Author Archive

Family Legacy Video and Financial Planning

By Katana Abbott, Certified Fiancial Planner and founder Designated Daughter

Almost 20 years ago, my mother remarried the most wonderful man who changed her life.  It was a marriage made in heaven… 20 years later; they were still in love at 86 and 72. 

Since I was a Certified Financial Planner, when they married, Dale asked me to do a financial plan; he was 72 and my mom was 58.  He created a living trust that gave my mother a life interest, but the principle transferred to his children at his death.  He also purchased life insurance and long term care for both him and my mom.  My mother’s long term care policy was $100/day with a 5% inflation rider and lifetime benefits. 

In the fall of 2005, at 86, Dale was diagnosed with lung cancer.    If we had left things the way he originally set them up, when they were first married, which was the typical joint ownership with rights of survivorship, his children would have been disinherited, my mother would not have had long term care insurance and would have used up all his assets.

Because his estate planning had been in place for years, and reviewed annually, we were able to focus on his quality of life and quality of care that last year. 

During the last three months of his life, Hospice was with us daily, we had moved his bed into the living room, so he could look out at the ducks on the pond.

The week before Dale died; he looked up at me and whispered, “You’re my miracle worker”.  I will never forget his words or the impact his planning has had on his loved ones lives.

He knew that he had done a great job; my mom was set for life and I know he had overheard us talking when we received the call from the insurance company that my mother had been approved for her long term care insurance claim.  She had recently been diagnosed with dementia and the insurance would provide her with up to $150/day for life—with an increasing benefit to keep up with inflation.  This was almost $55,000 a year of additional income that would be tax free.

Between her survivor pension and tax free long term care benefits, my mother was able to move into Sunrise Assisted Living without using any of her investment income.  In addition, we saw that she would probably never need the assets from my step father’s trust, so we made an immediate gift of $100,000 to his children who were just a few years younger than my mother. 

I am so thankful that Dale had agreed to do this planning decades before when they had many options, and were not under stress. 

I was able to play a video that I had taped of my step-father and mother for Dale’s children and grandchildren the Christmas after his death.  He still looked great in the video; the lake and flowers in the background were cheery as my step father told stories about his past, as well as stories about his father and grandfather.

His children may never have known these stories if I had not taped that video that day.  In addition, I came across some wonderful photos of his father and grandfather in northern Michigan working as loggers at the turn of the century.  I will be creating a professional legacy video this year and giving the video and some prints to his family this Christmas. 

I had always wanted to be able to do this for my clients during my 20 years as a financial planner, but I did not have this process in place at the time.

I think passing the story along with the money could help many financial and legal professionals develop a deeper relationship with their clients as well as with the next generation. 

What do you think?  What is your story?  I would love to hear from you!

Visit for an interactive on-line community featuring  the Designated Daughter Caregiving, Legacy and Aging Experts who work together as a team in the Designated Daughter Tea Room!

How Proper Estate Planning Can Preserve and Protect Assets for Families

What is a Will and How Does a Will Work?

It is more critical than ever with our unpredictable economy that families do the proper estate planning. Otherwise, all of the assets that they worked so long and hard to build and preserve, could be wasted on probate court, taxes, attorneys, long term care costs, and too many other costs to mention. This article will examine how families can preserve the assets that they want to pass on to their loved ones in spite of the threatening economy.

Many people assume that once they execute a will, all of their affairs are in order for when they pass away. It is a myth that a will provides for our future and the security of our loved ones. Nothing can be further from the truth. A will does not provide protection from a lifetime disability. A will only becomes effective when we die and it is given life by the probate court. A WILL IS A GUARANTEE TO PROBATE. The only good thing about probate court is that you
can avoid it. However, a lot of people do not realize the following:

  • every will has to go through probate court if an individual dies with assets in his or her individual name without a co-owner, owned by a trust, or have beneficiary designation;
  • a will is a public document and therefore, anyone can go to the courthouse and look up what someone owned when they passed away and to whom they left their money to;
  • probate court can be a time consuming process;
  • unhappy family members (i.e. individuals that have been disinherited or that have received less money than other beneficiaries) can contest the will; and
  • probate court can be expensive.

Notwithstanding the same, if you have a will and pass away, the Personal Representative of your will must take your will to the appropriate probate court and file it along with all of the accompanying probate paperwork. Sometimes a Personal Representative will have to post a bond. In the event that an “interested party” wants to contest any portion of the will, a hearing will be set. In order to open an estate in probate court, there is a filing fee. In order to close the estate in probate court, an inventory fee must be paid which is calculated on the value of the assets. Under Michigan law, an
estate in probate court can be closed as soon as four months after publication, once the period for creditor objections has expired, but the average probate estate in Michigan takes approximately 1 year from start to finish.

