Trying to plan your North Carolina estate? Get the answers you need to protect your family.
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Does a revocable living trust protect my assets for Medicaid and nursing home planning purposes?
No. The general rule of thumb from the world of debtor-creditor law is whatever you have direct access to, your debtors and creditors have access to. This means that the assets owned by the revocable living trust while you are alive are still subject to your persona liabilities including nursing home expenses. Furthermore, any assets owned by your revocable living trust must be reported on a Medicaid application.
I have a long term care insurance policy, should I still consider Medicaid planning?
One of the most effective strategies for planning for nursing home and long term care is to combine a long term care insurance policy with other Medicaid planning strategies. Depending upon the terms of the policy, the long term care insurance can be used for home care and levels of care lower than nursing home care. Thus, it can be used during the ‘transition’ phase before you need full on nursing home care (Medicaid is only available for nursing home level care).
In addition, the long term care insurance can provide you with greater flexibility when it comes to facility selection as you will not be required . However, if you use up all of the long term care insurance benefit and continue to need care, this is when your planning will transition to Medicaid qualification for assistance paying the cost of nursing home care.
Finally, the cost of nursing home and long term care is constantly increasing. Thus, if your long term care insurance does not include an inflation rider or at some point becomes too expensive for you to maintain, if you’ve already engaged in Medicaid planning, you’ll have a back-up plan to fall back on to either replace the insurance or fill in the ‘gap’ if your long term care insurance benefit is not enough to cover the cost of the nursing home.
Should I let the nursing home employee or social worker complete my Medicaid application for me?
No, we do NOT recommend letting a nursing home employee or case worker complete your Medicaid application. Filing the application at the wrong time or with the wrong information can be catastrophic. Both the nursing home and the Medicaid department just want you to complete the application as quickly as possible. This will usually result in unnecessarily spending almost all of your money on nursing home expenses before you can receive Medicaid benefits.
Should I file my Medicaid application as soon as possible?
If you are 100% positive that you qualify, then yes. However, if you are not yet eligible or have made any gifts or transfers, applying too early can be a very costly mistake if gifts have been made that impact eligibility!
Depending on the size and timing of gifts and transfers, applying at the wrong time can potentially be disastrous. I heard a story once about a professional accountant and his mother. Rather than hire an elder law attorney, he decided to go the Do-It-Yourself route. He read about the Medicaid rules and planning techniques. He thought he understood them and he transferred $500,000 to an irrevocable trust.
He then began paying for his mother’s care through what he thought the ineligibility period (also sometimes called a ‘penalty period’) was and then he filed the Medicaid application. But it turned out that the application was not submitted at the right time. As a result, his mother had to start a new ineligibility period (in this case of 100 months due to the size of the transfer!). This is an easy mistake to be made by someone that does not work in the area of Medicaid planning.
Of course filing too late can also cost your family thousands in lost benefits, so it is critical to apply at just the right time.
What immediate actions do we need to take after a family member dies?
During the first few days after a loved one passes, everything seems to go by very quickly. Your priorities need to be focused on taking care of yourself and your family. The Probate and Estate Administration process can generally wait for a couple of weeks to give you time to mourn and spend time with loved ones. However, there are items that need immediate attention. In times like these, it’s helpful to have a checklist and a notebook. Here’s what’s needed:
1. Determine whether urgent legal action is needed.
In some circumstances, it may be necessary to file an immediate petition with the Court. If any of the following apply, make an appointment with a qualified Probate attorney as soon as possible:
- Minor children (under age 18) who no longer have a surviving parent or guardian.
- The deceased owned a business.
- Anticipating a family dispute over the Estate.
- Other circumstances that threaten to harm the Estate or other individuals if immediate legal action is not taken.
2. Locate Estate Planning documents.
If you know or suspect that your loved one had a Will and other legal planning done, attempt to locate these documents. Often, these will be stored with “memorial instructions” that explain, for example, what he or she wanted for a funeral and burial or cremation.
