• Can I gift my children $14,000 per year without Medicaid imposing a penalty?

    Can I gift my children $14,000 per year without Medicaid imposing a penalty?

    Generally, in determining the Medicaid eligibility of a person receiving nursing facility services, any gifting of assets made by the applicant within the “look back period” will render the person ineligible for Medicaid for a period of time equal to the value of the gift divided by the regional rate.  Under current law, the look back period is the five (5) year period prior to the date of application.  A gift is defined as any transfer of assets for less than fair market value.

    Many people do not realize that your everyday common gifts are captured by this widely cast net.  For instance, paying for your grandchildren’s college education, assisting a financially troubled child, and contributions to your local church are all considered gifts for purposes of determining Medicaid eligibility for nursing home care.  A common misconception is that you are allowed to gift $14,000.00 each year without incurring a penalty for Medicaid eligibility purposes.  This is incorrect.  

    In 2017, the annual gift tax exclusion for federal gift tax purposes is $14,000.00.  That means that you can open the phonebook and give everyone in the phonebook $14,000.00 this year without filing a gift tax return.  However, federal tax law has nothing to do with Medicaid eligibility rules.  If you are gifting $14,000.00 each year, those gifts will be evaluated for Medicaid eligibility purposes.

    Given the economic environment, it has been increasingly common for me to encounter situations where gifts have been made by applicants to their children or grandchildren during the look back period which is giving rise to a more complicated Medicaid application process.

  • If I disinherit my son or daughter in my Will, does he/she need to be contacted upon my death?

    If I disinherit my son or daughter in my Will, does he/she need to be contacted upon my death?

    Actually, yes!  When someone dies, the first step is to determine if the decedent owned any assets individually, meaning there were assets with no joint owner or designated beneficiary.  A very common fact pattern is where a surviving spouse dies owning a house.  Once it is determined that individually owned assets exist, someone needs to obtain the legal authority to manage those assets.  If the decedent died with a Will, the Will must be probated.  The probate process is the process of taking the Will to Court and proving to the Court that the Will is valid.  Once the Court determines that the Will is valid, an Executor will be appointed who can then manage the assets of the estate.

    As part of the probate process, the Court requires that each and every person who could have inherited from the decedent if the decedent has no Will must be contacted and asked to sign certain papers.  This is a requirement regardless of whether the person is a named beneficiary in the decedent’s Will and in cases where the individual has been disinherited, can cause a lot of problems.        

    This is a good example of why simply having a Will is insufficient planning.  You can avoid the above debacle by planning with a revocable trust since a revocable trust avoids probate.  


  • My Father is 85 years old and needs care. He never did any planning. Is it too late?

    My Father is 85 years old and needs care.  He never did any planning.  Is it too late?

    Contrary to popular belief, it is never too late.  An elder law attorney can work to implement many different techniques even at the 11th hour to preserve assets.  What is important is that you have a relationship with an elder law attorney.  An elder law attorney can relieve some of the anxiety natural to this time of your life and has resources in many different areas.

    Some examples of last minute planning might include taking advantage of certain exempt transfers.  For instance, the house can be transferred to a caretaker child, spouse, another sibling with an equity interest in the house or a disabled person.  Take caution when transferring the home because there are significant tax considerations to be mindful of.

    If your loved one needs home care, there is no look-back period.  Thus, transfers of assets can be made in short order to qualify for Medicaid.  This assumes the person has capacity.  If there is no capacity and no power of attorney (with a statutory gifts rider), then a guardianship is needed.

    Finally, if nursing home care is required, there is a planning technique to save approximately forty-five percent (45%) of the available resources.  

    I often see people spending down their assets because they believe they waited too long to do their planning.  In most cases, they are unaware of simple things like the protection afforded an IRA.  In all cases, they do not have an elder law attorney properly guiding them and are wasting away their assets.  

  • If I am a Power of Attorney, am I legally responsible for someone’s bills?

    If I am a Power of Attorney, am I legally responsible for someone’s bills?

    No.  When someone appoints you as his/her attorney in fact (people casually refer to their title as “power of attorney”) to handle their financial affairs, you are acting as an agent to that person.  You are called a fiduciary and fiduciaries must act according to certain fiduciary standards.  For instance, a fiduciary must act in the best interests of the principal (the person who appointed you).  That means that you stand in the shoes of the principal and all financial decisions must generally be in furtherance of that person’s heath, maintenance, education and support.  

