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By John M. Bigler I find that sometimes the easiest way to understand some of the complicated aspects of elderlaw is to use an example that readers can relate to. The following is a case study of a typical, middle class, senior married couple. In future columns I will deal with individuals with good children, bad children and no children so as to present every possible elder law client scenario.
The couple have three children, two of whom are out of state, and one lives locally. Recently, a neighbor entered a nursing home and that along with the children's prodding have gotten the couple to make an appointment with an elderlaw attorney for a consultation.
Of course, it would mean cashing in the IRA of the ill spouse and there would be tax consequences, but overall, this is a reassuring fact that the couple was not aware of. Not only would the spouse in the community keep all of the assets, but they would also be allowed to keep a total of $2,049 a month, a total of the couple's income. The spouse in the institution would keep $50 and the rest would go to the nursing home. The attorney warns that spousal refusal also has drawbacks. For one, it is not unusual that the caregiver for an ill spouse suddenly dies. And. The ill spouse now needs nursing home care because there is no one at home to care for John or Mary. Furthermore, there is no community spouse to transfer assets to and transfers to the children will result in a period of ineligibility for Medicaid. A second problem might be that both spouses could need nursing home care, or that the county might decide to start aggressively pursuing the recovery from the spouse in the community. Also, there is a danger of a lien being attached to the assets of the spouse in the community. The attorney suggests that it's not necessary to do anything dramatic because of spousal refusal, but the couple may want to take some precautionary steps at the present time. The couple could consider long-term insurance to cover them in the future. Neither has been diagnosed with any disease, and even though John is somewhat forgetful, he could pass the insurance test. This couple is right on the cusp of whether or not the insurance would be affordable. Depending on their financial beliefs, this couple may or may not want to pay premiums probably ranging in the area of $8,000 to $10,000 a year for coverage, but it would be something for them to consider. They might also suggest their children help with the premium, since it's the children who will ultimately benefit. The attorney will certainly suggest that the couple have powers of attorney, probably appointing each other as agent and one or more of the children as alternate agents so that financial decisions can continue to be made even if one of the couple is no longer competent at some point in the future. They should have health care proxies so that a proxy can make medical decisions for them. Again, they can appoint each other as proxy and one of the children as an alternate. They may also begin to make transfers out of both of the spouses' names, which will start a period of ineligibility against both spouses, but that period will commence now while neither is in need of nursing home care. Their main concern should be protecting their assets in case the need for nursing home care should arise. The couple might consider transferring their home in some fashion. If they do so, they should keep control of it. They might consider transferring it to their children and retaining a life estate or transferring it into an irrevocable trust in which they will retain a greater degree of control. If they set up the trust they might put some of their stocks into the trust. If they don't set up the trust, they might consider transferring some of their cash to the children. However, the attorney will caution them to be conservative in that regard. Above all, the attorney might emphasize that John and Mary should not sacrifice their own independence and dignity because of a concern for preserving assets for their children. This is a legitimate concern but should be secondary to the couple's comfort. They do not want to be in a situation in the future where they have to go to their children and ask for money. Even if the children are the most wonderful, cooperative children in the world, it is simply not a healthy thing to have to ask for money that is yours in the first place. If Mary and John choose to do nothing at all, they should at least understand the risks involved. Should they take some action, their actions should be conservative, with an eye toward keeping as much control as possible over assets. For many spouses, their main concern is that if one becomes ill, the other will be impoverished. With spousal refusal, that is highly unlikely and so the only real danger is to preserve the inheritance for the next generation. Any decisions made should be made with the above facts in mind. Reprinted with permission of the Suffolk Times © 1999 [ Contact Us ] [ Guestbook ] [ Email ]  The Law Offices of John M. Bigler, Attorney At Law 1421 Wantagh Avenue, Wantagh, New York 11793-2206 1-888-ELDER-LAW · 516-409-6565 · Fax: 516-409-6522 E-Mail: info@biglerlaw.com · Web Site: www.biglerlaw.com |
John and Mary are both in their mid 70's and they are in good health except that John is showing some early signs of forgetfulness. They have approximately $100,000 in CD's, $100,000 in stocks and each has an IRA with $50,000 naming the other spouse as beneficiary. The couple own a home valued at $200,000. They originally paid $20,000.00 for the home. John has Social Security retirement benefits and a pension adding up to $1,500 a month in income and Mary has Social Security of $700.00 a month.
At the consultation, John and Mary indicate that they are not sure that they would like to do anything at all, but would just like to understand their options. First, the attorney explains to the couple the concept of spousal refusal. The couple learned that if something should happen unexpectedly to either one of them requiring institutional care, all of the assets could be transferred to the other and the first could be found immediately eligible for Medicaid with the community spouse signing a spousal refusal.