If you are a regular reader of my blog you know that getting a Medicaid application approved can be tricky to say the least. As the process becomes more and more involved and complex, we are receiving more calls than we ever have seeking our assistance. When I discuss our fee, people often tell me that they have spoken with a “Medicaid company” whose fee is less than ours. My response has always been that you get what you pay for. Medicaid is a combination federal and state program that consists of laws, regulations and court decisions interpreting those laws and regulations. I explain to prospects that when an interpretation of these laws and regulations is necessary or when the State misapply these laws and regulations, you need an attorney to advocate on your behalf. While to some, hiring an attorney seems costly or unnecessary, if it turns out you weren’t eligible when you thought you were, but that realization happens 3 or 4 or 6 months after you filed for Medicaid, you can only fix the problem moving forward. Even if you hire an attorney at that point, more likely than not you will lose months of Medicaid eligibility costing tens and in some cases hundreds of thousands of dollars in unpaid long term care costs.
In last week’s post I reviewed the changes to retirement accounts under a new law called the SECURE Act. I started with the positive changes but not all about the new law is a plus. The SECURE Act severely limits the ability of retirement account beneficiaries to stretch out the payouts. As I explained last week, under the old rules, beneficiaries could stretch out the withdrawals over their life expectancies. Now spousal beneficiaries can still take the distributions over their own life expectancies, however, other non-spouse beneficiaries can no longer do so (with some limited exceptions). The majority of non-spouse beneficiaries must now withdraw the entire account value within 10 years. Besides spousal beneficiaries, minor child beneficiaries, beneficiaries who are no more than 10 years younger than the deceased account owner and chronically ill individuals can still exercise the stretch provisions. This change has an obvious impact for Americans whose retirement accounts have grown to six and seven figures. Many have intended to withdraw only the minimum and leave as much as possible to children and grandchildren who could then stretch the withdrawals out over 30, 40 or 50 years or more. That is no longer possible. In fact, the tax hit could be greater for the children than for the senior account
Just before the holidays last month, Congress passed and President Trump signed into law significant changes to retirement accounts that affects owners and beneficiaries of tax deferred retirement accounts including IRAs and 401ks. Known as the SECURE Act (Setting Every Community Up for Retirement Enhancement Act), it became effective 1/1/2020. While some of the changes are favorable, others are definitely not. First let’s review the favorable ones. Before the SECURE Act, once an account owner reached 70 and ½ years of age, no more contributions could be made to traditional IRAs. The SECURE Act repealed this age restriction so now you can make contributions no matter your age. This was always the case, by the way, for Roth IRAs and remains unchanged. The new law also raises the required minimum distribution age, the point when you must begin withdrawals from your retirement account. It was 70 and ½ and now it is 72 but only for people who reach 70 and ½ in 2020 or later. For anyone who already turned 70 and ½ the RMD age remains 70 and ½. There is an exception to the RMD requirement that remains the same. If you continue to be employed beyond your RMD date, you can postpone that date until you do retire – as long as you
My posts the past two weeks have been about Mary’s problem caring for her stepmom, June after her dad died. Last week I told you that we needed to file a guardianship action. 2 doctors needed to examine June and sign affidavits stating that in their medical opinion she was incompetent. A court appointed attorney then was assigned to represent June. Our guardianship application also included an assertion on June’s behalf to her right to the elective share. We also had to provide notice and copies of all court papers to Mary’s sisters. Because guardianship hearings can take 60 days or longer to schedule in some counties we needed to request temporary guardianship in order to allow Mary to move June to another facility. Since she had no assets of her own, I had to make the facility comfortable that while we could not pay them yet, once the elective share was determined we would immediately make payments. That by itself, however, was not enough to assure the nursing facility. They also asked us when we could expect to qualify for Medicaid and if there would be any Medicaid penalties resulting from any transfers for less than fair value. That required Mary
In last week’s post I started telling you about Mary’s call concerning her stepmom, June. Mary’s dad had recently died leaving her with the responsibility of caring for June. He also left June with ¼ of his estate per his will which she knew would not last very long, approximately 6 months. As I related last week, under the law June is entitled to a minimum amount from Mary’s dad’s estate to satisfy her right to an elective share. In New Jersey that is 1/3 of the deceased spouse’s estate less what the surviving spouse already has. June had nothing so it made it easy in the sense that I knew the ¼ share in the will would not be enough. Mary objected that her sisters would not understand why their dad’s will wouldn’t control here. I explained that if June does not assert her right to the full amount of the elective share then Medicaid will assess a penalty – a period of ineligibility for benefits - for any amount she does not receive to which she was entitled. Mary asked me how we could accomplish this since June didn’t have a power of attorney. I explained that all this needed to
Most people don’t prepare well for the possibility of needing long term care. This story is no different but with the right steps, guidance and a lot of work this story shows what can be accomplished. Mary called us after her dad died. She wasn’t calling because she needed help with the probate of his will. Mary wasn’t sure what to do about her stepmom, June. Dad and June had been living together in an assisted living facility when he died. Dad’s will left 1/4 of his estate to June and the rest to Mary and her 2 sisters. Mary also told me that June had no power of attorney. When I asked about her health, Mary told me that June had advanced dementia and no longer recognized anyone or had an ability to communicate any longer. She added that while Dad was alive, he helped provide her care but now that he is gone the assisted living facility said June needed an aide to be able to stay there. Mary told me that there isn’t enough money to cover the cost for very long and she’ll need to apply for Medicaid. I anticipated that Medicaid would be needed within 6 months. Mary’s