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How to Select the Right Elder Law Attorney

June 2, 2016

Filed under: Elder Law — Neel Shah @ 9:15 am

Most people have not had the experience of keeping an attorney on retainer. Most of their interactions with a lawyer happened for a specific purpose, like buying a house or handling a sudden litigation issue. That’s why it can be confusing when facing elder law issues, because you need to identify an attorney with whom you can form a relationship.elder law New Jersey

Your elder law attorney should be someone you can trust, because he or she will be helping you with the planning and decision-making associated with your golden years. As people are living longer, there are more and more complex issues that need to be addressed by people facing retirement age. Having a long-term plan for your assets and your healthcare is important, and an elder law attorney should work with you personally to help identify your individual needs.

That being said, if your interaction with attorneys has been sparse and focused largely on resolving one specific issue, you need to shift gears when hiring someone to help with your elder law needs. You need to first understand how an elder law attorney can help you. An elder law attorney is a lawyer who may help you with some of the specific but also the broader picture associated with your needs as you get older, including:

  • Planning for long-term care
  • Making sure your estate planning documents match your goals for your life as well as after you pass away
  • Coordinating private and public resources to help pay for long-term care, should you need it
  • Helping you identify possible locations for care

These are just some of the things that an elder law attorney can help with, but it’s essential that you find someone who focuses on holistic solutions. No two people are the same, and each elder law planning opportunity presents the need for unique considerations. Make sure you identify a New Jersey elder law attorney with experience in the field.

What Are the Advantages of Working with an Elder Law and Special Needs Attorney?

May 9, 2016

Filed under: Elder Law — Tags: , , — Neel Shah @ 9:15 am

When you work with an elder law attorney, you get the benefit of knowing that this individual is well aware of the laws impacting you and your loved one and is committed to helping you apply them correctly. There are clear policy guidelines associated with agencies who administer programs for individuals with disabilities and the elderly. shutterstock_250299895

An experienced elder law attorney can help you evaluate all the potential issues associated with your loved ones and to determine the appropriate strategies for assisting and protecting you well into the future. There are many common mistakes that individuals might make in the process of handling an elder law concern and this can be catastrophic as it relates to qualification from Medicaid and other aspects of long-term care.

Consulting with someone well in advance helps to address issues down the road but it can also be beneficial to form a relationship with an elder law attorney after an issue has arisen. Speaking with someone who is knowledgeable about the law and helps other clients with similar cases gives you the peace of mind that you are working with a true professional. Do not hesitate to contact an experienced elder law planning attorney in New Jersey today to learn more.

Questions to Ask When Evaluating an Elder Care Facility

March 17, 2016

Filed under: Elder Law,Elder Safety — Neel Shah @ 9:15 am

Your walkthrough of an elder care facility is important for determining if it’s the right place for your elderly loved one.

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You should also ask several important questions like:

  • Are there wheel chair ramps?
  • Is there an exercise or activity room?
  • Are there any unpleasant odors?
  • Are there outdoor areas where residents can walk or sit?
  • Is smoking allowed?
  • Are all facilities air-conditioned?
  • Do rooms have windows?
  • Are married couples allowed to share a room?
  • Are wheelchair ramps easily accessible?
  • Are the grounds well maintained?
  • Are there curtains or screens for privacy in rooms with more than one resident?
  • Are the rooms kept at a comfortable temperature?
  • Can residents adjust the temperature of their own rooms?
  • Are residents allowed to bring their own furniture?
  • Are there ample storage, rooms or spaces?
  • Is there an evacuation plan posted?
  • What kind of medical supervision is offered?
  • Are there any personal or beauty services offered?
  • How do residents and staff interact?
  • Are there any language barriers between residents and staff?
  • How often are social activities scheduled?
  • Are fire exits clearly marked?
  • Is the food well-presented and appetizing?
  • Is the down payment refundable if the resident passes away or moves?
  • What responsibilities do family members have in assisting with payment obligations?

