There are a lot of people out there offering their services to help people qualify for VA pension benefits (most often “aid and attendance” benefits). Your choice of who to refer someone to assist them with that important process can have far-reaching financial consequences.  Here are nine things you need to consider before referring someone for assistance in planning and applying for VA benefits.

1.  The Department of Veterans Affairs is engaged in an active effort to crack down on individuals employed by private companies who claim to help veterans and their dependents apply for VA benefits. These individuals lead claimants and facilities to believe they have special knowledge of VA laws and can maximize claimants’ entitlement to VA benefits, and often give claimants the impression they are employed by or connected to the VA.  If you encounter anything of that sort, you’re probably best to run, not walk, away.

2.  If a claim for benefits is denied or only partially allowed, and an appeal is needed, ONLY a licensed, VA accredited attorney or a VA accredited claims representative (a list of those can be accessed on the General Counsel’s webpage at www.va.gov.) can represent someone before the Department of Veterans Affairs. Anyone else (including a family member) can only prepare a benefit claim for one veteran on a one-time basis.  One quick assessment tool for determining whether someone who claims that they can help with the VA planning and application process is someone who can assist through the entire process, and help get past any problems that may come up, is to ask that person “Are you either a VA-accredited attorney or a VA-accredited claims representative, and can that be verified through the VA’s web site?”  If the answer is “No,” anything after that is basically an excuse or an effort to skirt the critical question.  The bottom line:  No means No, and that should be your answer, too.

3.  Anyone who suggests they are providing a great courtesy by filing a VA benefits application for free, or directs you to someone who will help file it for free, is misleading you. It is against the law to charge for filing a VA benefits application. However, an attorney can appropriately charge fees for assisting a client with legal planning toward establishing eligibility for VA or other benefits and for preparing legal documents utilized to carry out that planning.

4.  Because attorneys are the only ones who can properly charge for legal advice and planning that will enable you to establish eligibility for VA benefits, any non-attorney who offers assistance can only make money by selling something. Usually what they propose to sell are financial products, most often annuities.  Although annuities, like any other forms of investment, are appropriate for some people under certain circumstances, it is absolutely not necessary for anyone to purchase an annuity in order to establish eligibility for VA benefits. In this situation as in any other, a competent and scrupulous investment advisor should consider all possible investment vehicles and assist in choosing the one or ones that are most suitable to each situation. Further, in many situations there is no need to change an investment structure or purchase new investments.  If someone already has an investment advisor they trust, the advisor can most likely assist in the purchase of any new investments that may, in a given case, be helpful toward best carrying out the planning.

5.  Any annuity salesperson who leads you to believe that there are no costs associated with a purchase of an annuity is misleading you. Insurance producers are paid commissions, in some cases as high as 8-10% of the amount you invest, to sell an annuity. While there can be some legitimate charges associated with the purchase of investments, someone who sells a high-commission annuity that isn’t really benefitting the person who bought it – that person is making a hefty profit.

 6.  Any gifts or other transfers of assets made for the purpose of establishing eligibility for VA benefits can cause ineligibility for Medicaid nursing home benefits that may be needed later. For most people, the maximum monthly VA benefit isn’t enough to enable them to cover nursing home costs. Since many folks with care needs will end up needing nursing home care, planning that focuses exclusively on VA benefits can turn out to be a “quick fix” that causes costly and serious problems later on.

7.  A competent elder law attorney who has a close working knowledge of the Medicaid eligibility laws and regulations, as well as those of the VA, can assess each family’s situation. An attorney can help develop a plan that looks at the “big picture” of evolving health care needs and enables one to qualify for VA and/or Medicaid benefits in a way that will do the best job of preserving the most assets in the long run, and not temporarily “fix” one problem in a way that fails to address, or can even cause, a larger problem later.

8. The protection available if the person who advises a resident about establishing eligibility for VA benefits gives bad advice that causes problems in establishing eligibility for those benefits or in later establishing eligibility for Medicaid nursing home benefits should be a major concern when referring someone. Before agreeing to work with anyone, ask for a written assurance that the person carries professional liability insurance that will protect against those risks, and make sure the assurance isn’t limited by a disclaimer that, since the person is only helping with VA benefits planning, the protection isn’t there if the planning later causes otherwise avoidable problems in establishing Medicaid eligibility.

9.  An assisted living facility that refers a current or prospective resident for VA planning advice that ends up causing them financial harm can be held legally responsible for the resulting financial damages, including particularly nursing home costs they have to pay out of pocket if their eligibility for Medicaid is later denied or delayed as a result of planning that failed to properly account for their foreseeable later need to transition to nursing home care.  That is exactly what happened in the case of [we either have that case citation somewhere, or if not, I'm pretty sure we can get it from Law Elder Law.]

