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George called me because his father had recently died.  He told me that his mother was having difficulty accessing all of Dad’s accounts.  “The bank where he has most of his accounts wants a tax waiver,” George told me. I asked a few more questions.  Dad had a few accounts at that financial institution totaling $700,000.  Some accounts had Mom designated as the primary beneficiary.  Other accounts were owned jointly with Mom.  There also was one account in Dad’s name alone, without any beneficiary designations.  George told me that his dad’s will leaves everything to Mom. I already knew what his problem was before he confirmed it for me.  It has to do with a piece of paper called a tax waiver.  Sure enough, George told me that the bank would not release all the funds to Mom without her providing them with the tax waiver. I explained to George that the State of New Jersey automatically places a lien on certain New Jersey located property – real estate and accounts in New Jersey financial institutions -  to protect the state and insure that estates pay all New Jersey estate and inheritance tax that is owed.  The lien is released when the State

It’s a growing epidemic, the number of aging Americans who have no one who would naturally be their support system as their health declines and they need assistance.  A New York Times article the other day, titled “The Childless Plan for Their Fading Days”, highlights this problem and what some seniors are doing about it.   In our practice, we’ve seen an increase in single and/or childless seniors who need assistance.  According to a recent  AARP report, nearly 12% of women between 80 and 84 in 2010 had no children.  Coupled with the fact that many of these women are widowed, divorced or never married, they have no natural support system.  Who will step into the roles of financial and healthcare decision makers, when they need it?   This problem will become even more acute when we consider that the baby boomer generation, Americans between the ages of 50 and 68, who make up the largest percentage of the caregivers right now, will themselves need care in the next 20 years.  Here are some numbers to consider.   According to the same AARP report, the number of people ages 45 to 64, the peak caregiving years, is expected to increase 1% between 2010 and 2030.  At

Last week we were discussing George’s dad and step-mother.  Dad married Rita 5 years ago and now she needs nursing home care.  Are Dad’s assets protected or must he spend them down towards Rita’s care? Even though Rita came to the marriage with few assets and they’ve been together only a few years, Medicaid looks at them as one unit. Dad’s assets count when determining Rita’s Medicaid eligibility.  George wasn’t thrilled with my answer.   “But there are some options,” I told him. One thing Dad could do is sell his home and buy another one.  A home is an exempt asset as long as the healthy spouse is living in it, no matter the value.  If his home is worth $500,000 or $600,000 or $700,000, it is exempt.  But, George told me Dad wouldn’t want to move. Another option is to purchase a Medicaid compliant annuity with the countable assets.  This would convert countable assets to a stream of income.  While assets in Dad’s name are countable towards Rita’s eligibility, income in Dad’s name is not.  I told George that annuity route can be complicated.  Not every annuity is a “Medicaid compliant” one and New Jersey still views these with a huge amount

George called me concerning his step-mom, Rita.  Rita is in the hospital but about to be transferred to a nursing facility where she will remain on a long term basis once Medicare coverage stops.  The conversation quickly turned to Medicaid. George explained that Dad and Rita have been married 5 years.  Rita came into the marriage with very few assets.  Dad owns the home where George and his brother grew up, worth approximately $500,000. and another $500,000 of additional investments.  His mom died about 10 years ago and Dad, seeking companionship, reconnected with Rita, an old high school classmate.  George told me that Rita has a daughter with whom she has no relationship and who is no help at all in caring for Rita. George’s $64,000 question was, “How much does Dad have to spend down towards Rita’s care before she can qualify for Medicaid?”  He told me that Dad had always intended to leave his assets to George and his brother when he dies but now is concerned about whether that will happen. I asked George some preliminary questions.  Neither Dad nor Rita has any long term care insurance.  They also do not have a prenuptial agreement in place, although even if

Last week we were discussing Joe’s problem.  His brother Jim had been using Dad’s account to buy and sell Jim’s investments, presumably because having Dad pay the tax instead of Jim was more beneficial.  However, what happens when Dad applies for Medicaid? Medicaid will definitely question the $500,000 in assets transferred back from Dad to Jim.  As long as Jim can show that he originally transferred the assets to Dad, then the transfer back is simply Jim taking his money back.  Joe, however, told me of Jim’s reluctance to cooperate, for obvious reasons. I explained that while I cannot guarantee that the IRS or State Division of Taxation won’t catch on, it is highly unlikely.  I don’t know of any instance in which Medicaid has reported what it sees on a Medicaid application to the IRS or New Jersey’s income  tax division.  Government bureaucracies don’t communicate well with each other.  And certainly there is even less communication between federal and state government.  So, I think it is very unlikely that Jim will run into problems because of what is disclosed as part of a Medicaid application. Still, that may not be enough to secure Jim’s cooperation.  But, I told Joe that his calling

Joe called me because he had just taken over Dad’s finances and the management of care from his brother, Jim.  That’s when he made a discovery that troubled him and caused him to reach out to us. Dad was still living at home alone but his health was declining.  Joe began looking at assisted living facilities.  At a cost of approximately $4000 per month, Joe was concerned about whether Dad could afford it.  So I started to ask him about Dad’s assets and income. Joe told me Dad has about $300,000 in assets but he then went on to explain that Jim had transferred almost $500,000 out of Dad’s name.  He explained that Jim bought and sold investments in Dad’s account so the income was being taxed at Dad’s income level, which was lower than Jim’s.   “Is that a problem”, he asked. “It could be”, I told him.  If Dad runs out of money and needs to apply for Medicaid, he’ll have to produce 5 years of records and that’s where the problem lies.  They’ll see the money going back to Jim.  As I always explain, Medicaid works differently than the criminal system.  In the criminal system you are innocent until proven guilty,