In order to leave specific amounts of money (or specific assets, such as brokerage accounts, etc.) to named beneficiaries, you may have your bank account(s) and/or your brokerage account(s) titled in one or more of the following manners:

• "[YOUR NAME] IN TRUST FOR"          ("ITF" ACCOUNT)
• "[YOUR NAME] AS TRUSTEE FOR"          ("ATF" ACCOUNT)
• "[YOUR NAME] PAYABLE ON DEATH TO"          ("POD" ACCOUNT)
• "[YOUR NAME] TRANSFER ON DEATH TO"          ("TOD" ACCOUNT)

You may also use a special designation for minors (under 18 years of age), called the “Uniform Gifts to Minors Act” (or “UGMA”) designation(s). Please discuss this with your broker or bank representative so that the account(s) are properly set up for the minor(s). You will need the minor’s social security number, and the gift must be deemed irrevocable.

Another way to “avoid probate” is to make the beneficiaries joint owners with you. This designation is sometimes “Joint Tenants With Rights of Survivorship” or (“JTWROS”). There are
a number of real dangers associates with this kind of titling. These include (but are not limited to) adverse tax consequences as to appreciated assets (like stocks), possible loss of the assets to the children of predeceased beneficiaries, possible loss of income to the donor (as to “UGMA” accounts), and possible loss of the assets due to creditors’ actions against the other joint tenant(s), to name a few. Accordingly, joint ownership (except as between husband and wife) should not be undertaken unless and until you discuss this form of titling with your accountant or attorney.

Note, too, that tax-deferred investments (such as IRA accounts) should not be titled in “TOD” of “POD” or “ITF” or “ATF” designation(s) as long as your spouse is surviving, as he or she may “roll-over” the tax-deferred investment into his or her name and continue to realize tax-deferred status. Such investments should have designated beneficiaries (primary and contingent) as part of the investment plan. You should consult your tax advisor or attorney as to the precise manner in which such tax-deferred investments are to be titled.

You have been nominated to serve as Personal Representative for a deceased person (“the decedent”). You will be in charge of carrying out the decedent’s plan as expressed in the Will. To perform this role well, you do not ordinarily need special financial or legal training. Common sense, conscientiousness and honesty are the main requirements. Should you need help, you will be able to hire lawyers, accountants or other experts and pay them from the decedent’s assets. So, as you learn about the duties of  Personal Representatives, keep in mind that you can always hire someone to guide you through the process of estate administration.

As Personal Representative, your duties are likely to include:

