Medicaid Planning

Medicaid Income Rules When You Have a Community Spouse and an Institutionalized Spouse

Any way you look at it, long term care services are expensive. And when you have a married couple with one spouse residing in the nursing home while the other spouse is healthy enough to reside in their residence, it gets tough because on top of the several thousand dollar nursing home bill, the couple is also spending thousands monthly to maintain the residence. In these circumstances, couples spend hundreds of thousands of dollars over several years.

Many couples, particularly those who do not plan ahead, are forced to consume their assets (also called "Countable Resources"). This post is not about spending or protecting the assets, but this post is about how the monthly income of the couple gets handled.

Here's an example. Let's say that each spouse is receiving $2,000 of monthly income (social security and pensions are common forms of monthly income, but there are others).

Louisiana Long Term Care Medicaid rules provide that ownership of income is determined without regard to community property laws. For Medicaid purposes, a spouse has full ownership of income paid in his name.

In determining how much of the income the couple can keep. Medicaid rules provide that the income of the community spouse is never to be considered in determining eligibility for an institutionalized spouse. Keep in mind that the spouse residing in the nursing home institution is called the "institutionalized spouse," while the spouse still living in the community is called the "community spouse." The community spouse always gets to keep all of the community spouse's income.

In order to determine the institutionalized spouse's patient liability, we must start with that spouse's gross monthly income ($2,000 in our example) and subtract their personal needs allowance ($38). Then, we subtract the Community Spouse's Maintenance Needs Allowance.

The Community Spouse's Maintenance Needs Allowance is calculated by subtracting the community spouse's income ($2,000) from the Community Spouse's Maintenance Needs Standard ($3,160.50 for the first half of 2019 - it gets adjusted twice each year). Thus the Community Spouse's Maintenance Needs Allowance totals $1,160.50.

So, $2,000 minus $38 minus $1,160.50 equals $801.50. This is the institutionalized spouse's patient liability. The concept here is that the community spouse always gets to keep all of the community spouse's income. But if the community spouse's income is less than the applicable Maintenance Needs Standard, then the community spouse gets to keep enough of the institutionalized spouse's income to get the community spouse up to a total of monthly income that equals the Maintenance Needs Standard.

Keep in mind here that these are Louisiana rules and your state's rules may differ. Also note that this calculation is not made, nor is it relevant, if the patient is denied Medicaid due to too many countable resources or for some other disqualifying reason.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

Use "Return of Transferred Resources" Rules To Qualify for Louisiana Long Term Care Medicaid

This post will help people who have a family member or loved one in a nursing home (or their loved one is about to enter a nursing home) and the family member or loved one has more than $70,000 of countable resources.

Most people think that if you enter a nursing home owning more than $2,000 of assets (other than your home and car), then you will be forced to spend all of those assets on your care until you deplete them down to less than $2,000. Nursing homes are expensive so the money gets depleted rapidly, preventing seniors from being able to leave an inheritance to their children or other loved ones.

But there is a particular legal strategy that can enable you to protect at least half of your countable resources, even if you don't take advantage of the strategy until you (or your loved one) are already in the nursing home as a private pay patient.

Let's use an example to describe how the Return of Transferred Resources provisions of the Louisiana Medicaid Eligibility Manual ("Medicaid Manual") can help one family save $100,000. Let's say Mom (who is not married) is entering the nursing home with a bank account balance of $200,000.

Now we must look at a couple of provisions of the Medicaid Manual. The first provision says, "Do not continue to count the uncompensated value of a transferred resource if the original resource is returned."

Another important provision states, "If only a part of the asset or its equivalent is returned, the penalty period is modified, but not eliminated."

In our example, let's say Mom donated $200,000 to Daughter just prior to Mom entering the nursing home. Mom then applies for Medicaid and gets denied due to the transfer of countable resources. Medicaid will assess a penalty period equal to 40 months ($200,000 transferred divided by $5,000 LA monthly private pay rate). The penalty period begins the month Mom is determined eligible for Medicaid except for the transfer of resources.

