The Split Gift & Annuity Plan (Creating and then Curing Penalties

 The Split Gift & Annuity Plan
(Creating and then Curing Penalties)

Long Term Care Medicaid is a welfare based program. This means that in order to qualify for Medicaid a person must not only have a medical need, but they must also financially qualify by having less than $2,000 in countable assets. A person, who has more than $2,000 in assets, can expect to pay privately until the money runs out and they qualify financially for Medicaid.

Many seniors are distressed by the idea of their life savings being drained to pay for final expensive days in a nursing home. They worry about how they will get by with only $50 in income once they are on Medicaid, and they wanted to leave behind an inheritance for their children. In some cases it may be possible to do emergency plans that can protect a portion of the assets from being spent down for Medicaid. We call this strategy a Split Gift & Annuity Plan.

Reducing assets to $2,000 can be accomplished by either giving away the assets or turning the assets into income for the Medicaid Applicant. The Split Gift Annuity Plan uses a combination of both techniques to shelter some of the assets while still providing payment for the applicant’s care.

Who This Plan is Good For

  • Single clients about to receive nursing home care with children, or others who they trust and want to inherit.
  • Clients who do not have other penalty free transfers available to them.
  • Clients who have already pre-purchased funerals, spent down assets, and still have assets left over.
  • Clients with at least $100,000 in assets half of which are liquid.

Making the Gift

The government does not want to encourage people who could pay for their care to give away their assets, so they penalize gifts.  Making gifts is not illegal, but is discouraged through the rules of Medicaid. Any gifts made within five years of your Medicaid application (the “look back” period) will cause a period of Medicaid ineligibility. Gifts made more than 60 months before your application need not be reported and will not be penalized. Once the gift is made, it will be penalized unless it is returned in full. A partial return of the gift will not shorten the penalty period.

Gifts made within this “look back” period will cause you to be ineligible for Medicaid for one month for every $6,327 transferred.  In other words, if you were to transfer $63,270, you would be ineligible for full Medicaid for 10 months ($63,270 divided by $6,327= 10 months).

During this penalty period when you are on Restrictive Medicaid, Medicaid does not pay for your nursing home care. This means you need to find another way to pay for your nursing home bill. However, the clock on the penalty period does not start until you are otherwise qualified for Medicaid (remember you must have less than $2,000 to qualify). With less than $2,000 in assets, there must be another way to pay for care during the penalty period without returning the gift. To accomplish this, we use a Medicaid Qualified Annuity.

Paying During the Penalty Period

During the penalty period, you will be required to come up with the funds for this nursing home bill elsewhere. Your regular income from Social Security or pensions will presumably cover part of the costs, but presumably you will still need some other way to supplement your income to afford your nursing home bill. To accomplish this, you use a portion of your assets not gifted away to purchase a Medicaid Qualified Annuity to pay for your care during the penalty period. Each month, the annuity will provide a guaranteed payment. Once the penalty period has passed, your annuity will run out and Medicaid will kick in and pay for all your care. The gifted assets will then be in your children’s hands, and Medicaid will not be able to come back for them.

Dealing with High Income

Medicaid has income limits that do not allow people to qualify for Medicaid without a special type of trust. If a person’s income is over $2,199, in order to qualify for Medicaid they will need to place their excess income in a Qualified Income Trust (QIT). Because the annuity will raise the applicant’s income over the limit, a QIT will need to be set up during the penalty period. Many people do not need the QIT after the penalty period has passed. For more information, please ask your attorney.

Possible Problems

While the Split-Gift Annuity Plan can work very well when used appropriately, there are some risks involved. There can be tax consequences. The people who receive the gift may run into issues while holding onto it. Sometimes a change in the applicant’s health or a death can interfere with the plan.

Because assets need to be liquid in order for this type of plan to work, you may be required to cash out assets. This may cause unfavorable income tax consequences. If IRA or 401K assets are liquidated, every dollar is taxable.  Withdrawing a large sum may also put you into a higher tax bracket. Accumulated income on deferred annuities and savings bonds are taxable. You may also have capital gains if you liquidate appreciated assets.  Depending on your circumstances, the cost of medical care may be deducted from your taxes.

Once the applicant gives away their assets, they lose all control over them. A gift to your children means that the funds transferred belong to them, no matter what promises they may make to hold them for you. The funds are vulnerable in the event of a child’s death, divorce, a lawsuit, bankruptcy, or the child’s decision to simply use the funds for herself. If these issues are a concern, a special type of trust can protect against some of these possibilities.

