For the past two years there have been questions as to whether Medicaid transfer-of-assets penalties would apply to transfers to pooled trusts by individuals age 65 and older. A Centers for Medicare and Medicaid Services (CMS) memo dated April 14, 2008, from Gale Arden (Baltimore) to Jay Gavens (Atlanta Region IV) stated that “only trusts established for a disabled individual age 64 or younger are exempt from application of the transfer of assets penalty provisions ( see section 1917(c)(2)(B)(iv) of the Act.)” This was followed in May 2008 by a Boston Regional Office bulletin stating that transfers to pooled trusts are subject to transfer penalties.

Not all states are imposing a penalty; some allow transfers to pooled trusts by people of all ages. The latest such state is Maryland.  CMS stated that after researching this “complicated and nuanced” area of law, it had concluded that “[a]s a matter of policy, there is no age limitation imposed by existing federal or state law on who may transfer assets into a sub-account of a pooled trust. Accordingly, a disabled beneficiary 65 years of age and older may transfer assets into an approved pooled trust sub-account without penalty”.

According to a recent discussion on the National Academy of Elder Law Attorneys’ listserv initiated by a Georgia ElderLawAnswers member, Maryland joins at least 10 other states that permit transfers by those over 65 to a pooled trust. These states are, in addition to Maryland: Alabama, California, Colorado, Florida, Iowa, Massachusetts, Michigan, Ohio, Utah and Wisconsin. (from www.elderlawanswers.com)

However, the use of pooled trusts is not a panacea for asset protection from nursing home costs.  There are restrictions on fund usage, maintenance expenses, and other profound issues.  However, for some people, this may be an attractive way to set aside funds to pay for items Medical Assistance will not cover.  This policy clarification by CMS is an important, and positive, development for Maryland seniors.

The starting point is what type of guardian do you seek.  There are two types of guardians.  The first is the guardian of the person.  It is this person that makes medical related decisions on behalf of the disabled.   The second type of guardian is the guardian of the property.  This person makes strictly financials decisions on behalf of the disabled.  Both types of guardians need not be assigned at the same time.   The priority for each, while similar, is different.

Maryland Ann. Code Est. & Trust § 13-707 provides as follows, as it relates to the priority of eligibility of someone asking the court to be appointed as guardian of the person.

Persons are entitled to appointment as guardian of the person according to the following priorities:

(1) A person, agency, or corporation nominated by the disabled person if the disabled person was 16 years old or older when the disabled person signed the designation and, in the opinion of the court, the disabled person had sufficient mental capacity to make an intelligent choice at the time the disabled person executed the designation;

(2) A health care agent appointed by the disabled person in accordance with Title 5, Subtitle 6 of the Health-General Article;

(3) The disabled person’s spouse;

(4) The disabled person’s parents;

(5) A person, agency, or corporation nominated by the will of a deceased parent;

(6) The disabled person’s children;

(7) Adult persons who would be the disabled person’s heirs if the disabled person were dead;

(8) A person, agency, or corporation nominated by a person caring for the disabled person;

(9) Any other person, agency, or corporation considered appropriate by the court; and

(10) For adults less than 65 years old, the director of the local department of social services or, for adults 65 years old or older, the Secretary of Aging or the director of the area agency on aging, except in those cases where the department of social services has been appointed guardian of the person prior to age 65. Upon appointment as guardian, directors of local departments of social services, directors of area agencies on aging, and the Secretary of Aging may delegate responsibilities of guardianship to staff persons whose names and positions have been registered with the court.

So, if a son and daughter both wanted to become guardian of the person for their mother and the daughter was a health care agent of the mother in accordance with Title 5, Subtitle 6 of the Health-General Article, she would have priority of appointment over her brother who was not a health care agent.  However, please note that this is only a starting point.  If the son could “show cause” why the court should over look this priority, the court may overlook this statutory priority and pick the son, even though he was not the named health care agent.

The analysis for priority of appointment for guardian of the property is different.  Maryland Ann. Code § 13-207 provides, in part:

(a) Persons are entitled to appointment as guardian (of the property) for a minor or disabled person according to the following priorities:

(1) A conservator, committee, guardian of property, or other like fiduciary appointed by any appropriate court of any foreign jurisdiction in which the minor or disabled person resides;

(2) A person or corporation nominated by the minor or disabled person if the designation was signed by the minor or disabled person after his 16th birthday, and, in the opinion of the court, he had sufficient mental capacity to make an intelligent choice at the time he executed the designation;

(3) His spouse;

(4) His parents;

(5) A person or corporation nominated by the will of a deceased parent;

(6) His children;

(7) The persons who would be his heirs if he were dead;

(8) A person or corporation nominated by a person who, or institution, organization, or public agency which, is caring for him;

(9) A person or corporation nominated by a governmental agency which is paying benefits to him; and

(10) Any other person considered appropriate by the court.

Please note that section 10 of this section allows the court to appoint “any other person considered appropriate.”   So, if all of the interested parties (i.e. children, etc.) are deemed undesirable (for whatever reason), the court could well assign an attorney, not affiliated with any of the interested person, to serve as guardian of the property.

The above listed information is but a snap shot of some of the issues relating to priority.  Often, the determination of guardianship is both document driven and fact driven.

The lawsuit was filed in Los Angeles Superior Court on May 27, 2010, by Katherine Webster, who is the niece of the late Anthony J. Ferrantino and the executor of Mr. Ferrantino’s estate.

