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Social Security and Social Media (Disability)

Posted on: March 11th, 2019 by Mark R. Friedman

The New York Times reported on social media and disability that the Trump administration is looking into using social media to root out people who are receiving disability payments but shouldn’t be receiving them.

The idea is that if a person is receiving disability benefits for a back injury that the person claims is completely debilitating, but the person posts Facebook or Instagram pictures of a physically intense activity like golfing or skiing, the Social Security Administration can investigate further and deny that person benefits going forward.

President Trump has claimed that the program is rife with people abusing the system, and this is a cheap way to root out fraud, and bring down the costs of disability benefit programs without negatively impacting people who are legitimately receiving benefits.

From my perspective, I’ve helped a lot of clients with disability benefits over the years.  I’ve never seen someone receive benefits who wasn’t clearly and truly disabled.  To the contrary – I’ve heard of a lot of people being denied for disability benefits who I thought should qualify.  In this area (the Northeast), at least in my experience, it’s more difficult than it is easy to qualify for benefits.  People who are clearly disabled (e.g., someone born with severe developmental disabilities) tend to be approved quickly.  But people who are at all questionable or borderline (often people with mental health issues where it isn’t immediately obvious why the person cannot work, or people who develop a disability later after working for many years) often face an uphill battle obtaining disability benefits.

We’ll see what happens.  We certainly don’t support people fraudulently obtaining benefits, but I’m also concerned that overzealous investigators may misconstrue innocent social media posts and use them as a basis to deny benefits.

So if you receive disability benefits, be careful what you post on social media.

Mark R. Friedman named to Rising Stars

Posted on: February 28th, 2019 by Mark R. Friedman

FriedmanLaw attorney Mark R. Friedman was selected to the New Jersey Super Lawyers Rising Stars list for 2019.

Or rather, I was selected to the list.

It was gratifying.  I’ve put together a lot of educational events recently for both the public, and other attorneys.  I’ve been particularly pleased with Senior Citizens Law Day, a program I organize with the New Jersey Bar Foundation that provides legal information to seniors – both the elder law and estate planning work I do, and other topics of interest like scams and frauds that target seniors.  Last year we had the Middlesex County Prosecutor’s Office speak on that, and this year we anticipate having the New Jersey Attorney General’s Office speak.

I’ve also served on the Executive Committee of the New Jersey State Bar Association’s Elder and Disability Law section for the past few years, advising the Section on legislation that affects seniors and people with disabilities, and organizing meetings and programs.

I think that these educational programs, and my work with the Bar, is a big part of why I was selected.

It’s nice to be recognized, and it’s a real honor to be picked alongside the other attorneys on the list.  Many of the colleagues who I respect and admire most were named as Rising Stars in the past or as Super Lawyers now.

One of them, my colleague at the firm (and father), Larry Friedman, has been named to the Super Lawyers list every year since 2006.  This year was no exception, and he was chosen for 2019.

Larry and I both really enjoy serving our clients and helping with elder law, Medicaid, long term care, nursing home, asset protection, wills, trusts, tax and estate planning, disabilities, guardianship, and other legal issues.  If you have concerns involving one of these areas, please call or email us today.

2019 NJ Medicaid income limits

Posted on: February 6th, 2019 by Mark R. Friedman

New Jersey’s Department of Human Services, Division of Medical Assistance and Health Services (DMAHS), the state agency that administers Medicaid, released 2019 NJ Medicaid income eligibility standards today.

The new standards raise the income limits for a variety of Medicaid programs.  Managed Long Term Services and Supports (MLTSS) is the program that can pay for long term care, whether with home health aides, or in a nursing home or assisted living facility.  The MLTSS income “cap” was raised to $2,313.  People with gross monthly income over this figure may still qualify for Medicaid using a Qualified Income Trust (QIT).

In addition, the limits for other aspects of MLTSS were revised as well.  If one spouse needs long term care but the other does not, the healthy spouse is allowed to keep part of the couple’s assets, within certain limits.  The amount the healthy spouse can keep is called a Community Spousal Resource Allowance, or CSRA, by many elder law attorneys.

The CSRA is calculated using a complicated formula, and you should contact FriedmanLaw to find out more information about your specific situation.  That said, New Jersey has a minimum and maximum figure for the CSRA.  In 2019, the minimum is $25,284.00, and the maximum is $126,420.00.  This is a significant increase, and should be welcomed by Medicaid applicants.

Finally, when one spouse needs long term care but the other does not, the healthy spouse may be able to keep part of the ill spouse’s income.  This also is subject to a complex formula, and the numbers that govern that formula were revised upward with the other 2019 changes, in line with the rising cost of living.

If you or a loved one is interested in Medicaid, long term care, asset protection planning or other elder care law needs, please call or email FriedmanLaw today.

New SSI POMS on Sole Benefit Rule for SNT’s

Posted on: October 3rd, 2018 by Mark R. Friedman

A few months ago, the Social Security Administration released new POMS on the sole benefit rule for first-party special needs trusts.

A first-party special needs trust (SNT) is an SNT established to hold the property of the beneficiary – the disabled person.  Often this is funded as part of a lawsuit, using funds that a disabled person won or received in settlement of a personal injury lawsuit.

In order for the beneficiary (the disabled person) of the SNT to qualify for SSI, Medicaid and other benefits, distributions (payments) from the SNT must be for the sole benefit of the beneficiary.  This is called the sole benefit rule.

For some things, this is clear.  If the trust pays for a doctor visit for the beneficiary, it’s clearly for the beneficiary’s sole benefit.