The Estate Administration process will be much easier if the original Will can be located. If you cannot locate the original documents, try contacting the attorney the Decedent may have used, as they may have copies of the documents on file.
If there is no Will, someone will need to be appointed by the Court as the Administrator to manage the Estate.
We cover some things to look for in the Will and how to proceed without a Will later in this guide.
3. Make Funeral Arrangements.
If available, use the memorial instructions to guide arrangements for the funeral. Check to see whether there is a pre-paid funeral plan in place—often there will be a small insurance policy for this specific purpose.
Do not use the assets of the Estate (e.g., the Decedent’s credit cards) at this point. If a loved one wishes to cover the costs of the funeral, they will be reimbursed for any out-of-pocket expenses they incur. Otherwise, we recommend asking for an extension on funeral expenses. A letter indicating that there are sufficient funds in the Estate to pay funeral costs may be required. Keep all contracts and receipts from the funeral home.
The funeral director will order death certificates on your behalf. We recommend that you order at least 10 certified death certificates from the county, though you can order more at a later time, if needed.
4. Secure the House and Estate Property.
The home, vehicles, and any other personal property should be secured until the Executor and/or Trustee has been appointed.
- Arrange for the care of any pets.
- Store vehicles in the garage, if possible.
- Consider changing the locks on the home.
- Take photos of jewelry or other small valuables. Consider locking them in a safe or safe deposit box for the time being.
Do not let family members take any property of the Estate until Probate is opened, the inventory is complete, and the Executor or Administrator has approved the distribution!
5. Begin Collecting Important Documents.
Estate Administration is the process of accounting for the property left after someone passes away and distributing that property to those who are legally entitled to it. To do that, you’ll need a full picture of the Decedent’s financial situation, including all assets and debts. Gather and organize any bank statements, credit card statements, deeds, titles, business documents, and any other financial documents you find or receive in the mail.
6. Begin Making Key Contacts.
Even if you haven’t yet been appointed as executor or trustee, there are a few important contacts that you should make as soon as possible:
- Social Security Administration: Notify the Social Security Administration of your love one’s passing. Often the funeral home may do this for you, but it is still a good idea to follow up separately to claim the $255 death benefit and any applicable benefits if there is a surviving spouse or dependent children. You can call the Social Security Administration at 1-800-772-1213.
- If your loved one was a veteran, contact the Veteran’s Administration as soon as possible, as your loved one may be entitled to additional benefits for funeral or burial costs. In some instances, a surviving spouse or dependent children may also be eligible for continuing benefits. You can read more about VA Memorial benefits at https://explore.va.gov/memorial-benefits
- If your loved one was receiving a pension, call the pension administrator to notify them of your loved one’s passing.
7. Preserve Assets and Keep Accounts Open.
Until the Probate is opened, your primary concerns should be, 1) taking care of yourself, your surviving loved ones, and the Decedent’s memorial instructions; 2) preserving value in the Estate; and 3) keeping your options open to maximize value for the Beneficiaries. Therefore:
- Don’t close any bank accounts or roll over any IRAs, 401(k)s, or other retirement plans. You may not have authority to do so until the Probate is opened, and there may be opportunities to preserve and protect these assets for Beneficiaries.
- Do cancel utilities and non-essential services. If no one is living at the home, cancel services such as cable television, internet service, phone service, and any magazine and newspaper subscriptions.
- Notify the homeowner’s insurance carrier if the home is vacant. A higher premium may be required on homes that will be vacant longer than 60 days, but the alternative is the insurance company may not cover damage incurred if they were not informed the house was vacant.
- Notify the auto insurance carrier that any vehicles belonging to the Estate will not be driven. This may reduce the premium. However, the policy should not be cancelled until after Probate is opened and the vehicle is sold or distributed.
Do not attempt to use the Decedent’s power of attorney to pay bills or perform any other function. Powers of attorney become void upon the death of the maker. Continuing to use a power of attorney after death could be considered as fraud.
