The AFA’s Educating America tour is a nation-wide educational initiative connecting communities with information about Alzheimer’s disease, brain health, caregiving, and more. Participants had the opportunity to hear from experts on Alzheimer’s research, caregiving, elder law, and advance planning.
Mark’s presentation was titled, Why a Will is Not Enough, and included a range of topics from lifetime planning and financial decision making, to long-term care and medicaid planning.
Update! Mark’s presentation has been made available and is embedded below:
I have known the lead physician featured, Dr. Brian R. Ott, since the 1990s when we served together on the Board of the Rhode Island Alzheimer’s Association. Brian has also graciously spoken to students in the Elder Law class I teach at Roger Williams University School of Law. However, I did not know Dr. Ott’s “origin story”—that is, how, as a behavioral neurologist, his interest in seeking treatments for Alzheimer’s disease evolved.
As Dr. Ott points out, when he began his work thirty years ago, “there were no treatments at all”, however, “they were just starting to do clinical trials”. Nevertheless, Brian could see that “down the tracks we’re going to get a treatment”, and participated in clinical trials for the first drug approved by the FDA for prescription to treat Alzheimer’s disease and related disorders.
Having followed the news of many false starts for the treatment of this devastating disease over the years, I was encouraged to read in Wayne’s story of Brian’s hope for the future. Dr. Ott and his team of researchers at Rhode Island Hospital’s Alzheimer’s Disease and Memory Disorders Center are participating in national studies of new treatments, causing him to be “optimistic again”.
These studies, and the work of Brian’s team members, including Dr. Lori Ann Daiello and Dr. Jonathan D. Drake, are described in more detail in Wayne’s article, which includes an audio recording of Brian and his team describing their work. Also featured in the article are videos of two participants in the research, who graciously shared their own stories, which are sure to resonate with anyone whose family member or other loved has coped with this condition.
Thanks to Brian and his team for their persistence and dedication, and thanks again to Wayne and the Providence Journal for their reporting of it.
Comments Off on Mark Heffner Video Testimony to RI Task Force on Elderly Abuse and Financial Exploitation
Following up on a post from this last Wednesday, we are sharing the video testimony of Attorney Mark Heffner’s presentation to the Rhode Island Special Task Force on Elderly Abuse and Financial Exploitation.
Comments Off on Mark Heffner Presents to Rhode Island Special Task Force on Elderly Abuse and Financial Exploitation
Our firm’s principal, Mark B. Heffner, Esq., will present later today (March 6, 2019) at the fourth meeting of the Rhode Island Special Task Force to Study Elderly Abuse and Financial Exploitation.
Attorney Heffner, who is also a sitting member of the task force, served for ten years as a member of the Rhode Island House of Representatives. In that capacity, Mark chaired the Guardianship Commission and the Probate Commission, the work of each of which he will reference in his remarks today.
In 2016, Mark’s article in the Rhode Island Bar Journal on the history of guardianship laws in Rhode Island won the Bar Journal’s annual writing award. A copy of that article has been distributed to Task Force members and will be available to attendees of today’s hearing.
We hope to publish a video of Mark Heffner’s presentation at a date in the near future.
This post will focus on one of these–Section 6–which seeks to directly affect the limited opportunities for middle-class Rhode Islanders requiring Medicaid long-term care services to preserve some of their assets. The changes in this Section 6are all to Rhode Island General Laws §40-8-15 entitled, “Lien on Deceased Recipient’s Estate for Assistance”.
First, the Governor’s proposal seeks to expand “estate recovery” to assets passing outside the probate estate. Literally twenty years ago, in 1995, the State amended this section of the General Laws to conform with a federal law requiring states to put claims on the probate estates of deceased Medicaid recipients. The federal law, called “OBRA ‘93”, enabled the states to, if they chose, “expand” their estate recovery to non-probate assets.
The large majority of states chose, as Rhode Island did, to limit its estate recovery efforts to probate assets. This was the procedure utilized by the Department of Human Services for the next seventeen years.
