pay back approximately one-half of the monies transferred (the loaned assets), plus interest, to your mom on a monthly basis.  The monthly amount to be paid back to your mom will be calculated using the nursing home daily rate less your mom’s income.  Upon payment of the monthly amount to your mom, she will write a check for the same amount to the nursing home.  The note repayment amount covers payment to the nursing home during the penalty period (number of months) incurred by the transfer of the other one-half of the assets (the gifted assets).  The loan payments are calculated to end at the same time that the penalty period on the gifted assets ends, thereby making your mom Medicaid eligible on that date.  You will keep one-half of the assets, approximately $100,000 (the gifted assets) free and clear.

Q:  My Dad put most of his money into a trust in September of 2005.  We recently transferred title to his Florida condo to the trust.  Dad is now living with my sister in New York and has virtually no assets.  He is applying for Medicaid Home Care benefits.  The condo in Florida is for sale and when we sell it, the cash from the sale will go into the trust.  Would Medicaid require that the “new” money (from the sale of the condo) be spent down before paying for nursing home care?  If so, can we protect part of that “new” money by purchasing a pre-need funeral trust?

--    Sandy

A:  Your dad will be financially eligible for Medicaid Home Care benefits as long as his total assets are below $13,800 (the 2010 resource allowance).  There is no look-back period or penalty period for Medicaid Home Care benefits.  However, if your dad needs Nursing Home care, he will have a penalty period (and not be eligible for Medicaid nursing home benefits) for a period of time after he goes into a nursing home based on the transfer of the condo to the trust.  The penalty period will depend on the value of the condo and will only start to run after he is in a nursing home and below the resource allowance (having spent any other assets down to below $13,800).  If five (5) years pass from the date he transferred title of the Florida condo to the trust, then that transfer will be free and clear from any penalty period.
The above assumes that the trust is irrevocable.  If the trust is revocable, the assets are fully available to your dad and will not be protected in any way.
A pre-need funeral trust can be set up any time (even after nursing home admission) and is a permissible expense, for which there is no penalty period.

Q:  My mother is 85 years old.  I live with her and am her caretaker.  In December, it will be 2 years that I am caring for her in her home.  I have heard that I may qualify as a “caretaker child”.  If she needs to go to a nursing home, can title to the home be transferred to me?  Will there be a penalty period? Also, if I get a home health aide for my mom through the Medicaid Home Care program, will that negate my status as a caretaker child?  If Medicaid provides assistance in the home, will they have a claim on the house?

-- Susan, Amityville

A:  Any child who has lived with a parent in the parent’s house for two (2) years prior to the parent needing nursing home care will qualify as a “caretaker child”.  As a caretaker child, the deed to the parent’s house may be transferred to that child without any penalty. The law provides a special exemption for a caretaker child on the premise that the child is providing some level of care or assistance to the parent by virtue of living together.  This is true whether or not the caretaker child actually provided any care to the parent.  If a home health aide is in place to care for your mom, it will not negate your status as a caretaker child.  You would still qualify for the exemption.  If title to the house is NOT transferred and your mom receives Medicaid benefits of any kind (home care or nursing home), Medicaid may put a lien on the house and will recoup monies paid out on your mom’s behalf, either after she has permanently moved into a nursing home or after she passes away.

Q:  My daughter is 55 years old and has Downs Syndrome.  She lives in a group home and receives SSI and Medicaid benefits.  I want to leave her enough money to live on for the rest of her life but I’ve heard that she may lose her government benefits if I leave money to her.  What should I do?
        -- Ann C., Central Islip

A:  You should establish a Supplemental Needs Trust for your daughter in your Will.  When you pass away, your daughter’s share of your estate will pass into this special trust.  A trustee will manage the trust assets for your daughter’s benefit.  Your daughter can inherit an unlimited amount of money without losing her government benefits so long as the money is held in a Supplemental Needs Trust.  The funds held in a Supplemental Needs Trust are to be used for things that government programs do not cover, such as vacations, computer equipment, purchase of a house or car, modifications to a house (such as ramps or wheelchair accessible bathrooms), special medical or therapeutic equipment and personal care items.  The trustee must pay for such items by making payment directly to the vendor.  Money cannot go directly into your daughter’s hands.  You may also specify who should inherit any remaining trust funds upon the death of your daughter.


Q:  I recently established an irrevocable living trust.  I want to re-title my accounts at the bank into the trust account.  The bank is telling me that I need a Tax ID number for the trust.  Is that correct?

