Lack of Coordination: The Potential for Best Laid Plans to Go Awry

By: Martin S. Shenkman and Sandra D. Glazier[1]

This article was originally published in Leimberg Information Services, Inc. (LISI).

In 1786 Robert Burns wrote his insightful poem commonly referred to as “Mousie”. In it he reflects that upon plowing his fields he undoes the foresight of mice who unfortunately built their nest in Burns’ field. He pens the oft used phrase that “the best laid plans of mice and men often go awry”.[2] In the realm of estate planning, a lack of coordination in the designation of agents, assets and/or beneficiaries frequently causes even the best laid plans to go awry. While subsequent changes to designations made by a client may be beyond our control, attention to the potential difficulties arising from conflicting directions and designations of agents may be a discussion worth having. At least the client who is “forewarned is forearmed”.[3]

Generally, clients come to us with some general, or perhaps even specific, ideas of how they wish to dispose of their property upon death. As part of a comprehensive approach to the client’s estate plan, it’s incumbent upon us to ask who they want to be responsible for administering those assets, not only upon death but also in the event of incapacity. Because the issue of asset management and control can fall under the auspices of different fiduciaries, consideration of who they will be and how they might interact and relate can be extremely important. Creating a comprehensive plan for clients often goes beyond simply drafting estate planning documents.

Planning for aging (and incapacity) requires more than just the traditional preparation of a Will, durable power of attorney (“DPOA”) (and perhaps a revocable trust). The multitude of fiduciary and quasi-fiduciary appointments clients make, almost entirely without professional input, can create conflicts and inconsistencies in the administration of the client’s affairs. Practitioners can provide great assistance to their clients when they expand the scope of their inquiry and client discussions to address issues relating to such appointments and the importance of coordination of fiduciaries named under primary legal documents. Doing so can forewarn the client of pitfalls that could undermine the safeguards the planning team is endeavoring to create. As estate planning remains extremely relevant in implementing client desires, it’s important for practitioners to evolve and consider a broader range of practical, non-technical, considerations that can make our services beneficial to all spheres of client echelons.

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Four Myths about Medicaid Eligibility

  • You must sell all your assets to qualify

FALSE: Certain assets are classified as exempt, such as your home, personal and household items, certain funeral contracts, a burial plot, and income producing real estate. Also, countable assets like cash, certificates of deposit, as well as stocks and bonds can also be converted to exempt assets with no penalty. For married individuals, additional exemptions apply.

  • If you have a Medicare Card, you are not eligible for Medicaid.

FALSE: Though both pay for essential health care services, their eligibility requirements, administration and coverage are different. Medicare does not require financial needs test for those 65 and over, US citizens or permanent residents who worked at least 10 years in covered employment. Medicaid, on the other hand, is based in significant part on financial need.

  • If all your assets are transferred to a trust, you can qualify for Medicaid immediately.

FALSE: The State looks back about 5 years at any transfers made to a trust before granting eligibility. These transfers may cause Medicaid eligibility for a period of time. The only exception to this is the Spousal Annuity Trust, which when setup in compliance with the rules, allows a couple to exempt all their excess assets from being counted and lets applicants become eligible nearly overnight.

  • Once Qualified for Medicaid, the State will pay for all nursing home care.

FALSE: Medicaid covers almost all expenses needed while living in a certified nursing home, except for incidentals. Recipients must use part of their monthly income to help pay their nursing home costs. This amount is called “patient pay amount” and is calculated by an established formula used by Medicaid.

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