Medicaid is a needs-based program that is administered by the state.  Therefore, many of its eligibility requirements and procedures vary across state lines.  Generally, when an applicant is an owner of a joint bank account the full amount in the account is presumed to belong to the applicant. Regardless of how many other names are listed on the account, 100% of the account balance is typically included when calculating the applicant’s eligibility for Medicaid benefits.    

Why would the state do this? Often, these jointly held bank accounts consist solely of funds contributed by the Medicaid applicant, with the second person added to the account for administrative or convenience purposes, such as writing checks or discussing matters with bank representatives. If a joint owner can document that both parties have contributed funds and the account is truly a “joint” account, the state may value the account differently. Absent clear and convincing evidence, however, the full balance of the joint bank account will be deemed to belong to the applicant.  

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Failure to Update Contingent Beneficiaries

Assets in an IRA account usually transfer automatically to the named beneficiaries upon the death of the account holder, outside of the probate process.  If the account holder’s desired beneficiaries change, due to marriage, divorce, or other major life events, it is critically important to update the named beneficiaries as quickly as possible to prevent the asset from passing to an outdated beneficiary.  When updating beneficiaries, account holders should not neglect contingent beneficiaries – those individuals named to receive the asset if the primary named beneficiary is already deceased when the account holder dies.

Example:  Sarah’s IRA documents name her husband, Harold, as the primary beneficiary of her IRA.  The contingent beneficiary is Harold’s son, George, from Harold’s first marriage.  Sarah and Harold divorce.  Harold dies.  If Sarah dies before changing her IRA beneficiaries, George will receive the IRA.  This may no longer be the result Sarah would have wanted.

Failure to Consider a Trust as the Contingent Beneficiary of an IRA

There are three main advantages of naming a trust as the contingent beneficiary of your IRA: 

1. It avoids the problem described above of having incorrect contingent beneficiaries named at death.
2. It protects the IRA if the desired beneficiary is a minor, has debt or marital troubles, or is irresponsible with money.
3. It protects the IRA from intentional or unintentional withdrawal.

Since 2005, the IRS has allowed a type of trust created specifically to be the beneficiary of an IRA.  The IRA Beneficiary Trust is also known as an IRA trust, an IRA stretch trust, an IRA protection trust, or a standalone IRA trust.

The main advantage of using an IRA Beneficiary Trust instead of a standard revocable living trust is that the IRA trust can restrict distributions to ensure compliance with tax rules and minimum distribution requirements – thus maximizing the amount of tax-free growth of the investments.

Another advantage is that the IRA stretch trust has a framework that allows it to be structured in a way that guarantees protection of the distributions from the IRA as well as protection of the principal of the IRA.  When you first establish the IRA protection trust, you structure the trust as either a conduit trust or an accumulation trust.  A conduit trust will pass the required minimum distributions directly to your named beneficiaries, maximizing the tax deferral benefits.  An accumulation trust passes the required minimum distributions into another trust over which a named trustee has discretion to accumulate the funds, resulting in greater asset protection for the benefit of the beneficiary.

During your lifetime, the IRS allows you to switch between the conduit trust and accumulation trust for each of your beneficiaries, as circumstances change.  Furthermore, you may name a “trust protector” who may change the type of trust one last time after your death.  This change may be

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The first step is to reduce the need to drive. Find ways to bring the things they need right to them, like ordering groceries online for delivery and encouraging in-home appointments. Suggest that they invite friends and family over for regular visits instead of going out. They may be surprised by how many things are possible from the comfort of their own home.

For the times your loved ones need to, or want to, venture elsewhere, look into other transportation options. Although there is usually no need to quit driving all at once, look to family, friends, taxis, and public transportation when you can, especially for longer trips. Use the money you’ve been saving, along with what would have been spent on gas, on alternate modes of transportation. Their town may even have designated senior transportation services. 

