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Helping Someone With Dementia Sell the Home

Selling the home through guadrianship

Sometimes, a home must be sold, but the homeowner is no longer able to sign a listing or sale agreement due to cognitive impairment, confusion, advanced dementia or severe and persistent addiction issues (i.e., Wernicke-Korsakoff syndrome), or new onset dementia after recovering from COVID-19.  covid-19-pneumonia-increases-risk-of-dementia-study-says  Others may be temporarily incapacitated due to cardiac issues, surgery, or severe illness.  These conditions can prevent an adult from being temporarily or permanently able to make important financial, medical or legal decisions.  Adults who can no longer make decisions may be incapacitated.  And in real estate bubble with many residential properties reaching their peak value, it’s critical to act fast to accept the best home sale offer.

Unfortunately, incapacitated adults are unable to enter into a binding contract, such as an agreement to list or sell the home. When this happens, one option may be to use a general durable power of attorney or a real estate power of attorney to sell the home.  But that can only be successful where there is already a valid general durable power of attorney or real estate power of attorney in place.  If there is a power of attorney, and the homeowner is able to make decisions, the home cannot be sold through a power of attorney without the homeowner’s consent to the sale.  Giving a power of attorney to a trusted adult child or friend is like giving them an extra set of keys to the car. You can always take back the keys when you wish.

More to the point, a power of attorney is an important legal document by which the principal (i.e., the person signing the power of attorney) gives authority to an agent to carry out the affairs of the principal.  The catch-22 is that in order to make a power of attorney, the principal must have legal capacity.  Unfortunately, there are many incapacitated persons who never bothered to obtain a power of attorney before they lost capacity.   Another risk is that there may be a valid power of attorney, but the agent named may be deceased, very ill, or no longer available to serve.  Once again, there is no one with legal authority to sign the home sale agreement and the house cannot be sold even if there is a buyer.

The solution is to seek a court order for authority to sell the home.  This involves filing a lawsuit in the Superior Court for a judgment of incapacitation and award of guardianship.  The guardianship process is not a simple one. There are several different types of guardianships and the correct type must be selected.  Various court rules, required information and forms must be complied with.

The guardianship process requires doctor’s reports and an investigation into the finances and health of the alleged incapacitated person. As part of the process, the Superior Court judge appoints an independent attorney to investigate these matters and to write a report.  This attorney is referred to as the court-appointed attorney.  Often, that attorney’s report carries great weight with the court.  Testimony by the doctors may be waived, or if the guardianship is disputed, there may be an adversarial hearing.  If the evidence, any testimony and the court-appointed attorney’s report indicates that the alleged incapacitated person cannot make any significant decisions as to his person or property, then a plenary guardianship may be awarded.

But this is only the first step in obtaining court-authority to sell the home of the incapacitated person, who may urgently need the anticipated net home sale proceeds to pay for long-term care.  The next step is to file a motion with the court to sell the home through the guardianship.  The court can potentially award the requested order.  Only when such an order is in place, can the home be legally sold.

Not surprisingly, this process requires additional legal work and documentation.  The guardian must show that the proposed sale is fair and reasonable and in the “best interests” of the incapacitated person. In deciding whether this standard is satisfied, the judge may consider whether the incapacitated person will ever be able to return to the home to live there independently or with the assistance of paid caregivers, provided there are sufficient funds.  The fair market value and the tax-assessed value of the home will also be considered, as will the outcome of any prior attempts to sell the property, the cost of continued homeownership, and whether the anticipated net house sale proceeds are needed to pay for long-term care. In many cases, the home must be sold as a condition of Medicaid eligibility for the former homeowner in a nursing home.

This process takes time.   In limited cases where the safety of the alleged incapacitated person is endangered, or a very good purchase offer may be lost without swift court approval, the guardianship process can be expedited in New Jersey.

The bottom line, is that when capacity is in issue, selling the home a general durable power of attorney or a real estate power of attorney is much more efficient than through a guardianship. However, selling the home through a guardianship can be done in the difficult cases where there is no legal authority in place to sell the home.

Questions, or if you need help clearing title to sell a home through a guardianship? Let Jane know.

New Elder Justice Resources

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Photo by Nicola Barts on Pexes.com

Elder financial abuse involves the misuse of an elderly persons’s money, credit or property. Unfortunately, this is a growing and often unreported problem.

Fortunately, there are resources available to fight elder abuse. One is the statewide criminal referral hotline, found on the elder justice website of the New Jersey courts. Additional information and resources are available online at https://www.njcourts.gov/public/elder-justice.html.

Financial professionals, in particular, should remain alert for behavioral red flags of elder financial abuse. These can include:

  • new contact information for a financial account (address, email, or telephone)
  • unusual purchases or withdrawals on the account of someone who is cognitively impaired
  • an elderly person who seems withdrawn, anxious or afraid
  • an elderly person who cannot answer simple questions about her account activity
  • someone new taking great interest in the finances of an elderly person
  • repeated unsuccessful attempts to contact an elderly account holder
  • someone without proper identification trying to help an elderly person with bank or brokerage transactions

More information is contained in a government report to financial institutions found online at Advisory on Elder Financial Exploitation

What to Do if You Suspect Elder Abuse.

