Some trust assets may disqualify a Medicaid applicant

One friend tells another, “Put your assets in a trust so the nursing home won’t take them.” But this technique isn’t necessarily the “magic bullet.” The concept of countable assets and resources is broader under Medicaid law  than it is under some other bodies of law. Placing your assets into a trust structure might avoid some problems — like probate in a state where probate estate administration requires ongoing aggravating  interaction with the probate court, or help with Veterans Pension eligibility, or to preserve them for your children while protecting them against the kids’ future creditors. Doing so doesn’t necessarily insulate the assets in the event you apply for Medicaid.

A “resource” is an asset other than income to which the Medicaid applicant or his/her spouse has the right, title and interest, and power to convert the asset to cash. If the applicant’s assets are in a trust, the trust can be counted as a resource if there are any circumstances under which the trust assets can be paid to/spent on the Medicaid applicant. So whether the assets that are sitting in a trust can be counted as resources is a crucial issue. Medicaid is a means-tested program with strict resource limits, and it can take a very long time to receive the Agency’s decision about the application. So it can be a nasty surprise to find out  months down the road that you never were eligible because the assets in the trust are countable resources.

This happened in a recent New Hampshire case. The applicant, Ms. Braiterman,  had transferred some of her assets to an irrevocable trust in 1994. Her children were the beneficiaries.She was not a beneficiary, and she had resigned as Trustee, but she had the retained  power to appoint herself as trustee. She also had the power to impose conditions on the trustee’s appointment of income or principal to the beneficiaries. Now this may have been a great plan with reference to estate tax/cost basis planning. But when she applied for Medicaid years later, the assets in the trust were counted,  so she had excess resources and her application was denied. Why? Because as a condition for the trustee to make a payment to her children, she could have required the trustee to obligate the children to spend the funds on her..

A similar result occurred in Washington State.  Margaret  Berto applied for Medicaid. She and her husband, who died before her, had transferred  their assets into a revocable living trust. In his Will he created a trust for her, so at his death, some of  the revocable trust’s assets were transferred to the testamentary trust. She was the co-trustee and she was the sole beneficiary. Presumably the assets in the revocable trust were spent down prior to the time she applied for Medicaid. The Trust was counted as an available resource, and eligibility for Medicaid was denied.

What makes the excess-resource cases even worse is that by the time the applicant receives the bad news, s/he and her spouse  may have amassed an enormous debt to  the nursing home.

 Careful planning can prevent a crisis. Medicaid planning requires careful evaluation of the specific Medicaid rules, which often compel a different plan than estate and tax

Call us for advice and representation on Medicaid eligibility planning, applications and  appeals…. 732 – 382-6070

New Jersey’s Medicaid agencies are imposing extra unpublished requirements for “caregiver child” house transfers

Federal and State Medicaid law allow the transfer of an applicant’s home to his/her “caregiver child” without imposing the usual penalty for that transfer. But what does it take to be a “caregiver child?” There is an alarming trend we are seeing. County Medicaid agencies are imposing penalties when houses are transferred to such children, citing factors which the State has never publicized by way of regulations.They are basing the decision on facts such as  child wasn’t present 24/7 because s/he worked outside the home, child had another person or  agency providing some of the 24/7 care, even that a child telecommuted from the parent’s home while being available as needed for care and supervision..

Examples of possible situations abound, as dedicated adult children restructure their lives to help their parents age in place. What if the child lives in the house, coordinates all of the care, is on duty throughout the night as needed, takes the parent for the medical appointments, prepares the meals, manages the medication… but also leaves the home for part of each day for employment? What if the person works out of a home office?  What if the child leaves the house alone half a day a week to do all the household errands and engages a temporary substitute care provider? What if the child is simultaneously caring for the frail, aged parent and her infant or preschool-aged children?

The federal statute requires  that such a person be (1) a child of the applicant who (2) resided with the applicant for two years immediately preceding the entry into institutional care (or application for home based Medicaid benefits) and (3) ” (as determined by the State) provided care to such individual which permitted such individual to reside at home rather than in such an institution or facility.”  42 USC 1396p(c)(2)(A)(4).