Another thing to consider is the applicant’s health. If an annuity is calculated for 10 months, but the applicant goes into the hospital for a month, they don’t need the money to cover nursing home costs during that time and will have too many assets to continue to qualify for Medicaid. Sixty-eight percent of nursing home stays last less than three months, however many last significantly longer than this. Sometimes if the applicant is in very poor health and may pass away before the penalty period would pass, it may make more sense to pay privately to avoid tax burdens and administrative costs.

It is important to remember Medicaid law is complex and dynamic. Not every plan will work for every situation. There may be better options available to you and your family. You should always consult a qualified elder law attorney before attempting any Medicaid transfer plan.

Hypothetical Example

Claire needs long term care. Her nursing home costs $7,500 a month. She has $126,540 in assets. She receives $1,250 in income each month. She has two children, Annie and Bobby. Under the supervision of her attorney, Claire splits her assets in half and gifts half ($63,270) to her two children, and uses the other half to purchase herself a Medicaid Qualified Annuity that pays her an income of $6,250 a month guaranteed for ten months.

She then applies for Medicaid, and is put on Restrictive Medicaid for ten months (due to the gift). During the penalty period she uses the annuity and her income to pay privately for her care for ten months. Because her income is high, she will need a Qualified Income Trust during this period.

At the end of the ten months the annuity is all used up. Her income drops back down to $1,250 a month and Medicaid pays for her care. The children have a bank account in their names with $63,270 in it. They use this to pay for any extra things Claire may need during her life time. When Claire dies, they divide the bank account as an inheritance.



Power’s of Attorney – Stepping Up & Stepping In

Powers of Attorney
Stepping Up & Stepping In

            It is a great honor to be named Agent for another person in a Power of Attorney. It means that that person (the Principal) trusts you enough to make decisions for her in the most important areas of her life – her health or her wealth. With great power comes great responsibility. How do you know when to Step Up to the job and when to Step In to make decisions?

Ohio law provides for two types of power of attorney: Power of Attorney for Health Care and Power of Attorney for Finances.

A Health Care Power of Attorney names the person or persons who can make decisions about medical treatment. This includes choice of doctors, placement in a rehab or nursing home, specific procedures and medications, as well as, do not resuscitate orders and other end of life decisions. The Agent under a Power of Attorney for Health Care can only act, however, if the Principal is incapacitated to the point where she is unable to make decisions for herself.

An Agent under a Financial Power of Attorney (sometimes simply called a “Durable Power of Attorney”) may be authorized to handle bank and brokerage accounts, IRA’s, contracts, sale or purchase of cars or real estate, life insurance and other financial matters. The agent is limited to only those matters specified in the document. The Financial Power of Attorney generally allows the Agent to handle these matters even if the Principal is still capable of doing it herself.

An Agent is bound to do what the Principal reasonably expects, to act in good faith and always in the Principal’s best interest. When acting as the Agent, you should disclose your identity as well as the Principal’s signing (“Principal’s Name”) by (“Agent’s Signature”) POA.

Stepping Up

How will you know when the Principal needs you to start acting and what you will need to do?

When you receive your paperwork, talk to the Principal about her health and/or wealth and expectations. Go through documents together, the bills she pays, the medications she takes, the names of her doctors, bankers, stockbrokers, insurance agents, etc. Let family, friends, and neighbors know to call you in an emergency.

If you are named as Health Care Agent, consider visiting doctors with your Principal and have her sign a HIPAA release so that you can ask the doctor questions and look at medical records even if your Principal is still able to make decisions for herself.

If you are named as Financial Agent, you might help your Principal sign up for automatic deposits and automatic payments of utilities and other regular bills. This will reduce the burden on her and allow her to continue managing her own business longer. Meet periodically to review statements and balance the checkbook or consider signing up to monitor her accounts electronically.

Stepping In

          You must keep contact with your Principal regularly to know when her capacity is diminished and it is time to Step In and make decisions. You may notice confusion, physical disability, or changes in mood, housekeeping habits, or hygiene. Missed appointments, unpaid bills, unfilled or untaken medication, weight loss, unexplained damage to the car, and falls are all signs that your Principal may need your help.

Check the refrigerator to be sure there is fresh food. You may need to help with the shopping or arrange for meals to be brought in. If your Principal can no longer use a stove safely, you may need to disable it.

When your Principal can no longer drive safely, you may need to talk with her doctor about having her license revoked or disabling or selling the vehicle. A Principal will often accept these restrictions more easily coming from her doctor rather than a relative or friend. If she continues to drive while impaired it is possible her insurance company will deny claims because of recklessness.

