Assume wife enters nursing home at the time that spousal resources are $400,000.00. The community spouse resource allowance is $109,560.00 and the spouse's protected amount is assumed to be $2,000.00. The parties are renting an apartment.
Further assume that after the applicant enters a nursing home, the community spouse purchases a condominium for $250,000.00. The protected amount is approximately $360,000.00. Therefore, the spenddown is $40,000.00
The spenddown can consist of pre-paid funeral arrangements for spouses of $20,000.00, two months deposit of nursing home of approximately $20,000.00, attorney's fees and justifiable expenses on the home.
The community spouse could sell the home after the applicant receives Medicaid (see Post 11).
Therefore, Medicaid eligibility could be almost immediate with a savings of approximately $360,000.00 for the community spouse.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2011, Post 151
Monday, June 27, 2011
Monday, June 20, 2011
Five Year Planning for Husband and Wife with Children
Suppose a spouse is about to enter a nursing home and spousal resources are $800,000.00 in cash. A potential plan would be to transfer the $800,000.00 to a reliable child. Such child would use the funds on the transferor who enters the nursing home.
The will of the child would be a discretionary trust amongst the remaining parent, the child and other children. If the transferor enters a nursing home within five years, the portion of the $800,000.00 are spent until 60 months after the transfer. If the transferor goes into a nursing home after five years, any remaining monies are saved for the family. The transferee child would use any excess monies on the second parent if such parent enters a nursing home. If the second parent does not enter a nursing home, and then passes away, the child can distribute the monies to him/herself and the remaining children.
If the transferee predeceases the second parent, the funds would go to a testamentary trust. If a child or the remaining parent then enters the nursing home, a kick-out to the other relatives would not be a transfer (see Post 85).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2011, Post 150
The will of the child would be a discretionary trust amongst the remaining parent, the child and other children. If the transferor enters a nursing home within five years, the portion of the $800,000.00 are spent until 60 months after the transfer. If the transferor goes into a nursing home after five years, any remaining monies are saved for the family. The transferee child would use any excess monies on the second parent if such parent enters a nursing home. If the second parent does not enter a nursing home, and then passes away, the child can distribute the monies to him/herself and the remaining children.
If the transferee predeceases the second parent, the funds would go to a testamentary trust. If a child or the remaining parent then enters the nursing home, a kick-out to the other relatives would not be a transfer (see Post 85).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2011, Post 150
Tuesday, June 14, 2011
Inaccessible Resources Revisited
Post 48 discusses inaccessible resources, which are treated as excludable for Medicaid purposes (N.J.A.C. 10:71-4.4(b)6 ). The theory is that a countable resource is only such that can be converted to monies to pay nursing home costs. Further, suppose a Medicaid applicant resides with a sibling who has an equity interest in the home and who was residing in the home for at least one year prior to the date of institutionalization (see Post 11).
In this situation, not only is the real estate inaccessible, and therefore not a countable resource, but there is an additional benefit. If the sibling resides in the home for the requisite time period, the applicant's interest in the home can be transferred to the sibling without such transfer being subject to the penalty. Therefore, the individual would qualify for Medicaid, and the home would not be subject to the lien.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2011, Post 149
In this situation, not only is the real estate inaccessible, and therefore not a countable resource, but there is an additional benefit. If the sibling resides in the home for the requisite time period, the applicant's interest in the home can be transferred to the sibling without such transfer being subject to the penalty. Therefore, the individual would qualify for Medicaid, and the home would not be subject to the lien.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2011, Post 149
Thursday, June 9, 2011
Dependency Exclusion Revisited
Post 14 discusses the dependency exclusion for the home of a Medicaid applicant. That is, if a dependent relative (as defined in Program Instruction Number 85-8-9), resides in the applicant's home, the home is excluded for Medicaid purposes.
The key to this exclusion is that there is no time period limitation for the dependent relative to reside in the applicant's home. Therefore, if it is contemplated that an individual may be going into a nursing home, a dependent relative (i.e. a child) can move into the home. Unlike the exclusion from the transfer rules, which requires two years of care (see Post 34), the time limitation on dependency does not apply.
Moreover, if the dependent individual is a relative (would be a relative by definition), the Medicaid lien does not apply upon the death of the Medicaid applicant. The lien would only apply at such time as the family member dies, sells or moves out of the primary residence (see N.J.A.C. 49:14.1).
As indicated in Post 14, financial dependency is easy to prove. For example, even a working child could be financially dependent if such child could not afford an abode where the cost is comparable to recipient's primary residence.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2011, Post 148
The key to this exclusion is that there is no time period limitation for the dependent relative to reside in the applicant's home. Therefore, if it is contemplated that an individual may be going into a nursing home, a dependent relative (i.e. a child) can move into the home. Unlike the exclusion from the transfer rules, which requires two years of care (see Post 34), the time limitation on dependency does not apply.
