Category: Elder Law

New FinCEN Residential Real Estate Reporting Rule

Posted on | by Mercy Kurian

What Is Changing?

Beginning March 1, 2026, if you are planning to purchase residential real estate either in an all cash transaction or by privately financing the purchase and you plan to have an LLC or corporation trusts own such property, then you must be report this transaction to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The purpose of this reporting requirement is to increase transparency in the U.S. residential real estate sector and to combat and deter money laundering.

When Does This Apply?

A report is required if ALL of the following apply:
✔ The property is residential (1–4 family home, condo, co-op, townhome, or residential land)1
✔ The purchase is non-financed (no bank loan secured by the property)
✔ The buyer is a legal entity (LLC, corporation, partnership) or trust; and
✔ No exemption applies (death, divorce, court order, etc.)

What Information Must Be Reported? NOTE: One report is filed per transaction.

The person filing the deed must report:
• Property details
• Seller information
• Buyer entity or trust information
• Beneficial owner information (name, DOB, address, Tax ID, citizenship)
• Total purchase price and payment details

These reports will be maintained by FinCEN in a secure database along with other Bank Secrecy Act (BSA) reports and, like any other BSA report, will be subject to strict limits on use and redissemination. Real Estate Reports will not be accessible to the general public.

1 Properties are considered residential real property even if there is also a commercial element—a single family residence that is located above a commercial enterprise, for example. Additionally, certain types of land on which a residence is not yet built are also included if the transferee intends to build on the property
one or more structures designed principally for occupancy by one to four families

What This Means for You

If you are purchasing residential real estate through an LLC or trust OR our firm is helping you with the deed transfer to an LLC or trust:
• Expect requests from us (or from anyone preparing the deed) for beneficial ownership information
• Allow additional time for the deed to be recorded while this information is collected
• Expect increased fees to be collected as part of the filing fees.
• Expect that if it is determined that you are not exempt, then know that this filing cannot be waived

Exemptions

• Transfers are not reportable if they involve extensions of credit by financial institutions as those institutions that have to abide by their own reporting        requirements2
.• Transfers incident to a divorce or dissolution of marriage or civil union
• Testamentary trusts created by Wills
• Transfers for no consideration made by an individual and/or the individual’s spouse into a revocable trust

Questions?

If you are planning to purchase property through an entity or trust, and need our firm to help you with the deed transfer, then please contact our office early in the process so we can coordinate compliance amongst our team. If we have advised you that you will need a deed transfer as part of your estate planning, then please expect additional time for us to gather the necessary information as well as increased filing fees to be compliant with this requirement.
2 But if the property already has a mortgage on it and our firm is now preparing the deed transfer to LLC or irrevocable trust, we will still need to abide by this additional reporting requirement in addition to obtaining lender consent.

Thinking Of Transferring Your Home To Your Children? STOP!!

Posted on | by Mercy Kurian

Answer: True

We often hear from many potential clients at their initial consultations who say they want to transfer their primary residence to their children – they often mistakenly believe that if they do so, then should they fall sick and incur huge hospital bills, their hard earned assets will not get sucked up in paying for their care.

However, in their eagerness to do so, they may inadvertently forego the right to protect and pass down their home in a Medicaid compliant manner and instead fall into the trap of a large penalty being imposed on such a transfer if it happened within 5 years from the date of Medicaid application submission.

This right to protect under New Jersey Medicaid is called the caregiver exemption.

What is the Caregiver Exemption?

In simple terms, the caregiver exemption is an exception that allows people who have provided or will provide care to a family member to avoid penalties that usually come with transferring assets. Normally, Medicaid looks back five years from the date of transfer of money or property to see if the transfer was made for less than fair value ( in other words, if there was a gift made).  If yes, the applicant might have to wait before qualifying for benefits. Instead, if you utilize the exemption correctly, it can help prevent or reduce those delays if certain conditions are met.

Why is This Important for You?

