Month: September 2013

A Success Story in Estate Planning: Estate Plan Offers Major Benefits, Even Before Death

An August 5th article in the Appleton Post Crescent highlights what many estate planning attorneys already know, but is a lesson well worth repeating: namely, that your estate plan can provide essential assistance to your family long before you die, and that the time for estate planning is before you or your spouse encounter a problem, not after. By having a proper plan in place, you can provide for yourself and your family in the event you become mentally incapacitated.

The Post Crescent article tells the story of Bill and Carol Fenrich. Bill Fenrich began displaying symptoms of diminished memory. Even though Fenrich passed a memory test required for the couple’s long-term care insurance, they decided to move forward with planning their estates, including creating powers of attorney and living wills. Ultimately, Fenrich died as a result of complications from frontal temporal dementia.

Although Fenrich’s illness did not lead to a prolonged period in which his mental function was so diminished by his dementia that he was unable to make decisions for himself, the couple’s situation provides a clear warning. The husband’s condition clearly could have created a situation in which he was alive, but his mental capacity was so severely diminished by his illness that he could not make decisions for himself. Furthermore, this state could have existed for years. However, by ensuring they had an estate plan in place before problems arose, the Fenrichs had the peace of mind of knowing that they were prepared regardless of the direction the husband’s dementia took. “I am very grateful that all the necessary documents were in place at the time of Bill’s final illness,” Carol Fenrich told the Post Crescent.

More Medicaid Recovery: New State Law Could Change How Wisconsinites Plan Their Estates

A component of the new state budget that cleared the state legislature back in June could have a substantial impact on the way some Wisconsin residents go about planning their estates. That’s because, under the new budget, the state has broader authority to recover assets paid out to Medicaid recipients after they die, the Wausau Daily Herald reports. Some observers speculate that the new law may even impact how seniors approach decisions as fundamental as marriage.

Medicaid is a collaboration between the federal government and the states. Federal law requires the states to create a system for recouping some of the money paid out to Medicaid recipients after they die. In the past, Wisconsin law called for the government only to pursue those assets subject to probate. That meant that, if you created a revocable living trust and fully funded it with your probatable assets, you could not only protect your family from probate, but Medicaid estate recovery, as well.

The new budget law changes that. It gives the state the green light to pursue assets whether they are in a Medicaid recipient’s probate estate, or in trusts the recipient created. The new law also requires that, if a living trust’s creator received Medicaid benefits, then the successor trustee must inform the state government’s estate recovery unit in writing of the trustor’s death within 30 days. Additionally, if the state timely files a claim with the trust for repayment of Medicaid benefits, the trustee must pay the claim within 90 days. The law establishes similar 30-day and 90-day deadlines for special needs trusts.

Our clients will not be surprised at this news, because we have always counseled them that a revocable living trust is not a way (in itself) to protect assets from Medicaid spend-down or recovery.

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