Many of the people we meet with have made the decision to set up a revocable living trust (RLT). This probably isn’t surprising, given we are estate & elder law attorneys, but what is surprising, is the number of times we hear individuals or couples have established a trust and NEVER got around to funding it, they are disappointed and feel misled by their previous representation and are coming to us for help.

One possible reason for this is that it can be a time-consuming process. But, most of the time it is because clients were under the impression that funding was almost complete at the time of signing a trust or that the attorney hired to establish the trust was going to do it afterwards.

RLT’s go by several different names. Over the last few years, it seems every law firm has branded their own term that fits their own clientele. This is good marketing, but often confuses clients into thinking they are getting an entirely different product. Some names I’ve recently come across were Legacy Trust, Wealth Preservation Trust, Estate Trust, and the list goes on. Rest assured, these products all “basically” can do the same things, customized to a specific client’s situation. Some of the benefits of RLT include the ability to continuously control assets during and after your lifetime, provide for children of any age, avoid the costs, publicity and burdensome process of probate proceedings, and limit your federal tax burden. However, with increases in the Federal Estate Tax Exemption, tax planning has become less of a focus.

It’s important to know that none of these benefits will be realized if the trust is never funded. This is especially unfortunate since the concept of funding is fairly simple. Funding includes changing the names on assets such as financial statements or the title to a house or car, to the name of your trust. It also entails changing beneficiaries on financial accounts and other non-title assets to the trust. Title, insurance and financial organizations can be helpful in assisting their clients with these changes, but after someone dies, they often can be difficult to work with, frequently going beyond their own legal requirements to make these changes for their customers. As the saying goes, they love taking your money, but when it comes to giving it back, “good luck.”

Many Estate planning attorneys that write RLTs for their clients do not fund trusts after they are executed and if they do, charge additional fees. This is because the time involved funding trusts is unpredictable, as institutions have different requirements, and these requirements seem to change daily, depending on who you talk to on a given day.

Setting up an unfunded trust is like buying a car, and not putting any gas in it. Before discussing a trust, make sure you check to see if the tank is full. Make sure you're able to get where you want to go when it counts. Many attorneys will talk about the wonderful features of a trust, but never put anything in it, that will help you do what you thought you had planned for it to do.  
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Berger Estate & Elder Law P.A. has been finding solutions throughout Kansas City for over 30 years providing Trusted Counsel with Proactive Solutions for many. We’ve been helping our clients establish trusts tailored for their desires and needs and being upfront about trust funding, doing it for you or helping you every step along the way. Give us a call today at (913) 491-6332, visit our website berger-lawfirm.com or stop by our conveniently located offices at 11233 Nall, Suite 140 Leawood, KS 66211 for more information.
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Anyone who gifted assets within five years of applying for Medicaid may be subject to a penalty period, but that penalty can be reduced or eliminated if the assets are returned. 

In order to be eligible for Medicaid, you cannot have recently transferred assets. Congress does not want you to move into a nursing home on Monday, give all your money to your children (or whomever) on Tuesday, and qualify for Medicaid on Wednesday. So it has imposed a penalty on people who transfer assets without receiving fair value in return.

This penalty is a period of time during which the person transferring the assets will be ineligible for Medicaid. The penalty period is determined by dividing the amount transferred by what Medicaid determines to be the average private pay cost of a nursing home in your state.

However, Congress has created a very important escape hatch from the transfer penalty: the penalty will be "cured" if the transferred asset is returned in its entirety, or it will be reduced if the transferred asset is partially returned (although some states do not permit partial returns and only give credit for the full return of transferred assets). 

Partially curing a transfer can be a “half a loaf” planning strategy for Medicaid applicants who want to preserve some assets.  In this case, a nursing home resident transfers all of his or her funds to the resident’s children (or other family members) and applies for Medicaid, receiving a long ineligibility period. After the Medicaid application has been filed, the recipients return half the transferred funds, thus “curing” half of the ineligibility period and giving the nursing home resident the funds he or she needs to pay for care until the remaining penalty period expires.