But what if the trust purchases a house for the beneficiary?  If the beneficiary is a young child, odds are good that her parents are taking care of her, and her parents are going to live with her in the house.  Perhaps her siblings would live there too.  If the trust buys a house for the beneficiary, but she has other family members living there, was the house purchase really for the beneficiary’s sole benefit?

What if the beneficiary likes watching TV?  The trust might buy a television for the living room of the house, and the beneficiary will watch it there.  But other family members will probably watch it too.  Is the purchase then really for the beneficiary’s sole benefit?

Previously this wasn’t clear, and some trustees had significant problems as a result.  However, the new POMS provide some guidance:

“The key to evaluating this provision is that, when the trust makes a payment to a third party for goods or services, the goods or services must be for the primary benefit of the trust beneficiary. You should not read this so strictly as to prevent any collateral benefit to anyone else. For example, if the trust buys a house for the beneficiary to live in, that does not mean that no one else can live there, or if the trust purchases a television, that no one else can watch it. On the other hand, it would violate the sole benefit rule if the trust purchased a car for the beneficiary’s grandson to take her to her doctor’s appointments twice a month, but he was also driving it to work every day.”

So distributions must be for the primary benefit of the beneficiary, but may allow incidental benefits to third parties.  I think the key here is whether that incidental benefit is is reasonable, as the examples illustrate.

The POMS also provide guidance of travel expenses, credit cards, and other important issues, which we’ll try to cover in forthcoming blog posts.  In the meantime, if you have any questions about special needs trusts, call (908-704-1900) or email FriedmanLaw today.

NJ Medicaid Changes Penalty Divisor

Posted on: August 27th, 2018 by Mark R. Friedman

New Jersey Medicaid recently changed the way it calculates penalties for gifts.

New Jersey residents can qualify for New Jersey Medicaid, a government program that can pay for long term care in a nursing home, assisted living facility, or with home health aides. However, when you apply for long term care Medicaid, the Medicaid agency reviews your finances for the past five years, and looks to see if you’ve made any gifts.

If you have made gifts, Medicaid imposes a penalty based on the value of the gift. The penalty is a length of time (the penalty period) during which Medicaid will not pay for your long term care. During that time, you have to pay for your own care. However, the penalty period doesn’t start running until you’re eligible for Medicaid – until your resources are spent down below $2,000 and you’ve met Medicaid’s other requirements. In other words, during the penalty period people typically will have no money to pay for their long term care. So it’s a problem.

Medicaid calculates the penalty period based on a formula. Under the old penalty divisor formula from recent years, applicants lost roughly one month of Medicaid for every $13,000 in gifts. So if an applicant made a gift of approximately $100,000, the applicant would get a penalty period of roughly eight months.

Medicaid recently changed that formula, to the detriment of applicants who’ve made gifts. Under the new penalty divisor formula, applicants lose one month of Medicaid for roughly every $10,000 in gifts. So that same $100,000 gift would now result in a penalty period closer to ten months.

Some elder law attorneys are making efforts to get this change reversed, but it’s not clear whether those efforts will yield results.

All the same, if you need Medicaid to pay for long term care, or you have questions about gifts and Medicaid, FriedmanLaw is available to help. Call or email us today.

NJ Medicaid to issue new Regulations on Trusts

Posted on: July 9th, 2018 by Mark R. Friedman

New Jersey’s Department of Human Services, Division of Medical Assistance and Health Services (DMAHS), recently posted notice that it will issue new regulations on how Medicaid laws and rules apply to trusts, including special needs trusts and qualified income trusts.

Why does this matter to you?

Well, if you have a loved one with disabilities or a loved one who may need long term care in the future, or receives long term care now, odds are good that you’ll eventually be seeking Medicaid.  You might already be on Medicaid.

There’s also a chance that you’ll be using a trust to do so.  In New Jersey, people with high incomes (currently over $2,250 per month gross) have to use a Qualified Income Trust (aka Miller Trust) in order to qualify for long term care Medicaid.

And if a person with disabilities inherits money from family or receives proceeds from a lawsuit or other significant funds, often it makes sense for those funds to be held in trust with a special needs trust.

These new regulations are going to create new rules for how qualified income trusts (QIT’s) and special needs trusts (SNT’s) are treated.  If you are seeking Medicaid, or you’re on Medicaid, it’s important to understand how these new rules affect eligibility.  Or better yet, to work with a lawyer who understands that.

The regulations have yet to be issued, but you can bet that FriedmanLaw will be following this matter.  In addition, I (Mark Friedman) serve as roundtable coordinator for the New Jersey State Bar Association’s Elder and Disability Law Section, and we’ll likely be doing a program on the new regulations in February 2019.  For other attorneys who are members of the NJSBA, it would be very helpful to attend that program.

NJ Medicaid Planning and your Power of Attorney

Posted on: May 18th, 2018 by Mark R. Friedman

If you think you may need long term care in the future, and are interested in doing asset protection planning or Medicaid planning to protect your assets for your spouse or children, one of the best things you can do now is make sure you have a well-drafted power of attorney document.

That’s because Medicaid planning often involves making gifts. In order for Medicaid to pay for long term care (in a nursing home or other setting), applicants must spend down their assets below $2,000. Medicaid planning seeks to spend those assets in a way that provides benefit or value to family members, instead of spending everything on nursing home bills or other long term care. That often involves making gifts in a structured, planned way, working with New Jersey elder law attorneys like FriedmanLaw to do planned Medicaid gifts.

However, people who need long term care often lack capacity to manage their affairs, due to conditions that affect mental capacity such as dementia, Alzheimer’s disease or severe stroke. If you can’t make gifts yourself, it limits your ability to do Medicaid planning.