Next, Daughter returns to Mom $100,000 of the original $200,000 transferred. As a result, Medicaid will modify the penalty period from 40 months to 20 months. Now, Mom has $100,000 in Mom's account. Daughter has $100,000 in Daughter's account. And Mom's modified 20 month penalty period is underway. Mom uses the $100,000 in Mom's account to pay for her care during the 20 month penalty period.

At the end of the 20 month penalty period, Mom has less than $2,000 of countable resources, the penalty period expires, Medicaid starts covering Mom's nursing home expenses, and Daughter still has $100,000 in Daughter's account.

A few things to keep in mind. We are basing this on the Louisiana Medicaid Eligibility rules. If you live in another state, find out what your state's rules are on the return of transferred resources. Second, DON'T TRY THIS AT HOME. Complications result through the Medicaid Application process, the many transactions that take place, and the providing of appropriate financial institution documentation to Medicaid and other third parties. Get good help. One false move and you could do more harm than good.

Also, the family members that play a role in this must be 100% cooperative and supportive. It does not good if they turn around and spend all of the money on themselves.

So, what should you do? Call our office and say you'd like to find out of t he "Transfer and Return" strategy can help your family protect assets. We'll look at your situation and determine whether this would be worthwhile to take advantage of.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

2019 Medicaid Asset Limit Updates

Every year the State of Louisiana's Department of Health adjusts certain Louisiana Long Term Care Medicaid asset and income limitations for Long Term Care applicants and recipients. The following is a summary of the changes made for 2019.

The Long Term Care Resource Limit for Single Individuals ($2,000) and Married Couples ($3,000) has not changed.

The Spousal Resource Standard has increased from the 2018 amount of $123,600, to the 2019 new limit of $126,420. What this means is that if one spouse is in a nursing home (the "institutionalized spouse") and one spouse still lives in the community (the "community spouse"), the the community spouse can retain up to $126,420 of Countable Resources. The rationale is that the spouse who is not in the nursing home needs assets to live off of.

Note that the Louisiana Home Equity Limit has increased from $572,000 in 2017, to $585,000 for 2019. Most people realize that the home is not a countable resource - it is an exempt asset. But what some don't realize is that when a Medicaid recipient dies, the State of Louisiana has Estate Recovery Rights which allows the State of Louisiana to force the sale of the home to reimburse Medicaid for what Medicaid spent on the deceased Medicaid recipient's care.

However, if the home, at the time of Medicaid application, is worth more than $585,000, then the applicant will not qualify for Medicaid due to Louisiana's Home Equity Limit of $585,000.

Regarding monthly income, the new Spouse's Maintenance Needs is $3,160.50 of monthly income. Generally, the Community Spouse will be permitted to keep the first $3,160.50 of the couple's monthly income. Exceptions to this rule apply, however, so work with the right estate planning attorney to protect as much of your assets and income as possible.

Finally, the Average Monthly Cost for Private Patients of Nursing Facility Services increased on March 1, 2018 from $4,000 to $5,000. This means that if you make an uncompensated transfer within five years prior to applying for Medicaid, you will be assessed a penalty period of the value of the transfer divided by $5,000.

Note that this post does not address any of the planning strategies that are available to help people protect what they own, nor is it an in depth discussion of the Medicaid definitions, such as countable resource or exempt asset, nor do these figures apply to all 50 states - each state is different so if you live outside of Louisiana, make sure you are working with the correct figures.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

Who Will Pay Your Long Term Care Expenses (Part 3 of 3)?

People turning 65 have a 70% chance of needing long term care services. And 20% of people turning 65 will need long term care services for more than five years.

Basic long term care services exceed $5,000 monthly. In 20 years, this cost will double. Funds come long term care services come from three sources: (1) the government; (2) insurance companies; and (3) out of people's own pockets.

In previous posts we discussed more specifically how the government pays people's long term care expenses through Medicaid (Part 1), and we discussed how insurance companies provide funds to help people cover all or a portion of these expenses (Part 2). Here we'll address what happens when people are forced to pay for the care out of their own pocketbooks.

Here are some problems that families incur when they have to spend their own hard-earned dollars paying for long term care services.

Sometimes a family will admit a spouse or parent into a nursing home, forking out $6,000 per month, while the people in the rooms to the left and the right, and the nursing home resident across the hall, are all getting what's called "a free ride." This makes people bitter about the "system."

