What happens next if the Power of Attorney Resigns?

The resignation of the named agent under a signed Power of Attorney document can create mischief and delay in the management of the daily life and financial affairs of the person who has depended on that agent. Of course, ideally the document names a successor who is still available, and ideally, the agent won’t just drop the ball and leave the principal in the lurch. Ideally, they will turn over the records, the keys, the passwords, and everything that’s necessary. There needs to be an orderly transition.

The next-named agent in the document will want to get a signed Letter of Resignation to show to the various entities s/he has to deal with. It will probably be necessary for this successor agent to sign an Affidavit of Full Force and Effect to provide assurances to the bank, brokerage, etc. that the principal is still alive and the Power of Attorney has not been revoked and is “still in full force” and still has “legal effect.” The bank may not simply allow the successor agent to sign the signature cards on the accounts without signing this kind of document first, but instead of saying what is needed, they may say “this is outdated” or “she has to come in here herself and sign a new power of attorney” or confusing things like that.

Here’s the actual statute, which can be quoted to the financial institution if the successor agent runs into a problem like this:

Section: 46:2B-8.6: Good faith reliance.

6. Good Faith Reliance.

a. Any third party may rely upon the authority granted in a durable power of attorney until the third party has received actual notice of the revocation of the power of attorney, the termination or suspension of the authority of the attorney-in-fact, or the death of the principal.

b. A third party who has not received such actual notice under paragraph a. of this section may, but need not, require that the attorney-in-fact execute an affidavit stating that the attorney-in-fact did not have at the time of exercise of the power actual knowledge of the termination of the power by revocation, the termination or suspension of the authority of the attorney-in-fact, or the principal’s death, disability, or incapacity. Such affidavit is conclusive proof of the nonrevocation or nontermination of the power at that time. If the exercise of the power of attorney requires execution and delivery of any instrument that is recordable, the affidavit when authenticated for record is likewise recordable. This section does not affect any provision in a power of attorney for its termination by expiration of time or occurrence of an event other than express revocation or a change in the principal’s capacity.”

There is also a specific provision in the statute that specifies that the mere passage of time does not negate the validity of a power of attorney. Again, the Affidavit can be signed, and that should take care of this problem.

Call us for advice about fulfilling the fiduciary role under a power of attorney or other estate planning arrangements …….. 732-382-6070

A title search is a useful tool in elder care planning

“My Mother wants to transfer the house to us.” Preserving family assets through transfers of ownership is part of the big picture of elder care legal planning. We look at who owns what, how it’s owned, whether there are any restrictions or liens, and how to cover the costs of care after assets are transferred. From time to time a client has a different ownership interest in the property than what they think they have, and they may not even have a copy of the latest Deed. When a person is buying a house on the market, running a title search is a standard part of the process. When acquiring a house from a parent, people seem to think of it all in a different way. “Can’t you just do a quitclaim deed?”

The parent, as transferor, needs to know what they own so they can know what they are transferring. Also, if they might apply for Medicaid within 5 years, they need to know the potential “Medicaid transfer penalties” that could result from this transfer. It seems obvious, but there may be old mechanics’ liens on the property or liens left over from a program that supplied home renovations to the senior. There may be a reverse mortgage on the property that will have to be refinanced and paid off it title is transferred. The parent may own less than the full interest – perhaps they have just a half interest because the property was retitled as tenants in common with their spouse for estate planning purposes. They may only own the life estate, thinking they still own the entire property interest. There may be an adjacent lot whose title has merged with the title for the home property.

I had one case years ago in which the elderly client lived in the house and truly believed that she owned it 100%. As it turned out, she was one of a number of siblings who had inherited the property from their deceased grandparents, no estates were ever administered and no one had a Will, and the prior generation (her mother and her aunts & uncles) had an array of children as well; it turned out she only actually owned about 15% of the whole. Or as I encountered in a recent case, they may not yet own the property at all — it was left to them as part of the general residue of the estate under the Will of a deceased relative, but the tax waiver was never obtained by the Executor, it’s unknown whether all of  the estate’s obligations were paid, and the property was never transferred to the residuary beneficiary by the Executor.

The family member(s) who are receiving this gifted property also need to know just what they are acquiring, as they now will have an asset on their own balance sheets that needs to be reported under various circumstances such as an application for a loan or for financial aid. The legal rights of the recipient vary based on just what property interest they have acquired.

There are also times that changes have been made to the property by the owner or an adjacent owner, such that an updated survey might be a good idea. Many deeds have been uploaded by the County clerks and can be accessed online – here. A comprehensive title and judgment search can be ordered through a title company and will reveal whether there are other owners or encumbrances that would be an impediment to a transfer or which would create a headache for the transferee.

A real property transfer typically involves a very substantial transfer of assets. Doing the extra steps to confirm the status of the title will go along way to preventing future problems.

