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LTC Bullet:

Is Medicaid Planning Elder Abuse?

Monday May 08, 2000


The April 2000 issue of "Elder Law Advisory," a newsletter for elder law attorneys, contains an article entitled "Elder Abuse: One Prosecutor's Perspective." The author, Paul Greenwood, is the head of the San Diego District Attorney's Elder Abuse Prosecution Unit.

According to the article: "We are being reminded constantly that the older generation is the fastest growing section of the U.S. population. As prosecutors, we need to take heed of the various statistics so that we can prepare now to meet the challenges of responding to the needs of a graying society. WITHIN FIVE YEARS, THE TERM ELDER ABUSE WILL BE AS FAMILIAR AS SPOUSAL ABUSE AND CHILD ABUSE ARE NOW." (Emphasis added.)

That is startling in itself, but look what Mr. Greenwood lists among his examples of financial abuse of the elderly:

  • "Theft of assets such as savings, stocks, or real property by use of a power of attorney or quitclaim deed."


  • "Exchanging the senior's assets in return for a false promise of 'life time care.'"

Now compare these examples of elder abuse with the following description of training for Medicaid estate planning attorneys that we published in an LTC Bullet in December 1998.

"My colleague David Rosenfeld and I attended [The National Academy of Elder Law Attorneys'] 10th Anniversary Advanced Elder Law Institute in Washington, D.C. from November 20 to 22, 1998. True to past practice, this conference focused on aggressive techniques to qualify well-to-do seniors for Medicaid- financed long-term care while eliminating or mini- mizing their spend-down liability. For example, past- NAELA-President Vincent Russo gave a session entitled 'Irrevocable Trusts for Asset Protection' to a jam-packed audience in which he explained how to protect half a million dollars while qualifying a client for Medicaid. He concluded: 'If an individual requires long term care and has significant assets to protect, then a combination of outright transfers directly to family members and assets being placed in an Irrevocable Living Trust may make sense.' In another session, Florida attorneys Nicola Boone and Scott Solkoff recommended the 'Personal Care Contract,' a legal device whereby adult children promise to take care of an ailing parent in exchange for an early inheritance of his or her life's savings. When and if nursing home care becomes necessary, Medicaid eligibility is obviously no problem because the parent is now indigent. We questioned the ethics of this technique, but a New York attorney in attendance assured us that: 'It is not financial abuse of the elderly if the elderly person wants you to do it.' A third session, offered by Attorney Victor Finmann, explained how to divert large Individual Retirement Account (IRA) balances from Medicaid spend-down liability, while simultaneously avoiding Federal and State income, estate and excise taxes. According to Finmann's outline, his clients want to '[t]ransfer assets to qualify for Medicaid and thereby avoid [the] 100% 'tax' on assets [that would occur] (by payment of 100% of assets to [a] nursing home or home health care aides.)'"

If an elder law attorney charges $275 an hour to impoverish an ailing senior artificially for the purpose of Medicaid qualification, is it elder abuse? When an adult heir takes an early inheritance while placing an Alzheimers-afflicted parent in a nursing home on Medicaid, is it financial abuse? Is a well-to-do, but cognitively impaired, senior victimized by being placed in a welfare home when he or she could have afforded home care or assisted living prior to Medicaid planning? How does a "Personal Care Contract" promoted by a Medicaid planning attorney differ from a "false promise of 'life time care'" cited above as an example of elder abuse? How can agents be expected to sell long-term care insurance to healthy clients who are in denial about the need, when lawyers routinely provide government-financed care after the insurable event occurs? These are questions we would like to hear advocates of Medicaid estate planning answer.