1. Deciding whether probate court proceedings are needed, or whether the amount and type of property covered by the Will means it can be distributed without probate.
2. Deciding whether there are simplified procedures that allow the immediate transfer of at least some assets to the people who are entitled to these assets due to the death of the decedent.
3. Marshaling of assets and identification of heir(s), including a search for “unknown assets” (such as via www.fltreasurehunt.org) and a search for heirs who need to be located and notified (may need genealogical services to assist you in this regard).
4. File the Will (and any Codicils) in the appropriate Court.
5. Review Testamentary Plan with beneficiaries (and serve the correct notices of administration upon the appropriate beneficiaries).
6. Obtain documents to qualify you as Personal Representatives (death certificates, waivers and bonding documents).
7. File Probate Pleadings in Court to have the Will admitted to probate and to have you appointed by the Judge as the Personal Representative.
8. Sending notice of probate to persons (relatives) who would have been entitled to the decedent’s estate but for certain provisions in the Will.
9. Securing all probate and non-probate assets and sensibly managing probate assets during the period of administration (which can take more than a year).
10. Handling day-to-day details of the estate, such as terminating service contracts, leases, etc., notifying government agencies (e.g., social security, Medicare, V.A., etc.) that you are handling the decedent’s affairs and seeing that mail is appropriately forwarded and change-of-address notices are timely made.
11. Setting up of appropriate bank and brokerage accounts to hold money and assets belonging to the decedent’s estate.
12. Establish and maintain all books and records of the estate for accounting(s).
13. Paying continuing expenses of the estate (e.g., mortgage payments, utilities, taxes, maintenance, insurance, etc.).
14. Paying any debts that the estate is legally required to pay. As part of this requirement, you must identify any “reasonably ascertainable” creditors and provide notices to them. Creditors then have a specific time frame in which to assert a claim against the estate (usually three months). You must also decide whether a claim is or is not valid.
15. File and serve objections to creditors’ claims which you decide are not valid claims against the estate.
16. Prepare applicable I.R.S. form(s) (such as form numbers 56, SS-4, 1041, W-9, K-1, etc.) for execution by all appropriate parties and see that appropriate forms are served on parties and/or filed with I.R.S.
17. See that decedent’s final income tax return (form 1040) is filed and that any unpaid income taxes are paid in a timely fashion to avoid penalties and interest.
18. See that the estate receives any income tax refund for overpayments.
19. Generally obtain and review documents, correspondence, contracts, memoranda, tax returns, etc., relevant to the decedent’s assets and liabilities.
20. Gather information about and value non-probate assets in which the decedent had an interest (such as life insurance, joint bank accounts, etc.).
21. Obtain appraisals for unvalued estate assets.
22. Invest cash balances in interest-bearing, money-market or equivalent accounts, and see that investments are properly allocated and/or diversified to further satisfy Prudent Investor requirements.
23. Prepare Notice Concerning Fiduciary Relationship (form 56) for the I.R.S..
24. Maintain sufficient cash assets to meet ongoing needs of the estate and raise funds if necessary (i.e., to pay estate taxes, creditors’ claims, etc.).
25. Determine and pay funeral and administrative expenses (Court costs, attorney’s fees and accountant’s fees, etc.).
26. See to the publication of Notices of Administration.
27. Prepare, and serve estate Inventories (initial and amended).
28. Prepare Preliminary Notice and Report or Affidavit of No Estate Taxes Due.
29. Consider post-mortem planning in conjunction with attorney for estate and tax advisors (as to federally taxable estates).
30. Prepare Affidavits of Domicile.
31. Revalue assets as of six months after date of death for federal estate-tax purposes.
32. Arrange for estate representation by CPA on routine audits.
33. File federal estate tax return (form 706) along with payment of estimated estate tax payment.
34. Obtain Federal estate tax closing letter (for federally taxable estates).
35. Protect decedent’s pets and see that they are relocated in accordance with decedent’s wishes.
36. File petition to recognize Florida homestead and obtain protective Order re same.
37. In estate “pour-over” situations, see that other fiduciary (trustee) has been notified and is able to receive distribution.
38. Pay or satisfy all estate beneficiaries and heirs.
39. Prepare and obtain Receipts of beneficiaries and heirs and file same in court.
40. Prepare, serve and file Accountings as necessary or obtain waivers re same.
41. Obtain Discharge of Personal Representative and file same in court.
42. Complete plan of distribution as set forth in final Order Closing Estate.
43. Close estate.

The foregoing list is illustrative and not necessarily all-inclusive, because the Duties of a Personal Representative of an estate vary greatly depending upon the nature of the estate assets (business assets, real estate, stocks, bonds, personal property, etc.), and the value of the gross estate (including both probate and non-probate assets). Many of the duties enumerated above may be expanded greatly or eliminated entirely. For example, if there are real estate or business assets to be disposed of, steps may have to be taken to protect, insure, manage, and then actively market and sell said property. Creditor’s claims, when same are objected to by the Personal representative, may require separate litigation, including mandatory mediation.

For sizable estates (in excess of the federal estate-tax threshold – which may be anywhere from $600,000 to  more than $3.5 million, depending upon the date of death of the decedent) –  those services relating to the preparation and filing of a federal estate-tax return (form 706) will be necessary,  and advanced post-mortem estate planning is usually required. Additional legal and tax-accounting services from professionals (lawyers and accountants) are to be obtained by the Personal Representative.

Few things we have to deal with in life are more difficult than having to face the loss of a loved one. Beyond the grief accompanying the loss, we are faced with new and often bewildering legal and financial challenges. The following is a brief checklist of the procedures and steps that must be addressed at this terrible time:

1. Funeral Issues:

Quite often pre-arrangements have been made. Whether pre-arrangements have been made or not, most funeral homes will assist you with the formalities of the funeral and burial process. One issue relates to the number of death certificates to be obtained (see Death Certificates, below).