In 2012, however, the State sought to expand its estate recovery to include non-probate assets. This would means, for example, that real estate held jointly by a mother in a nursing home on Medicaid with her adult son, which would ordinarily pass without a claim to the adult son, would now be subject to the State’s lien. Due to the dramatically increased efforts which would be required by the Department of Human Services to accomplish this “expansion”, as well as the House Finance Committee’s understandable distaste for adding any additional pain beyond that required by federal law, this proposal was roundly rejected by the House Finance Committee.
Also rejected in 2012 was a proposal by the State to put so-called “lifetime liens” on property of certain Medicaid recipients. Presently, as long as the Medicaid recipient declares an intention to return to his or her home, the home remains an exempt asset. While the home is potentially vulnerable post-death if it passes through probate, there is no impact during the life of the Medicaid recipient (unless the property is sold in which case the Department of Human Services needs to be notified).
In 2012, the House Finance Committee also rejected this effort to impose “lifetime liens”. It did, however, enact two statutes that provided additional protections to the Department of Human Services to prevent properties belonging to current or deceased Medicaid recipients from being sold without the Department’s notice.
Fast forward to May 7, 2015. In Section 6 of “The Reinventing Medicaid Act of 2015”, the current administration “doubles down” on the efforts made in 2012. Apparently unaware of the drubbing these proposals took by the House Finance Committee in 2012, the Raimondo administration has tried them again, adding to them an additional extraordinary provision which would allow the Department to collect interest at the rate of 12% per annum on its claims.
You read that right – 12%. Your CDs are not even getting 1%. The 10-year U.S. Treasury bill is getting slightly more than 2%. But the Governor proposes that the State, unlike any other claimant in a probate estate, receive not only a statutory rate of interest, but a rate equivalent to that which a successful party in civil litigation would enjoy after obtaining a judgment.
But wait – there’s more! Section 6 of “The Reinventing Medicaid Act of 2015” adds an entirely new section which would deal with eligibility for long term care Medicaid, not just estate recoveries. It attempts to graft onto the estate recovery provisions statutes—not regulations as currently exists—regarding asset transfers and eligibility requirements for long-term care Medicaid. And as an added bonus, it is a remarkably poorly written, referring to terms like “annuity”, “penalty period” nowhere defined in the Rhode Island General Laws.
On Tuesday evening, May 19th, I testified (video below) before the House Finance Committee in opposition to Section 6 of the Act. Some of the Committee members were the same Representatives who heard and rejected the previous attempt in 2012.
I am confident that the House Finance Committee and the House the Representatives as a whole will again reject this aggressive and unnecessary attempt by the State to add pain to Rhode Islanders who already have the misfortune of suffering from a chronic illness or condition requiring them to seek long-term care Medicaid benefits.
Comments Off on The Lady-Bird deed flies away, not to be missed by most Medicaid planning clients.
In the all the breathless hype over the past weeks regarding the demise of enhanced life estate—or so-called “Lady Bird”—deeds was lost a critical fact—that this technique was rarely the best option in Medicaid planning anyway.
First, the story known to some readers. After an unsuccessful attempt last year, this year the State agency which administers the Medicaid program was able to have legislation enacted which banned the future use of enhanced life estate deeds. Specifically, the legislation disallows an exemption of the home of a Medicaid recipient if it is titled to such an enhanced life estate deed recorded after June 30, 2014.
This pending date caused some attorneys to send mailings suggesting that action be taken before this “deadline” came and went.
I met with several of clients who had received these mailings. In each of these instances, I recommended that the clients not execute an enhanced life estate deed, but instead utilize a “traditional” life estate deed.
But how can this be? By definition, if the State is no longer allowing this technique, it must be most desirable, right?
Not necessarily. To understand why, the brief story not known to most readers—that of the approximately fourteen year life cycle of the enhanced life estate deed-will be helpful.
In August, 2000, the Rhode Island Department of Human Services (DHS), the State agency that administers the Medicaid program in Rhode Island, announced its intention to issue regulations which would prohibit the use of revocable living trusts holding title to a principal residence for Medicaid purposes. This was bad news, though expected, as DHS had been considering this for many years.
The reason: holding a principal residence in a revocable trust was a nearly ideal scenario. Since the trust was revocable, and the “settlors” of the trust (the property owners) were the only beneficiaries and were often trustees of the trust during their lifetimes, they essentially lost no control over their principal residence during their lifetimes.
