‘Hot Topics In Elder Law’ Informs A Curious Crowd

By Nancy K. Crevier

Attorney Ann Fowler-Cruz, a certified elder law attorney qualified by the National Elder Law Foundation and of counsel to Cohen and Wolf, PC of Danbury, Westport, and Bridgeport, spent one hour Wednesday afternoon, November 14, demystifying elder law and asset protection planning to nearly three dozen senior citizens at the Newtown Senior Center on Riverside Road.

Ms Fowler-Cruz identified elder law attorneys in literature handed out as attorneys who “use asset protection planning and long-term care planning strategies to enhance quality of life for the elderly, as well as younger people suffering from a serious illness or disability.”

She clarified for those present the confusing aspects of elder law, including the laws that surround Medicaid, Medicare, Social Security; power of attorney; guardianship; older persons’ legal capacity; and the conservation and disposition of an estate. In particular, Ms Fowler-Cruz spent a good deal of time discussing the many new changes to the Deficit Reduction Act (DRA) that impact asset protection planning in case of long-term care, a topic that affects many people as they age.

“Don’t give your money away to the state if you don’t have to. Use the rules to minimize expenditure on long-term care,” advised Ms Fowler-Cruz. Despite changes to the DRA, many good tools remain that can be used to an individual’s benefit, protecting assets while remaining eligible for Medicaid, she said. “There are still some opportunities to resolve crisis planning,” she said. However, it is important that seniors be aware of the new laws.

Changes in the gifting laws have created a five-year look-back period, up from the previous three-year look-back. A giver is allowed to give up to $12,000 per person per year and up to $2 million over the course of a lifetime in Connecticut, said Ms Fowler-Cruz. That money is then no longer eligible as an asset when a person applies for Medicaid coverage for long-term care, as long as it was gifted five or more years prior to the giver entering long-term care, whether at home or in a facility.

Another DRA change, Ms Fowler-Cruz pointed out, is that under the old law, a home of any value was not looked at when considering Medicaid eligibility. Under the new law, in the state of Connecticut, the value of a home beyond $750,000 is now considered income and must be used for long-term care before Medicaid kicks in. She suggested taking out a reverse mortgage for homes valued above $750,000 if care can be provided in a home setting and a person so desires. Reverse mortgages are highly regulated now, and a good tool for staying home and solving a cash flow problem, said Ms Fowler-Cruz without affecting Medicaid eligibility. It is a hard concept for older people to grasp, she said, because by taking equity out of the house, a person consumes the equity in the house. “But it is a good solution if you want to stay in your home and need care,” she said.

Other methods for protecting assets and yet become eligible for Medicaid for long-term care presented by Ms Fowler-Cruz to the attentive audience included moving assets to a spouse; or moving assets to a child under the age of 21 or to a disabled “child” of any age. Rules that apply only to houses include moving the house over to a caregiver child living in the home and providing care to a parent. Or, in the case of a sibling who cohabits with the person requiring long-term care, the sibling with equity in the house can stay there.

“The rules are not generous,” warned the attorney. Grandchildren, nieces, nephews, or friends who provide care in the home cannot have the house gifted to them without it still being considered an asset that will be counted by Medicaid as income that must be spent before the government takes over payment of long-term care.

Annuities that turn cash into an income stream are another possibility for using savings before they are seized by the state for long-term care, nor is there any penalty for spending down cash or for spending money on home improvements.

Another change in the DRA concerns conservationship rules, said Ms Fowler-Cruz, those rules that cover the petitioning for and assignment of a guardian. The new rules have increased to protect alleged incapacitated persons, she said, which is a good thing. However, it means increased costs, time, and court room appearances. One of the new aspects of the rules, she gave as an example, is that even if a guardian is appointed, the judge may pick and choose to what degree the guardian has power. Another change allows the incapacitated to pick the guardian, and the judge must comply with this request, unless there is compelling evidence that the guardian would not be appropriate.

Besides focusing on the DRA changes, Ms Fowler-Cruz also emphasized four documents that she feels everybody should have. “Everybody should have a power of attorney document that assigns someone to act on your financial behalf if you are not able to do so,” she said. The other two documents necessary are a health care proxy for medical decisions in case of emergency and a living will, which Ms Fowler-Cruz defined as a sort of “end of life philosophy.”

The fourth document she mentioned was a will. “This is essentially a book of instructions to those left behind when you die,” she said, and while most commonly sought is probably not as important as the other three documents. “Remember, though, “ she warned, “the title on your assets trumps your will.”

Many details of her talk were summarized in a six-page handout provided to the seniors present Wednesday afternoon. Consulting with a person trained in elder law may be the best way to sort through the complexities of each individual’s situation. Elder law attorneys are also able to direct senior to the many service and resources in the community, said Ms Fowler-Cruz.

 It is hard for a generation who has grown up believing in saving money to do otherwise, noted Ms Fowler-Cruz. But even realizing this, the attorney suggested that as one ages, rather than wait for illness and disability to strike and for a lifetime’s earnings to be handed over to the government for care, “Spend your money, enjoy it.” And plan ahead, before crisis strikes.