The time to start making this transition may be sooner than you or your loved ones think. Don’t wait until an accident leaves them with no alternative. It may be time to start talking about limiting driving if they report noticing subtle difficulties, like trouble reading traffic signs or delayed breaking. Keep an eye out for small dings in your loved one’s car or surrounding items, like the mailbox or garage door, along with slower response time or difficulty finding their way around familiar territory. Ask them to watch for these things as well.

Asking a loved one to turn over their keys can be tough but with an open dialogue, the right support system and reasonable alternatives in place to ensure that they can continue to live an active lifestyle, a smooth transition is feasible.  

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In the event of a medical emergency, if a young adult is conscious and competent to make decisions, the doctors will ask the patient about his or her preferred course of treatment. Even if the individual is unable to speak, he or she may still be able to communicate by using hand signals or even blinking one’s eyes in response to questions.

But what happens in instances where the young adult is incapacitated and unable to make decisions? Who will decide on the best course of treatment? Without advance directives, the answer to this question can be unclear, often causing the family of the incapacitated person emotional stress and financial hardship.

In instances of life threatening injury or an illness that requires immediate care, the doctors will likely do all they can to treat the patient as aggressively as possible, relying on the standards of care to decide on the best course of treatment. However, if there is no “urgent” need to treat they will look to someone else who has authority to make those decisions on behalf of the young individual. Most states have specific statutes that list who has priority to make decisions on behalf of an incapacitated individual, when there are no advance directives in place. Many states favor a spouse, adult children, and parents in a list of priority. Doctors will generally try to get in touch with the patient’s “next of kin” to provide the direction necessary for treatment.

A number of recent high-profile court cases remind us of the dangers of relying on state statues to determine who has the authority to make healthcare decisions on behalf of the ill. What happens if the parents of the incapacitated disagree on the best course of treatment? Or what happens if the patient is estranged from her spouse but technically still married- will he have ultimate say? For most, the thought is unsettling.

To avoid the unknown, it’s highly recommended that all adults, regardless of age, work with an estate planning attorney to prepare advance directives including a health care power of attorney (or health care proxy) as well as a living will which outline their wishes and ensure compliance with all applicable state statutes.

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Healthcare directives can be vitally important, as recent cases, like that of Terry Schiavo, clearly brought to light. These important documents can mean the difference between your health care wishes being carried out or family members fighting over whether a loved one should be placed in a nursing home or removed from life support. Healthcare directives usually include both a healthcare power of attorney and a living will, or a form which is a combination of the two. In a healthcare power of attorney, an individual authorizes another individual to make healthcare decisions for him or her if the individual becomes unable to do so. A living will expresses an individual’s preferences about life support.

Once you have executed your healthcare directives, you may be uncertain as to what to do with them. First, you should make copies of the documents and inform others of their existence. In addition to your health care agent, persons you should consider notifying of the directives include family members and your health care providers.  Ideally, the originals should be kept in a place that is both safe and easily accessible.

You may wish to consider using a secure registry service to store your healthcare directives. Such services allow you to access healthcare directives any time and in any location with access to the Internet.  Some also allow the documents to be accessed via an automated fax-back service. In addition to providing the healthcare directives, many registries also allow caregivers to access information like emergency contacts, allergies, and other pertinent medical information.

You should review your healthcare directives regularly.  As individuals get older, their preferences about health care and life support change, and it’s important that your directives reflect your current health care wishes.   Of course, life changing events such as marriage, divorce, or the death of a loved one typically require changes in those documents to ensure that the people named in them are still those you wish to make decisions on your behalf.

Moving to another state? Many states provide that healthcare directives prepared in another state are valid, but you should consult an attorney to make sure your wishes will be carried out in the manner you desire.

Establishing your healthcare directives can spare your family a great deal of anguish if they need to make decisions at a time that is already very emotionally-charged. By keeping the documents in a secure place, providing copies to loved ones, and reviewing them regularly, you can be more certain that your healthcare wishes will be carried out.

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