Where pre-arrangements have not been made, it is up to the next of kin or the designated Personal Representative under the deceased’s Last Will and Testament (the “Will”) to see that these arrangements are promptly made. Sometimes the deceased has written some directions or preferences regarding funeral and burial arrangements (burial versus cremation, location of cemetery plots, choices as to religious services, etc.). Sometimes the deceased is an organ donor (which may be ascertained by looking at their driver’s license or advance directives. If there is no Will, and there is a surviving spouse, he or she usually has the legal say as to funeral arrangements. If there is no Will nor a surviving spouse, next of kin of equal consanguinity (that is, blood relations of equal standing in terms of inheritance, have authority to make and carry out funeral arrangements. These are (in this order): children, parents, grandchildren, grandparents, siblings (brothers and sisters), nieces and nephews, aunts and uncles, first cousins, second cousins, and so on. If there are no pre-arrangements nor written directives of the deceased, and next of kin of equal sanguinity cannot agree upon the arrangements, resort to legal proceedings may be necessary.

Funeral expenses are a second priority claim against the estate (after estate administration expenses), and the Courts take special care to see that such expenses are paid even before taxes are paid or the heirs may receive their inheritance. Most funeral bills can be paid through credit cards or other means and, when such charges are advanced by loved ones, the estate administrator is required reimburse the loved ones for any such advances before the inheritance can be distributed to designated heirs.

2. Death Certificates:

There are two basic kinds of death certificates issued by the State of Florida. One kind (the “long-form”) sets forth the cause of death. The second kind (the “short-form”) redacts the cause of death. Generally, the long-form is only needed for claims involving  insurance. Banks, courts, brokerage firms, etc., can be provided the short form. In fact, Florida prohibits the recording of the long-form of death certificate (due to privacy issues). You can always order additional certified copies when they may be needed. In all but a few rare instances, photo-copies are not permitted. If you are unsure, you may order six initial death certificates, two with cause of death and four without. If you are aware of six life insurance policies, you would immediately order at least six long-form death certificates.

3. Handling Financial Matters:

Where there are bank or brokerage accounts in the name of the deceased and his or her spouse, or other jointly held assets, which allow either joint owner to sign checks, the death of either owner has no impact upon the survivor’s ability to pay bills and meet exigent needs. Where the next of kin or heirs at law are not the same, the Personal Representative of the estate has the legal responsibility for seeing to it that ongoing bills of the estate are paid. This may be a problem, because – among other things – it can take up a month or more to initiate estate administration, open up an estate account and transfer funds into that new account. Your lawyer should be consulted in this regard as soon as practicable, as there are means for accessing estate funds in such exigent circumstances.

Remember, however, that there are few bills which must be paid immediately, and most creditors will allow a substantial grace period for nonpayment. For example, public utilities will not shut off service, insurance companies will not cancel hazard insurance (for automobiles, real estate, etc.), condo and homeowner associations will not impose liens, and taxing authorities will usually waive penalties for late payment. You should notify credit-card companies, mortgage lenders, etc., if you will be paying late (of course explaining that the reason relates to the death of a loved one), and these creditors always allow sufficient time for you to open a formal estate administration and marshal assets to pay their bills.

4. Social Security:

The funeral home usually notifies the Social Security office as to the death of your loved one. The Social Security Administration then stops making further payments in the name of the deceased but provides a one-time death benefit of $255 to the surviving spouse. If payments of monthly Social Security benefits have been being made through direct deposits to the deceased’s bank account, the entire payment for the month in which the deceased person died will be automatically debited back to the Social Security from that account. This is the case even if the date of death was the last day of that calendar month.

Where there is a surviving spouse, and his or her Social Security  payments are less than the deceased spouse’s Social Security payments, the surviving spouse’s payments will be increased to the same level as her or her spouse’s – received in the next calendar month after death. Of course, no further payments will be received under the deceased’s account.

5. Homeowner and Automobile Insurance:

Unfortunately, Florida is currently going through a crisis with respect to liability insurance – particularly due to recent hurricanes. Several major insurance companies have even threatened to cancel all policies in the State and pull out of the homeowners insurance business in Florida. Where the insurance company learns that a homeowner has died and that the residence is now vacant and solely in the name of the deceased’s estate, many companies will not renew the insurance. Steps must be taken to deal with this issue as soon as possible, because we may be in the hurricane season (June 1 through November 30) when the policy is scheduled to end, and you do not want to leave such a substantial asset as a home or condominium uninsured.  Often times vacant property cannot be insured, or the insurance rates will be greatly increased.

As to automobiles, whoever is going to be driving the car must either have their own car insurance or have their name added to an existing policy.