If your Principal is unable to drive, assist in arranging transportation. Isolation may become an issue. Regular phone communication, home health services and adult day care can help your Principal remain at home longer. If health care or other workers are in the home, check frequently to be sure your Principal is getting proper care and no items or money is missing. Be sure the workers are properly screened, bonded and insured.

When care at home is no longer possible, you will need to arrange placement in an Assisted Living Facility or Nursing Home. Visit facilities with your Principal if possible on multiple occasions and at different times of the day. Talk to residents and their families. Stay for a meal and a tour or consider a short respite stay to try it out.

If your Principal is resistant to a move, but unsafe at home, talk to the doctor. It is far easier to move to a facility upon doctor’s orders from a hospital or the doctor’s office than to attempt a direct placement from home by force or deceit. Later, when your Principal asks to go home, you can say with conviction that she can return home when her doctor says she can.

As Financial Agent, you will need to see that your Principal’s bills are paid and that her estate plan is followed if you know what that plan is. You must see that taxes are paid and that required minimum distributions are taken on IRA’s. You may need to make a claim on long term care insurance or Medicaid if necessary. Keep careful records of everything that you do on the Principal’s behalf.

Stepping In as agent can be a difficult and thankless job. If the Principal is unhappy with what you are doing – right or wrong – she can remove you since the power came from her in the first place. If this should happen and you feel your Principal is incapacitated and unsafe, your only resort may be to seek authority from the court in a guardianship proceeding. If you are in doubt as to your responsibilities or need assistance in understanding any of your duties as agent, seek the advice of a qualified elder law attorney.

Home Is Where The Care Is


Home is where the heart is. Though you may love your home, the day may come when you are unable to receive the care you need there. Sometimes living in the home is no longer practical or safe. The home may be too hard to navigate or too isolated and sometimes healthcare needs just exceed what can be provided at home.

Many seniors’ biggest fear is leaving their homes. Some fear leaving home will mean a total loss of independence. They fear that if they leave home, they will be “locked away” in a nursing home. The good news is there are many options available for seniors besides nursing home care. When facing a housing change you need to be asking the right questions. What level of care do you need? Who will provide the care? Where can you get this care? How will you pay for this care?


Sometimes staying in the home is the best option, whether for financial or emotional reasons. Accepting care in the home early can help prolong the period of time seniors can remain safely in their homes. The next question is what resources do you have available to you to allow you to remain in your home while still getting the care you need. Some people are low in funds, but rich in family. Some people may not have family in the area, but can afford to pay for care in the home. There are also some low cost home services available for those who qualify.

Care Taker Child Services

If you are lucky enough to have a child or grandchild in the area whom is able to care for you, you may receive basic care from them. Sometimes it’s enough for your children to split up duties and visit or call every day. Sometimes someone may need to move into the senior’s home to make sure 24/7 care is provided or the senior may choose to go live with relatives in their home.

Care contracts can be very helpful in laying out the terms of who is expected to pay and do what. Drawing up a care contract early on can ensure both parties know what they are getting into, and make things clear to other family members that no fraud is taking place. A good care contract can also serve to transfer funds within the rules of Medicaid. Medicaid also has certain exceptions for transferring the home to caretaker children and rules for mother-in-law suites. You should consult with an elder law attorney if you are considering moving in with a relative.

Home Care Services

Some people don’t have family nearby who are able to help. A senior who would like to remain at home may consider hiring in some home services. There are two types of Home Services; Home Care and Home Health Care. Home Care services offer personal care and can be provided by any agency or individual. Home Health Care deals with medical issues, and requires licensed skilled nursing. Many times, some combination of the two is needed.

It can be hard for seniors who have saved their whole life to pay for work they’re used to doing, but it can ease burdens and prevent injury. Just about everything can be hired out these days. Lawn services, cleaning services, meal prep and taxis are usually the first thoughts, but anything consisting of assistance with personal hygiene, dressing or feeding, nutritional or support functions can be hired. Medical needs can also require services which include skilled nursing care, speech, physical or occupational therapy or home health aide services.

When hiring someone to come into your home it is important that you find a good fit. Check to make sure an agency is licensed and bonded and runs background checks on their workers. Usually these services are private pay, or offered through a church, a specialty charity, or by friends. If you cannot afford to pay for these services, you may be able to qualify through a welfare program such as PASSPORT. Consult with your elder law attorney to see if you qualify for assistance.

