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The final budget left spousal refusal intact. Stock photo

By Nancy Burner, ESQ.

Nancy Burner, Esq.

On March 31, the New York State Legislature and Gov. Andrew Cuomo (D) finalized the budget for the 2019 fiscal year. In January, the governor’s office set forth a budget proposal. Using that as a jumping-off point, the Legislature and the executive started a negotiation process that resulted in the budget beginning the fiscal year on April 1, 2018.

Elder law attorneys across the state watch the budget proposal and negotiations closely to see what, if any, impact there will be on the Medicaid program. Many elderly and disabled individuals in the state rely on the Medicaid program to cover their costs of long-term care. The budget proposals often suggest changes to eligibility as well as to the methods by which care is provided.

One item that was in the governor’s original proposal, but eventually left out of the final budget, was the elimination of spousal refusal. Spousal refusal is the method by which a spouse in need of care can enroll in the Medicaid program while the healthy spouse can maintain assets in their own name to support their own needs. The final budget left spousal refusal intact. This is a tremendous benefit to the spouses of Medicaid recipients.

The budget did include a change in the way the Medicaid program will be administered to long-term nursing facility residents. Until the budget was enacted, long-term patients in a nursing facility were enrolled in a managed long-term care plan. These plans receive a flat rate from the state for each enrollee regardless of whether the enrollee is receiving a small amount of in-home care, round-the-clock care in the home or nursing facility services. 

The new rule is that a patient that has been in a nursing facility for three months will be disenrolled from the managed long-term care plan and their services will be paid directly to the facility from the Medicaid program. The stated purpose for this change is to eliminate any duplication of care coordination services. The concern from the governor’s office was that both the facility and the plan were providing this same service.

Another change to the Medicaid program will impact managed long-term care plan participants who want to switch plans. Prior to the new budget, there were no restrictions on such changes. The new budget states that a plan participant can change plans within the first 90 days after enrollment without cause. However, after the first 90 days, the participant can only change plans once in every 12-month period. Any additional changes after the first 90 days must be for cause. Good cause is listed to include, but is not limited to, issues relating to quality of care and access to providers.

The managed long-term care plans will also be affected by the budget provision that will limit the number of licensed home care agencies with whom a plan can have a contract. As stated above, each plan receives a set rate from the state for each enrollee. That plan then has to contract with an agency to provide the aide in the home for a Community Medicaid recipient. 

Until now, a plan was not limited on the number of agencies with which it could hold a contract. As of Oct. 1, 2018, a plan can only hold a contract with one agency for every 75 members it enrolls, and on Oct. 1, 2019, it will be one contract per 100 members.

These budget provisions adjust the ever-changing landscape of the long-term care Medicaid program. The direct impact of these changes on consumers is not yet known. The stated purpose of the managed long-term care program is to streamline the care provided to the aging and disabled population of New York state. Advocates in this area continue to work with the governor and Legislature to make Medicaid long-term care benefits available to all New York residents who require such assistance. Stay tuned.      

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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A new power of attorney should be prepared if the document you now have predates 2009. Stock photo

By Linda M. Toga, Esq.

Linda Toga, Esq.

THE FACTS: I signed a power of attorney many years ago in which I named my spouse as my agent and my son as my successor agent. My son passed away recently. 

THE QUESTION: Should I have a new power of attorney prepared?

THE ANSWER: If you did not name a successor agent to act in the event your son was unable to do so, you should have a new power of attorney prepared. You should also have a new power of attorney prepared if the document you now have predates 2009. That is because the New York State Legislature created a new power of attorney form that became effective on Sept. 1, 2009. Minor changes were made to that form in 2010. 

Based upon my own experience and that of my clients, it appears that the people and entities that your agent may have to deal with will be more comfortable if the power of attorney upon which they are relying was signed relatively recently. They are very reluctant to accept the old form, which often was a single legal-sized piece of paper printed on both sides. 

Although the law requires that, absent evidence of fraud or wrongdoing, properly drafted and executed powers of attorney must be honored regardless of the age of the document, I recommend that my clients update their powers of attorney periodically. By doing so they increase the likelihood that their agents will not be faced with situations where the person with whom the agent needs to transact business on the client’s behalf improperly refuses to honor the power of attorney based upon its age. 

If the power of attorney in which you named your son as a successor agent was signed before September 2009, you will be surprised to see that the current power of attorney form is much longer and more complex than what you signed. While the goal of the current power of attorney is still to allow the principal to grant an agent or agents authority to carry out certain types of transactions on the principal’s behalf, post-2009 powers of attorney include a number of safeguards to protect the principal. 

For example, the current power of attorney warns the principal about abuse by agents. In the current form, the principal is not only given the option to name an individual to monitor the activity of his/her agent, but the principal is also required to sign a power of attorney rider in the presence of two witnesses and a notary public if he/she wants to give his/her agent the authority to make gifts in excess of $500.  

In an effort to educate the public, the current power of attorney provides agents with information about the duty of care they owe the principal and requires that the agent sign the power of attorney before acting on the principal’s behalf. By signing the power of attorney, the agent acknowledges that he/she must act in the best interest of the principal.  