If you are thinking about moving your elderly loved one into a care facility. It is a good idea to consult with an elder law attorney to answer questions about how this will be financed and to address any concerns associated with Medicaid.

Why Would I Need an Elder Law Attorney?

March 19, 2015

Filed under: Elder Law — Neel Shah @ 3:16 pm

Elder law refers to a practice that is devoted to the needs of older clients. Elder law attorneys have specialized knowledge about long-term care planning, advance health care directives, powers of attorney, probate and trusts, guardianships, and asset protection. While many elder law clients turn to an attorney in the midst of an elder care planning crisis, you might also reach out to an attorney with experience in this field so that you can plan ahead. shutterstock_183409916

There are many reasons that you might need an elder law attorney. If you or a loved one has concerns over the cost of long-term care and how you will be able to pay for it, then it’s pertinent that you speak to an elder law attorney as soon as possible. Your attorney can walk you through the various options to pay for long-term care, including any government programs for which you or your loved one may be eligible.

An elder law attorney can be crucial for helping you learn about qualifying for these programs and walking you through your options to ensure that your wishes are carried out in the manner that you intend.

These are just a handful of the ways that an elder law attorney can help you. Whether you’re in a crisis situation or looking ahead to plan for the future, contact an elder law attorney to get the information you need to make these important decisions. Reach out to us today at info@lawesq.net.

What’s the Difference Between Elder Law and Estate Planning?

March 2, 2015

Filed under: Elder Law,Estate Planning — Neel Shah @ 4:46 pm

Even though there are often situations where these two practices blend into one another, talking about estate planning and elder law does not always mean exactly the same thing. One key way to look at what makes these two kinds of practice unique is to consider the critical questions that each aims to answer:

  • What happens if I die?
  • What happens if I live?

Invariably, both elder law and estate planning in some ways address both life and death. Increasingly, estate planning tools help individuals capitalize on plans while they are still alive. Estate planning, however, has a much sharper focus on what happens when you die, especially when it comes to the transfer of your assets. A lot of the questions addressed in elder law, however, have to do with helping people plan for the future within their own life. As longevity is a major concern for today’s elderly, planning in advance for aging and long-term care are just as important as factoring in estate planning. shutterstock_196636610

Estate planning and elder law work together. Imagine it this way: what benefit is putting so much effort into planning for the transfer of your assets on death when you pass away if all of those assets are put in jeopardy by one major health event? Elder law works to protect those assets and get you thinking about these concerns early on so that you can meet your estate planning goals. Send us an email today at info@lawesq.net to learn more.

3 Policies That Might Influence Your Plans to Retire

June 12, 2014

Filed under: Elder Law — Neel Shah @ 11:59 am

There’s a flurry of activity in D.C. lately that might have an influence on your retirement plans. The proposed Obama budget has some important considerations inside for IRAs and Social Security. To start with, the plan suggests “harmonizing” required minimum distribution rules making mandatory RMDs for Roth IRAs after the individual passes age 70 ½. As of now, Roth IRAs still offer unique benefits since they are not in line with other rules on RMDs in retirement accounts.

3 Policies That Might Influence Your Plans to Retire
(Photo Credit: alignedforlifechiropractic.com)

A second proposal inside the budget suggests a cap on IRAs that would limit what an individual can put into the vehicle once they have surpassed a “secure retirement” stage. This would influence wealthy individuals and could reduce opportunities for roll-over from an employer sponsored plan.

Finally, the government aims to explore ways in which to maximize Social Security benefits. Currently, some retirees are able to get the most out of Social Security with claiming strategies, but the government wants to reduce any windfalls and use those savings to help make the Social Security program more solvent.

As always, tax, retirement, and estate planning are subject to change often- and they do. These proposed changes could influence your own plans. Staying on top of the game by working with a qualified planner “in the know” can ensure that you’re getting the most out of your plans. To learn more, email info@lawesq.net or contact us via phone at 732-521-9455 to get started.

