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 Below are some of the questions we are frequently asked. If you don't see the question you are looking for then please feel free to contact us. Medicaid/Nursing Home Planning
Medicaid/Nursing Home Planning Q. Why should I do Medicaid Planning? A. No one wants to end up in a nursing home. But, statistics show that about 4 out of every 10 individuals will spend some amount of time in a nursing home. On average, a one-year stay in a nursing home today costs about $60,000. Costs can vary greatly with the level of care needed and location. Because most people cannot afford paying $60,000 per year to live in a nursing home, without planning the cost of the nursing home can wipe out a person’s life savings very quickly. Q. When should I do Medicaid Planning? A. The sooner the planning begins, the more opportunities and options there are to preserve a person’s assets. That being said, medicaid planning can be done even after a person has entered a nursing home and some assets can usually still be protected. Q. Why can’t my mom just give away all of her assets as soon as we find out she is going to have to enter a nursing home? A. Because Medicaid has a law commonly referred to as the "look-back rule". Medicaid will look-back at any transfer of assets mom's made in the previous years (the look-back period is 36 months as of March 1, 2010, but is expected to increase to 60 months sometime in the future). If assets have been given away during the look-back period before applying for Medicaid, mom will likely be ineligible to receive Medicaid coverage for some period of time. Q. Well, even if mom can’t give away all her assets right before she applies for medicaid, I have heard that she can give away $10,000 to anyone she wants. Is this correct? A. This is a common question we here all of the time! In 2010, the IRS allows a person to make annual $13,000 gifts to individuals without the gift having to be reported to the IRS and without it affecting Federal Estate and Gift Taxes. However, Medicaid does not care about the IRS gifting rules! Rather, Medicaid rules state that any gifting done within the look-back period must be reported on a Medicaid application and the gifts will result is a penalty period. Q. I have a Will so isn’t my property protected if I have to enter a nursing home? A. No, a will only passes property that you own at your death. It does not protect your assets if you have to enter a nursing home. Q: If my spouse goes into a nursing home, will I have to spend all of our assets and income in order to pay for the cost of my spouse’s nursing home care? A. No, under Medicaid rules, your spouse can receive Medicaid benefits and you can keep certain assets (the "community spouse resource allowance") and certain income (the "monthly maintenance needs allowance") up to the state-determined limits. My office helps you to try and preserve as much income and as many assets as the rules allow while still qualifying your spouse for Medicaid. Q. A friend of mine told me that there has been some changes to the medicaid rules. Is this true? A. Yes, on February 8, 2006, President Bush signed into law the Deficit Reduction Act (DRA). It changes the look back period and it changes the way the penalty period will be calculated when a gift has been made during the look back period. There were several other changes but those were the two most significant changes for Medicaid planning purposes. As of March 1, 2010, Illinois is one of only a few states which has not adopted the rules under the DRA. However, my office believes that it is only a matter of time before those rules are adopted. It is very important that you contact me to discuss the how adoption of the DRA could affect your planning opportunities.
Q. I already have a last will and testament. Can’t my executor handle my affairs? A. No. Your will determines how your property will be distributed after you die. Your executor has no authority to act on your behalf before your death. Your power of attorney gives your agent the power to deal with your property during your lifetime. At your death, your power of attorney by law automatically terminates. Q. I own everything jointly with my spouse (or an adult child). Why do I need a power of attorney for property/financial matters? A. A joint owner of a bank account probably has authority to write checks on your account. However, a spouse or child who is a joint owner of other assets does not have the right to sign your name or otherwise have authority to handle certain transactions (i.e. car, house, stock, certificate of deposit). To transact any sort of business with these types of assets would require your signature. On the other hand, if you had a power of attorney, he/she would have the authority to handle these types of transactions on your behalf. Q. How is a health care power of attorney different from a living will? A. A living will takes effect only if you have a terminal illness and your doctor has determined that your death is imminent except for death delaying procedures. A health care power of attorney allows your agent to not only carry out your wishes if you have a terminal illness, but also to stop water and tube feeding (if that is your wish), gain access to your medical records, change doctors, carry out your wishes concerning organ donation and decide where you will live if you cannot live at home. Q. If I give someone power of attorney over my property, does that mean I don't have any rights over my money and assets any more? A. Even if you sign a power of attorney for property, you can still manage your own financial affairs. You are not giving up anything. Rather, you are taking steps today so that your agent can act for you if some day you are unable to act on your own.
