estate planning
Understanding the Texas Medicaid Estate Recovery Program (MERP)
The Texas Medicaid program pays almost half the cost of all nursing home and other long term care expenses. So in March of 2005, Texas implemented the Medicaid Estate Recovery Program (MERP) to comply with federal laws. This program allows the state to file a claim against the estate of a deceased Medicaid recipient, age 55 or older, who received payments for certain long-term care services. Claims can include the cost of services, hospital care and prescription drugs paid for by Medicaid. However, the state will not file claims in the following situations:
a) where there are estates valued less than $10,000,
b) where the costs were less than $3,000,
c) where the cost of selling the property would be result in no value.
The state will not file a claim when there is a surviving spouse, there is a surviving child under 21 years of age, there is a child who is blind or totally disabled, or where there is a an unmarried child living in the Medicaid recipient’s homestead for at least one year prior to the death. The state also allows a hardship waiver to be filed in certain situations.
The State will not collect certain types of assets that fall outside a person’s estate. Therefore it may be necessary to do your estate planning with consideration given to Medicaid rules.
The personal representative of an estate (executor or administrator) is required by law to give the State of Texas notice of Medicaid recipient’s death thereby allowing the state to file a claim. Such a claim by the State of Texas is a Class 7 claim which is paid after funeral bills, administration expenses, secured claims, child support, taxes, and it is paid before all other creditors and before the beneficiaries are compensated.
The Department of Aging and Disability Services administers the MERP and they provide a wonderful guide for those with additional questions.
http://www.dads.state.tx.us/news_info/publications/brochures/DADS121_merp.html
Guardianships over the mentally ill
The United States has one of the highest rates of mental illness in the world, including major depression, schizophrenia, bipolar disorder, obsessive-compulsive disorder, panic disorder, post-traumatic stress disorder and borderline personality disorder. The National Association for Mental Illness reports “without treatment the consequences of mental illness for the individual and society are staggering: unnecessary disability, unemployment, substance abuse, domestic violence, homelessness, inappropriate incarceration, suicide and wasted lives.”
Families with mentally ill children, siblings, or parents find that there is little they can do to help their mentally ill family member. There is limited help from both the Probate Code or the Mental Health Code.
The Probate Code allows for guardianship over incapacitated persons. “incapacitated person” being defined as an adult individual who, because of a physical or mental condition, is substantially unable to provide food, clothing, or shelter for himself or herself, to care for the individual’s own physical health, or to manage the individual’s own financial affairs. This sounds like a mentally ill person would qualify as an incapacitated person, and they do for a short period of time. Once the guardianship is obtained, the party would regain capacity and the guardianship would terminate. If you have ever dealt with a mentally ill person, the minute they are no longer forced to take medication they usually won’t take it! Therefore, there is a gaping hole in the statute concerning mentally ill people.
The Mental Health Code does not specifically address the guardianship issue for mentally ill people. The code currently defines mental illness as an illness, disease, or condition, other than epilepsy, senility, alcoholism, or mental deficiency, that: (A) substantially impairs a person’s thought, perception of reality, emotional process, or judgment; or (B) grossly impairs behavior as demonstrated by recent disturbed behavior. This statute does allows for emergency detention of those who are a threat to themselves or others, to be held in a mental health facility and treated pending a court proceeding. If the Court decides to keep the party, then they will get stabilized and eventually sent home with instructions to take their medication, which they rarely do and the process starts all over again. If the Court decides to send the party home, then they will likely stop taking their medicine and the process starts all over again.
In Texas, the mental health code has not been revised since 1985, but it is seriously needs an overhaul. Last year, the nonprofit advocacy organization, Texas Appleseed asked lawmakers to replace the existing mental health code with one that reflects contemporary mental health needs. The Appleseed report’s recommendations include eliminating provisions in the code that call for law enforcement to obtain a warrant to detain someone in a mental health crisis and adding explicit laws that allow officers to confiscate firearms from people who become dangerous as a result of their mental condition. Another recommendation calls for the adoption of a uniform one-page intake form for law enforcement officers to complete when they take someone in crisis to a mental hospital. Currently, forms across the state vary; some are many pages long and take hours to complete. Representative José Menéndez, Democrat of San Antonio, filed House Bill 245, which would allow hospitals to detain mentally ill people for up to 24 hours. This is because hospitals currently do not have legal authority to detain people who voluntarily enter their facilities in search of mental health care but then decide to leave.