Your legal recourse may include criminal or civil prosecution, revoking a power of attorney, executing a new power of attorney and/or a guardianship or conservatorship. For strategies and solutions for your unique situation, contact Archer Brogan, LLP at https://archerbrogan.com

A Path to Financial Freedom

What if there was a simple way to finance your future long-term care?

How can you age in place at home without spending a fortune? Does that sound too good to be true? It’s not. If you are still insurable, advance planning with long-term care insurance can keep your options open.

Most of us will need a skilled nursing level of care, some for months or years. Medicare, Medigap and other health insurance plans do not pay for custodial care. These policies will only pay for limited sub-acute and skilled care for limited periods. Disability insurance is intended to replace your earned income from work if you become disabled.

What if you have a medical crisis and need 24/7 care? At a cost of over $5,000 per month at the private pay rate, even staying at home with paid care can be very expensive. https://www.genworth.com/aging-and-you/finances/cost-of-care.html.

The benefits of long-term care insurance. Long-term care insurance can help protect your family’s financial and emotional freedom and can facilitate asset protection planning.

How to you get and pay for long-term care insurance? Policies are typically purchased while the insured has attained the age of forty and before approximately age 66. With age, the risk of uninsurability increases.

Some federal and state government employers offer long-term care insurance. It may also be available through some private employers. Long-term care insurance can also be purchased through an insurance agent. Private banks also can help high net worth individuals obtain specially priced policies. Some individuals use their qualified retirement assets to pay for long-term care insurance premiums. Many policies are tax-qualified, meaning that the benefits paid under the policy may not be subject to income taxes. Some policies have special Medicaid protections. These are called “partnership policies.”

It is very important to understand what the policy will cover and how the elimination period will work. Make sure any long-term care insurance you purchase is a policy you can still afford if the premiums increase. Talk to your elder care attorney if you think you may want to lower the benefit amount or increase the waiting period before benefits are payable under the policy.

Individuals who want to plan for themselves can benefit from long-term care insurance. Dick and Jane are married and in their mid-sixties. Dick is a government employee with a long-term care insurance policy through his work. The policy pays four years of benefits after a 90-day elimination period. Dick has a serious fall and fractures requiring surgery. He goes into the hospital for surgery and contracts COVID-19 in the hospital. By the time he is ready for discharge from the hospital, he is generally deconditioned and just wants to go home.

Jane is a petite woman. She tells the hospital discharge planner that she is afraid she might hurt herself if she tries to lift Dick himself. Dick needs constant hands-on assistance to perform activities like walking, dressing, bathing, toileting, and transferring from a bed to a chair. At first, the social worker was recommending placement in a nursing home or rehabilitation for Dick, due to concern that Jane can’t care for Dick safely in the home. But after learning that there is a long-term care insurance policy, the hospital discharges Dick to the home. Once Dick satisfies the policy’s 90-day elimination period, the benefits are triggered and the benefit payments can pay for Dick’s care, relieving the financial burden on Jane. Dick and Jane do not need to spend down their assets to qualify for Medicaid, due to the long-term care insurance benefit. If they have substantial additional assets and Dick and Jane wish to do so, they can work with an elder care attorney to protect additional assets that may be at risk after the policy term is exhausted.

 Adult children who want to plan for their parent or parents can benefit from long-term care insurance. Sarah was a single mother in her early 60’s who raised four very successful adult children while working two jobs and living frugally. She is active and healthy and still working at Dunkin Donuts every day. When she retires, based on current projections, her income will limited to Social Security of about $1,500 per month, which is not enough to pay for a nice assisted living facility, if she should need some care. Her now very successful adult children purchase a policy insuring their mother, so that she can now enjoy her golden years in a comfortable community setting if she should need assisted living care. With her income and several years of long-term care insurance, if Sarah were to need a skilled level of care, she could potentially age in place in assisted living, in a very comfortable setting, and then transition to Medicaid after the facility’s private pay period is satisfied.

More information about long-term care insurance in New Jersey is available online click here .

Smooth Sailing In Your Golden Years

Life is smooth sailing, until it’s not. Don’t jeopardize your independence and quality of life, or your loved ones’ freedom, by waiting for a crisis to plan your elder care and your estate.

The COVID-19 pandemic showed us the importance of being prepared. Failing to plan for death, taxes, long-term care and disability can create hardship and stress. Medicare only pays for a limited amount of long-term care under limited circumstances. Private pay long-term care can cost you and your spouse more than $13,000 per month at the private pay rate in New Jersey. At that rate, your life savings can be quickly dissipated without advance planning. Even the cost of part-time paid care at home can add up quickly. For an idea of the costs you may be facing, check out the Genworth long-term care study at https://www.genworth.com/aging-and-you/finances/cost-of-care.html.