With a power of attorney, you can appoint someone you trust to manage your financial affairs. That person is called your attorney-in-fact. You can give your attorney-in-fact broad powers over your finances – buying and selling property, paying for things, moving money between accounts, signing contracts and starting or ending lawsuits, etc. However, your attorney-in-fact cannot make gifts of your assets unless you explicitly authorize him or her to do so. (That is because of a law, N.J.S.A. 46:2B-8.13A, which Larry Friedman helped draft.) A blanket grant of authority is not enough.

Often, power of attorney documents that are not prepared by attorneys familiar with elder law do not include this gift provision, and if you don’t have a power of attorney with the right language, your family will have to apply to court for guardianship to get this authority, which may or may not be granted.

So if you may need long term care in the future, and you may want to do Medicaid planning to protect assets, it’s worth talking with an elder law attorney to make sure you have the right power of attorney. FriedmanLaw is available to help, call or email us today.

NJ Medicaid and Qualified Income Trusts

Posted on: May 10th, 2018 by Mark R. Friedman

Lately we’ve been hearing a lot from people with questions about Qualified Income Trusts (QIT’s) – aka Miller Trusts.

We have a whole page on our website devoted to QIT’s, with lots of information. But all the same, I’m going to take this opportunity to give anyone who’s reading this some basic information about how QIT’s work.

In New Jersey, if you want Medicaid to pay for your long term care, you have to have income within the income limit. In 2018, that limit is $2,250. And what counts is your gross income – your income before deductions, such as Medicare premium or tax withholdings.

If your income is above that figure, you may need a Qualified Income Trust (QIT), aka Miller Trust, to get New Jersey Medicaid to pay for a nursing home, assisted living facility, home health aide or other long term care.

An NJ elder law / elder care attorney like FriedmanLaw can help you set up a QIT. Once it’s established, the QIT is managed by a trustee – usually a family member (especially spouse or child) of the person who needs long term care. The person who needs long term care is the beneficiary.

The trustee opens a bank account in the name of the QIT (i.e., owned by the QIT, not by the trustee or by the beneficiary). The beneficiary’s income is deposited into the QIT each month, and paid out according to QIT rules. The income must be paid out in a certain order, depending on the situation. An example of that order might be first for the beneficiary’s personal needs allowance, then to the beneficiary’s spouse for spousal maintenance, then for the beneficiary’s health insurance premium, then to the nursing home for the beneficiary’s cost share.

If the QIT is set up and administered correctly, then the income that gets paid into the QIT every month should not count towards that Medicaid income limit, and the beneficiary can get Medicaid despite high income (provided, of course, that the beneficiary meets Medicaid’s other requirements).

If you think you may need a QIT, it’s worth talking to an elder law attorney. You may not know whether or not you need one, Medicaid staff may not tell you, and you may set it up wrong if you try to do it yourself. In all these situations, if Medicaid is denied as a result, you could end up with a big nursing home bill and no way to pay it.

If you have more questions about a qualified income trust, call (908-704-1900) or email FriedmanLaw today.

New Jersey and Estate Tax – Will They or Won’t They?

Posted on: April 30th, 2018 by Mark R. Friedman

For a while now, New Jersey estate planners have been playing a guessing game.

Guessing whether New Jersey will bring back the estate tax.

The estate tax is a tax that your estate pays when you pass away. In the past, anyone who died in New Jersey and left behind an estate valued at more than $675,000 had to pay the estate tax (with some work-arounds like leaving property to a spouse or charity).

From the State’s perspective, the estate tax was good, because it brought in much-needed revenue to pay for schools, roads, police, etc. And back when New Jersey’s estate tax was created, this sort of tax was common among states.

But in the years since then, many other states raised their thresholds significantly, or eliminated estate tax altogether. New York’s estate tax threshold was $1 million, which was then raised to over $5 million. Many of New Jersey’s other neighbors have no estate tax. And many older New Jerseyans are moving to states like Florida that have lower taxes in general.

When residents leave New Jersey for lower tax states, the State loses revenue. So it’s a balance – taxes generate revenue, but if they drive residents away, the State ultimately loses revenue.

I think the tipping point may have come a few years ago when David Tepper, a wealthy hedge fund manager, moved from New Jersey to Florida.  Mr. Tepper was New Jersey’s wealthiest resident, and he reportedly owned property in both New Jersey and Florida, so he simply changed his residency to Florida.  Reportedly when he did so, New Jersey lost hundreds of millions of dollars in lost taxes.

In 2016, New Jersey passed a tax reform bill that changed the gas tax, sales tax, and estate tax. The gas tax was increased, sales tax decreased, and estate tax decreased and eventually eliminated.

In 2017, the estate tax threshold in New Jersey was raised from $675,000 to $2 million. And in 2018, the New Jersey estate tax was eliminated.

As of this writing, if you die a resident of New Jersey, you don’t have to pay New Jersey estate tax, no matter the value of your estate.

That said, the estate tax reform was enacted under our previous governor, Chris Christie. We have a new governor now, Phil Murphy, who has proposed increased funding for a number of measures, particularly schools.

This comes on top of a state budget that is already strained, with increasing pension obligations that pose fiscal peril.

In short, the state needs more revenue. So some professionals who work in this area think that the estate tax will come back in the near to mid future. Governor Murphy has said he intends to leave the estate tax eliminated, but if we face a true budget crisis, who can predict what will happen.

For our part, we try to do estate planning both for now, and for the future. If we think a client may have a valuable estate in the future, we sometimes recommend including provisions in the will that could save New Jersey estate tax, if it comes back. One example is a credit shelter trust, which allows a married couple to take advantage of both spouses’ estate tax exemptions when passing assets to their children.

