CLOSE
Finance & Law

by -
0 11435

By Nancy Burner, Esq.

The New York State estate tax exclusion amount will be increasing again as of April 1, 2016, to $4,187,500. This is an increase from the $3,125,000 exclusion amount that has been in effect since April 1, 2015. As of Jan. 1, 2016, the federal estate tax exclusion is $5,450,000.

The New York State estate tax exclusion will increase again on April 1, 2017, to $5,250,000. This exclusion amount will remain in effect until Dec. 31, 2018. On Jan. 1, 2019, the basic exclusion amount will be indexed for inflation annually and will be equal to the federal exclusion amount. The New York State and federal exclusion amount is estimated to be $5,900,000 in 2019.

An item still of particular concern to many is the “cliff” language contained in the law. If the estate is valued between 100 and 105 percent of the exclusion amount, the amount over the exclusion will be taxed. As of April 1, 2016, the 105 percent amount is $4,396,875. However, once an estate exceeds the exclusion amount by more than 5 percent, not just the amount in excess of the exclusion amount is taxed, but, rather, the entire estate is subject to estate tax.

Practically, this means that taxable estates greater than 105 percent of the exclusion amount receive no benefit from the exclusion amounts shown above and will pay the same tax that would have been paid under the prior estate tax law.

New York repealed its gift tax in 2000.  This meant that as a New York resident, if you made lifetime gifts to friends or family members, the gift was not taxed or included in your New York gross estate for purposes of calculating your estate tax. With the 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).

For federal gift tax purposes, in 2016, you can still make annual gifts of $14,000 per person without having to report these gifts on a gift tax return. These $14,000 gifts are also not included for New York State estate tax purposes.

The New York State estate tax law does not contain a portability provision like in the federal estate tax law. Portability is a provision in the federal estate tax law that allows the unused estate tax exemption of a married taxpayer to carry over to his or her surviving spouse. Without portability, the manner in which a married couple holds title to their assets may continue to have a significant effect on the amount of New York State estate tax ultimately payable upon the survivors’ death.

This New York estate tax law is working to close, and eventually eliminate, the gap between the New York and federal estate tax exclusion amounts. For the next three years, however, as the exclusion amount increases and the three-year look-back for taxable gifts applies, tax planning will still be complex. That being said, it is important for anyone considering whether to make changes to their estate plans or gifting strategies to see an estate planning attorney specializing in these matters.

Nancy Burner, Esq. has practiced elder law and estate planning for 25 years.

by -
0 1400

By Linda M. Toga, Esq.

The Facts:  I created an irrevocable trust a number of years ago. However, my circumstances have changed dramatically, and the trust no longer suits my needs. I want to revoke the trust and sell the assets that are in the trust.

The Question: Although the trust is irrevocable, is there a way it can be revoked?

The Answer: Good news! Fortunately, there are circumstances when an irrevocable trust can, in fact, be revoked. If your needs and goals have changed to the point that the trust no longer serves a useful purpose, you may want to amend or revoke the trust. Whether you are able to do so will depend on the language of the trust document itself and the cooperation of the beneficiaries.

Generally, if all of the beneficiaries are of legal age and competent, they can sign a document giving their consent to the amendment or the revocation of the trust. The beneficiaries’ signatures must be notarized for the amendment/revocation to be effective. If any of the beneficiaries are minors, you will not be able to amend or revoke the trust since minors cannot legally give consent.    

Assuming that you are able to revoke your trust, you will also have to change the title on any trust assets such as real property or motor vehicles that have recorded titles. Accounts held by the trust will also need to be retitled if the trust is revoked. This may or may not need to be done if you simply amend the terms of the trust without removing trust assets.

When amending or revoking a trust, it is very important that the document setting forth the changes to be made to the trust properly identify the trust and the beneficiaries. It is also important that all trust assets be accounted for and properly retitled when appropriate.

To avoid mistakes and problems down the road either with an unhappy beneficiary or with assets that are still held by a trust that no longer exists, it is best to retain the services of an attorney with experience creating and revoking trusts.

