Don’t Forget About Medicaid’s Medical Test – Part 2
In my blog post last week, I began a discussion about Medicaid’s medical test. While the financial requirements to qualify for Medicaid are extensive and involve “looking back” through 5 years of financial transaction, we cannot forget that there is also a medical requirement of needing nursing home level care. As I explained last week, this is never a problem when the applicant is living in a nursing home and applying for Medicaid. No one resides in a nursing home who doesn’t need to be there. Assisted living facilities (ALFs) however, are trickier. That’s because they are not licensed as nursing homes and therefore, not all residents need nursing home level care. In fact, the majority of assisted living residents do not need nursing home level care when they first enter a facility. Over time, as their health declines, they need increased care. The concern, however, is that a resident may run out of money before he or she meets the medical test for Medicaid. When families are looking for a facility in which to place a loved one and then engage with the facility regarding the financial terms, a discussion about Medicaid typically happens. Most ALFs have a 2 year or 3 year private pay requirement before they will
Don’t Forget About Medicaid’s Medical Test
When families call our office to inquire about Medicaid, the conversation tends to focus mostly on my explanation of the financial requirements. People generally understand that Medicaid is a needs based benefit with an income test and an asset test. The State’s scrutiny of an applicant’s finances over a 5 year period leading up to the application is detailed. It tends to overwhelm families if they are not prepared for it. At some point during the conversation, however, I always remind families that there is a medical requirement that we cannot overlook. Even if you spend down your assets and provide each and every document that is requested, if you are “too healthy” to qualify it doesn’t matter that you have satisfied the financial test. Only when you need “nursing home level” care do you satisfy the medical requirement. The medical test is defined in terms of the activities of daily living (ADLs). Those activities are ambulating, bathing, dressing, toileting, feeding oneself, and incontinence. One must show the need for assistance with at least 3 of ADLs to meet the test of needing nursing home level care. This is established by Medicaid who sends a nurse to conduct an evaluation and issue a report. If the test is met, a medical
Your Payable on Death Designation May Surprise You – Part 2
In my blog last week I began talking about payable on death designations. Wife died and 10 days later Husband died. Neither spouse had left a will but Wife had designated Husband as her primary beneficiary of her 401k. She did not designate any alternate beneficiaries. In the process of liquidating Wife’s 401k, we were required to complete a beneficiary affidavit. The form stated that if the claimant is the spouse no further information about any other family members is necessary so we sent it back leaving blank the questions about children parents and siblings. The financial institution, however, sent us back the form stating it was incomplete. When I called the institution to clarify what was incomplete, things got interesting. They explained that they needed me to provide this information about family members of the Husband and not the Wife. I explained that since Husband outlived Wife, the account proceeds should then become part of his estate to be distributed by the Administrator of his estate. Husband had no children or siblings and his parents had passed away many years before so in the end, in our case, the outcome was what I believe it should have been anyway - payable to Husband’s estate. But, what they told me still
Your Payable on Death Beneficiary Just May Surprise You (Part 1)
I have posted many times on this blog about the reasons why you should have a will. I have also written about certain types of assets that are not controlled by a last will. One such type is contract property, which is any account that has a payable upon death (POD) designation which overrides the will. It is important, therefore, to carefully plan whether to choose POD beneficiaries at all and if so, who they should be. In the case of retirement accounts which have income tax implications, because these tax deferred accounts will potentially trigger a large income tax when the plan participant dies, it is especially important to make a careful choice. A recent case in our office resulted in an interesting conversation about the line of succession to such an account. A wife died and 10 days later her husband died. They had no children and they left no wills. Wife had a large 401k thru her employment. She had completed a beneficiary form designating Husband as the beneficiary, but she did not designate a contingent (alternate) beneficiary. We received the paperwork required to liquidate the account and transfer it to the rightful recipients. Because the account is contract property, the POD designation takes precedence over New Jersey
How to Leave Personal Property (Part 4)
How to Leave Personal Property (Part 4) In my blog post last week discussing personal property, I explained that leaving a written list in your will can problematic for several reasons. This week I will tell you about one specific reason. The State of New Jersey may come calling. That’s because it periodically checks with the county surrogate offices to see what has been probated. If, for example, my will identifies a tangible item I wish to leave my niece or my friend, that also means there may be inheritance tax owing because that person is a Class D beneficiary. Anything I leave to that person with a value of more than $500 will be subject to tax at a 15% (or if the bequest is large enough a 16%) rate. The State typically sends a notice to the executor stating that no inheritance tax return has been filed and if one isn’t filed the State will impose an arbitrary assessment of tax. This arbitrary amount is more than what any tax is likely to be but it generates the State’s desired response. If the return is not filed the assessment becomes final regardless of whether it is accurate or not. It is simply designed to get the estate to file
How to Leave Personal Property (Part 3)
How to Leave Personal Property (Part 3) In this 3rd blog post on this topic I continue a discussion about how to leave personal property when one passes away. Last week I explained that when clients sign their wills, we also give them a personal property memorandum that they can complete at any time, designating to whom they wish to leave tangible items. They can also do this by making specific designations in the will, but there are reasons the memorandum may be a better option. When a will is probated, it becomes a matter of public record with the Surrogate. Creditors, heirs and family members who may not be heirs can obtain a copy. While the will does not include a list of everything the decedent (person who died leaving the last will) owned at the time of his or her death, including a list of tangible property and the person you intend to leave it to does create a record, at least as far as those items that the person owned at the time the will was signed. This does not mean, of course, that the decedent still owned them at the time of death but it could lead to headaches for the executor (estate