Adult Daycare

Adult Daycare is group supervision for elderly persons in a community facility. It provides social, recreational and sometimes health services. Seniors go to a location for the daytime and come home in the evenings. This setup works particularly well for seniors who need full time supervision and live with a working child or spouse.

There are three main types of Adult Daycare. Adult Social Daycare provides meals, recreation, organized social activities and some minor health related services. Adult Health Daycare provides some social activities, and more intensive health and therapy services. Specialized Adult Daycare Centers serve only specific care recipients such as those with diagnosed dementia.

Ohio does not license and regulate adult day care. Because of this, there may be a great difference between individual centers; do your research. Costs vary greatly and can range from $25 to over $100 per day. Adult Daycare is not usually covered by Medicare and is usually private pay. Some financial assistance may be available through other programs (e.g. Medicaid, Older Americans Act, Veterans’ Health Administration).


Sometimes staying at home is no longer an option. When this is the case, most people automatically think “Nursing Home” but depending on the level of care needed, there may be less expensive and less intrusive options for facilities

Independent Facilities

If staying at home is no longer feasible because of isolation or transportation, but the senior is still very high functioning, an Independent Living Facility may be a great option. Independent living is any housing arrangement designed exclusively for seniors, generally those aged 55 and over.

The senior has their own private space which is a part of a larger senior community. Housing varies widely, from apartment-style living to freestanding homes. While residents live independently, most communities offer amenities, activities, and services. Since independent living facilities are aimed at older adults who need little or no assistance with activities of daily living, most do not offer medical care or nursing staff however, as with regular housing, though, you can hire in-home help separately as required.

Costs can vary widely with independent living. Average monthly cost of independent living ranges from about $1,500 to $3,500. Medicare does not cover the cost of independent living.  Some long term insurance with home care benefits may contribute to independent living expenses. Most people pay privately. There is subsidized housing for low-income seniors available.

Assisted living facilities

For those seniors who are unable to perform activities of daily living or who have a cognitive impairment beyond the point of independent living, Assisted Living is the next step up after independent living, but still is a step below a nursing home.

Assisted living residences vary considerably. Most provide meals, laundry, housekeeping, transportation, and social activities. They also offer personal care, like assistance with eating, bathing, grooming and personal hygiene. Some nursing care is also provided, including medication administration and dressing changes.

Costs for Assisted Living can vary widely, even within a facility, depending on the amount of care needed. Costs generally range from $2,000 to $4,000 per month and vary depending on the size of the living area chosen, location and the amount of care needed. Basic room and board is set at one fee, and as you add on extra services costs go up. If a senior moves to an assisted living facility, she should budget expecting costs to go up as their need for care increases over time.

Medicare does not cover the cost of assisted living. Most people private pay for assisted living facilities. Ohio’s Assisted Living Waiver Program pays the costs of care in an assisted living facility for certain people with Medicaid, allowing the consumer to use his or her resources to cover “room and board” expenses. Individuals who meet certain medical and financial criteria may be eligible for Ohio’s Assisted Living Waiver Program. Unfortunately, very few assisted living facilities accept Medicaid and even if they do, there may be a limited amount of “Medicaid qualified beds”. If looking at an assisted living, consult with your elder law attorney on payment and planning options.

Nursing Homes

Nursing Homes offer full 24/7 care for seniors. The senior may have a private, semi private, or shared room. The facility provides all meals and social activities. Some have locked units for people suffering from dementia and wandering. Each nursing home has its own personality, so it is important to shop around for a good fit. You may need to get on a waiting list ahead of time. While some seniors live at a nursing home for an extended period, more than half of all nursing home stays are for three months or less.

Nursing Homes must be licensed by the state of Ohio. There is a wide range in costs between different nursing homes, but statewide, the average cost of a nursing home is more than $6,000 per month (though costs may be significantly higher). Medicare does not cover the cost of a nursing home (other than for limited rehabilitation). Long Term Care Insurance or Private Pay are often used to cover nursing home stays.

Many people staying long term in a nursing home facility cannot afford to private pay for long.  Because of this, Medicaid is the primary payer for over 63 percent of nursing facilities. In order have Medicaid pay, you need to have spent your assets down to a qualifying level, and need to be receiving care in a nursing home that accepts Medicaid and has a Medicaid bed open. It is important that if you are looking to move into a nursing home for long term care to consult with your elder law attorney. There are many legal strategies available to help qualify for Medicaid while possibly protecting some assets.