But let's say, rather, that a family decides to skip the nursing home route and they decide to keep husband/wife/father/mother at home. Well, 24/7 care these days cost in excess of $10,000 monthly - so the funds go even faster.

So now the family decides to save money by having the children "take turns" caring for their parent. But what often happens is only two of the four children live in the same geographic area, while two others live in town. And the primary caregiving daughter who lives locally gets made at her siblings because, while she does not mind caring for her parent, she's having to carry the heave load while other siblings don't pull their weight. All this causes family relationships to tear apart - at least that's what they tell me!

So, what should you do?

(1) Plan ahead. You'll have the most options if you start having serious discussions while you are healthy. Talk to an attorney who can help you with these and other estate planning options. Talk to your family who will play a significant role in your care.

(2) Get some help. To get the best information about your best options, you'll need help from an estate attorney who understand's your state rules regarding Medicaid eligibility, and what it takes to get there. You'll need to uncover your long term care insurance options - perhaps your attorney can guide you through this as well. And you'll need to consult with your family who will be assisting you in the future.

(3) Don't be a victim of "Paralysis By Analysis." Sometimes, when there are too many options to consider, and some of those options seem complicated, people throw up their hands and take no action, putting it off for another day, which turns into another year and then another decade.

So plan ahead. Get good information. Work with good people so you can get it right the first time, and then live your life to the fullest knowing that your long term care needs will be met according to your plan.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

Medicaid Eligibility: What If You Transfer Assets, And Then Transfer Additional Assets Later?

We get asked the following question often: "What if I make a transfer out of my name to other individuals, or to a trust, and then I transfer additional assets out of my name at a later date? Which of these assets will be protected? How will this affect my long term care Medicaid application or eligibility?

One of the biggest threats to a person's estate is that they will be forced to deplete their estate while they are alive due to long term care expenses, and then the state will exercise it's estate recovery rights when they die so that the children or other heirs will not be able to inherit the family home.

Many people transfer assets to individuals or certain kinds of trusts while they are alive in an attempt to "protect" those assets from nursing home expenses. However, the complicated Medicaid eligibility rules make it difficult for people to take the actions they want or need to take to protect their estate.

One area that causes a great deal of confusion is when an individual makes multiple transfers at different times. Let's take an example: Let's say Joan transfers assets having a value of $400,000 on January 1, 2016. Then, on January 1, 2020, Joan transfers an additional $50,000. Then, on March 1, 2021, Joan moves into the nursing home and applies for Louisiana Long Term Care Medicaid. The following is the analysis that takes place.

An inquiry will be made to determine whether Joan had transferred any resources in the previous five years. The only resource transferred in the previous 5 years was the $50,000 transfer on 1/1/20. Since a transfer had taken place in the previous 5 years, a transfer of resources penalty period must be determined. In order to determine the penalty period, one must divide the value of the resource transferred ($50,000) by the average monthly private pay rate (determined to be $5,000), rendering Joan ineligible for Medicaid for 10 months beginning with 3/1/21 (the date of Medicaid application and otherwise eligible except for the transfer).

Many people, once they realize the application of the rules to the multiple transfers will conclude that the $400,000 is protected but the $50,000 is not.

So, what should Joan do? One option is to have the $50,000 returned to her and spend that prior to Medicaid application. The Louisiana Long Term Care Medicaid Manual provides that the uncompensated value of a transferred resource is not counted if the original resource is returned.

Or, Joan could apply for Medicaid, get denied originally, and then be eligible for Medicaid 10 months later. Or, she could go through the complicated and often mis-understood process of applying, getting denied, and then returning part of the resources to reduce the penalty period, pursuant to the rule which states that if only part of the asset or its equivalent value is returned, the penalty period is modified but not eliminated.

None of these legal strategies should be attempted by the lay person who does not have an excellent working knowledge of the Medicaid Eligibility Manual. The key in protecting your estate is to start early, work with the right people, and get it right the first time. One mistake could make things really difficult for your spouse, children, and grandchildren.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

Four Key Medicaid Rules Regarding Bank Accounts as Countable Resources

Many indviduals, couples, and families are concerned that a nursing home stay will cause them to deplete their life savnigs, and force them to lose their home to the State of Louisiana when they die due to the State's Estate Recovery Rights.

