Category: Long Term Care

Emergency Preparedness for People With Disabilities

Posted on | by Mercy Kurian

Did you know that if you or loved one has a disability you may be entitled to a priority power restoration in the event of a electrical outage? Or that your local community may have designated special needs shelters with electrical outlets and medical support in the case of emergency evacuations? Read this really important article by SNA member Attorney Ashley Shannon Burke who presents some eye-opening and practical tips on how families with loved ones with disabilities can prepare for emergencies. Follow the articles guidelines on steps you can take now to be prepared in the future which will give you some peace of mind.

 

Emergency Preparedness for People With Disabilities

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!

Questions you didn’t know that you did not know about Medicaid planning: What I have learned as a Medicaid specialist at an elder law firm!

Posted on | by Tom

Life has a way of going on, the clock is always ticking, and time never stops. However, if that unfortunate time comes when you may need financial assistance from the government to help pay for long term care costs, then your life may come to a screeching halt as you now must look back on your life (five years to be exact) and recall the “why” and “for what” on certain withdrawals from your accounts for this period of time.

Working as a Medicaid Specialist for Rao Legal Group, an estate and elder law firm in Princeton, NJ, I have come to see the value in planning early and preparing for the day when you may need long term care.

The things you do now can change what happens in the last chapter of your life, and so many people don’t even consider the consequences of each and everything they do on a daily basis.

Something as simple as paying your grandson when he mows your lawn every week because that chore has become difficult for you. Did you know that even a small check made out to him for mowing could be called into question later should you decide to apply for Medicaid benefits? And if you wrote out these checks on a weekly basis, then without clear proof that you were getting something in exchange for this payment, Medicaid could likely consider those checks as gifts to him?

Or, how about when your daughter and her family were kind enough to help by doing your grocery shopping for you. Maybe you’re not able to shop on your own, or you simply don’t have the energy for it. When your family pitches in to help you by paying for certain things with their own money, of course you want to reimburse them for the items purchased. Did you write a check? Did you take some cash out of your ATM for this purpose? Are they doing your shopping every week? Did you remember to keep the receipts and keep an accurate record? Do you have a loan agreement in place? If not, Medicaid may look at these checks or withdrawals as gifts, too. And they have up to five years of these transactions, so maintaining proof of all these receipts/reimbursements may be useful to justify such expenses.

Perhaps you have a son who is hardworking and providing for his family by working two jobs, but suddenly, he is unable to work because of an accident. Now, the bills are adding up for him, and his family needs groceries and the electric bill is overdue. This is a time when you would like to help them out, buying food or paying a bill — isn’t that what families do for one another? But what if we told you that Medicaid would treat that as a gift, which could in turn disqualify you for a certain period from receiving government assistance if this transaction occurred within five years of your Medicaid application.

Have you ever needed to have someone move into your home to help with bills? Or maybe you just have a friend who needs a place to stay temporarily. Your friend wants to pay rent to you for the time at your home. Has a rental agreement been prepared? What will Medicaid require as proof of the payments made to you?

On the flip side, sometimes people have worked hard and are lucky enough to have some assets set aside to pay for the needs of their families. They may have even been frugal enough to save this money for the future, along with paying a mortgage on their home. What if your house needs some repairs? Have you hired a contractor to help with some renovations? Did you have them write up a contract? Or did they want you to make out the check to cash? Are you aware that if you do not have accurate records and receipts, then Medicaid might look at those expenses as gifts, too?

Finally, if you own your home — have you considered what could happen if you became ill and needed long term care? What will happen to your home? Have you thought about the rules surrounding Medicaid and the agency’s rights to assess a lien on your home upon your death?

Maybe you have other assets, another property besides your primary residence? Or perhaps you have acquired some stocks and bonds, an IRA, or even a life insurance policy? All such assets will be looked at by Medicaid as countable assets that would need to be completely spent down prior to applying for Medicaid.

Another area to consider is the rising cost of care. You could have a small “nest egg” built up, one you worked hard to put away, and you believe that some of these investments will allow you to live out your life on these assets with a small portion passing down to your loved ones. But with the rising costs of long-term care, one major health event could land you in a situation where that nest egg is depleted and without proper advanced planning, you may not be able to protect your assets.

It can be daunting to apply for Medicaid benefits — trust me, I know this first-hand in my role as a Medicaid specialist and assisting clients and their families with their Medicaid applications.

If you meet the clinical eligibility requirements for Medicaid, you still must jump over the hurdle of meeting the financial eligibility requirements. If you don’t meet with a qualified elder law firm to help you with your planning, you could be missing out on the opportunity to avail yourself of certain strategies to help you to protect some of your assets and still qualify for Medicaid.

Some final questions: Have you set up a Financial or Healthcare Power of Attorney? How about a Will? It is so important to have these Estate Planning documents prepared. When you are suddenly not able to make decisions for yourself, it is imperative that you have someone in place that can make those decisions for you. When the day arrives that you no longer can care for yourself, you want to be ready.

The best advice I can offer to you is to do your research, get your Estate Planning documents prepared by a qualified elder law attorney, and then have your questions addressed by the attorney so that you can be ready when the day comes that you need help. Don’t wait until you already need the help, because remember, life has a way of going on, and the clock is still ticking.