Continuing Care Retirement Communities (CCRCs)

Continuing Care Retirement Communities offer a spectrum of care from independent living to nursing home care in the same community. A senior may start out in independent living in an onsite condo, and then transfer to the nursing home facility later on depending on need. People like CCRC’s because they can age in the same place. They can be especially good for spouses who would like to stay together, but may need different levels of care.

CCRCs are almost always private pay. On top of this, most CCRCs generally require a large entrance fee which covers some of the costs associated with higher care levels later on. Once this large entrance fee is paid, residents then pay a monthly rent, which increases as care levels increase. If a senior decides to move elsewhere later on, it can be difficult to recover the entrance fee. Consult your elder law attorney on the pros and cons of CCRCs and how you might pay for care at one.

VA Contract Home & Services

The VA offers everything from full nursing home care, to home care, and financial assistance for eligible veterans. All of the options listed above may have some VA alternative for eligible veterans. Funding may be partly private, but the VA helps financially provided the senior meets their financial, medical, and service requirements.

The VA has its own private contract nursing home known as the Ohio Veterans Home in Sandusky. This is a contract home that is a 427-bed nursing home facility. It offers two levels of care: standard care for those veterans in need of any intermediate level of care, and special care for veterans with Alzheimer’s disease and other types of dementia. Unlike other nursing homes, the VA contract home is mostly populated by men. For more info, call toll free (866) 644-6838


Sometimes you are not looking for a long term solution you just need help “right now” in the moment. There are short term solutions available to seniors looking for help while they make other arrangements.

Respite Care

Respite Care is a short-term stay at a senior community, usually an assisted living or memory care community. It is not a long term solution, but can be a great living option for an elderly or disabled person who needs some day-to-day supportive services, but still desires social stimulation, engagement and activities. It can provide a good for break for caregivers, so that they know the senior is receiving good care while they are out of town, or unable to be available for a period of time. It can also be a good way to ease into a transition or try out different facilities. Many nursing homes and assisted living offer short term stays. It is almost always private pay, but Medicare may cover up to 100 days if the short term stay is for rehab.


Hospitals are not a feasible long term care solution. They are for short term emergencies generally. A hospital can be a good solution to caring for a senior with health or mental problems while placement is being arranged at a nursing home or assisted living. When a hospital inpatient is staying at the hospital and there is no medical necessity for being in there, this is considered an “alternate level of care”.

Hospice Care

Hospice is a program for persons who are terminally ill and have a life expectancy of six months or less. Hospice can treat patients in their home, a nursing home, or a hospital. Hospice offers palliative care only, which is specialized medical care for people with serious illness. It focuses on providing relief from the symptoms and stress of a serious illness.

The goal of hospice is to improve quality of life for both the patient and the family. Services extend outside of medical care. Hospice services also may include; running errands, preparing light meals, staying with a patient to give family members a break, lending emotional support, companionship, grief counseling, “make a wish” type programs, and more.

In order to qualify for hospice, a doctor has to certify that you are terminally ill and have a life expectancy of six months or less. Hospice care is then provided for two 90-day benefit periods, followed by unlimited number of 60-day benefit periods. You have the right to change providers only once during each benefit period. At the start of each period, the doctor must re-certify that you’re terminally ill so you can continue to get hospice care. If you get better or go into remission, you can “fail out” of Hospice. Once you choose hospice care, your hospice benefit should cover everything you need, other than room and board, which is still paid privately. Hospice is covered by your Medicare, Medicaid and insurance completely.

As people age, the level of care they need can change. There are many places where seniors can get the care they need. It is not just a question of home vs. nursing home. The important thing is that people have access to the help they need and know their options. When considering care and housing for yourself or a loved one, please call your elder law attorney to discuss your specific situation and what your options may be.

Major Changes in Ohio’s Medicaid Laws – The 1634 Transition

Major Change in Ohio’s Medicaid Laws
The 1634 Transition

“The world hates change, yet it is the only thing that has brought progress.”
–Charles Kettering

A change to Ohio’s system of qualifying for need based public benefits is long overdue. The current system is fragmented and complex requiring needy individuals who are aged, blind or disabled to navigate a maze of different agencies, policies and procedures to qualify for SSI, Medicaid, and other programs. 

SSI Ohio Medicaid
OOD – Opportunity for Ohioans with Disabilities ODM – Ohio Department of Medicaid
Resources – $2,000 Resources – $1,500
Income – $743 Income – $634


On July 1, 2016 Ohio will streamline its Medicaid system by using the same eligibility requirements for Medicaid as are used by the Social Security Administration to determine eligibility for SSI. Only one application will be necessary and those qualified for SSI will automatically qualify for Medicaid.


