Real Estate and Medicaid – Part 1
As I have written about many times on this blog, Medicaid is a needs based benefit. Assets must be spent down below $2000. Not every asset, however, is countable. There are exempt or non countable assets. These are assets that do not count against the $2000 limit. Additionally, in the case of married couple the non Medicaid spouse can keep as much as $154,140 in countable assets. The primary residence is the biggest exempt asset as long as the Medicaid recipient or the spouse is living in it. A number of people calling our office about Medicaid express a common concern. If they own more than one property, can they exempt all their real estate? The answer to that question is “no”. Only the primary residence is exempt and in the case of a single applicant the exemption has a limit of just over $1,000,000. For a married couple there is no value limit to the exemption for the primary residence. So, must the other homes be sold and spent down in order to achieve Medicaid eligibility? Not necessarily. There may be other options that will allow families to keep the other properties. I’ll discuss what I mean next week.
What is the Meaning of Per Stirpes? Part 2
In last week’s blog post, I explained the term “per stirpes”, which is typically found in a last will and testament. It is meant to cover the possibility that the person who I name in my will to receive a bequest has died before me. As I explained last week, the term is Latin and means “by branch”. If I leave $50,000 to Person A who has two children and dies before me, and if I have designated that bequest to be made “per stirpes”, it means that A’s children step up and split that bequest. They each receive $25,000. I could, however, also choose another designation, “per capita”. Per capita is also a Latin term meaning “by the head” or “by representation”. Property is to be divided into as many equal shares as there are surviving descendants in the generation nearest to the designated person and deceased descendants in the same generation who left surviving descendants. The people in the nearest generation get a share and then the descendants in the next generation split the rest. Looking at an example of this, let’s say I had 4 children, A, B, C and D. A and B survived me but C and D died before me. C has 2 children,
What is the Meaning of Per Stirpes? Part 1
Whenever I review drafts of a will we have prepared for a client there are certain terms and clauses that I can almost always guarantee will trigger questions. One of those is the term “per stirpes”. Per stirpes is actually a Latin term meaning “by branch”. It is used to describe how assets are distributed when someone dies. Let’s say I leave a bequest in my will to person A. What happens if A dies before me? The next question is “who then inherits what would have been A’s share? I have several options. I could decide that A’s share should go to another specifically named person. Let’s call him B. I could also decide that l want A’s share to lapse so that A’s share is to be distributed to the persons named to receive the residuary (ie. the balance) of my estate. I could also,however, choose to pass on A’s share to A’s descendants. That is done with a per stirpes designation. If A has 2 children, C and D, a per stirpes designation means C and D step into A’s shoes and split A’s share. Finally, I could choose a designation of “per capita”. I’ll explain more next week.
In Terrorem Clauses – Enforceable or Not? Part 2
In my post last week, I explained the concept of an in terrorem clause. These clauses are designed to discourage will challenges, however they do have limitations. They work by providing that if someone challenges the will they would receive nothing. This acts as a disincentive to challenging the will if the person loses whatever they were going to receive. There is a common misunderstanding, however, about the scope of this clause. It does not act as a complete bar to a will challenge. In fact, New Jersey law specifically provides that “a provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable if probable cause exists for instituting the proceeding”. What this means is that if probable cause exists, the right to contest the will still exists. For example, if the testator signed the will under duress or undue influence or lacked the mental capacity to execute a will, then a challenge can still be made. It’s just that the in terrorem clause raises the stakes, so to speak. If the applicant is unsuccessful and probable cause to file the action did not exist then the applicant would lose the case but the loss doesn’t
In Terrorem Clauses – Enforceable or Not? (Part 1)
In this week’s post I discuss in terrorem clauses, more commonly known as no contest clauses which can be found in a last will and testament. In terrorem is a Latin term meaning “in fear”. The purpose of such a clause is to discourage will challenges. The clause states that if an heir files a legal proceeding challenging the will, he or she will not receive any interest in the estate. These clauses are generally allowable because they support the idea that a person’s wishes with respect to the distribution of his or her estate should be honored, however, that is a very general statement. There is more to it than that. For example, when one of our clients disinherits a family member, they typically will ask for a no contest clause to be inserted in the will. But, if an heir isn’t receiving anything in the will anyway, adding an in terrorem clause doesn’t really act as a disincentive. The issues surrounding no contest clauses are a bit more involved. It is important to understand that the clause doesn’t provide absolute protection against will challenges no matter what. I’ll explain more next week.
2025 Social Security Cost of Living Adjustment
When we get to the end of the year, it’s time to look ahead to what numbers may change in 2025 for the government programs from which our clients receive benefits. It starts with the Social Security Administration, which announces its cost of living adjustment (COLA). Other government programs then adjust their numbers, often using the same COLA as Social Security. Since inflation hit a 40 year high in 2022, the rate has dropped. After a COLA of 8.7% in 2023, the adjustment dropped to 3.2% for 2024. Inflation, has continued to decline this year and consequently so has the COLA. For 2025 Social Security payments will increase by 2.5%. This bump up will be first be seen in January, 2025 monthly payments. Medicare numbers will also change next year, although not tied to the same adjustment. Similar to last year, the standard Medicare Part B premium that most people pay will increase. While that number has not yet been finalized, it is anticipated to increase by almost 6% to $185 per month.. Certain Medicare deductibles and copays will increase next year. The Part A hospitalization deductible is expected to increase by $52 to $1684 and the copay for days 61 through 90 is expected to increase from $408 to $421 per