The person who returns the money needs to be the same person who received the gift; otherwise, it is not really a return of the original gift. But many people will have spent the gifted assets and no longer have any money to return. If the person who received the transfer no longer has the funds to cure, other family members could give or loan that person the funds to do so. 
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Returning the funds will likely mean the Medicaid applicant will have excess resources that will need to be spent down before the applicant will qualify for Medicaid. States vary on how they handle returns. Some states may consider payments made directly to the nursing home on behalf of the Medicaid applicant to be a return of funds; others require that the payments go directly to the applicant. 

Berger Estate & Elder Law P.A. has been serving Kansas City for over 30 years providing Trusted Counsel with Proactive Solutions. Give us a call today at (913) 491-6332, visit our website berger-lawfirm.com or stop by our conveniently located offices at 11233 Nall, Suite 140 Leawood, KS 66211 for more information.

When applying for Medicaid’s long-term care coverage, in addition to the strict income and asset limits, you must demonstrate that you need a level of care typically provided in a nursing home.  

Whether you are applying for nursing home coverage or through a Medicaid waiver program for coverage at home, you must meet the level-of-care requirement set by the state. Each state has its own criteria for determining if you meet the mandated level of care, and the criteria is not always clear.

The state looks at an applicant’s functional, medical, and cognitive abilities to determine if care in a nursing home is called for. In general, you must be unable to care for yourself or pose a danger to yourself without outside help. The following are the factors usually considered when making a level-of-care determination: 

• You need help with two or more “activities of daily living” (such as bathing, dressing, eating, moving, and going to the bathroom).
• You need frequent medical care, such as assistance with medication, injections, IVs, or other medical treatment. 
• Your cognitive ability is impaired by Alzheimer’s disease or another form of dementia, you have trouble making decisions on your own, or you are unable to process information. 
• You have behavior problems, such as wandering away from home or aggressiveness. 

When assessing a Medicaid applicant, the state will conduct the evaluation. The state may require a doctor’s diagnosis, but it will also likely require the applicant to answer a series of questions about his or her ability to perform activities of daily living as well the applicant’s mental abilities and behavior problems and the applicant’s family’s ability to provide support. 

To apply for Medicaid, contact your local Medicaid office. Your elder law attorney can help you navigate the Medicaid application process, which is not easy. 

Berger Estate & Elder Law P.A. has been serving Kansas City for over 30 years providing Trusted Counsel with Proactive Solutions. Give us a call today at (913) 491-6332, visit our website berger-lawfirm.com or stop by our conveniently located offices at 11233 Nall, Suite 140 Leawood, KS 66211 for more information.

No parents want their children to fight among themselves after they are gone. Sadly, conflicts often arise, especially when a parent has gifted or loaned money to one child and not others. However, a few key words in your estate plan can minimize the potential for conflict.

If you give money to one child, the other siblings may claim that the child should receive a reduced share of your estate.  You can forestall such disputes by making your intent clear in your estate planning documents. For example, the document could state that you are not making any adjustments based on gifts. This would make it clear to everyone that no one should receive a reduced share. Alternatively, you could specify the gifts that have been made and explain why one child is receiving a reduced share.

Loans are another problem. These can be addressed in a number of ways, depending on your intent. Verbal loans are difficult to prove, so consider including a provision in your estate planning documents stating that all verbal loans are a gift. If you have any outstanding verbal loans that you don't want to be a gift, then make sure you put these in writing. If you want the loan to be an advance against inheritance, this can also be specified in your estate planning documents. To avoid a child claiming the loan was forgiven, you can require that the forgiveness be in writing.

The important thing is to make sure your estate planning documents clearly convey your intent. Be sure to consult your attorney to ensure your documents provide the guidance you want regarding gifts and loans.

Berger Estate & Elder Law P.A. has been serving Kansas City for over 30 years providing Trusted Counsel with Proactive Solutions. Give us a call today at (913) 491-6332, visit our website berger-lawfirm.com or stop by our conveniently located offices at 11233 Nall, Suite 140 Leawood, KS 66211 for more information.