What are Planning Documents?
These are instruments declaring your instructions in the event you become incapacitated.
Also known as a directive to physicians and family surrogates, this document clearly express to your doctor and others your wishes regarding the use of life‑sustaining medical procedures when death is imminent.
Medical Power of Attorney
A medical power of attorney for health care authorizes the person you name to make health care decisions for you in the event you are unable to make them.
Power of Attorney for Property and Finances
A durable power of attorney for property and finance authorizes the person you name to handle your financial affairs when you are incapable of doing so.
Declaration of Guardian in the Event of Incapacity
This instrument designates the person you would like to have appointed as your guardian if guardianship is unavoidable. It can also be used to prevent the appointment of a certain person.
Wills and Trusts
Your peace of mind is the goal when we
work together to plan your estate. Peace of mind means obtaining
legal instruments designed to distribute your property according
to your wishes with the least possible taxes, expenses and delay
that can be achieved in your circumstances.
A typical disposition of a moderately sized estate
can usually be handled with a simple will. Evan a person with a
small estate can benefit greatly from having a will.
If you need tax planning, or if you have
particular needs or circumstances to be addressed, we can draft a
will that is right for you, including, as appropriate, bypass trusts, disclaimer trusts, contingent trusts and special needs trusts. Additionally, your estate, if large enough may justify the need for
family limited partnerships, life insurance trust or a regular gifting
plan to take advantage of the annual gift tax exclusion.
The living trust can be a valuable estate planning tool for a client in an appropriate situation.
Special Needs Trust
The special needs trust allows
individuals to give assets to individuals, either during their lifetime
or at their death through their will, without causing those assets to
make the beneficiary ineligible for Medicaid benefits. This type of
trust allows the person to have many of the "extras" that the
government will not otherwise pay.
What are the Common Mistakes in Texas Medicaid- Asset Protection Planning?
- Depleting assets by waiting too long to begin asset protection planning.
- Thinking that it is too late to begin the planning process.
- Believing that Medicare pays for long term nursing home care.
- Failing to preserve a reserve fund to pay for care not provided by Medicaid.
- Relying on advice from someone who is not an expert in the Texas Medicaid program.
- Failing to get a durable power of attorney signed before a person is incompetent.
- Neglecting the possibility that the well spouse may die before the sick spouse.
- Skipping the fact that both spouses may need nursing home care.
- Failing to take advantage of spousal protection regulations.
- Transferring assets without understanding the Texas transfer rules and penalties.
- Confusing the look back period and the transfer disqualification period.
- Causing the look back period and the transfer disqualification period.
- Transferring the home directly to the children without understanding the homestead protection laws in Texas.
- Ignoring exempt transfers that do not result in a period of disqualification.
- Failing to disclose all transfers made in the 60 months prior to the Medicaid application.
- Confusing the Internal Revenue Service $12,000 yearly gift tax exclusion with the Department of Aging rules concerning disqualification penalties caused by the transfer of assets.
- Failing to consider the tax consequences during the planning process.
- Thinking that assets in any type of trust will not be counted in the available asset total.
- Lacking knowledge about how annuities can be used to gain Medicaid qualification quickly.
- Missing the use of exempt assets in the planning process.
- Confusing gross income with net income, the amount actually received after deduction for such things as income taxes, health insurance premiums, etc.
- Applying for Medicaid for a person whose gross income is greater than Texas's income cap and who does not have a Qualified Income Trust.
- Failing to fund the Qualified Income Trust each month of Medicaid benefits.
- Omitting any assets or source of income in the Medicaid application.
Failing to keep accurate records for submission to Texas Department of Aging.
- Neglecting to notify of any changes in assets or income after approval.
What are the Medicaid Application and Eligibility Requirements?
There are primarily four hurdles to get over in order to achieve Medicaid eligibility.
A Person must be at least 65 years of age,
blind, or disabled, and be a U.S. citizen or a resident alien.
The applicant must meet the medical eligibility
requirements for Medicaid. This evaluation is completed by the applicant's doctor on a TDHS provided form known as the 3652 or level of care form.
The applicant may not receive direct income of more than
$1,911.00. If the amount exceeds the cap, a Miller Trust can usually solve the problem.
