Barnes Lipscomb & Stewart PLLC

If I Don’t Have a Will, Is It Such a Big Deal?

Imagine your children being raised by someone you would never, ever have wanted, even as a babysitter. That’s just one reason why young parents need to have wills.

There are many other reason why everyone needs a will, but the focus of a recent article appearing in moms.com, “What Actually Happens If You Die Without A Will,” focuses on young children and what could happen if their parents die with no will.

Many parents put this task off, and it’s certainly understandable. Who wants to plan for their own death? We all want to enjoy life and pretend to ourselves that we will somehow outsmart dying.

However, we should do what needs to be done to make sure our family and children aren't left to deal with more stress and fighting when we die.

A will is a legal, binding document that provides instructions regarding how you want your estate to be handled after you die. It can also address the care and guardianship of your minor children, if both parents are deceased or one is unable or unwilling to take guardianship of them. You can also include your final wishes for funeral arrangements.

If you die without a will (intestate), then the assets in your estate (possessions, savings, retirement funds and any property you own) will be divided among your living beneficiaries. Without a will, the estate is divided up according to state probate law.

With a will, you can be certain that your specific wishes are honored after your death. For instance, if you have a common-law spouse, you can ensure they get whatever you want them to have. Some states and cities don’t give common-law spouses estate rights. Your will can help you distinguish between biological or step-children, or minor or adult children.

It is important that a will can establish guardianship of your children, in the event of the death of both parents (or an inability or unwillingness of a living parent to take guardianship). Without a will that discusses guardianship for your children, a judge will make the decision, locating and screening potential guardians. This could take weeks or months, and may not be the person who you want raising your children.

Selecting a guardian for your children is a little daunting. Do you want your sister and brother-in-law to raise them, alongside their cousins? Some people select close friends or godparents. It’s not always an easy decision.

You’ll want to have a properly prepared, legally binding will, prepared by an estate planning attorney, to protect your family. Delaying getting this task done, because it’s not a fun way to spend an afternoon, can have serious consequences.

Reference: moms.com (November 26, 2018) “What Actually Happens If You Die Without A Will”

How Do I Make Sure My Assets are Properly Titled?

An estate planning attorney will tell you that assets need to be properly titled, so that your estate plan aligns with the assets. In some cases, you can use joint ownership of an asset to have the asset pass directly to an heir at the time of your death. However, it’s not always the right way to do it.

Every estate plan is different, because every family’s situation is different. However, any estate plan can be undermined, if assets are not titled properly. This is examined in the article, “Joint-ownership property titling can avoid costly probate process,” from Reflector.com, with a look at five ways of titling assets.

Joint tenancy. In this situation, two or more persons own equal shares of a property. The owners don’t have to be related or married to each other. When the asset is owned jointly by spouses, the asset is passed onto the surviving spouse at the death of the other spouse.  However, when the asset is owned jointly by unmarried people, the entire value of the asset is included in the deceased’s estate and is subject to probate. Therefore, joint tenancy might not be the best property titling method, if you want to share joint ownership with somebody other than your spouse. If one of the owners doesn’t honor his/her financial obligations, the asset can be subject to the pursuit of creditors up to that owner’s respective ownership percentage.

Tenancy in common. This is similar to joint tenancy in many ways.  However, the big difference between joint tenancy and tenancy in common, is that the relative ownership percentages of the tenants in common may differ. One owner can own 25% of the asset, while the other can own the other 75%. If one tenant in common dies, the percentage of her ownership in the asset is included in her estate and is subject to probate.

JTWROS. Joint Tenancy with Rights of Survivorship (JTWROS) means that the right of survivorship distinguishes JTWROS from joint tenancy and tenancy in common. When the owner dies, her share of the ownership is transferred to the surviving joint owner automatically by operation of law without probate. Each joint owner also has the right to transfer or sell his or her interest in the property without the consent of the other joint owner, and thereby destroy the JTWROS status. Were this to happen, it would convert a JTWROS into a tenancy in common.

Tenancy by entirety is a JTWROS between spouses. However, neither spouse can transfer or sell their interest without the consent of the other spouse. Tenancy by entirety is better protection from the creditors against one spouse than a JTWROS. That is because the property isn’t owned by either the husband or the wife but by the marital entity.

