Maryland Elder Law

A technical Article for Maryland Elder Law Practitioners

Soon after the opinion was issued, this writer posted an article discussing the case, Schoukroun v. Karsenty (Md. App. December 11, 2007), which article you may access by clicking on the case name in this sentence. That article suggests that the court-created augmented estate rule set forth in that opinion might have implications in the Medicaid planning context.

There are other rules that are important for Elder Law Practitioners to bear in mind when considering the implications of Schoukroun.

42 U.S.C. § 1396p, subsection (4) provides the statutory definition of “estate” for recovery purposes under the Federal Medicaid program, as follows:

(4) For purposes of this subsection, the term “estate”, with respect to a deceased individual—

(A) shall include all real and personal property and other assets included within the individual’s estate, as defined for purposes of State probate law; and

(B) may include, at the option of the State . . . any other real and personal property and other assets in which the individual had any legal title or interest at the time of death (to the extent of such interest), including such assets conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement.

Moreover, 42 U.S.C. § 1396p(b)(2) allows for recovery of Medicaid benefits from the estate of a deceased Medicaid recipient only after the death of the Medicaid recipient’s spouse (among other circumstances).

In circumstances where a state may seek recovery from assets passing outside of the decedent’s probate estate for Medicaid purposes, the question arises whether the state would have a right to track the spouse’s assets after the death of the Medicaid recipient in order ultimately to collect from the spouse’s estate.

This issue is addressed in a recent Missouri court case, In the Estate of: Raymond V. Shuh, Deceased, Mo.App. ED89849 (Jan. 29, 2008). That case, the opinion for which you may access by clicking on the case name in this paragraph, reviews the applicable Federal and State rules, and concludes that the Missouri Medicaid program may not ultimately recover from the surviving spouse’s estate for Medicaid benefits paid for the benefit of the first spouse to die.

When people think about using Medicaid to pay for nursing home care, they generally think that the program will pay only after most of their assets are gone. However, there are little known rules that allow people to keep certain substantial assets and still get Medicaid for nursing home care. Some of these rules apply only if there is a spouse living at home, and others apply even if a single person is seeking Medicaid benefits.

In the past, there was a limit on the equity value of one’s automobile. If the car was worth more than a certain amount, then the owner or the owner’s spouse might not be eligible for Medicaid (depending on what other assets were in hand). Now, in Maryland one may own a car of any value. In fact, one may own ten cars, and none of them will be counted for Medicaid eligibility purposes.

The law used to impose strict requirements on income producing property. If one owned an income producing property with an equity value of $6,000 or less, and that asset produced a minimum 6% return on the investment, then the asset was not counted in the Medicaid eligibility process. Now Maryland allows one to keep income producing property of any value as long as that property produces income that is reasonable.

Conceivably, then, one may own 30 rental townhouses worth $2,000,000 and as long as those properties return fair market value rent, these assets may be disregarded when determining whether the owner’s spouse would be eligible to receive Medicaid for nursing home care.  [If a single person owned this much income producing property, then her income would be so high that Medicaid would not be needed.]

Also, jointly owned property will be valued at zero for purposes of the Medicaid eligibility determination if the joint owner would refuse to participate in a sale of the property.

These and other special rules make it possible to preserve more assets than one might think if nursing home care should become necessary.

This office has recommended, and most estate planners will agree, that one should consider appointing a trusted individual to make health care decisions for you in the event you are unable to do so. I wrote a comprehensive article on that topic on October 7, 2007.

Maryland law not only allows one to appoint a Health Care Agent, the statute provides forms one may use to do so. While I have always recommended that one seek experienced legal counsel when appointing a Health Care Agent - one of the statutory forms curiously omits a significant provision - such advice is even more compelling in light of a new ruling by Maryland’s Attorney General.

Maryland’s Health Care Decision Act enables a person both to appoint a Health Care Agent to make Medical Decisions for you in the event you are unable to do so for yourself, and to state your intentions concerning end of life treatment in certain circumstances: if death from a terminal condition is imminent, if you are in a persistent vegetative state or coma, or if you are in an end stage condition as a consequence of a terminal disease.

There are forms in the statute to effectuate both of these purposes, designated Parts A and B of the statutory advance directive form. In the typical circumstance, an individual will complete both forms, even if the individual intends that the determination of his health care agent, whether it be that individual’s spouse, adult child, or other appropriate individual, will prevail notwithstanding the choices made in Part B, the end of life health care instructions.

For example, one may check the boxes on the form requesting that treatment be provided in the three circumstances discussed above, while at the same time relying on her spouse or other chosen agent to make the decision when “enough is enough” and authorize removal of life support. Nobody wants to become the next Terry Schiavo, the woman who lived in a permanent coma for 15 years while a legal battle raged between her husband and her parents over whether or not to remove her feeding tube.

However, according to Maryland’s Attorney General, once you make your choices on Part B of Maryland’s advance directive form, you will be locked in to those choices even if your advance directive explicitly states that your chosen Health Care Agent may override those choices.

Consequently, some respected elder law attorneys not only recommend foregoing implementation of the Health Care Decisions section (Part B) of Maryland’s statutory advance directive, but refuse to assist clients in appointing a Health Care Agent altogether. While both appointing a Health Care Agent and also completing Part B of the Advance Directive may be problematic, refusing to assist with the appointment of a Health Care Agent seems to be a cure worse than the ill.