While the suggested changes are a great start, they do not go far enough. We need to address the issue of how family members are supposed to help their loved one get the help they need to manage their life, stay on medication, find housing, etc. If your family is affected by these issues, please do not hesitate to contact your representative to voice your concern!
Beware: Texas law does not require CPR in senior living facilities
Earlier this month, the news reported on a 911 call that was taken by a nurse in California who refused to give emergency CPR assistance to a dying senior in her care. The refusal of this nurse to assist a dying resident is nothing less than shocking, however, the facility was within its rights to refuse care.
In Texas, facilities, even licenses facilities such as those regulated by Adult Protective Services, have the option of not providing CPR. However, they are required to notify individuals during the admissions policy process that they will not administer CPR.
The question is whether notifying people upon admissions is reasonable. It is likely that facilities around the state have a form that is signed during admissions stating they are aware of the policy of the facility. However, during the admissions process, there are tons of documents to sign and many people do not even read them. Does this constitute notice?
Does the nurses refusal to administer aid constitute a criminal case in Texas? Failure to stop and render aid (FSRA) is governed by Chapter 550 of the Texas Transportation Code. The penal code typically governs criminal offenses resulting in possible confinement and a conviction for FSRA can result in jail time, probation and a fine. However the Texas nurse is not likely guilty of FSRA because the rules are pretty clear that the facility is not required to provide CPR. If this were you or me, we would be required if we knew CPR. Funny! So beware of the facilities policy before you place your love one in a senior living facility!
Do I need a living will?
This is a common question I get asked by a variety of different types of clients. The simple answer is YES! A living will is not really a will, but is a physician’s directive (also known as an advanced directive or Do Not Resuscitate). An advanced directive is governed by the Texas Health and Safety Code to allow people to choose what type of care they want if they need life-sustaining treatment. I believe that everyone should have a Physician’s Directive to ensure that they get to make the decisions about life support and not burden their family with such decisions.
Alzheimer’s Disease claims another victim
Arlington police have confirmed that the body found on January 5, 2013 was that of Maria Arrocha, an Alzheimer’s patient who was reported missing in December. The Tarrant County Medical Examiner ruled that Maria Arrocha died from exposure to the elements. Arrocha was found near the 1500 block of E. Abram Street near Stadium Drive in east Arlington. Officers were searching for Maria Arrocha who has been missing since Dec. 18, said Arlington police Sgt. Christopher Cook.
More than 5 million Americans have Alzheimer’s or similar dementias, and that number is expected to rise rapidly as the baby boomers age. The Texas adult population with disabilities has grown to 1,683,350, which is a 300,000 jump in the last 10 years. As more and more of our citizens, reach retirement age there are going to be more dementia related problems.
Therefore, both the Texas House and Senate 2013 budget plans include $5.2 million for the Darrell K Royal Alzheimer’s initiative in 2014. The private fund, announced last year to spur Alzheimer’s research, was named for the iconic University of Texas football coach who died in November after living with dementia for several years.
The future of Alzheimer’s
One of the largest burdens on American’s health care system is caused by Alzheimer’s disease and other related dementia. Currently over 5.4 million people are living with the disease and more than 15 million Americans are caring for persons with Alzheimer’s and other dementias. Alzheimer’s disease is the sixth-leading cause of death in the US and the ONLY cause among the top 10 that has no cure, prevention treatment or can even be slowed. Is Alzheimer’s our new Cancer?
A strategic plan is being developed by the Journal of Alzheimer’s Association. States across the country are vamping up their APS departments, elderly abuse divisions of district attorneys offices are popping up, and drug companies are trying to find cures, ways to predict the disease and even ways to slow the disease down.
The pharmaceutical company Eli Lilly & Co. show promise with new experimental Alzheimer’s treatment due to decline of cognition in some patients. Read the Article. Researches find promise in attacking a key building block of the Alzheimer’s disease. Read the Article. TauRx Therapeutics is conducting a clinical trial on a new treatment for Pick’s Disease (a form of Dementia which is similar to Alzheimer’s. Read the Article.