Preventing End of Life Costs from Destroying Your Estate

May 19, 2014

Filed under: Asset Protection Planning,Elder Law,Long Term Care,Medicaid,Nursing Homes — Tags: , , , , , — Neel Shah @ 9:58 pm

It’s very rare that anybody has covered all possible risks in terms of their wealth management when it comes to income and cash flow, guaranteed income, cash, investments, and the connection between long term care and your estate. If you skip planning for long term care expenses, you may find that your other wealth management tools and strategies don’t hold up to the rising cost of healthcare.

Preventing End of Life Costs from Destroying Your Estate
(Photo Credit: colourbox.com)

The average cost per month for a long-term care facility is over $7,000. That’s why long term care planning is so essential. When a long-term care insurance policy is too expensive or not an option because you do not qualify.

There are alternatives, however. Structuring your estate in a particular manner can help you guard against the cost of long term care. Two common strategies are eliminating assets through trusts and transfers. This means that down the road, if you need to reduce your assets for Medicaid eligibility, you’ve already done most of the work. If you are confronted with a long-term care event before you have done this, you could find yourself having to “spend down” your assets anyways before government assistance kicks in, depleting your savings and forcing you to do it rapidly, which is rarely in your best interest. However, if you do it incorrectly, it has the potential to have a severely negative impact on eligibility and penalty periods. To learn more about trust planning, gifting, and other strategies to mitigate risk in estate planning, email info@lawesq.net or contact us via phone at 732-521-9455.

Assisted Suicide Case Dismissed

March 19, 2014

Filed under: Current Events,Elder Law,Lawsuits — Neel Shah @ 10:00 am

A judge in Pennsylvania has thrown out a case of assisted suicide lodged against a nurse who was charged with murder last year for allegedly giving her father a bottle of morphine pills.

Pick Your Painkiller

(Photo credit: sfxeric)

The decision is the latest in a series of developments signaling that courts and states are not interested in criminalizing care that may hasten death, according to a report on NPR.org.

In this case, Barbara Mancini, 58, a nurse, was charged with assisting in the suicide of her 93-year-old father in Feb., 2013.

The father, Joseph Yourshaw, was in home hospice in failing health. A hospice nurse checked on him and found him unconscious. The hospice had him taken to the hospital by ambulance against the wishes of the family. He was revived, but died a few days later.

In a scathing 47-page opinion, the judge wrote that the state did not establish that Mancini had committed a crime — that she tried to help him commit suicide rather than ease his pain.

She said the charges were based on speculation. Mancini said she only wanted to help ease his pain but a hospice nurse and a police officer said she told them she wanted to help end his life. He had previously told hospice workers and family that he wanted to die.

The judge said there was no evidence Mancini fed him the pills and noted that the man was capable of opening the bottle and taking the pills on his own. It was ruled he died of a morphine overdose.

“This case demonstrates that the government has no business interfering in families’ end-of-life decisions,” Mickey MacIntyre of the advocacy group Compassion and Choices said in a statement. “This prosecution could have chilled end-of-life decisions and pain care for millions of future terminally ill patients who simply want to die at home, peacefully and with dignity.”

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What To Do When Your Elderly Parents Move In With You

March 4, 2014

Filed under: Caregivers,Elder Law,Finances — Neel Shah @ 5:36 pm

More and more, elderly parents are moving in with their grown children. With the increasing costs of nursing homes, this makes financial sense for many people. But what should you and your parents do to prepare for such a dramatic move?

English: My parents.

English: My parents. (Photo credit: Wikipedia)

Issues that must be considered range from the financial to the emotional, according to an article on elderlawanswers.com.

The first thing to consider is the financial details. If the adult children who are taking in their parents have siblings, they should work something out so that the other siblings (those not taking in the parents) contribute something towards the costs of rooming and boarding the parents.

