Crisis planning is exactly what it says – estate planning that is conducted when a loved one is facing a crisis: declining health, a diagnosis of dementia or Alzheimer’s Disease, a stroke, or a terminal diagnosis. In most instances, the person for whom planning is sought is either recently admitted to a nursing home or is likely to be admitted in the near future. The type of planning required is very fact-sensitive, and the totality of the situation must be examined by a practitioner with experience dealing with these situations.
Any crisis is extremely sensitive – mostly because emotions are running high due to the uncertainty surrounding the loved one’s situation and diagnosis. Additionally, those assisting the loved one are often unaware of the current status of that person’s estate planning. But the sensitivity extends to the decisions that are made regarding planning. Incorrect decisions resulting from a lack of knowledge or improper advice can result in a failure to qualify for Medicaid, a loss of assets to Medicaid recovery, or an estate plan that doesn’t meet the needs of the loved one or the loved one’s family members.
The best way to understand how crisis planning conducted by an experienced attorney can benefit a family facing a crisis is by example:
Steven and Susan Smith have been married for 50 years. Steven is 75, Susan is 73. They own their home, along with 10 acres of farmland that was deeded to them by Susan’s parents 20 years ago. They have saved relentlessly and never lived extravagantly – Steven worked his whole life for a textile company, while Susan worked as a teacher. They raised two sons and a daughter, all of whom are married and have children of their own. They have $300,000.00 in cash in CDs at the local bank. Both Steven and Susan have pensions from their jobs, and both collect Social Security. Steven’s monthly income is $2,500.00 and Susan’s is $2,300.00. Neither have long term care health insurance.
One day, not long after returning from a family vacation, Steven suffered a stroke that left him in need of skilled nursing care. He went to a nursing facility in town directly from the hospital, where he is currently undergoing rehabilitation. Susan has been told that once he is no longer benefitting from the rehabilitation, he will either need to go home (not a possibility due to Susan’s age and the level of care Steven needs on a daily basis), or he will need to remain in the facility, at which point he will need to pay for his care privately. Susan is informed that the monthly rate for Steven’s room and care is $7,000.00. Susan realizes that they do not have the monthly income to cover these expenses, and realizes that the difference between their incomes and the monthly rate will quickly wipe out the money they have in savings. Susan goes to the Department of Social Services in her county to apply for Medicaid assistance. She is told upon application that she and her husband have more assets than are allowable, and that for the time being her husband will not qualify for Medicaid. She is told that once they have reduced the value of their assets to roughly $115,000.00 to reapply, and that something will need to be done about the 10 acres of land.
Susan is facing many issues – the most pressing and overwhelming of which is the drastic change in her husband’s health. But she must also consider what to do about the astronomical cost of her husband’s care while ensuring that she has the funds she needs to continue living at home. Does she sell the family farmland or give it to her kids? Can she give money away to her kids to try and protect it? Can she pay for repairs on the home? What happens if she becomes unable to deal with her husband’s affairs? Does she even have authority to deal with his affairs? What happens if she dies before her husband?
These are all important questions, and they are all questions that have a significant impact on the steps that are taken in crisis planning and how those steps impact Susan, Steven, and their family. They are also questions that require understanding the Medicaid regulations. We have years of experience in dealing with these situations, and we have an understanding of the Medicaid rules and regulations that is deep and is built on those years of experience. We can help walk you through these difficult times, and give you options that protect your estate and your assets, even in times of crisis. If you or a loved one are facing this sort of situation, please give our office a call so we can help.