  1. Saving Your Assets: Many people worry about losing their savings to pay for long-term care. This exemption helps safeguard assets for your loved ones if they have spent at least 2 years of their lives caring for you in the home.
  2. Supporting Family Caregivers: If you or someone you love is providing care, this rule acknowledges that and can make it easier to plan transfers and support without penalties.
  3. Making Smarter Choices: Knowing about this exemption allows you to avoid gifting or transfer penalties should you decide to apply for Medicaid when you need it most.
  4. Avoiding Mistakes: It’s important to document your caregiving arrangements properly so that they will qualify for the exemption and won’t lead to costly delays in getting Medicaid.

 

 

How Does It Work?

This rule applies when:

  • You transfer assets to someone who is providing or will provide care for you or a family member,
  • You have a written agreement that details the care services and their value,
  • The transfer and care arrangement follow the rules set out in the law, and
  • You keep good records to show the transfers and caregiving arrangements.

What Should You Do?

If you are caring for a loved one or planning to do so:

  • Keep detailed notes about the care you provide or will provide,
  • Consider drafting a written care agreement drawn up by an elder law attorney and which explains the services and their value,
  • Consult an elder law attorney to make sure your plans follow New Jersey rules and help you qualify for Medicaid without unnecessary delays.

In Summary

The caregiver exemption in New Jersey is a helpful rule that recognizes the importance of family caregivers and can protect your home when you need long-term care. Understanding this law allows you to make informed decisions and get the help you need without losing everything you’ve worked hard for.

If you have questions about how this exemption might apply to your situation, speaking with an experienced elder law attorney can give you the guidance and peace of mind you deserve.

 

Gifting in the Medicaid World – IRS and the Medicaid agency – 2 very different beasts

Posted on | by Mercy Kurian

Time and again clients come to us with the misconceptions about gifting – “My (type in any of the following – CPA, financial advisor, friend, neighbor) told us that we could gift up to $19k a year to our kids or grandchildren.  Why can’t I gift all my money then qualify for Medicaid – it’s the same thing right?

Unfortunately, this is not so easy. The reason why there is a a 5-year lookback on gifts is specifically because the government does not want people to think they can gift away their money and immediately  qualify for Medicaid.  After all, Medicaid is a needs-based program  designed to assist the impoverished when dealing with the devastating costs of long term health care.  The Managed Long Term Care Support and Services under the ABD  program is specifically meant for those individuals deemed “clinically” eligible for Medicaid and have no way to pay for it. However, those individuals who worked hard to build a small nest egg to pass down to their children are heartbroken to know that their house/retirement account or some other savings that they had squirreled away for their kids may no longer be protected from the rising costs of healthcare.  For these people, if they gift without consulting an specialized elder law attorney they may inadvertently make improper gifts thinking it was okay. However, it’s important to keep in mind that the IRS rules do not apply to the world of Medicaid and vice versa. These are 2 different agencies who have different goals and objectives.  The IRS deals with income, gift and estate taxation – their rules are clear –, if you gift $19k each year, you don’t even have to report it to the IRS so long as you only make 1 gift per person per year.  This may be a way to bring down your estate value to avoid this harsh 40% estate tax; however, in the Medicaid world, if you submit an application for Medicaid, gifts  as little as $1k or more made within 5 years of the date of the application will be added together and  a penalty will be assessed based on a certain formula  disqualifying you from getting Medicaid until the penalty period is over.  You could have the gift returned to the applicant so the penalty gets removed, but in NJ, if you have made gifts to several people, then all gifts must be returned to erase the penalty.

So, our suggestion – the next time you hear anyone speak to you about gifting please contact a specialized estate planning attorney to help you navigate through how, when and what gifts to make so as to not jeopardize your entire plan. .  At RLG, we are certified estate planning attorneys, and our goal is to guide you through the process on how to gift and when. Contact us if you have more questions.

Medicaid Look-Back

Posted on | by Mercy Kurian

Is It True That the Medicaid Look-Back Is 36 Months in New Jersey?

FALSE  — in New Jersey, the look-back period for long-term care Medicaid is 60 months (5 years).

