Protecting Retirement Accounts for Spouses Who Need Long Term Care

Protecting Retirement Accounts for Spouses Who Need Long Term Care

Given the rapidly increasing cost of long-term care in a nursing home or assisted living facility, many couples inquire about how to protect their assets from being consumed by such costs, particularly their retirement accounts which often account for the majority of their wealth. While the Medicaid program is designed to provide payment for long term care costs for those who cannot afford the monthly cost, it is only available to those who qualify financially. A major determining factor for Medicaid eligibility is the amount of resources (assets) that are available to pay for care. An applicant for Medicaid cannot qualify for assistance if they possess excess assets, including the value of their retirement accounts. The Medicaid program also looks at the assets of the spouse in determining whether the applicant qualifies for assistance.

For married couples, the spouse who needs long term care (the “institutionalized spouse”) can only have $2,000. The spouse who does not need long-term care (the “community spouse”) can have the residence, vehicle, personal property and their own retirement accounts. They can also have a community spouse resource allowance that is based on the total countable assets that the couple has at the time of applying for Medicaid (between a minimum of $50,000 and a maximum of $130,380). Although the community spouse’s retirement accounts are not counted, all retirement accounts of the institutionalized spouse are counted in determining the asset limit. This can be very problematic when the institutionalized spouse has larger retirement accounts than the community spouse. Normally, the institutionalized spouse cannot just transfer their retirement accounts to their spouse without triggering income tax on the entire amount transferred.

The exception is a transfer of a “qualified” retirement asset that is divided by a Qualified Domestic Relations Order (QDRO). Qualified plans include: 401(k) plans, profit sharing plans, pensions, 403(B) plans and some forms of Simplified Employee Pension (SEP) IRAs. QDRO’s are typically thought of as a mechanism to divide assets when a couple divorces; however, if the retirement account is held in a “qualified plan” it can be divided by a QDRO without having to go through a divorce. Although a court order is required, it can be obtained in an action in family court for property division of a married couple, or through a guardianship action for transfer of the ward’s assets to a spouse, and no divorce action is required. Whether to bring the action in family action or a guardianship action will vary depending upon the circumstances, but either will accomplish obtaining the necessary court order.  Importantly, if the retirement account is an IRA, then a legal separation action must be filed in family court. Federal law provides that non-qualified retirement assets that are transferred from one spouse to another are not taxed if “transferred under a divorce or legal separation instrument.”

The benefits of the transfer of retirement accounts are numerous. Once a retirement account is transferred, the community spouse will become the owner of the qualified plan, without triggering any tax. The account will be considered an exempt retirement asset of the community spouse and will not interfere with the institutionalized spouse’s eligibility for Medicaid. Furthermore, any income received from the retirement account will not be considered available to pay the institutionalized spouse’s care costs and will not be available for estate recovery.

Although the transfer of a retirement account can be accomplished at the time one spouse needs care, it is important to think about advanced planning so that if retirement accounts need to be transferred pursuant to legal action, you have given each other the authority to do so under your durable general powers of attorney or other documents in case the institutionalized spouse is unable to sign the documents necessary to participate in the planning. Consult with a qualified elder law attorney who can be sure that you have the necessary documents in place for this important advanced planning.


Long Term Effects of COVID-19 May Be Deemed A Disability Under ADA

Long Term Effects of COVID-19 May Be Deemed A Disability Under ADA

On December 14, 2021, the U.S. Equal Employment Opportunity Commission issued written guidance with respect to when the effects of COVID-19 may be considered a disability under the Americans with Disabilities Act (ADA).

The guidance is helpful because it clarifies that merely being diagnosed with COVID-19 is not, by itself, a disability that may require reasonable accommodations under the law. Rather, it is the extended effects of the condition that may give rise to disability status.

The guidance is clear: Each situation must be assessed on a case-by-case basis. Merely being diagnosed with the condition does not give rise to disability status.

Employers with 15 or more employees come within the reach of the ADA. But the guidance may be persuasive and helpful for businesses that have one or more employees, because the Wisconsin Fair Employment Act applies to those employers.

The guidance generally tracks what we already know about how to analyze physical or mental conditions that may be deemed a disability under the three basic ADA standards.

Clcik here for the new guidance information:


How Long Will My Divorce Take?

