To Gift or Not to Gift…That is the Question

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A gift is defined in the dictionary as: “something given voluntarily without payment in return, as to show favor toward someone, honor an occasion, or make a gesture of assistance; present.” That definition makes a whole lot of sense. Think of gifts that you’ve received for your birthday, Christmas, or your anniversary. A box with a bow or an envelope with money in it, are the types of gifts that everyone understands. Describing these gifts would not make for a very informative article. The gifts I’m interested in telling you about occur all the time without much thought, but are considered the same as the box with the bow as far as state and federal government authorities are concerned. If you or anyone you know may be applying for Medicaid (Medical Assistance), you should be familiar with these examples.

An extremely common example of a gift, that isn’t as clear or simple as above, is selling something, but giving a loved one a “deal” on it. For example, your house is worth $150,000 but you sell it to your son for $80,000. That’s a $70,000 gift that needs to be reported and accounted for. Or your car is worth $1,000, but you sell it to your 16-year-old grandson for $1. This is also a gift.

Another situation that is common is where parents transfer a cottage or home to family members, and the parents continue to pay the real estate taxes on the property despite having no responsibility to do so. Even though the money never goes to the family members directly, payment of someone else’s obligation is a gift.

Not charging rent to someone can be a gift. If you own a rental property, but let a family member live there rent free, that can be a gift in certain situations.

Likewise, paying a family member to assist you with personal care or other activities, without a written agreement, can also be considered a gift.

There are certainly other examples of gifts that are not as simple as handing someone a box with a bow on it. Whether something is a gift or not a gift is extremely important if Medicaid (Medical Assistance) is a possibility. Currently there is a 5 year “look back” period as it relates to gifts. Any gift made within 5 years of application must be returned in full, or a penalty is imposed on the applicant. Even if intentions were good at the time, the moral of the story is to be careful, especially when you or a loved one is considering Medicaid as an option to pay for long term care (e.g. nursing home care). If you aren’t sure if something would be considered a gift or not, seek someone with experience in the area to advise you on the correct way to do what you want to do.

Leave a Dog a Bone

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Something that not a lot of people think about, even very serious animal lovers, is what happens to your pet after you pass away? As with most estate planning issues, the answer is: it is up to you. If you do nothing, a pet is considered under Wisconsin law to be personal property, and would be treated like a piece of furniture or that antique clock that everyone has their eye on. In some cases, there is a beneficiary willing to adopt your pet, or find a good home. In other cases, there is not. When that occurs, pets often are shuttled to an animal shelter, where they sometimes find a good home.

An example we love to use when discussing estate planning for pets, is that of real estate and hotel tycoon, Leona Helmsley, who famously left $12 million dollars to her dog, Trouble. Even if you don’t have $12 million dollars, but you love your pets like family, how do you plan for them? There are several options, but the two most common are to set up a “pet trust” or to specifically discuss your pet in your will. The first option is more complex, but it also gives one the assurance of exactly what a trustee of a pet trust is allowed to do for the lifetime of a pet. A pet trust is also a private document that does not get filed with the register in probate, so it never becomes public knowledge. It also avoids your pet ever becoming a piece of personal property subject to distribution.

The simpler option is to either bequeath your pet to a specific person (hopefully you know ahead of time that the person wants your pet), or direct your personal representative to take special steps in regards to the care and maintenance of your pet. Keep your pets in mind when you do your estate planning. I’m sure they will appreciate it!

Playing Keep Away: Exempt Assets

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Efficient planning for Medicaid qualification often feels like a game of “keep away”. What is the State going to be able to keep, and what can a person keep safe? One of the most important ways to plan for Medicaid qualification is determining which assets, if any, are exempt from inclusion in a person’s assets, or in the assets that a spouse is able to retain. Many people don’t understand what can be retained, and what doesn’t count at all when making an application for Medicaid. The most commonly exempt assets for a single person are:

-$2,000.00 cash;

-pre-paid burial and funeral arrangements and;

-personal property (clothing, electronics, household items, etc.).