When someone applies for Medicaid to cover nursing home or home-based long-term care, the state reviews financial records from the past five years. They look at every single account or asset you have (including accounts closed out within the last 5 years) in order to see if you gave away money or assets for less than fair market value.  If you did and you cannot prove that you used the funds for the care of the applicant, then Medicaid imposes a penalty period — a delay in eligibility.  The penalty is calculated using a penalty divisor which is based on the average cost of care.  This number is adjusted every so often and each time the agency puts out a new divisor, it get reflected on a MEDCOMM or Medicaid Communication

Why People Think It’s 36 Months

  • Outdated info: Before 2006, the federal look-back period was 36 months, but New Jersey now follows the 60-month rule.
  • Different programs: Medicaid for health insurance (under the ACA) doesn’t have a look-back, which causes confusion.

What Happens If You Made a Gift?

If you gifted $50,000 to a relative within the last 5 years, and you apply for Medicaid eligibility in 2025, then since the New Jersey penalty divisor is $402.74 per day, or $12,250.01 per month, then you could face a penalty of about 4 months ($50,000 ÷ $12,250).

Bottom Line for New Jersey Residents

New Jersey applies a 5-year look-back period to long-term care Medicaid applications. If you’re planning ahead or already transferred assets, call our office to schedule a consultation with our office. The wrong move could delay or deny coverage.

 

Impact of Overseas Assets on Medicaid applications

Posted on | by Mercy Kurian

 

Impact of Overseas Assets on Medicaid applications

FALSE – Individuals seeking Medicaid eligibility for long term care supports and services must disclose all assets they own both in this country and anywhere in the world.

In our last post our elderly gentleman thought there was no need to disclose overseas assets when applying for institutional level of care Medicaid.  The program he is applying for is the Aged, Blind, and Disabled (ABD) Medicaid program under which falls the Managed Long Term Services and Supports (MLTSS) program.  In our earlier posts, we had noted that in order to qualify, there is an asset limit of a mere $2000 and even $1 in excess of this limit in any particular month could jeopardize eligibility.

In this article, we want to emphasize an applicant’s reporting requirements. Countable assets include all “available” assets, no matter where they are located.  Oftentimes applicants, either innocently or intentionally, fail to report their assets located overseas.  This can cause unintended adverse consequences either with an immediate rejection of the application should the agency uncover the existence before approval or with Medicaid recovery post death. In the latter situation, a loved one suddenly discovers a collection notice from the recovery department usually asking to satisfy a significant amount which would need to be paid back to the state by a certain date.  This amount represents the lien that had accrued over years of receiving Medicaid during the recipient’s lifetime. Worse yet, if the assets were never disclosed to the IRS, now there is an additional burden of proving the source of funds when it ends up in the hands of a US beneficiary.

Primary residences – one asset considered “unavailable” or “exempt” during lifetime is the primary residence of the applicant, who may have still have this in his or her name before moving to the US. While this is exempt during lifetime (especially if there are mitigating circumstances restricting sale at the time of the application) but recoverable upon death.  Post death, the agency stands in the same priority as the State of NJ or the IRS (with respect to income or death taxes) and repayment must be made from the proceeds of the sale. Otherwise the Executor/Administrator may be held personally liable for distributing any assets to the beneficiaries.

PRACTICAL TIP – While disclosure is always the best way to deal with overseas assets, it is also important to keep in mind that in some developing countries, it may not always be possible to obtain fair market values of property especially those located in remote villages or rural areas. In these places, even assessed values that are typically maintained by the tax office are hard to get because these offices are not technologically efficient and may still rely on antiquated paper logs.

If you or your loved ones own overseas assets and US is now your new home, then it is important to sit down with an elder law attorney to discuss these issues and develop a comprehensive estate plan that factors in the a future possibility of applying for Medicaid and possible steps you can take now with your overseas assets to avoid any surprises in the future.

WILLS VS. TRUSTS: IN PLAIN ENGLISH

Posted on | by Mercy Kurian

Everyone has heard of Wills and Trusts. Most articles written on these topics, however, often presume that everyone knows the basics of these important documents. But, in reality, many of us don’t – and with good reason – as they’re rooted in complicated, centuries-old law.