Revocable Living Trust:
What You Need to Know
If you think that a revocable living trust is only for millionaires, you couldn’t be more wrong. Whether you earn $25,000.00 or $1,000,000.00 per year, whether your assets are large or small, a revocable living trust will save you money and increase the value of your estate. A revocable living trust can offer benefits to just about everyone. Do you want to avoid probate court? Minimize estate taxes? Do you need to boost the protected spousal resource allowance for Medicaid? Do you need protection for a disabled child, adult, or relative? Do you want to prevent your beneficiaries
from paying substantial capital gains taxes for appreciated property such as real estate and stocks? Do you want to prevent a “will contest”? Do you want to keep your estate private after you pass away? If your answer to any or all of these questions is “yes”, a revocable living trust may be for you.
A revocable living trust is a trust that you control. You are the trustee, the manager of your living trust, just as you are the manager of your assets now, nothing changes. The “revocable” aspect of a living trust means that you are in control. It means once you create it, you can always change it. You can revoke it or amend all or part of it.
The “living” aspect means that it is created and funded while you are alive and provides for you during your lifetime. If drafted properly, a living trust, in the event of a lifetime disability, can help you avoid the need for a “living probate” (conservatorship) over your assets. This means that you only change title to your property to your name as trustee.
This does not mean that all your assets must be sold and invested in a bank or company. You change only the title. It is that simple.
Remember the agony created at death from an estate that goes through probate court is caused when your name is taken off the title and property is transferred to your heirs. It is costly, time consuming and a matter of public record. In a living trust, title does not change at death, just the name of the trustee changes. There is no delay, minimal cost, no publicity, no probate and if possible, estate taxes are minimized.
A living trust has been praised by our nation’s leading financial planners, and reported in publications such as The Wall Street Journal, Money Magazine, Business Week and many other publications.
A revocable living trust offers the following benefits:
• Your assets will not be subject to probate, either during your lifetime, in the event that you become disabled, or once you pass away.
• Your wishes and plans are private. Remember, if you do not have a trust, your assets will most likely be probated upon your death. Probate documents are public records that can be accessed by anyone.
• A revocable living trust is easy to create, change, administer and maintain. You maintain complete control of your assets.
• You can eliminate costly legal and court fees with a living trust. And you don’t have to be rich to enjoy its benefits.
• You maintain complete control of your assets, are able to buy and sell assets as before, and will file the same tax returns.
• Upon your death, your assets can be quickly distributed, if the trust so instructs. Alternatively, your assets can be held in the trust and administered pursuant to your wishes.
• In the event of your disability, the successor trustee will administer the trust for your benefit without needing a conservatorship from the probate court.
• By including special needs provisions you can protect children and adults with a disability from losing their governmental benefits such as Medicaid and SSI while still providing for their special needs.
• A revocable living trust is difficult to contest and can contain a provision that should a beneficiary contest the provisions of the trust, he or she will be disinherited.
• A married couple establishing separate revocable living trusts with estate tax provisions can be used to minimize estate taxes.
• A revocable living trust provides the caregiver spouse the opportunity to protect and preserve assets in the event that they predecease their disabled spouse.
• The distribution of a living trust is limited to one’s imagination. You can include provisions: that match a beneficiary’s income, provide for retirement, test for drugs, provide for a down payment to purchase a home or for an accredited education.
A revocable living trust offers many benefits that a will and joint ownership of assets do not. Oftentimes, a revocable living trust is the best type of estate planning.

Pitfalls of Joint Ownership
You may have heard of the terms “joint tenants with right of survivorship,” “tenants in common,” or “tenants by the entireties.” All of these are forms of what is known as “joint tenancy.” Joint tenancy means that more than one person owns the property. Many people own property together with someone else, such as a spouse or child, often believing that upon the death of one, the other will take immediate ownership of the property without the probate court. Joint ownership is generally not the best method of passing your property to your heirs and often results in many pitfalls.
However, effective estate planning, including a living trust, can overcome the pitfalls and avoid the intervention of the courts. If you add a person to the title of your assets, you will become partners with their life problems. If a child or other joint owner has creditor problems, such as a divorce or a lawsuit, the child’s creditors can legally come after the parents’ money and assets when the child is a joint owner. Also, if a child refuses to allow the parents to sell an asset, which requires the signature of all owners, such as real estate or stocks, the parent would be unable to access the equity in
those assets. In addition, if a child becomes disabled, the parents may not be able to sell their assets unless they obtain a conservatorship over their child, allowing the parent to legally handle the child’s financial affairs and to sign legal documents on behalf of the child. Finally, children will, most likely, be required to pay capital gains taxes upon the parents’ death in addition to any estate taxes that may be due. Joint ownership may avoid probate court, but ultimately,
more taxes may be paid!

Many people think, “How simple. I will just put my child’s name on this property and my beneficiaries will avoid all of the hassles of probate court upon my death. That way, I do not need to worry about a will.” Sometimes, it is advisable to title some or all of one’s property jointly with another. Frequently, however, it can cause an unexpected disaster. The manner in which you hold title to property needs to be carefully considered and designed as a part of your overall estate
planning goals. There are a variety of risks or pitfalls that can arise through joint property ownership.
Also, there is also a common belief that by adding a child’s name to a parent’s assets that it can be protected from Medicaid and the nursing home, which in most cases is untrue. Using a will or trust avoids the problems described above and for most families is more advantageous than the joint
ownership of assets.

Medical and End of Life Decisions
(Durable power of attorney for Health care)
How many of us plan for a lifetime disability? Leaving your planning to chance and unforeseen circumstances will only breed disaster. If you are unable to make your own medical decisions who will do so for you? Chances are that we will all suffer a debilitating illness such as Alzheimer’s or dementia or physical illness, before we die. Many of us have heard the term “living will” as the name of a document used to address our life support wishes. In Michigan, however, under our state statutory laws, we must use something called a “patient advocate” as living wills are not valid
in Michigan. A patient advocate is a document in which you appoint an individual to make your end-of-life decisions, in the event that you become unable to make these decisions yourself and a living will is a general statement of your end of life wishes.
Did you know that if you do become incapacitated you will become subject to a LIVING PROBATE? A probate proceeding for your health care and personal decisions is called a guardianship. It is a common misunderstanding to believe that your spouse, child or relative can act for you during a disability. The truth is, if you cannot make your own decisions or sign your name, a court will.

Guardianship is a drastic remedy, a cannon used to swat a fly.”
Frankly, a Guardianship is not necessary. In fact, the probate court process is optional. It is your choice. Everyone over the age of 18 can avoid a guardianship by creating a comprehensive patient advocate, more commonly known as a durable power of attorney for health care. The word “durable” means that it is different from an ordinary power of attorney in that it is not affected by incapacity. Once you grant a durable power of attorney, as long as you are competent you can revoke it. The only time a durable power of attorney terminates is upon death, voluntary revocation
or by Court order. Simply put, a durable power of attorney is a legal document that allows you to delegate your personal health care responsibilities to an agent.
A proper patient advocate should cover all possible situations. Specifically your patient advocate should address end of life, everyday medical and mental health decisions. You also want to make sure that your patient advocate contains upto-date provisions. Michigan and the Congress has passed several new laws, such as the Do-Not-Resuscitate, Hospice Care, and HIPAA (medical privacy) laws, which may not be reflected in Patient advocates that were prepared prior to
As elder law attorneys, we draft medical durable powers of attorneys to address end of life and mental health decisions when one is unable to participate in their decisions (is incapacitated). However, in light of federal privacy acts such as HIPAA and the need to be involved in one’s care before a crisis we address day to day medical decisions to be effective immediately. We cannot stress the importance of this oversight by most attorneys!
Estate Planning is more important than ever with our unstable economy. Families who do the proper planning will be able to preserve more money in a time where every dollar counts more than ever.

