After the Wedding Bells Have Rung Again, Update your Estate Plan

It is surprising how often we hear of situations in which a person passed away unexpectedly or had a catastrophic accident or stoke, and various family members or good friends start trying to find out information or even start trying to gain access to assets without any authority to do so. Oftentimes, energy is fruitlessly spent before legal advice is obtained. Sometimes, tremendous fights ensue. These issues are bad enough when the individual has no spouse or no children  — there may be a certain group of nieces, nephews or cousins who believe they are the rightful heirs or the rightful decision-makers — but the issues can be magnified where there are  children from a prior relationship as well as a current spouse.

Once a person is divorced, any prior designation of their now ex-spouse as a fiduciary in a Will or Power of Attorney or Health Care proxy is deemed to be voided. In some circumstances, that can leave the individual without any fiduciary. Remarriage by itself doesn’t grant actual fiduciary authority to one spouse over the other. Signing a new set of estate planning documents is very important. The individual can specify who has the decision-making authority in the event of incapacity, and who will be the Executor of the Estate.  A carefully written set of documents will address any necessary interplay between the second spouse and the individual’s children. Are adult children entitled to continue to live in the marital home if their parent is now incapacitated or deceased? Are they required to pay expenses or rent? If the incapacitated parent was supporting adult children, is the Agent under Power of Attorney obligated to continue this pattern?  Many issues can be addressed through careful planning and signed legal documents.

If an individual becomes incapacitated and never signed any power of attorney, there may be a need for someone to pursue Guardianship to attain authority to make decisions and handle real property and other assets. At times, we have to dash into court with a petition for some emergency authority. In situations where there is a second spouse and children from a prior relationship, a guardianship action may become contested, leading to extensive and expensive litigation over who is entitled and best suited to be appointed as Guardian.

A spoken statement doesn’t create a Will. A spoken promise doesn’t create a power of attorney. A person’s belief that they were authorized to handle someone’s financial matters doesn’t translate into authority without a writing.

Thoughtful estate planning can go a long way to prevent crises and litigation, and thoughtful updating of estate plans on a regular basis — especially after a major life event such as marriage — can help ensure that your wishes will be carried out.

Call us about creating first time or updated estate plans .. 732-382-6070

 

Marinaro is new NAELA Federal Policy Co-Chair

The National Academy of Elder Law Attorneys held its annual meeting in Fort Worth, Texas last week. Lauren S. Marinaro was selected as the incoming Co-Chair of NAELA’s Federal Policy Committee.

Marinaro is  President of the New Jersey Chapter of NAELA (NJ-NAELA), which advocates on legislative and policy matters that affect senior citizens and people with disabilities in New Jersey. She’s a Partner with Fink Rosner Ershow-Levenberg in Clark. She  attended the NAELA Annual Meeting and Trust Workshop in Ft. Worth, Texas on May 8-10th. While there, she participated in discussion groups on various Trust topics, facilitated a workshop on NAELA State Chapter advocacy and growth, and was announced as the 2019-2020 Federal Policy Committee co-Chair. The members of both state and national NAELA are attorneys who are experienced and trained in working with the legal problems of aging Americans and individuals of all ages with special needs. Established in 1987, NAELA’s mission is to educate, inspire, serve, and provide community to attorneys with practices in elder and special needs law. The organization also provide plenty of information for the public who may need such legal services.

Among the “hot topics” in Federal Policy that Lauren will work on through her activity with NAELA for 2019-2020 and beyond are monitoring 1115 Medicaid Waivers, fighting for improved spousal impoverishment standards for community-based Medicaid, supporting the Money Follows the Person initiative, protecting inherited IRAs for disabled and vulnerable heirs, and civil rights initiatives for disabled individuals and the elderly. Read more by clicking on those links, and contact Lauren or your legislators if these issues are of interest to you.

For advice on elder care senior planning and special needs, contact us at 732-382-6070

Who’s doing that Medicaid application?

An application for Medicaid to pay for nursing home care can be filed by the individual himself, his spouse, another relative by blood or marriage, a staff member of an agency of which the person is a client, the person’s physician, the person’s attorney, or a designated staff member at the nursing home. Of course, a court-appointed Guardian or Agent under Power of Attorney could also act on behalf of the applicant. Anyone other than the applicant him/herself is referred to as the “authorized agent.”  Whoever takes on that task should also accept the responsibility to monitor the file, collect the necessary verifications, take any necessary action to compel a third party to release records, file the application on time, and file appeals in a timely way. Potential legal hazards are lurking around every corner. There have been a series of cases recently involving authorized representatives which had disastrous results.

Sometimes the individual or family member appointed the nursing home or its affiliated application preparers to assemble and file the application, expecting to be relieved of any obligation to collect records. Sometimes it was the Agent under Power of Attorney or family member who started the application, but didn’t follow through due to difficulties collecting records and their own busy life. Sometimes the family member was led to believe that the County Board of Social Services would “assist with the application” by reaching out to get verifications that the family member couldn’t produce. In other cases, there were communications breakdowns between the affiliated authorized representative and the nursing home, or the representative and the family member. Either way, Medicaid eligibility is denied again and again for “failure to produce required verifications” or “failure to cooperate” with the application process. The individual is left holding the bag — with a huge debt and no source of ongoing payment — and the nursing home discovers that it has provided services without compensation.

