Hey there, Legal Tea Listeners –This is your host, Jenny Rozelle! Today’s episode of Legal Tea is the “cautionary tales” topic. And on these “cautionary tales” episodes of Legal Tea, we normally talk about real-life cases with real-life clients that are things me or my office have worked on -or they are things that I think are generally good things to be aware of, so you don’t turn into a cautionary tale on my Legal Tea podcast one day! Well, this episode is inspired by someone who said to me at an event I was attending recently, “You are my new year’s resolution! My husband and I are making it our new year’s resolution to get our estate plan done!” She said it excitedly, and we shared a laugh because at first, she phrased it kind of funny … but I commended her for prioritizing getting it done and encouraged her to make sure she follow through on it. So, today’s episode is about the follow-through aspect of estate planning.
You know, most of the time when I first meet someone and I tell them what I do, they’ll commonly say, “Oh gosh, I need to do my Will … or update my Will!” It happens all the Bobbye – and most of the Bobbye, I’m like, “Yeah! Just give the office a call when you’re ready!” But today’s episode is similar to that infamous saying, “If you fail to plan, you are planning to fail” because we’re going to talk about a recent interaction between my office and a family … and all of this I just said, will really be exemplified. So, let’s meet them … let’s call them John and Sally, as husband and wife – and they had one child, Bobby. John and Sally were in their 80s while Bobby was in his 50s.
Unfortunately, Sally had pretty advanced dementia and John and Bobby had come into our office to talk about their options as they contemplated placing Sally in nursing home care. Sally being at home was not only a danger to herself (she often wondered in the middle of the night), but it was completely wearing John down … to a point of being very concerned about John’s physical and mental health. As an elder law attorney, I often see the caregiver put their own health on the backburner – and I even see sometimes the caregiver falls ill or dies before the person they’re caring for. It happens. Anyone in the “senior” space has seen this happen over and over again.
In case you didn’t know, long-term care is super expensive. Helping folks navigate how to pay for long-term care, like through exploring Medicaid and VA benefits, is actually what many elder law attorneys do day-in-and-day-out. I have a lot of people ask me what elder law even is – clients will say to me, “What’s elder law? Helping old folks like me?” Sure, it’s typically helping individuals who are in their later years … but put more respectfully, like I said, much of elder law consists of helping families navigate their options on paying for home health care and long-term care (like, assisted living, nursing home, etc.).
I can kind of share some figures for Indiana … which, to be frank, consistently has a pretty low cost of living. So, some of these figures, you should expect higher. Anyway, around here in Indiana, home health care costs depends on how much you need a professional caregiver there – as they often charge hourly. Their rates are all over the board, but know they aren’t cheap. Now, assisted living is usually in the ballpark of $4000-$6000 a month range. Skilled nursing (often called nursing home) is usually in the $8000-$10,000 a month range. Like I said, please keep in mind these are Indiana ranges – so I’m certain places like California and New York are considerably more expensive!
This is why I always, always, always say that there is a massive difference between an attorney that does estate planning and an attorney does that AND elder law – it’s like it’s own separate practice area. With elder law, like John and Bobby, families will come in concerned about how to afford long-term care. It’s pretty rare I see individuals with long-term care insurance; while it certainly helps down the road when we DO need care, many people don’t move forward with it (in their earlier years) because of its cost. its reputation (in the past, long-term care insurance was thought of as “you could pay all this money and never use it!” but there are new, better products nowadays), AND / OR you can’t medically qualify for it (perhaps you have some condition that makes you essentially ineligible for it).
For those reasons, and it was for John and Sally’s situation, in these conversations, long-term care insurance is usually off the table. We are left with weighing the option of either 1) private paying (and that may mean the person runs out of money) or 2) moving and protecting assets in a way to qualify for a benefit like Medicaid. I should clarify – MediCAID, not MediCARE. Big difference. So, like I said, navigating whether to utilize Medicaid to pay for Sally’s long-term care is exactly what John and Bobby were talking about in our office about Sally. The good news is that there are ways to John and Sally’s assets to get her pretty quickly qualified for Medicaid – what that consisted of, however, was moving a majority of the assets over to John’s name alone. We were able to accomplish this because there are massively different rules in Medicaid law for married couples, than for single individuals. The Medicaid married couple rules tend to be more flexible and generous.
Fast forward a little bit of time, Sally ends up going into a nursing home because John just couldn’t truly give her the best care at home anymore. I remember him breaking down in my office over guilt and shame that he needed to do this … but it was honestly what was best for her and what was best for him. Both of them needed this to happen. So, my office worked our little elder law magic and got Sally qualified for Medicaid, so they don’t have to private pay those crazy figures I mentioned earlier. Now, here’s where things turn into a cautionary tale … any time we have a married couple and get one of them qualified for Medicaid, we always, always, always encourage the “healthy” one (here it was John) to create or update their estate plan. For John, he didn’t have a Will or anything – so he needed to get something created.
