Does Your Estate Plan Account for Dementia and Alzheimer’s?

Episode 10: Hey everybody. Welcome to this episode of the Protect Your Nest podcast with me, attorney Brandon Lawrence, the Lawyer for the City. You may have noticed an increase in discussions on the topic of memory care facilities. Memory care facilities are popping up to deal with the need to treat aging individuals suffering from dementia, severe memory loss, and Alzheimer’s. Often family members and loved ones are tasked with the responsibility of caring for individuals suffering from dementia and Alzheimer’s. It’s a full-time job. It’s a thankless job. It’s an unpaid job, and it can be a frustrating job.

Caring for a loved one with Alzheimer’s and dementia can put a significant strain on your personal relationship with them. Before it gets to that point, you may want to look into getting professional help to take care of your family member suffering from dementia. Today, we’re going to talk that over.

81,000 older adults in Kentucky live with Alzheimer’s. 11.2% of adults 45 and over in Kentucky experience cognitive decline. Now Medicaid will cover the cost of your stay in a nursing home if you have dementia, severe memory loss or Alzheimer’s if you need full-time supervision with safety and toileting. You still have to financially qualify though.

You still cannot earn more than $2,982 per month in income and you cannot have over $2,000 in assets. Now, if one spouse is applying for Medicaid for nursing home care, the non-applicant spouse does not have a monthly income limit. And their asset limit is $162,660. We’ve discussed asset protection in earlier podcasts such as using irrevocable trust to do that. And we’ve also discussed spend down techniques such as paying down debt, purchasing prepaid burial plans or funeral plans, and making home modifications like a walk-in shower, a wheelchair ramp or stair lift to assist the person in need.

Other requirements to consider is you have to physically qualify. You must require assistance dressing yourself, bathing, using the bathroom and/or feeding yourself to qualify for Medicaid to pay for your nursing home stay. Now you can still live in your home and you can have a car and those won’t be counted as assets for Medicaid. Now of course, your home, we’ve got to set that up to avoid the Medicare Recovery Act because after you pass away, Medicare can come and try to get some assets or get paid through your home after you die.

Hollywood Estates Gone Wrong

Now, speaking of Trust and Wills, go back to that, this is a little bit of a Hollywood addition of Protected Nest. We all know Theo from The Cosby Show and of course Black Panther, Chadwick Boseman.

Now Malcolm Jamar Warner, who played Theo, his wife was involved in a lawsuit with his mother because initially before Malcolm Jamal Warner was married, he started a family trust and that left everything to his family and his parents. After he constructed the trust, he got married and later on he had a child. So he never went back to change any of the terms of the parameters of the trust. And we’ve talked about this before as well.

What you need to do is every couple years review your estate plan, whether it’s a Will, trust or whatever you got in it to make sure that it is up to date and that it reflects how your life looks and how your family looks at the current time. Malcolm Jamar Warner did not do that. So he passed away with that family trust in place that he initiated before he was married.

So what ended up happening was his wife had to sue or felt she had to sue his mom to get any type of funds because apparently before they were married, he had promised proceeds from a life insurance policy and really they would’ve had nothing or next to nothing if the trust would’ve stayed in place.

So they ended up settling and his daughter received the bulk of the trust assets and her college is going to be paid for. Now what can happen, just say for instance in Kentucky where we are, if that was a situation where if you have a trust that was written before a couple was married and it was never changed, what would be able to happen? The surviving spouse will be able to challenge the trust, especially if it was a revocable trust. And in that challenge you would propose to the judge, I guess the probate judge or the judge you were in front of that that was a fraudulent trust, a fraudulent transaction because it would’ve excluded the spouse from getting anything after the other spouse had passed away.

Now it would probably revert to probably statutory intestate laws that would in turn in Kentucky give the spouse 50% of the assets and the parents, if there were surviving parents of the deceased spouse, they would get another 50%. That’s Kentucky intestate law, which would be how it would go if you challenge that.

Now we’ve got another situation as I mentioned before with the Black Panther, Chadwick Boseman. He died intestate and you know what that means without a Will. And that was in California and I think this lawsuit is still ongoing. Now in California, California is just like Kentucky.

The surviving spouse receives 50% of the assets of the estate and the other 50%, if there are parents that are surviving, they would get the other 50 to split. So California, Kentucky are the same in that regard and a few other states. So in that case, intestate, that’s pretty much automatic. That’s statutory, that’s automatic. But if say for instance, you cannot disinherit your, you can’t write your spouse out of a will whether you want to or not. So you can’t do that.

So eventually it’ll come back to Kentucky statutory intestate law, which would give that spouse 50%. Of course, they’d have to challenge it, spend money on attorneys and things like that unnecessarily because the spouse is going to get their share anyway.

So you want to look at those things if you’re married, you want to know that going ahead of time. And that’s of course, unless you come to a prenuptial agreement that the surviving spouse is going to agree to be disinherited, but good luck with that.

Hey, I guess that was just a little bit of Hollywood gossip, but it was appropriate for us in our conversation because it still covers the Wills, the trust and test date and the succession plans for couples and for your estate planning. So remember, you can’t disinherit your spouse and Medicaid can cover cognitive disabilities as far as memory loss, dementia, if you’re going to need a full-time nursing home stay.

Conclusion

So it was good talking to you again as usual and I look forward to the next episodes and go back and look at other episodes on my website, YouTube. I hope you found this information helpful.

You can find more of these estate planning episodes, of course, on my website, lawyerforthecity.org, YouTube, Spotify, other podcast platforms. This has been attorney Brandon Lawrence, the Lawyer for the City, and this has been Protect Your Nest Podcast. Until next time, let’s talk it over.