For the spouse not on Medicaid, in addition to the above items:

-homestead property (house and all contiguous land);

-one vehicle, and;

-all of the community spouse’s retirement accounts.

As with any and all topics involving Medicaid, there are several quirks, nuances and exceptions to consider. There are several other potentially exempt assets (as well as “unavailable” assets which is the subject of a different article) depending on each individual situation. For example, this article does not discuss the additional assets that the spouse is allowed to retain (which I do not consider “exempt” for these purposes.)

Planning ahead, and shifting of assets from non-exempt to exempt can be a great way to retain as many of your hard-earned assets as possible. Just as in a game of keep away, timing can be vitally important. Doing something too early, or too late, can result in you or your loved one losing the game.

The Probate Boogeyman

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A common theme we hear from our estate planning clients is, “I hear Probate is terrible, and I want to avoid it”. Most of the time, after further discussing the client’s wants and needs, it becomes obvious the person didn’t have any idea what probate was, or why they should or shouldn’t be afraid of it.

Probate is the Court-supervised legal process by which the “Probate” Court determines that a decedent’s will is valid, determines who will be in charge of administering the estate (in Wisconsin that person is called a Personal Representative), determines who the decedent’s heirs are, determines what assets the decedent had at his/her death (that are subject to probate), and determines whether the Personal Representative ultimately distributed the property correctly. Probate is a very common occurrence. Are there downsides to Probate? Absolutely. While every case is different, the common problems with probate are that it tends to take longer to complete than other methods (usually 6 to 12 months), there are court fees associated (.2% of the total value of the Estate), and Probate is a public record with most probate records readily accessible over the Internet. Depending on the circumstances of the case, a probate also makes it easy for disgruntled “heirs” to have a venue to battle over an estate, or for claims to be made. In addition, notification requirements can be cumbersome if there are many or unknown heirs. Most people that are afraid of probate know someone that has been through a messy probate, or have dealt with one themselves.

There are good things about probate. The positives of probate are it gives a clear and defined procedure to settle disputes, it creates a more open environment and it ensures that everything is administered properly. While I’m generally an advocate of avoiding probate, there are times where the increased costs of that type of planning (trusts, etc.) don’t make sense for a client. Probate can certainly be a bad thing, but it isn’t always something one needs to lose sleep over. The most important thing is that the client receives the proper estate plan for them, which may or may not involve probate.

TRUMPCARE?

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Donald Trump is set to be inducted as the 45th President of the United States on January 20, 2017. One of the things he has pledged to do is repeal the Affordable Care Act (aka “Obamacare”). The actual plan is currently unknown, but it can be safely assumed that something will change. The Affordable Care Act is a tremendously complex set of legislation and executive orders, and trying to discuss every aspect of what might change is a fool’s errand. I want to touch on possible changes to Medicaid. Medicaid is the program whereby the state, with the assistance of the federal government, provides health care for those that cannot afford it. In Wisconsin, it takes on many forms in its subprograms (e.g. Badgercare, Family Care, Institutional Long Term Care, etc.).
President Trump may be proposing to change a portion of Medicaid to provide “block grants”. Essentially, instead of the Federal Government directly funding a portion of Medicaid on an as needed basis, it would provide a specified amount of funds to each state each year, and the state would administer the programs alone. Because the federal government currently pays more for Medicaid than the state typically does, there are fears that the funds would be mismanaged by the states, or that states will pass more stringent laws to limit Medicaid eligibility. If that happens, it would likely create a gap where people who need and can’t afford health care also can’t receive it at a free or reduced cost because they don’t qualify. Proponents say that giving states autonomy will help them to reduce overall healthcare costs. Time will tell what effect any possible changes may have.

What is Elder Law?