6. Securing Property:

The Personal Representative is legally responsible for seeing to it that all of the deceased’s property – real and personal – is secured and protected. This may involve taking possession of certain property (such as jewelry), changing locks on doors, etc., but there are a few things that must immediately be dealt with:


Real property: In Florida, where climate-related factors exist, vacant property can be put in jeopardy if not secured and monitored. Humidity can lead to mold which can severely damage property. Hurricanes can utterly destroy property that has not been safeguarded (e.g., where hurricane protection systems such as shutters are not attended to). If the Personal Representative cannot attend to these issues, professional property managers can be engaged to see that unoccupied property is so protected.

Automobiles, boats and other vehicles: These types  vehicles too face grater risk  of loss or damage in Florida. Cars should not be left where they may be stolen or damaged. Boats must be secured and kept out of harms way.  Recreational vehicles require special safeguards to avoid being lost or damaged. Most importantly, insurance must not be allowed to lapse. The Personal Representative of the estate has the legal responsibility for seeing to it that this insurance is maintained.

7. Automatic bank payments:

Often the deceased has arranged for certain payments to be automatically debited from his or her bank account (usually a checking account) on a periodic basis (usually monthly). The Personal Representative or joint owner on said account must ascertain just what bills these payments apply to and whether they should be continued or discontinued. For example, auto-debiting for supplemental health insurance should be curtailed for a deceased person. In many cases the amount being debited should be reduced (e.g., certain other kinds of insurance).

8. Mail – Change of Address:

A Change of Address form should be delivered to the local post office of the deceased as soon as possible, providing the post office with the address of the Personal Representative of the estate. In addition, postal boxes should be checked periodically after the date of death so that mail doesn’t accumulate. Usually, the local letter carriers will be advised and will not allow mail to accumulate in postal boxes (but not always).

As each bill comes in, you should fill out the change of address form provided with that bill – even if you have already notified the post office regarding a general change of address. In other cases, contact the vendors directly to advise of the new address. You always want to confirm such changes in writing.

9. Safe Deposit Boxes:

In Florida, safe deposit boxes are not sealed upon the death of the owner, and co-owners on the box are not precluded from having access. In fact, there is a presumption that personal property (money and jewelry) belong to the co-owner on a safe deposit box. Of course, the co-owners must have a key to gain immediate access, or, if the key cannot be located, the bank will arrange to have the box “drilled.” This entails the services of a locksmith and considerable expense ($200 or more). In the absence of a co-owner, a Court order must be obtained. In such case an attorney can obtain the Court order at a special exigent type of hearing. There is additional legal for this proceeding (usually $1,000 or more). A less expensive way to obtain a Court order allowing entry into the safe deposit box is through the mail, in which case a Court appearance is not necessary and the cost is less than $500.

Even after obtaining the Court order, a bank officer must be present and must supervise (and closely monitor) the entry into the box and must then prepare an inventory of the contents of the box which must be filed with the Court. Nothing can be removed from the box except a Will and Codicil, life insurance policies, and the Will and Codicil must be immediately filed with the Probate Court.  A separate Court order is required to remove anything else from the box.

10. Who must be notified of the death:

Only persons having an interest in the estate of the deceased must be notified. Such persons always include the surviving spouse, minor children (through their legal guardian), and the putative Personal Representative. Beyond that select group, no other persons must be immediately notified. During the course of an estate administration, other persons, classes of persons, and certain business and governmental entities must be provided formal notice of estate administration as well as other documents. All of these persons and entities, however, can wait until estate administration is formally opened up, which can often take weeks or even months after death. The Will, Trust and other legal instruments dictate the identities of these persons and entities.

11. Dealing with Loneliness:

The single biggest problem to be dealt with – after the shock and immediate  grief begins to pass – is the loneliness that accompanies the loss. This is particularly true for surviving spouses and is one of the reasons that the mortality rate for surviving spouses is very high, especially in the first year following the death of a spouse.

As a result there is a vital need for frequent and close contact between the bereaved and his or her loved ones – especially children. It is not a good idea to allow the surviving spouse to remain at home alone or for long periods of time. This solitude  can be as devastating as the loss itself. There is nothing wrong with providing grief counseling and grief management services through professional advisors and appropriately-trained members of the clergy.