Instead of such a drastic response, the Gatesman Law Office recommends that you have a frank discussion with your attorney and that you consider all the implications of your future health care choices. We recommend that you employ legal documents that will enable you to achieve your objectives without tying the hands of those you have appointed to assist you.

Now more than ever, it is important that you seek the guidance of knowledgeable legal counsel when deciding whether to employ the health care decision-making forms provided by Maryland’s Health Care Decisions Act.

Much of elder law practice revolves around dollars and cents, dealing, for example, with questions of how to save the house to pass onto future generations, how to find alternative sources of payment for nursing home care, or how to avoid estate taxes, to name but a few. However, elder law practice involves much more than that.

In my elder law practice, I counsel clients dealing with significant life changing circumstances. While it is clear that people suffer grief when their spouse, parent, or other loved one dies, it may not occur to some that other events likewise will trigger the grief cycle.

Such circumstances include a spouse or other significant person in one’s life taking up permanent residence in a nursing home, the appointment of a guardian for a dear companion due to the intervention of a third party, or actions taken by close family members who call into question one’s loyalty, such as a groundless challenge to one’s faithfulness as agent under a power of attorney or as trustee under a trust.

In these and similar situations, one suffers a loss not unlike the loss suffered when someone dies, and the typical response to such loss is grief.

Elisabeth Kübler-Ross, who studied cancer patients in the late 1960’s, proposed five stages of grief:

• Denial: “This can’t be happening to me.”
• Anger: “Why is this happening? Who is to blame?”
• Bargaining: “Make this not happen, and in return I will ____.”
• Depression: “I’m too sad to do anything.”
• Acceptance: “I’m at peace with what is going to happen/has happened.

Kübler-Ross suggests that one necessarily must pass through these various stages of grief before one will find peace with the situation. Having suffered a grievous loss myself, I contend that it is helpful to understand these stages to give one hope for the future.

These stages are not mere labels. The anger one feels can be intense, the depression can be deep and seemingly unending. To recognize that this is a natural response to any significant loss may help one cope with the various stages, understanding that eventually one will learn to accept the situation and once again find inner peace.

Remembering that it is not only the loss brought on by the death of a loved one that causes grief, and that grief may arise in other situations as well will help bring perspective to one’s situation.

There are numerous internet resources that address the grieving process. Listed below are a few web links to assist you in learning more about the grieving process.

Helpguid.org

Mental Health Information Service

Changing Minds.org

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Some families make large gifts to family members — to enable a child to purchase a house, for example, or to assist a grandchild by paying college expenses. Others make the conscious choice to make a large gift of assets to their children to ensure that those funds will stand in the place of an inheritance should the parents ever require long term care in a nursing home. Without such large gift, those funds might otherwise be depleted by high nursing home costs.

Considering Future Medicaid Eligibility

When making such gifts, seniors must pay close attention to the affect such gifts would have on their ability to obtain government benefits to pay for future nursing home care. As long as sufficient time passes from the time of the gift and an application for Medicaid benefits, those assets will be protected and the gift-giver’s children will not be required to pay back the gift to cover the gift-giver’s care costs.

Read more

We have added a page to our website to provide our clients with forms they may need to facilitate our representation. You may access that page by clicking on the word “Forms” in the menu at the top of this page.

One of the documents in the Forms directory is a Memorandum listing the items one needs to provide to us to support a Medicaid application .

Battley v. Banks (Md. App. December 20, 2007)

The Gatesman Law Office assists clients in the appointment of a guardian for persons who become incapacitated and cannot make personal or financial decisions for themselves. Guardians are entitled to be compensated for their services, but they must petition the guardianship court for approval of such compensation.

When the disabled person, called the “ward” of the court, dies, the guardian must prepare a final account of the ward’s assets. That account should include the guardian’s final request for compensation.

Whether the guardian may pay such compensation to himself out of the guardianship assets before the ward’s assets are turned over the personal representative of the ward’s probate estate depended on the county in which the ward resided. The courts in different counties applied different rules.

Now, however, the rule is clear. Read more

Schoukroun v. Karsenty (Md. App. December 11, 2007). A Technical Article for Maryland Elder Law and Estate Planning Attorneys

The Maryland Court of Special Appeals, in a seismic shift to the estates and trusts law of Maryland, issued an opinion on December 11, 2007, imposing augmented estate rules on the State of Maryland. This decision has significant consequences affecting Medicaid asset preservation planners, estate planners, family law practitioners and CPAs.

Prior to this decision, the Maryland legislature, despite years long advocacy by some members of the Estates and Trusts section of the Maryland State Bar Association, refused to add augmented estate rules to the estates and trusts law of Maryland.

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Many seniors have heard that giving assets to one’s children is a way to safeguard those assets so that they will pass on to the younger generation upon the senior’s death even if nursing home care is required. However, the law governing Medicaid has changed and it now appears that Medicaid will not be available to those who make such gifts.

Nevertheless, while the strategy of making gifts to children in anticipation of requiring nursing home care is much more complex under the new law, it still may be possible for you to preserve assets in this manner.

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