Q. Can I prepare my own will? A. Yes, legally you may prepare your own will just like you can prepare your own income tax returns. The difference is that if you prepare a tax return incorrectly, you will be notified by the IRS and you can then amend your return. However, with a will, you will never know if you prepared your will correctly because it will not be reviewed by a judge until your death. If it was not prepared correctly, it will be your loved ones who will have to deal with the problems and ramifications rather than you. There are strict state law requirements that must be followed in order for your will to be legally valid. An experienced estate planning attorney can draft your will to address these requirements and also explain to you potential tax implications other applicable legal issues which a self-prepared will might not address. Q. Is a will expensive? A. Pretty frequently when clients learn how much their will is going to cost, their reaction is "that's all?" Of course that is not always true -- some wills are more complicated than others. Attorneys charge for the time they spend preparing a Will and usually spend a few hours on the entire "process". This process includes meeting with you initially to gather information and discuss your needs, preparing the will, and meeting with you again to review, explain and execute the will. We will meet with you initially at no charge to discuss your needs and make recommendations. You will most likely prepare a Will only once during your entire lifetime. Think about how much money you spend going to the dentist or eye doctor each time you go for a visit (which is likely at least once a year). A properly drafted will may reduce or eliminate estate taxes as well as save on the expense of various administrative costs upon your death. These savings alone often far exceed the cost of a will. Q. Is it expensive if I want to make changes to my will? A. Thank goodness for computers! Once we have prepared your will, it is saved on our computer, and it is easy and costs very little to make minor changes. You will probably make a few revisions to your will during your life. In fact, we recommend that you review your will every few years to see if anything needs changed. Q. What happens if I die without a will? A. If you die without a will (referred to as dying "intestate"), Illinois law dictates who is entitled to receive your property, manage your estate and a court selects a guardian over any minor children. Even if you intend to leave your property to the same persons who would receive it under instate laws, a carefully drafted will may result in substantial cost savings in the probate of your will. Q. What happens to my will after I die? A. The answer depends on a number of factors which are too lengthy to explain in any detail in this answer. However, at the very least, Illinois law (755 ILCS 5/6-1) states in part that "Immediately upon the death of the testator (testator means the person who made the will) any person who has the testator’s will in his possession shall file it with the clerk of the court of the proper county......" "If any person willfully alters or destroys a will without the direction of the testator or willfully secretes it for the period of 30 days after the death of the testator is known to him, the person so offending, on conviction thereof, shall be sentenced as in cases of theft of property classified as a Class 3 felony by the law in effect at the date of the offense".
Q. I know I need to schedule an appointment for estate planning, but what do I need to get together so that I am prepared for the appointment? A. This is a common "fear" many people have of estate planning. Because a person isn't sure what is needed for an appointment, or because a person assumes that he or she will have to gather all kinds of documents for the attorney prior to the meeting, people often just put off making an appointment altogether. Actually, you do not need to gather anything for the initial meeting. This is just a meeting to find out more about you and discuss ideas. If any written documentation is needed, you will be told what you need to contain to bring to the office. Time after time we have clients after the conclusion of the initial meeting say something like, "That's it? That wasn't nearly as bad as I thought it was going to be. I can't believe I put this off for so long!" Q. What types of legal documents do I need to cover the estate planning basics? A. Because estate planning allows an individual to ensure that his or her property will go to the people he or she wants, in the way he or she wants, and when he or she wants, it is important for everyone, even if an estate is likely to be small, to have an estate plan. An estate plan can help to reduce tax liabilities, court costs, and attorneys' fees, and it can also make it easier for families to cope with the administrative and financial issues that arise after the loss of family members. Estate plans should typically include at least three important estate planning instruments: a last will and testament, a durable power of attorney for health care and a durable power of attorney for property/financial matters. Q. If I move to a different state, what effect does that have on my estate planning documents? A. Generally, as long as your estate planning documents are valid when you sign them, they will remain valid even if you change your state of residence. That being said, it would still be a good idea to consult an attorney who practices law in the state of your new residence because laws do vary state to state.
More information coming soon.
More information coming soon.
More information coming soon.
More information coming soon.
More information coming soon.
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