The Home and Not Much Else (Part 2)
In last week’s post I laid out a common fact pattern we see in our office. In short, it’s a case where long term care is needed and there is not much in the way of liquid assets to pay for it but there is a house which the senior owns - usually with a small or no mortgage. In general, there are 3 ways to pay for care - using your own funds (referred to as private pay), long term care insurance and government benefits - maybe a VA benefit but more often Medicaid. Both these benefits are needs based. Because the home is an exempt asset if the applicant or a spouse is living in it as a primary residence, it is possible to qualify for these programs without selling the home - assuming the other eligibility requirements are met (eg. no transfers were made that would cause a waiting period for benefits). Just because one can qualify, however, doesn’t mean that will completely solve the long term care financing problem. That’s because these programs may not cover the entire cost of care. For example, the VA Aid and Attendance pension will max out at about $2200 per month for a married couple and somewhat
The Home and Not Much Else (Part 1)
In this week’s post, I address a common problem we see often in our office. An elderly client owns a home but very few other liquid assets. Income from Social Security and pensions is enough to meet monthly expenses - but then things change. Long term care becomes necessary. That’s when the status quo no longer works. Expenses will far outstrip income. So what are the options? There are a number of choices. Which ones work best depends on the type and amount of care needed and where it is administered. In making a decision it is important to be as realistic as possible about the situation and to recognize that change may be necessary with very little notice. Navigating the long term care journey can be a roller coaster ride. Care needs will typically increase over time as a person’s health deteriorates. This is typically gradual but it could also be sudden. Consideration should be given whenever possible to implementing a plan that has flexibility to enable a shift in care if and when it is needed. The available options will involve tapping into the home’s equity. That could be done by selling the home or borrowing against that equity. In some cases, the equity may not be needed at all. I’ll get into the details
The Time and Expense of Having No Will
People will sometimes ask me why they need a will if they don’t have any probate assets. This might be because they believe everything is owned jointly with right of survivorship or because they own nothing. It usually turns out, however, that they do own something. It might be a car that is titled in the name of the decedent or refund checks issued after death, such as unearned premiums or tax rebate checks. Having a will makes it a whole lot easier to administer these assets. As I have written about in previous posts, a typical will designates an executor who usually serves without the requirement to post a bond. The bond acts as an insurance policy to insure the creditors and heirs receive what they are entitled to. When there is no will, an administrator must be appointed and a bond posted. That can pose a problem in terms of time and cost. First of all, it must be determined who has a right to serve as administrator. All people with equal or greater right to serve must sign a renunciation agreeing not to serve in favor of the person applying for the appointment. If they will not or cannot sign, then a court proceeding by way of an
How Not to Lose Medicaid (Part 5)
In last week’s post I explained that when the non-Medicaid spouse dies, the Medicaid spouse must receive at least a minimum amount of assets from the deceased spouse. This is known as the elective share and in New Jersey is determined to be 1/3 of the deceased spouse’s estate less what the surviving spouse already has. When the surviving spouse is receiving Medicaid, those assets could result in the loss of benefits - maybe. Once the exact dollar amount of the elective share is determined, one option is to simply give those assets to the State of New Jersey and remain on Medicaid. Why would someone do that? In order to answer that question, we must first look to determine how much in Medicaid benefits the surviving spouse has already received. This will tell us what the State will be looking to recoup once the Medicaid recipient dies under what is known as estate recovery. While the State must wait until the Medicaid recipient dies to seek recovery, if we know that amount already approaches or exceeds the value of the elective share, there is no advantage to accepting the assets and terminating Medicaid. Let’s look at a couple of examples. Suppose the elective share amount is $100,000 and
How Not to Lose Medicaid (Part 4)
In last week’s post, I explained that when a Medicaid recipient’s spouse dies the estate administration process can take time to complete. This process impacts the Medicaid spouse because - like it or not - that spouse must receive a minimum amount of assets under New Jersey’s elective share. Obviously, this could potentially impact Medicaid eligibility since it doesn’t take much to exceed Medicaid’s $2000 asset limit. How exactly? Well, that depends on the type and amount of assets. As I wrote last week, if the deceased spouse owned assets that are considered inaccessible as defined by Medicaid regulations - such as real estate owned with another person who refuses to sell - these assets would not count towards the asset limit and would not cause a loss of benefits. The primary residence of the deceased spouse might also be good asset to use to satisfy the elective share if there is another family member who has been living there. The home would not need to be sold until that family member moves out. If there are, however, assets that must be given to the Medicaid spouse that clearly are countable, a decision needs to be made whether to give those assets to the State and remain on
How Not to Lose Medicaid (Part 3)
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