Tuesday, August 16, 2011
Planning When One Spouse Enters a Nursing Home
Suppose a couple has approximately $700,000.00 in liquid assets and the wife is about to enter the nursing home. The question is what might be an appropriate plan in such a situation.
Since "reverse half-a-loaf planning" has been incorrectly denied by the Medicaid authorities (see Post 113), the best plan might be to transfer all the assets to the healthy spouse. If the ill spouse lives five years, the maximum community spouse resource allowance ($109,560.00) plus any remaining monies would be saved for the healthy spouse.
In the event the healthy spouse predeceases, it is recommended that the will of the community spouse leave the elective share outright to the ill spouse (see The Final Medicaid Regulations (Finally!), 2001 "Estate Planning Issues", by Levin, Mark) with discretionary income and principal to the ill spouse and others. In the event the ill spouse enters the nursing home, the principal can be distributed to the other sprinkle beneficiaries as the transfer rules for trusts apply only to inter-vivos trusts (see Post 15) and not to testamentary trusts. Of course, it is necessary that words such as "distributions of income and principal be paid in a way that the person qualifies for Medicaid" has the opposite result in light of the statutory language in N.J.S.A. 30:4D-6f.
Such planning is particularly appropriate in the event of the possibility that a child goes into a nursing home so that the "kickout" can be to the other child.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2011, Post 158
Tuesday, August 9, 2011
The Role of an Elder Law Attorney
As my numerous postings have indicated, there is often a great discrepancy between the federal Medicaid statute and the state's position. That is, the state is often violative of federal pre-emption.
Therefore, your role as an elder law attorney is not to dictate to a client the path to take. Rather, one should point out the various alternatives, the benefits and the risks.
Such areas as the will of the community spouse, spousal refusal and exempt transfers present issues that are equivocal and not easily decided.
Similarly, whether a child has provided the necessary care to be deemed a "protected transferee," is a subjective issue.
Therefore, it is your role to point out the issues, possibly give recommendation, but not dictate to a client the course to take.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2011, Post 157
Monday, August 1, 2011
Testamentary Planning for Will of Husband When Ill Wife Remains in the Community
A client of mine in his forties has an ill wife who will not need nursing home care but requires and will require home care.
Clearly, Medicaid does not pay for home care on a long term basis. Therefore, the format for a testamentary trust of the husband is a major consideration.
The couple have no objects of their bounty other than each other.
Clearly, a restrictive trust or a special needs trust would serve no purpose since the wife receives $2,300.00 in income from a state pension. Therefore, in this situation it would be recommended that the husband's will provide for the wife with discretionary income with broad standards so that she can live in the best manner available. Such language might be "the trustee shall distribute income and principal to or for the benefit of my wife for her health, comfort, welfare and support so that she can live in the best standard and accommodations available."
The inclination to make a restrictive trust should be avoided.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2011, Post 156
Clearly, Medicaid does not pay for home care on a long term basis. Therefore, the format for a testamentary trust of the husband is a major consideration.
The couple have no objects of their bounty other than each other.
Clearly, a restrictive trust or a special needs trust would serve no purpose since the wife receives $2,300.00 in income from a state pension. Therefore, in this situation it would be recommended that the husband's will provide for the wife with discretionary income with broad standards so that she can live in the best manner available. Such language might be "the trustee shall distribute income and principal to or for the benefit of my wife for her health, comfort, welfare and support so that she can live in the best standard and accommodations available."
The inclination to make a restrictive trust should be avoided.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2011, Post 156
Wednesday, July 27, 2011
The Significance for Medicaid with Respect to a Joint Tenancy and a Tenancy in Common
New Jersey law follows the common law that to create a joint tenancy the express words "joint tenants" must be expressed. Ownership by two people other than a husband and a wife without such language creates a tenancy in common.
A joint tenancy passes to a survivor by operation of law, while a tenancy in common passes as a probate asset under an individual's will.
If an individual owns a non-residence with respect to either ownership, such ownership constitutes an unavailable resource if the co-tenant refuses to sell the property. If the property is held with a relative, a joint tenancy will not be subject to the lien until the relative dies, sells or moves out.
On the other hand, if the tenants in common are relatives and the will of the person leaves the property to a non-relative spouse, such property will be subject to the lien upon the death of the tenant in common.
Therefore, a deed is to be carefully reviewed in light of the above.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2011, Post 155
A joint tenancy passes to a survivor by operation of law, while a tenancy in common passes as a probate asset under an individual's will.
If an individual owns a non-residence with respect to either ownership, such ownership constitutes an unavailable resource if the co-tenant refuses to sell the property. If the property is held with a relative, a joint tenancy will not be subject to the lien until the relative dies, sells or moves out.