Costs can mount up. Besides food, one may need to do renovations or hire a home care aide.

Consider having your parents sign a contract under which they pay their children for taking them in. Maybe the parents can contribute to the remodeling or gift their own house to their children. There may be tax consequences to these actions to consider.

To avoid or reduce resentment and guilt down, family members should discuss everything out in the open at the outset. An elder law attorney can help work these things out.

Once the decision has been made, one should consider making the home senior-friendly. This may involve putting on an addition to the home, installation of  grab bars in the bathrooms, installation of ramps or conversion of a room on the first floor into a bedroom if necessary.

You may also be able to take a tax deduction by claiming your parents as dependants.

And make sure to seek out support from organizations such as local agencies that work on aging issues.

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You have Options For Your or Your Loved One’s Long-Term Care Needs

January 29, 2014

Filed under: Elder Law,Long Term Care,Medicaid — Neel Shah @ 7:24 pm

As life expectancy continues to rise, so does the possibility that an individual will require long-term care at the end of his or her life. A recent article states that 7 in 10 Americans will require long-term care at some point in their lives. Unfortunately, as life expectancies rise, so do the costs of long-term care.

ElderlyWomanInGlasses

(Photo credit: Wikipedia)

Many families do not realize how high the costs of care are until they are trying to place a loved one in a facility.  Many studies estimate the cost to range from $8,000 per month to $13,000 per month.  At that point, it is too late to utilize any sort of planning or saving and the financial reality can be devastating. Therefore, it is important to have a plan to cover your long-term care costs. Below are three of the most common ways that people plan to pay for their long-term care.

1. Save and pay out of pocket: If you believe that you will be able to pay for your long-term care costs out-of-pocket, be sure to conduct some research to predict how much money you will need to save and account for contingencies.
2. Purchase long-term care insurance: Long-term care insurance is becoming a more popular method through which individuals pay for their long-term care costs. Importantly, be sure to purchase this early for the best rates.
3. Spend down your assets so that you apply for Medicaid: Medicaid is a needs-based program. Therefore, your assets must be below a specific threshold in order to qualify for benefits. If you are above the threshold, you may be able to carefully spend your assets down until you qualify for coverage.

Which is right for your family?

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More “Granny Cams” Used in Nursing Homes

December 25, 2013

Filed under: Elder Abuse,Elder Law,Elder Safety,Nursing Homes — Neel Shah @ 2:51 pm

After the story of Eryetha Mayberry – the nursing home patient whose abuse was caught on a hidden camera – became widely known, the type of surveillance used in the case has grown increasingly widespread. However, some have been quick to criticize the practice. A recent article discusses some of the arguments made for and against the use of “granny cams” in nursing homes.

Opponents contend that the secret monitoring raises ethical and legal questions. Not only is the family member being video taped, but whoever passes in and out of the room is caught on camera as well. Although a protective measure, the cameras are also an invasion of privacy. Some argue nursing home staff should be made aware of the cameras.

Proponents of this form of surveillance argue that the technology is incredibly accessible and widespread. For example, ‘nanny cams’ are often used when parents hire a new babysitter for a child. However, there is a difference between secretly filming a babysitter caring for an infant, and secretly filming aides caring for a full grown adult.

Whether you agree or disagree with the use of secret cameras in nursing homes, it is important to remember that the real problem is the abuse that is occurring. Perhaps nursing homes need to work harder to address the deep-seated issues at the many facilities that have had abuse complaints.

Considering Providing In-Home Care for a Loved One? Read This First

November 27, 2013

Filed under: Elder Law — Neel Shah @ 9:00 am

For some elderly citizens, remaining at home is no longer an option. Either physical or mental deterioration makes it impossible for them to carry out daily tasks, even with assistance from loved ones. Other seniors, however, may be able to live at home longer than they think. A recent article discusses considerations a person should make before committing to provide in-home care for a loved one.