Linda M. Toga, Esq. provides legal services in the areas of litigation, estate planning and real estate from her East Setauket office.

by -
0 956

By Jonathan S. Kuttin

When life gets busy, it’s easy to become more passive about managing your bank accounts and credit cards by letting receipts, bills and statements pile up. Even if you regularly keep up with your finances, it can be beneficial to take a fresh look at them. Simplify your financial life with these three strategies:

Go paperless. It’s easier than ever to access financial documents online. Going paperless will not only make your life more efficient and clutter-free, it’s also environmentally friendly.

A good place to start is by requesting electronic statements and opting out of printed ones from the companies who send you regular bills. Consider going paperless with your bank, credit card companies, cell phone and cable providers or your electric company. You’ll then receive an email when your statement or bill is ready each month. This gives you the option to download and store your statements electronically and also to print and file if needed.

If you’re not already enrolled in direct deposit with your employer, make sure to get this set up. It saves a trip to the bank on payday and you get to enjoy the fruits of your labors sooner. While you’re at it, go ahead and request electronic receipts at the store when they’re offered, in lieu of stuffing them in your pockets or purse.

Consolidate where you can. There are several corners of your financial life that can be simplified through consolidation. Retirement accounts are one of those areas. If you’ve worked for several employers during the course of your career, you’ve probably acquired a few retirement accounts along the way. Accumulated assets left in a former employer’s retirement account are still yours, but they sometimes offer less investment flexibility.

If you like the idea of having fewer accounts to keep track of, or if you prefer to actively manage your retirement dollars, consider consolidating stray 401(k) and IRA dollars by rolling them into a centralized retirement account. There’s a lot to consider when it comes to rollovers, so it’s important to weigh all your options carefully. Consider a direct rollover, as withholding tax and tax penalties may apply for cash withdrawals.

Credit cards and debt are two other areas where consolidation may be wise. Is it time to chop up the card that carries a hefty annual fee? Are you carrying a credit card balance that is snowballing due to high interest rates? It may be financially advantageous to pay off the cards with the highest interest rates and either close the account or put it away for emergency-use only. It’s a relief to have fewer cards to manage, along with a plan for extinguishing debt.

Turn to the professionals. As you sort through your financial choices, enlist the right team of professionals to assist you. Helpful professionals may include a tax advisor or accountant, who can provide guidance on how to put you in the best tax situation, and a lawyer who specializes in estate planning. Also, consider consulting a financial advisor who can help you streamline your financial life and accelerate your financial goals by recommending specific strategies based on your individual situation. Each of these professionals can share their expertise with you and help you eliminate unnecessary financial clutter.

Jonathan S. Kuttin is a Private Wealth Advisor with Kuttin-Metis Wealth Management, a private advisory practice of Ameriprise Financial Services, Inc. in Melville. He specializes in fee-based financial planning and asset management strategies and has been in practice for 19 years.

by -
0 71

By Nancy Burner, Esq.

The Question: I am considering applying for Community Medicaid for my mom in order to cover the cost of home health aides. I heard that Community Medicaid might pay for certain supplies my mom could use in her home. Is that true?

The Answer: Yes. The Community-Based (Homecare) Medicaid program can assist families in paying for the cost of home health aides as well as other programs, supplies and equipment.  Once approved for Community Medicaid, the individual may be enrolled in a Managed Long Term Care Company (MLTC).  The MLTC will be in charge of coordinating the recipient’s health care needs including, but not limited to, a home health care aide.

The MLTC will determine the amount of hours per day and days per week that the individual is entitled to have a home health care aide. The determination is based upon the needs of the individual. The home health care aide can assist with all activities of daily living, including but not limited to bathing, grooming, toileting, ambulating, meal preparation, laundry and light housekeeping. 

