The Perils of GoFundMe – Part 3
In my blog post last week, I discussed crowd funding sites like GoFundMe. We see families dealing with a sudden catastrophic illness or injury attempt to use these sites to raise money to pay for medical and other bills. It rarely is a solution if only because of the amount of money needed and length of time of recovery - if full recovery is even possible. For most people Medicaid becomes a necessary financial solution. As I explained last week, Medicaid is a needs based program. Certain asset and income limitations must be met and the State scrutinizes an applicant’s finances over a five year look back period. Raising money thru GoFundMe and sites like it create two common problems when trying to achieve Medicaid eligibility. The first is that in order to meet Medicaid’s asset limit one must spend down. GoFundMe money coming in results in account balances going in the “wrong direction”, increasing rather than declining. Granted, that money will be spent on medical and other bills as part of the spend down process but strict asset limits must be met and that is difficult when money keeps coming into accounts in differing amounts and at different times. Secondly, these transfers in must be documented for Medicaid
The Perils of GoFundMe – Part 2
In my post last week, I wrote about a particular solution - really attempted solution - to the financial burdens caused by a catastrophic illness or injury. In the age of the internet, crowd funding websites have made it easier to raise money from a large group of people. The GoFundMe site is maybe the most commonly known one. Efforts to raise the money needed to pay medical bills and the cost of long term care are rarely successful simply because the target amount is so undefined in terms of dollars and length of time. The road to recovery is a long one and for those without long term care insurance the Medicaid program will be the only alternative, which is where the fundraising efforts can create a problem. As regular readers of this blog know, Medicaid is a needs based program with an asset test and an income test. A Medicaid applicant must have less than $2000 in assets to qualify for Medicaid. In the case of married couples, the non-Medicaid spouse also has an asset limit. When an application is filed, 5 years of account statements must be provided for every account the applicant and spouse had in that time frame. All transfers into and out of
The Perils of GoFundMe (Part 1)
In this week’s blog post, I write about a particular solution - or really attempted solution - to the financial burden caused by a catastrophic illness or accident. A family member calls concerning a loved one who has suffered a serious illness or accident, one that will result in needing extensive custodial care. As readers of this blog know, custodial care is quite expensive, whether in a facility or at home. On average the cost is $13,000 to $15,000 per month and in some cases much more than that. This type of cost is tough for a majority of Americans to cover for any extended period of time but that’s what usually is needed. Recovery to the point of being able to live independently is not achievable in most of these instances. As I have discussed many times, the problem is particularly acute for younger individuals. That’s because they have not accumulated as much savings that can be applied towards care and are less likely to have even considered - let alone purchased - long term care insurance. They also tend to have been working to support spouses and young children. A major source of income may be gone. Medicaid becomes the obvious solution. When I explain how Medicaid works and how
Dispute Over a Retirement Account – Part 2
In my blog post last week I told you about a recent Wall Street Journal article that caught my eye. Jeffrey’s siblings sued to recover their brother’s retirement account. In 1987 Jeffrey designated his girlfriend at the time as the beneficiary of the account. He broke up with her in 1989 but never changed the beneficiary so when he died the account custodian said they had to pay her. That’s because the retirement account is considered contract property. A will or when there is none state intestacy laws, do not control contract property if there is a beneficiary designation on file with the account custodian. Jeffrey’s siblings sued and lost but according to the WSJ article they intend to appeal. Based on my experience I would say they are very unlikely to succeed. It reminds me of a case years ago I was referred by another attorney who had tried and failed to do what Jeffrey’s siblings tried - to get a court to override the beneficiary designation. The siblings sued Proctor and Gamble, the company that Jeffrey worked for, alleging it violated a fiduciary obligation to inform him of his beneficiary designation. It isn’t clear from the article why they should have reminded him. P&G said that when it changed service
Dispute Over a Retirement Account (Part 1)
A recent Wall Street Journal article about a fight over a $1 million dollar retirement account reminded me of a similar case I had in my office 25 years ago. First about the case highlighted in the Journal. To summarize, Jeffrey, single with no children died in 2015. He had no will. The majority of his estate consisted of a retirement account that is now worth $1,000,000. That is the subject of a legal battle between his brothers and his ex-girlfriend from more than 40 years ago. The back story is that when Jeffrey first set up his retirement account at Proctor and Gamble, he designated his then girlfriend as the beneficiary on that account. In the mid 1980’s this was done by completing a paper document that he signed and submitted to the company. Jeffrey and his girlfriend split up a few years later and she went on to marry and have children. Jeffrey did not, however, ever change the beneficiary form. When he died, the ex-girlfriend was still listed as beneficiary on the original form Jeffrey had completed in 1987. The form was clear and unambiguous. It also is clear that the retirement account is considered what is called “contract property”. The retirement plan custodian has a contractual obligation with
Medicaid Redetermination – Part 7
In my blog post last week, I discussed the calculation of Mary’s elective share. That is the amount Mary is entitled to receive as a result of her husband, George’s death, which turned out to be $300,000. Obviously this is more than the $2000 in assets she is entitled to keep to maintain her Medicaid eligibility. So, must she be terminated from Medicaid? Not necessarily. That’s because there is a choice as far as which assets Mary receives. She could receive 1/2 ownership of the house, valued at $300,000. This, by itself, would satisfy the elective share in its entirety. The other 50% would pass to George and Mary’s children per George’s will. While this would leave Mary with an asset worth well more than the $2000 Medicaid asset limit, it would be co-owned with her children. If they do not wish to sell the house so she can spend down her 1/2 of the proceeds, the house becomes what Medicaid calls an “inaccessible asset”. That is one that can’t be liquidated thru no fault of the Medicaid recipient. Medicaid does not include such assets when assessing the asset limit, thus preserving Mary’s Medicaid eligibility. It should be noted that after Mary dies the home will be subject to Medicaid estate recovery, but