-- Lisa A., Holtsville

A:  If you are the grantor (also known as the creator or settlor) of the trust and if you have the right to receive income generated by the trust assets, then you may generally use your Social Security number as the trust Tax ID number.  By using your Social Security number, you will report interest, dividends and capital gains earned by the trust on your own personal income tax return.  You will not need to file a separate income tax return for the Trust.  You will also pay tax on such income at your income tax rate, rather than at the trust tax rates, which are more stringent and generally result in higher taxes due.  Banks will often not understand this and will routinely request a separate trust Tax ID number (or “EIN”) even when one is not required.  You will need to explain to the bank manager that the trust is a “grantor trust” and should be reported under your Social Security number.


Q:  Ten years ago my mom placed her house into an irrevocable trust to protect it.  My mom is now 87 and can’t live alone anymore.  Can she sell the house before she dies?  Will the money from the sale still be protected?  
       -- Chris B., Smithtown

A:  The terms of the trust will govern the ability of the trustee(s) to sell a house owned by a trust.  A trust agreement will typically specify such things as who may live in the house, whether the trustee can sell the house and what happens to the assets in the trust when your mother passes away.  Typically, the trust would allow the house to be sold, but the sale proceeds would remain in the trust.  The trust could then buy replacement property or simply continue to hold the cash.  Since the trust is irrevocable, the assets held in the trust are protected for Medicaid purposes once the look-back period passes (currently five years).  If the house is sold and the trust then holds the cash proceeds, the cash is protected for Medicaid purposes as well


Q:  If my father is on Medicaid, will he only be able to go to certain nursing homes?

- Susan W., Huntington

A:  No. All nursing homes in New York State accept Medicaid as payment for services rendered.  Further, nursing homes are prohibited by federal law from discriminating against potential residents based upon their source of payment.  There is no such thing as “Medicaid facilities” in New York.  As few people can afford to pay for nursing home care from their personal finances for very long (costs range from $8,000 to $15,000 per month), approximately 90% of nursing home residents in New York State are recipients of institutional Medicaid Benefits.  A resident may enter a nursing home and pay with his/her own funds for their care for a period of time.  When their funds run out and the resident becomes Medicaid eligible, nothing changes as far as the resident is concerned.  The resident still gets the same care, same nurses and aides, same food, same services, etc.  In fact, the nurses, social workers and other staff have no idea who is private pay and who is on Medicaid.  The only possible change is if a private pay resident is in a private room, s/he will have to switch to a double room when Medicaid becomes the payor source.


Q: My mother is 87 years old and receives Medicaid Benefits for doctor visits and medical needs.  She also receives food stamps. She recently moved in with me because she is not capable of living alone due to dementia. I work from 9-5 and Mom is in need of an aide who can administer her medications, prepare meals and perhaps take her to the local senior center a few times a week. Can Medicaid assist me in paying for her care?
      -- Michele R., Wantagh

A: Yes.  Since your mother is already financially eligible for Medicaid benefits, she will simply need to enroll in the Medicaid home health care program.  Medicaid will provide an aide to help your mom with her activities of daily living in her home.  She could receive anywhere from 4 hours a day to 24 hours/7 days a week of care and services.  Your mom’s treating physician will need to complete a form certifying your mom’s medical diagnoses and conditions, listing her medications and describing the things your mom needs assistance with.  The Medicaid Request for Home Care Services must be completed within 30 days of the date your mom last saw the physician and must be submitted to the Medicaid agency within 30 days after it is signed by the doctor.  The Medicaid agency will then send out their own evaluator to determine the number of hours of care your mom will receive.
The home health aide can prepare meals, clean, do laundry and accompany (but not drive) your mom to her doctor appointments, the senior center, the grocery store, etc.  As to her medications, you will need to pre-pour your mom’s medications so that the aide can give them to your mom at the appropriate times.


Q: Can I preserve any assets once my mom is placed in a nursing home?  
         -- Rosanna C., Deer Park

A: You may be able to save about ½ of your mom’s assets by promissory note planning.  One half of the assets are gifted to you and the remainder is transferred to you as a loan that you promise to pay back with interest to mom on a monthly basis.  This loan money is used to cover payments to the nursing home during the penalty period and once it is paid back, mom will be eligible for Medicaid benefits.  You will be able to keep the gifted assets free and clear.