The baseline amount for eligibility is $2,000.00 subject to many
exceptions as indicated in this website.
A person should not think that if the amount of
assets greatly exceeds the $2,000.00 baseline amount
that nothing can be done. There is usually
an array of techniques available for legally preserving
The base amount for both spouses entering a nursing home and applying for Medicaid is $3,000.00, also subject to many exceptions.
Miller Trusts or QIT's
Commonly known as income sheltering devices, these trusts enable otherwise income ineligible Medicaid applicants to qualify for Medicaid.
The Miller Trust was established as the result
of a Colorado case in which four elderly women were
unable to receive Medicaid benefits because they received
too much income. However, there was not enough
income to pay for the average cost of nursing home
care. The women's conservator seeking to right
an injustice, sued the federal government and won. The
case resulted in the statutory Miller Trust. Texas
like Colorado is an income cap state. That
means that if the applicant receives more than the
published "cap" income in direct income
per month then the person is income ineligible for
Medicaid. If a Miller Trust is used, the state Medicaid
program no longer recognizes the income and thus
the applicant becomes income eligible for Medicaid
The current income cap in Texas is $1,911.00 per
month which changes every January. Income that
exceeds the cap disqualifies an applicant. Here
is an example of how a Miller Trust works. Say
an individual receives $2,000.00 per month of income. The
$2,000.00 can be placed into the Miller Trust and
bills paid out each month as allowed by the Texas
Department of Human Services. Typical bills
paid would be a $60.00 personal needs allowance to
the applicant, some insurance premiums, allowance
to a community spouse, if eligible, and he balance
in applied income to the nursing home. The
exact amounts and payments authorized are determined
by TDHS. Miller Trusts are also referred to as Qualified
A Typical spousal impoverishment case is one in
which one spouse is headed for the nursing home
and the other will remain in the community. The
community spouse is entitled to a certain level of
asset protection which at the minimum is $20,880.00
and the maximum is $104,400.00 for the year 2008.
The amount the community spouse is allowed to
keep is known as the Protected Resource Amount ("PRA").
However, what many individuals who go through the
Medicaid process do not discover is that there are
federal regulations that can be utilized to preserve
in many, if not most, cases a significant amount
of assets for the community spouse which far exceeds
the published maximum stated above.
"Spending down" is a
phrase that is used to describe the process of spending
one's assets in order to become eligible for Medicaid
by bringing the countable resources below the $2,000.00
limit of assets allowed. Spending down should only
be done in an informed manner. Otherwise, money
that may have been ultimately preserved in
cash or property may end up being needlessly spent
on goods or services that may have otherwise been
What Documents You'll Need Before You Proceed?
- Statements from bank and brokerage accounts for
the past 4 months
- Bank, brokerage, etc.
- Closed Accounts in the last 36 months showing zero balance
- Statements showing transfer or "chip" transactions
- Certificates of Deposit
- Stock Certificates, bonds, CDs, U.S. government bonds, municipals, annuities not held in brokerage accounts
Individual Retirement Accounts (IRAs) or any other deferred compensation plans including the last annual statement showing income and distributions
- Prepaid burial or cremation contract, deed to cemetery plot, special burial bank account
- Title's issued by Department of Motor Vehicles for automobile, mobile home, boat, trailer, truck, van, recreational vehicle and insurance policy for automobiles or other vehicles.
- Deed to residence, current real estate tax bill, homeowner's insurance policy and premium statement
- Copy of deed(s), tax bill, and proof of insurance for any other real property. If for sale, listing agreement and statement of fair market value from realtor. Any mortgages, titles or notes on any other real property.
- Life, Accident, Health, Auto & Property insurance policies. Pages needed are the cover page and declarations page that lists the information about the policy and the beneficiary information.
- Income verification from Social Security, Veterans Administrations, Civil Services, pension, IRA distributions
- Mortgage and/or promissory note owing to you.
- Income tax returns and intangible tax returns for the past five (5) years
- Medical expense records
- Income Tax returns for past 5 years
- Credit Cards and charge account balances, names & numbers
- Location and inventory or personal, valued items
- Any debt balances of any sort.
- Any income of any sort.