8. Open the Estate with the Court.
In some cases, it may not be necessary to Probate the Estate. However, in most instances, it will be necessary for practical purposes. For example:
- Unless the property is in a Trust, you cannot change the title to real estate without opening Probate.
- Often, financial institutions will not discuss details of the deceased’s accounts until an Executor or Administrator has been appointed by the Court.
Losing a loved one is hard. The days and weeks after a loss are often fraught with grief, questions, and unfortunately, family complications. It’s a terrible time to try to think through a legal process clearly. It’s often a challenge just to know where to start. Maybe you’re not even sure what questions to ask and whom to ask. How do you know you’re getting good advice and doing it right? You could probably use some help. Our Understanding Estate Administration guide can help. This guide will give you an overview of the probate and estate administration process in plain English. Request your free copy here.
How many death certificates should I request from the funeral director?
We generally recommend that you order about 10 certified death certificates. You can always order more if they are needed. The funeral director will order these on your behalf. You are going to need them for a variety of purposes, such as for the probate court, taxing authorities, life insurance companies, banks and other purposes. Yes, there is a small cost per certificate, but the convenience of having plenty of copies available is well worth it.
What are the first steps to take to take after the death of a loved one?
Once you are ready to roll up your sleeves and start getting to work, the following tasks should be completed:
- Locate estate planning documents
- Look for any “memorial instructions”
- Arrange for the care of any pets
- Remove any plants and perishables
- Secure the house
- Make funeral arrangements
- Schedule an appointment with an attorney to discuss the estate or trust settlement process
- Don’t close any bank accounts or roll over any IRAs, 401(k)s or other retirement plans
- Don’t drive the decedent’s car (unless you are the surviving spouse and the car was owned jointly with rights of survivorship)
- Don’t remove any household furnishings
- Don’t pay any of the decedent’s bills
- Don’t use the decedent’s credit cards
- Don’t contact life insurance companies
- Don’t use any Power of Attorneys
- Begin making an inventory of the deceased’s assets and liabilities and make note if any of them are time sensitive
Is there anything I need to do before meeting with the funeral director?
Yes, check to see whether there is a pre-paid funeral plan in place. This is typically purchased in the form of an insurance policy. Information on a pre-paid funeral plan may be included among any “memorial instructions” found with the decedent’s estate planning documents.
How should I pay for the funeral expenses?
First, be sure to carefully review the deceased’s important papers and records to determine if pre-need funeral planning has already been undertaken or if he or she owns any burial plots.
If there is not a pre-paid funeral in place, then there will be an issue with how to pay the funeral expenses. Most of the funeral directors will want to see payment of the funeral expenses at the time services are rendered.
Frequently, a family member or other loved one will pay the costs of the funeral and later be reimbursed from the deceased’s estate for any out of pocket expenses they incurred.
Also, if the deceased was a veteran, he or she may be entitled to certain memorial benefits, such as a U.S. flag. In very limited circumstances, the veteran’s benefits may also include monetary benefits.
If you're involved in a North Carolina probate or estate administration, or if you want to make sure your own estate is protected, please call us at (919)443-3035. Ask about a free phone assessment, or contact us online. At the end of your assessment, you'll know the next steps to take, and we'll connect you with resources that can help. There is no obligation to you. The assessment is completely free.
Is it okay if the family meets at the house after the funeral and distributes the household furnishings?
We do not recommend allowing anyone to remove personal property and household furnishings. Often there are specific distributions of personal property and household furnishings in the estate plan that will need to be made before any remaining household furnishings are distributed.
In fact, we recommend that you consider changing the locks to the deceased’s home as quickly as possible. You’d be surprised at some of the stories we’ve heard of family members being surprised to discover that a child or sibling entered without permission and helped themselves to various items that “the deceased would have wanted them to have.” If you are the executor or trustee, it is your duty and obligation to ensure that the property is properly handled and distributed to the correct people at the appropriate time.