Under the present Medicaid system, individuals with income higher than the qualifying level can “spenddown” their excess income on medical expenses each month in order to qualify. Spenddown can be made in a variety of ways and expenses are sometimes grouped together making individuals qualified in some months, but not in others.

Reoccurring Expenses “Pay In” Delayed
Established monthly costs or unpaid medical bills that meet spend down Pay excess assets directly to Medicaid by the 15th of the month Expenses are “incurred” in the month whether or not the person pays the bill

The “spenddown” system is inordinately complex both for the applicant and for the Medicaid worker who must review the bills and payments used to determine eligibility month by month. Depending on the type of spend down, the system is also patently unfair as some people may be forced to pay up front while others may “incur” bills that are never paid.


Effective July 1 there will be no spenddown option. Those with income more than the qualifying level will no longer be eligible for Medicaid benefits. ($733/month for community Medicaid –$2,199/month for institutional Medicaid)

The majority of Ohioans receiving Medicaid will not be affected by the change. Some who are will leave Medicaid and seek medical coverage through the exchange or through Medicare. Individuals with severe and persistent mental illness will be covered under a new state plan with an income cap of 300% of the Federal Benefit Rate ($2,199 in 2016).

“What we call progress is the exchange of one nuisance for another nuisance.”
–Havelock Ellis


In place of monthly spenddown, individuals with too high an income to qualify for Medicaid must place their excess income in a Qualified Income Trust (QIT) each month. Income properly placed in the QIT is disregarded and the individual will qualify for Medicaid.

Ohio has issued regulations regarding the qualification and operation of QIT’s and has engaged the services of Automated Health System to educate applicants and facilitate the establishment of QIT’s. These services will be provided free of charge for those already on Medicaid who will lose their benefits because of excess income when the transition occurs on July 1 (an estimated 30,000 people).

A QIT can only be used to establish Medicaid eligibility by a primary beneficiary who is eligible for LTC Services by the Ohio Medicaid Program.

  • Inpatient care in an institution such as a nursing home
  • Home and Community Based Services
  • Program for All-Inclusive Care for the Elderly (PACE) Services


The Trust itself must meet all the statutory requirements:

  • Established by primary beneficiary, his agent or guardian
  • Irrevocable
  • Primary beneficiary cannot serve as trustee
  • Medicaid payback on the death of the primary beneficiary


Trustee must establish a QIT account with a bank, credit union or other financial institution.

  • Only the primary beneficiary’s income can be placed in the QIT account
  • No other property or resources can be put into the QIT account (income received in one month and held into the next month is then considered a resource)
  • The primary beneficiary cannot assign his income directly to the QIT account, but must first receive the income then move it to the QIT in the same month
  • The primary beneficiary can put some of all of his income into the QIT, but all of the income from any one source must be put into the QIT account
  • The source of the income must be reported to Medicaid


  • Each month after the excess income is deposited into the trust account, distributions must be made as follows:
    • Personal allowances for the beneficiary
    • Maintenance allowance for the beneficiary’s spouse or dependents
    • Medical expenses incurred by the beneficiary
    • Up to $15 for bank fees, attorney fees, or other administrative costs
Income Social Security – $2,050

Pension – $1,000


$50 PSA

$1,000 MIA

$2,000 NH

Resources $1,500 Medicaid ^


Income Social Security – $2,050

Pension – $1,000





$50 PSA

1,000 MIA

$15 Bank

$1,985 NH

Resources $2,000   Medicaid ^


  • If the QIT is not established, the beneficiary cannot qualify for Medicaid
  • If the QIT document is not drafted correctly, everything in the QIT account will be considered available resources
  • If the verifying information is not provided to Medicaid every month, the income will be considered available and the beneficiary will be ineligible for Medicaid – any payments made by Medicaid during a period of ineligibility are subject to recovery
  • Any funds other than the permitted income put into the QIT account will be considered an improper transfer
  • Any distributions made from the QIT account other than those permitted will be considered an improper transfer

Some questions remain regarding the QIT process. Who will establish the QIT’s for disabled individuals who do not have an agent or guardian? Who will arrange for the transfer of their income to the QIT each month? Who will serve as Trustee for those who have no one?

“Any change, even a change for the better, is always accompanied by drawbacks and discomforts.
–Arnold Bennett

What Widows Need to Know

What Widows Need to Know

There are over 11.5 million widows in the US today, according to the US Census Bureau. These women have to adjust to all sorts of changes, including becoming the sole decision maker in matters of their finances. Many women are not comfortable handling money. The whole process can seem complicated and daunting, but it is important that you know what you own and how it’s held. Once you have tamed everything it should seem much less overwhelming in the face of tragedy.