Please contact Danielle Mayoras for additional information or questions at or 1-877-PLAN-758.

You can also visit:,, and subscribe to our bi-monthly e-letter, The
Insight: News, Stories, and Thoughts on Elder, Special Needs, and Probate Law.

Reprinted from Alzheimer’s Disease & Related Dementias: a Guidebook for Care, Comfort, Legal
and Financial Security.

How Special Needs Individuals Can Afford Long Term Care Costs with Our Current Economy

By: Danielle B. Mayoras & Matthew L. Joswick

A lot of articles explore Special Needs Trusts and the wonderful benefits that they provide to both parents and individuals with special needs who are on government benefits. When a parent leaves an inheritance over $2,000 to an individual with special needs, the inheritance is actually a gift to the government because it eliminates that child’s qualification for government benefits.

The use of a Special Needs Trust eliminates this disqualification because the inheritance is not left to the special needs individual, but rather to his or her trust. As a result, the individual maintains his or her government benefits and receives an inheritance. These trusts provide peace of mind to the
parents and an additional fund for the individual with special needs. The Special Needs Trust answers questions, such as follows:
Who will look after my loved one with special needs when I pass away?
How will my loved one’s extras be paid after I pass away?

This article, however, goes beyond the basic Special Needs Trust and also focuses on the planning for an individual with special needs from mid life and beyond. In addition to the general concerns that parents of special needs children have, parents also worry about the long term care costs of their special needs loved ones. Specifically, what if the individual with special needs outlives his or her parent and needs long term care? What if the parents are not around to provide the long term care? How will the long term care costs be paid?

The statistics show that it is likely that an individual with special needs will require some type of long term care. They are currently 1.2 million disabled Medicaid enrollees either receiving acute care or long term care. There are several different long term care options including home care, assisted living, adult foster care, and nursing homes.
Each of these will be addressed separately below.

Home care is health and supportive care provided to an individual in their own home by a licensed medical professional. The advantages of home care are obvious – your loved one receives care in the comfort of their own home. This ensures more privacy for your special needs loved one and also allows the family to better monitor the quality of health care that their special needs loved one is receiving.
Assisted living facilities are a middle ground between home care and nursing home care. Typically residents of assisted living facilities require help with their activities of daily living, but do not need skilled nursing home care.
The advantages of receiving care in an assisted living facility are clear – the environment is more residential and less restrictive with a greater emphasis on privacy and autonomy.
With the average hourly rate for home care at $19.18 per hour, and the average cost of assisted living at nearly $40,000.00 per year, receiving care in these environments will be cost prohibitive for most families. Some long term care alternatives to these high costs are Adult Foster Care and nursing homes.
Adult Foster Care (AFC) is a licensed, sheltered living arrangement for adults with special needs who are unable to live alone. AFC homes provide five basic services: room, board, supervision, protection, and household services (laundry, cleaning, etc). Additionally, adult foster care homes may provide the following services:
1. Assistance with dressing, personal hygiene, and/or eating;
2. Transportation to appointments, senior centers, shopping, or activities;
3. Medication reminders of administration; and
4. Assistance with money management.
Typically there is a minimum room and board payment made to providers per month, which is set by the State. This amount is typically equal to the monthly income that the adult with special needs receives in governmental benefits.
Adult foster care may be a cost-effective alternative to nursing homes or larger assisted-living facilities. For many special needs individuals who need long term care, Adult Foster Care is appropriate medically and financially is a good long term care option as well.
On the other hand, nursing care facilities are places of residence for people who require constant care and assistance with their activities of daily living. Residents include both the elderly and individuals with special needs. The numbers are startling – the average cost of nursing home care in the United States exceeds $77,000.00 per year and is expected to reach $190,000 per year in 2030. Furthermore, almost 56% of nursing home residents spend at least one year in the nursing home, with another almost 26% spending at least three years in the nursing home. Many parents
wonder how their special needs loved one will be able to afford it.
One way is to qualify your adult child with special needs for Medicaid. Medicaid is a state administered program that pays for long term care costs if certain eligibility requirements are met. Although this is a Federal program, each state has its own guidelines regarding eligibility and services. Therefore, it is critical to consult with a special needs attorney who is familiar with the specialized Medicaid laws in the state where your loved one resides.
Certain requirements must be met to qualify for Medicaid. These may include your age, whether you are disabled, blind, or aged; your income and resources; whether you are a United States citizen or a lawfully admitted immigrant.
The rules for counting your income and resources vary from state to state and from group to group. There are special rules for those who live in nursing homes and for disabled children living at home.
A single individual who resides in a nursing home may own certain assets, which Medicaid views as exempt assets, and still qualify for Medicaid. For example, in the State of Michigan, those exempt assets for Medicaid eligibility are as follows:
1. Home (with certain restrictions);
2. Car;
3. Personal Property;
4. Burial Blot and Burial Space items;
5. Funeral Contract worth up to $11,072.00;
6. Life Insurance with face value of $1,500.00;
7. $2,000 in cash assets;
8. Assets that are in a Special Needs Trust, an OBRA Trust or a Pooled Income Trust; and
9. Immediate Annuity.
All other assets are countable and an adult child with special needs will not be Medicaid eligible until those assets are spent down or converted into one of the above exempt assets.
You can ensure that your child with special needs qualifies for Medicaid upon your death by planning ahead. By completing a full estate plan, parents are able to place the adult child=s portion of their inheritance into a Special Needs Trust. This trust allows the adult child to maintain government benefits as the Trust is an exempt asset under Medicaid guidelines. When the parents create their own estate plan, their revocable living trust will provide the inheritance, for the benefit of their special needs child, be funneled into the Special Needs Trust
The Special Needs Trust has a trustee, who is responsible for administering the trust and ensuring that the adult child’s needs are met. Assets in a trust of this nature are not countable and in the event that the child requires long term care and needs to qualify for Medicaid, these trust assets will be preserved for the adult child=s benefit. A trust of this nature can be used for most any item the adult child may need with the exception of food and shelter. For example, the trustee can purchase clothing, an automobile, electronic equipment, furniture, fitness equipment, funeral expenses, vacation and travel costs, vocational programs, therapy, personal care items and much more. The
trustee can also use the funds from the trust for non-reimbursed medical expenses.
While government agencies recognize Special Needs Trusts, there are strict rules and it is critical that you work with an experienced special needs attorney to draft the Trust. We have reviewed countless Special Needs Trusts that do not comply with Social Security Insurance and Medicaid Rules. If the funds are used for food or shelter, however, then there is the potential that the adult child=s governmental benefits may be reduced or eliminated. With respect to shelter, your child can use the money to purchase a home, but cannot use the money for rent. In fact, one wrong
word or phrase can make the difference between an inheritance that benefits your child and one that causes your child to lose the many services, assistance, and benefits available.
In the event that the parents pass away without having the proper estate planning in place, there are still planning strategies that can be implemented to preserve the inheritance of the adult child with special needs allowing the adult child to maintain or qualify for government benefits. The inheritance can be placed into an OBRA Disability Payback Trust or into a Pooled Income Trust. These trusts provide the same protections as the above discussed special needs trust with one important difference – both of these trusts have a provision that require the assets to be used for specific purposes after the death of the adult child with special needs. The OBRA Trust requires that in the event there are any funds remaining in the trust at the death of the adult child with special needs, Medicaid is paid back for any services rendered up to the full amount of assets in the trust. The Pooled Income Trust, which is run by a non profit organization, requires that the organization be the remainder beneficiary of the trust.
Something else to keep in mind is the possibility of your special needs loved one executing Durable Powers of Attorney. If your adult child with special needs is competent, then he or she can execute Durable Powers of Attorney. There are two types of Durable Power of Attorney: Financial Durable Power of Attorney and Medical Durable Power of Attorney/Patient Advocate Designation. By executing a Financial Durable Power of Attorney, your child appoints an attorney-in-fact to handle his or her financial affairs in the event that he or she is physically or mentally unable to do so. For example, this may include banking, real estate, signing tax returns, hiring and firing agents, and commencing litigation.
The Medical Durable Power of Attorney/Patient Advocate Designation addresses all of your loved one’s medical decisions including, residential placement, surgery and treatment, and daily medical decisions. If your adult child with special needs is able to execute Durable Powers of Attorney, this will generally eliminate the need to go through the probate court system to obtain a guardianship or conservatorship. These documents cannot be executed by your child until he or she is an adult and is 18 years of age. As probate court can be expensive (legal fees and court costs), burdensome (annual report requirements and multiple trips to court), and time consuming, it is highly
advisable that if your adult child with special needs has the requisite capacity to execute legal documents that they do so. Most importantly, he or she would be able to maintain control of his or her financial and medical decisions.
We know that every parent’s greatest worry is what will happen to their special needs loved one after they are gone. With the proper planning, there are government programs that can ensure that your adult child with special needs receives long term care after you are gone and receives an inheritance from you that does not disqualify them from government benefits. Estate planning is always important to do; however, when one of the beneficiaries is a special needs loved one, the planning becomes critical.

