If a loved one is experiencing memory loss or suddenly making poor decisions, you may consider what needs to be done. The option of last resort is to ask the court to appoint a guardian. This requires a declaration of incapacity. Because a guardianship takes away the rights of a person, a guardianship should be pursued if no other avenues of assistance are possible. What Does Incapacity Mean?Determining whether someone is incapacitated such that he or she is unable to make their own decisions is a complicated process. A person cannot be declared incapacitated simply because they make imprudent or foolish decisions. For example, a court may not declare a person incapacitated simply because the person spends money in ways that seem odd to someone else or even the court. Furthermore, a developmental disability or mental health condition is not, by itself, enough to declare the person incapacitated. A person cannot be declared incapacitated simply because they make imprudent or foolish decisions. The standard for whether someone is legally incapacitated isn't always the same as whether the person has capacity to make legal decisions.
Adult GuardianshipIf a loved one becomes unable to make decisions for themselves, a guardianship may be unavoidable if your loved one has not done any estate planning .
The standard under which a person may require a guardian differs from state to state. In some states, these standards depend on whether you are seeking a complete guardianship or a or just a conservatorship over th person's assets. Generally, a court may deem a person in need of a guardian when they show a lack of capacity to manage all or some of their affairs or meet some requirements of their health, safety and well-being. The court usually looks at a number of factors in determining the need for a guardian or conservator. These include the following:
Legal Standard for a Guardianship in the District of ColumbiaIn the District of Columbia, the court may appoint a guardian or conservator for an individual, when the individual is proven to be incapacitated. An incapacitated individual is an adult whose ability to receive and evaluate information effectively or to communicate decisions is impaired to such an extent that he or she lacks the capacity to manage all or some of his or her financial resources or to meet all or some essential requirements for his or her physical health, safety, habilitation, or therapeutic needs without court-ordered assistance or the appointment of a guardian or conservator. Legal Standard in MarylandIn Maryland, the court may appoint a guardian of the person or a guardian of the property, and a guardian can be of both the person and property. Guardian of the PersonA court will appoint a guardian of an alleged disabled person if it determines by clear and convincing evidence that a person (the alleged disabled person):
Guardian of the PropertyA court will appoint a guardian of the property if it determines that the alleged disabled person:
Legal Standard in VirginiaIn Virginia, the court may appoint a guardian or conservator upon a finding by the court or even a jury that the alleged person is incapacitated and is in need of a guardian or conservator. "Incapacitated person" means an adult who has been found by a court to be incapacitated to be incapable of receiving and evaluating information effectively or responding to people, events, or environments to such an extent that the individual lacks the capacity to (i) meet the essential requirements for his health, care, safety, or therapeutic needs without the assistance or protection of a guardian or (ii) manage property or financial affairs or provide for his support or for the support of his legal dependents without the assistance or protection of a conservator. Final ThoughtsGuardianships in the District of Columbia should be avoided. We work to ensure that our clients and their families stay out of court - most importantly guardianship proceedings.
If a guardianship cannot be avoided, you should be aware that you may be successfully appointed as the guardian of your loved one. However, you will likely find the requirements and reporting obligations to be overwhelming and if you miss a deadline, the court will readily replace you with a professional guardian and you will lose complete control over your loved-one and his or her resources. To ensure that you do not lose control, you must obtain counsel to advise you on how to meet the requirements and reporting obligations.
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Millions of seniors nationwide rely on the financial support they receive each month via their Social Security benefits checks. These payouts have failed to keep up with inflation and the escalating prices of basic goods and services over time.
The Cost-of-Living Adjustment (COLA)At the end of each year, the Social Security Administration (SSA) informs Social Security recipients about how much they can expect to see in their payouts for the forthcoming year. Benefits typically undergo some level of change based on the SSA’s annual cost-of-living adjustment (COLA).
Boosting Benefits and COLAs for Seniors ActIn late March 2024, U.S. Senator Bob Casey introduced the Boosting Benefits and COLAs for Seniors Act. The Act changes the formula that the SSA uses to calculate Social Security benefits for older adults. Specifically, it proposes using the Consumer Price Index for the Elderly (CPI-E), which would better reflect the specific types of costs seniors face.
