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Ask an Attorney: FAQs Concerning Elder and Special Needs Planning

Recently, Attorney Linda M. Anderson of Anderson Elder Law hosted a digital workshop entitled “5 Solutions to Protect You, Your Spouse & Your Family.” At the end of the event guests were invited to ask questions and many of these touched on fundamental concerns regarding elder and special needs planning. In the interest of sharing the many insights that came of this event with a larger audience, a selection of the questions asked alongside the answers given are presented below.

1. What legal concerns should I consider when either buying or renovating a home in order to live with my daughter, son-in-law, and seventeen-year-old granddaughter?

This question addresses a growing or, perhaps more accurately, returning trend: multi-generational housing. While still the norm in many parts of the world, families in the US had moved away from this practice until the mid-2000s, when the emotional and economic benefits of such arrangements led to increased interest.

Naturally, the pros are many. Parents gain the peace of mind of knowing that their care will be coordinated and that they will be able to age in place. Children profit from having an easier time fulfilling their care-giver responsibilities. Even grandchildren benefit from having more loving adults around.

Difficulties arise in such situations when something unforeseen happens and no plan is in place. Should your daughter unexpectedly pass away, for instance, and your son-in-law decide that he no longer wants to uphold the living arrangement, matters can quickly get messy. For this reason, it is essential to address such unlikely possibilities from an arms-length perspective and with fair market values in mind while everyone still gets along.

An attorney can help you include a promissory note in a mortgage that outlines how a break in the agreement will be handled. Alternatively, they can assist with drafting a personal service contract that meets the same need.

An additional concern for many in this situation will be whether money spent on making a child’s home senior-citizen friendly will later jeopardize access to Medicaid. The short answer is: no. An experienced elder law attorney can walk you through how to ensure such expenses are not treated as uncompensated transfers or gifts.

2. How helpful is it to consolidate finances before creating a revocable living trust?

In a word: very.

When setting up a revocable living trust for the purpose of avoiding probate, you need to take all accounts in your name and place them in the trust. Any assets you forget to include will be subject to probate before they may be distributed to heirs and so taking the time to consolidate everything now can be a huge headache-saver for your loved ones down the road.

Ideally, you would operate from a single checking account. All social security and pension deposits go into this account and all automatic payments come out of it. The simpler you can make your record keeping and financial management the better—not only for you but for those who will administer your estate when you are gone, too.

3. Our house will pass to our son’s special needs trust when we die. Will this arrangement make a change of ownership of our house impossible in the instance that I or my husband need nursing home care?

This is essentially a question about Medicaid’s five-year look-back period—a rule which penalizes a person for gifting assets in the five years prior to their application for the program.

While gifting a house would normally cause a transfer penalty, Medicaid recognizes certain types of permissible transfers, including those undertaken in support of a child with special needs. Both parents and grandparents of such children are allowed to support their loved one by placing assets in a special needs trust. It is important to understand, however, that setting up a trust in your child’s name is only possible if you have the right powers of attorney.

Naturally, an experienced elder law attorney with special needs planning experience is your best resource for complete answers to any elder or special needs planning questions. The team at Anderson Elder Law is always available to address your concerns and is committed to ensuring that you and your loved ones receive the best possible care at all stages of life.

For more on any of these matters, do not hesitate to call us at 610-566-4700 or reach out via the contact form on our website.