A guardianship in Florida typically involves a difficult situation where an incapacitated person needs help through the court process. The end result of the guardianship allows a guardian to manage the ward's legal, financial and health care decisions. In this situation, it is probable/possible that the ward would need long-term care which is generally very expensive. Long-term care typically costs:
- $25/hour(+) for in-home care
- $3,000 to $7,000 per month for assisted living care (including "dementia care")
- $10,000+ per month for skilled nursing (i.e., the nursing home)
When long-term care is needed, Medicaid can help pay for care in certain situations. Here is a breif overview of Medicaid and long-term care:
- The applicant can only have $2,000 in assets (bank accounts, etc.) to be eligible. Here is some more information on financial qualification for Medicaid.
- The applicant's income must be below the income cap ($2,382/m in 2021)
- There is no "wait list" for Medicaid in the skilled nursing facility/nursing home
- There is a wait list for Medicaid for in-home care or assisted living care
- When assets are above the threshold for Medicaid, elder law attorneys can be helpful for asset protection planning
But what about Medicaid planning under a guardianship?
The concept of "Medicaid planning" generally means trying to legally protect assets as part of the Medicaid application process instead of spending all of the money down to less than $2,000. Some people refer to this as Medicaid spend-down planning. When assets are above the threshold, there are legal steps that can be taken to protect assets, typically with the elder's input or through his or her durable power of attorney. But in a guardianship, things are different - the court needs to approve all planning to "protect assets." In this process, the court has a few questions it will need to ask:
- Is the action taken to preserve assets in the ward's best interest?
- Is the action taken what the ward would have wanted? (known as the "substituted judgment" standard)
What is the Best Interest Standard?
This is the basic legal concept that anything done must be done to requires the guardian to choose the alternative that produces the greatest benefit for the ward. Here, the judge will really not care that much about protecting the ward's assets for the ward's children (i.e., for an inheritance), as asset protection planning benefits the heirs, for the most part.
How does Substituted Judgment Work?
Here, the judge must confirm that any decision to help the ward would generally be following what the ward would have wanted had he or she not been under a guardianship. If possible, the court may hold a hearing and ask for the ward's input, for instance. It also means that planning must follow the ward's estate plan - i.e., if the Ward had a last will and testament, any planning should generally follow the will/estate plan.
What "Medicaid Planning" Can Be Done?
In trying to do Medicaid planning, the court will generally hold a hearing and make a determination on what is in the Ward's best interest and following what the Ward would have wanted. The court may approve these matters in the court's discretion. When this is done, the court may authorize the following:
- Creation of a Pooled Special Needs Trust
- Creation of a D(4)(A) Special Needs Trust
- Creation of a Qualified Income Trust
- Personal services contracts (paying caregivers in advance for help to the Ward)
Could you provide an example?
The ward is age 86 and must be in the nursing home due to declining health. The ward has $50,000 left in her bank account that will soon be spent at $10,000/month for private pay (minus the ward's income). Here, the guardian's attorney can petition the court to place the ward's funds into a pooled special needs trust. Upon approval, the guardian places $49,000 of the ward's funds into the pooled trust and the guardian applies for Medicaid. The $49,000 placed into the trust is now available to pay for the ward's future costs such as paying for a private caregiver, clothing, medical equipement, a private room, geriatric care management, the guardian him/her self and the guardian's attorney. The ward's money would certainly have been depleted without placing the funds into the pooled trust and now there is money that will help the Ward's other expenses.
Can money be gifted to protect it from the nursing home?
While the court may approve gifting under certain circumstances (mostly for estate tax purposes), money cannot simply be given away to protect the funds. Giving money away certainly would not be in the ward's best interest due to the five year medicaid look-back penalty.
How Can Your Law Firm Help?
Our elder law attorneys may be able to assist your guardianship attorney if he/she is unfamiliar with Medicaid planning. Our law firm does hundreds of Medicaid applications a year and we can help the entire process in a difficult time.
People who read this:
- Different types of Special Needs Trusts
- How a care coordinator can help your guardianship
- Guardianships in Florida