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E-Newsletter of August 28, 2012 | Vol. 5, No. 35

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Attention New Lawyers!

The MSBA Elder Law Section has allocated funds for five (5) scholarships to attend the 2012 Elder Law Institute.  The institute occurs on October 11 and 12, 2012, at the Minnesota CLE Conference Center in Minneapolis.  The scholarship covers the complete cost of tuition.  (Recipients will need to cover any other expenses that they may incur.)

To qualify, 1) you must be a lawyer licensed to practice within the last three (3) years; 2) you must be practicing law within a solo, small firm, legal aid, or public interest law practice in either a paid or unpaid capacity; and 3) you must practice at least partly in elder law.  Unemployed and underemployed attorneys are particularly encouraged to apply.  Applications are available upon request by contacting Laura Orr at orr63475@stthomas.edu and including “ELI Scholarship” in your subject heading. 

Interested applicants must apply by midnight on Monday, September 17, 2012.  Scholarship recipients will be notified by Friday, September 21, 2012.  Scholarship recipients must be section members by October 11, 2012; however, applicants do not need to be section members in order to apply and be selected.  Previous recipients of scholarships from the MSBA Elder Law Section are ineligible.

Please contact Laura Orr (orr63475@stthomas.edu) for any further information.

Submitted by Laura Orr, Esq. 
orr63475@stthomas.edu


Article of the Week

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SELLING REAL PROPERTY WHEN THE OWNER IS RECEIVING MEDICAL ASSISTANCE
Non-homestead real property is not counted against asset limits if the owner is making "reasonable efforts to sell."  "Reasonable efforts to sell" are described in the Health Care Programs Manual ( HCPM) at § 19.25.15.10.  This section has elaborate guidelines to explain and enforce the "reasonable effort to sell" requirements.  Here are the guidelines in § 19.25.15.10:

    HCPM 19.25.15.10

        What is Reasonable Effort to Sell?
A reasonable effort to sell has two criteria
1. Attempting to sell the property, which means:
        Listing the property with a real estate broker, or
        Having a readable sign on the property with the owner's name and telephone number and advertising it in the official county newspaper, the
        newspaper with the largest circulation in the county, or the local shopper newspaper.
2. Listing an appropriate price for the property. The asking price should be the estimated market value (EMV) on the tax statement, except when the accuracy of the EMV is disputed.
The asking price can be the fair market value (FMV) determined by a licensed real estate appraiser if the client disputes the accuracy of the EMV. Neither a letter from a real estate agent with a recommended market price nor comparable listings from the immediate neighborhood are acceptable. A client who disputes the EMV but cannot afford an appraisal can request a new EMV determination from the county in which the property is located.
Note:  The asking price must be the FMV if the client provides an FMV from a licensed real estate appraiser that is higher than the EMV.

Example:
    Jerry and Esther apply for health care for themselves and their children. They own a lake cabin with an EMV of $20,000. They state that comparable property in the area has been selling for at least $30,000.
Action:
    Allow them to list the property for the FMV if the FMV is determined by a licensed real estate appraiser.
Example:
    Leroy has been in a long-term care facility (LTCF) for six months and expects to remain permanently. His home has an EMV of $55,000 and does not meet a condition for exclusion as a homestead. His authorized representative wishes to list the property for $40,000 on the grounds that the real estate market in Leroy’s town has been slow and the home needs some repairs.
Action:
    Allow the authorized representative to list the property for the FMV if the FMV is determined by a licensed real estate appraiser.

Reasonable efforts to sell the property must continue until the property is sold in order to continue the exclusion.

What is a Reasonable Offer?
    Require the owner to attempt to get offers for the EMV, or the verified FMV if the client disputes the EMV.
        There is no minimum length of time during which the owner must try to get offers close to the EMV (or FMV). Base the reasonable length of time for getting offers on the local market, or the time period designated in a real estate contract.
        The property must be offered for sale on the open market before the owner may accept an offer lower than the EMV (or FMV) without penalty. An offer for less than two-thirds of the EMV (or FMV) is not considered reasonable.

Document in case notes whether there have been reasonable offers to buy the property since the last review. Document the amount of the offer and whether the owner accepted it. If the owner rejects the offer, document the reason for refusing the offer.