The MLTC will also cover adult day care health programs that offer a place for seniors to go during the day and then return home at night. There are two different options: Medical Model and Social Model. Medical Model will provide meals, rehabilitation, monitoring of health conditions and assist with personal hygiene. Social Model will provide meals, stimulation and senior activities. Some programs will offer transportation to and from the facility.  The entire cost of the program, including transportation, will be covered by Community Medicaid. 

Another service covered by the MLTC is transportation to and from nonemergency medical appointments.  The individual can schedule pick-up at his or her home to any doctor’s office with prior notice. The MLTC will also have a network of providers that will accept Medicaid to cover audiology, dentistry, podiatry, optometry and physical/occupational/speech therapy.

The individual may also be entitled to medical supplies such as diapers, pull-ups, Chux, a wheelchair, walker, hospital bed and portable ramp, depending on the individual’s need. These supplies can be ordered with a prescription from the primary physician. These supplies will be delivered to the home of the Medicaid recipient at no cost.

Finally, certain MLTC providers also offer additional coverage that could be used to pay for premiums, deductibles and other co-pays for medical and prescription drugs. This additional coverage could eliminate the need for supplemental health insurance. It is important to speak with the specific MLTC to find out about what they specifically offer to enrollees.   

The Community-Based Medicaid Program is an invaluable program for many seniors who wish to age at home but are unable to do so without some level of care and certain supplies the cost of which would be otherwise too expensive to sustain on their own. In order to get specific eligibility requirements, please see a local elder law expert in your area.

Nancy Burner, Esq. has practiced elder law and estate planning for over 25 years.

by -
0 1286

By Linda M. Toga, Esq.

The Facts: I want to give my children and grandchildren significant cash gifts for the holidays, but I am confused about gift tax liability and about how gifting may impact my future eligibility for Medicaid in the event I need long-term care.

The Question:

Would you explain how gifts are treated for Medicaid and gift tax purposes?

The Answer: As they look ahead to the holidays, many clients call with questions about gifting and its consequences. There is a great deal of confusion surrounding gifts, and clients often assume that gifts that are exempt from gift tax are also exempt transfers under the Medicaid rules. Unfortunately, that is not the case.

When a person applies for Medicaid to cover the cost of care in a nursing home, social services looks at the applicant’s financial records going back five years. Significant gifts, also known as uncompensated transfers, made by the applicant during the five-year look-back period raise a red flag and can lead to a penalty period during which the applicant is denied benefits. While any gift is subject to scrutiny by social services, gifts of $2,000 or more, or a pattern of gifting in smaller amounts, are certain to prompt questions and likely to result in penalties under current Medicaid rules.

In contrast, annual gifts of up to $14,000 to any number of people are exempt from gift tax under the IRA code. Such gifts are essentially under the radar for tax purposes since they need not be reported and have no adverse gift tax consequences. A federal gift tax return only needs to be filed if a donor makes a gift in excess of $14,000 to any one individual in a calendar year.

For example, if someone gifts their son $20,000, the donor will have to report the $6,000 gift on a federal gift tax return that should be filed along with his/her personal income tax return next April. Even then, the donor will not incur any gift tax liability and no gift tax will be due unless and until the donor’s reportable lifetime gifts exceed the federal estate tax exclusion amount in effect at the time.

While the current exclusion amount is $3,125,000 and the figure is scheduled to increase annually for a number of years, it is important to note that the value of reportable lifetime gifts may be added to the value of your estate at the time of your death to determine if federal estate tax will be due. You cannot simply gift away your assets during your lifetime to avoid estate tax.

Based upon the facts set forth above, it is clear that a gift that does not adversely impact a donor’s taxes will likely result in denial of Medicaid benefits for a period of time if the donor applies for Medicaid within five years of making the gift. For this reason, it is important to carefully plan any gifting that you may be considering and to look at the impact that gift will have both on taxes and on your ability to obtain benefits should the need arise.