Let’s face it, if you’re not an estate planning attorney, these concepts tend to remain merely that – concepts. So, if you’re “fuzzy” about Wills and Trusts, know that you are not alone. After we show you the difference between all these documents, we’ll let you decide why you think one may be better off than the other for your particular situation.

Wills vs. Trusts: Defined

Let’s take a minute and define both “Will” and “Trust”:

Will. A Will is a written document that is signed and witnessed. A Will is considered a “death” document as it only goes into effect when you die.  A Will provides for the distribution of assets owned by you, but not assets directed to others through beneficiary designations (e.g. life insurance or retirement benefits).  It permits you to revoke or amend your instructions during your lifetime, tends to cost less than a Trust on the outset but costs more to settle during court proceedings after death.  Example – to probate a 50-page Will, you are looking at a cost of $300 just for the filing fee plus more for the Executor Short certificate etc.

Trust. There are 2 types of trusts – (1) A Testamentary Trust; (2) An inter-vivos (or living) Trust.  Inter-vivos trust can either be Revocable or Irrevocable.

  • Testamentary trusts are created under a Will or a Revocable Living Trust and assets pass into such trusts only after the death of a Testator. That means, in order for these testamentary trusts to become effective, death needs to occur.  Example:  My Will states that upon my death my minor child who is 17 now shall inherit my assets at age 35.  This means that a testamentary trust has been created under my Will so that if my death occurs before my child turns 35, the assets passing from my estate will go into a trust until my child turns 35.
  • Inter-vivos or living trusts are legal documents, signed and either witnessed or notarized (or both) effective during your lifetime, during any period of disability, and after death. However, in order to be effective, either trust needs to be funded with your assets.  They are of two types – revocable living trust or irrevocable living trust.

Revocable Living Trust (RLT).  RLTs are nothing more than Will substitutes and form an important part of an individual’s foundational estate plan.  They become effective immediately upon execution and remain effective during your lifetime until terminated.  Just like Wills, they are completely changeable or modifiable during lifetime and minor changes can be added on by restating the original or including amendments.  Upon death, RLTs function just like Wills by providing for the distribution of your assets to your ultimate beneficiaries. It avoids probate if fully funded, provides for a successor trustee upon your death or incapacity, allows for the management of your property – even if you’re incapacitated, can address appointing disability guardians during your lifetime for any minor beneficiaries of your estate and permit you to revoke or amend your wishes during your lifetime.  It does cost more than a simple Will on the outset but much less upon administration, since there is no probate and costly delays are avoided.  If you have property in another states, putting these properties into an RLT will avoid ancillary probate in all these states.  Finally, in NJ, no Inheritance Tax lien is imposed on any of the assets inside the RLT – your estate may still be subject to taxes but there is no “freezing” of the any bank accounts or other probate assets while the estate is waiting for the waivers to be issued by the NJ Tax Branch.

Irrevocable Living Trusts.  These trusts, as the name suggests, are set up during an individual’s lifetime but are irrevocable.  When established, the Grantor (the person setting up the trust) transfers either by sale or gift, assets into this trust and completely gives up all dominion and control over the assets in the trust.  The appointed Trustees now “own” the assets in the trust and manage the assets on behalf of the beneficiaries.  These trusts are set up primarily to save on estate taxes as the assets in the trust are not included in the Grantor’s estate upon death, provides creditor protection both to the Grantor as well as to the beneficiaries and depending on how the trust provisions are drafted, the assets may avoid passing into the estates of the individual beneficiaries as well.  In the Elder Law area, irrevocable living trusts may also be established as part of Medicaid planning to get individuals eligible for Medicaid.  No matter which trust structure is utilized, irrevocable living trusts are sophisticated planning techniques that are established as part of an individual or married couple’s advanced planning.

Probate Process: Key Element in Deciding Between a Will and Revocable Living Trust

A key element in deciding between a Will and a Revocable Trust (your foundational plan) is understanding the probate process. “Probate” – which literally means “proving” – refers to the process wherein a decedent’s Last Will & Testament must be authenticated, outstanding legitimate debts paid, and assets transferred to the beneficiaries.  The downside is that probate can take a long time – even years – it’s expensive in many places and the entire process is completely public, meaning your nosey neighbor Nancy and evil predator Paul both know exactly who got what and how to contact them.  Additionally, as explained previously, in New Jersey, due to the inheritance tax structure, assets passing through probate will have an immediate lien imposed until waivers are obtained.