Who makes the funeral decisions?
In Texas, if the Decedent did not leave any written instructions, then the Texas Health & Safety Code authorizes the following persons, in the priority listed, to control disposition, including cremation. They also bear liability to pay the reasonable cost of burial, from their own funds if the estate does not have adequate funds. They are:
1) The surviving spouse;
2) Any one of the surviving adult children;
3) Either one of the decedent’s surviving parents;
4) Any one of the decedent’s surviving adult siblings; or
5) Any other adult who would inherit under the intestacy laws.
However, if the Decedent left instructions, they get top priority! Legally, a person may provide funeral directions in the following:
1) a Will;
2) a pre-arranged funeral; or
3) a written instrument signed and acknowledged by that person.
If the directions are in the Will, then for the limited purpose of handling the funeral there is no need that the Will first be probated. The person authorized to control the disposition must promptly carry out the directions to the extent that they are affordable to the estate or the Agent. If that alleged Will is later denied probate or is declared invalid, the funeral directions remain valid to the extent they were acted on in good faith. Again, probate of the Will is not required – just the appearance of a document that purports to be the Will and is acted on in good faith.
The directions might also be in a legal document called an “Appointment of Agent to Control Disposition of Remains.” It is essentially a power of attorney, but it takes effect at the moment of death, contrary to typical powers of attorney that cease at the moment of death. That Appointment document may include very explicit and legally binding instructions, including the requirement of cremation or a traditional funeral. It must be signed by the principal (and acknowledged before a notary) and it must be signed by the agent. When the agent signs it, the agent is also agreeing to pay for the funeral if the estate’s funds prove inadequate.
Keep in mind that the funeral home can legally refuse to accept the Decedent’s remains or to conduct the funeral or cremation until it receives a court order or other suitable confirmation that the dispute has been resolved. So don’t put your family through the fuss of deciding what your burial plan will be, prepare ahead of time!
What is a Guardianship? Do you need one for mom or dad?
I. WHAT IS A GUARDIANSHIP?
A. Basic Definition A guardianship is a Court supervised procedure where the Court gives one person the legal authority to make personal or financial decisions for a person who can no longer make such decisions for himself or herself.
B. Incapacitated Person A person for whom a guardianship is necessary is known as an “incapacitated person” (“IP”) which is defined in TPC 601(14) to mean a minor or an adult individual who, because of a physical or mental condition and is substantially unable to provide food, clothing or shelter for himself or herself; or to care for the individual’s own physical health; or to manage the individual’s own financial affairs.
C. Policy – Purpose of Guardianship Unless a Court determines that a guardian with full authority over an IP is necessary, the Court should limit the authority of the guardian so that it is the least restrictive authority possible. Section 602 of the TPC provides that a court may appoint a guardian with full authority over an IP; or a court may appoint a guardian with limited authority over an IP: as indicated by the incapacitated person’s actual mental or physical limitations, and only as necessary to promote and protect the well-being of the person. Except for minors, the Court may not use age as the sole factor in determining whether to appoint a guardian for the person. In creating a guardianship that gives a guardian limited power or authority over an IP, the Court shall design the guardianship to encourage the development or maintenance of maximum self-reliance and independence in the incapacitated person.
D. Guardian A guardian is the person who accepts the Court’s appointment to be responsible for making decisions for the IP. A guardian has only those powers specified in the Order Appointing Guardian. Generally, two types of guardians exist:
1. Guardian of the Person – A guardian of the person has the right to have physical possession of the IP and to establish the IP’s legal domicile; duty of care, control and protection of the IP; duty to provide the IP with clothing, food, medical care and shelter; and power to consent to medical, psychiatric, and surgical treatment other than the in-patient psychiatric commitment of the IP.
2. Guardian of the Estate – A guardian of the estate of the IP has the following powers and duties to possess and manage all property of the IP; to collect all debts, rentals or claims that are due to the IP; to enforce all obligations in favor of the IP; and to bring and defend suits by and against the IP.
