A young woman recently contacted our office seeking guidance about her uncle, who was about to enter a long-term care facility. He was unmarried, had no children, and she was the closest relative willing to help manage his affairs.
Her concerns were common ones:
- Would her uncle qualify for Medicaid?
- Would his home need to be sold to pay for his care?
- Could Medicaid recover the cost of his care after his death?
- Would she be personally responsible for any unpaid bills?
The first question I asked was whether her uncle still had the capacity to make his own decisions. If he was competent, the most important step was to immediately put proper legal documents in place, including a General Durable Power of Attorney and other estate planning documents. By appointing his niece as his agent, she could legally assist with financial and long-term care planning.
Without these documents, however, the family could be forced into a lengthy and expensive guardianship proceeding simply to gain authority to manage his affairs.
The next question to consider is how the impact of the NJ inheritance tax which is a death tax imposed on all non-Class A beneficiaries. In New Jersey, this tax is avoided where there is a spouse, parent(s) or child to inherit the money but where there are none, as in this case, the impact may be significant.
Therefore, with proper planning, an experienced estate planning and elder law attorney can often help individuals not only qualify for Medicaid, protect certain assets and reduce the amount subject to Medicaid estate recovery but also create a strategic and thoughtful plan to maximize all available exemptions to keep the New Jersey inheritance tax burden at a minimum.
The key takeaway is simple: planning before a crisis occurs creates options. For individuals who do not have a spouse or children, executing legal documents naming their closest relatives outside the immediate family have the authority to act, can save loved ones significant time, expense, and stress.
Don’t wait for a health crisis to begin planning. If you or a loved one may need long-term care in the future, contact our office to discuss your options and ensure the proper legal protections are in place before they are urgently needed.