Community property. This is recognized in Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Community property provides that married couples own an equal and undivided interest in all properties accumulated while they are married. Each spouse owns half of the value of the community property, and either spouse can transfer or sell one half of the property. When one spouse dies, one-half of the value of the community property is included in the probate estate and gross estate of the deceased spouse.

Talk with your estate planning attorney about how to title your assets, to ensure that your estate plan works the way you want it to. If you need to make changes, don’t wait—delaying this important step can lead to a wide range of estate problems for your heirs.

Reference: Reflector.com (December 2, 2018) “Joint-ownership property titling can avoid costly probate process”

Is Your Estate Plan out of Date?

If your estate plan is more than three or four years old, it’s out of date, and that could cost your heirs plenty. Is that worse than not having an estate plan at all?

Not having an estate plan is a bad thing. Having an out-of-date estate plan isn’t much better. Both could cost your loved ones plenty and create a stressful situation. Every few years, you need a review. If you have big changes in your life, or if the tax laws change, you need a review, as reported in the article “7 Reasons It's Time To Update Your Estate Plan” from Forbes.

If there’s a change in the laws that govern your estate, like powers of attorney or advance medical directives, you should review your plan. An estate plan should also be reviewed, when you experience a significant life event or changes in circumstances. Let’s look at the most likely events that should motivate you to contact your estate planning attorney.

• A move to another state. Every state has its own laws for wills, trusts, and other estate planning documents. Some of the differences are minor, like the number of witnesses required for a will to be valid; and others are more substantive, like laws that say a spouse will inherit a minimum share of the estate. A few states also still have inheritance or estate taxes.
• A second home in another state. This may also be cause for a plan update. You might want to work with your attorney to determine which state should be your principal residence. You may also need powers of attorney and advance medical directives that are valid in the new state in case you become disabled there.
• A change in your feelings or circumstances with heirs. This can occur when there’s an addition to the family, like a new child or grandchild. Revise the documents so the new family members are named and specifically included. The same is true with a new in-law. You also may want to delete someone who was included in your estate plan because of a death, divorce, or remarriage. Perhaps you also want to disinherit someone who’s estranged from the family. Your thoughts about a specific charity may have changed or you may want to change the charities in your will.
• A change in your assets or liabilities. A significant change in the value of your estate since the plan was drafted is reason for a review, whether it is an increase or decrease. You should look at the way in which the property is divided and decide if that’s still how you want it with your new circumstances.
• A change in the composition of your estate. If you’ve sold an asset, like a business or real estate that was a major part of the estate or you’ve added such an asset, you need to examine your plan.
• Your qualified retirement plan is outdated. It’s common for a person to not update the beneficiary designations of IRAs, 401(k)s, life insurance, and other retirement plans. Updating the beneficiary designations is critical, especially if the value of the account has increased significantly.
• Your executors and trustees have all died, or don’t want to serve. This is reason alone to update your estate plan. If the people you wanted to serve in these roles are no longer alive, it’s a sign that your estate plan is way out-of-date. Over time, people move, or relationships change. That’s why a review every few years is recommended.

Speak with your estate planning attorney. You may need a simple review, or a complete overhaul. Either way, you’ll sleep better knowing this is taken care of.

Reference: Forbes (December 2, 2018) “7 Reasons It's Time To Update Your Estate Plan”

Comedian Tim Conway’s Incapacity and Family Squabble Provides a Lesson

Few performers could match Tim Conway for making fellow actors break character and dissolve into giggles, as he did on The Carol Burnett Show in the 1970s. His ad-libs were enough to send everyone on stage and in the audience into uncontrollable laughter.

However, as funny as Conway was on screen, the last few years of his life were tragic. He was incapacitated by dementia, and the family fought over who had the right to make his healthcare decisions. A daughter from his first marriage and his second wife went at it in Los Angeles probate court for his conservatorship, as detailed in a recent article from Kiplinger, “Choose Agents for Power of Attorney, Health Care Proxy Carefully.”

Conway’s case illustrates that as more adults age with blended families in charge of their care, family disputes over decision-making authority are increasing. A person’s second spouse may be listed as health care proxy or the agent under the power of attorney. However, that doesn’t mean the adult children from the first marriage—who may have hard feelings—won’t start a legal challenge.  Siblings with different opinions on the costs and quality of care also may want to find a way to take control. This may result in a judge appointing a guardian or revoking a relative’s authority. This can only mean more resentment and more legal bills.