II. WHEN IS A GUARDIANSHIP NECESSARY?
A. Common Situations mental retardation, Alzheimer’s dementia, multi-infarct dementia, Down’s syndrome, Parkinson’s disease, closed head injuries, chronic mental illness, excessive short term memory loss.
B. Guardianship Not Used treatable mental illness, drug addiction, alcoholism, homelessness, spendthrifts, persons receiving only social security benefits (no Guardian of the Estate is necessary).
C. Less Restrictive Alternatives Court Investigators are to investigate the circumstances of each application to determine if a less restrictive alternative to guardianship is available. In counties without a Court Investigator, the attorney ad litem for the IP should examine these alternatives. A list of some of the most common Less Restrictive Alternatives is attached to this paper.
III. HOW DOES ONE GET A GUARDIANSHIP STARTED?
A. Courts Statutory Probate Courts, County Courts at Law and County Courts (in that order) have jurisdiction of guardianship cases.
B. Attorneys Most Courts will allow only attorneys to file a guardianship application. In an ideal situation, a concerned family member will contact an attorney to file an application to be appointed as guardian of an IP.
C. Court Initiated Guardianships The Texas Probate Code provides that “if a Court has probable cause to believe that a person domiciled or found in the county in which the Court is located is an incapacitated person, and the person does not have a guardian in this state, the Court shall appoint a guardian ad litem or a court investigator to investigate and file an application for the appointment of a guardian of the person or estate, or both, of the person believed to be incapacitated.”
In Tarrant County, the Courts require an information letter and a doctor’s letter to establish probable cause. If the IP’s incapacity is mental retardation, the Court must be provided with a Determination of Mental Retardation or “DMR” pursuant to §687(c) of the Texas Probate Code. This section states that if the basis of the Proposed Ward’s incapacity is mental retardation a physician or psychologist shall conduct an examination according to the rules adopted by the Texas Department of Mental Health and Mental Retardation and shall submit written findings and recommendations to the Court. This report must be based upon an examination conducted not earlier than twenty-four months before the date of a hearing to appoint a guardian for the proposed ward. Unless the IP is in imminent danger, Court Initiated Guardianships take at least 4 to 6 weeks from the date the Court receives the proper letters.
D. Social Worker Involvement
1. Adult Protective Services If there is concern that an adult is being abused, exploited or neglected, Adult Protect Services should be called (1-800-252-5400). APS sends a worker to investigate. If APS believes a guardianship is necessary, the worker will take a doctor to examine the IP. If no emergency action is necessary, APS should make a referral to the Texas Department of Aging and Disability Services for a guardianship investigation.
2. Nursing Home and Hospital Social Workers Social Workers at nursing homes and at hospitals have also used the court initiated guardianship procedure to begin the guardianship process for clients or patients who are IP. Hospital discharge planners should determine if the patient is an IP as soon as possible since the procedure may take a while. Stating that the IP will be in imminent danger when discharged is not considered imminent danger by most courts.
E. Guardian Appointment Process
1. Application for Guardianship is filed by a private attorney, guardian ad litem or court investigator. Only attorneys can file applications.
2. The Sheriff or Constable personally serves the IP with a copy of the Application.
3. The Court appoints an Attorney Ad Litem to represent and advocate for the IP.
4. The known relatives of the IP must receive statutory notice of the application.
5. Unless the application is for the appointment of a temporary guardian, the guardianship cannot be established until the Monday following ten days from the date the IP is personally served.
6. The Attorney ad litem must personally visit the IP and determine if the IP wants to contest the guardianship.
7. The applicant’s attorney must file a doctor’s letter with the court which states that the IP is incapacitated and generally describes the nature of the incapacity.
8. A hearing date is set with the Court. The IP must attend the hearing unless the Court determines that it is not in the best interests of the IP to attend.
9. The Judge or jury hears testimony and decides if a guardianship is necessary, what powers the guardian should have, how the IP’s rights should be limited and whether the person seeking to be appointed guardian is suitable.
10. The Judge then signs an Order Appointing Guardian. The Guardian must file an Oath and Bond in order to qualify. The Clerk then issues Letters of Guardianship to the guardian.