When we write wills, we try to give our clients options that don’t have any negative effects, but can decrease their taxes in the future if New Jersey does bring back the estate tax.

If you would like to find out more about creating a will, please call or email FriedmanLaw.

Special Needs Trusts and Retirement Accounts

Posted on: April 23rd, 2018 by Mark R. Friedman

A special needs trust is important if you have a child or grandchild, or another person in your life, with disabilities who you want to leave property to when you pass away.

A lot of people with disabilities receive disability benefits, which are often valuable and important. Some of these disability benefits programs are means-tested, which means that you must have limited assets and income (means) in order to be eligible for these programs.

SSI and a number of Medicaid programs have asset limits of $2,000. That means a person with disabilities must maintain assets under that figure to remain eligible for these benefits.

So if you leave property to your child with disabilities, you may be disqualifying her from disability benefits on which she relies.

Instead, those assets can be left to a special needs trust, a legal instrument in which the money is held and managed by someone other than your child (the trustee). The trustee controls the money, but can only spend it for the benefit of your child (the beneficiary). If the trust is created and administered correctly, the property can be used to benefit your child while your child remains eligible for disability benefits.

That said, a special needs trust only works if the property you want to leave to your child goes to the trust instead. For much of your property, this can be accomplished with your will. But as we wrote last week, some of your property may pass outside your will by law – life insurance with a designated beneficiary, houses owned by joint tenants with a right of survivorship, bank accounts with a payable on death beneficiary.

One type of property that often passes by law is retirement accounts. If you designate a joint beneficiary, the account will typically pass outside your will to that beneficiary. And because of favorable tax treatment, there is usually good reason to designate a beneficiary on your retirement accounts.

That designated beneficiary can be the trustees of your child’s special needs trust.

The beneficiary designations have to be completed in a particular way in order to achieve this. FriedmanLaw can work with the custodian of your retirement account (Vanguard, Fidelity, etc.) to set up beneficiary designations leaving the account to the special needs trust.

If you’re interested in learning more, please call or email FriedmanLaw today.

Does my will cover my retirement accounts?

Posted on: April 20th, 2018 by Mark R. Friedman

Everyone should have a will.

It’s the most basic component of an estate plan. In it, you set forth your directions on how your property should be distributed after you die, who should manage your affairs, who should take care of your children, etc.

However, in some cases your will does not cover all of your property. Certain property will pass outside your will. The legal system calls this property “non-probate assets,” because it passes outside probate by law. In other words, the legal directions regarding this property take precedence over the directions you set forth in your will.

Examples of non-probate assets include joint property with a right of survivorship. If a married couple buys a house together, and the husband dies, the house usually passes by law to the wife. Another example is a bank account with a payable on death (POD) beneficiary. If you have a bank account and you designate your brother as POD beneficiary, but your will says that everything goes to your child, then usually when you die the bank account will still go to your brother. Likewise for a life insurance policy, if you have a designated beneficiary on that policy.

One type of asset where this becomes especially important is tax-advantaged retirement accounts, like an individual retirement account (IRA), Roth IRA, 401(k) account, etc. These accounts get favorable tax treatment. That tax treatment of retirement accounts is described in detail elsewhere, but essentially, these accounts typically let you defer paying taxes until later, allowing your investments to grow with money that would have gone to taxes. Or they allow you to pay taxes now, and avoid paying taxes later on your investment gains.

The bottom line of this favorable tax treatment is that it’s usually more profitable to keep your money in these accounts longer, and delay taking withdrawals for as long as possible.

If you pass away, and you still have money in these retirement accounts, for some accounts you have to distribute the entire remaining balance of the accounts within five years. Unless you have a designated beneficiary on the account. If so, and if the account is set up right, it can be transferred to that beneficiary, and be distributed over that beneficiary’s lifetime. That means it may be able to distribute the account over forty years, instead of five. That could result in enormous gains – depending on how the numbers play out, tens of thousands, hundreds of thousands, or even millions of dollars.

So there are compelling reasons to have a designated beneficiary on your retirement accounts. That said, doing so means the account will go to the beneficiary, and not pass under your will. Your will can include safety measures like trusts, in case the beneficiary shouldn’t receive the money – for example, if they’re too young to wisely manage it, or they are irresponsible with money, or they have a drug problem and shouldn’t have access to a large amount of money, or they receive government benefits that they would lose if they receive a large sum of money.

Leaving the property directly to a beneficiary circumvents the trusts that would protect the beneficiary in these scenarios.

It’s possible to instead leave retirement accounts to a trust, and still get favorable tax treatment, but the trust has to be set up properly.

The bottom line is that retirement account designations, as well as a will and other non-probate assets, are part of a hollistic estate plan. If you want to get started crafting yours, or it’s time to review your estate plan, FriedmanLaw is available to help. Call or email us today.

Will NJ Medicaid pay for my care at home?

Posted on: April 16th, 2018 by Mark R. Friedman

We get asked this question a lot. And the answer is maybe.

New Jersey Medicaid can pay for home health aides to come to your home and provide care to you. However, there are two caveats to that.

First, you may not get as many hours of home health care as you think you need. New Jersey has privatized its Medicaid program to some degree – instead of the state paying providers directly, the state makes payments to managed care organizations (MCO’s), which are health insurance companies like United Healthcare and Horizon NJ Health.

If you qualify for Medicaid and seek aides at home, the MCO will send out staff to evaluate your needs. It will award you a number of hours based on that assessment.

Here’s the thing. These are private insurance companies, and they are seeking a profit. They get a fixed payment from the state for each Medicaid beneficiary. So they make more money when they pay for fewer aide hours, and they lose money when they pay for more hours. The MCO has a natural incentive to award you as few hours as possible.