While it is important to take advantage of legal strategies to protect your estate from nursing home poverty at least five years before you wind up in a nursing home, it's also important to understand what you can and cannot own at the time one goes into a nursing home and applies for Louisiana Long Term Care Medicaid.

A single person can have no more than $2,000 of Countable Resources when they apply for Louisiana Long Term Care Medicaid. Bank accounts are a Countable Resource. This post takes a closer look at four key Medicaid rules regarding bank accounts as a Countable Resource for purposes of Louisiana Long Term Care Medicaid.

(1) 1st Day of Month. Medicaid counts the balance shown by your bank for the first moment of the first day of the month. Be prepared to furnish banking records.

(2) Encumbrances Deducted From Bank Balance. If you have written a check for a legal obligation, and that check has not cleared by the first moment of the first day of the month, the encumbrance may be deducted from the actual bank balance.

(3) Unrestricted Access ("or") Accounts. The Medicaid applicant is presumed to be the owner of all funds held in an "or" account.

(4) Rebutting the Presumption for an "or" Account. If the Medicaid applicant is not the owner of funds in an "or" account, the applicant can rebut the presumption of ownership by providing written and corroborating statements regarding ownership, withdrawals, and deposits, along with a change in account title or the establishment of a new account with only the Medicaid applicant's funds.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

Arranging a Louisiana Estate for Asset Protection and Easy Inheritance

This post describes how Irrevocable Grantor Trusts are used to protect assets while parents are alive, and then to provide for an easy transition or inheritance to the children or other heirs.

As folks age, they often worry that they will run out of money before they die due to their longevity and all of the threats that seniors face these days.

Many seniors create trusts to help protect what they've worked for. They often keep some assets in their name, and they transfer other assets to a trust that they create.
 
Because their assets are titled in the right kind of trust, with the right kind of asset protection provisions, they are less likely to lose these assets from some kind of life-changing event.

These asset trusts are often irrevocable, but sometimes certain aspects of the trust are amendable. These trusts typically allow for trust assets to be sold and re-invested. These trusts usually have some provision for distributions of principal. Many of these trusts and estates are arranged so that probate is avoided at the death of the Settlors/Grantors/Trustors.

Check with the right estate planning attorney in your jurisdiction to make sure you establish an estate planning legal program that is right for you and your family. Don't try to do this yourself. Too much is at stake.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

Does a Revocable Living Trust Protect From Nursing Home, Lawsuits, or Income Tax?

People often ask whether creating, funding, and maintaining a revocable living trust gives them protection from the long term care Medicaid spend down that applies when one enters a nursing home with assets, whether the revocable living trusts protects assets in the event the Settlor of the trust is sued, and people also ask what effect a revocable living trust will have on their income taxes.

Regarding whether revocable trust assets give protection from the nursing home spend-down, the answer is clear. The Louisiana Medicaid Eligibility Manual provides that the trust is a resource of yours if you have the right to revoke it and use the funds for your own benefit. 

Regarding protection from lawsuits (creditors), the Louisiana Trust Code provides that a creditor may seize an interest in income or principal that is subject to voluntary alienation by a beneficiary. Since you can voluntarily alienate (and do whatever you want) your revocable trust assets, the assets in the trust could be seized if someone files a lawsuit against you, is successful in the lawsuit, and gets a judgment against you.

Regarding income tax, a revocable living trust is considered a Grantor Trust. Grantor Trusts are those where you have retained certain powers. One of the enumerated Grantor Trust powers is the power to revoke the trust. Thus, a revocable trust is a Grantor Trust for income tax purposes. Grantor Trusts are generally disregarded for income tax purposes during your lifetime. The IRS will treat you as the owner of your revocable trust assets. The Grantor Trust is ignored for income tax purposes, and all income is treated as belonging directly to you (the "Grantor"). During your lifetime, you will report the income from trust assets on your personal income tax return. 

To find out more, subscribe to our Youtube channel (Rabalais Estate Planning, LLC), subscribe to our podcast (Estate Planning with Paul Rabalais), or check out our website (www.RabalaisEstatePlanning.com).