*   *   *

The foregoing topics and suggested ways of coping with the loss of a loved one are not intended to encompass every circumstance and concern. Attorneys who routinely handle estate administration can and should be consulted as soon as you have suffered the loss and feel strong enough to deal with these issues. Often some other relative or close family friend can make the contact for grieving relatives or friends.

One thing you should glean from this essay is that it is wise to do pre-planning. Death being an inevitability, pre-planning makes extremely good sense. To pre-plan you need about one hour with an appropriate professional who cam provide planning advice and a planning checklist to be reviewed. Besides your attorney, the funeral home can and will provide such pre-planning advice.

Elder law attorneys routinely provide pre-planning advice and counsel, and a short consultation with such an attorney may be the surest way to avoid some of the anxiety and confusion (and potential mistakes) that often accompanies the loss of a loved one.

A Road to Avoiding Impoverishment

There are essentially two ways of planning for a health-care calamity requiring long-term-care: (1) Waiting until the calamity is upon you, or (2) Looking ahead, anticipating the problems associated with such calamity and seeking appropriate professional guidance to protect you and your loved ones from being impoverished. Most people take the first route, and as a result the risks of financial ruin loom greater, and the options for planning are far fewer.

To assist you in taking the second approach, the following is a brief explanation of the Medicaid program, contrasting it with Medicare, and the current state of the Medicaid program as it relates to the elderly. Medicare and Medicaid sound alike, but these programs are quite different in terms of their benefits and eligibility requirements. Medicare is a government-subsidized insurance program, similar to social security. Medicaid is a need-based, fully government-paid-for entitlement program (i.e., “welfare”).

Medicare is a federal program open to all persons over 65 years of age who are entitled to receive social security or Railroad Retirement benefits. There are four parts to the Medicare program (parts A, B, C and D).

Part A covers medically necessary inpatient care, home health care, hospice services and convalescent or rehabilitative services in a skilled nursing home – up to a maximum of 100 days. Strictly custodial care in the patient’s home or in a skilled nursing home is not covered by Medicare.

Part B covers outpatient care provided by physicians, and such services as X-rays, ambulance services, therapy, medical equipment (wheel chairs, breathing apparatus, etc.), and similar services. Medicare pays 80% of the usual and customary costs of such services. The remaining 20% is the patient’s responsibility or can be paid through a supplemental health insurance policy (called Medigap insurance). Part B does not cover any costs of skilled nursing care in a care facility.

Part C is a combination plan, including Parts A and B, using a managed care approach. There are some limited benefits to this “HMO-type” approach; however, many of the same drawbacks to HMOs generally apply to managed care Medicare under Part C. In any case, the costs of skilled nursing home care is not covered.

Part D is the new prescription drug plan. There are a multitude of variations in Part D plan options – too numerous to include here.

As far as skilled nursing care is concerned, Medicare Part A requires (1) applicant must be in a Medicare approved facility, (2) the stay in the facility must follow at least three days of hospital care, (3) the patient must enter the facility within thirty days of the hospital care, and (4) the patient must require skilled nursing services. This requirement is based upon a need for skilled nursing services (not merely custodial care), such as those types of services provided by highly-trained personnel, such as R.N.s, therapists and related professionals. Custodial care relates to “activities of daily living” (or “ADLs”), which include, bathing, transferring, toileting, feeding and clothing. In addition, to qualify for Medicare Part A, the patient must continue to need such services and must show continued improvement from such rehabilitative services. Once the patient’s condition stabilizes, Medicare Part A skilled nursing services are discontinued. Medicare will only pay 100% of the first twenty days of care, after which the patient must pay a co-payment for the next 80 days (e.g., $137.50 per day).

Although Medicaid covers many types of health-care needs and includes persons under the age of 65, in this article I will refer primarily to the Medicaid Institutional Care Program (“ICP”) as it relates to the elderly (over 65) who may need skilled nursing care (beyond the 100-day Medicare limit) and custodial care (where the applicant cannot meet his or her activities of daily living).