Typically, we see people get between twenty and fifty hours per week, with maybe thirty or forty being typical. That works out to around four to six hours per day, seven days a week. Or maybe seven or eight hours a day, five days a week. If that’s enough to meet your needs, then you may be a good candidate for home care with Medicaid.

To get it, you’ll have to qualify for Medicaid’s long term care (LTC) program. The LTC program has strict eligibility requirements. You must have less than $2,000 in assets. In addition, you’re required to submit five years’ worth of records for all financial accounts, and Medicaid staff will review those records to see if any gifts have been made. Any gifts that were made affect eligibility. Likewise, Medicaid will look to see if there are any hidden accounts. You also must meed medical eligibility requirements for the LTC program, and various other requirements.

There are a lot of moving parts to obtaining Medicaid. You may have to spend down your assets to get below $2,000, and you may want to do that in a way that’s least unfavorable to your spouse and children.

If you’re interested in having long term care Medicaid pay for home health aides, you may have questions regarding the Medicaid spend-down, and you may need help applying for Medicaid. FriedmanLaw is available for these issues. Call or email us today.

How Tax Reform hurts People on Medicaid

Posted on: November 21st, 2017 by Mark R. Friedman

Not to get political here, but…

I’ve been following President Trump and Republicans’ proposed tax reform with interest.  If you’re also interested, you can read all about it elsewhere, including  how it affects the estate tax, state and local tax deductions for people in high-tax states like New Jersey, etc.  But there’s one provision that should be of particular concern to our clients – the medical expenses deduction.

The tax reform bill eliminates the deduction for medical expenses.  That’s a big deal for people in nursing homes, especially people in nursing homes on Medicaid with relatively high incomes.

That is because once you go on Medicaid, your income must be spent according to Medicaid rules.  When you apply for Medicaid, the agency gives you a breakdown at the end that shows how you have to spend your income each month.  For people without a spouse, usually all of your income must go to pay the nursing home or assisted living facility, with perhaps a small amount allowed to pay for health insurance.

There is no allowance to pay for taxes.

Usually that’s not an issue, because Medicaid beneficiaries typically have low income.  And if their income is not low, usually their medical expenses (which are almost all of their income) are high enough that the medical expense deduction is high enough to result in no tax.

But if the medical expense deduction goes away, people in nursing homes with high incomes may end up owing tax.  In that case, they would be in a very difficult situation.  They would owe money to the IRS, but also owe money to the nursing home.  They would have to decide whether to follow tax law, or Medicaid rules.  Either way, they could end up with obligations that they cannot pay.

I hope that lawmakers will take this into account as tax reform progresses.

Are you Worth the Money?

Posted on: August 30th, 2017 by Mark R. Friedman

Why should you pay a lawyer to do something that you could do yourself for free?

I get asked that question from time to time. And my answer is, you shouldn’t. I certainly wouldn’t. However, there may be good reasons you haven’t considered why you can’t really do it yourself.

Some things are worth paying for, and people regularly find that out the hard way. I had a genius friend who wanted a “floating television” – a TV mounted on the wall, with the power cable hidden in the wall (i.e., running through the wall). An electrician quoted him a fee he considered too high, so he decided to run the cable through the wall himself. He was a pretty handy guy, and it was just a matter of drilling some holes. Right?

Wrong. His amateur electrical work started a fire, and also voided his insurance coverage, so he had to pay for the damage himself.

I know a little about cars and do some basic maintenance myself. But for serious problems, I take my car to a mechanic, because I don’t want to find out that I fixed my brakes wrong when I’m going 70mph on the highway and my car won’t stop.

In the same way, people who write their own wills or trusts, or do their own Medicaid planning, may be setting themselves up for problems down the road. The classic example is someone who reads about Medicaid on the internet and then deeds their house away to their kids to protect against future nursing home costs. Three years later they go into a nursing home and apply for Medicaid, only to find out that there’s now a three-year gift penalty because of the house.

Likewise, if you write your will yourself or download it off the internet, it may not do what you think it does. And no one may realize that until it’s too late to change it – because you’ve already passed away or lost capacity. Your DIY will might result in thousands in taxes that could have been avoided, or in your property being distributed in a way you wouldn’t want, or to someone who can’t manage it responsibly.

That’s not to say you can never do certain things yourself. For a truly simple and straightforward will, you may be okay with something you got online, and for a simple and straightforward Medicaid application you may be okay doing it yourself. However, in our experience, “simple and straightforward” is rare – there usually is some kind of complicating factor in each situation, and you probably won’t recognize it without seeing an experienced lawyer.

Making sure your affairs can be taken care of if you become incapacitated, taking care of your loved ones after you die, making sure you are able to pay for long term care and don’t leave your family impoverished or riddled with debt – these are all important concerns, and in my view, it’s worth paying to get done right. To me, the right question isn’t whether a lawyer is worth the money. It’s whether your family and your peace of mind are worth the money.

Is Medicaid Planning Ethical?

Posted on: July 28th, 2017 by Mark R. Friedman

The New York Times recently published a thought-provoking article by Ron Lieber on the ethics of Medicaid planning. The article posed the question of whether it’s ethical to engage in Medicaid planning, to preserve assets for other family members while qualifying for Medicaid to pay for long term care.

As NJ elder care attorneys, Medicaid and long term care planning are a large part of our practice here at FriedmanLaw. I have helped dozens of clients save tens or hundreds of thousands of dollars against long term care costs. Larry has helped hundreds, perhaps thousands of clients with Medicaid planning over the years.