Then why do it? Because it created, through the nomination of successor trustees, a smooth asset management technique in the event that one or both of the settlors/trustees became incapacitated. Even more importantly to clients, assuming proper titling of the property to the trust, it avoided the need for probate administration of the property upon the second of the settlors to die.
Probate in Rhode Island, assuming typical assets and a relatively intact family situation, is not the nightmare that clients have heard (or occasionally experienced as beneficiaries). Nevertheless, it turned out that this use of revocable trusts for holding title to a principal residence also had benefits for Medicaid planning. This is because, in the mid-1990s, the federal government forced Rhode Island and other states to institute so-called “estate recovery” techniques to seek to recover the cost of Medicaid following a Medicaid beneficiary’s death.
Rhode Island, like the majority of other states, opted to comply with the federal government’s requirement by limiting its estate recovery efforts to the probate estate. To expand the estate recovery to non-probate assets, Rhode Island and most states reasoned (and continue to reason), would require substantially greater expenditure of personnel and other state resources for potentially uncertain gains.
Thus, after the mid-1990s in particular, avoiding probate administration for a principal residence of a Medicaid recipient became particularly important. And since the use of revocable living trusts had all these other virtues, it became one more reason to consider their use for clients.
The Rhode Island Department of Human Service, has had been (and continues to be) fair-minded when it comes to considering people who made plans under the rules then in effect. For example, in response to comments by me and others, it “grandfathered” revocable trusts created on or before December 1, 2000, the effective date of its regulation.
Seeking an alternative, a technique known as the Lady Bird deed was imported from Florida. (Ironic, isn’t it, since most Rhode Islanders mostly mitigate in the opposite direction!) It was called a Lady Bird deed because a Florida attorney describing it used Lady Bird Johnson as a character in hypothetical fact situation.
I have always preferred to describe it by its proper name—an enhanced life deed—because it is easier to explain to a client. I find that clients generally can understand the concept of a “life estate deed”—that is, when you transfer property to a third party and reserve the ability to live in, use, enjoy, rent and do pretty much whatever you want to do with the property while you are living. (I generally prefer that the third party to whom the property is transferred is an irrevocable trust, but that’s a topic for another day.)
The modifer “enhanced” means that those rights transferred—to keep a portion of the proceeds of the property if it is sold during the life estate holder’s lifetime, or even requiring the third party’s permission for such a sale—are in fact not given away.
Got it? Well, it’s more complicated and generally took longer for clients to get their minds around than a “traditional” life estate. However, in limited situations–generally crisis planning involving single people–it was an excellent tool and hence we recommended and utilized it on a number of occasions.
However, what made it work in crisis planning—that effectively no transfer for Medicaid purposes occurred—also made it generally ill-suited to non-crisis planning. Take for example a widow—let’s call her Hope–in her early 80s in relatively good health, with no near turn plans to sell her home and with a modest amount of other assets. If Hope transfers title to her home using a traditional life estate, that transfer is subject to a potential five year “lookback period” for Medicaid eligibility should she require nursing home care.
However, if Hope utilized the enhanced life estate deed, that transfer is not subject to any potential penalty period for Medicaid eligibility purposes. That’s better, right?
Well, assume that Hope three years into the five year lookback period sells her home and moves to an assisted living facility for which she is paying privately. And then two years later, Hope suffers a stroke and requires nursing home care.
Had Hope utilized the enhanced life estate deed, 100% of the proceeds of that sale would be exposed to spenddown for nursing home costs. Conversely, had she utilized a traditional life estate—one in which she transferred an interest in the property to an adult child as trustee of an irrevocable trust—a substantial portion of the sale proceeds would be protected in the irrevocable trust from exposure for nursing home costs.
I will miss reaching into my Medicaid planning toolbox and pulling out the enhanced life estate deed to solve a problem created by a single person with little or no chance of making through a five year lookback period, and with limited non-home assets capable of getting him or her through the five year period. However, in many other circumstances—for example, a married couple or a relatively healthy single person like Hope—there were always better alternatives.
Fortunately, those alternatives still exist even after the Lady Bird deed technique flies away. However, the lack of being able to pull this tool out when needed puts more of a premium on clients, particularly single persons, to initiate planning in advance in order to get a jump on the five year lookback period for Medicaid eligibility.