A correction to the previous video “If You’re Married & Over 65, Your Wills Are Probably Wrong.” Wes Coulson explains the difference between leaving everything to each other and for each other.

Hi, I’m Wes Coulson and this is your Elder Law Minute. I kind of messed up last week, so I’m going to ask you to do what I meant and not what I said. We talked about how married couples are consistently getting it wrong in their wills and living trusts. And what I said was that you should leave everything to each other rather than for each other. What I meant to say is that your wills and living trusts should be structured, and it takes special legal language, to leave everything for each other and not to each other. Why is that so important? Well, because it is the way of protecting what each of you leave for the other from having to be spent down if the one of you who lives longer winds up needing nursing home care and would have to apply for Medicaid. So it’s a great planning idea as long as you do it the way I meant, which is to leave everything for each other and not to each other. Thanks!

Wes Coulson discusses income tax tips for giving to charity and how you can get the most out of your charitable contributions. Through planning, there are ways to save on your taxes when making charitable donations.

Hi, I’m Wes Coulson and this is your Elder Law Minute. You probably already know that you get a tax deduction for making charitable contributions. But did you know that there are some more cost-efficient ways to go about it to get more bang for your charitable buck, if you will? One of the best ideas is instead of making a cash contribution, to give a charity appreciated stock, that if you sold it in order to invest in something else, you would have to pay capital gains tax on it. If you give that appreciated stock to charity, you never wind up having to pay capital gains tax on it and you can use the money that you would have used for the charity for other purposes. At a more sophisticated level, there are some great things that we can do by way of charitable planning to save you taxes. If you are thinking of making charitable contributions, give us a call. We’ll talk about how you can do it the best way. Thanks!

In this Elder Law Minute, Wes Coulson reviews the nine most common mistakes in special needs planning. Disinheriting a child, creating a generic trust, and procrastinating are just a few mistakes parents of special needs children can make in their planning.

Hi, I’m Wes Coulson and this is your Elder Law Minute. If you’re the parent of a special needs child, whether that child’s 4 or 45, you might want to send for our brochure, 9 Costly Mistakes to Avoid When Planning for A Special Needs Child. There’s really a lot of helpful information. Let me give you some examples. Here are common mistakes: disinheriting your child; ignoring their special needs when creating a trust for them; creating a generic trust that doesn’t fit; procrastinating; failing to invite contributions from other family members; choosing the wrong trustee; relying on your other children to use their money for your special needs child; failing to protect your child from special needs predators; and failure to properly fund and maintain the plan. You can learn how to avoid those mistakes by sending for our free brochure and also, give us a call. We’ll talk about it. Thanks!

There are planning opportunities that allow an elder to pay a family member to be their caregiver at home and establish eligibility for benefits. It is a great option for care, but you need to see an elder law attorney to make sure you’re doing it correctly so it won’t affect the elder’s application for Medicaid.

Hi, I’m Wes Coulson and this is your Elder Law Minute. For most people, their first choice of where and from whom to receive long-term care is at home and from a family member. Paying a family member as a caregiver can actually be a very good planning opportunity, but it has to be done right. If it’s done right, the payments to the family member caregiver will be considered by the VA as out-of-pocket care expenses in determining eligibility for benefits. It can also be a good way of achieving Medicaid spend-down. But with Medicaid there’s always a question as to whether it’s a gift or payment for services, and there are some very specific requirements that you need to meet to have it considered the right way. So a good idea, but something where you definitely want to talk to an elder law attorney and make sure it’s done right. Thanks!

Wes Coulson discusses how widowed spouses of veterans are eligible for VA benefits. These benefits can be used to pay for nursing home, assisted living, and even home care. Many people think that only veterans can receive these benefits, but the VA also provides them to widowed spouses.

Hi, I’m Wes Coulson and this is your Elder Law Minute. We are given the privilege of helping a lot of people in establishing eligibility for veteran’s pension benefits. These are benefits that can be really helpful toward paying for long-term care in any setting, not just nursing home, but also assisted living and even for home care. Because they are known as veteran’s benefits, some people have the misconception that only a veteran can be eligible for them. That’s not true. The VA also has, at each level of benefits, what are known as widowed spouses’ benefits. They’re not as high as the benefits available to the veteran, him- or herself, but if you’re paying for long-term care out-of-pocket, boy, the money sure does come in handy. So if you’re hearing this, if you’re the widowed spouse of a veteran or listening on behalf of one, give us a call. We can talk to you about planning to help you get those benefits to pay for long-term care. Thanks!