The State regulation is N.J.A.C. 10:71-4.10(d)4. It requires that the child has provided care to such individual which permitted the individual to reside in the home rather than in an institution or facility. “i. The care provided by the individual’s son or daughter for the purposes of this subchapter shall have exceeded normal personal support activities (for  for example, routine transportation and shopping). The individual’s physical or mental condition shall have been such as to require special attention and care. The care provided by the son or daughter shall have been essential to the health and safety of the individual and shall have consisted of activities such as, but not limited to, supervision of medication, monitoring of nutritional status, and insuring the safety of the individual.”

The state regulation doesn’t say anything about minimum number of hours per week or that any outside employment is fatal to qualifying for this penalty-free transfer. There is no prohibition on outside employment and no prohibition on engaging another person to share the 24/7 duties.Examples of possible situations abound, as dedicated adult children restructure their lives to help their parents age in place. What if the child lives in the house, coordinates all of the care, is on duty throughout the night as needed, takes the parent for the medical appointments, prepares the meals, manages the medication… but also leaves the home for part of each day for employment? What if the person works out of a home office?  What if the child leaves the house without the parent for half a day a week to do all the household errands, and engages a temporary substitute care provider? What if the child is simultaneously caring for the frail, aged parent and the child’s own  infant or preschool-aged children?

What precipitated these actions? It’s a mystery right now. Despite the requirements of the NJ Administrative Procedure Act and the Supreme Court’s 1984 decision in Metromedia vs Director, Division of Taxation about the need for agencies to adopt rules on issues that have widespread effect, State hasn’t proposed any such regulations. Nothing has been issued by DMAHS to put the caregiving public and their parents on notice that even after providing such substantial caregiving for two years, they may have to pursue costly appeals against a State agency which arbitrarily imposed additional criteria which they had no way to know about. In one recent case, Nieves v. Connolly, the applicant had to sue the Mercer  County Office of Temporary Assistance in federal court to bring about a rescission of its penalty notice, in a case involving a son who provided the substantial care but also was employed.

Call us for advice about Medicaid planning, applications and appeals … 732-382-6070

Testator’s hostility toward the heir he excluded doesn’t necessarily invalidate the Will

In the recent case of In the Matter of Estate of Jameson ,  the New Jersey Appellate Division reiterated that there are limited bases to set aside a duly-signed Last Will and Testament.   Kenneth Jameson’s Will disinherited his daughter and made various strongly-worded statements about his feelings about her alleged behavior toward him and about her relationship with someone of a different faith. His wife (her mother) had shared these opinions as well. Kenneth’s wife predeceased him. After his death, his daughter sought to invalidate the Will. Among other things, she argued that her father’s Will was the result off his discriminatory motivation against people of that religion and that, therefore, the Will violated public policy and was unenforceable.

According to the decision, “Article Four of Kenneth’s will stated that “[n]o part of [his] estate is at any time to be gifted, bequeathed, or devised to [his] daughter,” Stacy. Article Four further stated as follows” ‘As an extremely loving and devoted parent, I found that the love, care and concern which I lavished on my daughter was not acknowledged or returned in any way by my daughter. Instead, she acted toward me with selfishness, manipulation, cruelty, and with abusiveness. My daughter . . . blatantly lied to and about me, acted with hatefulness and vindictiveness towards me, and was abusive and physically violent towards me. [Stacy’s] shameful and hateful behavior towards me and her mother has brought me to my carefully considered decision that [Stacy] is to receive absolutely nothing from my estate.'”

Quoting from the 1992 case of In re Will & Testament of Liebl,, the Jameson Court stated, “A will may be contrary to the principles of justice and humanity; its provisions may be shockingly unnatural and extremely unfair,” however, courts are bound to uphold the validity of a will if made by a person of sufficient age to be competent  and if made while of sound and unconstrained mind. “[A] will cannot be set aside on account of strong, violent and unjust prejudice of the testator . . . if such prejudice be not founded on delusions and does not show mental incapacity . . . [and] that the unreasonableness of testator’s prejudice and unfairness in the disposition of his property will not alone avail the court to repudiate the will.”