Copies we will need to complete Medicaid application:
- Most recent nursing home bill
- Personal documentation: Social Security cards, Medicare cards, Medicaid Cards, birth certificates, and marriage license, divorce decrees, naturalization and adoption papers, or any information that you can provide for the above
- Medicare EOMB's (Explanation of Medical Benefits)
- Education and Military records and/or discharge papers
- Supplemental health insurance card, policy, and current premium statement
- Long term care policy. Please include benefit page.
- Award letter from Social Security Disability or Supplemental Security Income.
- Names and Address of children (or location of death certificates, if any of your children or your spouse is deceased)
- List of employers and dates of employment
- Location of Wills and Trust
- Durable Powers of Attorney, Durable Powers of Attorney for Health Care, Living Wills, and Funeral Plans
- Name, address and phone numbers of close friends and relatives
- Name, address and phone numbers for doctors, pharmacists, emergency services and hospitals
- Health Charts: Medical conditions; allergies, dates and descriptions or past illnesses, operations and immunizations
How do I select a Nursing Home?
For most families, placing a loved one in a nursing home is a difficult decision. First, if possible, get input from your loved one, and try to accommodate their wishes. If they are no longer capable of making their own decisions, be sure that you have a legal authority to make decisions on their behalf, i.e. a power of attorney or court appointed guardian. Talk with their Doctors about the level of care they will need and then try to find a facility that will match that level of care. You will need to ask a lot of questions, and many answers can be found on the internet. If you do not have internet access at home, then your local library maybe able to help.
A starting point maybe the Health Care Finance Administration "Guide to Choosing a Nursing Home" and you can get a hard copy by calling 1‑800‑638‑6833.
States are trying to Simplify the selection process. The Elder Information Library is in the process of compiling all 50 state's nursing home guidelines. To see the list go
Here are some of the questions you need to ask:
- Does the staff treat residents respectfully at all times?
- Are residents dressed appropriately and well groomed?
- What efforts does staff make to meet the needs of each resident?
- What activities are planned to meet the needs of individual residents?
- Is the food attractive and tasty? Try to sample a meal.
- How does the staff respond to calls for assistance?
- How are residents and family involved in resident care planning?
- What therapies can the facility provide?
- What type of arrangement does the nursing home have with a nearby hospital?
- Is the facility clean? Are spills and other accidents cleaned up quickly?
- Are the hallways free of clutter and well lighted?
- What are the results of the latest inspections, and is a list of residents rights posted?
What do I need for Asset Protection & Medicaid Planning?
The purpose of our questionnaire is to gather information relevant to the rules and regulations of the Texas Medicaid Institutional Care Program. Our planning also includes what happens after the death of our client or spouse.
Information gathering process ‑ your job as our client
Fill out the questionnaire as accurately as possible. Richard’s advice depends on a complete understanding of your situation.
- List all sources of income.
- List and value all assets.
- List all gifts in the past 66 months.
- Provide personal information.
- Provide information about estate planning.
Education process ‑ Richard's job
- Determine assets that the Texas Department of Aging and Disability Services considers as available assets.
- Provide strategic information about how to make available assets unavailable within the Texas regulations.
- Add up available assets.
- Determine income qualification and, if necessary, explain Qualified Income Trust.
- Make experienced recommendations about actions necessary to qualify for Medicaid.
- Review and recommend actions regarding estate planning.
Frequently asked questions
We realize that our questionnaire looks long and complicated. Not every asset type may apply to you. Only complete the sections that apply to you. If you have a question not addressed below, call our office for help.
How does your questionnaire differ from the financial information questionnaire I filled out for my broker?
Your accountant, your broker, and other financial advisors are concerned with tax issues. Our questionnaire is geared to Medicaid rules which are entirely different from tax laws.
How do I find all the assets?
Current bank or brokerage account statements and your tax returns are a great source of information. Your accountant, your broker, and your financial institutions should also be able to help.
What if I don't know what type of assets are listed on my statement?
Put your statement total under brokerage account on the questionnaire. Make a copy of the statement. Richard will be able to help you figure out how to classify the assets.
Who is the client?
Generally we consider the person who is either in the nursing home or who soon may be there as the client. If both client and spouse are well, we list the husband as the client. The key is to be consistent throughout the questionnaire.
What do you mean by a transfer for less than value?
