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George had been looking in on his dad and his Aunt Harriet for years.  They had been living together for at least 20 years, ever since his mother died, when Dad moved into Harriet’s home.  Now Dad was in rapidly declining health and would need nursing home care and Medicaid pretty soon.  I asked about Dad’s assets and that’s when George went into some detail about the house. George explained that about 15 years ago Harriet had creditor problems so she transferred the home to Dad.  He was concerned that now Medicaid would take the home.  I explained that as long as a family member remained living there New Jersey Medicaid would not force the sale of the home.  Dad could qualify for Medicaid and Harriet could continue to live there.  When he died, however, New Jersey, under its estate recovery laws, would place a lien on the home. I asked George about his Dad’s will.  He told me that the will does leave the house to Harriet.  I explained that should she survive his dad, Harriet would inherit the home.  But, she would need to pay New Jersey inheritance tax as a sibling.  I estimated the tax would be somewhere in

Last week we were talking about Brenda, who tried to apply for Medicaid for her grandfather, but ran into a snag.  She provided the New Jersey Medicaid caseworker with 5 years of financial records and was told that Granddad still had to spend down another $30,000 from accounts that Brenda never knew existed. When I looked at the statements Brenda gave to Medicaid, it was clear that the $30,000 in question was in two Uniform Gift to Minors Act accounts, which Granddad was acting as custodian for Brenda.  I asked her why she gave those documents to Medicaid and Brenda didn’t have a good answer.   “I just figured I would give them everything and they would tell me when he would be eligible and what I needed to do”, she replied. It’s a very common response.  Many people are under the erroneous belief that the Medicaid application process is a simple one.  “I know there is a penalty if we gift money but we haven’t done that.  We have legitimately spent down all the assets so we’ll just walk into the Medicaid office and tell them that, hand over everything and it will all be fine.”  Unfortunately, it rarely works out that

Brenda needed help.  She had looked after her grandfather for years.  When he needed nursing level care she found a nursing home nearby, arranged for him to be admitted and, as agent under his Power of Attorney, spent down his remaining assets.  A dutiful granddaughter, she then scheduled an appointment with a New Jersey Medicaid caseworker to file a Medicaid application on his behalf.   It seemed to be pretty simple but that’s when the problems began. Brenda gathered her grandfather’s financial records together and turned them over to the Medicaid caseworker at the first interview.  The caseworker completed the Medicaid application with her right there, printed it and had her sign it. She left the office thinking everything would proceed smoothly – that is until she got a letter from the same caseworker telling her that her grandfather still had $30,000 in assets remaining to be spent down. Brenda was confused by the letter.  She was positive that her grandfather had only a few hundred dollars left in his checking account, the only asset he had remaining.  That’s when she called us for help.  I asked Brenda to provide me with copies of everything she gave to the caseworker.  Upon my review,

Every year brings change, sometimes small sometimes big.    Many of the government benefit programs that we, as elder law attorneys, work with frequently, such as New Jersey’s Medicaid program and the VA Aid and Attendance program, underwent slight changes as the clock turned to 2013.  Let’s review them. Medicaid and VA Aid and Attendance are needs based programs.  There are certain income and asset limitations.  These numbers typically are tied to the Social Security increases.  When Social Security benefits get a cost of living adjustment so do these other programs.  In 2013 the increase for Social Security is 1.7%. Accordingly, New Jersey’s Medicaid income cap for 2013 went from $2094 to $2130.  This means that for many of the Medicaid programs, such as assisted living and home based Medicaid, a recipient can have no more than $2130 per month of gross income in order to qualify for those programs. An applicant must spend down countable assets to less than $2000 in order to qualify.  However, in the case of a married couple, the healthy spouse can keep one half of the countable assets up to a certain dollar limit.  This year that number is $115,920. VA rates also have increase in 2013.  A single

For New Jersey Medicaid purposes, a transaction involving a life estate is considered a transfer of assets, but only insofar as the remainder interest is concerned.  A Medicaid penalty is assessed on the part that was transferred.  If Mom transfers her home to her children but keeps the life estate the penalty is calculated on the remainder interest, that part that was transferred to the children.   The part Mom still owns is an exempt asset if she continues to live in it.  However, if the home is sold she is entitled to a portion of the sale proceeds equal to the value of her life estate and that is a countable asset for New Jersey Medicaid purposes.

All anyone was talking about in the last days of 2012 was whether Congress and President Obama would work together to avoid an increase in taxes caused by the expiration of a number of tax breaks dating back to President Bush.  An agreement was reached at the 11th hour.  But what does it all mean?  And how does it affect seniors? First let’s talk income taxes.  The President and Republicans reached a compromise, raising the tax rate on individuals earning more than $400,000 and married couples making more than $450,000 from 35 to 39.6 percent.  Payroll taxes will increase as well, back to 6.2 percent, for all wage earnings up to $113,700 in 2013.  The past 2 years saw a 2 percent reduction in mandatory contributions to the Social Security program.  While this will impact 160 million American employees it won’t affect most seniors who are retired. There was much speculation on the federal estate tax exemption and whether the $5,000,000 exemption would expire and return to $1,000,000.  Remember, at the end of 2010 we went through this when there was no federal estate tax and we waited to see if that law would expire and return the exemption to $1,000,000.  Well,