Linda M. Toga, Esq. provides legal services in the areas of litigation, estate planning and real estate from her East Setauket office. The opinions of columnists are their own. They do not speak for the paper.

by -
0 937

By Jonathan S. Kuttin

Outside of your 20s, your 60s may be one of the decades in which you face the most significant lifestyle and financial changes – so it’s normal to experience mixed emotions about money and retirement. You’ve either reached the traditional retirement age or are almost there, and may be excited and hopeful about what’s to come. At the same time, you may be anxious about your ability to fund the retirement of your dreams. The key is to keep a close eye on your finances and adjust your plans as needed. Here are five tips for people who are nearing this important milestone:

Evaluate your expenses and budget. It may seem simple, but do you have a solid grasp on your expenses? During your working years, it can be easy to think you’ll make up for overspending the next time you receive a paycheck. During retirement, you’re unlikely to have that luxury. Know what it costs to cover the essentials and examine how much you’re spending on discretionary items. Also, consider areas where your expenses may fluctuate up and down during the coming years — such as health care, recreation and travel.

Replace your paycheck. One of the smartest and most reassuring things you can do in retirement is to replace a regular paycheck so you have a predictable amount of income every month, similar to during your working years. The process can be complicated, especially if you want to structure your withdrawals in the most strategic and efficient way. A financial advisor and tax professional can help. It’s a good idea to create a written plan — if you haven’t done so already — so you have a road map to follow in the years ahead.

Review your portfolio. If you feel nervous about your invested assets, take a close look at your portfolio and how your investments may have fluctuated since the recession. It’s beneficial to know exactly where you stand and to evaluate how your assets are allocated to a variety of investments that provide the potential for growth, income, or preservation. If you need to rebalance your portfolio or move some funds to less volatile products, do so. It’s essential that you take a balanced approach to managing your investments, especially as you approach and begin your retirement years.

Be rational. It may be difficult to avoid the constant stream of economic news, but don’t let market swings and political back-and-forth cloud your judgment. Stay away from quick fixes or impulsive decisions, like purchasing excessively risky assets, selling your home or withdrawing all of your money from liquid investments. Work to stabilize your personal financial situation and consult with friends or family who are also preparing for retirement. Having a support network may help ground your emotions.

Prepare for the unexpected. If you don’t already have a will, put it at the top of your to do list. If you have one in place, make sure it still reflects your current wishes. In addition, check to see that all your beneficiary information is up-to-date on specific accounts, such as IRAs. Make sure to discuss your plans with your spouse or significant other and your children — and ensure they know where to find your financial documents if you die or are unable to make financial decisions for yourself. These can be difficult conversations for everyone involved, but they can also reduce the amount of stress you and your family may face later on.

It’s a good idea to stay in close contact with your financial advisor during these crucial years. A financial advisor can help you manage your immediate expenses with a budget and provide guidance on your long-term goals.

Jonathan S. Kuttin is a Private Wealth Advisor with Kuttin-Metis Wealth Management, a private advisory practice of Ameriprise Financial Services Inc. in Melville. He specializes in fee-based financial planning and asset management strategies, and has been in practice for 19 years.

by -
0 1446
Superintendent Michael Ring discusses the NYS Comptroller’s report with local residents. Photo by Giselle Barkley

Despite the New York State Comptroller’s audit report, Rocky Point school district is sticking to their guns.

Last week, on Nov. 19, New York State Comptroller Thomas P. DiNapoli released completed audits of four school districts, including Rocky Point. In the audit, he claimed that the school district exceeded the four percent statutory limit on its fund balance between July 1, 2013 and March 31 of this year.

According to the audit, during the 2009-10 to 2013-14 fiscal years, the Board at the time had accumulated $13.1 million. However, the district only used $1.2 million, and experienced a surplus in their unrestricted fund balance. Rocky Point’s Superintendent, Michael Ring, said this fund is utilized in emergency situations where the district cannot afford necessary expenditures — this includes funding programs or accommodating a special needs child, among other reasons.

Ring refuted the comptroller’s financial report.

“Bottom line for us is that if we were over the four percent, our external auditors would be required to report that,” Ring said in a phone interview.

But the Superintendent said no such claims were filed. He added that the Comptroller’s odd method of counting the school’s fund balance is unusual, as excess money from one school year is added to the previous year’s closing bonds.