Families can avoid the time and expense of litigation, by attempting mediation of the problem before going to court. A geriatric care manager or a social worker can assess a loved one’s care needs and offer a professional opinion to assist a family looking for a solution. There are also other strategies you can try to avoid a fight.

To begin with, choose carefully when you give a person decision-making power over your finances and your health. It’s best to select a person who’ll try to get you the best care possible and not worry about their inheritance. A child with financial problems might not be the right choice for your financial power of attorney. For seniors living alone, there are of care-management agencies that will act as agents for a fee. However, make certain that you understand the fees and costs involved.

Once you’ve designated an individual as your health care proxy, have a conversation with them about why you selected them.  You should be specific about what type of care you want to receive.

You can also guard against a potential battle, by adding terms in your will that say if your children unsuccessfully challenge your choice of agent or health care proxy, they could have their inheritance eliminated or reduced.

Every few years, review the documents and confirm that they reflect your wishes. Make clear to family members what your wishes are, and if appropriate, why. If you know that your family relationships are not great, consider writing a letter to explain your decisions for assigning power of attorney and health care proxy choices. If you can leave your family intact, even when you have departed, that may be some comfort to all concerned.

Reference: Kiplinger (November 29, 2018) “Choose Agents for Power of Attorney, Health Care Proxy Carefully”

What Taxes Are Paid on Big Gifts?

So your parents are all about generosity, and gave you an extra big gift this year. Don’t worry about the taxes. Usually the giver pays them, but it’s not likely that your parents owe anything to Uncle Sam.

Unless your parents handed you a small fortune, like more than $15,000, the chances that they have to pay any gift taxes are very low, according to a recent article, “All About Gift Taxes: Do I Pay Tax on Gifts From Parents?” from Wealth Advisor .

If you are lucky enough to have such generous parents, make sure they understand the tax consequences of such a large gift.

In 2018, a person can give up to $15,000 per person, without any tax ramifications. However, even if your parent hits that level, they may only be required to file some paperwork. Your parent generally won’t owe an actual out-of-pocket tax payment, unless their gifts for the year are beyond the lifetime gift tax exclusion. For tax year 2018, that number is $11.18 million, and $22.36 million, if married filing jointly. The exclusion goes up to $11.4 million in 2019 and $22.8 million, if married filing jointly.

It’s possible that the IRS may impose a gift tax on a person who transfers money or property to another person, without getting something of at least equal value in return. However, this depends on the amount, and the IRS typically doesn’t go after any gifts that don’t hit the annual gift tax exclusion.

The annual gift tax exclusion is $15,000 and $30,000 for married couples filing jointly in 2018, which means your parent can give $15,000 to any person without creating a tax liability. If, for instance, a parent gives you $20,000—that would be a taxable gift. There’s most likely no tax, but he must file a gift tax return and fill out IRS Form 709, so the government can track the parent’s lifetime gift tax exclusion.

The IRS recently stated that the annual gift tax exclusion for tax year 2019 will stay at $15,000 for individuals and $30,000 for married couples filing jointly. However, the lifetime gift tax exclusion will increase to $11.4 million.

The IRS never taxes some specific transfers of cash or property, regardless of amount. You can avoid gift taxes when making gifts to a spouse, political organizations, or paying tuition and medical expenses on behalf of another.

When you pay for someone’s tuition or medical bills, send those payments directly to the institution to avoid any issues with the IRS. If you send it to the student or patient first, there will be some extra paperwork and it may also reduce their lifetime gift tax exclusion. If a gift creates an actual tax bill from the IRS, the person responsible for paying it would be the donor.

There are many ways to avoid the gift tax, such as smart estate planning strategies, creating a trust, and leveraging the exclusions for giving money to students. These can be effective, if parents invest in a 529 college savings plan for a child.

When a parent does owe out-of-pocket gift taxes to the IRS, the rate can be 18% to 40%. However, the IRS has specific rules and allows some exceptions, when it comes to gift taxes. For example, each year parents can make a lump sum contribution toward a 529 plan up to five times the annual gift tax exclusion, while avoiding a gift tax, as long as they make a special election. The special election means parents can ask the IRS to treat this contribution, as if they made it evenly throughout a five-year period.

