A Family Theft – Part 3
Last year I wrote about a family theft and its implications for Medicaid eligibility (Blog posts on 9/24/18 and 10/1/18). To summarize, we needed to apply for Medicaid for Sophie, who could no longer live at home but now needed nursing home care. She had lived with her sister Mary, who handled her finances for many years. When Mary herself needed care, brother Joe took over and discovered that Mary had helped herself to some of Sophie’s money. In order for Medicaid to treat the transfers to Mary as theft and not voluntary transfers subject to a Medicaid penalty we needed Joe to file both a criminal complaint for theft as well as a civil complaint to recover the money taken which reached in excess of $200,000. The criminal complaint went nowhere. The police took the complaint but it wasn’t a priority for them. Joe never heard from them but that was OK since the we just needed to take the first step. The civil lawsuit, however, took a surprising twist. When we filed for Medicaid, as I told Joe, the caseworker only was willing to accept our explanation with proof of the criminal and civil complaints. Because Mary moved in with
Right Way and the Wrong Way to Help Out Parents (Part 2)
In last week’s post I was explaining the wrong way for children to chip in financially to help their parents. The wrong way can cause ineligibility periods for Medicaid and VA benefits. It can also eliminate the ability of the parents to repay the children when they do sell their house. Let’s go back to my typical fact pattern from last week. Mom lives in her home which she owns free and clear with no mortgage but has little liquid assets to pay for care that will allow her to stay at home. Alternatively, she might need to move to a facility but the family does not want to sell the home, perhaps to avoid capital gains tax or because another family member also lives there. So, if the children pay for Mom’s care the right way to do it is all about documentation. Without it, the payments will either be treated as gifts to Mom or financial support of Mom. In reality, the family intends these payments to be loans which will be paid back when the home is sold. The problem, however, is that they need proof that it
The Right Way and the Wrong Way to Help Out Parents
Families look after each other. They pitch in when a member needs help. As an elder law attorney, I see this quite often. It can be an aging parent helping out an adult child in need due to financial difficulties caused by illness, job loss or divorce. It can also be an adult child providing financial assistance to an aging parent who needs care and doesn’t have the funds to pay for it. Let me give you a typical fact pattern. Mom lives in her home which she owns free and clear with no mortgage. She has very little other liquid assets and is in declining health but wants to remain in her home as long as possible. The family discusses the options. Mom could take a mortgage against her home. A traditional mortgage is not an option because she does not have enough income and/or assets to qualify. She can take a reverse mortgage but the fees associated with it are typically higher than a traditional mortgage. Instead, the children decide to advance the funds needed to care for mom at home. There is no formal agreement – nothing in writing. Only
New Jersey Passes Assisted Suicide Law – Part 1
You might have missed it but in April, Governor Phil Murphy signed a bill making New Jersey the 8th state in the country to enact an assisted suicide bill. The other states that have such bills are California, Colorado, Hawaii, Montana, Oregon, Vermont, and Washington. The law becomes effective August 1, 2019. Patients with a prognosis of six months to live or less have the option of ending their own life. The law requires a psychiatrist or psychologist to “sign off” that the patient has the mental capacity to understand and make the decision. Once made, the patient is then to be given a prescription for pills that will hasten death. The pills can be taken at home or in a facility. The vote in both legislative houses in Trenton was close and opponents of the bill raised concerns about how it will be implemented, such as whether doctors should be placed in the role of deciding the issue of capacity and the possibility of loopholes. Next week we’ll delve into some of the issues presented by the new law.
Not as Much Time as You Think (Part 3)
A few weeks back I wrote about Mary’s call to our office regarding her dad who wanted to make a change to his will. He wanted to leave his home to Mary and everything else split equally between Mary and her sister Kate (See 5/20/19 and 5/27/19 posts.) Dad, however, died before he could change his will. Kate and Mary agreed that Mary should have the house as their dad had wanted. Because the will says otherwise, Kate will need to transfer her 50% interest in the home to Mary – what would be considered a gift. The house is valued at almost $500,000 so this would be a gift of almost $250,000. I explained to Mary that New Jersey does not have a gift tax, but there is federal gift tax to consider. Gifts greater than $15,000 per person per year carry a tax, however, there is also a lifetime gift exclusion amount that is tied into the estate tax exclusion. Current federal law says that a person can pass up to $11.4 million during lifetime or at death without paying gift or estate tax. Kate could use part of her $11.4 million exclusion now to transfer her interest
The Dreaded Diagnosis – Part 2
In my blog post last week I was discussing the answer to the question “when is the right time to plan for long term care.” I also noted that we are seeing more people dealing with long term care at a younger age, often in their 50’s and 60’s – and sometimes even younger than that. A failure to address the issue of long term care can have a devastating effect on the ill person and his or her family from an emotional, psychological and financial perspective. In many ways, however, younger families face their own challenges. Unless you experience it personally with a family member, it is hard to understand. 60 Minutes did a piece on frontotemporal dementia. Part of the report profiled Mark Johnson, a 40 year old suffering from FTD. Mark has a wife and 4 children. He is no longer able to live at home and now resides in a long term care facility an hour away from his family, whom he often does not recognize. Mark was the primary financial provider for his family when the illness hit. His wife, Amy must raise young children alone