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PO Box 995
1428 Rt. 23
Wayne, NJ 07470-5826
Phone:(973) 694-0800
Fax: (973) 694-0302
Planning for the Elderly Client
Steven A. Weisberger
Williams, Caliri, Miller & Otley, P.C.
A Professional Corporation
Lawyers
1428 Route 23
P.O. Box 995
Wayne, NJ 07470-0995
Telephone: 973-694-0800
Telecopier: 973-694-0302
What Is Elder Law?
A relatively new specialty devoted to the legal issues of senior citizens, including:
- estate planning
- health care
- planning for incapacity or mental incompetence
- retirement benefits
- employment discrimination
- Medicaid
- Medicare
- guardianship
- probate
Why Has Elder Law Developed?
- Rapid increase in elderly population
- 12% of the population was over 65 in 1985
- Projected percentage to rise to 20% by the year 2050
- Senior citizen are wealthier and better educated and informed than ever before
What Are Some of the Tools Available to an Elder Law Attorney?
- Will
- Living Will
- Revocable Living Trust
- Power of Attorney
- Trusts
What is a Will?
- Written instrument containing directions for how the property of the person making the will (the “Testator”) shall pass on his or her death
- Must be executed in accordance with the laws of the state where the testator resides
- State laws generally require that a will be signed at the end by the testator and by at least two witnesses
- Testator must be competent (not insane, senile or mentally disabled)
- Testator must not be acting under duress under the influence of another person
Who Should Have a Will?
- Most adults should have a will. In the absence of a will, assets will pass in accordance with state statute, which may not be consistent with the person’s wishes
What is an Executor?
- An executor is the person designated by the testator to administer the probate estate
- When the will is probated, the executor will be given the authority to act as the testator’s legal representative in administering the estate
- Executors duties include collecting the decedent’s probate assets, paying valid debts (including any estate taxes), investing estate funds and ultimately distributing them to the beneficiaries in accordance with the terms of the will
- Can have co-executors
- Entitled to a commission as set by state statute, or as provided in the will
What Assets Will Pass Under My Will?
What Assets Will Not Pass Under My Will?
- Probate assets, are assets that pass under a will. Generally assets that are in your sole name
- Non probate assets will not pass under your will
- Non probate assets include jointly owned assets with rights of survivorship, life nsurance, IRA, pension, 401(k)
- Non probate assets pass either by survivorship or by beneficiary designation
What Happens If I Die Without a Will?
- If you die without a will, your probate assets will be distributed in accordance with a state statute –intestacy laws
- As a general rule, your spouse and children will receive your property
Estate Taxes
- Tax based on the privilege of leaving property to others following death
- Based on fair market value of assets
- Tax due 9 months following death
- Unlimited marital deduction
Applicable Credit Amount
| 2003 |
-$1,000,000 |
| 2004 & 2005 |
-$1,500,000 |
| 2006, 2007 & 2008 |
-$2,000,000 |
| 2009 |
-$3,500,000 |
| 2010 |
REPEAL |
| 2011 |
-$1,000,000 |
Living Will
- Appoint a health care representative to make medical decisions on your behalf in the event that you are not capable of making your own medical decisions
- Give instructions regarding heroic medical treatment in the event of a terminal or permanently unconscious condition
Durable Power of Attorney
- Appoint an attorney-in-fact to handle your financial issues in the event that you are not capable of managing your own affairs
Planning for Nursing Home Costs
- Statistics show that 43% of the population age 65 will spend time in a nursing home
- Population is aging
- Cost of health care is increasing
- Government programs are being cut back
- Median cost of nursing home in New Jersey is over $72,000
Sources of Payment
- Private Pay
- Nursing home insurance
- Medicare
- Medicaid
- Veterans Administration
Medicaid
- Administered by state and funded by both Federal and state governments
- In NJ administered by County Welfare Boards
- Must be a US citizen and resident of NJ
- Must 65 years of age or older, unless blind or disabled
- Must be eligible from a medical standpoint
Qualification for Medicaid
- NJ has two Medicaid programs, if patient’s monthly income is $1,635 or more, then Medically Needy Medicaid program, if monthly income is under $1,635, then Medicaid only
- Resources (assets) cannot exceed $2,000 under Medicaid Only, or $4,000 under Medically Needy
Excluded Resources
- Principal home is excluded if occupied by the institutionalized person, the community spouse, a sibling with an equity interest in the home who has resided there for at least one year prior to institutionalization, or by an unmarried child under 21, or a blind or disabled child; or by a child who has resided in the home of the parent for at least two years and provided a level of care sufficient to keep the parent out of a nursing home for two years
- Automobile
- Personal effects and household goods
- Wedding ring and engagement ring
- Medical equipment
- Burial fund
- Term life insurance
- Whole life insurance with a maximum face value of $1,500
Pooling of Resources
- Resources owned individually by the institutionalized spouse and the community spouse are pooled together to determine Medicaid eligibility
Look Back Rule
- There is a 36 month look-back rule for transfers to individuals and a 60 month look-back rule for transfers to trusts
- Transfers made during the look-back period result in a period of ineligibility for Medicaid
- Penalty rate is currently $5,540. Transfer of $100,000 during look-back period results in a period of ineligibility of 18 months
- Transfers made beyond the look-back period do not result in a penalty period
Exempt Transfers
- Certain transfers do not result in a penalty period:
- Transfer to the community spouse
- Transfer to a blind or disabled child
- Transfer of a principal residence to:
- Community spouse
- Child under 21, blind or disabled
- Child who is residing in the house for at least two years, and who provided care for the parent, allowing the parent to live at home
- Sibling who also has an ownership in the house, and who is residing in the house for at least a year
Community Spouse Resource Allowance
- Provides community spouse with a minimum amount of resources without affecting the institutionalized spouse’s eligibility for Medicaid
- The greater of $18,132 or one-half of the couples non-exempt resources not to exceed $90,660
- If the couple’s non-exempt assets are $300,000, CSRA is $90,660. Excess assets have to be spent down
- If the couple’s non-exempt resources is $100,000, CSRA is $50,000
Planning for Spend Down
- Transfer resources more than 36 months prior to applying for Medicaid
- Consider long term care insurance with a 3 year benefit period
- Transfer home to permitted transferees
- Payoff mortgage
- Home improvements and repairs
- Prepay funeral
- Buy car
Planning for Spend Down
- Transfers assets, retaining sufficient assets to private pay for care during resulting penalty period, so that following penalty period resulting from transfer, client qualifies for Medicaid
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