The need for long-term care is common but the cost is staggering.  Seventy percent (70%) of people over age 65 will need long term care during their lifetimes. Figures on average nursing home stays vary widely. A 2019 report from HHS from 2015 to 2019 found an average stay of 485 days. The average annual cost of a nursing home room in the Cleveland Metropolitan area is $98,556. 

Medicare pays the cost of a skilled nursing facility for up to 20 days, with a co-pay of $152 per day for the next 80 days.  However, once Medicare coverage terminates at 100 days, the individual must pay out of their own pocket.  How can the average person afford to pay for nursing home or other long-term care? The answer is Medicaid.

How do I qualify for Medicaid to pay for my assisting living or nursing home?

You must meet these four eligibility requirements:

• Residency- You must be a resident of the state in which you are applying.
• Care Needs- You must meet the level of care requirements.
• Income- An applicant cannot have more than $2,829 in income a month as of January 2024. If the applicant’s income is greater than the income limit, he can utilize a Qualified Income Trust (QIT) to qualify.
• Resources- As of January 2024, a single individual cannot have more than $2,000 in countable resources. There are many exempt resources including the home he lives in, intends to return to or has a spouse living in, automobile he uses for transportation, life insurance policies with aggregate cash value less than $1,500. Different resource rules apply to married couples.

What happens if I have too much income or resources to qualify for Medicaid?

This is where the Medicaid Planning Attorney comes in. A Medicaid Planning Attorney will review all your assets and income with you and guide you through strategies to save assets for you, your spouse and/or beneficiaries, depending on your goals. It is crucial to engage an experienced Medicaid Planning attorney as just “giving away” assets can result in loss of eligibility for benefits. A Medicaid Planning Attorney can also handle the Medicaid application process for you, from start to finish. Medicaid Planning can be done prior to the five-year look-back period or at the time care is needed. However different strategies will be available depending on the timing of the planning.

What is the most important document to have in place for future Medicaid Planning?

A Financial Power of Attorney with long term care planning authority is the most important document to have in place for future Medicaid planning. Without a financial power of attorney in place with Medicaid planning authority, should you become incompetent, your loved ones would not be able to engage in Medicaid planning. Many powers of attorney do not have long term care planning authority. Hence, it is crucial that you have yours reviewed by a Medicaid Planning Attorney while you are still competent to do so, in the event it must be replaced.

The law is constantly changing.

The laws that govern Medicaid are constantly changing and so too are the appropriate planning strategies. For that reason, it is essential to have the guidance of an experienced Medicaid planning attorney before embarking on any plan.

What if I name the minor as beneficiary of my Will or beneficiary of my accounts?

In either of these cases, probate court would be involved. If there are probate assets (meaning assets owned only by you, so no joint with right of survivorship owner or beneficiary named) then they will be governed by the terms of your Will and subject to a probate process when you die. Then, a guardian would likely need to be appointed by probate court to access the funds for the minor until the minor reaches 18, at which time the minor would receive all the remaining funds.

If in your Will you appoint a custodian over the funds under the Transfers to Minors Act, then probate property, after passing through the probate court process, would be released to your chosen custodian for the minor child, so no guardianship would be necessary.

In short, if you name a minor as a beneficiary of an account or if a minor inherits probate property through your Will, some probate will be necessary. Further, if you name a minor as a direct beneficiary of an account or the account goes through probate (because there is no beneficiary or joint owner) and you have not named a custodian, then the minor child will receive the funds at 18.

But I want to avoid probate. How do I do that?

Instead of naming the minor as beneficiary of your account, you could name a custodian on the beneficiary form under the Transfers to Minors Act. For example, instead of naming Little Jimmy as beneficiary, you would name Big John, as custodian FBO Little Jimmy until age 23 under the UTMA. With a custodial designation, no probate would be necessary. Big John, who you chose and trust, would manage the funds for Little Jimmy until Little Jimmy reaches the age of 23, or whatever age that you choose as permitted by the state’s law. If Little Jimmy needed money prior to age 23, Big John could make distributions for him. This can be a great, low cost, probate avoidance option.