In a slightly different situation, if you have recently received an inheritance from a parent, then you need to find out if you have an inheritance tax bill. An estate planning attorney will be able to help you with this.

Parents who want to provide their children with significant gifts should also meet with an estate planning attorney to create a strategic plan to manage their tax liabilities. This should be part of an estate plan.

Reference: Wealth Advisor (November 30, 2018) “All About Gift Taxes: Do I Pay Tax on Gifts From Parents?”

Is Your Retirement Plan Missing a Critical Piece?

People spend decades saving, tracking their account, and hoping they have enough money for their retirement. However, there’s often a missing piece—sometimes more than one!

How is your retirement planning going? No, we aren’t asking about your retirement accounts, although those are important. This article, “The One Piece Missing From Most Retirement Plans,” from Forbes, notes that while most people obsess about their savings, the missing piece they should be considering is what their retirement plan is: what do they want to do during retirement.

You can’t possibly know how much money you’ll need for retirement, if you don't know what you’ll be doing, right? There’s a big difference in the money needed to travel around the world versus sitting on the porch knitting sweaters for grandchildren and playing bingo at church.

Next, when you wake up on your first morning of official retirement, you’ll have no responsibilities or plans. How great! But, be honest: how much can you really tend to your garden or catch up on reading? Retirement can be up to 30 years or more. That's a lot of time left to live. Retirees frequently are bored, lonely, or depressed during retirement, because they don't have the routine, social interaction or purpose that they had at work.

Before you begin your retirement calculations, ask yourself these questions:

• Where will I live?
• Do I want to downsize?
• What are my dreams and goals in retirement?
• Do I want to have the flexibility to move near my children?
• Do I want to help my children with their finances?
• Have I adequately considered the rising cost of healthcare?
• Do I have family to help me?
• Will I need to consider living in a retirement home?
• Do I want to work a part-time job to keep busy?
• Do I want to leave my estate to my children or charity?

Yes, you need to save for retirement, and you need to make sure you have an estate plan in place. However, don’t neglect the important task of figuring out how you want to spend your time when you are retired. That will have an impact on how much money you need, where you will live and what the last decades of your life will look like.

Reference: Forbes (November 21, 2018) “The One Piece Missing From Most Retirement Plans”

How Does Medicare Differ from Medicaid?

Millions of Americans have access to healthcare services, because of one of these two programs. Their names are similar, but they serve different functions.

Maybe people get confused because the first six letters of both Medicare and Medicaid are identical. But they are very different, as the article “Medicare vs. Medicaid” from U.S. News & World Report explains.

Each program concentrates on different populations and offers specific benefits for its insured. There are several differences between Medicare and Medicaid. However, they share one thing: they are similarly complex. Let’s look at the key differences between Medicare and Medicaid and how each health insurance program works.

Medicare

Medicare beneficiaries are primarily seniors. Everyone who has paid into the Medicare system becomes eligible for Medicare when they reach age 65. Medicare isn’t based on income. Those who’ve received Social Security disability benefits for two years or who have certain conditions, like ALS (Lou Gehrig’s Disease), are also eligible. Medicare is operated by the federal government, and expenses are paid from Medicare trust funds. Original Medicare includes Part A, which pays for expenses related to hospitalizations, and Part B, which covers outpatient care. Beneficiaries can also buy a separate Part D plan for prescription drugs. There may be deductible and copayment costs associated with these plans.

Those who’d rather get benefits from a private insurer, instead of from the government, can sign up for Medicare Advantage, or Part C. These plans are required to cover everything provided by Medicare Parts A and B, and many also provide Part D coverage and dental or vision care benefits. Medicare Advantage plans vary in their deductibles and out-of-pocket costs and can restrict participants to the use of a network of approved providers.

Medicaid

Medicaid is the government health insurance program for those in low to moderate income households. People may also be eligible if they have physical, intellectual, or behavioral disabilities. The income and asset limits vary by state, but 138% of the federal poverty limit is the median eligibility requirement for adults. Applicants can usually have no more than $2,000 in liquid assets. Medicaid coverage includes hospitalizations, outpatient care and prescription drugs, as well as long-term care. Many enrollees have little or no out-of-pocket costs for coverage.

