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Alternatives to Guardianship

Many people with developmental disabilities have sufficient mental capacity to execute wills, revocable trusts, durable powers of attorney, and beneficiary designations. A person has sufficient mental capacity if they have the ability to know the nature and extent of their property, understand that they are providing for the disposition of their property, know the natural objects of their bounty and understand in a reasonable manner the general nature and effect of their act in signing the document.

Guardianship is a formal court process through which a person is declared to be legally incapacitated. The rights and decision-making powers granted to the guardian are simultaneously stripped from the person with a disability. This status is reported to and maintained in the records of the Michigan State Police.

The law regarding guardianships of individuals with developmental disabilities states,
Guardianship for individuals with developmental disability shall be utilized only as is necessary to promote and protect the well-being of the individual, including protection from neglect, exploitation, and abuse; shall take into account the individual’s abilities; shall be designed to encourage the development of maximum self-reliance and independence in the individual; and shall be ordered only to the extent necessitated by the individual’s actual mental and adaptive limitations. MCL 330.1602(1).

Therefore, there is no automatic need to appoint a guardian for a person with a developmental disability, and guardianship is not mandatory when the child turns 18. The decision to pursue a guardianship should always be justified by need and should only occur after less restrictive alternatives have been considered such as:

  1. Representative Payee – controls only those funds paid out by the Social Security Administration (SSA) such as Supplemental Security Income or Social Security Disability. Similar to a guardian, the Representative Payee manages, and spends the funds and must account to the SSA for the funds. The SSA considers court determinations, medical and other evidence to determine whether the interests of the beneficiary would be served by such an appointment. The appointment of a Representative Payee is not a determination of legal incompetence.
  2. Powers of Attorney
    a. Financial – A person appoints an agent to handle their finances. A durable power of attorney is preferred because it remains in effect even if the person is later deemed legally incapacitated. Its authority ceases upon the person’s death.
    b. Health Care (Patient Advocate Designation) – A person appoints an agent to make health care decisions to the degree that they are unable to participate in decisions regarding their care, medical treatment, residence, etc. Its authority ceases upon the person’s death. (A person can separately designate a Funeral Representative to carry out burial, cremation, etc. wishes after death.)
  3. Trust – A person transfers their assets into a trust and designates the trustee, successor trustee and distribution of the assets during their lifetime and upon their death. The creation of the trust document and funding of the trust are carried out by the person’s attorney.
  4. Protective Order – is issued by the probate court upon filing a petition regarding a specific asset or a specific circumstance. This is generically a “one-shot-deal” to permanently resolve a financial issue that does not require ongoing court supervision. For example, changing the character of an asset to make the person eligible for a public benefit.

The Easy Way to Qualify for Medicaid without an Attorney: Strategically Spend Down Your Assets

Let’s recap.  In general, a patient is eligible for Medicaid benefits to pay for long-term skilled nursing care in Michigan if they have not more than:

  1. One motor vehicle,
  2. One house worth not more than $585,000  (This limit does not apply if the patient’s spouse or a blind, disabled, under-21-year-old child lives there.)
  3. Pre-paid funeral goods and services not exceeding $12,770
  4. A very small life insurance policy (Michigan excludes the entire cash surrender value when the total face values of all policies a policy owner has for the same insured are $1,500 or less) and
  5. $2,000 in cash or on deposit

If you have excess cash, buy a car.  Remodel your house.  Buy furniture or carpeting for your house.  Put in a new furnace or put on a new roof.  Pre-pay your funeral and that of your spouse.  

Buy one of the following for each of your parents, children, siblings and the spouse of each of those people: a burial plot, gravesite, crypt, mausoleum, casket, urn or niche.

Pay off your mortgage and/or your home equity loan.  This increases the net worth of your home for the benefit of your heirs.  Just make sure that the home passes to your loved ones outside of probate using a trust or a Lady Bird Quit Claim Deed, for example.  Otherwise the state of Michigan will be a creditor of your probate estate and be reimbursed for the cost of your care before your heirs get anything.

Irrevocably assign your too-large whole life insurance policy proceeds to a reputable funeral director.  This removes the policy from your assets and pre-pays your funeral, a win-win.

Remember, do not give away cash or any other assets!  This is called divestment and will render you ineligible for Medicaid benefits for as long as the value of what you gave away would have paid for your care.

Happy spending!

Financial Planners for the Rest of Us

Whether your retirement savings are small, medium or large, a study shows that you will amass greater wealth with the help of a financial advisor than you would be able to do on your own.  Naturally, the amount of additional wealth accumulated, even with a comprehensive planner, depends on whether your income is modest, medium or high, but this is another area in which there is no substitute for a principled professional.

Beware of “free” advice.  You may be compensating that advisor unbeknownst to you when they steer you to buy the financial product they are selling, not necessarily the best product for you.  Most planners earn a living from commissions and money-management fees.  Frequently these fees are buried in your statements and deciphering the true cost of a product may be nigh unto impossible.

However, some financial planners charge only for advice, without selling a product.  Sometimes referred to as a pay-as-you-go planner, they will review your current assets, income and investments and render unbiased advice.  Budgets, taxes, debt retirement and other specific topics of concern to you can be addressed, too.

Such planners may not be easy to locate, but the unadulterated guidance they provide buys a common-sense road map and priceless peace of mind.  You may be charged hourly or a flat fee.  To pay a monthly or annual fee for answers to questions as they arise may also be available.  Fees could be in the range of $150 per hour or $200 per month.  A full, comprehensive review could cost $5,000.

Be prepared to spend some time on the phone for recommendations, ascertain qualifications and to establish the professional’s compensation.  The good advice you pay for now will earn money for you in the long run.

Medicaid 101: How to Pay for a Nursing Home

There are basically three ways to fund long-term skilled nursing care in a nursing home:

  1. Private Pay – Pay out of your own assets and income.  If your income exceeds the monthly private pay rate charged at the facility, you will not be eligible for Medicaid benefits.  The private pay rate is the highest rate.
  2. Long-term Care Insurance – Purchase a long-term care policy of insurance.  Premiums for such policies start at more than $200 per month and usually require a waiting period before benefits will be paid.  If admission is imminent, it is too late to purchase such a policy.
  3. Medicaid – Medicaid consists of federal monies distributed to the states.  Each state administers the funds it receives according to its own rules.  Medicaid is a means-tested benefit which means that you will not be eligible if you have more than a certain amount of assets or income.  In General, a patient is eligible in Michigan if they have not more than:
    • One motor vehicle
    • One house worth not more than $585,000.  This limit does not apply if the patient’s spouse or a blind, disabled, under-21-year-old child lives there
    • Pre-paid funeral goods and services not exceeding $12,770
    • A very small life insurance policy
    • $2,000 in cash or on deposit

There are many factors that determine whether each of these criteria are met.  Your circumstance is unique.  Don’t guess! Make an appointment to review all your details for precise advice.

Note:  These guidelines are established by the Michigan Department of Health and Human Services and are subject to change.

Get Your Ducks in a Row this New Year!

Whatever your age or stage, it’s always the right time to think about and plan for the handling of your health and financial affairs. Getting your ducks in a row now means peace of mind for you and your loved ones into the future.  Protect yourself, your assets and loved ones by making an appointment to create or tune up your powers of attorney, will, trust, privacy waiver, deeds, or beneficiary designations. 

Like exercise, just do it and you’ll be glad to check it off your list!