In order to begin to understand Medicaid eligibility, you first need to understand how Medicaid will treat your assets.

When you apply for Medicaid (known as MO Healthnet in Missouri) benefits, the caseworker who reviews your application will separate your assets into two categories.  The first category will be those assets which are “exempt”.  Exempt assets are those that the applicant is permitted to retain and still become eligible for Medicaid.

The second category will be those assets which are classified as “non-exempt.”  Non-exempt assets will be considered as available to you toward paying the cost of your care.  The value of non-exempt assets will be counted as available to you and they will have to be “spent down,” or otherwise legally disposed of, before you will qualify for Medicaid long term care benefits.

While the laws in Illinois and Missouri differ in some respects, exempt assets are very similar in both states.  In most instances the following assets are exempt:

• One’s home, no matter its value, as long as it is the principal place of residence for the applicant, his or her spouse, or a dependent child.  Your home includes any surrounding property that is not separated from your home by someone else’s property.

• Household and personal belongings, such as furniture and appliances (if in use), clothing and personal effects, wedding and/or engagements rings (but not other jewelry).

• Tools of a trade or occupation, and farm supplies, livestock and similar items in some restricted instances.

• One automobile or truck per household in Missouri, unless special circumstances exist.  In Illinois, for a single individual one automobile or truck, but it cannot be valued at more than $4,500.00 unless special circumstances exist.  For a married couple, the spouse at home can also own an automobile or truck of unlimited value.

• A life insurance policy up to a very limited value (this is an instance in which Illinois and Missouri law differ).  Term life insurance policies and group policies that have no cash surrender value are exempt.

• A prepaid funeral and burial plan, if irrevocable.  But in Missouri, if the value of the prepaid funeral and burial plan is more than $1,500.00, then all life insurance cash value will be non-exempt.

• A burial space for the applicant, and in Missouri for each member of the applicant’s household, and in Illinois for each member of the applicant’s immediate family.

• A very limited amount of otherwise non-exempt assets, which most people choose to keep as money in a bank account.  The applicant is allowed to keep resources up to a cash value of not greater than $999.00 in Missouri or $2,000.00 in Illinois.  In the case of a married couple, the spouse at home will also be allowed to keep a certain amount of cash.  The amount the spouse at home can keep is determined differently in Missouri and Illinois.  See our newsletter on Medicaid Planning for Married Couples.

One important caveat:  an asset that is exempt while you are alive may not be exempt after you pass away, unless proper planning has been undertaken.  This includes especially the home.  Moreover, if an exempt asset (such as the home) is sold during your lifetime, you no longer have that exempt asset.  Instead, you have the non-exempt money from the sale of that asset.  Another important caveat: just because an asset is considered exempt in determining eligibility at the time of application, that does not mean that its transfer is exempt from the “transfer penalties” that can substantially delay eligibility.  Most particularly here, the fact that your home is an exempt asset does not mean that you are free to transfer its ownership to someone else.

Non-exempt “countable” assets that will be counted against you in determining eligibility for Medicaid include just about everything else that you own, such as checking accounts, savings accounts, certificates of deposit, money market accounts, stocks, mutual funds, bonds, IRAs, non-exempt life insurance policies, any real estate or any interest in real estate (such as a time share or oil and gas rights), second vehicles, boats, recreational vehicles, “luxury personal property” such as jewelry and furs, antiques, gun collections, and so on. While there are some minor exceptions to these rules, for the most part, all money and property, as well as any item that can be valued and turned into cash, is a countable asset.

While the Medicaid rules themselves are complicated and somewhat tricky, for a single person it is safe to say that you will qualify for Medicaid so long as you have only exempt assets plus a small amount of cash (i.e., less than $999.99 in Missouri and less than $2,000.00 in Illinois).

With proper advice from a qualified elder law attorney, you can learn how to best ensure that your exempt assets will remain that way after your death so you can pass them on to your heirs.  You will also learn how best divest yourself of your non-exempt assets, minimizing losses in value and tax liabilities in the process, and protecting them from having to be spent down to pay for nursing home care to the greatest extent that the laws and your circumstances will permit, before applying for Medicaid long term care benefits.  That process is known as “Medicaid eligibility planning,” and it is a process from which any senior facing the potential loss of his or her life savings to nursing home care costs will benefit greatly.

In this Elder Law Minute, the difference between revocable trusts and irrevocable trusts is explained by Wes Coulson. A revocable trust is a trust that you can change or get rid of. An irrevocable trust is locked in and can’t be changed. Any revocable trust becomes irrevocable once you die.

