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                About a month ago, my parents’ health took a sudden turn and it led me down the path that many of our clients and their families face, tackling long term care.   In our case, it was an accident outside their home.  My mom broke her leg.  My dad suffered some bumps and bruises but nothing worse than that.                 As elder care attorneys, Laurie and I are very familiar with the range of service available when a crisis arises and the amazing work performed by rehab facilities, social workers, care managers, therapists and home health care agencies.  We relied upon the people we have come to trust and recommend to our clients to help my mom.  The recovery process is a slow one but with the guidance and care she has received, and will continue to receive, she’s on the mend.                 We have been lucky in that, until now, both my parents have been healthy and independent.  However, I always knew of the likelihood that this time would come.  I am always reminded of a conversation I had some time ago with the child of a 95 year old parent who called me seeking help.  She said, “I just never thought

                Last year I wrote about an important court ruling in a case that impacts Medicaid and VA Aid and Attendance benefits.  Several elder law attorneys filed a lawsuit against the State of New Jersey which, despite being in clear violation of federal law, insisted on counting VA Aid and Attendance benefits as income for purposes of determining eligibility for Medicaid.                 This impacted many applicants who were denied Medicaid because, with the VA benefit, their income exceeded Medicaid’s income cap .  The judge in that case, Galletta v. Velez, agreed that the State of New Jersey was flat out wrong.                 Last month came word that New Jersey has agreed to issue a Medicaid Communication to all its county agencies advising them that they may not count the Aid and Attendance as income for eligibility purposes.  In addition, the State agreed to pay the plaintiffs’ attorney  fees and costs .                 As I have always explained to my clients about Medicaid, the State often takes a position that is blatantly wrong because it knows that it can get away with it.  The high cost of appealing a decision and fighting it out in court makes it impractical and in many cases just

     Last week we were discussing potential changes to the tax laws proposed by President Obama that would eliminate the step up in basis.  Obama claims the target is wealthy Americans but the change could have a much bigger impact on average middle class citizens.      That’s because with the federal estate tax exemption currently at $5.43 million, only estates larger than that number must pay federal estate tax.  While New Jersey estate taxes kick in on estates greater than $675,000, removing the step up in basis still means that many heirs would have to pay an additional tax on assets they inherit.      Let me give you a very common scenario we see.   Mom passes away and leaves her assets to her children.  Those assets include Exxon stock she and Dad bought many years ago.  The stock is now worth $500,000.  The total estate is worth $1,000,000, including her home which Mom and Dad purchased for $20,000, which is now worth $400,000.      Under current tax laws the children get a step up in basis on both the stock and the home.  Presuming they sell the home immediately after Mom’s passing, there would be no capital gains tax

           A few weeks back, President Obama proposed, in his State of the Union address, that the “step up in basis” provision of the capital gains tax be eliminated.  While Obama claims that he wants to eliminate a loophole for the rich, such a change could have a bigger impact on the average middle class American.              But before I explain why, let’s first review what the step up in basis is exactly.  Certain assets, such as stock, mutual funds and real estate, appreciate in value over time.  I bought stock in ABC Company for $1.  If it is now worth $10 and I sell it, I have a gain of $9.  That gain is subject to something called capital gains tax.  The gain is calculated by subtracting the sale price minus the basis, which usually is the purchase price. (There are cases where the basis gets adjusted but we’ll keep our example simple.)             There are certain instances where I may not have to pay capital gains tax.  One such instance is if I hold onto that stock and don’t sell it before I die.  Instead, I transfer it to my heirs

            New Jersey has one of the worst, if not the absolute worst, estate taxes in the country.  It is one of two states that has an estate tax and an inheritance tax.  Over the past 15 years the federal estate tax exemption, that amount that is exempt from federal estate tax, has increased more than fivefold.  Many states have gradually increased their exemptions but New Jersey has kept its exemption, the amount one can pass free of tax, at $675,000.  With the average cost of a home at $300,000 it doesn’t take much for the average resident’s estate to reach that threshold.              Over the past several years, I have often been asked about rumors that the state will raise the exemption.   Just this past week, a front page article in the Star Ledger talked about efforts in Trenton to generate more money to fix state roads and bridges.  New Jersey’s Transportation Trust fund will be out of money soon.               One way would be to raise the gas tax.  New Jersey has some of the lowest gas prices in the country, in part because

            It’s something I always remind clients when we talk about Medicaid eligibility.  Meeting the income and asset limits are not the only requirements.   An applicant must also be medically eligible.              What does that mean?  An applicant must establish the need for nursing home level care, needing assistance with the activities of daily living.  It’s one of the reasons why the planning that we do is so important.  If I run out of money before my health is bad enough for me to need long term care, I won’t be able to get New Jersey Medicaid to help me.  It’s a very common scenario, one which I was reminded of last week.               We received a call from Jim regarding his dad, who has been living with Jim for the last several years.  Dad is bipolar but functions well when he takes his medications.   It often is a struggle, however, to get him to take that medication.  Jim works during the day so he isn’t always at home to  monitor Dad.                Jim explained that his dad becomes somewhat agitated and occasionally wanders when he