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Planning Trends and Incorporating Medicaid Planning into Your Practice
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Planning Trends and Incorporating Medicaid Planning into Your Practice
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Do Non-Attorneys Have a Role in Medicaid Planning?

In episode 10 of our Industry Insights video series, our Corporate Counsel Scott Engstrom, J.D, discusses the professional roles and responsibilities involved in Medicaid planning.

Scott examines the attorney’s position as the leader of the process, but also the roles other financial specialists — tax advisors, insurance agents, and financial advisors — play in creating a comprehensive plan for the client. He also highlights when it is appropriate to include other professionals, the value they can bring, and things to consider when entering any professional partnerships.

Amy: Hi, I’m Amy Beacham, Communications Director for Krause Financial Services. Welcome to Industry Insights. In this series, we discuss news, updates, and hot discussion topics that affect the elder law space and that are relevant to you as an elder law attorney. Working on hundreds of cases per month and working with attorneys from across the country, we see trends that affect this area in planning, and we want to share some of those insights with you today. Today, we have our Corporate Counsel, Scott Engstrom. If you’ve been following along with Industry Insights, you know Scott is a regular on this series. Today, he’s going to discuss a topic we’ve seen trending on the Listservs lately: what is the difference between an attorney and a non-attorney Medicaid planner? Welcome, Scott.

Scott: Hi, Amy. Thanks for having me.

Amy: So, to start off and to lay a baseline here, what is Medicaid planning? What are we talking about when we say that?

Scott: So, when people ask about Medicaid planning, they’re asking about a financial review, specifically, of someone’s finances or a family’s finances when there’s some sort of long-term care horizon. Whether you’re looking at a long-term care horizon or what some more immediate needs are, you’re looking at what the finances look like and what could be done with them to preserve assets, and if there are options available.

Amy: And why is identifying that timeframe so important?

Scott: Well, and you could find a lot of this great information on our website about the lookback and the penalty periods. But really broadly, Medicaid is a joint federal and state program with complex sets of rules. So, there are rules relating to gifting assets away. And if you gift assets, there can be a penalty period. So, identifying whether your long-term care needs are further down the road, further out than five years most likely, based on the health of the individual that you would be considering, or if it’s going to be more immediate in the very short term or the medium term within five years. That’s going to dictate what types of planning options are available.

Amy: So, if we’re looking at Medicaid planning then, who would a person contact if they want to engage in that type of planning?

Scott: First and foremost, I would recommend contacting an attorney. That’s just basically because an attorney is likely going to know who to contact if there are other aspects that you need to review. But also, there are going to be some corresponding documents you’ll likely need. So, it might not just be the actual financial documents, but you might need a will, you might need a power of attorney.

Amy: Sure. Some of that basic estate planning in place.

Scott: Absolutely. So, that’s why the first person I would go to would be an attorney.

Amy: Okay. Anyone else?

Scott: I would go to a tax advisor. What you’re doing with your assets can have tax implications, and you want to make sure that whatever you’re doing on the financial planning side, or when you’re putting together this plan, taking into account your long-term care needs–you want to make sure that any benefit you’re getting from those planning strategies isn’t wiped out by the tax ramifications. So, a tax advisor is someone you definitely want to consult with. You’d also want to potentially consult with an insurance agent. An insurance agent is somebody who is going to have specific insight into how particular insurance products could help. Long-Term Care Insurance, a Medicaid Compliant Annuity, a funeral trust funded by a life insurance policy, things like that–the insurance agent is going to be very familiar with those products and also familiar with the carriers and which specific carrier might be the best option for you. Another person you would contact is a financial advisor or planner, someone you might have worked with previously. Or if you don’t have somebody specific, finding a financial advisor. They’re kind of good at looking holistically at your financial picture, your income sources, your assets, whether they’re liquid assets or whether they’re tied up in real estate or other items. They’re going to have a holistic picture of your finances as well. So, those three are kind of the real big buckets I would put the other people you’d want to consult with in.

