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In last week’s post, I was explaining that the death of the non Medicaid spouse impacts the continued eligibility of the Medicaid spouse.  That’s because the Medicaid spouse’s income and/or assets may change.  The asset change is the more complicated one, in part because the estate administration process takes time.   An application must be submitted to the Surrogate to admit the will and appoint the executor.  If there is no will, an application must be made to appoint an administrator.   Whether there is a will or not, the surviving spouse is entitled to a minimum amount - the elective share - which is 1/3 of the deceased spouse’s estate after certain deductions and less what the surviving spouse already has in his or her name (next to nothing if on Medicaid). Assets need to be valued as of the date of death.  In many cases there are choices that can be made as to which assets to give to the surviving spouse.  For example, if there is real estate that the deceased spouse owned with others, that can be a good asset to give to the Medicaid spouse.  If the other co-owners refuse to sell, the asset is considered inaccessible.  In other words, Medicaid can’t require the sale and spend

In my post last week I explained that once a Medicaid application is approved, everything isn’t on autopilot.  What I mean is that you must be vigilant so as not to lose the benefits once you have them. That can happen a number of ways such as a change in circumstance.  The death of the non-Medicaid spouse - known as the community spouse - can be one way.  Careful attention must be paid to the administration of the deceased spouse’s estate and how it will impact Medicaid eligibility for the surviving spouse. There will always be some assets in the community spouse’s estate because some marital assets usually must be shifted over to that spouse since the Medicaid spouse must have no more than $2000 in assets.  Often there is a house which is an exempt asset as long as the community spouse has been living in it.  Married couples typically have what we call “I love you” wills.  Their wills first leave everything to each other and then to children and other heirs in the case of the second spouse’s death.  When there is no will, under the intestacy laws most if not all of the assets first go to the spouse. As

Whenever I talk to families about how to get Medicaid approved, there are so many elements to a successful application and so many confusing requirements that the tendency is to relax a bit, thinking the job is done when we first get the application approved. One example is with respect to the $2000 asset limit. One must spend down to less than $2000 in assets by the close of business on the last day of the month directly preceding the month we want Medicaid to start - known as the Medicaid pick up date.  I constantly must remind families, however, that once you get to that number to achieve eligibility, you must keep under $2000 at the end of each and every month thereafter to maintain eligibility. The same thing must be done in the case of a qualified income trust, which must be used when an applicant’s income exceeds the income cap or limit ($2742 per month in 2023).  It is not enough to use it correctly the first month.  If you forget to pass the right amount thru it in any one month, then you run the risk of losing Medicaid benefits in any month you are deficientThere are other ways to lose

In this third post of three, I go back to the problem caused by the death of an owner of real estate and the subsequent deaths of the next two people who were to inherit that property.  As I explained last week, A died in 1994 and her interest in her home passed by way of intestacy to her daughter, B.  When B died, by intestacy her share passed to her half brother, C.  C had a will leaving everything to his spouse.  By the time anyone realized that the fact the property was still in A’s name was a problem, they were about to close. The title company which planned to issue a title insurance policy to the buyer was concerned about the issue of taxes, specifically estate and/or inheritance taxes.  If there remained any unpaid taxes then the title company could be on the hook if it issued a policy, which is why they required proof that either the taxes had been paid or there were none due. Last week I explained that although there currently is no New Jersey estate tax, there was at the time that A, B and C died.  No estate tax was due, however, because

In my post last week I began to tell you about a real estate sale that we were asked to help finalize because the deceased owner’s estate administration process had never been completed.  Actually, the person who inherited ownership had also died as did the person who inherited it from that person. As I stated last week, the problem came to a head because the insurance company that insures the property for the buyer would not issue the policy without certain issues being addressed.  One was figuring out the rightful heirs to the property and having a person (executor or administrator) appointed by the Surrogate to be able to sign the necessary paperwork on behalf of each estate. The other concern, however, was estate and inheritance tax.  Inheritance tax is determined based on the relationship of the heir to the person who died.  Class A beneficiaries are exempt from tax.  Spouses, children and grandchildren are Class A.  That meant that when A died and left the house to her daughter B, we did not need to worry about inheritance tax.  Under intestacy law, B’s share passed to her half sibling, C since she had no spouse or children.  C was a Class C beneficiary subject to inheritance tax.  C’s will left

I wrote two posts last November about a common problem we see.  A real estate transaction is about to close when someone - usually the title company - determines that no one has been appointed as administrator or executor with authority to sign the closing documents on behalf of the deceased owner. Things, however, can become more complicated when we add estate and inheritance taxes to the mix.   A recent case in our office highlights the problem.  The sale of a home owned in part by a someone who died 30 years ago couldn’t close because the estate administration process had not been completed. We’ll refer to that owner as “A”.  A died without a will and left an only child, “B”.  B died 15 years later, having never finished estate administration, including transferring title to the property to herself.  B did not leave a will either.  According to New Jersey’s intestacy statute, her estate passed to her half sibling, C (who was not A’s child).  C died 3 years after B with a will leaving everything to a surviving spouse. While the 3 estate all needed to go thru the estate administration process, the more complicated problem to unwind is estate tax and inheritance tax.  Although none of the estates was