There comes a time in every estate planner’s career when their clients come to them about protecting a lifetime of savings from the nursing home, whether the long term care is for them or their parents. With those first clients and the others to come, the estate planner has to decide whether or not to expand their practice into Medicaid Planning or start to refer those cases out. There is a third option, but first, there are six things every estate planner should know before venturing into the Medicaid Planning world.
1-It’s a Whole Other Level of Complicated. The rules around Medicaid will seem to clash with everything you know about estates, but it’s not hopeless. You just really need to know the rules inside and out, probably more than any other area of law you’ve studied. With more than 200,000 rules, it’s important to understand and absorb the concepts while knowing how to look up all of the specifics, which may change at any given time. (North Carolina does not have a printed manual of the Medicaid rules; everything is online so it can be changed at a moment’s notice.) Treating Medicaid Planning as a side gig to your main business is a sure way to get to know your malpractice insurance carrier.
2-Good Medicaid Planning Includes Estate Planning. Among all of the different perspectives, angles, and details that go into every single GamePlan to qualify for Medicaid, there is always the question “where do you want your assets to go once you have passed on?” While the main objective is to protect and shelter as many assets as possible for the family, it is still up to the clients to direct how the assets should be allocated and distributed just like it would be in a Will or Revocable Trust.
3-A Good Medicaid GamePlan Looks a Few Steps Ahead. Unfortunately, this is something that even attorneys who hold themselves out as experts often fail to do. The professional may meet with a married couple concerned because one of them was diagnosed with early-stage dementia, the professional will chart a course to rearrange assets and income to qualify that one spouse and look no further. At my company, The Care Assistance Center, LLC, we’ll work to arrange things so the spouse diagnosed with dementia will qualify for benefits, set things up to protect assets should the other spouse need benefits down the road, and possibly even arrange some of the protected financial assets to provide some long term care benefits for the children. We treat creating a GamePlan like surgery. As long as we’re “cutting things open,” we might as well handle as much as possible to avoid an unnecessary surgery later.
4-One Missing Element Can Radically Change the Overall GamePlan. Unlike estate planning, if one item is missed, it can throw off the entire Medicaid qualification process and change the entire outlook. If while planning for a client’s estate you are setting up and then funding a revocable living trust to avoid probate the client forgets to tell you about an account, it is not fatal to the whole plan. The worst things that could happen are that a particular account goes somewhere other than where the client wants or it ends up in probate before being distributed to the right beneficiaries. If one account is forgotten in the Medicaid Planning process, it could corrupt the whole plan since everything is interdependent. If one puzzle piece changes, the whole picture is different. We once met with a potential client who refused to disclose all of their father’s assets ahead of the first meeting, so in trying to formulate a first sketch of a GamePlan, we would put out a few options. Then the daughter, thinking she was being clever, would pull out a statement for another account and say, “well, what about this?” With the new information, all of the options changed. She then whined, “but you just said…” She also did this several times with the answers having to change with each new asset. Needless to say, we didn’t take her on as a client. From that meeting forward, we refused to meet or talk with anyone who wouldn’t disclose all of the assets and other information beforehand.
5-It’s Next to Impossible For Clients to Understand Every Detail of a Medicaid GamePlan Up Front and In Total. There are simply too many details involved in a multi-step GamePlan for your clients, or even you, to remember and comprehend all of them in total at the same time. Trying to go in-depth with the clients on every single step becomes a futile exercise that only frustrates the clients and brings doubt into the process. (I can’t even keep all of the details in my head, and I write books about care assistance planning. That’s why we rely on several professionals to exercise their knowledge on their specific areas of the GamePlan.) The best you can and should do is give the clients a clear overview of the process, provide a written multi-step summary of actions to take and when each “step” should happen, and not address specific questions in anything but the most basic high-level fashion if it’s more than one step ahead of where you currently are. In addition, once a step is completed, keep the client from going back over the finite details of the previous steps.
We once had a client with a husband who needed care, and she demanded to know specific interest rates for long-term investments within an irrevocable trust when those decisions were four months and five steps away. The steps in the plan were 1) set up the toolbox of trusts and other documents, 2) liquidate certain assets while dealing with debts and taxes, 3) transfer cash and some other assets into the trusts while spending money on other things that were exempt from Medicaid/VA scrutiny, 4) apply for benefits, and finally, 5) look at investments in the trusts. She refused to sign the legal documents in step 1 until she knew the exact guaranteed interest rates for all of the possible investments in step 5. Her banker and financial advisor got her so panicked that she did nothing, and the planning came to a dead stop. As far as we still know, she’s been spending $9,500 a month private paying for her husband’s in-home care since October of 2018 because her banker convinced her not to liquidate bank CDs so she wouldn’t lose $3,000 of accrued interest. And that leads us into the last item…
6-Bankers, Financial Advisors, Accountants, and Attorneys Who Dabble are the Enemy of Your Time. Estate planners often coordinate successfully with these other professionals because they are all at least somewhat versed in estates. However, once Medicaid and other benefit planning comes into play, the GamePlan often conflicts with what these professionals know to be true in the context of estate and retirement planning. (Thankfully, the professionals we work with on an ongoing basis are cooperative because they understand we know what we’re talking about.)
The GamePlan may call for liquidating bank CDs and transferring the funds into an irrevocable trust or spending the money elsewhere, and bankers will cry foul because you will lose your accrued interest. (Most banks will not allow any change in CD ownership to a trust and only allow the option of early liquidation.) Financial advisors are asked to liquidate their client’s stocks to transfer the money, and they’ll argue about capital gains taxes or boast about how they could make more money in the stock market. Accountants are asked to project the impact on income taxes when emptying out retirement accounts over one or more years, and they’ll take a strong stance against taking any action because of the taxes. What they are all failing to realize is that the GamePlan is designed to prevent the hemorrhaging of up to $10,000 a month or more for nursing home care while keeping the overall asset positioning flexible enough to account for changes in health which would necessitate changes in the GamePlan.
This is why my company The Care Assistance Center, LLC will recommend professionals to our clients or refer out the work called for by the GamePlan (specifically to accountants and local attorneys), and we will not discuss/argue details with outside professionals without additional charges. If one of these professionals wishes to become part of our network on an ongoing basis, we’re happy to provide information and then guidance, but we’re not going to do a deep dive into all of the reasons behind the actions in a particular GamePlan just because the professional doesn’t understand Medicaid Planning. Before we started instituting charges, on more than forty percent (40%) of our cases at least half of my time was spent having to contradict what other professionals were advising, educate them on Medicaid Planning, and flat out arguing with them because they agitated our clients who were already in a vulnerable position.
Medicaid Planning often sounds like it is just an extension of estate planning, but it truly is its own area. Estate planners are often approached by their clients for help, and the decision needs to be made to venture into this area of planning or refer it out to someone else. If you are thinking about entering the Medicaid Planning arena, then please keep these six items in mind. However, there is no longer a need to either do it or not. Part of the mission of The Care Assistance Center, LLC is to help professionals nationwide without them having to become Certified Medicaid Planners™ themselves. We are available to consult on cases nationwide, you keep your clients happy and under your care, and you can even charge a fee for your services. We’re happy to provide a simplified course to professionals on how to best work with us on Medicaid Planning without having to master all of the 200,000+ rules of Medicaid. For more information, please email me at [email protected] and we’ll get the ball rolling.