Ring mentioned that the Comptroller acknowledged the district’s fund balance was below four percent within that time period. Now, the district is between 5.4 to 7.8 percent, according to the Comptroller’s report. Taxpayer dollars contribute to the district’s unregistered fund balance. An excess of money in this fund means taxpayer dollars go to waste. Ring assured meeting attendees that is not the case for the district.

For Rocky Point school board members, acquiring funds for the unrestricted fund balance is a guessing game. The school district must base their fund balance amount on possible future expenditures that the school may not be able to afford without this fund balance. Typically, the district budgets its money conservatively. The district’s actual expenditures are within 0.2 percent of what they budgeted.

Some community members weren’t phased by the Comptroller’s report. When asked about it, Rocky Point resident Mary Heely said she was surprised by the news. She stood by the Superintendent’s word that the district didn’t exceed the statutory limit of its unrestricted fund balance. With the failure of the district’s bond, Heely, like some other community members, had other financial issues on her mind.

“According to Mr. Callahan,” said Heely, referring to Rocky Point Board of Education member Sean Callahan, “we may be in serious trouble if there was a major event in this district. I think that’s the bigger concern at this point, as far as the lack of funds that could be necessary in the future.”

by -
0 1062

By Nancy Burner, ESQ.

The concept informally known as “portability” is now permanent as a result of the enactment of the American Taxpayer Relief Act of 2012. Portability allows a surviving spouse to use a deceased spouse’s unused estate tax exclusion (up to $5.43 million in 2015).

For those dying in 2011 and later, if a first-to-die spouse has not fully used the federal estate tax exclusion, the unused portion called the “Deceased Spousal Unused Exclusion Amount,” or “DSUE amount,” can be transferred or “ported” to the surviving spouse. Thereafter, for both gift and estate tax purposes, the surviving spouse’s exclusion is the sum of (1) his/her own exclusion (as such amount is inflation adjusted), plus (2) the first-to-die’s ported DSUE amount.

For example: Assume H and W are married, and H dies in 2015. H owns $3 million and W owns $10 million. H has the potential of leaving up to $5.43 million under federal estate tax to a bypass or credit shelter trust, which would avoid federal estate tax in both spouses’ estates.

However, because H only has $3 million, he does not take full advantage of the $5.43 exclusion. Prior to portability, $2.43 million would have been wasted. With portability, his $2.43 million can be saved and passed to W’s estate, increasing the amount she can leave heirs free from federal estate tax. With a 40 percent federal estate tax rate, this would save W’s estate approximately $972,000 in federal estate tax. 

With this plan, the estate would also avoid New York State Estate Tax at the husband’s death since the current exclusion is $3.125 million. The assets in this bypass trust would escape federal and New York estate taxation at W’s subsequent death.

In order for the surviving spouse to be able to use the unused exemption, the executor of the first-to-die’s estate must make an election on a timely filed estate tax return. A timely filed return is a return filed within nine months after death or within 15 months after obtaining an automatic extension of time to file from the IRS. Normally a federal estate tax return is only due if the gross estate plus the amount of any taxable gifts exceeds the applicable exclusion amount (up to $5.43 million in 2015). However, in order to be able to elect portability, a federal estate tax return would have to be filed even if the value of the first-to-die’s estate was below the exclusion amount.

The problem occurs when the first spouse dies and no estate tax was filed. In that event, the second-to-die spouse could not use the deceased spouse’s unused exemption. In the above example, the second spouse’s estate would have paid an additional $972,000 in estate taxes if the election was not made. What if the first spouse dies, no estate tax return is filed and no election was made on a timely basis? Does the surviving spouse lose the exemption?

In June 2015 the IRS issued its final regulations on portability. The final regulations make clear that the issue of whether an estate may obtain relief for making a “late” portability election will depend on whether or not the first estate was required to file an estate tax return.