            Know Your Money. In the case of finances, ignorance is not bliss. Organize all your finances and important documents. Find out where everything is, and how it’s held. Organize the information including passwords, companies, statements etc. This is important not only so you know where your assets are, but also so someone else could take care of your finances if you become incapacitated or pass away.

            Get All the Benefits You Can. As a whole, widows are one of the most impoverished groups in the country. There are many forms of assistance available to widows. Some may have been directly set up by your late husband, so contact any life insurance companies your husband may have had a policy with, and check to see if you are entitled to any widow’s benefits from his employer. Rollover your late husband’s IRA accounts into your name so as not to lose those tax benefits. You may want to check with the state for unclaimed funds. There also may be money available from Social Security or the Department of Veterans Affairs.

            Social Security Benefits. Widows may be entitled to receive Social Security benefits if the deceased spouse had earned enough work credits to qualify for Social Security benefits on his own. You can receive benefits as early as age 60, and can receive social security disability benefits as early as age 50.

            Veteran’s Benefits. If your husband was a veteran, it may be worthwhile to see what benefits you are entitled to. Veteran’s widows may qualify for assistance, but they have to apply for the funds. There are several Veteran pensions, and according to a VA estimate, only one in seven of veteran’s surviving spouses, who likely could qualify, actually get the monthly checks.

            Title all assets properly. As you’re sorting through paperwork, you may find assets that are still held in your late husband’s name or jointly titled to the two of you. If you have not yet done so, it is important that you get these assets transferred into your name alone. With joint assets, accounts with both your names, this can usually be done by taking a death certificate to the bank or department of motor vehicles and filling out the appropriate paperwork there. If there are assets in your late husband’s name alone you may need to open a probate estate.

            Set Up Your Estate Plan. Once you know where everything is, and it is all titled in your name, it is time to think about where you would like your assets to go when you pass away. Think about whether you would like your assets split equally between your children or if you would like certain individuals to inherit more or less. If you don’t have children, or are not close to them, think about who you would like to inherit when you pass away such as your siblings, nieces and nephews, close friends, or charities. Make sure you name new beneficiaries for any retirement account or life insurance policy you may have.

Take Care of Yourself. Most importantly, you need to figure out who you want to take care of you, should something happen. Who would be making your health care decisions for you if you were in the hospital? Who would manage your financial affairs should you no longer be able to? One of the things a widow has to adjust to is being on her own and taking care of herself. Make sure you have a good support system and a plan as to who would take care of you if you were unable.

When your husband passes away, everything changes. One of the changes is that you become in charge of handling your own estate. If you feel overwhelmed, an attorney can help you get everything in order. Remember, you are not alone.

Achieving A Better Life Experience – ABLE Accounts

Achieving A Better Life Experience – ABLE Accounts

2016 could be a banner year for Ohioans with disabilities and their families as our Treasurer of State rolls out a program to establish ABLE accounts. These tax advantaged savings accounts will allow individuals with special needs and their families to save for “qualified disability expenses” in the same way that a 529 plan allows families to set aside money for college expenses.  The funds accumulated in the ABLE account will not disqualify the beneficiary for needs-based public benefits such as SSI, Medicaid, Section 8 Housing, and food stamps.

Why would an ABLE account be needed?

Public benefits such as SSI and Medicaid are “needs-based”. In order to qualify, a person must have limited assets. To avoid jeopardizing their benefits, people live in a chronic state of poverty. They cannot save for big purchases.

The ABLE account can allow beneficiaries with small savings to qualify for Medicaid. It can give those on SSDI or SSI recipients with part time jobs an easy place to accumulate excess earnings. Family members will be able to make small gifts to encourage independence.

Who qualifies for an ABLE account?

To qualify for an ABLE account an individual must be disabled as defined by Social Security standards and the disability must have begun prior to the age of 26. Contributions can be made by anyone (the account beneficiary, family or friends).

What expenditures are allowed?

A “qualified disability expense” can include education, housing, transportation, employment training and support, assistive technology, health care expenses or financial management costs. These expenses can enhance the beneficiary’s quality of life by providing goods and services not covered by public benefits.

Are there limits as to how much money can be put in the ABLE account?

Each beneficiary can have only one ABLE account. Total contributions to the account can be no more than the annual gift tax exclusion ($14,000 in 2016). If the ABLE account balance exceeds $100,000, SSI income will be suspended until it is reduced, but other programs won’t be affected. Each state that adopts an ABLE program will set a maximum limit on the account.