Moreover, if the dependent individual is a relative (would be a relative by definition), the Medicaid lien does not apply upon the death of the Medicaid applicant. The lien would only apply at such time as the family member dies, sells or moves out of the primary residence (see N.J.A.C. 49:14.1).
As indicated in Post 14, financial dependency is easy to prove. For example, even a working child could be financially dependent if such child could not afford an abode where the cost is comparable to recipient's primary residence.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2011, Post 148
Wednesday, June 1, 2011
Review of Advantages of Community Spouse Resource Allowance
As indicated in Post 11, the community spouse resource allowance is not limited after the applicant receives Medicaid.
The advantages of this have been discussed in several posts and are to be considered in accordance with the situation.
For example, if a spouse is in a nursing home and the home has been transferred to a community spouse, the community spouse may sell or gift the residence after the applicant receives Medicaid (see Post 94). Similarly, if the community spouse inherits property after the applicant receives Medicaid, the inheritance is received free of the Medicaid rules.
As indicated in Post 33, if the community spouse is working, it has been suggested that the community spouse cease working until the applicant receives Medicaid. After such time, the community spouse can resume working and receive the earnings free of the Medicaid rules.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2011, Post 147
The advantages of this have been discussed in several posts and are to be considered in accordance with the situation.
For example, if a spouse is in a nursing home and the home has been transferred to a community spouse, the community spouse may sell or gift the residence after the applicant receives Medicaid (see Post 94). Similarly, if the community spouse inherits property after the applicant receives Medicaid, the inheritance is received free of the Medicaid rules.
As indicated in Post 33, if the community spouse is working, it has been suggested that the community spouse cease working until the applicant receives Medicaid. After such time, the community spouse can resume working and receive the earnings free of the Medicaid rules.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2011, Post 147
Wednesday, May 25, 2011
Advantages of Purchasing a Home by Community Spouse Revisited
In Post 11, the advantages of purchasing a home by the community spouse were discussed.
Suppose there are community assets of $400,000.00 and the community spouse is renting a home. The community spouse resource allowance maximum is $109,560.00. The community spouse can protect additional assets by purchasing a home which would be an excludable resource. As indicated by Post 11, the resources of the community spouse are no longer relevant after the applicant receives Medicaid.
Therefore, a viable planning technique would be for the community spouse to temporarily purchase a residence, which could be sold or gifted after the applicant gets Medicaid.
Further, as discussed in Post 33, if the community spouse is working, the community spouse should cease working until after the applicant receives Medicaid.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2011, Post 146
Suppose there are community assets of $400,000.00 and the community spouse is renting a home. The community spouse resource allowance maximum is $109,560.00. The community spouse can protect additional assets by purchasing a home which would be an excludable resource. As indicated by Post 11, the resources of the community spouse are no longer relevant after the applicant receives Medicaid.
Therefore, a viable planning technique would be for the community spouse to temporarily purchase a residence, which could be sold or gifted after the applicant gets Medicaid.
Further, as discussed in Post 33, if the community spouse is working, the community spouse should cease working until after the applicant receives Medicaid.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2011, Post 146
Wednesday, May 18, 2011
Negative Results of Disclaimer by Nursing Home Resident
Although a disclaimer may have estate planning benefits, such an action would be treated as a transfer under the Medicaid rules (see Federal Statute 42 U.S.C. Section 1396p(c) and (e)). The first Statute treats a transfer as any disposition and the second statute requires an affirmative act.
Since a disclaimer is an affirmative act, the period of ineligibility from the disclaimer would run not from the date of the disclaimer but from the date the individual was in the nursing home and down to the appropriate amount ($2,000 or $4,000).
Pursuant to Medicaid Communication 10-02 and 10-06 , reverse half-a-loaf planning will not work in New Jersey. Therefore, the only choice is not to disclaim and to spend the monies on the nursing home. The appropriate planning would be to transfer monies to the appropriate donees who would then use the monies for the benefit of the nursing home resident. Should any monies remain after the 5 year look back period, such funds would be saved for the donees.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2011, Post 145
Since a disclaimer is an affirmative act, the period of ineligibility from the disclaimer would run not from the date of the disclaimer but from the date the individual was in the nursing home and down to the appropriate amount ($2,000 or $4,000).
Pursuant to Medicaid Communication 10-02 and 10-06 , reverse half-a-loaf planning will not work in New Jersey. Therefore, the only choice is not to disclaim and to spend the monies on the nursing home. The appropriate planning would be to transfer monies to the appropriate donees who would then use the monies for the benefit of the nursing home resident. Should any monies remain after the 5 year look back period, such funds would be saved for the donees.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2011, Post 145
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