Jan Neal Law Firm, LLC

Alabama Estate, Elder and Special Needs Law


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Welcome

Welcome to Jan Neal Law Firm LLC, located at 207 N. 4th Street, Opelika, Alabama 36801 where you can find the latest news concerning Probate, Elder and Special Needs Law in Alabama.  Contact Jan at 334-745-2779 or toll free 1-800-270-7635 or email her at neal@janneallaw.com, jbneal@icloud.com, jbneal@me.com.

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Avoid The Ultimate Co-mingling of Assets

It is standard advice to avoid co-mingle property of an older relative with your own money because it may be necessary to prove what belongs to each.  For instance, if your relative needs to apply for Medicaid it may be difficult to provide a clean trail of his or her assets and expenditures for five years prior to application as is required by Medicaid.

But the ultimate co-mingling is when families live on property owned by the older relative who never partitioned the property to deed individual parcels to the children or grandchildren. It is not unusual to see families who live and operate businesses off the property of an aging mother, father, or grandparent.  This can provide a great family support system and work for all parties involved.  Until it doesn’t. 

If the aging parent becomes sick enough to need nursing home placement and there are not enough liquid resources to pay for that, then the property will need to be liquidated to provide income to pay for nursing home care or to spend down assets before qualifying for Medicaid.  This leaves the relatives living on the property in a very precarious position.

If you are in this position, get legal advice now about what you can do to protect yourself and your aging relative before it becomes an emergency.     


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Is Your Out-of-State Health Care Directive Valid?

Making sure your end-of-life wishes are followed no matter where you happen to be is important. If you move to a different state or split your time between one or more states, you should make sure your advance directive is valid in all the states you frequent.

A medical advance directive gives instructions on the kind of medical care you would like to receive or who should speak for you if you become unable to express your wishes yourself. Each state has its own laws setting forth requirements for valid advance directives and health care proxies. For example, some states require two witnesses, other states require one witness, and some states do not require a witness at all.

Most states have provisions accepting an advance directive that was created in another state. But some states only accept advance directives from states that have similar requirements and other states do not say anything about out-of-state directives. States can also differ on what the terms in an advance directive mean. For example, some states may require specific authorization for certain life-sustaining procedures such as feeding tubes while other states may allow blanket authorization for all procedures.

To find out if your document will work in all the states where you live, consult with an attorney in the state. You may want to prepare documents for each state. 

As for Alabama, health care directives prepared in other states are valid if they comply with Alabama law or the law of the state where created.  Even if an out of state directive is honored, Alabama will not authorize the administration, withholding or withdrawal of health care if prohibited in Alabama.  For instance, in Alabama a health care directive permits the agent to make all decisions the person who made the document could make but does not include psychosurgery, sterilization, abortion when not necessary to preserve the life of the principal, or involuntary hospitalization. Further, the advance directive for healthcare of a patient who is known by the attending physician to be pregnant shall have no effect during the course of the patient’s pregnancy.

Even if you have a valid out of state directive, consider that research may be needed during an emergency to determine whether the out of state document is valid under the laws of the state where prepared since medical professionals will not know without further investigation.  This is why creating a document which complies with the law of each state may be the most straightforward solution. 


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Physician Order For Life Sustaining Treatment (POLST)

You can get a good deal of information from the internet, but it is not always accurate for your state.  An example is the Physician Order for Life Sustaining Treatment (POLST) for Alabama.  This is an advance directive agreement between a doctor and a patient with advanced, chronic, or end-stage illness stating the patient’s choices for treatment. A doctor signing the form turns those choices into physician orders to assure that the patient gets only the treatment he or she wants. It is known as a portable medical order.  

There are a number of states which recognize this national form first developed in 1991 in Oregon, but Alabama is not one of them.  The closest thing Alabama has is a portable DNAR (Do Not Attempt Resuscitation) which only instructs health care providers not to perform cardiopulmonary resuscitation (CPR) if a patient’s breathing stops or if the patient’s heart stops beating. 

According to the Alabama Department of Public Health, A POLST form from another state (or downloaded from the internet) cannot be a substitute for the Alabama Portable DNAR form published by Health Department. If a hospital or other health care entity wants to use its own DNAR rather than the Health Department form, it can, but it will not be portable from facility to facility.

If you want specific treatments honored in Alabama you need to either name an agent who knows your wishes to act for you as your health care proxy or prepare a detailed Advance Directive For Health Care, but no doctor will sign off on it.    