To be eligible for Medicaid, seniors must spend down most of their assets, as well as meet income requirements. Most states have a five-year look-back period that prevents seniors from transferring assets to another family member to meet Medicaid eligibility.

Medicare and Medicaid pay for many of the basic services, but there may be gaps in coverage, such as dental services or prescriptions. One can close the gap in dental care, by coupling their Medicare or Medicaid coverage with an affordable alternative to dental insurance, such as a dental savings plan, which can save members between 10 to 60% on procedures. For prescriptions, free discount services can reduce drug costs by half or more.

One of the areas of practice for an elder law attorney is helping clients protect their assets and their families, so that they can qualify for Medicaid benefits, especially in a situation where they need long-term care. An estate planning attorney can also guide you through this complex process.

Reference: U.S. News & World Report (November 21, 2018) “Medicare vs. Medicaid”

Celebrities’ Larger Than Life Estate Snafus

Who doesn’t love to learn about the inner lives of celebrities? We live vicariously through articles devoted to the rich and famous. However, when they die and leave a mess behind, we should pay attention to what they did wrong.

In the article “Yes, even celebrities make estate planning mistakes,” the Reno Gazette Journal takes a close look at four big estate planning mistakes we should all avoid. These are such basic estate planning mistakes that you’d think no one would make them!

You don’t have a will. Your affairs should be properly handled, and your family should be protected, when you pass away. However, neither singers Aretha Franklin nor Amy Winehouse had a will. Franklin left behind four sons with some financial issues. Amy didn’t take the time to plan either. She didn’t say how she wanted her $6.7 million estate to be distributed. Without any written instructions, her estate went through probate and was distributed to her parents. The primary purposes of a will are to designate the guardians of minor children, an executor of your estate and which beneficiaries are to get what assets.

Not considering a trust. Who wants to be a celebrity when it comes to private matters? Remember that a will is a public document, and anyone can go to the courthouse and look it up. However, with a living trust, your wishes remain private. Learn from the saga of the late Whitney Houston, who died at age 48. First, her will named her daughter Bobbi Kristina Brown as sole beneficiary. However, then her daughter died three years later at age 22. Houston’s estate was then involved in a battle with the IRS over the valuation of recording royalties and was assessed a tax bill of $2.2 million. To top it all off, her ex-husband Bobby Brown, ironically may be the heir of the Houston estate.

A living trust can help your estate plan remain private and away from others. It names who is entitled to your assets and how they are to get them. A trust names trustees. It also may provide estate tax benefits. If you look at Whitney Houston’s situation, a living trust may have helped by providing guidance to daughter Bobbi, after her mother’s death.

Failing to update your estate plan. We all experience changes throughout our lives. This includes finances, health, family dynamics and relationships—any one of these can mean it’s time for an estate plan review with your attorney. Look at the late Michael Crichton, the author of Jurassic Park, who was diagnosed with throat cancer, when his sixth wife was pregnant. Crichton failed to update his estate plan to include his soon-to-arrive son. His wife sued to include the baby as an heir, and Crichton’s daughter from a prior marriage opposed. The judge ruled the baby could inherit. Crichton could have saved everyone a lot of stress, anguish and money, by simply updating his estate planning documents.

Failing to plan for disability before death. You should also think about planning for the possibility of being disabled and needing assistance in managing your affairs. Ask your estate planning attorney about powers of attorney and living wills to help protect you and your loved ones, in case of incapacity. For example, the final years of blues singer Etta James, known for “At Last” and “Tell Mama,” were full of court hearings. The legal battle was between her husband of 42 years and her son from a prior marriage. Etta signed power of attorney over to the son in 2008, but her husband claimed that she suffered from dementia and was incompetent. Her son wanted to restrict the amount of money Etta’s husband spent for her medical care. They settled, and the husband was named as conservator. However, he was limited to $350,000 for medical care for his wife. Etta James passed a short while later.

So you’re not famous and don’t have a room with gold records and Emmy statues? That doesn’t matter so much as you might think. Make your kids proud not because you are a global star, but because you took the time to meet with an estate planning attorney and protected your family. Now that’s cool.

