Elder law is not simply Medi-Cal planning. Nevertheless, an attorney who fails to recognize asset preservation issues, runs the risk of malpractice claims and ethics complaints.
In my opinion, elder law creates a new standard of practice for attorneys in estate planning and several other practice areas. Traditional estate planning, consisting of a "simple" will or living trust, becomes irrelevant if the estate is reduced by medical and long-term care costs which could have been prevented with elder law asset preservation planning.
On June 29, 1995 Los Angeles Daily Journal columnist, Robert E. Goodwin said, "...The anticipated probate cost savings of a living trust may pale in comparison to the Medi-Cal costs to which a living trust exposes the family property." Mr. Godwin went on to say, "...knowledge that a living trust may expose heirs to recovery claims of $200,000 to $300,000, in a typical case, will certainly cause the client to think twice before subjecting his estate to a potential claim of that magnitude even if its incurrence is uncertain.
At the very least, the duty now rests on practitioners to bring this new exposure to their clients' attention. Malpractice liability issues similarly arise for those in the investment advisory professions, where living trusts are regularly promoted with little regard for Medi-Cal consideration...."
Meanwhile, legal issues impacting older Americans continue to grow in number and complexity. Actions advised by attorneys with regard to a single matter may have unintended adverse legal consequences. For example, if you are going to update your clients' business succession plan and one spouse is ill, the attorney needs to know enough about Medi-Cal planning to know that the family business, valued in any amount, can be protected from the cost of the ill spouse's nursing home care. This enables the remaining family members to continue the family business uninterrupted. As another example, gifting, a primary component of sophisticated estate planning, can create adverse consequences in the context of asset preservation if the client requires long-term care. To overlook these legal issues invites professional disaster.
To further complicate matters, the "Granny Goes to Jail Law" adds another layer of complexity to Medi-Cal planning. In a little known section of the Health Insurance Portability and Accountability Act, enacted January 1, 1997, asset gifting constitutes a federal felony if the transfer incurs a penalty period. The transferor (Granny) may be fined $25,000 and spend up to five years in prison. The individual who assisted the transferor could receive up to a $10,000 fine and one year in prison. On the other hand, if no penalty period is triggered, nursing home costs are paid for by the Medi-Cal program. Elder law is not for the faint hearted.
Over the past eight years, elder law, once seen as a sub-specialty of estate planning, has burst onto the scene with state and county bar sections springing up across the country. Moreover, elder law has inched into other practice areas such as taxation, litigation, family, real property, and business law, to name a few. Recently, for the first time, the California State Bar now has an Elder Law Standing Committee. In the past, this standing committee was known as the Legal Services Section on Legal Problems of the Aging. Committee members believed the name change more accurately depicts its members' activities.
Further, elder law is now a recognized certification by the California State Bar. The State Bar, itself, credentials attorneys in probate, trust, and estate planning but not in elder law. Recognition of elder law as a distinct discipline in California and by most other state bars, indicates the expanding client needs for this unique practice area. Elder law as an official certification is accomplished through the National Elder Law Foundation with the American Bar Association as the accrediting agency. The American Bar Association, by the way, boasts its own elder law section.
Professionals sometimes question whether a matter constitutes estate planning or elder law. Often the categories overlap. For example, traditional estate planning attorneys formerly advised clients regarding probate, living trusts, guardianship/custodianship provisions for minors, conservatorship, right to die preferences, and high net worth tax planning. For elder law attorneys, the list of issues expand with most practioners concentrating in two or three of the following, and often as an adjunct to an existing estate planning practice:
- Independent living options (including home health care)
- Retirement planning, including public and private retirement benefits, survivor benefits and pension benefits
- Age discrimination in employment
- Housing issues, including discrimination and home equity conversions
- Long-term disability planning
- Supplemental and long-term health insurance issues
- Health law
- Medicare claims and appeals
- Preservation/transfer of assets seeking to avoid impoverishment when an individual enters a nursing home
- Medi-Cal
- Social Security and disability claims and appeals
- Mental health law
- Long-term care placements in nursing home
- Nursing home issues including questions of patients' rights and nursing home quality of care
- Elder abuse and fraud recovery cases