The one draw-back is that not all financial institutions will allow these designations. You would need to inquire with your financial institution as to whether they permit a custodial designation. If they don’t and you don’t want to move your assets to a financial institution who permits them, or if you want more control over how the funds will be used for Little Jimmy, or you want to extend the age of access for Little Jimmy beyond what is permitted under the Transfer to Minors Act where the financial institution is located, then you would consider having a Trust prepared.

How would it work if I have a trust prepared?

The trust would be the beneficiary of your assets, which would avoid probate. The trust agreement, which is basically an instruction manual for how the trust assets will be managed and distributed, would be prepared by your estate planning attorney. You would decide the terms of that instruction manual, ie. when the minors get the money, for what purposes can the funds be spent for the minor, etc. Because of income tax concerns, retirement accounts that funnel through the trust will typically be treated differently than non-taxable funds. That discussion is beyond the scope of this blog post, but a good conversation to have with your estate planning attorney, and something I may tackle in a future post.

But personal independence, the ability to stay in charge of our own lives, is something we should aim for all year long and is the subject of this month’s post. In my experience as an estate planning attorney, I’ve observed that when our health fails us, maintaining independence depends on several items.

Strong Financial Planning and the Cultivation of Relationships

When we need help, whether it’s a trip to the doctor or a prescription picked up at the store, we will need either the financial ability to hire someone to assist us or friends or family who are willing to lend a hand. For those who still have time to save and invest, a good financial advisor can help you become retirement ready.

When it comes to relationships, whether blood relative, neighbor or friend, focus on the dependable, kind people in your sphere and build mutually beneficial relationships. Senior centers, retirement communities, religious communities, and interest based social groups (think book clubs or hiking groups), are great places to seek out a social network.

Designate People Who Will Help Support You

When you put your estate plan together, you will need to decide who will handle your medical decision making if you can’t for yourself (agent under your health care power of attorney) and who will handle your financial affairs (agent under your financial power of attorney). A supportive agent under your health care power of attorney will ensure that you are in the driver’s seat of your own health care decisions. She will attend doctor’s appointments or other important health care meetings and help be an extra set of ears. She will be an advocate when needed.

When you need assistance to manage your financial affairs, a supportive agent under your financial power of attorney will keep you in the loop on all decision making and share all statements. Remember, a financial power of attorney and health care power of attorney do not take away your own authority over your health and financial affairs. Rather, in the case of health care, it provides who will make decisions if you can’t yourself. In the case of the financial power of attorney, it allows someone to assist you.

With good agent appointments under these documents, in the majority of circumstances, you will never need to be under court ordered guardianship, but rather will maintain your independence with support as long as you are able. An experienced estate planning attorney can help you put a plan together to secure your independence as long as possible.

When you pass away, if your assets (like your house, bank accounts, or car) are only in your name without a designated beneficiary, joint owner or a trust, they will need to go through a process called probate. This is where the court steps in to make sure your assets are transferred to the right people.

In Ohio, the most common probate process involves:

• The executor or administrator filing papers to be officially recognized by the court.
• The executor or administrator listing all your assets in a detailed inventory.
• Unless the executor is the only person receiving from your estate, he must also report all estate activities to the court in an account.

The executor or administrator may need to take additional steps with the court depending on the circumstances of the case. All this is public record and can be seen online. Because it’s time-consuming, costly, and public, many people prefer to organize their assets to avoid probate. Avoiding probate also means your debts (like medical or credit card bills) might not need to be paid from your estate assets.

What if You Leave Inheritance to Minors?

If you leave anything to children under 18 without a trust or custodian designation, a court will have to appoint someone a guardian to manage it. This can be expensive and slow, and the investments are typically very conservative. At 18, the child receives everything, which isn’t always ideal.