Reference: Reno Gazette Journal (November 14, 2018) “Yes, even celebrities make estate planning mistakes”

The Role of Life Insurance In Your Family’s Future

The real question isn’t if you need life insurance. The question is, what type of insurance do you need.

Life insurance is one of those things that you need, the minute you have a spouse or children who count on your income. Life insurance comes in two basic categories: term and permanent, also known as whole or universal insurance.

Term insurance is the less expensive of the two. It’s used to pay for things that your family needs in the next twenty or thirty years: paying the mortgage, financing college costs. Permanent insurance is used for leaving an inheritance, paying estate taxes or funeral costs. Permanent insurance grows in cash value that, depending on the terms of the policy, you can access while you are living.

NBC News recently published a story that asks “How much life insurance do I need?” As the article explains, term policies are cost effective and can be specifically designed to be in place when you need the coverage, like paying your mortgage or college tuition for children. Of course, the downside with term policies is that they’re only for a set duration. They’re not forever. People wait until the end of their term policy to get another one. Instead, they should buy a new policy as early as possible. Otherwise, you wind up paying more for the same amount of coverage later. Another negative about term policies, is that if you go to renew after the term, the premium will increase.

Permanent policies span your whole life and have cash value. They also grow tax free, and the savings can be borrowed from the policy tax free after a certain number of years. For higher-income earners, this can be a good way to have tax-free income in retirement and have greater tax diversification. Another benefit of permanent policies is that they can be used to pass down an inheritance tax-free. When someone dies, there may be an estate tax on their assets. Purchasing a permanent policy to alleviate this cost, is an effective way to pass down your wealth.

However, permanent life insurance policies are expensive. Returns in a life insurance policy are highly debated, with some believing in the tax advantages, and others counseling to “buy term and invest the rest.” Everyone’s situation is different. You can assess your needs by taking the “DIMEF” test:

• Debts: Look at all of your debts, except your mortgage.
• Income: Lost income from a spouse or a partner is the primary reason to buy life insurance and maintain the current lifestyle.
• Mortgage: Life insurance can pay off a mortgage, so your family can remain in the same home.
• Education: College costs for children or a spouse.
• Funeral expenses: These expenses add up quickly and your life insurance proceeds can pay for them.

Experts say you should have at least five times your annual income and enough to pay for 100% of your debts. You can calculate it with the following approach:

1. Take the total of your liabilities and debts, income to be replaced, final expenses and education or extra goals;
2. Subtract the savings or assets your family would use immediately, if you passed away; and
3. Subtract any current life insurance you own, excluding coverage offered through your work.

The cost will differ, based on factors such as age, health, lifestyle, gender, type of insurance and amount of coverage. You may also need to take a physical exam. If you’re ill, the cost will be more, or you may not be eligible for life insurance. The older and less healthy you are, the shorter your life expectancy is—and the more expensive the policy. To get a solid quote, you’ll need to undergo underwriting. The insurance companies can pull medical records or order a full physical. If you take prescription medications, the likelihood of a paying a higher premium also increases.

Life insurance is something that people tend not to think about, until they have children or purchase a home. The younger you are when you purchase a policy, the less expensive it will be. That’s something today’s millennials need to start thinking about. More than half of all millennials don’t own a life insurance policy. That may catch up with them in the future.

Reference: NBC News (November 24, 2018) “How much life insurance do I need?”

What You Need to Know About Nursing Homes

Nursing home residents are vulnerable. To protect a loved one who lives in a nursing home, you’ll need to know what the facilities are and are not permitted to do, and what actions to take, if necessary.

A nursing home is defined by Medicare as a special facility or part of a hospital that provides medically necessary professional services from a nurse, physical or occupational therapists, speech pathologists or audiologists. These rules are specific to a skilled nursing facilities, reports Investopedia in the article, “Things Nursing Homes Are Not Allowed to Do.” These rules do not apply to assisted living facilities or retirement homes, which have their own rules.

The following are some of the patient’s rights as spelled out by Medicare, and some are insights shared by a nursing home expert.

Discrimination. Skilled nursing facilities are prohibited by federal law from making a decision about whether someone can become a resident for reasons of race, color, religion, age, sex or any other protected characteristic.