Please contact Danielle Mayoras for additional information or questions at or 1-877-PLAN-758.

You can also visit:,, and subscribe to our bi-monthly e-letter, The Insight: News, Stories, and Thoughts on Elder, Special Needs, and Probate Law.

Reprinted from Alzheimer’s Disease & Related Dementias: a Guidebook for Care, Comfort,

Is Your Wallet Feeling a Little Light?

The Best Kept Secret:
Improved Pension Benefits for Veterans and Surviving Spouses
Most families have no idea that if an individual is a veteran, he or she is entitled to additional income. As individuals age, the rising long term costs make it very difficult to maintain financial security, especially in these rocky financial times. This article explores the often unclaimed income waiting for veterans. For most veterans, the idea of collecting a pension benefit from the military does not seem like a real possibility unless the veteran suffered a service connected disability. However, there is a veteran’s pension benefit program available to all veterans, and their families, which is available to pay for unreimbursed home health and medical expenses and the
unreimbursed cost of assisted living. This program is called the “Aid and Attendance Program” (“AA”).
Eligibility for the AA Program. In order to be eligible for the AA Program, a veteran must have served 90 days on active duty with at least one day during wartime, and must have been discharged under conditions other than dishonorable. Additionally, the veteran must be “permanently and totally disabled” because of a non-service connected condition.

Periods of Wartime Service:
WWI: April 6, 1917 to November 11, 1918
WWII: December 7, 1941 to December 31, 1946
Korean Conflict: June 27, 1950 to January 31, 1955
Vietnam Era: August 5, 1964 (February 28, 1961, for veterans who served “in country” before August 4, 1964) to May 7, 1975
Gulf War: August 2, 1990 – TBA
Permanently and Totally Disabled. “Permanently and totally disabled” means that a veteran must require “care or assistance on a regular basis,” which protects him or her from dangers of a daily living environment. The term can be established by showing one, or more, of the following conditions:
The veteran is blind or has a visual impairment;
The veteran is a patient in a nursing home or hospice facility because of mental or physical incapacity;
The veteran is unable to dress or undress or keep himself or herself clean and presentable;
The veteran needs adjustments to any special prosthetic, orthopedic appliance, or is not able to attend to the prosthetic,
or appliance;
The veteran has a physical or mental incapacity (dementia) that requires assistance on a regular basis to protect the veteran from the hazards of his or her environment.
Furthermore, it is generally presumed that a veteran who is residing in an assisted living facility does meet one, or more, of the aforementioned conditions. However, a letter from the veteran’s personal physician substantiating the veteran’s disability will greatly enhance the benefits process.