Senator Gillibrand, a cosponsor of the legislation, explains that this change would “factor the high cost of health care into Social Security benefits calculations.” In turn, this would mean bigger payouts for seniors and, she adds, would “help make sure recipients aren’t forced to choose between paying for their medication and buying other necessities.” Medicaid is the primary government program that offers long-term care benefits (such as assistance with dressing, eating, transferring in and out of bed, walking etc). In order to be elibigle for these benefits in your home or in a nursing home, you must meet both medical and financial elibility requirements. Most people erroneously believe that you must be broke to meet the financial eligibilty requirements. This is not true. In fact, pre-crisis planning for long-term care benefits can protect you from having your wealth disqualify you from receivign Medicaid long-term care benefits. Medicaid Asset Protection Trusts (MAPTS) are the fundamental pre-crisis planning tool so long as you not need Medicaid long-term care benefits within the next five years. (If you need Medicaid long-term care benefits now, then you are in crisis mode. And the strategies you would employ to quailfy for Medicaid without going broke would not include transfering your assets to a MAPT.) Below we discuss the scope of Medicaid and how MAPTs can be used a pre-crisis planning technique. Background on MedicaidMost people know Medicaid to be the state- and federally funded health program for lower-income persons of all ages. However, most people do not know that Medicaid is also the program to pay for long-term care (which is not considered healthcare). Because Medicaid was intended for the neediest of us, Medicaid imposes specific rules on how much income and resources the needy can have and still qualify for benefits. Hence most people think that you have to go broke in order to qualify for Medicaid benefits. Each state has different rules for how much an applicant may have in income and assets to qualify for Medicaid. To qualify for Medicaid, you must fall under your state’s corresponding limit, which can be as low as $2,000 for an individual and $3,000 for a married couple. These resource limits can also vary depending on whether a person applies for institutional or nursing home care, community-based services, or regular Medicaid. If your assets are above the resource limit that would allow you to qualify for Medicaid, you may be able to engage in planning that will allow you to qualify for Medicaid. Pre-crisis planning often involves establishing a Medicaid Asset Protection Trust (MAPT) which should be created and funded five-years before appling for Medicaid. If properly drafted and funded five years before applying for benefits, a MAPT can enable you to qualify under the eligibility rules (the front-end) and protect your assets from Medicaid recovery rules on the back-end. How Does a MAPT Work?A MAPT is an irrevocable trust created during your lifetime. The primary goal of a MAPT is to transfer assets to it so that Medicaid will not count these assets toward your resource limit when determining whether you qualify for Medicaid benefits. A MAPT must be in writing and properly acknowledged. You must also pick a trustee (not yourself) to manage the trust and its assets. The trustee can be a family member whom you trust. A MAPT must be created with sufficient time to avoid running afoul of Medicaid lookback periods. When it comes to qualifying for Medicaid, transfers to trusts are subject to a 60-month (five-year) lookback period. That is why this type of planning should be done before the need for Medicaid arises, preferably as early as possible. In addition, assets to be put in the MAPT actually need to be transferred before the 5-year look-back period. In the case of real estate, you must transfer the deed to the trust. Stocks and bonds must be registered in the name of the MAPT. While you no longer own assets after they are transferred to a MAPT, and assets may not revert to you, you can still benefit from these assets. For example, if you transfer your home to a MAPT, you may still be able to live there. In other situations, income generated from the trust principal may be paid to you (although you cannot liquidate or withdraw the principal). However, note that this income can be counted as available income for purposes of Medicaid eligibility. Can You Protect Your Home With a MAPT?People frequently wish to use a MAPT to protect their homes as it is their biggest assett and they want their loved-ones to inherit the family home. When examining any asset, including your home, under the Medicaid rules, you must consider both eligibility requirements (front-end) and the recovery rules (back-end). For example, if your home is under the equity limit then Medicaid may not “count” your home as an asset that falls within your resource limit. However, not being counted as a resource does not mean that your home is safe from Medicaid. You must also consider the estate recovery rules. These rules impose on every every state, including the District of Columbia, a requirement - after the Medicaid beneficiary dies - to recover from the beneficiary's estate what Medicaid had paid for the beneficiary's care. Following the estate recovery rules, a home may or may not be exempt from recovery. In some circusmtances the home will be exempt if there is a surviing spouse or disabled child still living in the home. However, if there is no applicable exemption to the circumstances in place, then the Medicaid recovery program may impose a lien on the family home in the course of trying to recover that amount of money Medicaid paid for the beneficiary's care. A proper planning strategy, which may include using a MAPT, can avoid this scenario. MAPTs also offer a certain degree of flexibility. For example, if you need to downsize to a smaller home, the MAPT can sell the house, receive the proceeds of the sale, and then purchase an apartment where you may reside. The new property is still protected from Medicaid, and the lookback does not start over. There are also some other features of MAPTs that lessen the sting of “irrevocability.” You may retain the power to change the trustee or beneficiaries of the trust. Other Assets That Can Be Placed in a MAPT Many types of property can be placed in a MAPT to help you qualify for Medicaid. Examples include:
The fees associated with preparing a MAPT can be costly, ranging from a few to several thousand dollars. Every person’s situation is unique, and you should not assume a MAPT is suitable for you without speaking to us. If you want to discuss how a MAPT may be included in your estate plan, its consequences and much more, then please contact us now. |
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