If a client accepts an offer without following the criteria above, the difference between the EMV (or FMV) and the sale price is an uncompensated transfer. See Transfers.

Example:
    Gordon has resided in an LTCF for more than six months and does not intend to return to his home, which is valued at $275,000. His nephew wishes to buy the home for $184,000, which is two-thirds of the estimated market value. Gordon’s authorized representative agrees with the $275,000 estimated value and does not wish to get an appraisal.
Action:
    Instruct the authorized representative that the property must be offered for sale on the open market for the EMV before Gordon can accept an offer of less than the EMV. The authorized representative must provide an appraisal if she disputes the EMV. She may accept the nephew’s $184,000 offer if there are no higher offers made within a reasonable length of time based on the local market.
Example:
    Mary has been in an LTCF for six months. Her son applies for MA on her behalf. Mary owns a home valued at $365,000. Her son offers to buy the property for $245,000, which is slightly more than two-thirds of the market value.
Action:
    Advise the son that if he buys the home for this price without attempting to sell it on the open market, the difference between the market value and the sale price will be considered an uncompensated transfer.
    Require him to make a good faith effort to sell the property at an asking price of $365,000 for the length of the real estate contract if he chooses to list the property with a realtor. If he chooses to list the property himself (through advertising in the newspaper and placing a sign on the property) at an asking price of $365,000, require him to continue the efforts for the same length of time as a realtor’s contract would run in the same area. At the end of that time, he may purchase the home for $245,000 without penalty if there have been no offers higher than $245,000.

Example:
    Loretta resides in an LTCF. Her home is currently unavailable because she is making a reasonable effort to sell it. The asking price is $60,000 which is the EMV.
    Loretta’s authorized representative documents that there have been three offers on the property. They are:
        $55,000. The prospective buyer could not get financing and wanted to purchase on contract for deed. The family refused the offer because of the prospective buyer’s limited income and poor credit history.
        $49,000 and $45,000. The family refused both offers because they were too far below the asking price.

Action:
    Advise the authorized representative that the family must accept any future offers of $40,000 or more (two-thirds of the EMV), subject to the prospective buyer’s ability to finance the purchase. The lack of offers closer to the EMV indicates that the property is unlikely to sell for that amount.
Some county financial workers confuse the "reasonable efforts to sell" requirements with the guidelines that apply when the property actually sells.  When real property is actually sold, the "reasonable efforts to sell" requirements no longer apply.  Instead, the simple issue is whether the property actually sells for fair value.  If the owner sells to a stranger in an arms-length transaction, the sale price itself is the best measure of fair value.  In the Appeal of Treb for Medical Assistance, DHS Appeal Docket No. 59260 (February 28, 2000; Supplemental Decision dated March 3, 2000), the owner sold her real property to a neighbor for less than the assessor's estimated value.  Morrison County objected, saying the property had to be sold for no less than the assessor's estimated market value.  In reversing the County's imposition of a penalty period, Chief Appeals Referee (now Co-Chief Appeals Judge) Kenneth M. Mentz concluded in his Supplemental Decision that:

Fair market value of property can be shown through any probative evidence.  In this case best evidence was what a buyer was willing to pay in an arms-length transaction.  This approach was sound, and except as modified [to correct an error in arithmetic], the February 28, 2000 decision is confirmed in all respects.
When selling real property to a stranger in an arms-length transaction, the negotiated purchase price, and not some imaginary estimated value, is ipso facto the fair market value of the property at the time of sale.  Notwithstanding any implication in HCPM § 19.25.15.10 to the contrary, the agreed purchase price in an arms-length transaction can be less than two-thirds of the estimated market value.  A penalty period cannot be imposed if the property is sold for fair market value.

When selling real property to a family member, while the seller is receiving medical asisstance or during the look-back period prior to application for benefits, other guidelines apply.  The family member must pay at least the estimated market value (EMV) or the fair market value (FMV) of the property or a penalty period will be imposed against the seller.  As indicated in HCPM § 19.25.15.10, the EMV of the property is either the assessor's estimated value taken from the property tax statement, or the value determined by a licensed appraiser, or by a re-assessment by the county assessor if the owner cannot afford a licensed appraiser.  Family members must pay the imaginary, estimated market value of real property unless fair market value can be established in some other way.  See below.