In the instance where the first spouse’s estate was taxable and required to file an estate tax return (because the value of the estate was over the exclusion amount), the time to timely file was nine months from date of death of the first spouse or six months later, if an extension was requested and granted. If that estate tax return was not filed, then the IRS cannot extend the time to file and elect portability. 

If the estate is not required otherwise to file an estate tax return because the value of the estate is below the exclusion amount, then the IRS may grant relief via a private letter ruling. A private letter ruling, or PLR, is a written statement issued to a taxpayer that interprets and applies tax laws to the taxpayer’s represented set of facts. A PLR is issued in response to a taxpayer’s written request. The PLR may not be relied upon as precedent by other taxpayers. 

When seeking a PLR allowing the estate to file late portability election, there are some burdens that must be met. First, the election must be made by the representative of the estate, which may or may not be the surviving spouse. The representative will have to show that he or she acted in good faith and that this ruling will not prejudice the interests of the government. This option is generally available where there was either an oversight in handling the first spouse’s estate or the taxpayer was the victim of bad advice from an accountant or attorney.

For those that had spouses pass away after Jan. 1, 2011, portability can be a valuable estate planning tool to save a significant amount of federal estate tax on the death of the second spouse. If a surviving spouse has assets that are close in value to the current federal exclusion amount, it is important to examine the records of the deceased spouse to make sure that a portability election was made on a timely filed federal estate tax return. If no return was filed, and no estate tax return was required to be filed, it may not be too late to apply to the IRS for a private letter ruling.

Nancy Burner, Esq. has practiced elder law and estate planning for over 25 years.

by -
0 1127

By Linda M. Toga, Esq.

The Facts:  My husband died over five years ago. I met another man, Joe, and he has asked me to marry him. I love Joe and do not have any objections to getting married, but I have heard that remarrying may create financial problems for both me and Joe.

The Questions:  What issues do you recommend I consider before making my final decision about getting married again?

The Answer:  You are wise to be thinking about the impact being married may have on your financial well-being. While marriage may afford you benefits such as access to state and federal spousal survivor benefits, having a right to a share of Joe’s estate, having more favorable treatment as the surviving spouse on Joe’s retirement plans, access to Medicare if you do not qualify on your own and being covered under his medical insurance plan, there could be some serious disadvantages to you as well.

For example, if you remarry, you won’t be able to continue collecting Social Security benefits based upon your first husband’s record. Although you may be eligible for benefits based upon Joe’s record, that amount might be less than what you had been receiving.

In addition to impacting Social Security benefits, remarriage often impacts other types of pension and benefit programs. For example, some widows of public employees lose their deceased spouse’s pension if they remarry, and the widows of veterans may lose veterans’ benefits based upon their deceased spouse’s service. If you are collecting Social Security, a pension or veterans’ benefits based upon your deceased spouse’s record, you should inquire as to how remarrying may impact those benefits.

Even if benefits you are receiving are not adversely impacted by marrying Joe, there is one disadvantage to remarriage in New York. That is the fact that in New York, as Joe’s spouse, you will be financially responsible for Joe’s medical expenses, including expenses associated with long-term care. If Joe does not have long-term care insurance and his health deteriorates to the point that he needs extensive medical treatment or has to be institutionalized, your assets could quickly be depleted paying for his care.

Even if you and Joe maintain separate accounts and enter into a prenuptial agreement in which you both agree that your assets are not to be used for each other’s care, the law imposes upon spouses an obligation of support. While a trust may be used to protect your assets, the fact remains that, if you have available assets, you are expected to use them before Joe will be eligible for needs-based programs such as Medicaid.

In light of what may be at risk, you should talk to an attorney about the pros and cons of entering into a prenuptial agreement and/or creating an irrevocable trust to protect your assets in the event you decide to go with your heart and marry Joe.

Linda M. Toga, Esq. provides legal services in the areas of litigation, estate planning and real estate from her East Setauket office.

by -
0 1142

By Nancy Burner, Esq.

What does “look-back” mean? What is spousal refusal? Will Medicaid take my house if my husband has to go into a nursing home? All too often these are the questions we hear from our clients who are faced with navigating the Medicaid landscape once a crisis occurs. 