Although Medicaid is a federally-created and federally-funded entitlement program, the eligibility requirements vary significantly from State to State. Applicants for Medicaid who are eligible for SSI or AFDC are automatically eligible for Medicaid. There are some basic eligibility requirements for the Florida ICP:

1. Must be a U.S. citizen or resident alien admitted for permanent residence, age 65 or older, blind or disabled

2. Must be a Florida resident

3. Must receive skilled care in a Medicaid certified facility

4. Must have a social security number

5. Must assign to the State all rights to collect private health insurance benefits and long-term-care insurance benefits

6. Must meet both income and asset tests

7. Must apply for all eligibility benefits

The first category of eligibility refers to the applicant’s level of care or the level of health-care assistance actually needed. This criterion is determined by the State of Florida Department of Elder Affairs (a subdivision of the Florida Department of Children and Families or “DCF”) through their CARES unit. The term “CARES” stands for Comprehensive Assessment and Review for Long-Term-Care Services. The CARES unit is a State administered team of professionals usually consisting of a registered nurse and social worker who visit the applicant and review the applicant’s medical records. As a general rule, the inability of the applicant to perform at least three activities of daily living (“ADLs”) will meet the basic level of care requirement.

The second category of eligibility relates to the income and assets of the applicant and his or her spouse. As far as income is concerned, the applicant’s gross monthly income cannot exceed the then-applicable income cap (presently $2,022. The term “gross monthly income” includes the Medicare premium (presently between $96.40 and $110.50), so if an applicant’s net social security benefit were $1,926.60, the gross figure (adding back the $96.40 Medicare premium) would be $2,023, just one dollar over the income cap, such that the applicant would not meet the income test. There are remedies for such circumstances however.

The applicant’s spouse, who may not presently need Medicaid assistance, is termed the “community spouse,” and his or her income is not counted as part of the income test.

The asset test, however, does apply to both the applicant and his or her spouse (the community spouse). The applicant may not have countable assets of more than $2,000, and the community spouse must not have countable assets in excess of $109,560. This last figure, called the community spouse resource allowance (or “CSRA”) increases each calendar year based upon the increase in the cost-of-living.

Certain assets of the applicant and his or her spouse (the community spouse) are not countable as far as Medicaid is concerned. These assets (in Florida) generally include: Homestead property having an equity value of no more than $500,000; household furniture, furnishings and personal effects of a reasonable value; one automobile of any value; income-producing property where the income being produced is consistent with its fair market value; life estate interests in real property; life insurance where the cash value is no more than $2,500; a pre-paid burial plan of any value, provided the plan is irrevocable; a separate burial fund of no more than $2,500; an IRA account which is annuitized in accordance with the life expectancy tables published through the Social Security Administration; and unmarketable real estate.

Because certain types of assets are non-countable, while other kinds are countable, you can readily see that converting a countable asset to a non-countable asset is aa quick way to meet the Medicaid asset test. For example, suppose the applicant had $12,000 in a bank account, and his Florida homestead having a fair market value of $100,000 has a mortgage of $10,000 owed on it. The applicant could simply take the excess $10,000 from his bank account and pay off his $10,000 mortgage, leaving him equity of $100,000 (far below the $500,000 threshold) and leaving him $2,000 in the bank – meeting that eligibility requirement.

There are other planning opportunities associated with transfers of assets from the applicant to others. In the first instance, any transfer from the applicant spouse to his or her community spouse is permitted prior to the application. Supposing the applicant had $106,000 and his spouse had $4,000, the applicant could transfer $104,000 to his community spouse, leaving himself with $2,000 and leaving the community spouse with $108,000 (below the CSRA of $109,560, and the applicant would be immediately eligible.

But suppose the applicant or his community spouse transferred the same $104,000 to their children prior to the application? Such a gift transfer would trigger a penalty, usually consisting of a period of Medicaid ineligibility being imposed against the applicant.

There are two elements to transfer penalties: (1) the period of required disclosure or “look-back” period, and (2) the manner in which the penalty for the transfer may be imposed, based upon the applicable penalty formula. Until the passage of the Deficit Reduction Act of 2005 (“DRA”), the look-back period was three years from the date of the Medicaid application. With the passage of the DRA this look-back period was increased to five years. Any uncompensated transfer (i.e., gift) must be disclosed as part of the Medicaid application process, if the transfer was made within the applicable five-year look-back period. I refer to this look-back period as the applicable look-back period, because Florida is phasing in the new DRA rules such that they will not fully apply to transfers until December of 2010. Until that month, the look-back period is based upon a gradual month-by-month phasing-in of the penalty period. I state “probably” because that is the way the new rules presently appear to be worded and because that is how Florida has historically enacted such sweeping changes in the Medicaid program (the last such major change having been made by OBRA 1994).