So we know a thing or two about it.

Sometimes friends or colleagues ask me in a social setting whether I’m comfortable with the ethics of Medicaid planning or whether I think it’s good for society to help people avoid paying long term care costs and instead shift the cost to the government. My response is that every technique we use is perfectly legal, and indeed provided for in Medicaid laws. But it can’t be denied that long term care Medicaid costs society a lot of money and increases the state and federal budget deficit.

That said… I’ve never had a client question me on the ethics of Medicaid planning. It’s fine to question the practices of others, or the practices of society. But when it comes to your own money, even the staunchest fiscal hawks tend to suddenly recognize the ethical rightness of Medicaid planning.

Long term care is incredibly expensive. In our area of central and northern New Jersey, nursing homes typically cost more than $120,000 per year. Faced with those kinds of overwhelming costs, it’s easy to see why people want to engage in Medicaid planning – because all of their money will be wiped out afterwards. When it’s your spouse who might be left impoverished, or you face the prospect of losing an inheritance you were counting on to pay for your children’s education, I find that for most people, ethical concerns about society and the deficit usually evaporate.

That’s not to say that the cost of long term care isn’t an important issue. It is. As our population ages, funding long term care for everyone who needs it is going to become a larger and larger share of our federal and state budgets. If we still want to fund education, infrastructure, law enforcement, the environment, the military, etc. (which we should), then we need to come up with better and more efficient ways to provide custodial care to seniors and people with disabilities.

I always keep my ears open for “creative” proposals, and one of the most interesting I’ve heard is robot caretakers. It may sound far-fetched, but robots are being developed now to do things like administer medication, assist with mobility, and provide supervision and even companionship. If we could have five robot caretakers, remotely controlled by one human monitoring each one on a staggered schedule (say, one for five minutes, then the next, etc.), we could multiple the effectiveness of each caretaker. That would allow more people to stay in their homes longer, saving money and leading to happier and healthier citizens.

In the meantime, if you or a loved one may need long term care and you’re interested in preserving assets for other family members, please call FriedmanLaw at 908-704-1900.

No, you Shouldn’t Put your House in your Kids’ Name to Protect against Nursing home costs

Posted on: June 23rd, 2017 by Mark R. Friedman

As New Jersey elder care lawyers, we often meet with families that include a loved one who needs long term care, such as in a nursing home. Nursing home are is incredibly expensive, typically ranging between $6,000 per month in lower-cost parts of the country, to as much as $15,000 per month in northern New Jersey where we are.

Usually, families we see want to protect their assets against those enormous long term care costs. They want to preserve their life savings for their spouse, so she won’t end up impoverished, or for their kids, to pay for their grandkids’ education or the like, instead of spending their life savings on nursing home costs.

The best way to preserve assets is to qualify for Medicaid, a government program that pays for nursing home care. Often, if you meet with an elder law attorney, the attorney can come up with a custom plan to preserve your family’s assets while you qualify for Medicaid, and save those assets within your family rather than losing them all to long term care costs.

However, there is unfortunately a lot of misinformation floating around on this subject. Sometimes we see people who have taken steps before we met with them, that have set them back in terms of asset protection and qualifying for Medicaid. One of the most common is people who have made large gifts without considering the consequences.

For example, some people read on the internet that they should just put their house in their kids’ name, and it will be protected against nursing home costs. However, there are a lot of reasons why that is often a very bad idea.

First, by putting your house in your kids’ name, you no longer own your house. Your kids own it, and they can do whatever they want with it. They can kick you out, sell it and pocket the money. Even if you trust your kids to never do that, they may not have a choice. If your child goes through a nasty divorce, the house could be awarded to their ex-spouse, or the court might order the house sold to raise funds for the divorce. If your child gets into a car accident, a plaintiff could sue your child and a court might order the seizure of your former house, which your child now owns. There are risks to having someone else own your home.

Second, Medicaid penalizes gifts. If you make gifts within five years before you apply for Medicaid, you have to disclose those gifts to the Medicaid agency during the application process. The agency also reviews your financial records (which you must submit) to verify whether gifts were made. If you have made gifts within the five years before you apply, Medicaid imposes a “penalty period” – a period of time during which Medicaid will not pay for your nursing home. Currently in New Jersey, you lose roughly one month of Medicaid for every $12,000 you give away. (The numbers differ in other states.) So if you give away a house worth $280,000, you would lose Medicaid for two years.

The kicker is, this penalty period doesn’t begin until you are otherwise eligible for Medicaid. That involves spending your assets down to under $2,000 (with some nuances that I can’t cover here). So imagine someone gives away her house, and then two years later needs nursing home care. She spends down her funds to below $2,000, then applies for Medicaid. The Medicaid agency tells her that because she gave away her house, Medicaid will not pay for her care for another two years. She has a quickly rising nursing home bill (thousands of dollars per month), and no way to pay it, with no money and no Medicaid. In this scenario, depending on state rules, likely no nursing home would take her, and if she’s already in a nursing home, the home might try to remove her, or come after other family members for unpaid bills.

There are a lot of potential pitfalls to trying to do Medicaid planning yourself without advice from counsel. In some cases, gifts make sense, but they should only be made with guidance from an experienced elder law attorney. Trying to do it yourself is the legal / financial equivalent to trying to do heart surgery on yourself. Which we recommend against.

Five Reasons why Estate Planning is Important

Posted on: June 1st, 2017 by Mark R. Friedman

This is another in a series of guest articles we’ll be posting from attorney colleagues across the country on issues relevant to our readers.  Enjoy!