Current AA Monthly Pension Benefits

The current approximate maximum monthly AA pension benefits are as follows:
Veteran & Spouse: $1,800.00
Veteran: $1,500.00
Surviving Spouse: $950.00

Unreimbursed Medical Expenses. Unreimbursed medical expenses are generally defined to include the costs associated to health and Medicare insurance premiums, prescriptions drugs, dental and vision care, and expenses related to an assisted living facility, and in-home care aid, and/or adult day care.
Net Worth Valuation. Finally, assuming a veteran, and/or his or her spouse, has tentatively qualified for the AA monthly pension benefit, the final test to fulfill the qualification process related to the net worth of the applicant. With the exception of the applicant’s home, an automobile, traditional household furnishings and personal property, which are treated as non-countable, attorneys who advise clients on veterans benefits are allowing the applicants to maintain
no more than one of the following cash asset levels without jeopardizing his or her opportunity to collect the maximum monthly AA pension benefit:
Couple: $80,000.00
Individual: $50,000.00
However, in practice, if a person’s assets are a home plus $40,000.00 in other assets, there are usually no issues. The home is not counted. In other words, the VA will rarely deny a claim if the net worth is below this number.
AA Pre-Planning. Lastly, with the Veterans Administration only looking at the applicant’s net worth at the time of the actual AA application, and with there being no penalty period for the transfer of assets prior to the time of the application, it is fair to conclude that with proper planning, just about any veteran, and/or his or her spouse, can qualify for a monthly AA pension benefit.
Medicaid Benefits. With the Medicaid program having stricter rules and regulations regarding asset transfers than the Veterans AA Program, it is very important that clients engage a qualified elder law attorney when developing a Long Term Care Plan. For instance, transferring assets to qualify for AA Benefits could result in a five year ineligibility for Medicaid benefits.

Please contact Danielle Mayoras for additional information or questions at or 1-877-PLAN-758.

You can also visit:,, and subscribe to our bi-monthly e-letter, The Insight:
News, Stories, and Thoughts on Elder, Special Needs, and Probate Law.

Reprinted from Alzheimer’s Disease & Related Dementias: a Guidebook for Care, Comfort, Legal
and Financial Security.

The Cost Of Feuding Families

In this economy it is more important than ever for families to have their estate planning needs in order. As this article illustrates, families who don’t are subject to both emotional heartache and monetary loss. These family feuds erupt frequently and happen more than people think.

What Happens When The Family Can’t Get Along?

Dealing with a loved one with Alzheimer’s or dementia is difficult enough, but the problem becomes even more troublesome when the condition acts as a spark to ignite family conflict. Sibling rivalries, second marriages, denied incompetence, and simple greed are but some of the situations that add fuel to the fire and foster dramatic family feuds.
Often the fire grows so great that families become torn in half, spending months – or even years – battling in probate court. Sadly, many families are never able to repair the damage, emotionally or financially.
No one wants to end up in probate court fighting in a public family squabble. What can be done to avoid it?
Sometimes nothing. If someone else is determined to steal from, cheat, or improperly care for someone suffering from Alzheimer’s or dementia, you may have no choice but to go to court. Other times, probate court battles can be prevented, or at least minimized. How? Two ways: know when to call an experienced probate litigation attorney and know your legal rights.

The first one is easy. Anytime you suspect that someone is not acting properly towards an elderly loved one in a way that will either jeopardize that persons’ care or well-being, or may result in a loss of assets, then you should call an attorney who regularly represents clients in contested probate matters. Many such attorneys offer a low-cost or even free consultation. For example, the experienced attorneys at The Center for Probate Litigation will provide a free consultation to discuss your specific situation and let you know whether action is required. Too many families regret waiting and doing nothing – when in doubt, call an expert.

The second way to protect your family and often avoid court is to become educated about your legal rights. The following is an overview of the basic concepts that families of a loved one with Alzheimer’s or dementia may face when a family dispute or conflict threatens to surface.
Challenging a Power of Attorney or Patient Advocate Designation Many people believe that once someone signs a power of attorney, for either health care or financial decisions, or a patient advocate designation, then all control has been surrendered to the person designated to make decisions (called the attorney-in-fact or agent) and the rest of the family has no choice but to step aside. In reality, the appointment of an attorney-in-fact or agent is often just the beginning.
A power of attorney or patient advocate designation is only valid if it was executed in compliance with Michigan law, and the person was legally competent at the time of execution. If a power of attorney or patient advocate was signed by someone who was not competent, then the document can be voided.
Even when dealing with a valid power of attorney or patient advocate designation, the attorney-in-fact has a legal responsibility to act in the best interest of the principal. For health care decisions, this means deciding where to live and whom to provide care, based on what is best for the person in need of care, not what is most convenient for the agents. Often the person appointed to make these decisions want to make these decisions based on what will maximize their inheritance or what is easiest for them. This does not fulfill their responsibility.
For financial decisions, this requires the attorney-in-fact to invest prudently and refrain from self-dealing. Often, a person with Alzheimer’s or dementia requires much more conservative investments than he or she had previously chosen earlier in life. This may require a sale of annuities or securities, and insuring the portfolio is diversified, liquid and protected from extreme market fluctuations.
When the loved one has significant assets, following the advice of a credentialed, knowledgeable and ethical financial planner is essential. But Agents must use common sense too – just because a licensed stock broker or annuity salesmen recommends an investment does not make it suitable for a senior citizen with Alzheimer’s or dementia.