 

Call us for advice on elder care asset preservation planning ….. 732-382-6070

The QIT requirements in New Jersey are a minefield – tread carefully!

The Medicaid program that pays for long-term services and supports (MLTSS) for nursing home care, assisted living and home care services is available for applicants whose income is less than the cost of care, as long as their resources (assets) don’t exceed the prescribed limits. We still hear from clients that they’ve been told that “you can never apply for Medicaid because your income is too high,” even though the income is well below the cost of that nursing home. That false information has led people down the wrong path more times than I care to count. The fact is that since 2014, if the person’s monthly income exceeds a certain limit ($2,313 in 2019), s/he can still apply for NJ MLTSS-Medicaid, but the procedure for turning over the monthly income is different (and more complicated) than it is for the basic “categorically needy” Medicaid program. A specific kind of income trust has to be set up by the applicant. It’s called a QIT – Qualified Income Trust. The Trust has to be established before the Medicaid application is filed.

Each month, the entire amount of an income source that makes the income exceed the “income cap” must be deposited into the QIT. Often the applicant will decide to just transfer all income each month into the QIT. From there, the Trustee has to disburse it in a particular way: for the Personal Needs Allowance (PNA); health care premiums; support of spouse if applicable; certain other authorized deductions; and the cost-share payment. Home care participants must turn over the excess income to the State of NJ – they don’t get to use it to pay for their care. Nursing home residents must turn over the excess to the nursing home. QIT Template      QIT_FAQs

So why is this a minefield? Every week we learn of things that went wrong for our clients in the handling of these QITs, leading to denials of applications. Now, I have been told by certain Medicaid supervisors that the applicant should inform the caseworker if they encounter a problem with a QIT (such as “the income didn’t arrive this month”) or should amend the Trust to solve a problem, but there might be many weeks if not months before the applicant even knows who’s handling the application or knows that a problem with the QIT exists. If the repair occurs, there’s no assurance that it will apply retroactively to the time of the application, leaving the nursing home resident and their spouse exposed to staggering unpaid nursing home bills. The mechanism tor report a problem to a caseworker isn’t always known, and it’s frankly unclear that a caseworker even has authority to accept a post-facto revision to a QIT.Further, I have been advised by certain county representatives that there is no obligation on the County Board to alert the applicant that they have spotted a problem with the QIT funding that should be corrected; the applicant may not realize it until months down the road when a Denial of benefits is received.

So, forewarned is forearmed.   Here’s a list of things that regularly occur and regularly cause problems in the application process.  To try to avoid these problems, anyone handling the income of an MLTSS Medicaid applicant needs to be exquisitely familiar with the intricate requirements of the QIT policies, and needs to be extra-vigilant to make sure they are doing it all “by the book.”

#1 The QIT information published by the State never specified whether the net or the gross income amount should be written on the QIT trust document, but if the trust document lists the gross amount of the income rather than the net, the amount of income being deposited into the QIT (the net) won’t match the trust document, and the applicant may be told that the QIT was “incorrectly funded.”

#2 If the income arrived in the checking account late in the month and couldn’t be transferred into the QIT until the following month, the QIT could be “incorrectly funded.”

#3 If income doesn’t arrive at all in a certain month due to an administrative snafu with the payor, the QIT could be “incorrectly funded” or “underfunded.”

#4 If the trustee of the QIT fails to disburse all of the income in the month of receipt, there could be an excess balance sitting in the QIT on the first day of the next month, which could lead to a Denial for failure to handle the QIT properly.

#5 If the Trustee uses the QIT for impermissible expenditures, the QIT may be regarded as invalid.

#6 Some applicants think that they can keep up to $2,000 in the QIT because there is a $2,000 resource limit for MLTSS. This is not correct. The QIT has a specific purpose – handling the income. It isn’t the general discretionary resource which the applicant may retain and enjoy.

#7 The Power of Attorney document might not authorize the Agent to establish any kind of trust, no less a QIT. If the applicant is incapacitated, it may be impossible to establish the QIT without getting a court order, which could take months. This creates a problem in the application process and a request for a hardship waiver needs to be made.

#8 The Judgment appointing a Guardian may not include anything authorizing the Guardian to establish a trust. As with the Power of Attorney problem, it will be impossible to set up the QIT without filing an emergency court petition. Again, this creates a problem in the application process and a request for a hardship waiver needs to be made.

#9  As noted, the excess income above $2,313 has to be turned over to the State as a cost-share by a home care MLTSS recipient. While the application is pending, this money has to just accumulate. There is concern about whether this creates a risk of having excess-resources.

#10 The income is deposited into the applicant’s bank account before it is transferred into the QIT, and auto-debits for insurance premiums are automatically taken out of that account because the applicant hasn’t yet switched them over to the QIT. The person handling the income for the applicant therefore transfers less than the full amount of the income into the QIT, since the insurance premium was already taken out it “those funds” from the other account. The deposit to the QIT therefore doesn’t match what’s written on the trust document. This situation has to be carefully explained in the application,  because if the wrong amount of dollars is transferred into the QIT for dispersal, the QIT may be deemed “incorrectly funded,” leading to the problems discussed above.

