A complicated system of rules and regulations makes it almost impossible for people to understand and navigate Medicaid. Even elder law attorneys are generally ill-equipped to provide accurate information about Medicaid and strategies for protecting clients’ money, property, and income unless they are Elder Law practitioners. It is possible to lose a fortune if you receive wrong or incomplete advice.
For example, it has been our experience to review documents drafted by other law firms that created trusts for clients to protect them from Medicaid’s “spend down” rules. However, it was discovered that the trust agreements allowed the clients to access the principal funds, nullifying any protection the trusts had offered by elder law attorneys. Medicaid examination requires specific, tightly-worded provisions in long-term care trusts if they function properly.
This is a recurrent myth based on misunderstanding the difference between Elder Law and estate planning. A person’s Elder Law planning focuses on preserving their income, assets, and assets for their benefit and care while alive. In contrast, an estate plan focuses on distributing those assets after they are deceased, typically in a tax-advantaged manner.
In Elder Law, you need an attorney who specialises in long-term care. Although this practice often involves estate and tax planning, it differs from the tax planning practice. An Elder Law firm will also have a unique understanding of the rights of senior citizens, so this is another important consideration. In one case, a major bank convinced a client to invest heavily in an annuity. This investment was inappropriate for the older adult, given his financial situation.
Most cash can’t be withdrawn without a penalty for several years after placing money in an annuity our client invested in. Our client’s money was needed for Elder Law planning, so we notified the bank of our concern. We explained our position that the bank’s recommendation was inappropriate and asked for the funds to be returned to our client without any withdrawal penalties. The bank complied without a struggle with our request.
Another case involved a client who had accumulated thousands of dollars in credit card debt. As a result of our advice, we quickly resolved the client’s debt issues in this instance. Credit card companies should not solicit older adults with certain economic profiles as customers.
The planning process should consider your current and potential care needs and how to pay for them. It is also important to discuss your resources, family structure and preferred care setting to ensure that you are prepared for what lies ahead.