Guardianship & Conservatorship Disputes
What do you do when you discover an invalid power of attorney or patient advocate designation, or that the attorney-infact is not acting in the best interests of your loved one with Alzheimer’s or dementia? The only way to make sure that control is taken away from an agent who is not acting appropriately is to initiate guardianship and/or conservatorship proceedings.
Both proceedings are handled in probate court and involve someone asking for a decision maker to be appointed. Guardians make medical, placement and other life decisions, while Conservators make financial decisions. One person can serve in both functions, but courts can appoint different people as well.
Who gets appointed in these roles?
Most often, it is a family member or another loved one of the individual in need of protection, or ward. And, the ward’s choice does matter! This is especially true for someone with early stages
Alzheimer’s or dementia who still retains some decision-making ability, but requires some assistance. Even an incompetent person’s choice will carry great weight if it was expressed through a power of attorney or patient advocate signed while the person was still competent.
Judges who make this decision often have a difficult time when the family disputes who should act in that role. Sibling rivalries and second marriages present significant challenges. Because probate judges have a great deal of discretion in making decisions, family members vying for appointment must do everything they can to convince the judge that they are the most suitable, and that their opponent is not. This process is not fun for anyone who participates, but sometimes is necessary.
Once the guardian and/or conservator is appointed, those who serve have similar fiduciary obligations as an Attorneyin-Fact. The big difference is that they are monitored by the probate court, and file detailed reports on an annual basis, so that the probate court can make sure that the ward is properly protected. Probate courts often also require bonds to be posted when the protected person has significant assets.
Certainly, no one should choose to initiate a guardianship or conservatorships proceeding unless they have no other good choice. But when diplomacy has failed, or when a loved one’s Alzheimer’s or dementia causes them to be too stubborn to admit that they need help making decisions, it is the only safe choice. With an experienced attorney guiding the family, protective proceedings through probate court helps many people sleep at night knowing their loved one is safe.

Theft and Loss of Assets
Court disputes are not always done to safeguard a person’s well-being. Often they are necessary to help a loved one from losing assets, either through mismanagement caused by their dementia or Alzheimer’s, or theft or exploitation from an unsavory family member or annuity salesman. Knowing when to intervene or not is not always easy.
Many seniors suffering from Alzheimer’s or dementia do not want to admit that they need help with their financial decisions. Often, their children do not want to insult them by asking too many questions. But when you have a loved one diagnosed with dementia or Alzheimer’s, you owe it to them to probe. Make sure their investments are secure and appropriate, and their assets are protected.
In doing so, pay attention to warning signs of exploitation. The National Center on Elder Abuse lists many warning signs of exploitation, including sudden changes in banking practice, unexplained withdrawal of large sums of money, the addition of names on a bank signature card, unauthorized withdrawal of the elder’s funds using an ATM card, abrupt changes in a will or other financial document; substandard care being provided or bills unpaid despite the availability of adequate financial resources, forged signatures, and unexplained transfers of assets, among others.
If you discover any of these warning signs, talk to an elder law attorney with knowledge in financial matters immediately. Often, children or other trusted family members are the ones exploiting or even stealing money from someone suffering from Alzheimer’s or dementia. In other cases, there are greedy financial planners who target vulnerable adults with high-commission, inappropriate investments. Financial exploitation is not always easy to spot.
Being on guard and proactive is the best defense.

Challenging Changes to a Joint Asset, Will or Trust
What do you do when you discover financial exploitation in a way that is not as overt as theft? What do you do when your father with Alzheimer’s or dementia has added his second wife’s name to a bank account that was always meant for the family, or your mother changed her will or trust to omit you in favor of your brother or sister?
All of these can be successfully challenged in court under the right circumstances, with the help of an experienced probate litigation attorney, but only if the help is sought before it is too late. Sometimes, it is not too late even after the exploited senior passes away. Will and trust changes, joint assets — including bank accounts and real estate, and even outright gifts can be set aside and undone on the basis of incompetence, undue influence, fraud and other reasons.
Incompetence – The test for competency varies depending on the document challenged, but for every situation, the crucial factor is whether the individual reasonably understood the nature of the document or transaction when it was signed. For someone in the early stages of Alzheimer’s or dementia, this is not a bright line test with an easy answer.
Undue Influence – When a person is compelled to make a decision that he or she would not have made, the decision is often the product of undue influence, which is a basis to set it aside. In fact, the law presumes undue influence has occurred when the beneficiary was acting as the power-of-attorney, or otherwise occupied a position of confidence and trust, before the decision or document was made.
Fraud – Even when competent, vulnerable adults with Alzheimer’s or dementia can be tricked into transferring assets, or changing bank accounts or estate planning documents, based on material statements of fact that are false. When someone relies on a material and false representation, the transaction or document can be set aside as invalid.
Accounts of Convenience – For joint bank accounts in particular, and sometimes other joint assets (sometimes even real estate), a loved one with Alzheimer’s or dementia may add the name of a child or other trusted relative as a convenience to help will bill paying, financial management or as a “poor man’s will” to save costs. If the person did not intend the joint owner to keep the asset on death, but instead only added the joint name as a convenience, then courts can and do order the asset to be turned over to the estate and shared with the other beneficiaries.
The decision whether or not to contest the joint nature of an asset, or a new estate planning document, is not always an easy one, and certainly should not be made lightly. Court battles seeking to set aside documents or transactions can be costly and time-consuming. But sometimes, honoring the true wishes of a loved one with Alzheimer’s or dementia is worth the fight.

Please contact Andrew W. Mayoras for additional information or questions at or 1-877-PLAN-758.

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Reprinted from Alzheimer’s Disease & Related Dementias: a Guidebook for Care, Comfort, Legal

and Financial Security.