Because we never know what the future holds, it’s important to plan your estate now rather than put it off until later when it might actually be too late. Let’s take a quick look at the specific reasons why being proactive when it comes to your estate is important:

1. Preparation in case disaster happens
– Estate planning provides you with the opportunity to appoint one or more people to make medical decisions on your behalf if you lose the ability to do that on your own.
– You can specify what, if any, extraordinary measures healthcare providers should take in the event you are incapacitated.
– Designate who will pay your bills during the time you are recovering from a medical issue or emergency.

2. Complete picture of finances
– As part of estate planning, you will inventory your debts and assets.
– You will designate who will inherit your assets and how you want them distributed. This is also true for sentimental items that have little financial value.
– As your review your important documents and other paperwork, you may find that updating some of them is necessary and would have otherwise been overlooked. This includes designating beneficiaries.

3. Reduce the stress of your family members in advance of your passing.
– When estate planning is not done in advance, it’s left to the surviving family members who will already be grieving your loss. Handling the deceased’s finances, distribution of assets, and other matters can add substantial stress to what they will already be experiencing.

4. Provision for your loved ones
– Specify guardians for your minor children.
– Set up a trust for your special needs children or other relatives to distribute funds to them after your passing. An estate planning attorney Scottsdale AZ can assist with this in a manner that the payments don’t interfere with the recipient’s government benefits.
– Designate which of your children from previous relationships and your current relationship should receive various of your assets. This can have the added benefit of protecting those assets from former spouses and creditors. Speak to an estate planning attorney for more details.

5. Establishes a plan in case of your incapacitation.
Estate planning makes it possible to provide information and answers to family members when they will most need to know but are unable to ask you. It is also likely to reduce tensions and conflict among your surviving family members. You can designate any or all of the below:
– The executor of your estate.
– End of life medical care that you wish to have.
– The disbursement of your retirement account funds.
– The disbursement of your sentimental items.
– The handling of your social media accounts.

Too many people delay or avoid planning their estate for any number of reasons. Taking a proactive approach to how you want your estate handled can be beneficial for your entire family. Talk to an estate planning attorney today to discuss your legal options.

Thanks to our colleagues and contributors from Hildebrand Law for their insight into estate planning practice.

Negligence vs. Abuse in a Nursing Home: What’s the difference?

Posted on: May 18th, 2017 by Mark R. Friedman

We’ll occasionally be posting blog articles from other attorneys on topics that may be relevant to our clients.  This one is from a Phoenix-area law firm on nursing home abuse and neglect, a topic we get asked about.  We hope you find it helpful!

The long-term care industry is an essential part of the American healthcare industry. Many institutions within the long-term care industry are committed to providing compassionate care to elderly patients. There are some exceptions, however. Some organizations fail to provide a reasonable standard of care for their patients — many of whom could be very vulnerable, and all of whom deserve the utmost respect. Nursing home negligence and nursing home abuse are two types of personal injury cases that involve the exploitation of residents living in long-term care facilities.

Nursing Home Abuse

Abuse implies some level of intent. This could mean the blatant intention of causing physical harm or it could mean clear indifference to the consequences of one’s actions. Nursing home abuse may be prosecuted in criminal court because it could be considered a criminal offense.

Some cases of elder abuse don’t involve the staff members of the long-term care facility; rather, a family member of the injured individual could be to blame. This may be particularly evident if a relative is attempting to take advantage of the elder’s financial situation.

In a nursing home setting, abuse may manifest itself in many forms. Residents may be physically, sexually, and/or emotionally abused. They might be financially abused by someone who wants to take advantage of their vulnerability.

Nursing Home Negligence

Negligence, on the other hand, is legally defined as the failure to perform some duty that is owed to another person. If someone is negligent, it doesn’t necessarily mean that they acted deliberately. It simply means that the individual failed to act in a reasonable way, and this failure led to another person’s injury.

In a nursing home environment, it could be easy for staff members to become distracted and fail to perform their regular duties to a reasonable standard. It’s possible for staff members to forget to provide the correct medication to patients or fail to pay attention to basic hygienic needs. The staff members in these situations might not be considered abusive because they did not intend physical or emotional harm to residents.

As a Phoenix nursing home negligence lawyer might explain, extreme cases of negligence could potentially be prosecuted as criminal charges. Depending on the jurisdiction where the act occurs, if an act of negligence is done in a manner that would suggest “willful disregard” for the safety of another, or is done “with reckless abandon,” such an act could be prosecuted in a criminal court.

Taking Action in a Nursing Home Negligence or Abuse Case

If you suspect that your elderly relative is being abused in a nursing home facility — by a staff member, by another resident, or even by a family member — don’t hesitate to contact a personal injury lawyer today.

Thanks to our friends and contributors from Alex & Saavedra, P.C. for their insight into nursing home negligence and elder abuse cases.

NJ Medicaid increases Penalty Divisor

Posted on: May 15th, 2017 by Mark R. Friedman

Today, New Jersey Medicaid increased the penalty divisor for applicants who make gifts.  This is a very good thing for people who need Medicaid to pay for long term care.

If you apply for Medicaid to pay for long term care (in a nursing home, assisted living facility or with home health aides), you must submit five years of financial records and disclose any gifts made in the past five years.  If you or your spouse has made any gifts, then Medicaid imposes a gift penalty.

The penalty is a period of time (called a “penalty period”) for which you will not receive Medicaid, and will have to pay for your own long term care.  Let’s say you’ve made gifts and Medicaid assigns you a two-month penalty period.  If you meet Medicaid’s requirements on June 1, and Medicaid would have started paying for your nursing home care then, this means that instead Medicaid will start on August 1, and you’ll have to pay for an extra two months of nursing home care.

