Tips on designing a guardianship plan

What are the responsibilities of a Guardian of the person and property of an incapacitated individual? The Guardian is expected to fulfill a broad array of obligations, since the Guardian is responsible to arrange for and oversee the financial and personal well-being of the person under guardianship. Each individual is unique, with her or her own preferences, likes and dislikes, and cultural experiences. In some cases, the Guardian is very familiar with the individual. In other cases, it’s all new and some investigation may be required to learn about the unique attributes of the individual. And of course an individual’s interests and needs will typically change over time.

New Jersey’s guardianship statute on this subject can be found at N.J.S.A. 3B:12-57 and there are other statutes surrounding it in the Probate Code.  Among other things, the Guardian needs to arrange for “the care, comfort and maintenance and, whenever appropriate, the education and training of the ward;”  must “develop a plan of supportive services for the needs of the ward and a plan to obtain supportive services;” and must take all measures required to attain eligibility for programs and benefits, to pursue assets that are owed to the ward, and to apply the available sums in the ward’s benefit.

To develop a plan,  create a budget. The budget needs to include every single recurring cost in a typical month or quarter. Determine the recurring sources of income and apply for benefits that are available. It may be necessary to apply for Social Security Disability or retirement income, SSI, employer’s disability pension, or to file a claim for any available long-term care insurance.  Do an assessment of whether the individual can stay in their current residence or if a different residence — or health care facility — would be more appropriate. Is in-home care needed? This becomes part of the budget. Is nursing home care required? It’s important to investigate the availability of Medicaid benefits. Are their unpaid bills or unfiled taxes? Start to tackle all of that and bring things up to date.

For a ward in the community, start investigating the social supports that can add meaning to that person’s life. Does the person enjoy attending religious services? See what needs to be done to bring the person to weekly services and have a companion there for assistance.  Perhaps the person can be enrolled in recreational activity at the local “Y” or senior center. Map out a plan of activity for an in-home caregiver to do — this might include reading aloud, exercise, outdoor walking excursions, movies, particular types of menus or trips to beloved eateries.

By putting together a thoughtful plan of activity to help the individual stay engaged in his or her cultural and social life, a Guardian can support the sense of well-being, happiness and security of the person under guardianship. In this way, the Guardian  can fulfill his or her legal obligation to “give due regard to the preferences of the ward, if known to the guardian or otherwise ascertainable upon reasonable inquiry. ”

Call us for legal advice in carrying out your responsibilities as a Guardian ….. 732-382-6070

Pet therapy provisions in the New Jersey Skilled Nursing Facility Manual

Are you watching out for a loved one or a client who resides in a nursing home? You will want to become familiar with some of the provisions in the State’s regulations for skilled nursing facilities. In this series of posts I will talk about some sections of the Code and its appendices that are useful for a patient’s advocate to know about.

Let’s start with the provisions about pet therapy. Can a resident of a nursing home be visited by their pets? Can a resident of a nursing home bring in a pet to live with them? Facilities are permitted to establish protocols that enable a resident to have a pet as a companion or to receive visits from animals that are residents of the nursing home or are brought in as visitors. The details are in Appendix A, which is found at page 105-107. Appendix A.

The idea of bringing animals into nursing homes for pet therapy isn’t new. The NY Times did this piece about it in 1987, and  researcher H.M. Hendy at the National Institutes of Health published a study that same year in the International Journal of Aging and Human Development which was a follow-up study of the effects of pet visits vs. human visits on residents’ alertness and other indicators of contentment and satisfaction.

Under the New Jersey program, allowable companion pets are dogs, cats, non-carnivorous birds, domestic rabbits, gerbils, hamsters, guinea pigs and fish. Reptiles, ferrets and other wild animals are not permitted. The facility itself (or a staff person or other party) can own and maintain the animals,   or  a resident can own the animal and keeps it on the premises. Any animal that resides at the facility more than 4 hours a day is referred to as a “residential pet.” Appendix A contains explicit requirements regarding the health and safety of such animals.

There is a category called “visiting pets.” If pets are brought in so that the resident can visit with the pet, the party bringing it in must abide by certain requirements. Dogs and cats must be vaccinated, housebroken, and not in estrus (not “in heat”) at time of visit. Dogs must be licensed and tagged. The owner must accompany the animal and is responsible and liable for its behavior while on the premises. Visiting birds are not permitted, but hamsters, gerbils, guinea pigs, domestic rabbits, rats and lab mice may visit.

