Louisiana Elder Law Matters

Lawyers for Medicaid Planning and Elder Law Matters

Trusts

Trusts are a common tool for estate planning, and they are also used in Medicaid planning. For those completely unfamiliar with trusts, a trust is a legal obligation to hold and dispose of assets in favor of a named recipient. Most trusts are required to be in writing. They may include:

• Living trust or inter vivos trust. The most common trust is a staple of estate planning because of the usual probate avoidance coupled with lifetime control and unrestricted access by the trust grantor. These trusts can be problematic in Medicaid planning, because they provide no asset protection for the items in the trust. The assets are seen as owned by the individual while living. What is worse is that Medicaid actually views such trust-owned assets as fully countable for purposes of Medicaid eligibility. Because an asset in the trust is fully available as a resource, whether it is owned by an individual or owned by the trust, the act of funding the trust does not have the effect of putting the asset out of reach of the grantor and does not create a divestment. To make matters worse, when Congress enacted the estate recovery rules pertaining to Medicaid long-term care benefits, it also enacted a provision that removed the homestead protection for a principal residence owned by a revocable trust. This means that a homestead of a Medicaid applicant that is owned by a living trust does not qualify as a non-countable asset for Medicaid eligibility purposes. If a homestead is not included in such a trust, it is a non-countable asset. Nevertheless, the living trust does have a valuable use in Medicaid planning. It can be used as a tool to increase the CSRA if utilized properly.
• Other trusts. Some irrevocable trusts are utilized in Medicaid planning in certain circumstances. Some of these types of trusts include: Solely for the Benefit of Spouse Trust, Solely for the Benefit of Blind or Disabled Child Trust, Supplemental Needs Trust, Pooled Trusts, Qualified Income Trusts a/k/a Miller Trusts, and Testamentary Trusts. Your Certified Medicaid Planner can recommend any of these trusts that may be useful in your case.

Special Needs Trusts

To qualify for Supplemental Security Income (SSI) and Medicaid medical benefits, a person cannot exceed certain income and resource thresholds. An inheritance or other windfall can disqualify a person from these important governmental benefits. A special needs trust can solve this problem.

A special needs trust, if crafted correctly, enables you to set funds aside on behalf of an adult or child with special needs in a trust. The funds in these trusts can be used only for limited, although extremely useful, purposes. Trust funds can only be utilized for needs supplemental to what is made available to the disabled person through governmental benefits.

Special needs trusts supplement government benefits and do not replace them. Some common ways funds from a special needs trust may be used include the following:

• Medical and dental expenses not covered by insurance
• Educational expenses
• Transportation and vehicles
• Entertainment and travel

There is significant complexity with the laws surrounding special needs trusts, so you need an attorney with experience in this area. Gary Brown can assist you with these matters.

Wills and Powers of Attorney

These are the most common estate planning tools. Every adult should have these. They include:

Last Will and Testament

Your will is a legal document that directs who will receive your estate at your death, and it appoints a personal representative, called an executor, to make sure your wishes are carried out. Some property does not pass to beneficiaries under a will. For example, life insurance and some retirement accounts go to a named beneficiary through a beneficiary designation form.

Laws governing wills and inheritance are state-specific, and they vary with respect to the requisites of form and for formal will execution. Louisiana recognizes two valid, lawful forms of wills: the notarial will and the holographic will.

If a will has not been executed or is legally invalid, the laws of intestacy will apply to determine how a decedent's (the person who dies) estate is passed. Essentially, the state decides who inherits your estate. You may not be satisfied with the state's plan for the distribution of your assets following death, so a will is important.

If you have established a nontraditional family relationship, have no close family, or are estranged from those who would be your intestate heirs, execution of a will is even more critical, as failure to do so may result in the complete disinheritance of those you care for the most.

In addition to accomplishing what you want with respect to the distribution of the estate, having a will that must be probated (as opposed to a living trust) affords the security of knowing that there will be court oversight of the management and distribution of the assets of the estate.

Gary Brown has helped hundreds of clients with wills, and he can help you execute your last will and testament in legal form and in accordance with your wishes as to whom you want to inherit your estate.

Power of Attorney

A power of attorney is an authorization for one person to act on someone else's behalf in a legal or business matter or a medical matter. The person authorized to act is the Agent, and the person granting the authorization is the Principal. A durable power of attorney is a power that continues or initiates the agent relationship after the principal becomes incapacitated.

Durable powers of attorney can be among the most important instruments an individual executes. They can provide a tool for preserving as much as possible the autonomy of a mentally or medically impaired adult, allow a trusted agent to carry out financial transactions, and make medical decisions for the principal when the principal is unable to do so. These powerful documents allow for the avoidance of expensive and time-consuming legal proceedings of conservatorship (called interdictions in Louisiana).

Although a durable power of attorney may indeed be the most important legal document a person executes, its potential for abuse, especially financially, also makes it the most dangerous.

Gary Brown has decades of experience in guiding clients through this important process working with his clients to choose an appropriate agent and decide the scope of the powers to be granted.

Contact Our Orleans Parish Estate Planning Attorney

To learn more about how Gary Brown can help address issues related to estate planning and Medicaid planning, contact us at 504-447-6000 and schedule an initial consultation.