First, consider what limitations your loved one faces. Are these limitations that a family member or in-home care worker can assist with? If your loved one requires regular doctor visits, could you arrange a doctor or nurse to make house calls? Finally, consider whether you can afford a personal-care assistant to assist with non-medical tasks such as meal-preparation, cooking and cleaning. Even hiring a person on a part-time basis will save you from the responsibility of 24/7 care.

If you plan on providing care to your loved one yourself, consider the toll the care may take on you. Often, family members undertake such tasks before realizing that they are ill equipped to deal with the unique tasks that aging individuals face. Additionally, if your loved one is unable to carry out simple tasks such as bathing, toileting, and dressing, a long term care facility may be the best and safest option.

Give Serious Consideration to End of Life Decisions

November 21, 2013

Filed under: Advanced Directives,Elder Law,Living Will,Long Term Care — Neel Shah @ 8:59 pm

One major part of estate planning is determining what kind of care, if any, you would like to receive at the end of your life. Although most people would rather not think about the end of their life, a recent article explains the importance of giving serious consideration to end-of-life care.

If you have thought about what type of care, if any, you would like to receive at the end of your life, it is important to complete an advanced medical directive and a medical power of attorney. These documents will allow you to put these desires in writing so that medical staff will be aware of your wishes when you cannot otherwise communicate with them. Additionally, they allow you to select the person who you trust to make medical decisions on your behalf.

Sample Virginia Durable Do Not Resuscitate Ord...

(Photo credit: Wikipedia)

One common type of advanced directive is a do not resuscitate order (“DNR”). A DNR advises medical staff not to take life-saving measures in the event that death is imminent. If you have a DNR, it is important to keep it in an easily accessible location, and inform your family and doctors of its existence. Importantly, an advanced directive that directs medical staff not to prolong the dying process does not withhold medicine and other procedures meant to keep you comfortable during the dying process.

Conversely, you could also complete a prolonging procedure declaration. This document instructs medical staff to do everything they can to delay death, even when it is imminent.

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Information Overload: The Need to Know for Seniors and Medicare

November 20, 2013

Filed under: Elder Law — Neel Shah @ 8:16 pm

With the changing field of health coverage and insurance thanks to the Affordable Healthcare Act, senior citizens who receive or are anticipating receiving Medicare may be understandably confused as to what the changes mean for them. A recent article discusses what seniors need to know about Medicare.

Primarily, senior citizens have faced confusion over whether the changes implemented by the Affordable Care Act will cause their Medicare or Medicaid benefits to be reduced or changed. This confusion partially stems from the fact that the open enrollment period for Medicare overlaps with that for Obamacare.

However, seniors should have no cause for concern. As Associate Vice President of the USF Health Jay Wolfson explains, “Medicare is a separate [from the healthcare exchange] qualified plan. They [seniors] do not need to worry about these Obamacare provisions for the exchanges. The exchanges are for people who don’t have Medicare, Medicaid, child health insurance coverage, veteran’s benefits, [or] Department of Defense Tri Care Benefits.”

If you are receiving Medicare, the open marketplace does not affect you. If you have a loved one who is receiving Medicare benefits, be sure they understand this as well. There is concern that once open enrollment opens, scam artists will target seniors, preying on this confusion.

Long Term Care Planning: Understanding the Medicaid Look-Back Provision

November 13, 2013

Filed under: Elder Law,Long Term Care,Medicaid,Nursing Homes — Neel Shah @ 6:01 pm

For those engaged in the process of Long Term Care Planning, perhaps the most intimidating proposition is Medicaid’s look-back provision. This provision provides that certain assets that a person no longer owns will still count toward the calculation of his or her total assets to determine whether he or she qualifies for Medicaid coverage. A recent article discusses the look-back rules.

