Medicaid Planning

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Medicaid is a need-based health care program that many older adults end up utilizing in the event of long-term care due to the expenses involved. Since Medicaid is need-based, there are limits on the amount of income and assets a party can have. An individual should plan ahead to make sure any countable assets and income are structured so as not to affect any future applications for Medicaid.  Additionally, individuals may want to shield assets such that Medicaid cannot assert a claim against their estate after their death for their subsidized medical expenses. Appropriate estate planning can assist in this regard.  Medicaid can look back five years from the date of an application so it is important to do any relevant estate planning well in advance.

Certain assets are not countable in terms of eligibility for Medicaid. One of the big exemptions is your home. Current federal law allows one residence to be exempt with a cap of $560,000 for the total equity of the home. Even if the home is above that amount of equity, it may still be exempt if a spouse, child under 18 or permanently disabled child is still residing in the home. In terms of income, a party seeking Medicaid cannot have more than $2,000 per month income. There are additional rules as far as assets your spouse can keep under the anti-impoverishment provision. It is important to look at your estate plan well before the need for any long term care arises to protect your assets and estate while maintaining the ability to use Medicaid to assist with medical costs.

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Identifying Marital Property in your Divorce

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Marital property is defined as assets or debts acquired during the marriage. Marital property is subject to equitable distribution between the parties as part of a divorce action. There is a process to acquire information on potential marital property if you are unsure of what assets and debts would comprise marital property in your case. Discovery is the process of obtaining information from the opposing party in the course of a lawsuit. Discovery is allowed in any divorce case which includes a request for equitable distribution or alimony. The information requested in discovery must be relevant to the case. In divorce, the court gives much leeway as to what is relevant since the factors for equitable distribution allow for broadness. As a practical matter however, you will want to focus on assets and debts and their values as of date of marriage, date of separation and present as these are the important dates with respect to valuation.

Formal discovery methods include interrogatories, depositions, production requests, subpoenas to produce documents, and requests for admission. Interrogatories are a written set of questions for the other party to answer under oath. A production request identifies which documents a party is seeking. Subpoenas are utilized as well when it is necessary to get information directly from the source in the instance a party does not have it or will not cooperate in turning it over. Authorizations can be acquired in lieu of a subpoena if a party has not produced the documents themselves but is willing to cooperate in signing the authorization for the opposing party to do the legwork in obtaining the documentation. Due to the expense to the parties for formal discovery, parties often agree to exchange information informally. Consult with an experienced family law attorney to discuss the marital property in your case and the best way to obtain the necessary information to effectively handle your case.  By April M. Townsend

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Living Will/Healthcare Directive

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A living will or health care directive is a legal document concerning your intentions for medical care in the event you are incapacitated and unable to convey your wishes. The agent(s) you name would be responsible to make sure your wishes are carried out. It is a good idea to make sure your regular physicians have a copy of the directive. You should also supply a copy prior to any major medical procedures. Finally, you should have a discussion concerning your intentions with your agents in addition to providing them with a copy. The living will directs the treating physician to withhold or withdraw any life-sustaining treatments that serve only to prolong the process of dying, in the event of a terminal condition or state of permanent unconsciousness, including persistent vegetative state or irreversible coma.

The following forms of treatment can be approved or denied: cardiac resuscitation, mechanical respiration, tube feeding or other artificial/invasive forms of nutrition/hydration, blood or blood products, surgery or invasive diagnostic test, kidney dialysis, antibiotics, or respiratory support. You may also set parameters as to what your agent can do on your behalf. For example, whether they can authorize your admission or discharge from care, allow surgical procedures, complete insurance forms, permit donation of anatomical parts, or sign releases for disclosure of your health records. Consult with an attorney as well as your physician to understand your options with respect to your health care power of attorney.  By April M. Townsend

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Legal Implications of Adoption

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Adoption will establish all the legal rights, duties and responsibilities as exist for natural born children between the adoptee and the prospective parent(s). Those rights and duties include, but are not limited to, the right of the child to inherit through you and your family, the legal obligation to financially support the child, the right of the child to seek support from you, the principle that these rights and duties would continue if you and your spouse separate or divorce as well as if the child develops any physical, psychological problems or becomes ill or disabled for any reason in the future.

At the final adoption hearing, your attorney and/or the Judge will confirm whether you understand the legal consequence of finalizing the adoption matter. A final adoption decree is issued following a successful hearing. Subsequent to receipt of the decree and barring any legal appeal, adoption is permanent and cannot be undone. Parties may elect to add the child to their health insurance or other benefits once the adoption is finalized and they can provide proof of their legally recognized parent-child relationship. The birth certificate for the child can also be updated at this time.  By April M. Townsend

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Last Will and Testament

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Your will is a legal document that directs what should happen to your belongings at the time of your death. A will can generally be changed during your lifetime. A new will can be drafted if there are substantial changes to your wishes. A codicil can be used to supplement your initial will if you are only making minor revisions. A will becomes irrevocable upon the death of the decedent. A will should identify who is responsible for carrying out the provisions of the will. That person is referred to as an Executor. The Executor would be responsible for producing the will to the appropriate court after death to begin the process of administration of the decedent’s estate.