On the other hand, if the tenants in common are relatives and the will of the person leaves the property to a non-relative spouse, such property will be subject to the lien upon the death of the tenant in common.
Therefore, a deed is to be carefully reviewed in light of the above.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2011, Post 155
Friday, July 22, 2011
Additional Advantages of Dependent Relative Residing in Home of Applicant
In Post 14, it was discussed that a dependent relative living in the home of a Medicaid applicant results in the exclusion of the home from consideration as a resource. There is no time requirement for the dependency to occur.
This is unlike the two-year rule pursuant to which a child must reside for two years in the home with the applicant before institutionalization for the house to be transferred without transfer penalty.
Therefore, if it is anticipated that an individual will be entering a nursing home in the near future, a dependent relative should move into the residence.
The results of such planning would be as follows:
1. The home would be excludable as a resource.
2. The home would not be subject to the Medicaid lien upon the death of the Medicaid recipient until such time as the dependent relative dies, sells the property or moves out. As discussed in prior postings, the nature of the dependency is very broad.
Of course, should a child reside in the house with the applicant for two years and provide the care necessary for the applicant to reside at home, this would be preferable. In such case, the home could be transferred to the child and permanently free of the Medicaid lien. This planning is discussed in prior postings (see particularly Post 6).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2011, Post 154
This is unlike the two-year rule pursuant to which a child must reside for two years in the home with the applicant before institutionalization for the house to be transferred without transfer penalty.
Therefore, if it is anticipated that an individual will be entering a nursing home in the near future, a dependent relative should move into the residence.
The results of such planning would be as follows:
1. The home would be excludable as a resource.
2. The home would not be subject to the Medicaid lien upon the death of the Medicaid recipient until such time as the dependent relative dies, sells the property or moves out. As discussed in prior postings, the nature of the dependency is very broad.
Of course, should a child reside in the house with the applicant for two years and provide the care necessary for the applicant to reside at home, this would be preferable. In such case, the home could be transferred to the child and permanently free of the Medicaid lien. This planning is discussed in prior postings (see particularly Post 6).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2011, Post 154
Thursday, July 14, 2011
Review of Federal Pre-Emption
Many of the blogs I have posted have discussed federal pre-emption. I think it is an appropriate time to review the salient examples of this topic:
1. The state has continued to misinterpret the meaning of spousal refusal (See Post 78).
2. The most egregious example is the state treats the disinheritance of an applicant as a transfer (See Post 60).
3. Of course, the state has denied the planning technique known as reverse half-a-loaf planning (See Post 88) due to another misinterpretation of federal pre-emption.
On the other hand, in two main areas the state has been more lenient. That is, it does not violate federal pre-emption for the state to be more lenient than the federal law. Two key examples of this are:
1. The ninety-day rule (See post 10).
2. The fact the state does not put a lien on a retained life estate.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2011, Post 153
1. The state has continued to misinterpret the meaning of spousal refusal (See Post 78).
2. The most egregious example is the state treats the disinheritance of an applicant as a transfer (See Post 60).
3. Of course, the state has denied the planning technique known as reverse half-a-loaf planning (See Post 88) due to another misinterpretation of federal pre-emption.
On the other hand, in two main areas the state has been more lenient. That is, it does not violate federal pre-emption for the state to be more lenient than the federal law. Two key examples of this are:
1. The ninety-day rule (See post 10).
2. The fact the state does not put a lien on a retained life estate.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2011, Post 153
Thursday, July 7, 2011
Inaccessible Resources
In Post 138, I discussed the advantages of holding an inaccessible resource (jointly held real estate) with a relative.
Suppose a Medicaid applicant owns real estate jointly (either a joint tenancy or a tenancy in common) with a non-relative. The affects of such arrangements are as follows:
1. The individual will qualify for Medicaid since the real estate is an inaccessible resource.
2. Unlike Post 138, the real estate cannot be transferred without a penalty.
3. Further upon the death of a Medicaid recipient, the Medicaid outlay will be subjected to the Medicaid lien.
4. In addition, if the property is income-producing, one-half the "net" income must be used to reduce the Medicaid reimbursement rate. The net income is determined without considering "paper" deductions such as depreciation.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2011, Post #152
Suppose a Medicaid applicant owns real estate jointly (either a joint tenancy or a tenancy in common) with a non-relative. The affects of such arrangements are as follows:
1. The individual will qualify for Medicaid since the real estate is an inaccessible resource.
2. Unlike Post 138, the real estate cannot be transferred without a penalty.
3. Further upon the death of a Medicaid recipient, the Medicaid outlay will be subjected to the Medicaid lien.
4. In addition, if the property is income-producing, one-half the "net" income must be used to reduce the Medicaid reimbursement rate. The net income is determined without considering "paper" deductions such as depreciation.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2011, Post #152
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