Although it addresses some of the concerns that attorneys and the public had with the pre-2009 power of attorney, in its basic form the current power of attorney does not give the principal the ability to delegate authority to perform many types of transactions that agents are likely to be called upon to perform. This is especially true when the agent is acting on behalf of an elderly principal. 

Experienced attorneys routinely modify the current form by adding an exhaustive list of additional transactions and activities that the principal may wish to delegate to his agent. To ensure that the new power of attorney you sign is tailored to your needs, I urge you to retain an attorney who practices in the area of estate planning to explain in detail the current power of attorney and the various types of transaction and activities you may want to delegate, and to prepare for you a new power of attorney that reflects your wishes. 

Linda M. Toga, Esq. provides personalized service and peace of mind to her clients in the areas of estate planning, real estate, marital agreements and litigation. Visit her website at www.lmtogalaw.com or call 631-444-5605 to schedule a free consultation.

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Medicare and Medicaid are both invaluable programs that can be used to cover various medical and custodial expenses.

By Nancy Burner, ESQ.

Nancy Burner, Esq.

This is a question we receive often. Navigating the maze of healthcare coverage can be confusing.nFor starters, a brief overview of the programs will help to demystify and clear some of the confusion. Medicare is a federal government program first implemented in 1965 as part of the Social Security program to provide health coverage to persons 65 or older and in some cases younger so long as they can show a qualifying disability.

Coverage through Medicare is broken down into sections, Part A is considered hospital insurance and covers inpatient hospital care, rehabilitation in a skilled nursing facility, hospice services, lab tests surgery and home health care. There is no premium for Part A provided you or your spouse have worked at least forty quarters and paid into the program.

It is important to note that the coverage for skilled nursing is limited to the first twenty days in full and then there will be a co-pay of $167.50 per day for days twenty-one through one hundred. A person must continue to qualify based on their skilled need throughout the hundred-day period for Medicare to continue cover. There is no guarantee that a person will receive all hundred days of coverage. Custodial care and extended stays will not be covered by Medicare.

Part B covers doctors and other health care providers’ services and outpatient care. The monthly premium for Part B is typically $134.00 but can vary depending on the person’s income. Part D provides cover with respect to prescription drugs. This is a stand-alone drug plan that can assist in reducing prescription drug costs. Finally, Medicare Part C, is also known as the Medicare Advantage which are optional plans offered by Medicare-approved private companies which replace Medicare Part A and B.

Unlike Medicare, Medicaid is a means tested program and is state specific. Medicaid can provide coverage for a personal care aide at home through the Community Medicaid program or can also cover an extended custodial stay at a skilled nursing facility through the Chronic Medicaid program. In order to be financially eligible to receive services at home, an applicant for Community Medicaid cannot have liquid non-retirement assets in excess of $15,150.00.

Also exempt is an irrevocable pre-paid burial, retirement assets in an unlimited amount so long as the applicant is receiving monthly distributions and the primary residence. With respect to income, an applicant for Medicaid is permitted to keep $837.00 per month in income plus a $20.00 disregard. However, where the applicant has income which exceeds $862.00 threshold, a Pooled Income Trust can be established to preserve the applicant’s excess income.

Even though there is a resource limit of $15,150.00, there is no “look back” for Community Medicaid. In other words, both the income and asset requirements can be met with a minimal waiting period allowing families to mitigate the cost of caring for their loved ones at home.

With respect to coverage in a nursing facility, Chronic Medicaid can cover an extended custodial stay at a nursing facility. In New York, an applicant applying for Chronic Medicaid will be required to provide a sixty-month lookback with respect to all financial records, including bank statements and tax returns. Unlike Community Medicaid, an applicant for Chronic Medicaid will be penalized for any monies transferred out of the applicant’s name during the sixty-month lookback except for transfers to exempt individuals, including to but not limited to spouse or disabled child. If your loved one requires long term nursing home placement, it is imperative to consult and Elder Law attorney in your area to discuss how to preserve the maximum amount of assets.

Medicare and Medicaid are both invaluable programs that can be used to cover various medical and custodial expenses. Understanding the difference and what each program covers will allow you to be an advocate for yourself or a loved one.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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The TCJA enacts a number of important tax changes. Stock photo

By Nancy Burner, ESQ.

Nancy Burner, Esq.

The Tax Cuts and Jobs Act increased the federal estate tax exclusion amount from $5 million to $10 million indexed for inflation for decedents dying in years 2018 to 2025. This amount is indexed for inflation back to 2011. The exact amount of the exclusion amount is not yet known for 2018. However, it is estimated to be $11.18 million. This means that an individual can leave $11.18 million and a married couple can leave $22.36 million dollars to their heirs or beneficiaries without paying any federal estate tax.

This also means that an individual or married couple can gift this same amount during their lifetime and not incur a federal gift tax. The rate for the federal estate and gift tax remains at 40 percent.

The doubling of the basic exclusion also means that the generation-skipping transfer tax (GST) exclusion is doubled to match the basic exclusion amount of $11.18 million for an individual and $22.36 million for a married couple.

