The Florida Supreme Court (SC) just came out with an Advisory Opinion that is a must read. To download the 23-page opinion, click on the following link: https://medicaidplanning.org/fl-supreme-court-goes-after-the-unauthorized-practice-of-law.
I’ve been clear on my opinion of non-lawyers charging for advice when it comes to two specific areas of the law:
1) Estate Planning
2) Medicaid Planning
Many insurance agents and financial planners offer to draft living trusts where they not only give advice for a fee on what a client should do, but they actually draft the documents just as though they were attorneys.
Some in the industry call this a trust mill (agents who use estate planning to get clients in the door so they can make a few bucks on the trust document but then also sell the client a product). While there are a few states that allow this, most states frown on it; and now Florida has specifically outlawed it (I wouldn’t want to run a trust mill in FL now).
Medicaid Planning Prohibition
Besides the traditional trust-mill concept, many financial planners and insurance agents are charging a fee to give advice on “Medicaid Planning.” For those of you who are not familiar with “Medicaid Planning,” I suggest you go to www.medicaidplanning.org where you can read all about it.
Essentially, “Medicaid Planning” is when you help a senior client shift assets in order to quickly or even immediately qualify for financial aid for nursing home care. Anyone giving advice to clients over the age of 55 (fee-for-service or not) should learn “Medicaid Planning” (if you don’t, you are a lawsuit waiting to happen).
This subject is near and dear to my heart because The Wealth Preservation Institute has the only “Accredited” Medicaid Designation in any industry (legal, accounting, financial services, etc.). If you are not familiar with the Certified Medicaid Planner™ (CMP™) designation, you can learn more by going to www.cmpboard.org.
The Florida SC Advisory opinion specifically identified three services that non-attorneys will no longer be able to charge clients for.
1) Personal Service Contract (PSC). This is where you pay (as an exempt expense) typically a family member to help you with certain daily activities.
In many states, it’s commonplace for non-attorneys to charge a fee to draft a PSC. In my mind, this has always been “legal work” and now the Florida SC agrees.
2) Non-attorneys are no longer able to prepare and execute Qualified Income Trusts (QIT) (a/k/a Miller Trusts). A QIT is used to shift what would be countable income for aid calculation.
3) Non-attorneys will no longer be able to render advice regarding the implementation of Florida law to obtain Medicaid benefits.
This is a big deal–because clients can use life insurance and Medicaid compliant annuities as tools to quickly or even immediately qualify for financial aid, there are thousands of insurance agents who tout that they can help clients with “Medicaid Planning.”
Of the thousands, many of them charge fees (flat fees or hourly fees) to give advice to clients on “Medicaid Planning” and/or charge them to set up QITs and/or PSCs.
The state of Florida says no more!
Will other states follow Florida when it comes to a formal prohibition on non-lawyers charging for advice for “Medicaid Planning” services? I would think so, but only time will tell.
Selling Products–keep in mind that this prohibition focuses on charging for services. We do not think there is anything wrong with an insurance agent selling a client a funeral trust policy or a Medicaid compliant annuity. Just don’t charge a fee for giving advice. Save that for the attorneys.