How Long Will My Divorce Take?

Everyone who is going through a divorce wants the process to be over as soon as possible through either the granting of a final divorce decree or, in certain cases, reconciliation of the spouses. The uncertainty and emotional toll that accompanies almost all divorces results in people wanting the divorce done sooner rather than later. Unfortunately, the family court system rarely moves at a speed that will satisfy its participants.

Even if spouses have an agreement on all issues and timely file all the required paperwork, Wisconsin law dictates that a final divorce date cannot be scheduled for at least 120 days after the filing the of the initial divorce petition. Beyond this requirement, the length of a divorce proceeding largely depends on the issues being contested. For example, if divorcing parents do not agree on issues concerning custody and placement of the children, the court will appoint a Guardian ad Litem to complete an investigation and provide a recommendation to the court on behalf of the children’s best interests. Such investigations can take anywhere from a couple months to over a year to complete. Even when there are no issues concerning custody and placement, if spouses disagree on issues pertaining to the division of marital property or spousal support, many months may be spent requesting and exchanging financial documents, taking depositions and finding professionals to appraise assets and evaluate spouses’ earning potentials. The most contentious divorces can take multiple years to reach a final divorce hearing date.

Those going through a divorce can take some steps to avoid unnecessary delays. Promptly collecting financial records, responding to discovery requests and filing the appropriate documents with court is recommended to keep the process moving forward. Additionally, spouses who are willing to make reasonable compromises are more likely to reach a marital settlement agreement, which allows the spouses to secure a final divorce hearing date with the court. An experienced family law attorney can help divorcing spouses understand what is and is not reasonable under Wisconsin law in order to work towards such an agreement. Whether by agreement or contested hearing, an attorney can help spouses complete a divorce in a timely manner while furthering the interests of their clients.


Post Pandemic Public Benefits, Who Will Lose Eligibility?

Post Pandemic Public Benefits, Who Will Lose Eligibility?

During the Public Health Emergency (PHE), the State of Wisconsin was required to keep people enrolled in Medicaid as a condition of receiving a temporary increase in the federal share of Medicaid costs.  When the PHE ends (recently extended to January of 2022) so will the increased funding, and the state will need to look at whether currently eligible individuals will be renewed for benefits. 

Those individuals who could keep benefits during the PHE were:

  • Individuals who did not pay their patient liability or monthly cost share;
  • Individuals who did not report changes in assets, income, work status or household composition;
  • Individuals who received maximum FoodShare benefits during the pandemic regardless of qualification; and
  • Individuals over age 65 who received prescription drug benefits but did not do their annual renewals or pay the annual fee.

When the enhanced federal funding ends, states will need to resume processing renewals for eligibility, many of which have been pending for almost 18 months.  Current federal guidance provides that states will have up to 12 months to discontinue benefits that were extended under the PHE.  Further, an individual must be provided with at least 60 days advanced notice before losing benefits.

For individuals who properly reported the receipt of excess assets and income during the PHE and continued to receive benefits, an overpayment occurred that has not yet impacted benefits.  For those who did not properly report changes in resources, a discontinuance of benefits may be looming.  The fate of those who properly reported changes remains to be seen in terms of how the penalty for overpayment will be treated.  Generally, only those overpayments that are due to a consumer’s failure to report or provide updated information are recoverable.  Consult with your attorney to ensure that you are provided with the requisite time frame to provide necessary eligibility verification and proper notice of any adverse action regarding benefits.


Joint Tenancy vs. Tenants in Common, What is the Difference?

Joint Tenancy vs. Tenants in Common, What is the Difference?

When buying real estate in Wisconsin, one of the items you will need to consider is how you would like to take title of the property. If you are buying the property as an individual, then this is usually not an issue; however, this item will play an important role if you buy the property with one or more co-owners. You will need to consider whether you will be joint tenants or tenants in common. Both ownership types have different aspects and characteristics, so it will be important to consider the facts and circumstances pertaining to your situation.

In the case of joint tenants, each will have an equal interest in the whole property for the duration of the joint tenancy period, regardless of different or unequal contributions at the start of the joint tenancy. Additionally, joint tenants have a right of survivorship, therefore, upon the death of one of the joint tenants, the survivor becomes the sole owner of the property.