Provided Services. The types of services to be provided and fees must be stated in writing before a patient becomes a resident. In some facilities, like continuing care communities, a large buy-in fee is required that ensures that residents will have access to various levels of care, as health needs change. Skilled nursing facilities may not charge those fees.

Patient Health Assessment. Patients receive a health assessment when they first enter a nursing home, and every day for as long as they are in the nursing home. The medical staff evaluates the physical and mental health, ability to speak and make decisions and to perform basic acts of daily living. The information from the assessment is used to plan treatment, evaluate progress and decide if the patient continues to be eligible for Medicare coverage. Residents have the right to be actively involved in their care planning. If they cannot, an adult child can participate for them.

Finances. While the nursing home is permitted to manage a resident’s personal finances, it cannot require a resident to do s, and it cannot do so without the written consent of the resident. If the resident decides to permit the nursing home to manage his money, they must receive quarterly financial statements, may not prevent residents from accessing their accounts, cash or financial documents and if more than $50 is deposited, the account must pay interest.

Respect and Dignity. It’s unfortunate that this has to be a law, but it does. Residents have the right to decide when they want to go to bed, when they want to wake, when they want to take their meals and what activities they want to do, as long as their decisions do not conflict with the plan of care. Abuse is not allowed, verbal or physical. No one is allowed to be medicated with any drugs not in their treatment plan. Physical restraint is not permitted, unless they pose a danger to themselves or others, and no one should be isolated. Residents also have the right to own personal property, privacy and security.

Visitation. Patients have the same rights in the nursing home that they have at their own homes. They may have visitors during reasonable times of day and they have the right not to see people, if they do not wish to see them. Family members must be permitted to visit at any time, unless the patient does not wish to see them.

General Health. The patient has the right to be treated like an adult, regardless of his or her physical or mental health. That means she is entitled to know her diagnoses, what medications she is being given and to see her medical records. She is also entitled to see her own doctor and not those of the nursing home. She may refuse treatments and medications, just as an outpatient may do. If she requests mental, legal or financial counseling, those services must be provided.

Medicare Benefits. Things get a little tricky here. The nursing home is not required to track the Medicare benefits being used to pay for the patient’s care. They also don’t have notify residents that the benefit days are ending. The only exception: if Original Medicare benefits stop earlier than expected because the patient is deemed not to be in need of the care. That’s the only time the nursing home is legally obligated to inform the patient. Patients or their family members need to be very cognizant of their coverage status. Medicare may cover a certain amount of time, under certain conditions, and then the benefits may end. Patients will be responsible for the rest of the bill.

Discharge Planning. Patients have the right to have help from the nursing home in the discharge planning process. Without the patient’s consent, they may not be discharged or transferred, unless:

• the patient’s health has declined to the stage, where the facility can no longer meet his needs;
• the patient has improved to the point, where he no longer requires the facility’s services; or
• the patient poses a threat to his own welfare or that of other residents.

In addition, a resident can be discharged for not paying the facility’s bills (but not when the delinquency is caused by waiting for Medicaid payments from the government).

Complaints. Residents and their advocates have a right to complain about any issue they have in a nursing home, and nursing homes can’t punish someone for doing so.

Ability to Sue. A 2016 regulation gave nursing home residents and their families the ability to sue any nursing home that receives federal funding. Before this, nursing homes could try to force people into arbitration, and any quality of care and safety issues could be kept private. However, a preliminary injunction granted in Mississippi in late in 2016 put this regulation on hold for now.

New Rules. There are new rules that give nursing home residents more rights. Residents will be allowed to receive any visitor, not just relatives, at any hour of the day, provided visitors don’t disturb fellow residents. Residents who want to live together will be permitted to do so, and nursing homes will have greater responsibility for ensuring that residents’ personal belongings aren’t lost or taken. In addition, nursing homes will be required to provide meals and snacks when residents want them, rather than only at set times. Staff will get more training in caring for dementia patients and preventing elder abuse, and nursing homes won’t be able to easily discharge residents with dementia, by sending them to a hospital and then refusing to readmit them.

At the essence, the patient’s rights in a nursing home should be the same as the patient’s rights in their own home. The more family members can be involved in their loved one’s day to day life at the home, the better the quality of life will be for the patient.

Reference: Investopedia (September 30, 2018) “Things Nursing Homes Are Not Allowed to Do”