What Every Caregiver Must Know In These Uncertain Financial Times

Introduction to
Elder Law for Caregivers

Caregiving for someone with Alzheimer’s or a related dementia is one of the most difficult jobs in the world. In addition to making sure that your loved one is safe and their daily needs are met, you are also faced with the fact that there are many financial and legal issues that must be addressed. As if that was not enough, you also are trying provide the best quality of care at the least cost to the family. Caregiving is expensive and stressful, especially in these uncertain financial times. Hopefully, this article can provide you the financial and legal answers you need to do a better job.
Elder law is not just for senior citizens who are no longer independent or who are about to enter a nursing home. Elder law is for anyone who is middle aged and beyond — and sometimes even younger.
There are now more than 5 million people in the United States living with Alzheimer’s. This is a 10% increase from 5 years ago, and clearly supports the long forecasted dementia epidemic. One in eight persons age 65 and over have Alzheimer’s disease and nearly half of all persons over the age of 85 have Alzheimer’s. Every 72 seconds someone develops Alzheimer’s disease; by mid-century someone will develop Alzheimer’s every 33 seconds.
You are not alone. There are over 50 million caregivers in this county. Studies show that 12 million people in this country need long term care. Twenty-one percent of American adults provide free caregiving for loved ones. Fiftynine percent of these caregivers either work outside the home, or have worked outside the home, while providing care.
It has been estimated that the value of free services given by caregivers is in excess of $310 billion a year.
Additionally, as a result of caregivers, businesses are also effected by the caregiving epidemic. Specifically, over 60% of caregivers work and dedicate on average 18 hours per week to provide care. Family caregivers account for 73% of early departures and late arrivals in the workplace. Caregiving by an employee costs the average employer $2,100 per employee or for all employers as much as $33 billion annually. These services are provided by family members without regard to cost because of the love and respect they have for their loved ones.
These statistics only represent the economic cost of caregiving. It does not even address the emotional and physical toll on caregivers. The fact is that 70% of all caregivers over the age of 70 die first. People generally do not think about the health of the caregiver or plan for the unthinkable – – the caregiver having health problems or passing away before their loved one with dementia. It is for this reason that we approach each situation from the worst case scenario. We plan for the worst and hope for the best, that way our clients are always protected.
We know that age is the biggest risk factor for Alzheimer’s and dementia related diseases, however, these diseases do not discriminate. We have helped clients who have loved ones suffering from Alzheimer’s and dementia related diseases, some as young as their late 30’s. The time to look down the road and make major decisions regarding your health, well-being and finances is now.
It is important to understand the difference between an elder law attorney and an estate planning attorney. While estate planning attorneys are concerned with what happens to your estate upon your death, elder law attorneys ensure that your affairs can be managed in the event of your disability as well as once you pass away. Specifically, an experienced elder law attorney addresses the following tough questions like:
Who will make my medical decisions when I am no longer able to make them?
If I am unable to care for myself, how can I achieve the greatest quality of care without bankrupting myself or my family?
Who will be able to talk to my doctors and the hospital when I require guidance even though I am able to make my own medical decisions?
Who will make my end of life decisions?
What happens if I get sick and cannot stay in my home anymore?
How am I going to pay for it?
For caregivers of loved ones with Alzheimer’s and related dementia, information regarding Medicaid and estate planning is a necessity. It is our hope that this guidebook will answer many common legal questions and that it will eliminate the belief that it is never too late to plan.
In these uncertain financial times, the proper long term care planning is more important than ever. Families who seek the proper professional advice will be able to protect significant portions of their assets, possibly all of their assets, in spite of these rocky financial times. However, families who fail to do the proper planning, will rapidly deplete their assets with the rising nursing home costs.

Medicaid Basics
We wanted to use this opportunity to explain Medicaid basics and to correct some of the most frequently misunderstood concepts of Medicaid. Please keep in mind, however, that the Medicaid laws are constantly changing. A brief summary of the most recent changes are discussed in the next Chapter. The discussion below is based on the current Medicaid laws as of January 2008. Prior to implementing any of the strategies discussed below, it is imperative that you contact an experienced elder law attorney. There are many common questions we are asked, such as:
What is the difference between a countable asset and a non-countable asset?
A countable asset means that Medicaid looks at it and it effects your Medicaid eligibility whereas a non-countable asset does not effect your Medicaid eligibility.
If I am single and trying to qualify for Medicaid, what assets can I keep?
A single individual can keep:
• $2,000.00 cash;
• a home if it is not owned by a living trust;
• all personal property and jewelry;
• one vehicle;
• life insurance with a combined face value up to $1,500.00;
• an irrevocable funeral contract up to a maximum of $11,072.00;
• burial space plan;
• OBRA ’93 Payback Trust, Pooled Income Trust; and
• in certain circumstances immediate annuities.
If my spouse goes into a nursing home, what assets can I keep?
For 2008, if your spouse goes into a nursing home,
then you may keep one-half of the countable assets, up to a maximum of $104,400.00 and no less than $20,880.00.
These numbers are adjusted annually. Medicaid will make this assessment based upon the value of your assets on the “snapshot date,” which is the first day that your spouse goes into the hospital or nursing home and receives continuous care for 30 days or more or commonly know as the date the last night your spouse slept at home.
Are there any other special planning tools for married couples?
There is very specialized technique called a “Trust for the Sole Benefit of the Community Spouse” that can be used in some circumstances to protect a significant portion of a married couple’s assets. This is an irrevocable trust with many requirements.
If my spouse goes into a nursing home, can I receive his or her Social Security and pension benefits?
It is possible. Sometimes, Medicaid will allow “shelter and utility allowances,” which means that it will divert a portion or all of your spouse’s income to you to help you pay your bills. For 2008, the maximum amount that you can receive as a
shelter allowance is $2,610.00 per month. In some circumstance where this is not enough, a probate court can increase the income allowance.
Does my mother have to wait five years to qualify for Medicaid?
No. The five year period is not a waiting period, but only an examination period. Therefore, if your mother enters a nursing home on November 1st and spends down her assets by January 1st, she may be eligible for Medicaid on January 1st.
Will Medicaid be able to recover the cost of care (Estate Recovery) from the home?
Yes, if you do not plan properly. Michigan recently enacted a probate Estate Recovery, which allows the State to file a claim against any assets that pass through the probate process. However, the residence and any other assets that pass to beneficiaries outside of probate court are not subject to Estate Recovery. Elder law attorneys accomplish this goal of protecting the home, through the preparation of a special deed. This deed allows your loved one to maintain ownership of the home
while living, and avoids probate court and Estate Recovery upon death, while remaining an exempt asset from Medicaid.
My mother applied for Medicaid and even though she had less than $2,000.00 in the bank, she was denied. The Medicaid office informed us that it was because her house was in a trust. Is it true that her house has to be sold before she can qualify for Medicaid?
Her house does not necessarily have to be sold. Your mother could execute a  quit claim deed transferring the home out of her trust. Many people do not realize that when a home is owned by a trust, it is a countable asset. When a home is not owned by a trust, it is a non-countable asset for Medicaid purposes. However, it will then go through the probate court process and be subject to Estate Recovery, unless one plans properly as explained in the question above. It is important to be certain that any attorney you work with is familiar with the Medicaid laws. Additionally, not to complicate matters more, there are circumstances when titling a house in a trust can be very advantageous.
Is it true that if I gift money to my children before applying for Medicaid, it will disqualify me from receiving Medicaid?
Not necessarily; it depends on when the gift was made and how it was done. Even though the laws
regarding gifting and Medicaid have change, it is important to understand that you can make gifts and still qualify for
Medicaid if the gifting is done properly. Gifting should only be done with the advice of an elder law attorney. See the next chapter titled “Recent Changes in Medicaid Laws.”
If my father added my name to his assets and now he needs to qualify for Medicaid, does that mean that I can keep half of the assets? The answer is: it depends. This is a very complicated area of Medicaid planning. It depends on whether the asset is available to your father without another’s consent and when your name was added to it. If your father added your name to his assets and he still has access to them, then the assets remain his irrespective of when he added your name. For instance, joint bank accounts are available to all owners and are countable. On the other hand, if
your father added your name to the cottage over five years ago, the asset may not be available for Medicaid purposes.