Resident pets and visiting pets cannot be allowed into certain areas such as nursing stations, drug preparation areas, linen storage areas and sterile supply rooms, for example. Food handlers may not be involved in the cleanup of animal waste. There must be a pet-free area within the facility so that residents can avoid undesired contact with animals. 

If you want to read the State’s entire manual of requirements for skilled nursing facilities, here it is. — Chapter 8:39 of the NJ Administrative Code.

A person who moves into a skilled nursing facility for long-term care is a resident, not a patient, and the SNF is their new home. Not only is an individualized plan of care required, but many protections and rights which  people have in their communities follow them into this new residence. Vigilant, attentive and creative advocacy can assure a good quality of life for your loved one in a senior care facility.

For advice and advocacy on senior care and elder law issues, call us at ……732-382-6070

 

Watch out for elective share issues in Medicaid planning

When a married person requires nursing home care, the spouse often seeks advice on how to preserve assets and minimize his/her exposure to the high cost of care. Often this will require consideration of how the Medicaid program (MLTSS or NJ FamilyCare) can help out. Assets may be transferred to the “community spouse,” and beneficiary designations may be changed. Some assets will be retained and others may be spent. There may be gifts, and there may be annuities that are purchased. Each plan is unique. The Will of the community spouse may be altered so as not to leave everything to the spouse who now requires nursing home care.

What happens if the community spouse dies first, and the institutionalized spouse is receiving MLTSS Medicaid benefits? The Executor of the Estate and the Agent under Power of Attorney for the surviving spouse will have some reckoning to do. This ‘reckoning” refers to calculating and satisfying the “elective share.”

The elective share is a statutory share of the deceased spouse’s estate. It is calculated by following the formula in N.J.S.A.3B:8-1 et seq. Basically it starts with the deceased person’s probate assets (essentially, the assets that have no beneficiaries or co-owners or that aren’t held in a living trust), minus expenses and debts, plus an array of other assets such as joint accounts, pay on death accounts, and assets that were given away within the prior 2 years. This whole combination of subtractions and additions produces what’s called the “augmented estate.” The elective share is one-third of the augmented estate. The share is “satisfied” first from assets owned by the surviving spouse or that he receives as a result of the death, and then from probate assets, and then from non-probate assets.

Sometimes it turns out that the surviving spouse gets a distribution of zero from the estate of his late spouse, but other times, the distribution is substantial, creating some havoc as the Executor tries to figure out how to make the payment — often, there is real property but insufficient cash, and the Will may leave the property to somebody specific.

Why does any of this matter? A person on Medicaid is required to seek all assets to which he is entitled, or he will face the risk under N.J.A.C. 10:71-4.10  of a transfer penalty. The Appellate Division has ruled in I.G. vs DMAHS that.  the failure to claim the elective share is a transfer of assets. If a transfer penalty is imposed, the State doesn’t pay for the nursing home for a period of time.

The Agent under Power of Attorney for a Medicaid applicant or recipient is obligated to report changes to the program. This would include notification that the person has been widowed. Typically, the County Board of Social Services then inquires about the estate of the deceased spouse and whether the Medicaid recipient has received his elective share. If the surviving spouse isn’t yet on Medicaid, then this issue will have to be addressed if the surviving spouse applies for Medicaid benefits during the ensuing five years, because at the time of the application, there is a 5-year look-back to see if any assets were given away/transferred.

What’s the risk? The risk is that Medicaid benefits were wrongfully received by the surviving spouse who failed to receive assets he was entitled to as an elective share. This further creates the risk that there was an overpayment, and the State has options under N.J.S.A. 30:4D-7.1, to pursue all culpable parties by initiating a lawsuit in Superior Court.

Careful planning can prevent a crisis. Senior care planning involves a whole array of activity, some now and some later as situations change. Call us for advice for now, and for later. … 732-382-6070

Brokerage found not liable to non-customer in joint account dispute

The owner of a financial account may choose from a variety of designations and forms of ownership for the account. It may be solely-owned; it may be jointly owned with right of survivorship but no independent access during lifetime; it may be “either-or,” it may be “pay on death to …,” it may be “in trust for …” Each of these carries very different legal ramifications during the lifetime of the account holder and after his/her death.  If a solely-held account is changed by the account holder to be jointly held with someone else, to what extent can the disgruntled heir of the estate seek compensation from the corporate financial entity which holds the account and processed that paperwork? The  NJ Appellate Division decision in Wolens v. Morgan Stanley Smith Barney  sheds some light on this subject.