Hi, I’m Wes Coulson and this is your Elder Law Minute. One of the questions I get occasionally is, “What’s the difference between a revocable trust and an irrevocable trust?” Of course, the first difference is obvious – the second one is even harder to say than the first one. What it really means is – can you change the trust or get rid of it? If so, it’s revocable. If it’s locked in, then it’s not revocable. Why would you want a trust locked in? Well, for some planning purposes, if the terms are locked in and you’re not in charge, the money in that trust doesn’t count as your asset any more. And of course, every revocable trust becomes irrevocable when you die because you don’t want people making changes to your estate plan on you after you’ve died. So, that’s the difference between a revocable and an irrevocable trust. Thanks!

Wes Coulson discusses how you can leave your inheritance as a retirement plan for your children.

Hi, I’m Wes Coulson and this is your Elder Law Minute. I saw something in the news a couple weeks ago expressing grave concern about the number of baby boomers who really haven’t set aside any money for retirement. We baby boomers are notorious for spending however much money we have. It calls to mind something I had several years ago. What I considered was, now, to be a very wise man, who had three children who were in their early 50s, late 40s, and he was widowed. And when I asked him how he wanted to leave his estate, he said, “Well, I don’t want my kids to get anything until they’re age 65.”

And at first I thought, “Boy, that’s kind of mean.” But then I asked him and I said, “What do you have in mind?” And he said, “Well, I’m going to be my children’s retirement plan. They don’t have money saved. They’ll spend it if they get it now. I want to make sure that they have a good stability and income in retirement.”

Just a thought if you’re planning your estate. Thanks!

Louise had been in the nursing home for more than a year. She had already gone through much of her life savings paying for her care. She only had about $50,000 left, along with her house.

Up to that point, no one had said anything to her children, Ben and Margie, about Louise going on Medicaid. But now the handwriting was on the wall. Despite her Alzheimer’s disease, Louise remained in good physical condition. She was “only” 83 years old, and her doctor thought there was a good chance that she might live for several more years. Her money clearly wouldn’t last that long. Ben and Margie did not want Louise to lose the family home that she and her late husband, Carl, had built themselves.

And so Ben and Margie scheduled a meeting with the administrator at the nursing home.  Trying to be helpful, she gave them the name and phone number of the Medicaid (MO Healthnet in Missouri) caseworker who handled the cases from that nursing home, and suggested they give the caseworker a call.

The caseworker told them that Louise would need to spend down her remaining funds until she was down to less than $2,000 (in Illinois; $1,000 in Missouri), and then she could apply for Medicaid. When she got below $2,000, the caseworker would be happy to help them with any questions they had in filling out the application. When Margie asked about the house, the caseworker told her, “Don’t worry about the house. Your mom won’t need to sell it.  It’s exempt.”

So Ben and Margie did as the caseworker suggested, and when the time came, the caseworker helped them fill out the application as promised. Louise’s application was approved. No problem, right? Wrong!

By law, caseworkers cannot offer legal advice. So what Ben and Margie learned from the caseworker was the result Louise would be stuck without proper legal planning. If Ben and Margie had consulted with a competent elder law attorney with experience in handling Medicaid eligibility cases, they could have protected well over half of Louise’s remaining assets from having to be spent down to pay for her nursing home care before she became eligible for Medicaid nursing home benefits. In addition, Louise could likely have been made eligible for “community Medicaid” benefits, to pay the $500 per month she was spending on her Alzheimer’s medication, as soon as her planning was completed.

By “saving some money by just letting the caseworker help,” Ben and Margie unknowingly cost Louise over $25,000 – money that could have been used to pay for Louise’s hair care, eyeglasses, dental work, clothes, toiletries, snack foods, satellite TV and phone services. Instead, since Louise is only permitted, as a Medicaid recipient, to keep $30 of her monthly income ($35 in Missouri), Ben and Margie will need to cover most of those expenses out of their own pockets.

Just as importantly, Margie and Ben could have avoided the shock they had to experience when their mother died three years later. It had been their hope and intention to keep Louise’s house in the family. One of her grandchildren, who could only get low-paying, on-and-off employment, was living there, and the caseworker had told them the house was “exempt.” What the caseworker had not told them was that the exemption was temporary, and would end when the house was sold or Louise died, whichever happened first. Instead, the house had to be sold, and all of the proceeds of the sale had to be paid over to the State to satisfy its “estate recovery” lien against the house. With proper legal planning, the house could have been saved.

The bottom line is this: unless the prospective Medicaid applicant is already broke and no longer owns her home, a much better result can always be achieved with proper legal planning than by asking the caseworker for help. And the sooner the planning is started, the greater the amount of assets that can be protected.