    However, having this “power” does not make you responsible for the principal’s debts and obligations.  This is important to know because many times third parties will use scare tactics against an attorney in fact to collect a debt.  Sometimes, nursing homes will ask the attorney in fact for a personal guarantee as a condition to the principal’s nursing home admission, which is against the law.

    To the contrary, if you use your power to transfer the principal’s assets in avoidance of debts, such as nursing home obligations, you make be subject to a lawsuit for misappropriating such assets.

    A properly drafted power of attorney is one of the most important documents in your arsenal of estate and elder law planning documents.  One of the problems seen every week in our office is the use of boilerplate powers of attorney obtained from the internet or non-elder law attorneys.  Using these documents could be very detrimental and costly to your family.

  • Do I need a power of attorney if my spouse is joint on all my accounts?

    Do I need a power of attorney if my spouse is joint on all my accounts?

     

    Your spouse might be able to access your bank accounts but he will be very limited in doing much else.  A properly drafted power of attorney and statutory gifts rider is an absolute necessity.

    When an elder law attorney prepares a power of attorney and statutory gifts rider, powers are included that are not readily apparent to you.  For instance, we will add powers allowing for the transfer of your assets in the case of Medicaid planning.  Having your spouse on a bank account does not allow him to transfer the assets of the account.  In fact, many brokerage accounts will not allow one spouse to withdraw money without the signature of the other.

    We also include powers that are necessary to make you eligible for Medicaid and file an application, if necessary, such as the power to create and fund trusts, the power to change beneficiary designations and the power to sign a spousal refusal.

  • Why is it someone with a revocable trust but still needs to probate their Will?

    Why is it someone with a revocable trust but still needs to probate their Will. 

     

    This is a very common issue with revocable trusts and it results from not respecting the formalities of the trust.

    In order for a revocable trust to work as intended, that is, to avoid probate, your assets must be transferred to the trust.  For instance, if you own a house, the deed needs to be changed to reflect that you own the house as trustee of your revocable trust.  The same applies to bank accounts and other financial assets.  It is important to note that assets having beneficiary designations or joint owners do not need to be placed into the trust to avoid probate since they avoid probate by their very nature.

    Many people often create revocable trusts and do nothing after leaving their attorney’s office.  Sometimes it is the fault of the client, other times it is the lack of good advice from the attorney.  In either case, when assets are not transferred to the trust and that person dies, a probate proceeding is required to manage those assets.  This defeats the purpose of the revocable trust.

  • What can I do if the Executor of my Mother’s Will is not giving me information about the assets of the estate?

    What can I do if the Executor of my parent’s Will is not giving me information about the assets of the estate?

     

    Assuming by your question that you are a beneficiary of your parent’s estate, you are entitled to certain information.  For instance, where the Estate is not required to file an estate tax return, an Executor must file an Inventory of Assets with the Court within six months of his appointment.  Where the Executor is prepared to make distributions, the Executor should prepare an account showing the activities of the estate leading up to the date of distribution.  Prior to making distributions, we advise our clients to maintain an open channel of communication with the beneficiaries of an estate to avoid unintended litigation.  A simple letter every now and again updating the beneficiaries can go a long way to avoid litigation.

    If the Executor fails to communicate with you, you have the right under New York State law to file a petition compelling the Executor to account.  Keep in mind, that some time should have passed since the Executor’s appointment.  A few months after the Executor’s appointment is hardly reasonable to begin the process of compelling an account.  You will need an attorney to assist you in this process but once filed, the Court has broad discretion in making the Executor file an account of his actions.  Generally, there will be stringent time frames imposed on the Executor to comply with the order of the Court.

    Often, an Executor’s failure to communicate with the beneficiaries or file an account is indicative of an Executor’s inability to properly handle the affairs of the estate.  By compelling the Executor to account, it may be determined that the Executor should be removed and replaced allowing the administration of the Estate to move along to completion.  

    We handle estate litigation matters on a regular basis.  Please call us at 914-925-1010 or e-mail me at smd@mfd-law.com to discuss your options.  

    Questions may also be submitted to smd@mfd-law.com for a response.

If you would like to submit a question for a response, please e-mail us your question at smd@mfd-law.com. We can also be reached at 914-925-1010 or by visiting our website at www.plantodayfortomorrow.com.