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In my post last week, I wrote about a particular solution - really attempted solution - to the financial burdens caused by a catastrophic illness or injury.  In the age of the internet, crowd funding websites have made it easier to raise money from a large group of people.  The GoFundMe site is maybe the most commonly known one. Efforts to raise the money needed to pay medical bills and the cost of long term care are rarely successful simply because the target amount is so undefined in terms of dollars and length of time.  The road to recovery is a long one and for those without long term care insurance the Medicaid program will be the only alternative, which is where the fundraising efforts can create a problem. As regular readers of this blog know, Medicaid is a needs based program with an asset test and an income test.  A Medicaid applicant must have less than $2000 in assets to qualify for Medicaid.  In the case of married couples, the non-Medicaid spouse also has an asset limit.  When an application is filed, 5 years of account statements must be provided for every account the applicant and spouse had in that time frame.  All transfers into and out of

In this week’s blog post, I write about a particular solution - or really attempted solution - to the financial burden caused by a catastrophic illness or accident.  A family member calls concerning a loved one who has suffered a serious illness or accident, one that will result in needing extensive custodial care.   As readers of this blog know, custodial care is quite expensive, whether in a facility or at home.  On average the cost is $13,000 to $15,000 per month and in some cases much more than that.  This type of cost is tough for a majority of Americans to cover for any extended period of time but that’s what usually is needed.  Recovery to the point of being able to live independently is not achievable in most of these instances. As I have discussed many times, the problem is particularly acute for younger individuals.  That’s because they have not accumulated as much savings that can be applied towards care and are less likely to have even considered - let alone purchased - long term care insurance.  They also tend to have been working  to support spouses and young children.  A major source of income may be gone. Medicaid becomes the obvious solution.  When I explain how Medicaid works and how

In my blog post last week I told you about a recent Wall Street Journal article that caught my eye.  Jeffrey’s siblings sued to recover their brother’s retirement account.  In 1987 Jeffrey designated his girlfriend at the time as the beneficiary of the account.  He broke up with her in 1989 but never changed the beneficiary so when he died the account custodian said they had to pay her. That’s because the retirement account is considered contract property.  A will or when there is none  state intestacy laws, do not control contract property if there is a beneficiary designation on file with the account custodian.  Jeffrey’s siblings sued and lost but according to the WSJ article they intend to appeal.  Based on my experience I would say they are very unlikely to succeed.  It reminds me of a case years ago I was referred by another attorney who had tried and failed to do what Jeffrey’s siblings tried - to get a court to override the beneficiary designation. The siblings sued Proctor and Gamble, the company that Jeffrey worked for, alleging it violated a fiduciary obligation to inform him of his beneficiary designation.  It isn’t clear from the article why they should have reminded him.   P&G said that when it changed service

A recent Wall Street Journal article about a fight over a $1 million dollar retirement account reminded me of a similar case I had in my office 25 years ago.  First about the case highlighted in the Journal. To summarize, Jeffrey, single with no children died in 2015.  He had no will.  The majority of his estate consisted of a retirement account that is now worth $1,000,000.  That is the subject of a legal battle between his brothers and his ex-girlfriend from more than 40 years ago. The back story is that when Jeffrey first set up his retirement account at Proctor and Gamble, he designated his then girlfriend as the beneficiary on that account.  In the mid 1980’s this was done by completing a paper document that he signed and submitted to the company.  Jeffrey and his girlfriend split up a few years later and she went on to marry and have children.  Jeffrey did not, however, ever change the beneficiary form. When he died, the ex-girlfriend was still listed as beneficiary on the original form Jeffrey had completed in 1987. The form was clear and unambiguous.  It also is clear that the retirement account is considered what is called “contract property”.   The retirement plan custodian has a contractual obligation with

In my blog post last week, I discussed the calculation of Mary’s elective share.  That is the amount Mary is entitled to receive as a result of her husband, George’s death, which turned out to be $300,000.  Obviously this is more than the $2000 in assets she is entitled to keep to maintain her Medicaid eligibility.  So, must she be terminated from Medicaid?  Not necessarily. That’s because there is a choice as far as which assets Mary receives.  She could receive 1/2 ownership of the house, valued at $300,000.  This, by itself, would satisfy the elective share in its entirety.  The other 50% would pass to George and Mary’s children per George’s will.  While this would leave Mary with an asset worth well more than the $2000 Medicaid asset limit, it would be co-owned with her children.  If they do not wish to sell the house so she can spend down her 1/2 of the proceeds, the house becomes what Medicaid calls an “inaccessible asset”.  That is one that can’t be liquidated thru no fault of the Medicaid recipient.  Medicaid does not include such assets when assessing the asset limit, thus preserving Mary’s Medicaid eligibility. It should be noted that after Mary dies the home will be subject to Medicaid estate recovery, but

Picking up where I left off in my blog post last week, George died leaving his wife, Mary who is on Medicaid which has a strict asset limit of $2000.  While George was alive we had him change his will to leave Mary only the minimum amount required to satisfy New Jersey’s statutory elective share, however, as I explained last week there are often assets that pass outside the will automatically to the spouse.  That’s what happened with Mary. Any assets received must be spent down in a month to preserve Medicaid.  That’s not easy to do since there isn’t much that Mary needs.  Alternatively, the money can be turned over to the State to then remain on Medicaid.  The State will seek to be reimbursed under estate recovery rules when Mary dies anyway, so this can be a good option - provided Medicaid isn’t terminated before the family realizes the money received is a problem. George had other assets as well.  He owned the marital home and he had some liquid assets as part of the community spouse resource allowance that he was entitled to keep.  He additionally inherited money from his brother who died after Mary was already on Medicaid.  Under Medicaid rules, his receipt of this inheritance