People often think of “estate planning” as just making a Last Will and Testament that directs who should inherit what. But a fundamental and necessary tenet of “estate planning” is to know just what you have, so that you can protect your heirs appropriately. Are any of your accounts jointly owned? Depending on the circumstances, that might defeat the plan in your well-written Will. Did your investment advisor or well-meaning friend persuade you to add a “pay on death” beneficiary to your huge brokerage account? Again, that might defeat the plan in your well-written Will. Do you actually still have that life insurance that you thought you had?
A recent New Jersey case illustrates an unfortunate set of circumstances in which it was thought that the deceased — a teacher — was covered by a group life insurance plan, but it turned out that he wasn’t, because the school he worked at was a charter school which did not complete the paperwork to become a participating employer in the Teachers’ Pension and Annuity Fund and to enroll its employees in the Fund prior to his date of death. In this case, he died just 6 months after beginning employment at that school. But for purposes of careful estate planning, the take-away is that a person may want to purchase private life insurance until they are certain that a sufficient employer policy will replace it.
The case is In the Matter of the Estate of Levinson, (NJ App. Div.), non-precedential (“unpublished”) opinion. The Court affirmed the New Jersey Division of Pensions and Benefits’ denial of the Estate’s application for the non-contributory life insurance benefits, and held that unless the employer had actually completed the process and had become a participant in the coverage agreement, no employee could be enrolled in a state pension plan. In this case, things got even worse because after Levinson’s death, the school’s charter was revoked, and so it could not even apply for retroactive participation in the plan.
Call us for thorough review of your situation and for estate planning …….. 732-382-6070
Self-settled special needs trusts must have a payback provision to be considered an exempt trust under the federal and state Medicaid program. A Medicaid applicant under 65 can transfer his or her excess resources (assets) into a “special needs trust” and avoid the usual transfer penalties, but only if the trust meets all of the requirements of the federal and state law. Also, if the trust meets all of the requirements it will not be treated as a countable resource that might otherwise disqualify the person. New Jersey’s regulations are quite detailed on this subject. One of these requirements is that the State of New Jersey must be named as the first beneficiary upon the death of the trust beneficiary/Medicaid recipient, up to the amount the State has expended for the individual. The case of D.W. v.Division of Medical Assistance and Health Services,
2015 WL 7738711 (App. Div. 2015), illustrates the problem.
D.W. received a settlement from a personal injury action, and a first party trust was established for D.W.’s benefit by the Court to receive the assets. However, the Trust lacked the required payback provision. D.W. lost his benefits/ was turned down for benefits because the amount in the trust was deemed to be a countable resource and put D.W. over the resource limit for the Medicaid program. On appeal, the Appellate Division affirmed, in an unpublished and nonprecedential opinion.
This was an unfortunate situation. D.W. may be able to initiate an action in court to reform (amend) the Trust moving forwards, but that will not guarantee that the amendment will be made retroactive.
For legal advice and representation on Special Needs Trusts and Medicaid application, call us at … 732-382-6070
In A.T. v. Division of Medical Assistance and Health Services (unpublished non-precedential decision, Appellate Division of Superior Court, 2015, WL 7421647), a Medicaid application was denied for failure to provide requested verifications of assets. The applicant’s grandson (DT) was her Agent under Power of Attorney (“POA”), and his father ST was the alternate Agent. The application was initiated by one of them. Both ST and DT received a Verification Form from the County Board of Social Services on three separate occasions that asked fort a litany of additional information. The court sustained the denial, holding that failure to provide the documentation impeded the Board’s ability to determine whether certain assets were available to A.T. or not.
An application for Medicaid requires 5 years’ of financial records, including deeds, copies of cancelled checks, and sometimes even old receipts or credit card statements. Generally, an Agent under a Durable General Power of Attorney should have the authority to request and obtain all of the needed records from third parties even if those records are considered confidential under other laws. It’s a huge job and its a real pity when a qualified applicant gets turned down because some of the papers haven’t been produced. Although it can take 6 months or more before a complete application is actually reviewed in some counties, the minute the applicant or their agent receives the letter asking for better proofs, they need to jump on it because the agency typically provides a very short window of opportunity, like 10 days. Then what happens is that the applications get denied if this deadline passes.
What if the applicant is incapacitated and has no agent under power of attorney and no legal guardian? Sometimes the party presenting the application is the nursing home, or is the next of kin who is authorized to file a Medicaid application under Medicaid law, but lacks legal authority under other law to actually demand copies of confidential records from banks etc. Not only are the assets inaccessible, but there may be no authority to get access to the historical records for purposes of the 5-year look-back. In a situation like that, the applicant’s representative needs to remind the agency that there is nothing accessible so the person is eligible for conditional benefits because the law requires that benefits be provided. The representative can then ask an attorney to file an appropriate type of legal suit to get authority for production of necessary records.
Call us for advice on Medicaid applications, appeals, guardianship and protective arrangements … 732-382-6070
There is a New Jersey insurance law which allows a person who is 62 years of age or older to designate an authorized third party to receive Policy Lapse Notices and Late Payment notices from the policyholder’s insurance company. This is a regulation at N.J.A.C. 11:2-19. The process is easy. Many companies will provide you with their own form upon request. For others, just send a written statement, signed and notarized, to your insurance company by certified mail, return receipt requested, designating the person (plus phone number and address) to whom you want the company to send the extra notices. The third party designee needs to also sign that letter to show their willingness to accept these notices. This notice can be revoked by the policy holder by a written communication, and the third party can, of course, resign by sending a written resignation.
The benefit for aging folks is that if you forget to send in a payment on your insurance policy because you’ve been out of the house during a prolonged illness, or things get worse and a notice of Lapse/termination arrives at the house, you have the comfort of knowing that your third party designee will receive that mail also and can then help you solve the problem. Presumably, your Agent under Power of Attorney can then spring into action on your behalf to prevent the lapse, make the payment or initiate steps to reinstate a lapsed policy. No matter what, the third party designee does not become personally liable merely because they agree to receive a copy of these notices.
Careful planning can prevent a crisis. Better to have another person on your elder care team who can receive a copy of such urgent mailings, than have to try to undo the damage later on when it may be too late.
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I have just learned that Morgan Stanley has instituted an optional opportunity that can be used by their aging customers. Maybe some other financial advisors or banks have a similar option. It provides a form for account holders to designate someone who the Morgan Stanley personnel can contact and share confidential information with, because — as the form says — “situations and circumstances may arise where Morgan Stanley, in order to protect me and my investment interests, may have concerns about my whereabouts, financial affairs or health status and deem it beneficial in its reasonable discretion, to share information, orally or in writing, about my account(s) with the contact person(s) I have listed below.” The option can be withdrawn, rescinded or cancelled by the customer at any time. The authorization is not the same thing as a trading authorization or power of attorney.
I think this is forward-thinking and really great. I have often blogged about the many ways people can plan ahead for a good old age, and that careful planning can prevent a crisis. This is another example of a sensible step people can take. You build your team, provide them with the tools they will need, and then head gracefully towards the future.
Call us about planning for a good old age ………. 732-382-6070