Knowing that he had only a few months to live, Mr. Ferrantino asked Ms. Webster in July 2007 to help him use LegalZoom to execute a will and living trust. Based on LegalZoom’s advertising, Ms. Webster says she believed that the documents they created would be legally binding and that if they encountered any problems, the company’s customer service department would resolve them.

But after the living trust documents were created and signed, Ms. Webster could not transfer any of her uncle’s assets into the trust because the financial institutions that held his money refused to accept the LegalZoom documents as valid. Ms. Webster tried to get help from LegalZoom, with no success. The trust was still not funded when Mr. Ferrantino died in November 2007.

Ms. Webster was forced to hire an estate planning attorney, who petitioned the court to allow the post-death funding of the trust. The attorney then had to convince the banks to transfer the funds — a more difficult task following Mr. Ferrantino’s death. The attorney also discovered that the will LegalZoom created for Mr. Ferrantino had not been properly witnessed. All this cost Mr. Ferrantino’s estate thousands of dollars.

The lawsuit claims that Ms. Webster and others like her relied on misleading statements by LegalZoom, including that LegalZoom carefully reviews customer documents, that it guarantees its customers 100 percent satisfaction with its services, that its documents are the same quality as those prepared by an attorney, and that the documents are effective and dependable.

“Nowhere in the [company's] manual do defendants explain that using LegalZoom is not the same as using an attorney and that its documents are only ‘customized’ to the extent that the LegalZoom computer program inputs your name and identifying information, but not tailored to your specific circumstances,” the lawsuit states, adding that “the customer service representatives are not lawyers and cannot by law provide legal advice.”

Ms. Webster is suing not only on her behalf but on behalf of anyone in California who paid LegalZoom for a living trust, will, living will, advance health care directive or power of attorney. The lawsuit estimates this class embraces more than 3,000 individuals.

“LegalZoom’s business is based on nurturing the false sense of security that people do not need to hire a traditional attorney,” says San Francisco attorney Robert Arns, one of the attorneys who filed the lawsuit. “The complaint points out that LegalZoom advertises that you don’t need a real attorney because its work is legally binding and reliable. That’s misleading. Improperly prepared estate planning documents are a ticking time bomb that can result in improper tax consequences and other items that could cost the estate and heirs huge sums.”

“LegalZoom preys on people when they’re at their most vulnerable, when they are of advanced age or poor health and need a will or a living trust,” adds San Francisco elder abuse attorney Kathryn Stebner, Ms. Webster’s lead counsel.

One of the defendants named in the suit is LegalZoom co-founder Robert Shapiro, who appears on the LegalZoom Web page and TV ads and who is best-known for being one of O.J. Simpsons attorneys.

This is not the first suit against LegalZoom. In December 2009, a Missouri man who paid LegalZoom to prepare his will sued the company for engaging in the unauthorized practice of law (Janson v. LegalZoom). The lawsuit is also seeking class action status. LegalZoom is trying to have the case removed from Missouri state court to the United States District Court for the Western District of Missouri.
From www.elderlawanswers.com.

Upon review of the new financial power of attorney statutory language for both the short and long form, there are many good aspects with the new provisions.  There are enforcement provisions in this new law.  Before, a bank could refuse to honor your power of attorney and there would be virtually no way to force the bank to honor your power of attorney other than jump through their unique requirements.  The agent must keep a record of all receipts, disbursements and transactions.  There are other requirements as well.  The execution requirements will change.  While there is bound to be much confusion when this is enacted on October 1, 2010, overall, this was a good move by the Maryland General Assembly and this a positive development for our seniors.  There are more safeguards into its use.  There more defined routes to attack misuse.  There is language that can be used to make this enforceable.

If you would like to know the background of why the new power of attorney laws are called “Loretta’s Law” please follow this link:

http://www.hometownannapolis.com/news/top/2008/02/21-38/Making-it-harder-to-steal-from-family.html?ne=1

The Maryland General Assembly just passed and the governor signed into law sweeping new changes regarding Maryland financial powers of attorney (Maryland Uniform Power of Attorney Act – Loretta’s Law).  There are a whole host of changes including new execution requirements, new statutory language, enforcement provisions, financial agent disclosure and non-disclosure requirements, and agent record keeping responsibilities.  The new law goes into effect October 1, 2010.

Is There a Need for a Guardian?

Having a properly executed financial power of attorney and advanced directive can certainly avoid the need for guardianship in many instances.  But, what happens if the financial power of attorney holder or the health care agent abuses his/her role as agent?  What happens if a new financial power of attorney or advanced directive is created under circumstances where the validity of the document is questionable?  One possible, and most likely scenario, involves invoking court oversight by filing a petition for guardianship.  The guardianship process can be complex and may not be the appropriate route for all circumstances.

Questions?

Post your contested guardianship questions here.

Medicaid rules involving a primary residence are complex with some rules involving initial eligibility with others relating to Medicaid lien provisions.  In many cases, the primary residence is an exempt asset not counted as part of the $2,500 (applicant) and $109,560 (community spouse – maximum) threshold.  However, in many cases it is counted.  One of the relatively new changes enacted by the Deficit Reduction Act of 2005 and adopted by Maryland in 2007 was an equity threshold test.  A home with an equity value equal to or exceeding $500,000 is a fully countable asset.  Not a good answer.  The good news is that there are still methods to protect the house.

From a Maryland perspective, Medical Assistance (i.e. Medicaid) only allows one gravesite per person to be exempt.  If there is a community spouse, then that community spouse is also only allowed to have one.  If there is more than one per person, it is a fully countable asset for Medicaid purposes and the application may be denied.