The manner in which the penalty period is imposed – the penalty formula – was based upon the dollar value of the transfer and the month of each such transfer. Until the passage of the DRA, the total dollar amount of a transfer made within any one month was divided by $3,300, the quotient was then rounded down to the nearest whole number,, and this whole number was the amount of months of Medicaid ineligibility imposed starting from and including that month during which the transfer was made. So, by way of example, a transfer of $6,500 in May of 2,007, would have to be disclosed for an application made in June, 2007. The $6,500 would be divided by $3,300, and the quotient (1.969) would be rounded down to the nearest whole number (1) and the applicant would be assessed a penalty of one-month’s ineligibility starting with the calendar month of the transfer (May, 2007), so as of June, 2007, the applicant would be eligible for Medicaid.

With the passage of the DRA, three major changes were enacted, one good, and two very harsh. The penalty divisor was increased to $5,000 (being a good change for the applicant), but the period of ineligibility now must run from the date of the Medicaid application, not the date of the transfer. This means that any transfer during the applicable look-back period which results in a transfer penalty will have that penalty period begin to run when the application for Medicaid is filed. What’s more, there will be no more rounding down of the penalty periods. The penalty period will be broken down into increments as small as daily (e.g., for a thirty-day month, a .5 penalty will equate to 15 days).

The effective date of the DRA – as far as computing of penalties is concerned – is November 1, 2007, so transfers made prior to that date will still use the old rule as far the date the penalty period will begin. The $5,000 denominator, however, will be used to calculate the pre-DRA transfers (good).

These new changes (the DRA) with respect to Medicaid do not mean that the applicant and his or her community spouse are bereft of planning options. Indeed, there are several new and effective tools remaining in the Elder Law attorney’s arsenal to protect assets and obtain Medicaid eligibility within the context of Medicaid. Because no two sets of circumstances are exactly alike, you are urged to set up a meeting with an Elder Law attorney to establish a suitable plan well in advance of having to face the kind of health-care calamity all too common to an aging population.



In recent years a new form of conveyance of real property, the "enhanced life estate deed," has been gaining popularity. Florida title underwriters, most notably the Lawyer's Title Fund (often referred to as "the Fund") fully recognize this type of ownership, which can be established through an appropriately‑worded deed. But what is an "enhanced life estate?" To better understand this term, we must look back at the history of life estate transactions as it applies to Floridians.

In the misplaced hope that senior citizens could "avoid probate" and make things "simple" for their loved ones upon their deaths, many people have turned to the use of a quitclaim deed of their property to their children while retaining in themselves a life estate interest. The language used in such a deed is some variation of, "Mary Jones, an unmarried woman, as Grantor, to Mary Jones, an unmarried woman, FOR LIFE, with the remainder interest to Jack Jones and Steven Jones, both married men, collectively as the Grantees." This form of conveyance creates an estate for life in Mary Jones and a remainder interest (that which remains after Mary's death) in her two sons, Jack Jones and Steven Jones.

Using this traditional form of conveyance, Mary Jones could not sell or encumber (e.g., mortgage) her property without the joinder of both her sons, Jack Jones and Steven Jones. Then, too, creditors of either of Mary's sons could obtain an enforceable lien against Mary's home, because neither son can claim Mary's home as his homestead property. Moreover, both sons being married, their respective wives can claim an interest in the property, either upon their husband's death or in the event of a divorce. If Mary and one of her sons have a falling out, that son could impair Mary's right to sell or otherwise dispose of her home. Since there are remainderpersons (the sons) who have an interest in Mary's home, Mary owes her sons a duty to not commit waste as to the home (this term, "waste," is a legal term which imposes special obligations upon Mary). These are just some of the potential problems with the traditional form of life estate.

The enhanced life estate (also termed a "Ladybird deed" in honor of the late former First Lady, "Ladybird" Johnson) recites that Mary retains the right to dispose of her home as she sees fit, can lease it, encumber it, etc., and shall not be liable for legal waste, wholly avoiding the need to obtain the consent or cooperation of the remainderpersons should she wish to exercise those retained rights. This also means that Mary Jones can mortgage, sell or otherwise change title to her home at any time in the future, without the need of even notifying her sons. Florida title companies now accept this form of conveyance, and it is a recommended alternative to the traditional life estate deed. This form of life estate also avoids unwanted capital gains taxation, and life estates are excluded assets when determining Medicaid eligibility.