IV. WHO WILL SERVE AS GUARDIAN?
Statutory Priority Texas Probate Code, Section 677 provides a legal priority as follows:
1. a person selected by IP on a declaration of guardian;
2. IP’s spouse;
3. nearest of kin;
4. any suitable person.
V. GUARDIANSHIP MONITORING
A. Annual Reports A guardian of the person is required to file a guardian of the person report each year concerning the IP’s mental and physical condition and stating any change of the IP’s or guardian’s residence. A guardian of the estate is required to file an annual account stating all receipts, disbursements, cash on hand, and assets being administrated. Failure to file either of these reports may lead to fines and/or removal.
B. Court Visitor Program Each statutory probate court is required to establish a Court Visitor Program. As a part of this program a volunteer makes an annual visit on each IP who is the subject of a guardianship. The Court Visitor personally visits the IP and the guardian and reports his or her findings and conclusions to the Court concerning the IP’s social and intellectual functioning as well as living conditions. If the Court Visitor recommends an increase or decrease in the guardian’s powers or removal of the guardian or guardianship, the Court will appoint a Court Investigator or Guardian ad litem to investigate, and, if necessary, to file a petition to modify the guardianship order or to remove the guardian or guardianship.
C. Annual Determination Each Court is required to make an annual review and determination of whether a guardianship should be continued, modified or terminated. In making this annual determination, the Court reviews the Court Visitor report and the guardian of the person report.
Do you need a Lady Bird Deed?
A “Lady Bird Deed” is a nickname given to an Enhanced Life Estate Deed, which is used to convey property to your heirs outside of probate. This deed is commonly used in Texas because it allows the grantor to transfer property to beneficiaries while retaining a life estate in the property coupled with the power to sell, convey, or mortgage the property without the beneficiaries’ consent. The beneficiary of the deed does not get any rights to the property while the current owner is alive. However, these deeds are outdated!
In Texas you do not need a Lady Bird Deed because the Texas Legislature created a Transfer on Death deed with a new law. This new law allows property to transfer at death to someone else, so no probate is needed. A Transfer on Death deed conveys property outside of probate. Avoiding probate allows for you to avoid court costs and administrative costs to deed the property to your beneficiary. Under current Texas law, it also excludes the real property from Medicaid estate recovery.
The Transfer on Death deed can only transfer real property (ie home, commercial property, etc) and the deed must be formal in all ways and filed with the local real property records office. Anyone can sign a Transfer on Death deed but they must have the capacity to understand what they are doing or the deed could be found to be invalid. You should consider retaining an attorney to prepare this deed as the cost would not be large.
Protecting assets from MERP
How can I protect my house from Medicaid Estate Recovery Program (MERP) after my death?
Medicaid imposes stringent limits on income and assets of recipients, consistent with its mission to provide a health care safety net for the poor and for those whose personal resources are insufficient to pay the full cost of care. Many times assistance is provided to those who own homes, because the home is an exempt assets when determining qualification for the program. The Medicaid Estate Recovery Program reclaims funds paid on your behalf and during your life for assisted living costs. The State of Texas expects to be repaid at the time of your death from any assets you may own.
States are prohibited from making estate recoveries:
-During the lifetime of the surviving spouse (no matter where he or she lives). -From a surviving child who is under age 21, or is blind or permanently disabled (according to the SSI/Medicaid definition of “disability”), no matter where he or she lives. -In the case of the former home of the recipient, when a sibling with an equity interest in the home has lived in the home for at least 1 year immediately before the deceased Medicaid recipient was institutionalized and has lawfully resided in the home continuously since the date of the recipient’s admission. -In the case of the former home of the recipient, when an adult child has lived in the home for at least 2 years immediately before the deceased Medicaid recipient was institutionalized, has lived there continuously since that time, and can establish to the satisfaction of the State that he or she provided care that may have delayed the recipient’s admission to the nursing home or other medical institution.
If you believe that you will one day need assisted living assistance, you may want to take actions to preserve your assets now. The Medicaid program has a 5 year look back period, which means they look at all gifts or transfers that have occurred for the 5 years prior to qualifying for Medicaid. If you gave something away or transferred it to an irrevocable trust then they pull it back into your estate and you may not qualify for Medicaid.
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