Why Is Estate Recovery Not as Bad as it Sounds?

28761E70-6F88-4F77-82BA-A019523A1586Estate recovery in Pennsylvania is the state's attempt at getting paid back at the time of an individual’s death for care that it has provided to that person, usually in the form of Medicaid payments for nursing home care.  Pennsylvania will attempt to recover from the probate estate only of individuals who have $2,400 or more in their name at the time of their death. However, this definition is often misunderstood. Again, the state will only go after assets that are greater than $2,400, and only from probateable assets in a person's name at the time of their death.  

In the case of married couples, in our practice we will only keep $2,000 in the name of the person who is receiving care, and the rest will be put into the community spouse's name. Because at the time of the death of the person receiving care there is $2,000 or less, and nothing else, in their name, there is nothing for the state to go after for the care of the institutionalized spouse. Therefore, in a married situation, estate recovery really doesn't apply, as long as everything is done properly and follows the rules. Often, people fall into the trap of leaving $7,000 or $8,000 in the institutionalized spouse's name simply because they are told they can, but they don't understand that they are subjecting themselves potentially to having to raise an estate and having the state just take their piece anyway.

In a single person, including a widow or widower, we also do not have to worry about estate recovery if the plan is done properly. Just as with a married couple, the institutionalized individual or applicant will only have about $2,000 in their name, which will again be less than the amount which will trigger estate recovery.

Where we find that a lot of individuals make a mistake is that they leave the house in the individual applicant's name alone, exempting it because they "have the intent to return home." Although this is one effective technique to be able to keep the house and still allow the individual to get care during his or her lifetime, the downside is that the state will place a lien at the time of death, up to the amount of care that was provided; when one considers that the state through Medicaid can pay up to about $8,600 for nursing home care, it does not take long for the state’s lienable amount to add up, and even entirely swallow the value of the residence.

In general, in a single case, we are able to protect 50% of the overall assets. However, in order to protect those assets, we need half of the total amount of money to be in cash. Where we run into trouble sometimes is that the house is actually worth more than half of the assets, in which case we would need the children to either throw in cash or sell the home quickly to be able to protect half. In either scenario, however, we will still get the house out of the applicant's name, because it is better to protect half guaranteed than have an opportunity for the state to take all of it in the future.

It is not my purpose here to get into the details of how asset protections works, but to show that, with proper planning, estate recovery is not a scary monster.

In fact, if the plan is done properly, there won't be any estate recovery, because the assets will never go through a probate or will be less than $2,400 in the applicant's name at the time of death. In this area, working with a qualified professional who understands elder law and estate recovery laws is essential. It is very easy to make a mistake in this area, thinking that you are doing somebody a favor by exempting the home with the intent to return home. But that doesn't do anybody any favors. You might as well do it properly and guarantee the protection of the assets.

If you would like to learn about these and many other topics, we invite you to contact our office to enroll in our free crisis planning workshop, offered every month, about how you can protect yourself and your family, and not have estate recovery become an issue later.  Just click here for more information.


Protecting Against Exploitation of An Elderly Individual

1A7411B9-7DBE-4A6C-A56F-68BC9D0E0B3CIn my career as an estate planning and elder law attorney, I have encountered numerous occasions where it was very clear to me that my client, the senior citizen, was being taken advantage of by other individuals.

Yes, there have certainly been the cases where scammers have convinced clients to wire money to an account.

And yes, there have been scammers who hacked into someone's banking information and took money.

But the more emotional and heart wrenching situations are the ones where it is a family member who takes advantage. Exploitation of an individual can take several forms; it does not necessarily have to only be financial, but could also be physical, verbal, emotional and other forms.

However, the one that I see the most in my practice is financial, probably because we are an elder law firm and assist with financial powers of attorney, and our clients will often call us if they believe that they are a victim.

Unfortunately, lots of seniors don't want to move forward because it means that they will have to pursue a matter against a family member and they rarely want to do that. Also, many are embarrassed because they feel that they should have seen it or should have known better and they are embarrassed to report it. As a professional who works in the senior community, I take my role very seriously and believe that all of us as citizens have a role in protecting our seniors against any of these exploitations – particularly against family exploitation.

In all of my workshops and professional presentations, I encourage everyone to be diligent and pay attention to signs of potential exploitation of a senior.

For example, if somebody is no longer coming out in public or a family member is always there and will not allow the person to be alone with other people, or a family member tends to speak for the elderly individual, these are all signs and need to be reported.

In Pennsylvania, every county has local Area Agency on Aging, all of which have protective services divisions. In York and Lancaster Counties, where I primarily practice, we are fortunate to have dedicated individuals who take their jobs very seriously.

You can make an anonymous tip to the protective services division and they will investigate the matter and make sure that the elderly person is protected.

I cannot underestimate the value that the agency provides.

Also, if there is any question in your mind about abuse, report it to the police, who also can investigate and handle such situations. We all need to be vigilant and to step in and help when we see a need.

If you want to join us for any one of our upcoming free educational workshops, you can find out more and save a seat by clicking here now.