The Medicaid look-back period is the five years prior to that date upon which an individual applies for Medicaid benefits.  All transfers made during this period are subject to scrutiny by Medicaid officials. For the purposes of calculating benefits, it is as though all gifts made during this period never occurred. For example, if an individual gave his or her child $20,000 the year before he or she applied for Medicaid coverage, the government would likely count that $20,000 towards the person’s assets to determine whether he or she qualifies for Medicaid.

Some individuals try to avoid the look-back provision by setting up a trust. Although Medicaid officials do not consider a trust to be a part of a person’s assets, assets moved into a trust are considered. Therefore, if assets are transferred to a trust during the five-year look-back period, Medicaid officials will take them into account.

Individuals often mistakenly believe that Medicaid has an annual gift-giving exclusion similar to that of the IRS. However, this is not true. Although the IRS allows taxpayers to give gifts up to a certain amount without invoking tax consequences, there is no parallel in the Medicaid determination.

See Something, Say Something: It’s Okay to Report Elder Abuse

November 6, 2013

Filed under: Elder Law,Elder Safety,Nursing Homes — Neel Shah @ 5:41 pm

Too many of our nation’s senior citizens have suffered financial abuse from strangers, caregivers, and even their own family members. As a recent article explains, federal regulators at the Consumer Financial Protection Bureau have told banks that they can report suspected financial elder abuse to the authorities without violating privacy laws.

The announcement was intended to assist with a crackdown on financial elder abuse, which has reached epidemic proportions. The Government Accountability Office has recently reported that in 2010, financial elder abuse had cost America’s senior citizens $2.9 billion.

As director of the Consumer Financial Protection Bureau, Richard Cordray explains that those who work at banks and credit unions “may be able to spot irregular transactions, abnormal account activity, or unusual behavior that signals financial abuse sooner than anyone else can.” Before the announcement, however, bank and credit union employees were afraid to report suspicious activity due to the Gramm-Leach-Bliley Act.

Not only should the new guidance encourage bank and credit union tellers to report suspicious activity, but it will also make it easier for those investigating possible cases of financial elder abuse to access the suspicious accounts.

What is an Irrevocable Funeral Trust?

October 24, 2013

Filed under: Elder Law,Long Term Care,Medicaid — Neel Shah @ 9:00 am

One tool for those looking to spend down their assets in order to apply for Medicaid benefits is the Irrevocable Funeral Trust (“IFT”). Through an IFT, a person can set aside funds to pay for his or her funeral and burial expenses. Importantly, funds in an IFT are not considered to be part of a person’s estate for purposes of Medicaid qualification. A recent article discusses the basics of the IFT.

Importantly, an IFT should not be used by just anyone. High net-worth individuals who will not require Medicaid assistance, for example, would not use an IFT because they likely have sufficient funds or insurance policies that will cover medical expenses.

However, those who are worried about how to pay for their long-term care costs and do not have money earmarked for their funeral should consider an IFT. A person taking out an IFT will be required to pay completely in advance, and will not be permitted to take out an IFT for an amount that exceeds 125 percent of the average funeral cost.

Importantly, no medical underwriting is necessary for an IFT. Beyond the one-time payment to the insurance company, the insured party faces no expense from the trust.

Dealing with Early-Stage Alzheimer’s

October 23, 2013

Filed under: Aging In Place,Caregivers,Elder Law,Long Term Care,Medicaid,Nursing Homes — Neel Shah @ 9:00 am

Currently, the sixth leading cause of death in the United States is Alzheimer’s disease. Between 2000 and 2010, the number of deaths caused by Alzheimer’s disease increased by 68 percent. By 2050, the number of Americans with Alzheimer’s disease is set to increase to 13.8 million. As a recent article explains, Alzheimer’s could quite possibly become an epidemic, if it is not one already.

English: PET scan of a human brain with Alzhei...