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Transfer on Death Deed (TODD) Not Valid in Alabama

You may have read a widely circulated post on Facebook that would make you think you should prepare a Transfer on Death Deed (TODD) to pass your property when you die without the need for probate.  And you can download and prepare such a document at various online locations.  See https://www.templateroller.com/template/2142576/transfer-on-death-deed-form-alabama.html. The only problem is Alabama does not have a TODD statute, so any such deed would have no validity.

As of January 14, 2022, twenty-nine states, along with the District of Columbia and the U.S. Virgin Islands, have some form of TODD.  Alabama is not one of them, and neither is Georgia or Florida.  Mississippi, bordering Alabama, does have a TODD statute, and, as of January 14, 2022, a TODD statute was pending in Tennessee.

There are other ways to pass property while avoiding probate, but be aware of the fact that the TODD is not available in Alabama. 


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How Gift Giving Can Affect Medicaid

If you will need Medicaid to pay for long-term care for you or your spouse in the next five years, you need to be careful with gift giving because giving away money or property can interfere with your eligibility. 

Under federal Medicaid law, if you transfer certain assets within five years before applying for Medicaid, you will be ineligible for a period of time (called a transfer penalty), depending on how much money you transferred. Even small transfers can affect eligibility. While federal law allows individuals to gift up to $16,000 a year (in 2022) without having to pay a gift tax, Medicaid law still treats that gift as a transfer.  In fact, for every $6600 you give away you will incur a one month period of ineligibility for Medicaid. A month of penalty means Medicaid will not pay for your care, no matter how destitute you are.    

Medicaid reviews all bank records for five years prior to application. Any transfer that you make, however innocent, will come under scrutiny. For example, Medicaid does not have an exception for gifts to charities. If you give money to a charity, it could affect your Medicaid eligibility down the road. Similarly, gifts for Christmas, weddings, birthdays, and graduations can all cause a transfer penalty, however reasonable gifts are usually allowed. If you buy something for a friend or relative, this could also result in a transfer penalty.  Also selling property for less than the tax assessor’s appraised value is considered an uncompensated transfer of the amount for which you sold the property for less than the tax value.  You will need documentation showing that you received fair market value in return for a transferred asset to avoid incurring a penalty. Repaying a debt not supported by a promissory note will also be considered a transfer subject to a penalty.

While most transfers are penalized, certain transfers are exempt from this penalty. Even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:

  • your spouse
  • a trust for the sole benefit of your child who is blind or permanently disabled
  • a special needs trust for the benefit of the Medicaid applicant

In addition, special exceptions apply to the transfer of a home. The Medicaid applicant’s home may be transferred to the following individuals without incurring a transfer penalty:

  • A spouse
  • A child who is under age 21
  • A child who is blind or disabled (the house does not have to be in a trust)
  • A sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home
  • A “caretaker child,” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.


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Medicaid Spousal Income Allowance Increase

Medicaid’s maximum monthly maintenance needs allowance (MMMNA) changes every July.  This is the most in monthly income that a spouse living at home (known as the community spouse) is allowed to have when his or her own income is not enough on which to live, allowing him or her to take some or all of the institutionalized spouse’s income. The minimum monthly maintenance needs allowance as of July 2022 for Alabama is $2289 (up from $2178)  As an example, a community spouse who has income of $1500 whose spouse entering the nursing home has $2200 in income, would be allowed to keep $789 of the institutionalized spouse’s income each month – enough to bring his or her income up to $2289.

As for resource limits established every January, in 2022 the community spouse may keep as much as $137,400 without jeopardizing the Medicaid eligibility of the spouse who is receiving long-term care. Known as the community spouse resource allowance or CSRA, this is the most that a state may allow a community spouse to retain. While some states set a lower maximum, the least that a state may allow a community spouse to retain in 2022 is $27,480.  As of January 2022 Alabama allows the community spouse to keep one-half of the couple’s resources, not to exceed the maximum of $137,400.

If nursing home care is anticipated in the future it is important to calculate the income and resources of a couple to determine the financial impact long term care will have and to plan to retain as much as possible and still qualify for Medicaid coverage.     


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Planning for Burial/Cremation

Alabama allows an individual to prepare an affidavit appointing an agent to deal with disposition of his or her remains at death. This can be a useful document to have when there is the potential for disputes in a blended family concerning where someone should be buried or whether to bury or cremate the remains.

I have written about this affidavit previously on this blog (see https://janneallaw.com/2017/01/06/appointing-an-agent-for-disposal-of-remains-in-alabama/), but it bears repeating due to a development I have seen in recent years.

Often unmarried significant others are making burial/cremation arrangements for a partner, and it comes as a surprise to them to learn that the funeral home will not accept the instructions of the unmarried partner to cremate. Instead the instruction must come from the next of kin. This can be especially problematic when there are estranged children, making the process even more stressful than it already is.

