How Do I Access a Deceased Owner’s Account? Part 3
In my blog posts the past 2 weeks I have addressed this commonly asked question. I explained the distinction between probate assets - ones controlled by a will or the intestacy laws - and non-probate assets which are not. Generally, an executor or administrator must be appointed before an account can be accessed. On the other hand, if the account has a joint owner with right of survivorship or beneficiary on death, that person (or persons if more than one co-owner or beneficiary exists) can immediately access the account by presenting a death certificate. I discussed last week that this person can unfreeze and become the owner of the account, but I alluded to a potential holdup. That is because of something called the New Jersey tax waiver system. This process is designed to protect the NewJersey’s interest in insuring that its inheritance tax is paid. Inheritance tax is payable as a result of and after one’s death. The tax is determined not by the size of the deceased person’s estate (that would be an estate tax which New Jersey eliminated in 2018), but instead by the relationship of the heirs to the person who died. Only a small percentage of estates actually owe inheritance tax. The reason is because
How Do I Access a Deceased Owner’s Account? Part 2
Last week I addressed a question we get frequently in our office - how to access the financial account of a loved one who has died. The answer is not the same for each account. We must first determine whether the account is a probate or non-probate asset, meaning “is it controlled by the will or if there is no will then by the intestacy laws”. In both cases one must first file papers with the county Surrogate’s office. This is part of what is known as the estate administration. If the account is titled in the deceased owner’s name alone with no co-owners and no beneficiary payable on death, then the estate administration process must be begun by seeking appointment either as an executor (if a will exists that names that person) or an administrator if there is no will. In that case New Jersey law decides who has the right to be appointed beginning first with the spouse and then children. Once the Surrogate issues Letters Testamentary (there being a validly executed will) or Letters of Administration (in the absence of a validly executed will), the person appointed may present those papers to the financial institution to then access the funds. Once obtained, the executor/administrator must
How Do I Access a Deceased Owner’s Account? (Part 1)
It is a common question we get when someone calls our office after a family member dies. “Can I still access their account since I am agent under power of attorney?” or “Can I use the account to pay for the funeral and other bills that need to be paid?” These questions don’t lend themselves to easy “yes” or “no” responses. The answers depend on a number of different factors so that in some cases funds from the account can be tapped into immediately while in other cases there are steps that must be taken to “free up” the account. When someone dies, financial institutions will generally put a hold or “freeze” on the account once they learn of the owner’s passing (often when Social Security is notified and direct deposits into an account are stopped). In part, that’s because it must be determined who now has the right to those funds. It is no longer the owner who died and so it also is no longer the agent under power of attorney for that owner. By law, the power of attorney no longer has effect. So, who can then step in? The answer depends on whether the account becomes a probate asset, falling under the estate administration process. In that
The Future of Medicaid
It is a question I am being asked with increasing frequency when people call our office about needing Medicaid now or planning for the possibility of needing it in the future. “Will there even be Medicaid coverage if and when I need it?” Specifically, I am talking about the Medicaid programs that cover long term care. My answer is that I don’t have an answer - meaning that it is impossible to predict the future - what will change or won’t change about Medicaid. What I tell people is what I know- that I have guided clients for 30 years under the current system which has yet changed in a major way. That’s not to say that over the years there haven’t been some changes. For example, the last substantive changes to Medicaid coverage occurred 20 years ago. That’s when the look back was extended from 3 years to 5 years and the method of calculating the Medicaid penalty was altered. While the subject of Medicaid cuts - along with other federal budget cuts - has ramped up with a new presidential administration and Congress, there are very few details about how this might be accomplished. Because Medicaid is a combination federal and state program but administered at the
Medicaid Spend Down – More Involved than First Meets the Eye (Part 5)
In this fifth blog post of five, I finish up with Mary’s call to our office about qualifying her mom for Medicaid. Mary thought her mom had very few assets left which could then be transferred to a special needs trust (SNT). Unfortunately, as I have explained in my past 4 posts, Mary was misinformed on a number of issues. Her mother’s life insurance policy has $150,000 in cash value. That money must be spent down. She cannot transfer it to the SNT which was set up for the benefit of her brother because he has not been deemed disabled by Social Security or the State of New Jersey. Similarly, the mobile home that he lives in but which Mom owns is a countable asset for Medicaid purposes and cannot be transferred to the SNT. Finally, the annuity that her mom purchased can be sold if someone is willing to purchase it. That cash would then also be considered an asset. So Mary then asked me, “where do I go from here”? There are a few possible options. If she thinks that her brother can qualify as disabled then Mom could transfer assets to him or to a trust for his benefit, although the SNT she created years ago is not the
Medicaid Spend Down – More Involved than First Meets the Eye (Part 4)
In this week’s blog post I continue with Mary’s call to our office about qualifying her mom for Medicaid. In my post 3 week’s ago I told you that Mary thought her mom would be able to transfer her remaining assets to a special needs trust for Mary’s brother. I explained that for a couple of reasons that transfer is not exempted from Medicaid’s transfer penalty rules. Last week I explained that Mom actually has $150,000 in cash value from a life insurance policy. This money must be spent down before qualifying for Medicaid. This week I will examine the annuity which Mary told me her mom purchased years ago and which provides monthly income. The question, however, is whether Medicaid will consider it to be an asset or income. If it is an asset then we must determine the value, which must then be counted towards the $2000 asset limit. So, what makes something an asset for Medicaid purposes? The key is whether that annuity can be converted to cash - can it be sold or surrendered? For that I needed Mary to provide me with the annuity contract. Annuities come in many different “shapes and sizes”. In this case, I saw that Mary’s mom had purchased a lifetime annuity with a