Forewarned is forearmed! Preparation of a Medicaid Eligibility Plan is complicated, with many moving parts, and is not just a matter of collecting and submitting a pile of records. Take care to get advice  so as to avoid the minefields when entering the battlefield of MLTSS applications.

Call us for asset preservation strategies and Medicaid applications & appeals …. 732-382-6070

New Jersey Court rejects denial of Medicaid benefits where spouse refused to cooperate

When a married person applies for MLTSS Medicaid benefits, the applicant must provide 5 years of records pertaining to all financial activity of the applicant and their spouse. The applicant also must supply proof of the spouse’s current income and assets. Sometimes, the spouse just refuses to cooperate with the process, creating a dilemna for the Medicaid applicant. In some circumstances, the couple is actually estranges and not living together. Sometimes the spouse actually resides out of state – the couple is still married, but they live separate and apart. In other circumstances, it’s a second marriage and the children of the community spouse don’t wish to cooperate with the process. And sometimes, they live together and the spouse just refuses to produce the evidence. Whether willful or otherwise, the situation is referred to as having a spouse who refuses to cooperate, sometimes called “spousal refusal.” Unlike some other states, New Jersey did not adopt a specific regulation concerning what to do if the spouse refuses to cooperate. However, there is an explicit provision in federal Medicaid law that says that benefits cannot be denied if the applicant has assigned to the State all of the rights he has under state law to support by his spouse, or if denial of benefits would work “an undue hardship.”  In fact on a Medicaid application, the applicant has to sign just such an assignment of rights. The federal law is at 42 U.S.C. § 1396r-5(c)(3)(A)  and (c)(3)(C).

The federal statute says:  “42 USC 1396r-5(c)(3). Assignment of support rights. The institutionalized spouse shall not be ineligible by reason of resources determined under paragraph (2) to be available for the cost of care where—

(A) the institutionalized spouse has assigned to the State any rights to support from the community spouse;
(B) the institutionalized spouse lacks the ability to execute an assignment due to physical or mental impairment but the State has the right to bring a support proceeding against a community spouse without such assignment; or
(C) the State determines that denial of eligibility would work an undue hardship.

A recent case illustrates what can happen in a case where the spouse of the Medicaid applicant simply refuses to cooperate with the process due to disability or emotional distress. N.S. v. Div. of Med. Assistance & Health Servs., N.J. Super. App. Div. (per curiam). NS was 87 and had moved to a nursing home. His 86 year old wife was the community spouse. His daughter was his legal guardian, and she did not have a close relationship with her stepmother. Six written demands for information were sent to NS’s wife, which she didn’t answer, and in 2 personal visits she told NS’ guardian to just stop asking about all of that because “it was causing her stress.” He asked for the hardship waiver based on his wife’s refusal to cooperate.

In this case, the county board of social services refused to approve Medicaid without the records from the spouse, and refused to apply this federal requirement. Evidently the state’s “policy” was that at a minimum, the spouses had to be estranged from one another. A fair hearing took place, and substantial evidence was placed in the record concerning the efforts made to get information and the refusal by the community spouse . Nonetheless, the Administrative Law Judge sustained the county board’s denial, and the state Division of Medical Assistance and Health Services (DMAHS) issued a Final Agency Decision adopting that recommendation. However, the appellate division reversed, holding that that decision was arbitrary and capricious and disregarded the evidence in the case record. The decision was “not approved for publication,” which means it is instructive but is not precedential or binding on other courts.

P.S. There is some interesting discussion at the end of the case (see page 18-19) regarding demands for information that didn’t exist and that had been reasonably explained by N.S.’s guardian in correspondence to the caseworker. For more on THAT type of problem, see our post here.

Call us for representation on Medicaid eligibility planning, asset preservation, fair hearings and appeals ……… 732-382-6070

Medicaid Improvement Act signed by Governor Murphy

On July 12th we reported that a bill to improve and streamline the Medicaid application process was on the Governor’s desk. The bill was signed recently. Here’s the NJ Bar Association’s press release. Lauren Marinaro worked along with other colleagues in NJ NAELA to help get this bill passed.

This new law (S-499/A4569) is a good start towards evaluating and implementing procedures that can improve the experience that the public has when they need to apply for Medicaid benefits for long-term care. As regular readers of this blog know, applying for MLTSS is often a harrowing experience and applicants encounter many frustrating proof requirements that can be difficult if not impossible to meet.  The bill appoints a Medicaid eligibility ombudsperson to receive complaints, as well as liberalizes requests for more time to retrieve documents in the application process.

Look for more updates here on the Murphy administration’s implementation of this new law!

For advice on MLTSS Medicaid applications and appeals, call us at … 732-382-6070