Elder Care Planning

Elder Planning Attorney, Stacey Pilato, Warren NJThe Elder Care Planning process begins with family. It involves making family decisions that will affect both parents and children.

In order to retain control of decisions made for both health and financial purposes, planning usually includes the preparation of an Advanced Healthcare Directive (also known as a “Living Will”) and Proxy Directive to appoint a healthcare representative and which states the end of life decisions of a person who has lost capacity and the ability to communicate his or her medical wishes. In addition, a General Durable Power of Attorney is also prepared to allow an individual to name a person to act as Agent for financial and legal purposes. The power of attorney instrument may grant either immediate authority or springing authority that “springs to life” in the event of the disability of the person granting the authority. This effectively avoids the need for loved ones to seek authority through the court system by way of a Guardianship application in the event a person in unable to govern his or her own affairs due to incapacity. There are no “public service announcements” about the importance of at least preparing a healthcare directive and power of attorney while we are still capable of making informed decisions, in addition to a Last Will & Testament or other testamentary instrument such as a revocable trust or irrevocable Medicaid-qualifying trust. Without investing in the thought process to establish these crucial documents, loved ones may face heartache, headache, lost time and, lost money. Most people have no experience in the court system and can become overwhelmed with stress and fear of the process of Guardianship. And the financial cost of having to resort to the court for relief may be far greater than investing in tailoring a plan appropriate for the elder’s wishes and needs. By doing so, all affected family members can breathe a sigh of relief if crisis strikes that the storm will be managed. The members of our firm welcome the opportunity to share their knowledge of laws surrounding these crucial planning documents and often are asked to speak on the topic to senior and caregiver groups.

Elder Care Planning also involves making financial decisions concerning retirement income, the utility and laws of reverse mortgages, the ability to pay for long-term care in the event of a disabling illness or accident, the use of long-term care insurance contracts, the availability and variety of alternative living arrangements such as assisted living, continuing care retirement communities, cooperative housing for low-income residents, shared housing programs, nursing homes and in-home care or assistance. The elder care planning process considers the common misunderstanding between Medicare and Medicaid, supplemental insurance, and the possibility of long-term health care needs and how it will be paid for.

A major concern for most families is the protection of assets when an elder member becomes ill. This is known as “Medicaid Planning.” Often, a married couple may be comprised of one spouse who is in need of managed long term care services and supports to aid with the activities of daily living, and the other spouse who is healthy and independent. There is an asset eligibility test in order to obtain financial eligibility for Medicaid. In order for the disabled spouse to qualify for Medicaid assistance to pay for that amount of his or her care which is unaffordable, the healthy (or “community”) spouse may retain the principal residence in which he or she resides and up to one-half of what is known as “countable” assets up to, in 2015, $119,220. A widowed or single individual in need of managed long term care supports may retain only $2,000 in countable assets. The law provides that with proper planning, assets may be transferred into a Medicaid qualifying trust to protect the maximum amount under law. However, this should be done before the need for Medicaid arises. There is currently a 5-year look-back period during which assets transferred to anyone other than the applicant’s spouse in the five-years prior to the application for assistance may be considered for Medicaid qualification purposes. Although there are limited exceptions, any transfers by an applicant for less than fair market value during that period may subject the applicant to a period of ineligibility.

To find out if a transfer of assets is permitted under the Medicaid statutes and regulations, contact our offices at (908) 754-4500 for a consultation.

Timing the Medicaid application is also important because of two other requirements for eligibility: income eligibility and clinical eligibility. A single individual in need of Medicaid assistance will either be income qualified because the total of his or her income resources are below $2,199 a month, (in 2015) or the income sources that create an excess over $2,199 are placed inside a Qualified Income Trust (“QIT”) to allow the applicant to become income eligible. If the applicant’s total monthly income exceeds the eligible amount, the income source causing the excess must be placed in the Qualified Income Trust bank account before an application for Medicaid will even be reviewed by the county office. Special rules apply for married individuals which may allow for the community (healthy) spouse to utilize specific amounts of the ill spouse to maintain a reasonable lifestyle and the principal residence. This amount, known as the Minimum Monthly Maintenance Needs Allowance (“MMNA”), varies as financial circumstances among married couples vary. As of July 1, 2015, the base allowance for a community spouse is $1,991.25 per month. If the community spouse pays shelter costs that exceed $597.38 per month, the excess is added to the base allowance. In addition, the community spouse is permitted a utility allowance of $491.00 per month if paying the utilities directly. The overall allowance is reduced by the community spouse’s own income and the remaining need may be deducted from the institutionalized spouse’s income. Other factors, such as a dependent family member in addition to a spouse, affect the income and resource allowances of the family. If the community spouse also becomes in need of managed long term care assistance, however, the assets must be spent to $3,000 and the income rules change.