Amy: Okay, so those are really the non-attorney Medicaid planners. So, can you describe what each of their roles really is in the Medicaid planning process?

Scott: Sure. So, each of them are going to work with the attorney. And again, the attorney is the quarterback here. The attorney needs to be the one leading this. But the tax professional is the one who is going to be working with the attorney to make sure that whatever planning options they’re coming up with with the other professionals are not going to have some significant tax ramifications. The insurance agent is going to be working with the insurance carrier, is going to be signing off as the producer of any insurance products that need to be purchased. The financial planner is also going to be able to facilitate transactions, work with financial institutions as well. And all of those parties are going to be communicating with the attorney. But again, everything needs to run through that attorney to make sure that everything is put into a comprehensive package that makes sense.

Amy: Okay. So, the attorney is the quarterback, like you said. Everything flows through that party. Can you describe then really what the attorney’s full role is in Medicaid planning?

Scott: Sure. So, because Medicaid is a joint state and federal program like I discussed at the top, there are a lot of very specific rules, and those rules are going to be specific to the state that the person is in. And whatever transactions occur, whether they were gifts, whether there are transactions that occur with tax-qualified funds, if there are insurance products that are purchased, they have to be done appropriately and according to the rules of Medicaid if you want to avoid any sort of transfer penalty if you are looking for some sort of more immediate need. And you also want to make sure that if you were doing something that is further down the road that there is still some sort of mechanism that you can use to get Medicaid eligibility if you need to in a shorter term than you anticipated. So, the attorney is really going to be looking at those rules very closely. They’re going to be looking at the advice they’re getting from the tax professional, from the insurance agent, from the financial planner. They’re going to be making sure that the information they’re getting from their client is accurate, and they’re going to be checking all of that information consistent with the Medicaid rules in their state to come up with a comprehensive plan. And then, very importantly, communicate it in a way that the client and their family can digest because getting all of that information and distilling it down into something that someone who is not an attorney can understand–that can be very difficult. And that’s a big part of the attorney’s job.

Amy: Okay. So, it sounds like we definitely agree an attorney should be involved in every Medicaid planning case. Now, for attorneys who might not be used to working with these so-called non-attorney Medicaid planners, what are the advantages of them choosing to work with those people?

Scott: Well, first of all, it’s beneficial to have that exchange of ideas. You can perhaps get new ideas. And it’s also going to give your client some peace of mind that, yes, this attorney is an attorney and they are trained in the law and they’re going to make sure that this plan is consistent with the law, but that attorney being willing to work with these other parties and make sure that things are buttoned up from various different angles–that shows the client that this attorney is going to be collaborative and work towards the right plan for them. And really, the second big benefit is education. You always want to be educating yourself. I always say that they call it the practice of law because you’re practicing every day. So, why not educate yourself throughout the process? Get ideas from the tax professional; learn more about the insurance industry and what products are available for your client from that insurance producer; and learn more about financial planning devices, tools, and transactions that can help your client. So, there’s a lot of benefits in creating this holistic team that can help get your client the objective that they’re seeing.

Amy: Sure. Yeah, I like the way you put that. So then, the flipside… now, are there any disadvantages or caveats the attorney should really be aware of when working with these other types of professionals?

Scott: Yep. You want to make sure, first of all, that these professionals are qualified, that they have experience, that they know what they’re doing. So, you’re going to want to have a test phone call with them and just discuss how they conduct their business. And if you like what you hear, that’s someone who you might want to work with after you look into their background. If it’s not someone you’re comfortable with on a personal level, it’s probably not somebody you should be working with for your client. And there is also the idea that there could be too many cooks in the kitchen. Not every case is going to be so complex that you need a tax professional, insurance agent, and financial planner. Somebody with very few liquid assets, it’s probably going to be something that’s relatively simple.

Amy: Okay, great. Well, thank you for sharing that insight with us, Scott. For more information on this topic, contact our office at 855-552-5893. Thanks for watching.


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