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Family Asset Protection Planning

Summary: For people who are planning for long-term care and where the preservation of assets fits into that planning, the firm’s lead form of representation is Family Asset Protection Planning (FAPP). Introducing Rose and Joe Baker as clients who may seem familiar to you, this article is a brief explanation of the firm’s services in FAPP.

Rose Baker had been married to her husband, Joe, for 59 years when she first came to me. They had lived their lives together in Massachusetts and had retired to South Florida in 1992. When I came out of my office to greet Mrs. Baker, her eyes were puffy, red and she was clutching a wrinkled tissue in one hand.

Bottom line: Joe is ill and in the nursing home and she, Rose, is depressed, feeling guilty, scared and lonely. On top of it all, she tells me, she is worried about being poor.

She expresses guilt and remorse for even talking about money because, she tells me, she should be at the nursing home taking care of what is really important — her husband, Joe. She is crying again but trying not to. She is embarrassed. I am leaning in from my desk, trying to convey assurance so I can make her feel better. Making her feel better is all I really want to do.

Rose is so obviously overwhelmed with all that is going on in her life. Her troubles shoot out like the staccato of a machine gun. She is talking at once about the doctor at the nursing home, Joe’s most recent hospitalization, her daughter who is disabled by reason of multiple sclerosis, her son who cannot do enough but lives “back home” in Massachusetts, the electric bill being higher this month because it is so hot, her three CDs which total $90,000.00, the stock which used to be worth $950,000.00 but is now worth $650,000.00. She mentions the home and her fear of losing the home. She is talking about how Joe used to be an important teacher and how good he was to her and the kids. She is crying off and on. Mrs. Baker reminds me of my grandmother. I feel bad for her but I am used to this.

I take control of the meeting by asking her some questions and filling out my intake form. I do this myself instead of having a staff member do it because I use these innocuous questions to make small talk with my clients. It helps them because they are often nervous and scared, just like Mrs. Baker. I talk with Mrs. Baker and calm her down a little bit. I write down some notes of my impressions and the answers to the questions on my form. I try to write down her own words whenever possible.

Mrs. Baker has two children; a daughter named Hillary and a son name Stephen. Hillary is a “good girl,” suffers from multiple sclerosis, and does not “deal well with sad things.” Hillary calls once each week but Mrs. Baker does not want to “burden her.” Mrs. Baker last saw Hillary eight months ago. It is hard for Hillary to travel because of her MS. Stephen is a teacher, having followed in Dad’s footsteps. Stephen is a big help to Mrs. Baker. He was just down for ten days and will be returning next month. Because there is no school in summer, Stephen has some flexibility for the time being.

Mrs. Baker is scared about the money. She just paid the nursing home $5,700.00 for last month alone. “We never spent money like this,” she says. She tells how she and her husband saved and saved their money; how they never had two cars, how Joe “taught me how to put money away for later.” She tells me how Joe does not even recognize her sometimes and she starts crying a lot now.

Even though I know I can help Mrs. Baker, I feel frustrated that I cannot do more. I want her to stop crying. I want her to be happy. I want her to feel secure again. I strong-arm my emotions aside and stay with my lawyerly, authoritative and assuring pose. I want her to know that I can help her so she will feel some relief.

I say, “Mrs. Baker, when you leave here today, I want you to leave with a weight taken off of your shoulders. I cannot fix all of the problems, but I can make the money problems less of an issue.” She exhales some years of worry and her shoulders visibly relax.

“How?” She is wobbling her head and looks incredulous. Then she adds, “The money is not important though.” Even in her excitement to maybe have found some help, she feels guilty that we are talking about “money” when her husband is suffering so much.

“Mrs. Baker,” I continue, “Money buys care. I cannot make your husband all better. Noone can. But what we can do is maximize the use of your savings so that he — and you — can get better care. We do this through a process of protecting your savings while accessing any and all benefits that will help you and your husband.”

Some people do not understand what I do as an Elder Law Attorney. Some people think that Medicaid planning means taking rich people and making their money “disappear,” putting them on the public dole. This is not true. Only a small portion of what I do as an Elder Law Attorney is about “Medicaid” and when it is, it is about people like Mrs. Baker.

Mrs. Baker is a composite of my average “Medicaid” client — middle-class to upper middle-class people who saved and saved and saved for retirement only to be beaned by a long-term care system that has spiraled out of control.

What the government wants is for Mrs. Baker to “spend down” the family savings and then, when there is little or nothing left, Medicaid will help pay for the nursing home. The problem, of course, is that Mrs. Baker then has little or nothing left to pay for those things that Medicaid will not cover. All of their efforts in saving for a lifetime mean nothing. They get no benefit from having saved. Indeed, in the room right next to Mr. Baker, a lady who never saved a penny is receiving the same care on Medicaid. The system is broken.

Our health care system in America chooses which diseases will be covered by the government and which will not be covered. Senior citizens diagnosed with cancer, for example, will receive all necessary health care through our Medicare program. If you have cancer, heart disease or other such illnesses, you are covered. If you are unlucky enough to get Alzheimer’s Disease or any other form of dementia, you are out of luck. This is because our American health care system, unlike that of other advanced nations, does not cover these diseases which predominantly affect the elderly. This selective health care system is not just.