Finally, anyone anticipating the need to apply for Medicaid should arrange to be evaluated for clinical eligibility as soon as possible so that the applicant does not wind up financially eligible but clinically ineligible because the evaluation by an Office of Community Choice Options nurse has not yet been requested. For guidance on and assistance with navigating the Medicaid application and approval process, contact our offices at (908) 754-4500 for a consultation.

Other resources such as Veterans Benefits known as compensation and aide and attendance allowance must also be reviewed to determine if a veteran or his surviving spouse is eligible for this income benefit that could stretch assets longer to avoid having to make a Medicaid application. Currently, there are also asset and income tests for Veterans Benefits although there is, currently, no look-back period for transfer of assets, and care expenses can be deducted against income to prove income eligibility without the need for a Qualified Income Trust.

For both Medicaid and Veterans Aide & Attendance benefits, the applicant must be physically qualified because unable to perform activities of daily living. Thus, Medicaid planning to protect assets is not for the very ill, but for anyone who wishes to protect their assets for themselves and their family with sufficient time to plan ahead for establishing and managing this complex type of plan.

So, what is the thought process behind Elder Care Planning? It is the coming together of family to consider the possible long-term concerns and needs of its elder members. It is the opportunity for families to discuss their wishes concerning health concerns, asset protection and possible financial needs. In essence, it is a chance for the elder care planning client to not only consider the possibilities concerning the future of the entire family, but also to create the legal documents to ensure their intentions are honored.

A complete Elder Care Plan would need to be developed taking into consideration Federal and State taxes, Wills and Non-Probate assets. This can be accomplished through the use of the following documents and plans, each tailored for the particular client’s circumstances:

Last Will & Testament:

  • Wills are necessary to ensure any assets remaining in the client’s probate estate pass pursuant to the client’s wishes. It may also be used to prevent assets from passing from the healthier spouse from passing to the disabled spouse who may either already be receiving Medicaid benefits or otherwise be Medicaid eligible, creating a “firewall” so that the disabled person will not be disqualified from any current or future potential public benefit or service.

Beneficiary Designations and Contract Assets:

  • Not every asset is governed by a Last Will & Testament; some are called “non-probate” assets because they are governed by a beneficiary designation or “POD” or “TOD” (payable on death and transfer on death) provision. These assets follow the specific dictates of the contract entered into with the asset’s custodian such as the bank or retirement account custodian. Often these attributes are overlooked and consequences may arise if the owner’s intent is not considered and the assets updated accordingly.

General Durable Power of Attorney and Advanced Healthcare Directive:

  • These documents may protect an elderly person from a Guardianship action, and the “Living Will” portion of the Healthcare Directive sets forth end of life care wishes, and allows for the appointment of healthcare agents. The General Durable Power of Attorney appoints financial agents without any court intervention.

Special Needs/ Medicaid Qualifying Trust:

  • This is a sophisticated trust that prevents the government from claiming against the assets held within the trust either by determining them as countable resources for a spend-down or attaching a lien post-death in an estate recovery action. These special trusts provide for the discretion of the trustees to utilize assets for an elderly or disabled person’s benefit while maintaining the beneficiary’s eligibility to receive Medicaid or other public benefits. These trusts are also utilized within an elder’s Will or revocable trust to provide for disabled children or grandchildren to preserve their eligibility, as well.

Gifts/Asset Transfers:

  • Transfers made only with specific advice and direction from our elder law attorneys in order to obtain eligibility for Medicaid purposes. Various implications regarding gift and income taxes, or exposure of risk by a gift recipient, also have to be considered before a potential Medicaid applicant gifts or transfers an asset.


The materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Lambariello & Pilato LLC and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

Speak Your Mind