To avoid this problem, when preparing estate planning documents, it is a good idea to have an affidavit prepared or included in your will giving the person of your choice, especially an unmarried partner, the authority to make arrangements in the manner you wish, to include cremation.


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Safety Warning For Adult Portable Bed Rail Models

An advisory issued earlier this month warns people against using a series of adult portable bed rail models after at least three people — including one in a nursing home and another in an assisted living facility — were entangled in them and died of asphyxia.

The U.S. Consumer Product Safety Commission named the following 10 models of Mobility Transfer Systems adult portable bed rails in which it says users may become trapped, resulting in serious injury or death:

  • Freedom Grip (model 501)
  • Freedom Grip Plus (model 502)
  • Freedom Grip Travel (model 505)
  • Reversible Slant Rail (model 600)
  • Transfer Handle (model 2025)
  • Easy Adjustable (model 2500)
  • 30-Inch Security Bed Rail, single-sided (model 5075)
  • 30-Inch Security Bed Rail – Extra Tall, single-sided (model 5075T)
  • 30-Inch SecurityBed Rail, double-sided (model 5085)
  • 30-Inch SecurityBed Rail – Extra Tall, double-sided (model 5085T)

The Commission’s advisory “urges consumers to immediately stop use, disassemble, and dispose of” these bed rails, which have been on the market since 1992 and available through such online retailers as Walmart.com and Amazon.com.

Users can report any incidents related to these rails at www.SaferProducts.gov.


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Supreme Court Rules Medicaid Can Recoup a Larger Share of Injury Settlements

If you are injured due to another person’s negligence and receive Medicaid benefits to pay for care, the state has a legal right to recover the funds it spends on your care from a personal injury settlement or award. Yet in a legal case involving a Floridian teen who was catastrophically injured more than a decade ago, the U.S. Supreme Court this week ruled that states have the right to recover funds that they may spend on future medical expenses, too. 

The decision affects anyone who receives medical care through Medicaid after suffering a disabling injury that results in a lawsuit.  

In 2008, a truck struck 13-year-old Gianinna Gallardo, leaving her in a vegetative state. The state’s Medicaid agency provided $862,688.77 in medical payments on Gallardo’s behalf. Her parents sued the parties responsible, and the case eventually settled for $800,000, of which about $35,000 represented payment for past medical expenses. The settlement also included funds for Gallardo’s future medical expenses, lost wages, and other damages. 

The state Medicaid agency claimed it was entitled to more than $300,000 in medical payments from this settlement, including money that had been specifically allocated for Gallardo’s future medical expenses. 

Gallardo’s parents then sued the agency in federal court, arguing that the state of Florida should be able to recover monies only from that portion of the settlement allocated for past medical expenses. 

When a U.S. district court ruled in favor of Gallardo, the Medicaid agency appealed. A court of appeals reversed the lower court’s decision. Ultimately, the U.S. Supreme Court agreed to hear the case to resolve the conflict. 

In a 7-2 decision, the Supreme Court agreed that the state is allowed to recover benefits for past — as well as future — medical care. Justice Clarence Thomas, who wrote the majority opinion, noted that Medicaid law “distinguishes only between medical and nonmedical care, not between past (paid) medical care payments and future (un-paid) medical care payments.”  

Justices Sonia Sotomayor and Stephen Breyer dissented. They argued that accepting Medicaid shouldn’t leave a beneficiary indebted to the state for future care that may or may not be needed. 

To read the full decision, click here.


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Medicaid Personal Liability

When Nursing Home Medicaid eligibility has been established there is an amount of income that the nursing home resident must pay directly to the nursing home.  After that amount is paid Medicaid picks up the difference in that personal liability and the nursing home Medicaid rate for room and board.    

Before paying the personal liability Medicaid will allow the resident to keep:

  • The personal needs allowance of $30 per month;
  • The spousal minimum monthly maintenance needs allowance (enough money to bring the income of the spouse at home up to $2178);
  • Family maintenance needs allowance (a similar allowance for minor or dependent adult child, a dependent parent or a dependent sibling of either spouse);
  • Costs of necessary medical or remedial care not covered by a third party (e.g. Medicare Part B premium).

These allowances are made to the extent the resident’s income can cover them.  It is entirely possible for the patient to exhaust his or her income before paying any personal liability at all to the nursing home.

It is important to remember that during the time a Medicaid application is pending the resident should pay the estimated personal liability or risk receiving a bill for this amount from the nursing home.  After eligibility is established Medicaid will publish the exact personal liability to use.

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