Another way to determine fair market value (FMV), when a family member desires to purchase the property, is to list the property as required by the "reasonable efforts to sell" requirements and wait for an offer from a stranger after a reasonable period on the market.  The family member should then make an offer at a higher purchase price.  The stranger's arms-length offer should be in writing, as well as the higher offer from the family member.  The county should have no objection if the owner then accepts the higher offer from a family member.  A sale to the stranger would be accepted as the measure of true fair market value.  A higher offer would be more than the established fair market value.  This strategy should be pursued with some caution, but HCPM § 19.25.10 makes clear that the real property must be sold either for EMV or FMV.  If the family member purchases for less than EMV, a penalty period will be imposed against the seller, unless the seller can obtain a hardship waiver, or the seller can convince the county that the transfer was exclusively for some other purpose than obtaining medical assistance benefits or maintaining eligibility, or the seller can convince the county that seller intended to receive fair market value.  See HCPM § 19.40.20, the exceptions to uncompensated transfer penalties.  No penalty can be imposed if the family member purchases for more than EMV or FMV.

The Decision of State Agency in the Appeal of Treb is available here. It is also posted on the Reports, Guides, and Memoranda page of the MSBA's Elder Law Section website.

Submitted by Julian Zweber, Esq.
julianzweber@qwestoffice.net

 

Elder Law News

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Telemedicine gives rural doctors immediate access to help | MPR News

Study: MN Leads the Nation in Providing Assisted Living Options for Consumers | Aging Services of MN

People with Medicare save over $4.1 billion on prescription drugs | Hometown Source

Feds levy fine against med center | Fairmont Sentinel

Be Aware. Know Medicare: Updates and Emerging Issues for 2013 | MN DHS

Hospitals face penalties if patients quickly return | Star Tribune

Video Launch: Senior Care in Minnesota is More Than Just Nursing Homes | Aging Services of MN

Submitted by Joel Smith, Esq.
joel@koslawfirm.com




Elder Law Cases

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The following opinions were released on Monday, August 20, 2012:

A11-1247
Wendell A. Jokela, Appellant,
vs.
Karol Jokela, et al., Respondents.

JOHNSON, Chief Judge

Harry Jokela died 30 years ago without a will.  His three adult children never sought to determine ownership of the farmland that he left behind.  Twenty-eight years after Harry's death, and after two of his children also had died, the heirs of Harry's deceased children petitioned the Becker County District Court for a determination of descent to establish that Harry's property passed to his three children in equal shares.  The sole surviving child opposed the petition and asserted a claim of adverse possession to establish that he is the sole owner of the property.  The district court rejected the adverse-possession claim on cross-motions for summary judgment, granted the petition for a determination of descent, and decreed that the surviving child and the deceased children's heirs hold undivided one-third interests in the farmland.  We affirm.

The opinion is available here.

A12-0029
In the Matter of the Charles H. and Laura G. Smith Living Trust, dated April 3, 1995

WORKE, Judge

In this appeal from a district court judgment determining that appellant's mother validly executed a trust and two deeds, appellant asserts that the district court erred in its assignment of the burden of proving testamentary capacity and undue influence; appellant also argues that the district court erred by concluding that appellant's mother had testamentary capacity and had not been unduly influenced by respondent to make changes to the trust. Because the district court did not err in its assignment of the burden of proof and because the record evidence supports the district court's conclusions as to testamentary capacity and undue influence, we affirm.
 
The opinion is available here.
A11-2198
Estate of Lawrence A. Werner, by Vivian Eileen Werner, Personal Representative, Appellant,
vs.
Kreg A. Werner, Respondent, and 
Kreg A. Werner, third party plaintiff, Respondent,
vs.
Vivian Eileen Werner, third party defendant, Appellant.

PETERSON, Judge

In this real-estate conveyance dispute, the district court, by summary judgment based on a quit-claim deed, awarded property to the buyer under a contract for deed.  On appeal, the personal representative of the estate of the seller under the contract for deed argues that (1) fact issues exist regarding whether the quit-claim deed was signed as security, rather than to convey the property; and (2) buyer's slander-of-title counterclaim fails to state a claim on which relief can be granted because the claim is based on seller's notice of lis pendens, the notice of lis pendens is legitimate, and the elements of slander of title have not been shown.  We reverse and remand.