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

Rules on an Irrevocable Trust and Nursing Home Medicaid

This post describes the regulations that exist regarding when assets in a trust are considered resources of someone who is applying for Long Term Care Medicaid.

Many Seniors are concerned about the cost of long term care, especially if it is necessary that they spend months or years in a skilled nursing facility.

Some Seniors explore getting assets out of their name timely to make themselves eligible for Medicaid. These same Seniors, however, are uncomfortable putting assets in their children's names for fear of losing control of the assets, and for fear of giving their children unwanted tax consequences.

Some people explore putting assets in trust for purposes of gaining future Long Term Care Medicaid eligibility. The Louisiana Long Term Care Medicaid Eligibility Manual (the "Manual") has specific rules regarding whether trust assets are considered a resource of the Medicaid applicant, rendering them ineligible for Medicaid benefits.

Regarding when the Medicaid applicant is a trustee of a trust, the Manual provides:

"Count the trust as a resource, regardless of whose funds were
originally deposited into the trust, if the applicant/enrollee:
 is the trustee, and
 has the legal right to:
- revoke the trust, and
- use the money for his own benefit."

Regarding when the Medicaid applicant is a Settlor of a trust, the Manual provides:

"Count the trust as a resource if the applicant/enrollee is the settlor
(created the trust) and:
 has the right to revoke it, and
 can use the funds for his own benefit"

Regarding when assets are not considered a resource and penalty periods apply to the transfer of the assets to a trust, the Manual provides:

Consider penalties under the transfer of resource policy (refer to
I-1670 Transfer of Resources For Less Than Fair Market Value) if
the applicant/enrollee:
 created the trust,
 does not have the right to revoke it, and
 cannot use the principal for his own benefit.

The traditional "avoid probate" revocable living trust clearly is a resource for a Medicaid applicant. Many people, however, create other trusts, and transfer assets to those trusts, which can enable a Senior to avoid the risks inherent in transferring assets during into children's names, while starting the five year penalty period and protecting assets from the nursing home spend down.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

Personal Care Agreement Can Protect Assets From Nursing Home Spend Down

The Louisiana Medicaid Eligibility Manual allows certain family members to enter into a written Personal Care Agreement which, essentially, allows money to be shifted to children/caregivers without the parent triggering a five year ineligibility period for Louisiana Long Term Care Medicaid.

When a parent has funds in their name and they transfer those funds to their children, it will typically trigger a five year ineligibility period for Louisiana Long Term Care Medicaid in the event the parent needs care in a nursing home.

However, in the right circumstances, if a child is actually providing care and assistance services to the parent, the parent can compensate the child without triggering the time-penalty Medicaid penalties, SO LONG AS ALL OF THE CORRECT DOCUMENTATION IS IN PLACE PRIOR THE SERVICES BEING PROVIDED.

There are at least seven mandatory conditions that must be met, but the one that families sometimes struggle with is that, "The agreement must be in writing, and properly executed prior
to the service or assistance being provided. The agreement
cannot be applied retroactively to pay for services or assistance that was provided prior to the agreement."

The concept is, if there is the right written contract in place, an individual (a parent, for example) can pay another person (a child, for example) to provide personal care services.

Note that one of many important provisions of the Louisiana Medicaid Eligibility Manual regarding these Personal Care Agreements provides that, "A Personal Care Agreement that fails to contain any of the mandatory provisions is considered to be invalid. Payments that are not considered to be compensation in accordance with a valid written agreement are transfers without compensation."

Bottom line - this can help certain families protect assets while keeping a parent or grandparent out of the nursing home.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

Protecting the Home Property When You Enter a Nursing Home

When someone enters a nursing home, it is likely that they own both exempt assets and countable resources. The countable resources must be consumed down to a certain limit ($2,000 for a single person) prior to Louisiana Long Term Care Medicaid eligibility. Exempt assets are not counted for purposes of initial Medicaid eligibility. The home is an exempt asset. So, it's important to understand the Medicaid definition of the home, under what circumstances you can transfer the home out of your name, and whether Medicaid will have Estate Recovery rights when you die.