The Court also explained that “absent undue influence, the motivation of the testator is not relevant to the validity of a decision to disinherit a putative heir.” The Court cited  In re Blake’s Will, a 1956 NJ Supreme Court case.

Will may be invalid due to “undue influence” by a person who becomes enriched as a result, or because the testator lacked sufficient mental capacity to knowingly determine the terms for his/her Will. Even those challenges are typically expensive, uphill battles. And beyond that, a challenge which is just based on  the reasonableness of  the Will, or the accuracy of the testator’s perceptions, may not even make it out of the starting box.

Call us for advice about preparing your Last Will and Testament and estate administration … 732-382-6070

Texas is trying out Supported Decision-making as an alternative to guardianship

The law allows a Court to appoint a legal guardian for a person who is incapacitated. An Incapacitated Person is defined in NJ as someone who by reason of mental illness, intellectual disability, physical illness, physical disability, chronic drug or alcohol use, or other cause, “lacks sufficient capacity to govern himself and manage his affairs.” Since we are dealing with the functioning of an adult human mind, “incapacity” is not always simple to determine, and can depend on the functional task in question. There are a wide range of decisions that a person needs to make on a daily basis. Some decisions have great impact on the person’s health and survival, and others don’t. Limited guardianship remains an option. Now,Texas has taken a bold step and has enacted a law (S-1881) called the Supported Decision-Making Agreement Act. We have previously blogged about supported decision-making as an aspirational idea. Since guardianship results in a loss of rights and liberties, supported decision-making may provide a workable less-restrictive alternative.

At its heart, supported decision-making is a contractual arrangement between two parties — one being the party who needs help with major decisions, and the other being the party who agrees to provide that assistance. Here is the Texas form for such an agreement.supported-decision-making-agreement-texas-form-oct15

As with any contract, there must be a “meeting of the minds” as to what is intended and expected, what each party’s duties are, how they will communicate, and how they will resolve disputes. The more detailed the written agreement, the better, because ambiguity leads to misunderstanding, confusion and chaos. There must be a framework for carrying out the decisions. Presumably, the party who needs assistance retains the right to sign legal documents. And there may still be a need to provide a broad power of attorney that could be used should the individual ever become truly “incapacitated” and require a surrogate decision-maker. 

Meanwhile, keep an eye on Texas to see how these new arrangement work out.

Call us to prepare estate plans and powers of attorney to protect you for the future … 732-382-6070

The Secret Life of Pet Trusts is a Heartwarming Tail!

A few weeks ago, I took my kids to see The Secret Life of Pets. It was cute, fun and the kids loved it. Of course, when I take my kids to the movies, my elder law brain has to go with me. So, spoiler alert, there was a pet in the movie who had an older owner who had died. This put the pet in a vulnerable position.  Wacky hi-jinks ensue, and all is well at the end.  But my brain goes to, wow, this pet could have really benefited from a pet trust so that in the event of his owner’s death, he would have a responsible human and funding to take care of him.

Now fast forward.  I recently supervised a Will signing and I’m happy to say there was a pet trust included.  In New Jersey, like in many states, there are statutory provisions for funding a pet trust during life or in your Will. There are also nonprofit organizations such as the Associated Humane Societies Inc. who will accept pets, and you can make an arrangement with them for the pets to receive lifetime care. Kitty City is one example of these kinds of places.If you want to include a charitable bequest or pet trust in your Last Will and Testament, it’s important to be specific, provide all important details, and have the name of the charitable organization precisely correct (to avoid disputes between different charities).

If you are an animal lover, take advantage of this!  Make sure that the not-so-secret lives of your pets are provided for in your estate plan!

Call us for estate plan advice and to prepare trusts for your pets … 732-382-6070