AFS Michigan - Winter/Spring 2023

their duties. Last, unhappy family members can object to the Will – we often call this process the “family feud.” Living Trust Court costs, legal fees, family disharmony and the delays associated with probate court can usually be avoided by setting up a Revocable Living Trust. A living trust is a document stating who (usually you) controls your money and property while you are alive and how it will be distributed after your death. The terms of the trust are limited only by your imagination. For example: you can provide for the future of your special needs loved one without affecting their governmental benefits or provide for the education of a child or grandchild and make sure your assets remain in the bloodline. Typically you are the Trustee, the manager of your Living Trust, just as you are the manager of your assets now, nothing changes. The “revocable” aspect of a Living Trust means you are in control. It means once you create it, you can always change it. You can revoke or amend all or part of it. The “living” aspect means that it is created and funded (assets transferred to you as trustee) while you are alive, and provides for your benefit during your lifetime and upon your disability, if drafted properly. It is that simple. Medicaid Laws and New Rules. ALERT: Michigan - Last State to Implement Estate Recovery. On July 1, 2011, Michigan will be the last state in the nation to implement “estate recovery”. Estate recovery means that people over the age of 55 who receive Medicaid benefits, including people in nursing homes, will have to repay the state for the costs of their care after they die unless they plan ahead. Estate Recovery allows the State to make a claim against a person’s property (typically their home) when they die. That’s the bad news. On a brighter note, the law, provides many protections and opportunities to avoid the harsh impact; such as exempting family farms or homes in which the person's spouse is living. The estate recovery law is full of traps for those that do not have the foresight to plan. However, by planning ahead you can avoid estate recovery. Estate Recovery ONLY applies to those assets that have to go through probate. Even though assets in a living trust, including a home, are not subject to estate recovery they are, however, not protected from Medicaid and are countable. With that said, depending on one’s personal circumstances, there may be reasons to title the home in trust. While assets that pass by joint ownership, beneficiary designations, payment on death designations and life estates are not subject to estate recovery, the creation of any of these in many circumstances will result in a future disqualification for Medicaid and should not occur without proper legal advice from an experienced elder law attorney. The solution to protect your home may be as simple a establishing a special deed commonly referred to as a Lady Bird Deed. New Laws on Special Needs Trusts, Joint Property and More. Medicaid laws are complex and forever changing. The laws are too numerous to summarize in this article. However, in addition to the new estate recovery, effective April 2011, there have been changes in the law as to how joint ownership of non-homestead property is now treated as well as the prohibition of special needs trusts established for the benefit of anyone over the age of 65. Additionally, it is important for one to understand how gifts are now treated and how far the State will look back. Michigan looks back 5 years from the date of an application for benefits. The law penalizes gifts discovered within the 5 year look back period from the date a person would be otherwise eligible for Medicaid but for the gifts. Gifts such as charitable and political contributions, as well as innocent gifts or payments to family for occasions, education, care giving and support (loss of job) are some of the type of transfers that could result in a Medicaid ineligibility period. Now more than ever proper planning with an Elder Law attorney is a must. Additional legal articles available on: AlternativesforSeniors.com 18 Please say “We Found You in Alternatives for Seniors ” , Winter/Spring 2023 legal information Continued from previous page