  • Probate Guaranteed with a Will.If you use a Will as your primary estate planning tool, you own property in your individual name, or property is made payable to your estate, probate is guaranteed.
  • Probate Avoided with a Revocable Living Trust.If you use a fully-funded Revocable Living Trust as your estate planning tool, probate is avoided – saving your family time and money.

 

Consult an attorney who specializes in estate planning & elder law to see whether trust planning is necessary for you and whether they will help in fulfilling your overall estate planning goals.  Trusts may not be necessary in every situation but it is important to understand if there may be ways in which your specific estate plan may benefit from them!

What Is a Living Will, and What Does It Mean to Me?

Posted on | by Tom

When an RLG team member sits down with a client to discuss designing their estate planning documents, we are often met with confusion when we bring up the topic of creating a  “Living Will.” Clients often have already completed a Living Will document at the hospital before going in for surgery or through AARP – in this document, you would specify “medical treatments you would want to be used and those you would not want to be used to keep you alive, as well as your preferences for other medical decisions, such as pain management or organ donation” (Mayo Clinic Staff).  However, in our office, we set up the Living Will so that this document seeks to address only one medical-related decision, which we will cover in the next paragraph. Clients also often think that the “Living Will” is the same as the “Last Will and Testament” because both documents share the word “Will” in the title. This article is intended to clarify the confusion about what a Living Will document is and what purpose it serves.

A Living Will is a legal document that is part of your “advance healthcare directives.” It contains a set of legal instructions laying out your wishes for the termination of artificial treatment if you are unable to make your own healthcare decisions (for example, if you are in a coma or vegetative state and there is no chance of meaningful recovery). The Living Will works in conjunction with another key advance healthcare directive document – the Healthcare Power of Attorney (HCPOA) document. The HCPOA document appoints one or more individuals to make healthcare decisions on your behalf if you cannot make them yourself. Although the HCPOA document is central to one’s advance healthcare directives, the Living Will is even more significant for some. But what is a Living Will?

Imagine that you are given a multiple-choice test that reads as follows:

In the event that I am terminally ill, with no chance of a meaningful recovery, whom do you want to make the final “end-of-life” decision?

  1. Two physicians
  2. The person whom I have appointed to make healthcare decisions on my behalf (aka my Healthcare Representative)

If you answered “A.” to the above question, you are saying that you want to execute a Living Will.  This document allows you to clearly state in no uncertain terms that in the event you are terminally ill with no possibility of recovery, and you cannot live without artificial support (i.e., if you are irreversibly brain dead and cannot breathe without a ventilator), you authorize two physicians to make the final “end-of-life” decision to terminate life support (it is important to stress that typically, physicians would only make this decision after consulting with the family, but they take away the burden of having a family member make this decision).

If you answered “B.”, you choose NOT to sign a Living Will – instead, the “end-of-life” decision will remain the responsibility of your Healthcare Representative. Simply put, if you want the end-of-life decision to be made by two physicians, you sign a Living Will. If you want the end-of-life decision made by the family member or friend you have appointed as your Healthcare Representative, you do not need to sign a Living Will.

Although the terms may be simple, the decision of whether or not to sign a Living Will is often very difficult. It is important to remember that there is no right or wrong answer – signing a Living Will is a completely subjective decision based on your personal feelings and values, as well as the personal feelings and values of your healthcare representatives. On the one hand, some people say, “I am going to sign a Living Will as I do not want my Healthcare Representatives to bear the emotional burden of making the end-of-life decision, even if they know that is what I want.” On the other hand, others may say, “ I am not going to sign a Living Will as I do not feel comfortable with two strangers making such an important decision that will impact my family and me.” Both points of view are equally valid. Whatever your decision may be, it is essential to have an open and honest discussion with those closest to you about your choices for end-of-life care.