You may be wondering … well, why is that so important? Well, it’s SUPER important because most of John and Sally’s assets are hanging out in John’s name alone now – and if he were to unexpectedly pass, we don’t want assets freely going over to Sally’s name because she would get kicked off of Medicaid. So, all of that hard work … would be for nothing. So, that’s what we did – we immediately started to encourage John to get his estate plan created … and we tried again …. and we tried again … and once or twice more. No response. I am sure he was dealing with a lot of things emotionally – his wife is in a nursing home, his health had taken a beating, he was lonely and probably depressed.
Unfortunately, my world is filled with a lot of “You can lead someone to the water, but you can’t make them drink it” moments. John never got back to us about his estate plan, and tragically and COMPLETELY unexpectedly, John passed away. Yes. That happened. It was awful. When I heard the news, I immediately said, “Did he ever get his estate plan done?” I knew the answer, but thought maybe he worked with someone else in the office … the answer was “no.” Sally was still living in the nursing home.
We haven’t talked about “not having a Will” in a while here on Legal Tea, but it has definitely been discussed over the course of this podcast before – What that means … passing away without a Will means that we’re going by the intestacy laws. That funky-sounding word, intestacy, is a fancy word that gets used for a chunk of statutes that essentially creates an estate plan for people who died and do not have a Last Will and Testament. It dictates who beneficiaries are of that person’s Estate. So, those intestacy rules, here in Indiana at least, for John would mean that ½ of the assets go to the spouse (Sally) and ½ go to his child (Bobby). I’m sure you’re thinking, “Oh thank goodness not everything went to Sally!” Well, you’re probably thinking that because you think that’s where the story ends … but it doesn’t! Oh no, it doesn’t.
So, let’s continue…(And I promise this is a real story, guys!)
Okay, so I just said that Sally was going to get ½ of the assets in John’s Estate – and now, because of that, she’s going to get kicked off Medicaid. At this point, because we are dealing with Medicaid law for single individuals, Sally will not be able to immediately go back on Medicaid and she’ll have to private pay. Remember when I said earlier that married couple Medicaid rules are different than “single person” rules, and in fact, they tend to be more flexible and generous. Well, because John has passed away, Medicaid would classify Sally as a single person meaning … we don’t get the play by those generous married couples rules anymore. So, that’s what I mean by her not being able to go back on Medicaid easily and she’ll now have to pay privately for her care, which was going to be quite a chunk of change each month.
Though, somewhat thankfully, Bobby, the son, got the other ½ of the assets in John’s Estate – well, the craziest twist in this entire story is that we only learned about John’s passing because the nursing home that Sally was at, called our office to tell us that they heard John passed away … and they only knew to call us because we had been communicating with them about Sally’s Medicaid. So, the craziest twist is that … when the nursing home called our office to tell us about John passing away, they also said that Bobby, the son, had passed away a mere few days AFTER John died. You heard me right … John and Bobby both died.
Bobby also did not have an estate plan, so even his Estate went by those funky-sounding intestacy rules … which those rules stated that if he died, his Estate would go to his parents – since John had died shortly before him, that meant, the share that he was going to get from his Dad’s estate, was going to boomerang right back to Mom, Sally. All of that to be said .. or maybe long story short, everything is coming back Sally’s way – ALL of John and Sally’s assets and Bobby’s assets. Everything is heading to Sally.
What makes my heart hurt is that they paid us to get Sally on Medicaid (and we did), then we had to take John’s Estate through probate (legal fees) and had to take Bobby’s Estate through probate (legal fees) …. And it somehow doesn’t stop there. Sally, remember she had very advanced dementia, had to end up having a professional guardian appointed for her because everyone in her Power of Attorney had passed away AND she was not of sound mind to execute a new Power of Attorney.
If I can be so simple, there was a path that 1) would have gotten Sally on Medicaid, 2) kept John’s Estate out of probate, and 3) kept Bobby’s Estate out of probate. That path required John getting his estate plan done and we tried so hard to get him to move. I actually, before I went to script out this episode, I counted to see how many times we tried to contact him … there were 5 letters and 4 phone calls. All went unanswered. For reasons we may never know, John completely froze and never finished his plan. Getting his plan done was a vital piece of puzzle. Whatever happened, happened – we will likely never know what caused John to go M.I.A. like that, but he did. And their family and Estate paid for it. Literally.
Alrighty, let’s shift to a sneak peak of next week, which we’re circling back to the “current trends” topic where we talk about things that are going on currently that impact my estate and elder law world – or maybe, things that I have stumbled upon on the news or social media that is relevant to this podcast. Well for next week, there is a tragic story out of South Carolina, where a young woman was killed shortly after her wedding (like hours…) … and there’s some family feuding going on about who is entitled to her Estate. So tune in for that topic next week, Legal Tea Listeners, so until then, be well and talk soon!
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