Power of Attorney Agents and Trustees Beware
Agents appointed under a power of attorney and/or trustee of a trust should be aware that if there is any chance that the grantor of the POA or Trust will enter a New Hampshire nursing home (whether or not they are a New Hampshire resident) it is imperative that they are educated on the severe financial consequences that can result from improper planning and seek legal counsel to avoid personal liability. As discussed further herein, a new law has been recently passed impacting the liability of fiduciaries, and therefore, all professional should advise their clients to formulate an estate plan designed to protect individuals, as well as their fiduciaries and beneficiaries, from future financial hardship associated with long term care costs.
Oftentimes an individual in failing health will enter a long term care facility and start receiving care from such facility prior to the approval, or even submission, of a Medicaid application by the individual’s family member or appointed fiduciary. Accordingly, with the average nursing home cost exceeding $10,000 in the State of New Hampshire, an individual may receive tens of thousands of dollars worth of care in anticipation that public benefits will cover the costs. Undue delay, excess assets, and/or certain disqualifying transfers made in the five years preceding the assistance may result in a penalty period in which Medicaid benefits are delayed for a number of months. During any such penalty period, the long term care facility will not receive payment from the State for the care of the individual, necessitating payment to come from another source. Most times, the individual receiving the care lacks any ability or resources to pay for the care during the penalty period.
The New Hampshire legislature has attempted to address the concerns of long term care facilities providing services without compensation with the passage of a new law. On July 3, 2013, Senate Bill 138 was passed into law, which provides assisted living or nursing facilities with causes of action against (1) fiduciaries who fail to promptly complete and fully prosecute a Medicaid application and (2) recipients of assets transferred by a Medicaid applicant for less than fair market value in the five year period preceding assistance being rendered to the applicant. The passage of this law has created serious consequences for fiduciaries acting as agents under a power of attorney and recipients of recent inter-vivos gifts from an individual entering an assisted living facility. New Hampshire Governor Maggie Hassan allowed Senate Bill 138 to become law without her signature and issued a press release indicating support of the sentiment of the bill but expressing her concerns that the bill could be improved. Although it appears that the Governor may seek to alter the law in future years, individuals must plan for the potential consequences of the current incarnation of the law.
Very often, the fiduciaries subject to litigation under this new law are children or close family members of the individuals who are not educated on the various rules and regulations surrounding Medicaid benefits and the application process. Additionally, children and grandchildren are routinely provided gifts from their parents or grandparents who could be subjecting the recipient child or grandchild to future litigation by a nursing home seeking to recover the cost of care. Individuals should be cognizant that these recoverable penalizing gifts for the purposes of Medicaid can, and does, include gifts that are less than the annual gift tax exclusion provided by the IRS.