 

Mayo Clinic Staff. Living wills and advance directives for medical decisions. Mayo Clinic, 2022,  https://www.mayoclinic.org/healthy-lifestyle/consumer-health/in-depth/living-wills/art-20046303

Why Pay for a Lawyer?

Posted on | by Tom

Why Pay for a Lawyer?

Legal services can be expensive. In estate planning, hiring a lawyer to design and draft an estate plan that includes a Will or a Trust and one or more Powers of Attorney can cost thousands of dollars.

What is it, exactly, that you are paying for? You know it’s possible to create your own Will using online software for a few hundred dollars. This option seems appealing when all you have to do is answer some questions, and the documents will be ready in minutes, while a law firm may take several weeks. Isn’t it just cheaper and faster to do it all yourself?

This is a common line of thinking for many people who want a will or trust, but experience “sticker shock” once they consult with a lawyer. However, most people who think this way don’t realize that what you are actually paying for is the lawyer’s expertise, which can save you time and money in the long run. If you don’t know what you don’t know, how can you be sure that the documents you create will achieve your goals? That’s where a specialized lawyer comes in.  Abraham Lincoln once said, “A lawyer’s time and advice are his stock in trade.”  Without a lawyer’s expertise, the documents you draft may create more issues for you or your beneficiaries in the future.

Here is one example:

Improperly Drafted General Durable Power of Attorney:

Dan is a widower with one adult son, Kevin. He wanted to create an estate plan, but the law firm he called quoted $2,500, which Dan thought was too expensive. Instead, Dan created his own documents online for $500.

Five years later, Dan is ill, and Kevin wants to move Dan into a facility where he can get the proper care. Unfortunately, the General Durable Power of Attorney Dan created did not give Kevin the authority he needed to sign a lease on Dan’s behalf, nor did it reference the critical New Jersey banking statute so Kevin could access Dan’s bank account to pay the rent.

If Dan still has the cognitive capacity, he can hire a specialized estate and elder law attorney to create the proper documents. But if Dan is incapacitated, Kevin will have to seek a guardianship, which is a lengthy and expensive court process.

In the end, trying to save a few thousand dollars on documents in the short term could cost Dan and Kevin much more overall. Our advice – If you don’t know what you don’t know, lean on the expertise and experience of the right lawyers who have spent hours researching the law and can guide you on achieving your goals.

Want to discuss if RLG is the right fit for you? Contact us today!

What to do if Your Income is Too High for Medicaid

Posted on | by Tom

What to do if Your Income is Too High for Medicaid?

Ben is retired. He receives a pension and social security totaling $4,000 a month and uses this money to pay for all his expenses, including rent, food, transportation, etc. Other than his home, Ben has less than $1500 in savings.

In the past six months, Ben has had two falls; the second one caused him to go to the hospital. As such, Ben’s doctor recommended that he no longer live alone. Ben’s son, James, finds an assisted living facility nearby so Ben can still see his friends and James can take care of his father’s needs. Unfortunately, the facility is expensive, costing over $6,000 a month. If Ben does not receive some assistance, he will run out of money.

James wants to apply for Medicaid benefits for his father. However, he has heard from one of his friends that Medicaid will only accept you if your income is less than $2523 a month (which is the 2022 income cap limit) – even if all your other income is going towards paying the facility bill but the income is still insufficient to cover the total cost of care. What can James do to help his father get on Medicaid?

James can and should contact an elder law attorney for help because a qualified attorney can set up a Qualified Income Trust or a QIT. Sometimes, this is referred to as a Miller Trust.

A QIT is a special Trust that can help Medicaid applicants whose income exceeds the threshold amount to become financially eligible for Medicaid. The Trust can accept the excess income, but the Trustee will need to use all the money coming in to pay the facility. A qualified attorney can ensure that the trust is drafted correctly so that it not only gets accepted by Medicaid but also, the attorney can guide the Trustee on how to properly administer the trust after it receives the income each month so that the applicant becomes eligible for Medicaid and maintains their eligibility after being approved.

If you have further questions or need assistance with a QIT, don’t hesitate to get in touch with us today.