In New York State, the Medicaid program can provide a source of payment for those who are financially eligible and require care, either in a nursing facility or in their own home. In order to be eligible for Chronic Care Medicaid (payment for nursing home care), an individual must meet certain income and asset requirements.

To start, the applicant may have no more than $14,850 in liquid nonqualified (nonretirement) assets in their name. They may have qualified (retirement) assets in an unlimited amount provided they are taking a monthly distribution. 

When applying, the Department of Social Services will require a full financial accounting from both the applicant and his spouse for the five years immediately prior.  This is what is often referred to as the look-back. The purpose of this investigation is to determine among other things whether any transfers were made during this time period that would affect eligibility. The rule is that for every $12,390 that was transferred, a one-month penalty will be imposed.

For example, if in the financial review it is discovered that the applicant gifted $40,000 to his children during the look-back period, a determination will be made that imposes a penalty for roughly three months. This means that Medicaid will not pay for the first three months of nursing care, and the family will be responsible to pay privately. The aggregate result of this type of penalty is roughly a dollar-for-dollar penalty, meaning that for each dollar that you transfer you will have to pay a like amount in nursing home care should the need arise. This rule applies unless the transfer is considered an exempt transfer.  Transfers that are exempt do not create a penalty and therefore do not affect Medicaid eligibility. In New York State, transfers to spouses are exempt under the provisions of spousal refusal.

We use the term “spousal refusal” when the community spouse (the spouse who is not institutionalized) chooses not to contribute to the cost of care for an institutionalized spouse. This means that the institutionalized spouse cannot be denied Medicaid because the community spouse refuses to contribute. Moreover, the above penalties cannot be assessed due to the fact that the signing of a spousal refusal makes it such that the transfer is an exempt transfer.  The refusing spouse must still provide any and all financial information and cooperate fully with the Medicaid application. It is important to note that once Medicaid is approved, the county does have the right to seek recovery against the community spouse. Other exempt transfers include transfers to disabled children, transfers of the primary residence to a caretaker child and finally transfers of a primary residence to a sibling with an equity interest. 

With respect to income, an applicant for Chronic Care Medicaid may only keep $50.00 of his income monthly. His spouse may retain the greater of (1) all of his or her own income or (2) all of his or her income and enough of the institutionalized spouse’s income to bring them to $2,980.50. 

Community Medicaid is the program that covers care at home.  This program will cover the cost of a personal care aide to assist with activities of daily living such as bathing, cooking, dressing, etc. The program may also cover day programs, transportation to medical appointments, assisted living programs and some durable medical equipment and supplies. For 2015, an individual applying for Community Medicaid can have no more than $14,850, not including their home, in nonqualified (nonretirement) liquid assets. They may have qualified (retirement) assets in an unlimited amount, provided they are taking a monthly distribution. 

It is important to realize that the home is an exempt resource while the Community Medicaid recipient is alive; however, additional estate planning should be considered to avoid a Medicaid lien after the recipient’s death. While these limitations may seem daunting, the good news is that there is no look-back period. That means someone looking to get care at home can transfer assets in one month and be eligible for Community Medicaid the following month with no penalty assessed for the transfer of assets. 

With respect to income, an applicant for Community Medicaid may have no more than $845 per month.  An individual with an income over the $845 can opt to use a Pooled Income Trust. The excess income would be paid to a pooled trust company, and the trustees of the trust would pay expenses for the benefit of the applicant.

As you can see from this brief overview of Medicaid, there are many options available for care when the need arises. Make sure you are seeking advice from those knowledgeable in the area to make sure that you are getting the care that you require without sacrificing all that you have worked for.

Nancy Burner, Esq. has practiced elder law and estate planning for more than 25 years.

Prev1...181920...23Next Page 19 of 23
TBR News Media is your local news and entertainment website.
We provide you with the latest breaking news and information for your community.
Contact us: [email protected]

Most Viewed

©