The opinion is available here.

Submitted by Andrea Palumbo, Esq.
andrea.m.palumbo@gmail.com


Elder Law Statutes, Regulations, and Bulletins

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There are no new statutes, regulations or bulletins to report this week.

Upcoming Events and CLE Programs

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The Affordable Care Act Decision: Implications for Health Law and Beyond
Wednesday, September 12, 2012
5:00 p.m. to 6:15 p.m. Presentation in the new Anderson Center, Room 111 
6:15 p.m. to 6:45 p.m. Reception on the Anderson Center Rooftop Terrace
1.25 CLE credits applied for
Registration fee for CLE credit is $35. Free for Hamline Law Alumni and guests not earning CLE.

The Supreme Court's long-anticipated ruling on constitutional challenges to the 2010 Patient Protection and Affordable Care Act (ACA) is having a profound impact on all segments of the healthcare industry.  Providers, payors, employers, and governmental agencies must address the challenges of compliance with the numerous mandates in the Act.
Our expert panel represents three disciplinary perspectives -- constitutional law, tax law, and health law – provided by faculty experts at Hamline University School of Law.  Over 75 minutes, the panel will provide participants with an assessment of the implications of the Supreme Court's ruling for Minnesota practitioners and their clients.  Panelists include: Associate Professor Laura Hermer, Associate Professor Mogran Holcomb, Professor Jonathan Kahn

Submitted by Kari Winter
kwinter03@gw.hamline.edu

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SAVE THE DATE!  The 22nd Annual Elder Law Institute will be held on October 11-12, 2012 at the Minnesota CLE Center in Minneapolis. 

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SAVE THE DATE!   "Legal, Medical, and Ethical Issues in Minnesota End-of-Life Care," the Hamline University Health Law Institute's multidisciplinary CLE Symposium, will be held in Hamline's brand new Anderson Center on November 8-9, 2012. To learn more, click here.

Submitted by Thadeus M. Pope, Esq.
tpope01@gw.hamline.edu

 

Elder Law Section Activities

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MA COMMITTEE MEETING: The next MA Committee meeting will be at 3:30 p.m. on Tuesday, October 16, 2012. The Medical Assistance Committee is a study group to analyze Elder Law Section member questions and case studies and to discuss administrative policies and procedures in relation to Medical Assistance in Minnesota.  Cathryn D. Reher of Long, Reher & Hanson, P.A., is Committee Chair.  For directions, or to attend by phone, please contact Tracie Fenske with Long, Reher & Hanson, P.A., at 952-929-0622 at least 24 hours in advance of the meeting. Topics for the meeting may be submitted to tfenske@mnelderlaw.com under the subject heading “MA Committee Topic”, or faxed to 952-542-9201. Please be reminded that the meeting location is: Estate & Elder Law Services (formerly MAO Legal Services), Monroe Village, 1900 Central Avenue NE, Minneapolis, Minnesota 55418. The meeting takes place in the building’s conference room. There are a few parking spaces behind the building and lots of street parking. People should walk to the back of the building and come to the back door which faces directly into the meeting room.

GOVERNING COUNCIL:  The next meeting of the Elder Law Section Governing Council will be on Friday, October 12, 2012 at 7:30 am, before the Elder Law Institute- location to be announced. For further information, please contact Laura Zdychnec, Chair, at: lzdychnec@mnelderlaw.com.

 

Elder Law Website

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DON'T FORGET THAT THE ELDER LAW WEBSITE IS A GREAT RESOURCE. Here’s what you can find on the Website:  Links to the DHS Health Care Programs Manual, the DHS Bulletin on treatment of uncompensated transfers, the Minnesota Bankers Association Compliance Bulletin on Powers of Attorney, legislative summary; Practice Links to organizations such as NAELA, ABA Commission on Law and Aging, Links to Federal and State Government Agencies, Statutes, and Regulations; Meeting Notices, Listings of Officers and Council Members, Section Bylaws, and more.

 

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