Several recent cases illustrate the problem. The decisions are “not approved for publication,” which means they are not precedential and not binding on lower courts, but they do provide a window into what can go wrong in these situations.

In P.B. vs DMAHS and Atlantic County, a daughter of the applicant took on the obligation to file the application. The documentation was incomplete and after multiple communications to the daughter, the application was denied for failure to provide required documents.

In A.D. vs DMAHS and Cape May County, Future Care Consultants was the designated representative. The caseworker was sending his/her requests for more documentation to the nursing home, and the decision does not say anything about the communications between those two. However, the representative failed to investigate the questions at hand and therefore, did not provide the available verifications.

In V.S. vs DMAHS, (Passaic County), the Agent under Power of Attorney designated the nursing home as the Authorized Representative. The necessary documents weren’t all provided, and the application was denied. The nursing home neglected to appeal within the 20 day window, and filed the request for hearing 7 months later. DMAHS refused to grant a waiver of the 20-day appeal deadline, and this denial was upheld.

In W.S. vs DMAHS and Atlantic County Board of Social Services, the individual’s authorized representative  was the nursing home. It applied four times and each application was denied for failure to provide the necessary proofs. The Court held that the county agency had no affirmative duty to acquire the needed documents.

In J.H. vs. DMAHS and Ocean County Bd. of Social Services, the authorized representative was Future Care Associates. They failed to procure all of the necessary verifications, with the result that the application was denied.

An application for Medicaid in New Jersey requires copious financial records for every single asset owned by the individual or spouse during the 5 year look-back. Copies of cancelled checks, deposit slips, credit card statements, explanations for ATM withdrawals … everything is being scrutinized. Once the county board asks for more records, the turnaround time is pretty short.  The applicant probably doesn’t have those records lying around, and it can take months for the Authorized Representative to get the records. The Authorized Representative may not even know where to start looking, and may need help from immediate family members. It could become necessary to file a court petition to compel third parties to produce documentation.

What’s the solution? Advance preparation is vital. We encourage our clients to come in three to six months before the date they plan to apply, so there is time to gather up the necessary proofs. Also, if a family member or POA  is appointing somebody as the representative, s/he should make sure that it is crystal clear as to who is doing what, and that all necessary authorizations have been provided so that the  representative can do their job. The family member should certainly insist that the representative keep them informed of the status, including any threatened denials. And the contract with the representative should spell out the representative’s responsibilities.

Call us for advice about Medicaid eligibility, asset preservation and the application process .. 732-382-6070

 

 

 

 

Elective share and Medicaid can lay a trap for the unwary

In New Jersey, a surviving spouse has the right to claim his or her “elective share” of the deceased spouse’s estate if the deceased left him/her an inadequate inheritance. The calculations are made using the step-by-step process of a set of state statutes, N.J.S.A. 3B:8-1. If the individual receives Medicaid benefits and is widowed, failure to claim the “elective share” can result in a loss of benefits because it is treated by the Medicaid program as an uncompensated transfer of assets. If a person receives benefits when they are not actually eligible, they may be subject to a claim or lien for reimbursement. Federal and State law (N.J.S.A. 30:4D-7.8) requires states to place liens for reimbursement against the estates of deceased Medicaid beneficiaries. All of these issues came together in a recent Appellate Division decision called  In the Matter of the Estate of Arthur E. Brown, N.J. Super. App. Div. (Simonelli, J.A.D.) (32 pp.) A-1086-14T4.

  • The case involved a widower who had been disinherited by his wife. The marital assets had been transferred into her name, and he received nursing home care that was paid for by Medicaid. When she died, he didn’t file a claim for the elective share. He continued to receive Medicaid benefits. Upon his death, the State took the position that the value of the claim which he had failed to pursue was an asset of his estate, which was subject to the State’s lien for reimbursement. The Court held that the value of the claim was correctly included as an asset of his estate subject to lien.

The estate had also argued that the deceased wasn’t entitled to an elective share at all because he and his wife had been living separate and apart at the time of her death, and the couple ceased to cohabit as man and wife under circumstances that gave the wife a cause of action for divorce under N.J.S.A. 2A:34-2(d) or (f). The elective share statute lists this as one of the reasons that a person can be barred from seeking an elective share. Residing in a nursing home due to Alzheimer’s dementia might be sufficient grounds for the spouse to seek a divorce, but the Court wasn’t ready to go so far as to hold that the “living separate and apart” as used in the law was intended to encompass this sort of reason for the separation.

When Estate planning is being done for the community spouse of a person who needs nursing home care, the impact of the estate plan on the ill spouse’s Medicaid eligibility needs to be considered.  Failing to consider the interplay of the elective share and the Medicaid rules can result in unintended consequences. Not only can there be an adverse impact on eligibility, there can be complicated impacts later which result in surprising litigation which adversely affects the heirs of the estate.

Call us about Medicaid eligibility planning and elder care estate planning … 732-382-6070