** This article has been revised from its original version which was published on January 15, 2020.

Individuals with capacity or who have executed a durable power of attorney granting financial, health, or legal authority to their trusted agents are ready to create a well-thought-out Medicaid plan.

However, when an individual has lost capacity and doesn’t have a sufficient durable power of attorney in place, then the process of becoming Medicaid eligible and obtaining benefits for their long-term care needs begins with a court proceeding for guardianship in New York.

Once guardianship has been established for personal needs and property management, the guardian may need to petition the court to expand their powers to start the long-term planning and Medicaid application process.

Begin with a New York Elder Law Attorney

Someone who is either petitioning the court for guardianship or an existing guardian helping their ward become Medicaid-eligible should seek the guidance of a New York elder law attorney with experience in both Medicaid planning and guardianship. The process can be overwhelming when gathering necessary documents. Your attorney is familiar with the needs of the court system and provides emotional support during a difficult time.

Medicaid Planning

Medicaid planning can include transferring assets to other family members or loved ones so they won’t be countable toward eligibility for Medicaid benefits that pay for long-term care expenses. Examples of New York Medicaid planning authorized by the court include:

• Spousal transfers of all assets
• Transfers to a child with disabilities
• Exempt transfers of residences to a live-in caregiver child
• Non-exempt transfers to family
• Signing renunciations and disclaimers of inheritances that can affect an incapacitated person’s ongoing Medicaid eligibility

As a fiduciary, the guardian must act in the best interest of the incapacitated person. They are held to a standard of care and loyalty when managing their ward’s estate. Intentionally divesting a significant portion of their ward’s assets may violate fiduciary responsibilities. This is especially true if the guardian gifts the incapacitated person’s assets to a third party or themselves.

How to Obtain the Court’s Approval

To obtain the court’s approval of the Medicaid plan, the guardian (or person petitioning for guardianship) must show, among other things, that proposed gifts won’t adversely affect the living conditions of the incapacitated person and would be consistent with their past preferences. If there is no evidence of past preferences, then the guardian must show that a competent reasonable individual in their ward’s situation would likely perform similar acts.

The guardian and/or petitioner should be aware that courts often approach Medicaid planning involving non-exempt transfers with caution. Cases in which the donees are charities or individuals who are not close surviving members of the incapacitated person’s family may seem suspicious. In the case of a Medicaid plan involving charitable gifting, courts have approved plans when the guardian has successfully shown evidence of a pattern of gifting or the incapacitated person consented to the charitable gifting.

Even in situations where the Medicaid plan calls for a transfer of assets that are exempt from transfer penalties, the guardian may need to show that the transfer doesn’t contradict the incapacitated person’s previous Last Will and Testament, intestate inheritance, or an established trust arrangement.

Transfer of Assets Example

An example could be a guardian seeking to transfer the incapacitated person’s home to only one sibling who has lived with them for many years and has an equity interest in the home. If the incapacitated person bequeaths their interest in the property to two siblings in their Last Will and Testament, or without a will, the laws of intestacy dictate that both siblings inherit equally, then the Medicaid plan could disrupt the estate plan or interfere with an intestate inheritance.

The guardian and/or petitioner should argue that the exemption is the only way to preserve the entire value of the house if the incapacitated person needs to apply for Medicaid. Furthermore, the guardian and/or petitioner should explain to the court that there will be transfer penalties if the title is given to the other sibling.

If you are a guardian seeking Medicaid eligibility for an incapacitated person, New York Medicaid planning must be well-thought-out and consistent with the known wishes of the incapacitated person.

When starting the process for guardianship in New York, it’s important to consult with and retain experienced New York elder law attorneys familiar with guardianship and Medicaid laws. The knowledgeable and compassionate team at Russo Law Group, P.C., provides professional services and advice regarding long-term care expenses, asset transfers, gifting, penalty periods, pooled trusts, and more. Take advantage of our comprehensive website as well as our free seminars and webinars to learn more about how Russo Law Group, P.C. provides peace of mind. Please contact our law firm to speak with one of our experienced elder law and estate planning attorneys today at 1 (800) 680-1717.