English: PET scan of a human brain with Alzheimer’s disease (Photo credit: Wikipedia)

If a loved one in your family begins to display the signs of Alzheimer’s disease, the first thing a family should do (beyond medical attention) is be sure that the family member has executed a will, durable financial power of attorney, and health care power of attorney. These documents allow the person to direct how his or her assets will be distributed upon his or her death, and also to direct who should make medical and financial decisions for him or her when he or she is no longer capable.

Importantly, a person diagnosed with early-stage Alzheimer’s may still be able to sign these legal documents. When a loved one is suffering from short-term memory or vocabulary loss, but still has a grasp on reality, he or she can often show the necessary mental capacity to create legal documents.  Although it is best if these documents are created prior to the early-stage dementia, if that is not possible, have a geriatric psychologist evaluate the person immediately prior to signing.

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‘Spending Down’ for Medicaid Coverage: A Cautionary Tale

October 16, 2013

Filed under: Aging In Place,Elder Law,Long Term Care,Medicaid,Spending Down — Neel Shah @ 9:00 am

Medicaid is a need-based public benefit program that assists citizens in paying for medical care. Therefore, a person can only receive benefits if he or she meets certain income criteria. In order to meet the criteria, many people attempt to spend down their assets. However, if not done properly, a ‘Medicaid spend-down’ could have disastrous consequences. A recent article tells the story of Eugene Shipman, who ran into trouble after attempting to spend down his assets to qualify for Medicaid.

Centers for Medicare and Medicaid Services (Me...

Centers for Medicare and Medicaid Services (Medicaid administrator) logo (Photo credit: Wikipedia)

Shipman and his wife, Arline, began the spend down process in April of 2008, so that Arline would qualify for Medicaid coverage for her anticipated and impending care needs. As part of this spend-down, Eugene disinherited her in his will executed in March of 2009. Following the drafting of the will, Arline’s son, David – who exercised her power of attorney – disclaimed any inheritance from Eugene on her behalf.

Then, in 2010, Eugene unexpectedly passed away. Arline’s attorney scrambled to file a petition to claim an elective share of Eugene’s estate on her behalf. When the trial court denied the petition, Medicaid got involved and asked the court to reconsider. Luckily, the appellate court revoked the disclaimer and granting Arline the elective share.

Had the court determined that the disclaimer should not be revoked, not only would she have lost her Medicaid eligibility, but she would have also missed out on half of Eugene’s estate. The story of Eugene and Arline should remind individuals that they must seek competent counsel and take caution when involved in a Medicaid spend down.

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ALERT: New Rules for Reverse Mortgages

October 2, 2013

Filed under: Aging In Place,Elder Law,Long Term Care,Medicaid,Reverse Mortgages — Neel Shah @ 2:16 pm

As the costs of long-term care continue to rise, more and more elderly Americans are turning to reverse mortgages in order to fund these costs. A reverse mortgage allows a homeowner aged 62 or older to convert his or her home equity into cash while also remaining in the home. The homeowner can choose to accept this cash through a line of credit, monthly payment, or lump sum. As a recent article explains, the rules surrounding reverse mortgages are about to change.

Logo of the Federal Housing Administration.

Logo of the Federal Housing Administration. (Photo credit: Wikipedia)

The Federal Housing Administration (“FHA”), which insures and regulates reverse mortgages, recently announced that it will modify the reverse mortgage program in order to reduce the incidence of default. Two major changes include lower caps on borrowing limits and new rules that will make it even harder to obtain a reverse mortgage.

The FHA plans to change the borrowing limits in order to reduce the cap on the amount that a borrower can receive in the first year of a reverse mortgage. After the new rules are implemented, a borrower will only be able to take up to 60 percent of the appraisal value of the home. This amount is reduced from the previous cap of 75 percent.

The FHA will also implement various rules that will make it harder to obtain a reverse mortgage. These rules will also likely reduce the size of the loan that borrowers will be able to receive. The new rules are scheduled to take effect on October 1.

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