It is with great mixed emotions that I write this ….

Michelle & BillAs many of you know, Bill Poole and wife Michelle Poole have been members of our team for nearly four and a half years.  Both of them have been nothing short of amazing, and have definitely touched many of the lives of people that they have met. 

There is no doubt that the law firm of Bellomo & Associates is in a much better place than it was before the two of them arrived.  Unfortunately, Bill was recently diagnosed with stage IV prostate cancer and he is getting ready to start his treatments to defeat this horrible disease. 

He and Michelle have decided, effective January 1, 2020, to leave Bellomo & Associates in order to take some time together to travel and see their friends and family, visit places of interest to them, and spend quality time with their grandchildren.  One thing that has become very clear to me is that there is nothing in this world that brings joy to Bill like his grandchildren.  When he talks about them or when he is going to pick one of them up or going to see them, he is filled with utter joy and excitement. 

I am so grateful that he and Michelle will get to spend a large portion of their remaining time together with their family.  I hope that they get to see wonderful parts of the United States and, if they choose, the world.

They will certainly be missed, and the holes that they leave will be hard to fill.  However, we promise you that we will continue to service you the same way we always have. 

For now, our thoughts are with Bill and Michelle, and we wish them nothing but the best in their time together.  We will always cherish our time with them and love them, and will do anything for them.  If you see either of them, please give them well wishes and nothing but the best encouragement.

We hope that all of you had a wonderful holiday season.  Until we see each other again, we hope that you stay healthy and happy.

Jeff Bellomo, Esq.


Grantor Trusts Versus Non-grantor Trusts

Arrow-2085195_640When we are educating on trusts and the use of trusts in estate planning, people often get a concept confused. There is a difference between a grantor trust and a non-grantor trust. Simply stated, a grantor trust still remains in the grantor's Social Security number, and a non-grantor trust will obtain a separate tax ID number and file separate trust tax returns. 

We will typically use grantor trusts for asset protection trusts and revocable living trusts.  

However, we often use a non-grantor trust for VA purposes as well as for estates that have a federal estate tax problem. Currently, a person has a federal estate tax problem when their estate is greater than $11.4 million and for a married couple $22.8 million. It is very rare in our practice to use non-grantor trusts, which require separate tax ID numbers and pay at higher trust tax rates, because not a lot of veterans are doing planning where they have to or want to give up complete control of their assets, and not a lot of estates are big enough to need federal estate tax planning. 

In those situations where we use grantor trusts, we intentionally put language in the trust so that is included in the person's estate, as well as for income tax purposes. We include this language because we want to get a step-up in basis at the death of the decedent, and we also want the parent or client to pay the income taxes, because generally retired clients have a lower income tax than the children who are still working. 

There are a lot of other factors that go into what type of trust should be used and under what circumstances, but this provides a basic understanding of the difference between grantor and non-grantor trusts. If you would like to learn more about these and other trust concepts, I invite come to one of our free in-house workshops to learn. We would be more than happy to assist. Just call our office or go to our website to enroll in a workshop at a date and time which is convenient for you.


Family Caregivers – Thank You! 🙏

Calligraphy-2658504_640Being a family caregiver is one of the most rewarding, amazing experiences that children can provide to their loved ones. I have heard time and time again from children who are able to provide caregiving how rewarding it is, particularly in cases when it keeps their loved ones out of a nursing home. 

For a number of reasons, children who provide caregiving should enter into a written caregiver agreement with their parents.

First, it is the best way to ensure that there are not mis-expectations and hurt feelings later.

Second, if done properly, it will actually provide for both VA purposes Medicaid purposes, a legitimate spend-down of resources which would otherwise go to the government, and the monies paid will not be considered a gift. Therefore, no penalty will be assessed for the money paid to the child.

The one thing to remember is for the child caregiver monies that are received will be income taxable to the child; it is very important that the child claim those monies as income on their tax return so that it clearly shows that it was not intended to be a gift later.

However, family caregiving is certainly not without its downsides to caregivers. In most cases the caregivers could make more money if they stayed in the workforce and did not leave to provide care. In a situation where they are trying to continue to work and provide care, the increased stress added to the caregivers can be detrimental their physical and/or emotional health.

There are often cases that the caregiver impacts the family, either because one child is doing the caregiving and that child feels like they're being taken advantage of, or others feel as though that child is taken advantage of Mom and Dad because they are getting paid.

Either way, a lot of times it provides an additional stress to family members that they weren't expecting. There are often times where a caregiver will be out-of-pocket as well for certain costs, and getting reimbursed may surely be an allowable thing under the law, but having other children understand why money is being distributed to one child versus the others is often not an easy conversation. 

There is no doubt that for those people who are able to provide care to their loved ones, care in the home it is a wonderful gift.

However, I highly recommend that everything be put in writing for all of the reasons stated above, but mostly so that there are no missed expectations among the people receiving the care, the people providing the care, and the other family members.

To those who have been able to keep their family members home, thank you for everything, all that you do is appreciated.

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