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As someone who practices in the area of “Elder Law” I am often asked. What is elder law? The purpose of this article is to answer that question. Elder Law generally describes the clients that an elder law attorney works with: people on various spectrums of the aging process, and their families. An Elder Law attorney uses a collaborative approach, working with other professionals to ensure that a client’s unique needs are being met. This includes working with financial advisors, CPAs, banks, trust companies, insurance agents, medical professionals, social workers and case workers.

An Elder Law attorney also practices in a wide variety of areas in order to meet the client’s needs. Some of these areas include: estate planning, long-term care planning, trust administration, probate and guardianships. These areas often overlap, and include some areas that most regular estate planning attorneys provide. The difference is that an elder law attorney has a specialized focus on the issues that pertain specifically to aging clients, and how to best serve them now and in the future.

The “Cool Parents” Win

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An interesting case was decided recently, on an issue that most Wisconsinites have
dealt with either as a young person growing up in the state, or as a
parent.  Wisconsin Courts decided
that until the State Legislature says otherwise, adults are allowed to allow underage
drinking parties at their homes.  (There
could still potentially be liability for the aftermath of said parties, but
that is a topic for a different article). Currently, state statute
does not allow a county or municipality to legislate on alcoholic beverages
unless the law strictly conforms with state law.  In this case, the Court of Appeals ruled that
a county ordinance prohibiting adults from hosting underage drinking parties at
their homes was stricter than the state ordinance which prohibits said parties
at a “premises” owned by the adult.  “Premises”
is defined elsewhere in state statute as a “licensed premises” which is
generally a tavern or liquor store.  As a
result, the parents prevailed.  It seems
unlikely that the state legislature intended this result when the laws were
written, but Wisconsin does have some of the most relaxed alcohol laws in the
country.  Given the culture of drinking
by people of all ages in Wisconsin, and the unfortunate results that sometimes
occur, I believe this may be on the State’s legislative agenda in the coming
session.  This is a good example of how a
single word in a law (or document) can completely change its meaning.

Medicaid Planning: Don’t Let the Nursing Home Get All Your Money

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Medicaid Planning is a complex, and ever-changing exercise.  If you’re like many estate planning clients that I have met, I bet you “don’t want the nursing home to get all your money.”  There are many ways that Medicaid planning can be accomplished to make sure your heirs inherit your estate, rather than having those funds paid to a long-term care facility.

While planning ahead with a solid estate plan is perhaps the most important aspect of Medicaid planning, the application and qualification process for Medical Assistance is very confusing and complex.  Even though most social workers and health and human service employees are very helpful and knowledgeable, they will not be able to help you in transferring and retaining the correct assets in order to qualify for aid.  In addition, if you do something wrong, and you forget to mention it, the penalties for lying can be serious.

Medicaid planning is an ever-changing area of law, and new rules are created all the time.  The best advice I can give you is that if you are thinking about Medicaid planning: call someone who knows what they are doing!  Trying to navigate this by yourself, even if you are fairly sophisticated, can cause serious problems and leave you or a loved one in a financial and emotional lurch.

In closing, it is important to plan ahead, both through estate planning and when navigating through the application process.  It is not worth it to save money on attorney fees, only to make matters worse, especially when an average month in a nursing home is currently nearly $8,000.00 per month.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Estate Planning – The Fundamentals

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Evan Lin recently partnered with Associated Bank as a presenter for the North Central States Regional Council of Carpenters Benefits Conference held at the Paper Valley Hotel in Appleton on October 29, 2016. Attorney Lin’s presentation was titled “Estate Planning – The Fundamentals.”

Evan Lin Named Super Lawyer 2016

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Evan Y. Lin, an attorney and managing member of Lin.Liebmann LLC, has been named to the 2016 Wisconsin Super Lawyers list by the publishers of Super Lawyers® Magazine.  Each year, only 5% of attorneys in Wisconsin are named a Super Lawyer.  Evan was previously named a 2015 Wisconsin Super Lawyer and five-time Wisconsin Rising Star in Estate Planning and Probate by the same publication.

Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement.  The selection process includes independent research, peer nominations and peer evaluations.