In contrast, tenants in common each have an undivided interest in the whole property for the duration of the tenancy. Tenants in common do not need to have equal interests in the whole property. Therefore, if there is a difference in the contribution amounts, then you may take that into consideration to determine the ownership interest each tenant in common receives. Additionally, there is no right of survivorship for tenants in common. Therefore, upon the death of a tenant in common, their ownership interest will be passed to their heirs at law under Wisconsin law and/or pass via their instructions within their estate planning documents.

Because there are differences between these types of ownerships, it will be important to consider how you want to take title. You should determine if you want your ownership interests to be equal or unequal, considering any differences in the amounts contributed by each co-owner. You may also want to consider how you would want the title to pass upon the death of a co-owner. Do you want the survivor to become the sole owner or would you like your interest in the property to pass to your heirs?

Under Wisconsin Law, it is assumed that co-owners of a property own as tenants in common, unless the intention of creating a joint tenancy is expressed in the document of title, instrument of transfer or bill of sale. Furthermore, under Wisconsin law, it is assumed that tenants in common each own an equal undivided interest in the whole property, unless the intent to have different undivided ownership amounts is expressed in the document of title, instrument of transfer or bill of sale.

As a result of the differences between joint tenants and tenants in common, it may be helpful to seek the advice of a real estate attorney before purchasing the property. An attorney would be able to analyze your situation and your intentions for the property and advise you on the best manner to take title with a co-owner. Moreover, an attorney will be able to assist you in expressing the appropriate language on the document of title, instrument of transfer or bill of sale to honor your intentions and prevent future issues regarding the ownership of the property. If you have questions, do not hesitate to reach out to one of our real estate attorneys.


As Afghans Resettle, A Reminder for Wisconsin Employers on Federal Discrimination Law

As Afghans Resettle, A Reminder for Wisconsin Employers on Federal Discrimination Law

Fort McCoy in Wisconsin recently became the temporary home of thousands of Afghan refugees following the U.S. military withdrawal in Afghanistan. As of this writing, Wisconsin has been designated by the U.S. Department of State to permanently receive approximately 400 Afghan refugees within state boundaries. This means that many Afghan refugees may be applying for employment throughout Wisconsin. This situation presents a good opportunity for employers to review their obligations under federal law with respect to considering non-citizens for hire.

The Immigration and Nationality Act

Under the federal Immigration and Nationality Act (“INA”), employers generally cannot make hiring, firing, recruitment or referral decisions based on a worker’s citizenship status. Citizenship status discrimination generally occurs when an employer refuses to recruit, refer, hire or fire someone because of the person’s citizenship or immigration status. One example of citizenship status discrimination is when employers limit jobs to U.S. citizens without legal justification.

Employers must use the Form I-9 to verify the worker’s identity and permission to work within three days after the individual begins working for the employer. Federal law generally allows workers to choose which valid, acceptable documentation to present to their employer to prove their identity and permission to work in the U.S. regardless of their citizenship, immigration status or nationality. Employers that discriminate in this process against individuals with permission to work in the U.S. might violate the INA.

 About Afghan Immigrants’ Employment Rights

The U.S. Department of Justice recently issued a fact sheet on Afghan immigrants’ employment rights. That fact sheet can be found here: According to the sheet, some Afghan refugees may have received special permission to work in the United States. Some individuals may have status as Special Immigrant Visa holders and may have permanent residence in the U.S. Other individuals, referred to as “parolees,” can work in the U.S. if the U.S. Department of Homeland Security grants them permission to do so. In such instances, the Department of Homeland Security will issue the refugee an Employment Authorization Document, often referred to as an “EAD” or Form I-766.

Refusing to hire Afghans with special immigration status may itself be a violation of the INA, subjecting the employer to investigation, complaint and fines from the U.S. government and prosecuted through the U.S. Department of Justice.

If an employer is seeking employee applicants, it should avoid violating the INA by not implying that it engages in citizenship status discrimination. Examples of possible violations of the law include statements as follows:

  1. “H-1Bs or OPT Candidates Preferred;”
  2. “Only U.S. Citizens;”
  3. “Only Green Card Holders;” or
  4. “Must Present U.S. Birth Certificate.”

For general or specific information about avoiding discrimination in the hiring process with respect to Afghan refugees or others who are not U.S. citizens, contact your employment law attorney and review your obligations under the INA.