In general, the home is described as property in which someone has an ownership interest and that serves as his or her principal
place of residence. Home property includes: the house or lot which is the usual residence, all contiguous property, and any other buildings on the home property. Property is contiguous to the residence if it is touching the residential property (even corner to corner) and is not separated by property owned by others. Property separated by a public right of way, such as a road, is considered contiguous.

If a person, in 2018, has more than $572,000 of equity in their home, then the excess in not exempt. If they own a home out of state, then, generally, it is not exempt. And if you list your home for sale, then it is no longer an exempt asset.

In certain circumstances, one can transfer their home to another person prior to applying for Medicaid, without incurring penalties. This is important because if you take the home out of your estate, then Medicaid will not have estate recovery rights when you die. 

You can transfer your home to a child who is blind or permanently and totally disabled as defined by SSI at the time of the transfer. You can also transfer your home to a child, without penalty, if the child is age 21 or over, is not blind or permanently and totally disabled, was residing in the home for at least two years
immediately before the date the individual became institutionalized, and provided care to the individual allowing the individual to reside at home, rather than in an institution.

A note exists to the above exception that provides:
The exception must be documented by written statement
from physician indicating his/her knowledge that during the
preceding two years, the individual’s child was present in the
home as the primary care giver and if not for the care
provided by the child the individual would have required care in an institution (nursing home).

Finally, if the home is in your name when you die, it will be part of your Louisiana Succession and thus, subject to Louisiana Estate Recovery rights. People often thing the home is "home-free" because it is an exempt asset. However, after a Medicaid recipient dies, if the home is in the recipient's Louisiana Succession, then Medicaid can seek reimbursement from the Succession, forcing the Succession to sell the home to pay the Succession debt.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

How Traditional, Simple Louisiana Estate Planning Can Wipe Out The Savings

This is my attempt to educate a few Louisiana folks on the front end about estate planning so they don't get bit on the back end.

Traditional estate just doesn't always work like it used to. It's typical and traditional for married couples, at some point, to go see a lawyer about getting a Will done. Then, the attorney prepares a Will that, typically, either leaves OWNERSHIP or USUFRUCT to the surviving spouse. In fact, most couples don't know what they did - they just know they wrote a Will.

Well, one of the biggest drains of an estate while you are alive can be long term care expenses. I hope that this enables you to realize that how you arrange your estate planning legal documentation can have a profound impact on what you leave your family and what you leave what some people call the Evil Empire of the State of Louisiana.

Let's take an example. Let's say that Dad died. Dad had saved over the years enough to accumulate some CDs. His CDs, when he died, totaled $500,000 in value. And let's say Dad's traditional Will either left Mom ownership or usufruct of the $500,000.

Now that Dad died, Mom cannot live alone. She needs around the clock care. So Mom goes into the nursing home. The children think that the $500,000 is PROTECTED, because Dad left it to the kids but left Mom only the usufruct. But of course they are all quickly informed that Mom must spend the entire $500,000 on her nursing home care before Mom would qualify for Louisiana Long Term Care Medicaid. 

Of course this is when Mom and all the kids say, "Well we did not know!" Or they say, "Nobody told us....". Or they say, ""This doesn't seem fair when 3 out of 4 people in the nursing home are on Medicaid..." Or, "Surely there is something we can do at the last minute here..." Or, "Can't we just hide the money in a hole in the back yard?" Or, "Daddy just wanted to take care of Momma..."

Here's the key: Plan for these situations in advance. What Dad and Mom are getting legal affairs in order, it makes perfect sense to have an intelligent discussion about how they should leave things to each other and the family in a way that the family does not lose it to long term care expenses, taxes, or other government intrusions.

Hopefully this little piece of education can help some unknowing families get ahead of the game and protect what they've worked for. In the past, only the wealthy could afford to pay lawyers and other professionals to get the best estate protection advice. Now, with the advent of youtube and other free social media networks, anyone who wants to education themselves can find out just about anything on the internet and then seek out the right help to protect themselves and their family.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com

A Last Will and Testament Ain't Asset Protection

Was working with a Louisiana couple that came in to discuss getting their estate legal affairs in order. While different people have different priorities when it comes to estate planning (taxes, nursing home expenses, probate, blended families, children who spend, disabled children, in-laws you don't like, protect grandchildren, who will be in charge, health care decisions, to name a few), this couple perceived their biggest threat the potential to lose their savings and home to nursing home expenses. One of the spouses had an illness that didn't pose an immediate threat to independent living, but there is certainly the likelihood down the road that long term care will be needed.