The sunsetting of the doubled basic exclusion amount after 2025 raises the prospect of exclusions decreasing in 2026. Taxpayers with estates over $11.18 million will want to discuss with their estate planning attorneys the potential for making transfers to take advantage of the larger exclusion amount before the anticipated sunset.

The act does not make changes to the rules regarding step-up basis at death. That means that when you die, your heirs’ cost basis in the assets you leave them are reset to the value at your date of death.

The portability election, which allows a surviving spouse to use his or her deceased spouse’s unused federal estate and gift tax exemption, is unchanged. This means a married couple can use the full $20 million exemption (indexed for inflation). To make a portability election, a federal estate tax return must be timely filed by the executor of the deceased spouse’s estate.

In 2018, the annual gift tax exclusion has increased to $15,000. This means that an individual can give away $15,000 to any person in a calendar year ($30,000 for a married couple) without having to file a federal gift tax return.

Despite the significantly larger federal estate tax exclusion amount, New York State’s estate tax exemption for 2018 remains at $5.25 million. New York State still does not recognize portability.

With the current New York State estate tax law as enacted in 2014, there is a limited three-year look-back period for gifts made between April 1, 2014, and Jan. 1, 2019. This means that if a New York resident dies within three years of making a taxable gift, the value of the gift will be included in the decedent’s estate for purposes of computing the New York estate tax.

The following gifts are excluded from the three-year look-back: (1) gifts made when the decedent was not a New York resident; (2) gifts made by a New York resident before April 1, 2014; (3) gifts made by a New York resident on or after Jan. 1, 2019; and (4) gifts that are otherwise includible in the decedent’s estate under another provision of the federal estate tax law (that is, such gifts aren’t taxed twice).

Under the act’s provisions, most taxpayers will never pay a federal estate tax. Even with the enlarged exemption, however, there are many reasons to engage in estate planning. Those reasons include long-term care planning, tax basis planning and planning to protect your beneficiaries once they inherit the wealth.

In addition, since New York State has a separate estate tax regime with a significantly lower exclusion than that of the federal regime, it is still critical to do estate tax planning if you and/or your spouse have an estate that is potentially taxable under the New York State law.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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By Nancy Burner, Esq.

While discussing an estate plan with a client, she stopped me and said “What is probate.” Sometimes we forget to explain the simplest concepts. Probate is the process by which a last will and testament is given effect. Under New York State Law, a will is admitted to probate after the executor files a Petition for Probate with the decedent’s will attached and gives proper notice to the individuals that would have inherited from the decedent had the decedent died without a will. The proceeding for the probate of a will takes place in the Surrogate’s Court in the county where the decedent resided at the time of his or her death. The probate proceeding gives the interested parties (distributees) the right and opportunity to object to the probate of the will.

Typically, we advise that a client that creates a will consider if there are any circumstances that will make the probate proceeding an expensive one. For instance, is any distributee being disinherited? If so, that disgruntled distributee may come to Surrogates Court and object to the will. The litigation objecting to a will can be long and drawn out — and expensive as well. Are there missing heirs that must be found before the will can be probated? If so, it could be very expensive and time-consuming to find all the individuals that are required to be given notice and an opportunity to object. Is there real property owned by the decedent in different states? If so, then the will would have to be probated in each state. If any of these circumstances exist, you may want to avoid probate altogether.

We also suggest avoiding probate if you are the surviving spouse and your spouse is or has received Medicaid benefits. Medicaid has a lien against the spouse’s estate for any Medicaid benefits paid for the other spouse within 10 years of the death of the surviving spouse.

Another reason to avoid probate is if you have a disabled beneficiary as the Surrogate’s Court may appoint a guardian ad litem to protect that person’s interest. That could be another delay and cost to the estate.

The next question to consider is how do you avoid probate? One way to avoid probate is to name beneficiaries on all your accounts. But I rarely, if ever, suggest that a client resort to this solution without first considering the consequences. First, it may not be possible to name beneficiaries on all your accounts. What if your beneficiaries are minor’s or disabled? If that is the case, the minor or disabled beneficiary would have to have a guardian appointed to collect the bequest. This is also timely.

For minor’s, the guardian would have to put the money in a bank account, earn little or no interest and turn the money over to the beneficiary when he or she turned 18. If the account was a retirement account, the result is even harsher. The IRA or other retirement account would have to be liquidated, all income taxes paid and then put into a custodial account at a bank, earn little interest and then be paid to the beneficiary at age 18.

Most clients, when given the choice, would rather protect their heirs from divorcing spouses, Medicaid liens, creditors and taxes than avoid probate. We can protect beneficiaries by having their assets paid to trusts. This can be done in a will (and probate) or by avoiding probate altogether by using a revocable trust.

The important point here is that it is a mistake to make the avoidance of probate the overriding consideration when embarking upon an estate plan. Not everyone needs a revocable trust, but some people will be well served by using a trust, if the circumstances make probate impractical.

One size does not fit all. A successful estate plan takes all factors into consideration. In a world where people are computer savvy and everything is available on the internet, it is easy to believe that you can just do it yourself. The fact is attorneys are called counselors at law for a reason. The documents are only part of the problem and solution. The fact is, there is no substitute for competent legal advice.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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