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Long Term Care Planning: Use of Family Agreements

Long Term Care Planning: Use of Family Agreements

The use of family agreements in long term care planning is a constant in my practice for several reasons. First of all, I want all parties involved to be aware of the issues (especially those involving money) and have a chance to comment or voice concerns up front. Secondly, since long term care planning often means disrupting a previously established estate plan, I want to protect all living beneficiaries. Lastly, I want to protect myself and do my best to avoid future family issues. It should also be noted that family agreements are not subject to scrutiny by Medicaid but are keep as a part of the client file. Below are examples of how this works.

Planning for Future Medicaid Eligibility

When we discuss gifting, the creation of an irrevocable income only trust, or the distribution of assets in anticipation of waiting out the 5 year look back, I always include a discussion of the family agreement and its importance in the overall plan. In this situation the family agreement will outline where the money is going, how it will be held, who will mange it, how others will be notified if funds are used, how often they will be notified, and most importantly, and if applicable, how the funds will be returned if Medicaid is needed and it becomes necessary to undo the penalty. My primary concern is that my client (the elder) has assurance that they will be cared for before and after Medicaid benefits become available.

Management of Homestead Property

When homestead property is to be preserved, but the cost must be covered by family, often times not everyone can contribute to the cost of taxes, insurance, maintenance and the like. When one or more family members cover this cost, we use a family agreement to outline what they agree to do and pay and how they wish to be compensated once the property is sold.

Preserving the distribution plan under the Last Will and Testament

Any time I pay out funds to one family member, as is typically done under a personal services contract, and there are other family beneficiaries under the Last Will and Testament, those family members are party to the family agreement. The goal being that all parties have the opportunity to ask questions and express any concerns, we reach an agreement and everyone signs. Fortunately, in all my cases we have always managed to find a way to make the terms agreeable to everyone.

VA Planning

I also use family agreements when money is being transferred to qualify for VA benefits. I advise clients on the issues regarding transfers and how the transfer will affect any future Medicaid benefits. This becomes especially important if funds need to be returned to undo any penalty if Medicaid is needed sooner than later. Having an agreement that outlines how funds may be used and everyone understanding the necessity to hold on to and properly manage any assets protects everyone involved.

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  • "In October 2009, my fiancé (and future wife) and I wanted to have estate documents prepared. Upon the recommendation of friends, we contacted an elder law firm in Sarasota, FL. We were assigned to Teresa K. Bowman, an estate planning and elder law attorney. Over the course of several months, she helped us to develop and refine our documents to our exact specifications and requirements, with our complete satisfaction. During the next few years, various modifications to our documents were required, and she helped us to implement these changes, always with absolute professionalism and precision, and with a warm, friendly manner. Incidentally, Teresa Bowman, serving in the role of Justice of the Peace, presided over our wedding ceremony in May, 2010. It was the first wedding ceremony she had ever performed, so we trust that it is just as memorable an event for her as it was for us. In 2014, when Teresa Bowman established her own Estate Planning and Elder Law practice, we, of course, transferred our accounts to her new firm. She has since implemented additional modifications to our estate documents, with the same high level of service that we have come to expect and appreciate. We would have absolutely no reservations in recommending Teresa Bowman and her firm to anyone who has need of the services she renders." - Robert G. and Judith L. Hores

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    I have been lucky enough to work with Teresa and her team with several clients and find her service and advise to be consistently of the highest of standards. She is a pleasure to deal with and nothing is ever too much trouble for her. I cannot recom...

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    Teresa is easy to talk to and is understanding of the situation brought to her. I would highly recommend her for your legal representative.

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    Teresa and Paula have been helping us with setting up a POA and all of our mother’s paperwork and will be filing for Medicaid for her for us. They really are very helpful and explain things in laymen’s terms.

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    Great team to work with. Questions answered in layman's terms!

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    Teresa Bowman and her entire team were very easy and pleasurable to work with. Every question was answered in an non-condescending manner and discussed thoroughly in layman's terms.

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