Recent Changes in Medicaid Laws
(full of traps and pitfalls for the uninformed)
Every so often, Congress changes the rules of Medicaid eligibility for nursing home coverage. In recent years the rules have been relatively stable, with no changes in federal law since 1993. However, on February 8, 2006, the Deficit Reduction Act of 2005 (“DRA”) was enacted and it substantially changed Medicaid laws.
In our collective experience of 37 years of practicing elder law, we have never seen such drastic changes when it comes to providing benefits to the elderly, disabled, and poor. Michigan enacted the DRA on July 1, 2007, effective retroactively to February 8, 2006. In addition to the drastic changes imposed by DRA, Michigan has implemented additional significant changes in April 2007, September 2007, October 2007 and in January 2008. This Chapter is intended to provide a brief summary and is not meant as a comprehensive summary of the changes.
Here is a brief summary of some of these new laws:
Increased Look-back Period.
All transfers under the new law, whether to individuals or to trusts, will be subject to a
five year look-back period rather than the previous look-back period (three years for individuals and five years for trusts). This has made the Medicaid application process more difficult and could result in more applicants being denied for lack of documentation, given that they will need to produce five years, instead of three years, worth of records. This will be particularly true for families that have a loved one with Alzheimer’s and related dementia as their record keeping skills are likely to have been poor. Keep in mind, if you work with an experienced elder law attorney, there may be ways to reduce the documentation burden of the five year look-back period.
Altered Penalty Start Date.
For asset transfers that are less than fair market value, the penalty period now begins on the
date that the individual would otherwise have been eligible for long term care services (Medicaid as well as the home based community waiver) but for the asset transfers, rather than the previous penalty period start date of the asset transfer itself. Simply put, Medicaid will penalize from the date of the Medicaid application instead of the date of the gift. Further, all transfers during the look-back period will be added together to determine the total transfer penalty.
With respect to asset transfers that occurred prior to February 8, 2006 the old penalty start date, the date of the gift, still applies.
Charitable and political contributions as well as innocent gifts to family members under the tax laws are some of the types of transfers that could result in a Medicaid ineligibility period.
For example, a semi-healthy grandmother gives her granddaughter $20,000 to assist with her college education. Three years later, the grandmother, as a result of Alzheimer’s disease or dementia, requires nursing home care. Over the next eighteen months, she spends her life savings on her own care. Forty-eight months after her gift to her granddaughter, the grandmother has depleted her assets and applies for Medicaid. She will be penalized for about four months before
she receives Medicaid benefits, even though she has no money remaining to pay for her care. How her care will be paid for during that four month period of ineligibility is anyone’s guess.
Hardship Waivers. To mitigate the effect of these new rules, Congress has mandated that each state institute a process for seeking a hardship waiver for those instances when the application of the transfer penalty would result in a deprivation of medical care that would endanger the applicant’s health or life, or for “food, clothing, shelter, or other necessities of life.” Michigan currently considers hardship when a delay in treatment may result in the person’s death or permanent impairment of the person’s health. The current standard is much stricter than that imposed upon by the new. Unfortunately, we do not anticipate that Michigan will change their hardship exception anytime soon.
Home Equity.
Medicaid previously disregarded the value of a primary residence regardless of its value in counting
assets. Under the DRA, individuals with more than $500,000 in home equity are now ineligible for Medicaid nursing home benefits. Keep in mind that under pre and post-DRA laws, any home owned by a revocable living trust is considered a countable asset and must be removed from the trust before the applicant can qualify for Medicaid. The cap on equity does not apply if there is a spouse or child under 21 or a blind or disabled child residing in the home.
These exceptions apply regardless of the equity value of the home.
Treatment of Annuities.
The DRA has set forth changes concerning annuities which are very complex and as of this date, it is unclear how they will be interpreted. The gist of these changes is to provide a requirement that the State of Michigan be named as a beneficiary to the extent medical services have been paid by Medicaid as well as instituting reporting requirements for the annuity companies. Previously, certain annuities were treated as exempt assets and did not require that the State of Michigan be named as the beneficiary. In the event that the Medicaid applicant has a spouse, however, Medicaid will only have to be named as a remainder beneficiary.
Long Term Care Insurance Partnership.
Under the DRA, Medicaid disregards any assets or resources in an amount equal to the insurance benefit payments that are made to or on behalf of an individual who is a beneficiary under a long term care insurance policy. This will most likely be implemented in Michigan sometime in the 2008 calendar year.

Danielle Mayoras • •1-877-PLAN-758 •

Are you prepared for that call in the night?

  • Are you currently a caregiver and experiencing overwhelm?
  • Have you had “the important conversations” with your aging parents or loved ones?
  • Is it hard to see solutions in the midst of juggling all the caregiving?
Welcome to the Designated Daughter Program where you will find support, information and an expert network to help you maintain your health, life balance and financial security while helping your aging parents or other loved ones maintain their dignity and quality of life.