What if You Are Unable to Manage Your Affairs?

If you become unable to make decisions and don’t have a power of attorney in place, the court will appoint someone to manage your health and financial matters. This takes time and money, and the court may not appoint your chosen candidate. A properly prepared financial and health care power of attorney allows someone you trust to immediately take over, saving time, preserving privacy, and reducing stress.

Next Steps

To avoid probate and ensure your wishes are respected, consider speaking with an estate planning attorney. Proper planning helps avoid probate, saves your family from unnecessary hassles, and ensures your assets and health care are handled in accordance with your wishes.

With cost like that, long-term care can quickly deplete most people’s savings.

Medicaid in a need based program that will pay for Long Term Care costs.  However, Medicaid’s resource limit is so low (currently $2,000 for a single person) that without proper planning, you will have to deplete all your savings before you will qualify.

One solution to this problem is a Medicaid Protection Trust.

If assets are transferred into the Medicaid Protection Trust five years before a Medicaid application is made, those assets will be protected from long term care costs and from collection from the state of Ohio after death. A trust is preferable over a gift to a family member for multiple reasons.

A trust provides protection from creditors and spouses of the trust beneficiaries. A trust ensures that the funds don’t go to unintended beneficiaries should the beneficiary die before you. A trust preserves a step-up in basis on your home, which means beneficiaries will likely pay little to no income tax on the sale of the home with the trust, whereas they would likely pay significant income taxes on the sale of the home if it were gifted instead.

In addition to the Medicaid Protection Trust, you should consider having a Financial Power of Attorney in place that permits Medicaid Planning for any assets not placed in Trust. It is essential that the Power of Attorney be prepared by an attorney experience in Medicaid Planning to ensure that the Power of Attorney has all the necessary provisions.

For more information on Medicaid Planning, contact a Cleveland Medicaid Planning lawyer.

Here are some of the most important rights afforded to those who are living in a private or public long term care facility in the State of Ohio.

• The right to a clean living environment pursuant to Medicare and Medicaid programs and applicable state laws.

• The right to be free from physical, verbal, mental, and emotional abuse and to be treated at all times with courtesy, respect, and full recognition of dignity and individuality.

• The right to adequate and appropriate medical treatment and nursing care and to other ancillary services that comprise necessary and appropriate care consistent with the program for which the resident contracted. This care shall be provided without regard to considerations such as race, color, religion, national origin, age, or source of payment for care.

• The right to privacy during medical examination or treatment and in the care of personal or bodily needs;

• The right to exercise all civil rights, including making arrangements to exercise the right to vote.

• The right to observe religious obligations and participate in religious activities; the right to maintain individual and cultural identity; and the right to meet with and participate in activities of social and community groups at the resident’s or the group’s initiative.

In addition to these rights, individuals are guaranteed private correspondence with family members, social workers, or any other person. This includes sending and receiving unopened mail, unrestricted access to the telephone, and private visits at any reasonable hour. In some cases, residents have a right to choose their primary physician and pharmacist.

For more information of what rights are afforded to residents of a long term care facility, contact a Cleveland Elder Law Lawyer.

1. Avoid being left holding the bag: It is common place for long term care facilities (assisted living and nursing homes) to place language in their agreements that make the family member helping to admit the patient into the facility financially responsible for the cost of care. If the patient fails to pay his bill, the facility can then sue the family member for any unpaid balance. An elder law lawyer can review the agreement and ensure that all the troubling language is removed from the agreement.
2. Avoid being left without adequate recourse: it is also common place for long term care facilities (assisted living and nursing homes) to put mandatory arbitration language in their agreements. If there is a dispute the facility, if for example the patient is injured while in the care of the facility, the patient could not sue in court, but instead could only enter arbitration. With arbitration, the usual rules of evidence that would be enforced in a court room are not enforced. Further, the arbitrator’s decision is often final whereas in a court room, a patient would have the right to appeal. Arbitrations are also confidential. Hence, a facility could engage in a pattern of bad conduct but due to the confidential nature of the arbitration claims, the public may never find out. Patient’s attorneys have also sited concerns that the arbitrators making the decisions often coming from backgrounds that are more sympathetic to the facilities than the patients. An elder law lawyer can review the agreement for arbitration clauses and can often assist with their removal.