What is more is that the care Mr. Baker receives is, in my opinion, substandard, even at the “good” facilities. To remain profitable, nursing homes pay low wages and therefore attract only those people who are willing to do hard and intensely personal work for very little money. The turn-over rate for staffing at many nursing homes is very high. Even the better-paid administrators are well known to shift from company to company. The government is not helping enough. The Medicaid reimbursement rate is too low. Nursing homes are regularly filing for bankruptcy protection. Cost-cutting measures mean a greater likelihood of abuse and injuries of nearly-helpless nursing home residents. The structure of government programs still force people into nursing homes rather than paying for assisted living or home care; a costly mistake for our government and for our society.

For all of these reasons and more, I know that maximizing the client’s own resources and getting educated is critical.

Through proper planning, I know I can show Mrs. Baker how to protect all or most of the family savings. I can show Mrs. Baker how she can qualify Mr. Baker for Medicaid while still getting the benefit of their savings. By using their own dollars and the government’s dollars, Mr. Baker (and Mrs. Baker) will be able to afford more and better care. This can make all the difference.

The New York Court of Appeals (that state’s highest court) put it well when it held that “[n]o agency of the government has any right to complain about the fact that middle class people confronted with desperate circumstances choose voluntarily to inflict poverty upon themselves when it is the government itself which has established the rule that poverty is a prerequisite to the receipt of government assistance in the defraying of the costs of ruinously expensive, but absolutely essential, medical treatment.’”

Mrs. Baker is every client who has walked into my office full of grief, guilt and fear.

Fortunately, my firm can help Joe, Rose and the kids. Over ten years ago, we created a successful and comprensive method of addressing the very needs which Joe and Rose present. We also developed a very reasonable fee structure where a fixed fee is calculated based on a set formula. The client knows exactly what the costs are up front. There are no hourly rates and no surprises down the road. Family Asset Protection Planning (FAPP) covers six different modalities the firm uses to help its clients:

(1) Asset protection in a long-term care context. Part of asset protection means the implementation of planning strategies designed to achieve eligibility for certain need–based government programs including certain Medicaid and Veteran’s benefits as appropriate and available.

(2) Estate Planning through the use of wills, trusts and different techniques of holding title, as appropriate. The goal of estate planning is to ensure that a client’s dispository wishes are honored but in such a way as to be consistent with the client’s asset protection goals. Most every client already comes with an estate plan (often as a referral from the estate planning attorney) but these plans typically need to be modified to meet the new objectives.

(3) Incapacity Planning is primarily directed to plan for what should happen if and as incapacity begins to affect a client and to deal with current incapacity issues. Regular durable power of attorneys do not suffice. Incapacity planning includes end-of-life health care decision-making, specialized powers of attorney and sometimes trusts and other devices.

(4) Protection against Estate Recovery is designed to prevent unnecessary loss of assets to the government upon the death of a Medicaid recipient.

(5) Application for Benefits: The firm will handle the application for public benefits by completing application materials and actually meeting with the government and/or communicating with the government all the way through the eligibility determination. We show the government everything that we have done by opening the books and explaining the law to the government case workers.

(6) Guidance for Quality of Life: The firm is not a health care provider and we provide no medical advice. However, we have significant knowledge, experience and contacts within the elder care system. We leverage these benefits to the advantage of our clients through a structured process of providing non-clinical caregiving guidance.

Whether FAPP is right for you depends on many factors not covered in this article. The firm must pre-qualify prospective clients during an initial consultation.

The firm has an excellent track record of proven results and has earned a national reputation for our progress (”google ” us to check out what others have to say!). One of the reasons for this success is a collaborative approach to providing comprehensive solutions to aging and incapacity. We want to work closely with our clients’ financial advisors and other professionals. It is fair to say that there is a seat open at our conference table for your financial advisor, accountant or others who may be of assistance in the process.

For Joe and Rose, it is not too late. We can help achieve goals including Medicaid eligibility in weeks or months (no 5-year waiting periods necessary here). Had they planned ahead, they would have had more and better options. For our healthier clients, there is more we can do because we have planning strategies which can be implemented over time. We can use the time we are given to our client’s great advantage.

To learn more and to see if FAPP is right for you, set an initial consultation. The charge is $250 for that meeting. When you call the office, you will be told what to expect and you will then shortly receive more information in the mail in advance of your meeting.

If you need the help, I hope we can guide you through the process just as we would for Joe and Rose. With an excellent staff and three caring and experienced attorneys, we have put together quite a system and one that makes a tremendous difference in people’s lives. How fortunate I am to be in such a rewarding job!

• How to Become a Client of Solkoff Legal, P.A. (   )
• Effective Date of the New Medicaid Eligibility Rules (   )
• Arkansas Department of Health v. Heidi Ahlborn (   )
• Congress changes Medicaid eligibility law (   )
• Scott Solkoff speaks at 2009 Alzheimer's Educational Conference (   )

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