Here are some tips that can help you remain at home as long as possible, avoid an elder care crisis and preserve a legacy for your heirs.

  • Your MVP team should include a tax and estates and elder law attorney, an accountant or enrolled agent, and a financial advisor. They can help you define your goals and the right plan to achieve them.   They can also vet others to help protect you from elder financial and other forms of abuse.
  • Execute a valid Will, a power of attorney and a health care proxy.   Work with your attorney to do this.
  • Discuss your completed estate plan with your attorney and your accountant or financial planner. Understand how your estate will be funded.   
  • Work with an elder care attorney to understand your options for long-term care.
  • Explain your wishes and preferences with your health care proxy and the person who will serve under your power of attorney.    
  • Trusts can protect your life savings, a special needs child or grandchild, and can leverage a charitable gift.  A trust can protect an inheritance from bankruptcy, divorce, disability, addiction and/or some taxes.
  • A revocable trust with a “pour over” will can provide privacy and ease of administration.
  • Periodically review your finances. Update your retirement account and insurance beneficiary designations.
  • Purchase long-term care insurance if you can qualify medically for a policy. Your financial planner can evaluate your disability, long-term care and life insurance needs.  Your elder care attorney can evaluate the policy provisions.
  • Periodically review your legal documents.  If they are outdated, or misplaced, how can they be useful?  
  • Don’t add payable on death or transfer on death designations to all your financial accounts without speaking to an attorney.   
  • Consider a prepaid burial.  Your loved ones and your funeral representative will be grateful that you did.

For questions, contact Jane at Archer Brogan – Elder Law Attorney – Trenton – Princeton – Somerville – Brick – Jamesburg

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Avoiding a Medicaid Penalty Period

What is the Medicaid penalty period?

During the Medicaid look back period, you can’t give away your money (without receiving equal value in return) and go on Managed Long Term Services and Supports (MLTSS) Medicaid. If you do, a Medicaid penalty period will result. During the Medicaid penalty period, the Medicaid applicant is treated as if she still had the gifted funds. During this period, Medicaid will not pay for long-term care.

How long with the Medicaid penalty period be?

The sum of all the gifts made during the look back period is added. Then the total of those gifts is divided by the applicable Medicaid divisor. The result of this equation is the Medicaid penalty period.

Example. The Medicaid penalty divisor is $374.39 per day, or $11,387.69 per month. If I give away the sum of $11,387.69 during the look back period, the total gifts ($11,387.69) are divided by the Medicaid divisor of $374.39 per day. The resulting penalty is just over 30 days. A penalty period of about one month will apply on my Medicaid application, without an exemption.

Why can even a short Medicaid penalty period be a big problem? During the Medicaid penalty period, Medicaid will not pay for my long-term care. If I am already poor and living in a nursing home, how will I get the money to pay my nursing home bill? This can be a real challenge. No nursing home or assisted living facility will provide free care.

Increase in the Medicaid penalty divisor.

The higher the divisor, the shorter the penalty period will be. On May 24, 2022, the State of New Jersey increased the Medicaid penalty divisor to a rate of $374.39 per day. The new divisor applies to Medicaid applications filed on or after April 1, 2022.  Increase_in_the_Penalty_Divisor_Effective_4-1-2022.

Medicaid Penalty Traps

Unfortunately, the Medicaid penalty period can be a trap for the unwary. A penalty period can be imposed even with no gifts during the Medicaid look back period. The recent decision of H.L. v. Division of Medical Assistance and Health Services et als. shows what can go wrong. The Final Agency Decision is available online at H.L.vDMAHS&MonmouthCty

In that case, a Medicaid application was filed on behalf of H.L. with the Monmouth County Medicaid office. The Medicaid office reviewed H.L.’s bank records. H.L. withdrew about $58,000 during the Medicaid look back period. No gifts were made. The cash was spent on everyday living expenses, including rent. Some of the withdrawals were made after H.L. moved into a nursing home.

The Medicaid office computed a 162 day Medicaid penalty period. H.L. was now in a difficult situation. Unless the Medicaid penalty period was removed, H.L. would have an unpaid long-term care bill of approximately $60,000.

Reducing the Penalty with a Medicaid Fair Hearing.

The solution in H.L.’s case was to file for a Fair Hearing. On Fair Hearing, the Medicaid penalty period was reduced by the amount of the rent. The penalty period might have been avoided with better documentation of H.L.’s expenses.

How An Elder Law Attorney Can Help You.

Applying for Medicaid may appear simple, until it’s not. Doing it yourself or using a non-attorney Medicaid advisory service) can be like wading through quicksand. You may not realize you are in trouble until it is too late. Once assessed, a. Medicaid penalty can be difficult to remove. Fortunately, a seasoned elder law legal team can help obtain Medicaid coverage with as little stress as possible.

For more information on how we can help you with your New Jersey Medicaid planning and application, contact Archer Brogan, LLP at telephone number (609) 842-9200 or visit our firm’s website at https://archerbrogan.com.