Not every asset owned by a party at the time of death will pass under the direction of the will. It is important to understand the difference in how assets will pass to ensure proper estate planning. Probate assets, those passing through the will, are those for which there is no pre-existing designation as to who should get the asset. Examples of typical assets that will pass under the direction of your will include individually owned bank accounts, cars, personal property, business interest, real property held as tenants in common, cash, and life insurance with no beneficiary. These types of assets should be distinguished from any account with a beneficiary designation, non-probate assets, as those accounts will pass to the beneficiary. Common non-probate assets include accounts with P.O.D./T.O.D. designation and retirement benefits or insurance policies with beneficiary designation.  By April M. Townsend

 

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Joint Property

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It is necessary to disclose joint property owned in part by the decedent at the time of his death. Often, joint accounts will provide for the surviving account owner to retain the account, however, these accounts must still be disclosed for purposes of assessing any applicable inheritance tax. Pennsylvania assesses an inheritance tax of 4.5% for lineal descendants, 12% for other relatives, and 15% for other third parties. There is no tax for assets passing to a spouse. An inheritance tax return should be filed with the Pennsylvania Department of Revenue within nine (9) months from the decedent’s death.

Schedule F of the inheritance tax return is for jointly-owned property with rights of survivorship. The list should include a complete description of the asset, date asset was placed into joint ownership, value at date of death and value of decedent’s taxable interest. The identity of the joint tenant(s) is also required along with address and relationship to decedent. Property held as tenants in common should not be included on Schedule F. Instead, those assets should be reported on the applicable schedule with the value of decedent’s interest only.  By April M. Townsend

 

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Inventory of Estate

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An inventory must be filed with the court in the course of administering an estate. This task would be the responsibility of the executor or administrator of the estate. The inventory should identify all probate assets of the decedent at the time of death. This may require some investigation by the executor/administrator. Ideally, the decedent would keep a list of all assets and debts along with their will. They make go a step further and include user name and passwords for their accounts along with this list since a majority of account maintenance and monitoring now happens electronically. If there is not a list provided, a good starting point is to monitor the decedent’s mail for evidence of statements for accounts.

The inventory filed with the court should include the value of the assets listed as of the decedent’s death. You can contact the respective institutions to request a date of death balance if not otherwise ascertainable by the statements available. The inventory is to be filed with the court within nine (9) months from the date of death unless an extension is granted. If additional assets are discovered after filing the initial inventory a supplemental inventory should be filed with the court.  By April M. Townsend

 

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Intestate Succession

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Chapter 21 of Title 20 outlines the order in which surviving relatives would inherit from a decedent. If the decedent was married and there is no surviving issue (child) or parent, the entire estate goes to the surviving spouse. If there is a surviving parent, the first $30,000 of the estate along with half of the balance would go to the surviving spouse. The other half of the balance would go to the parent(s). If there is surviving issue or children born to the decedent and the surviving spouse, the spouse gets the first $30,000 and the balance is split between the spouse and the children. If the surviving children are not born to decedent and surviving spouse, the entire estate is split between spouse and children.

If not married at the time of death, the decedent’s estate would pass in the following order: (1) surviving issue of the decedent; (2) parent(s) of the decedent; (3) brothers, sisters or their issue; (4) grandparents (half to paternal and half to maternal); (5) uncles, aunts and their issue; (6) the Commonwealth. The class to which the estate would pass is relevant for inheritance tax purposes. There is no inheritance tax for an estate passing to a spouse. There is a 4.5% tax for estate passing to lineal descendants (e.g. children or parents). There is a 12% tax for siblings and a 15% tax for all other relatives.

 

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Guardianship Changes

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Guardianship of an incapacitated person refers to the authority to make decisions on behalf of an adult individual who has been adjudicated as such by the court. The standard for incapacity involves an analysis of whether the individual can manage their financial resources and/or meet essential requirements for their own health and safety. The first step for a party interested in pursuing guardianship of someone is to file a petition with the court. At the time of filing the petition, the proposed guardian must now submit record of criminal background search from the Pennsylvania State Police. Additionally, if the incapacitated person suffers from mental health issues, a notice of mental health commitment form should be included.

The opinion of a medical expert regarding the extent of the incapacity and the potential necessity for a guardian is required. The Rules now provide for the expert to complete an expert report which may replace requirement of physical testimony in court. The Petitioner has the burden to prove incapacity by clear and convincing evidence. Notice of the hearing and a copy of the petition must be served on the individual for whom guardianship is sought (Respondent) explaining in plain language the possible ramifications of the forthcoming legal proceedings. Notice must also be given to additional interested parties such as family members.  By April M. Townsend

 

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How do you divide retirement assets in divorce?

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Pensions, as well as other retirement plans, are often one of the assets up for division in a divorce. The court will equitably divide the marital portion of a pension plan after considering all the relevant factors in equitable distribution. The marital portion of a plan would be the portion that accrued from the date of marriage through the date of separation. In some cases, the entire pension will be marital depending on the timing of the marriage alongside the start date of the pension plan. A qualified domestic relations order, or QDRO for short, is a document used to effectuate division of certain retirement benefits.

A QDRO can facilitate a tax-free transfer of retirement benefits from one party to their new or soon-to-be ex-spouse. The receiving spouse would then be taxed as they withdraw the money as the tax laws provide. The exact nuances of how the plan/benefit is split and what options are available will vary based on the type of plan. It is always advisable to review the procedures for the specific plan you may need distributed to understand what their rules and policies are when it comes to splitting a participant’s benefits via QDRO in the context of a divorce. You will also benefit from having an experienced family law attorney review the terms of the QDRO before you sign off on it and submit it to the Plan Administrator for implementation. Finally, most plans have very specific requirements as far as how the language of the QDRO is to be worded in order for it to be accepted and processed. At a minimum, a QDRO should identify the parties, the plan at issue, and the amount going to the receiving party either as a lump sum or a percentage of the total benefit. It is wise to enlist the services of an expert that routinely drafts QDROs to ensure the language is correct and all requirements are met.   By April M. Townsend

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