Any gift or transfer of an asset for which you did not receive equal value in return is a transfer for less than value. List all transfers in the past 66 months so that Richard can determine how they will affect Medicaid qualification.
Frequently believed myths
Everyone will end up in a nursing home and will stay there for years. Extended nursing home stays constitute one of the major concerns families have. They envision ruinous costs that will consume their assets. In actuality, statistics show that only 50% of women and 30% of men will enter a nursing home, and their average stay will be less than three years.
If you have a special needs child, one with down syndrome, ms, or other serious disability, you must either leave more assets to another child to take care of him/her or disinherit him/her so he/she will still be eligible for public benefits programs. The first course of action leaves a great deal to chance since any number of circumstances, even including the death of the other child, can prevent the benefits from reaching the special needs child. The second option could be disastrous. It is far preferable to establish a special needs trust, which allows inherited money to be used to supplement government programs, not to take their place. The money in the trust can be used to provide important quality of life amenities, extras, if you will, and is not to be used for the basic food, shelter and medical care provided by public benefits programs.
It doesn't matter whether a trust is funded or unfunded. You should almost never have an unfunded trust. It is like a car without gas. With an unfunded trust, the title to your assets, such as your home and your bank account, will not have been changed into the name of that trust. Thus, because the trust contains no assets, it cannot protect them.
If you establish a trust, you will loose control of your assets. On the contrary, one of the advantages of trusts is that during your lifetime you act as trustee and beneficiary, and you retain complete and total control over your property. You can buy, sell, or do whatever else you wish with it, just as if the trust did not exist. You can also make changes to the trust at any time.
I want to ensure my children receive my assets, so I am putting their names on my house and accounts. While this approach to passing on assets may be appropriate in general for spouses, you should never put assets in a child's name to avoid probate or for any other purpose. This results in joint ownership, and your assets are subject to any liabilities, which accrue to your child. The child may undergo financial reverses resulting from being laid off, for example, or from any of a number of reasons. If the child falls behind in payments and is taken to court by creditors, or if he or she declares bankruptcy, or is divorced, your assets, which are actually not yours but are jointly owned with your child, can be greatly reduced or even totally lost.
Call or e-mail us and we will send the questionnaire or take the information over the phone.
Why you need our services?
- We provide detailed instructions for each step necessary to qualify as soon as possible for Medicaid benefits.
- We monitor the process closely and help you work through the issues as they come along.
- Even a simple action can result in months of added disqualification if not done perfectly.
- We help you work through the bureaucratic rules and regulations which often make no sense.
- We have years of experience helping our clients work with financial institutions to achieve our desired goals.
- We adjust our planning process if you have any unexpected changes in your family circumstances.
- We notify you of any changes in the Texas Medicaid rules as they apply to your situation.
- We have extensive experience with families who have tried unsuccessfully to go forward without our help. Sometimes the mistakes they have made can mean months of expensive nursing home bills before we can fix their mistakes.
- Services provided in our going forward phase
- Analyze in detail each source of income, and all assets and liabilities.
- Prepare a spreadsheet allocating assets to the proper category of available, unavailable, or excluded according to Texas Department of Aging.
- Determine what needs to be done to gain Medicaid qualification.
- Prepare detailed plan of action.
- Give specific instructions regarding each asset.
- Assemble and review all necessary documentation.
- Monitor process carefully to make sure that all actions are completed correctly and in a timely fashion.
- Verify all sources of income.
- Make all necessary income calculations.
- Prepare Qualified Income Trust, if necessary.
- List all assets transferred within the past 66 months.
- Track each account closed over the last 66 months and note where
the funds were moved
- Review any necessary contracts.
- Prepare detailed Medicaid application package to be presented by us at the interview with Texas Department of Aging caseworker.
- Follow up with caseworker until application has been approved.
- Coordinate any VA Benefits you are entitled.
Call Susan my Medicaid and Nursing home Specialist At:
Legal Disclaimer. This information has been provided for informational purposes only. It does not constitute legal advice. The receipt of this information does not establish an attorney client privilege. Proper legal advice can only be given upon consideration of all the relevant facts and the law. Therefore, you should not act upon any information contained herein without seeking appropriate legal counsel.
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