Elder Law & Special Needs
Guardianship & Conservatorship
Our office encourages every client to proactively plan for the day when they are not able to care for themselves or manage their own property, such as by drafting advance directives or establishing a revocable living trust. In some cases where a person has not planned for this eventuality, the court must step in and appoint someone to act on that person’s behalf. A guardianship is an action filed with the propbate court to gain decision-making authority over someone (referred to as a “ward”) who lacks the capacity to make or communicate significant decisions regarding their health or safety. A conservatorship is a related action to gain decision-making authority over a ward’s property when they cannot make or communicate those decisions themselves.
A probate court will review petitions for guardianship and conservatorship to determine if there is probable cause to believe that the action is necessary. If so, the proposed ward will be served with a copy of their petition, notice of their right to court-appointed counsel, and instructions about appearing for an evaluation by a physician, psychologist, or licensed clinical social worker. Once the probate court has reviewed this evaluation, it will determine whether there is sufficient cause to proceed with a full hearing on the petition.
Both the guardianship and conservatorship are supposed to be construed narrowly by the court. Ingrained in the law is a respect for people’s independence and autonomy to make decisions for themselves, and both the guardianship and conservatorship can only be entered if there are not less restrictive means of caring for the proposed ward. These actions can also bring out strong feelings on both sides, as some friends and family members might think that court intervention is necessary to care for someone while others are strongly opposed. If either a guardianship or conservatorship action is dismissed or denied, the probate court will not consider another such action filed for the same proposed ward for two years.
Statistics tell us that approximately 75% of people above the age of 65 today will require some sort of long-term care in the future (which could include a nursing home stay). What many people do not realize is how high the cost of nursing home care is and how limited the options are for covering these costs if they cannot pay out-of-pocket.
According to a recent study, the median cost for nursing home care throughout Georgia is almost $70,000 per year. For many people on a fixed income, that cost is unattainable. What people must know is that Medicare does not provide coverage for long-term care in any real sense. If a number of technical requirements are satisfied, then Medicare will provide 100 days of long-term care coverage at the most, and only with a significant copayment. Many private insurance companies provide coverage for long-term care, but the premiums for that coverage are equally unrealistic for most people.
For many people, the only coverage option for long-term care is through Medicaid. Medicaid is a joint federal and state funded health insurance program with both income and resource limitations (as well as level-of-care requirements that are outside the scope of this article). In Georgia, the monthly income limit for Medicaid to provide long-term care coverage is $2205. Unfortunately, many people have too much income to qualify for Medicaid but not enough income to pay for their nursing home care out-of-pocket. Thankfully, most applicants for Medicaid can get under the income limit through the use of a qualified income (or “Miller”) trust.
The resource limits for nursing home Medicaid are a little more difficult to address than the income limits. All applicants have a $2000 general resource exemption, a $10,000 exemption for insurance and burial policies, and can have a homeplace worth up to $560,000 (so long as they intend to return to the home, a relative continues to live there, or selling the home would cause a hardship). If a Medicaid applicant’s resources exceed the limits, they need to take some additional steps to qualify. This usually involves spending down resources or converting those resources into something that is exempt from Medicaid eligibility considerations (for example, purchasing certain types of annuities). This process must be done carefully, however, because transferring assets for less than fair market value at any time during the five years leading up to a Medicaid application can result in a penalty period during which the applicant will be ineligible for coverage.
Special Needs Trusts
Special needs trusts (or SNTs) are established by or for the benefit of disabled individuals. One of the primary purposes of these trusts is to enable the individual to qualify for needs-based public assistance, such as Supplemental Security Income (SSI) and Medicaid coverage, despite having resources that exceed the eligibility limits for these programs. However, the trusts can also contain provisions for care management to ensure that the disabled individual will receive the supports they need and enjoy the quality of life they deserve.
There are two basic types of SNTs: self-settled and third party (which are sometimes referred to as supplemental needs trusts). In a self-settled SNT, a disabled individual will fund a trust with their own money for their own benefit. For example, If a person is involved in a disabling car accident and receives a large settlement, which would otherwise place them over applicable resource limits for public assistance, they can potentially qualify for SSI and Medicaid coverage by funding an SNT with their settlement. In a third-party SNT, someone other than the disabled individual will fund a trust with their money for the benefit of the disabled individual. For example, the parents of a disabled child may establish an SNT to receive any gifts and inheritance going to that child which could otherwise make that child ineligible for public assistance.
The main practical distinction between self-settled and third party SNTs is the “payback” requirement. With a self-settled SNT, the trust must include a provision stating that upon the death of the beneficiary (or termination of the trust) any remaining proceeds of the trust must be used to reimburse the state for its costs in providing Medicaid coverage. By contrast, the third-party SNT is not required to have a payback provision.
Our office is certified by the U.S. Department of Veterans Affairs to represent veterans in claims for benefits. Wartime veterans who are over the age of 65 or disabled, and who meet certain income and resource limits, are potentially eligible for a pension to supplement their income. The income limit and benefit amount for this pension go up significantly when veterans start to require the aid of another person to perform personal functions, become housebound, or enter a nursing home. This enhanced pension benefit is referred to as “aid and attendance.”
Aid and attendance benefits can be essential for veterans who choose to live at home or enter a personal care facilility for which Medicaid coverage is not available. It can also be helpful for veterans in a nursing home who need to spend down resources before they can become eligible for Medcaid. Aid and attendance benefits are not considered as income to a veteran for Medicaid eligibility purposes and, therefore, cannot prevent a veteran from being approved for Medicaid. However, once a veteran in a nursing home is approved for Medicaid, their aid and attendance benefit will be reduced to $90 per month.
Planning for Medicaid is about aligning your assets with the program’s eligibility requirements and in a way that will also protect those assets from estate recovery . When you’re attempting to obtain Medicaid eligibility in a crisis situation, such as when your need for long-term care is imminent, making significant changes to your assets will likely result in you becoming ineligible for Medicaid for a period of time. However, when you plan for Medicaid eligibility in advance, you have much greater freedom.
Some people recommend that seniors or other individuals who anticipate needing Medicaid in the future simply transfer their major assets to children outright. While it’s true that these transfers could facilitate Medicaid eligibility (as long as coverage isn’t needed for at least 5 years), outright gifts are not always advisable because it results in a loss of all control over the property. Deeding your home to children or other family members can be especially problematic, because the new owners could simply force you to leave the home if your relationship with them sours.
Our office drafts irrevocable Medicaid Asset Protection Trusts for clients who are planning for eligibility far enough in advance. Clients can transfer their major assets, including a home, to this trust, and the trust will manage the assets in a way that shelters them from Medicaid eligibility and estate recovery considerations. Even though you will no longer be the “owner” of property transferred to the trust, the trust is designed to protect your best interests. For instance, when a home is transferred to this trust, the trust explicitly provides that you have the right to live there for as long as needed.