What happens when the ABLE account beneficiary dies?

When the beneficiary dies, the money in the account must be used to reimburse the state for expenses paid by Medicaid.

How is an ABLE account different than a Special Needs Trust or Pooled Trust?

The ABLE account will cost less to establish and maintain than a Special Needs Trust or Pooled Trust and will allow beneficiaries to control their own money. This will make the ABLE accounts much more flexible and accessible. Funds in the account may also be more susceptible to misuse and penalty as they will lack the oversight of a Trustee. Trusts will still be better suited for large personal injury awards and inheritances.

Where can I establish an ABLE account?

You will be able to establish an ABLE account in any state that has an established program, but only one account can be established per beneficiary. Each state will determine which financial institutions will administer the ABLE accounts.

At the present time, no state has a fully developed ABLE plan. Ohio is on track to have one of the first.

ABLE accounts will be a valuable new resource for qualified beneficiaries and their families. Consult a knowledgeable elder law or estate planning attorney to discuss how they will coordinate with trusts, guardianship’s, and other legal issues affecting people with special needs.



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Life Insurance and You

Life Insurance and You

Life Insurance can be an important part of your estate plan. Pull out your old policies every time you update your plan and ask yourself these important questions:

  1. Do I Need Life Insurance?
    As the breadwinner of a young family, life insurance is tremendously important. If you should die your insurance can pay for the funeral, pay off the mortgage, provide for the children’s education and help your spouse get back on his or her feet. But now that the children are grown, you are divorced or widowed or retired, the premium payments or accumulated cash value might be better spent maintaining your own lifestyle.
  2. Who is the beneficiary?
    When we review life insurance policies, it is not unusual to find that the only named beneficiary is a long dead parent, deceased spouse or worse—an ex-spouse. If the named beneficiary is deceased then the insurance company’s internal policy will determine if it will pay out to the insured’s next of kin or probate estate. Sometimes an estate must be opened just to receive the insurance proceeds.

    Update your beneficiaries regularly and consider naming contingent beneficiaries to receive the claim should the primary beneficiary die before you.

  3. What Type of Insurance Policy Do I Have?
    All life insurance is not created equally. Each type has its own pros and cons.
  • Term Insurance– Term Life Insurance is the most straight forward and most economical type of insurance. You pay your premium for the month, quarter, or year and you are insured for the full amount of the insurance if your die within that period of time. Stop paying the premium and the insurance stops at the end of the term. As you get older, you are more likely to die during the term and the premium goes up. You can elect to make level term payments for a period of years so that you know the price will be fixed for that period.
  • Whole Life Insurance– Whole Life Insurance has a savings component as well as the premium. The cash value accumulates in the early years of the policy. At some point, the cash value approaches the death value payout of the policy and the policy is “paid up”. After that time no more premiums are due. Some whole life policies have an “endowment” at a certain age. If the insured reaches the endowment age, the cash value is paid out to the insured and the insurance ends.
  • Universal Life Insurance – Universal Life Insurance is a combination of Term and Whole Life Policies. The early payments go towards a low premium and a large cash value deposit. As the years go on the premiums increase and the cash value deposits are less and less. When the cost of the premiums for the insurance exceeds the payment due, the funds in the cash value are used to supplement the premium payments. At some point, the cash value will be exhausted by the ever increasing premiums. At that point, the insured can either begin paying the now much higher premiums or allow the policy to lapse.
  • Group Term Insurance – Some employers offer life insurance as a perk to their employees or retirees. Because premiums are paid in bulk, the cost to the employer is far lower than a private term policy would be.
  • Accidental Death and Dismemberment (AD&D) – This insurance is sometimes offered as a bonus by a bank, credit card provider or AAA. This is a group term insurance, but it only pays out if there is an accidental death. If the insured dies of cancer or some other illness or non-covered injury, no payout will be made.
  • Credit Life Insurance – This insurance only pays out to cover the creditor involved. Some credit card providers and mortgage brokers offer this life insurance to insure the loan will be paid off should you pass away. This insurance may or may not be less expensive than a standard term insurance policy, but it will only pay to cover the one debt to the extent that debt is still owed at your death.
  1. Does My Life Insurance Meet My Goals?
    Think of life insurance as a tool used to meet your specific goals. Whether it is to cover the cost of your burial, support your dependent spouse, finance your children’s education, or provide liquidity to your estate choosing the right type and amount of life insurance is critical to your plan’s success.