The Court explained, “As a general proposition, the case law in our state has not recognized that a financial institution owes a legal duty to injured third parties who are not their customers unless a statute, regulation or other codified provision imposed such a duty, or where a contractual or “special relationship” has been established between the non-customer third party and the financial institution.”

What happened in this case? The Plaintiff’s mother had owned investment account(s) in her name alone at Morgan Stanley Smith Barney (MSSB). The accounts made up most of her estate.  At some point, she presented MSSB with a written request to change the account’s title so it was jointly held with one of her three daughters. She passed away four months later. Another of her daughters learned about this after her mother died, when it was disclosed that this “non-probate asset” would not be passing through the probate estate and would not be shared with the people inheriting under the mother’s Last Will and Testament.

The dissatisfied daughter sued MSSB for honoring her mother’s request. The Court dismissed the action, finding that MSSB did not owe any legal duty to the plaintiff to protect her potential interest, because the plaintiff was not a customer of MSSB and MSSB had not established any contractual or special relationship. The Court emphasized that even if there had been wrongdoing on the part of the daughter whose name was added to the account, that would merely provide a possible cause of action against her in connection with the estate, and it would not establish a basis for liability on the part of MSSB, who had no relationship with potential heirs of their customer’s estate.

The Estate planning process involves looking carefully at all of your assets and how they are structured, to be sure that the Plan you think you have is the Plan you actually have.

Call us for advice on estate planning and elder care planning ……….

732-382-6070

 

 

Section 121 exclusion of capital gains available if nursing home resident resided in home 1 of last 5 years

Sale or transfer of a primary residence is often a major consideration in elder care planning. Property may be transferred from an infirm spouse to the “healthy spouse.” Property may be sold because the homeowner has to move into a nursing home or other care facility. Property may be transferred to the “caregiver child” in connection with a Medicaid application. A residence may be transferred “to the kids” to preserve its value for their benefit. When a sale or transfer takes place, there may be substantial capital gains incurred due to the large increase in value that has occurred during the decades that the elder resided in the property since time of purchase. This is where Section 121 of the Internal Revenue Code comes in. Let’s examine a few of the provisions.

Section 121 provides an exclusion from income tax of up to $250,000 of capital gains ($500,000 for a married couple) once every two years upon sale of the primary residence. The basic requirement is that the seller has resided in the property for 2 of the 5 years prior to sale. This would mean at least 2 years from the date the seller acquired title.

What about sales by widow/widowers? Under Section 121(b)(4), if the widow/er sells the residence within 2 years of the death, and all the other basic criteria are met, they can exclude up to $500,000 of gain.

What if the seller didn’t reside in the house the entire time? The time in which the person resided elsewhere before moving out for good is referred to as “nonqualified use,” and Section 121(b)(5)(C) specifies that there will be a proportional reduction in the exclusion based on the ratio of nonqualified use since 2009 to the whole period. There are a few exceptions.

What if the couple is married filing jointly, but only one spouse meets all of the requirements? Under Section 121 (d), They can claim the full $500,000 exclusion.

What if the seller has to move into a nursing home before the sale, or has resided in and out of health care facilities during the 5 years before the sale? Section 121(d)(7) has special provisions about that. If the individual “becomes physically or mentally incapable of self-care” and resided in the home for periods of time that, in aggregate, equal at least 1 year out of the past 5, “then the taxpayer shall be treated as using such property as the taxpayer’s principal residence during any time during such 5-year period in which the taxpayer owns the property and resides in any facility (including a nursing home) licensed by a State or political subdivision to care for an individual in the taxpayer’s condition.”

What if the parent transfers the property to a child who does not live there? The Section 121 capital gains exclusion will not be available to a family member who has received the property but then does not use it as his/her primary residence. When the property is later sold, there will be probably be capital gains to contend with, because the adjusted cost basis in the hands of the parent is “carried over” to the child who received the property.

Call us about asset protection planning and elder care ……… 732-382-6070