One of the spouses, who was not real educated, mentioned on one or more occasions something like, "While I kinda heard that when it comes to estate planning, all you need is a Will." 

I get that in coffee shops and in barber shops people give advice to their friends and colleagues. But when it comes to the intricacies and varied issues involved these days, one-size-fits-all advice just doesn't work.

Obviously, if you write a Last Will and Testament, you are going to leave all of your assets in your name. If you have assets in your name and you go into a nursing home, you must spend your assets first before Medicaid pays for the care. They let you keep your home but Medicaid will have Estate Recovery rights so that when you die, your home must be sold to reimburse Medicaid for what they spent on your care - after you spent all of your own money.

Because there is uncertainty in life, I don't know how this family's story will end. They've worked hard to accumulate what they have. It sounds like their children and grandchildren could really benefit from an inheritance. But only time will tell what will happen in the future.

Paul Rabalais
Estate Planning Attorney
paul@RabalaisEstatePlanning.com
Phone: 866-491-3884

4 Estate Planning Tips For 2018

2018 brings some changes to the estate planning horizon. The following are four tips that you can take advantage of to protect your estate in 2018.

(1) Taxes. With the new law changes, there will be less emphasis on gift and estate tax avoidance, and more emphasis on capital gains tax and income tax avoidance. Smart married planners will ensure that their estate gets the valuable "double step-up in basis" (doesn't happen automatically), while other smart planners will arrange their affairs so that they and their heirs and beneficiaries minimize the income tax burden of a transfer of retirement accounts and other valuable assets.

(2) You're Living Longer. Because you are living longer, you need to protect your estate if you get sick for a prolonged period, or, if your mind becomes demented. Arranging all of your assets so that your trusted loved ones have access when you can't, and, for some, protecting your estate from nursing home poverty, is critical. To protect your estate from when you are sick, you must take action while you are well.

(3) Simplify Your Estate Settlement. Many Louisiana families want to arrange their estate so that judicially-supervised court proceeding (some call it "Probate;" other Louisianians call it "Succession"). Whether it's utilizing a revocable living trust or other probate avoidance strategies, act in 2018 to make estate settlement simple. In addition, have conversations with participants in your estate settlement - before your estate settlement. This can go a long way toward having an amicable estate settlement.

(4) Get Started. Procrastination is a big obstacle to estate planning. Put it on your "To Do" list, and then get started so you can check it off your "To Do" list. You'll feel great knowing you have all your legal affairs in order for yourself and your family.

Happy New Year! Make 2018 your best ever.

Paul Rabalais
www.RabalaisEstatePlanning.com
Law Office locations: All over south Louisiana
Toll-free phone: 866-491-3884

Louisiana Man Protects House Proceeds FOR Grandchildren and FROM Nursing Home Costs

Hoping you can benefit from my vlog by hearing stories about what others have done and then realizing you can do the same to protect what you have for yourself and your loved ones.

I'm working with a gentleman who just sold his house and will likely be renting for the rest of his life. He's handicapped and he has no family nearby that can help take care of him - he's convinced that if his condition worsens one day in the future, he'll need to reside in a nursing home.

He has three grandchildren that he adores. He wants to make sure that his money stays protected for his grandchildren to benefit from one day. When I inquired whether he was concerned about losing the money to the nursing home, he said that was his #1 concern.

So we are in the process of setting up a trust for him - a very particular kind of trust - so that if he does go to the nursing home, that his money is protected. Note that the typical "avoid probate revocable living trust" does NOT protect the money from nursing home expenses.

I told him he was being smart by planning ahead. Because of some of our federal and state regulations, it's paramount that you take advantage of legal strategies well before you get sick.

For more updates, Subscribe to the youtube channel of Rabalais Estate Planning, LLC. Also, you'll be doing me a big favor if you share this info with your contacts and friends.

Paul Rabalais
866-491-3884
www.RabalaisEstatePlanning.com
Offices all over south Louisiana