For more information on nursing home and assisted living agreements, contact a Cleveland elder law lawyer.

What are digital assets?

Digital assets can be placed into four categories.

1. Electronic access to financial information: Logins for your banks, brokerage, investment and retirement accounts, credit cards, insurance, tax preparation software, financial software like Quickbooks.
2. Digital assets with value: Web addresses, online accounts that hold cash like Ebay or Paypal, online game accounts, Bitcoin and other digital currency.
3. Electronic files: Youtube accounts, websites or blogs, medical information through a health system like Cleveland Clinic, personal items on your computer or cloud storage like Icloud or Dropbox with family photos and videos.
4. Electronic Communications: Email.

Unless proper planning is done for your digital assets, you could leave your loved ones with an inability to access your digital assets or a difficult road to obtain access.

What are 5 things you can do to plan for digital assets?

1. Update your Last Will and Testament and Financial Power of Attorney to give your fiduciary access to digital communications or specifically exclude access to specific digital communications if that is your wish.
2. Create an Inventory of important digital assets, including Usernames and Passwords and where to find important files. Store the information in a safe place and make sure your trusted loved ones know where the Inventory is located.
3. Make sure your trusted loved ones can access your computer, i-pad, cell phone, external harddrives and flashdrives and other electronic devices and electronic storage to access digital information. Make sure they not only know where they are located but the login credentials.
4. Express your wishes to your loved ones for what should happen to your digital assets. If there are accounts you want deleted, or if you want to post a final “away message,” these preferences should be written down, or you should use one of the online services that will arrange such messages.
5. Check the settings of accounts you use for options upon your death. There are tools on Google (“Inactive Account Manager”) and Facebook (“Facebook Legacy Contact”) and a growing number of other sites.

For more information on Estate Planning for Digital Assets, contact a Cleveland estate planning lawyer.

It is generally a good idea to have a named beneficiary of a retirement account, like a Traditional IRA or 401(k) or other tax deferred retirement account because a named beneficiary is able to stretch distributions more than an estate can, mitigating the income tax due from the distributions.

The key, however, is to ensure that a custodian is named for that minor child on the beneficiary form to avoid the need for a court appointed guardian (Assuming that there is a trusted loved one available to serve as custodian of the funds). Under the Ohio Transfers to Minors Act, a custodian can be named to manage the funds up until the child turns 25. Without the custodian language on the change of beneficiary form, a guardian will need to be appointed by the court (requiring filing fees and additional cost) and the minor will be given full access to the funds at age 18.

To learn more about the leaving retirement accounts to minors, the proper language to use on a change of beneficiary form, and estate planning in general, contact a Cleveland estate planning lawyer.

Generally, I advise against this arrangement. There are two primary reasons for my position.

1. Making a child the joint owner of an account means that the child now has as much ownership of the account as you do. If the child is sued or decides to drain your account, you could lose your funds.
2. Upon death, the child becomes the owner of the account. If you have other wishes for your funds upon your death, leaving the funds to all three of your children equally for example, those wishes will be trumped by the joint ownership.

So what advise do I give clients so that their child has the ability to pay bills without the risks I outline above?

I advise that the client consider executing a financial power of attorney to give the child one the ability to manage financial assets.  With this arrangement, the child can ensure that bills are paid, and other financial matters are managed, and will do so without assuming any ownership of any assets and without disrupting estate planning wishes.

For more information on joint ownership of accounts and the financial power of attorney, contact a Cleveland estate planning lawyer.