The length of the penalty period is based on the amount you have made in gifts, and is determined using the penalty divisor.  Effective April 1, 2017, New Jersey Medicaid increased the penalty divisor from $332.50 / day to $423.95 / day.  If you make $10,000 in gifts, you would incur a 24-day penalty.  If you make a $30,000 gift, you could incur a 70 day penalty, a little over two months.

The penalty divisor is based on a survey the state conduct of the average cost of nursing home care in New Jersey.  That the divisor is higher is a good thing for FriedmanLaw and its clients.  It means clients will be penalized less for gifts already made, and it potentially opens new planning opportunities that FriedmanLaw can use to help our clients preserve assets when they need long term care.

If you or a loved one may need long term care in the future, we encourage you to call or email FriedmanLaw for information about your options.

What should you do now to protect against nursing home costs?

Posted on: April 26th, 2017 by Mark R. Friedman

People occasionally ask me: What should we do now to protect ourselves against nursing home costs and other long term care costs?

My answer is, it depends entirely on your circumstances right now.

If your spouse had a stroke and is already in a nursing home, then you should strongly consider immediate Medicaid planning to protect assets against long term care costs.

If your mother is starting to show early signs of dementia and may need long term care in the future, it’s worth meeting with an elder law attorney to get information on paying for long term care, and it may make sense to do some Medicaid planning.

If you’re fairly healthy with no warning signs, and you may never need long term care, it may not make sense to do any kind of Medicaid planning now.

That’s because Medicaid planning usually involves giving up control of your assets in one form or another. It may involve transferring part of your assets, or converting your assets into income, or making purchases that wouldn’t normally be economical. These techniques are incredibly valuable if you’re going to have to spend your assets on long term care costs anyway, but if you don’t have that sword hanging over your head, most people would prefer to retain control over their own assets.

So I can’t say that everyone should do Medicaid planning now. And you should be skeptical towards anyone who tells you otherwise, regardless of what you hear from friends or read on the internet. One size does not fit all – each situation is different and calls for a different approach.

However, there is one thing I would recommend immediately to anyone thinking about long term care – to have in place a well-drafted estate plan.

Everyone should have a will, power of attorney and advance directive for healthcare, but especially older people or people with health concerns who may need long term care. That’s because you can only execute these documents while you have mental capacity to understand what you’re doing. Once you lose capacity (which often happens with progressive diseases like dementia and Alzheimer’s), it’s too late to do these documents, which can create problems.

For example, a healthcare directive and power of attorney allow you to appoint someone you trust to manage your healthcare and finances. If you haven’t appointed an agent under these documents, and you lose capacity, there may be no one who can pay your bills. It may be necessary for your family, or the government, to apply for court for guardianship over you, a process that’s more expensive and difficult than executing a document ahead of time.

In addition, if you’re concerned about long term care, it’s important to have estate documents drafted by a lawyer familiar with elder law. For example, Medicaid planning often involves making gifts, and if you’ve lost capacity, the gifts would have to be made by your power of attorney agent. However, in order for the agent to make gifts, the power of attorney document must explicitly authorize that. We often see power of attorney documents that do not include that crucial gift language.

Likewise, if one spouse is healthy and the other is ill, it may make sense for the healthy spouse to leave a minimal inheritance to the ill spouse. That is because if the ill spouse is likely to be on Medicaid in the future, leaving a large inheritance to the ill spouse may end up wasting the inheritance. It depends on the situation, but it may make sense to have a will that deviates very much from the typical will that leaves everything to the spouse.

In sum, there is no one-size-fits-all approach to Medicaid planning, but everyone should have an estate plan, and it’s smart for your estate plan to be prepared by attorneys familiar with elder law.

For more information on Medicaid, long term care, Medicaid planning, and crafting a custom estate plan, please call or email FriedmanLaw.

What does Medicaid Reform mean for You?

Posted on: March 10th, 2017 by Mark R. Friedman

The United States is rethinking how it pays for healthcare.

There has been a lot of public discussion about the fate of the Affordable Care Act – whether it will be repealed, and if so, what its replacement (if any) will look like.  There has been less discussion about something related that may have an even greater impact on Americans – Medicaid reform.

Medicaid is a joint federal and state program that pays for healthcare for people who meet its eligibility requirements.  That means that Medicaid is paid for by both the federal government and the individual states that administer it.  For example in New Jersey, Medicaid is regulated and managed by the state Department of Human Services, and the funding comes partially from the New Jersey state budget, and partially from the federal government.

Since its inception in the 1960’s, funding Medicaid has been an open-ended commitment from the federal government.  Federal and state governments set rules on who was eligible for Medicaid, and the United States committed to provide enough funding to pay for every Medicaid beneficiary’s cost.  There is no limit on how much the federal government will spend on Medicaid, it simply pays (with states) for everyone who qualifies.

Now, that may change.  There is a proposal circulating now to change Medicaid funding to “block grants,” where the federal government would provide a fixed amount to each state based on that state’s Medicaid spending in 2016.  This would almost surely result in the federal government providing less money to states to fund Medicaid.

If that happens, states would either have to raise taxes, cut spending elsewhere (like schools and roads), or cut spending on Medicaid.   Or maybe all three.  If the cuts to Medicaid spending get drastic, the government may impose drastic measures, making it more difficult to qualify for Medicaid or preserve assets for other family members.  There is already a bill in congress to limit lucrative Medicaid annuity planning.

Point being, if you or a loved one may need Medicaid, and also want to preserve assets within your family, it may become harder to do so in the future, so it would be wise to start thinking about that now.

For more information on Medicaid planning and your specific situation, call or email FriedmanLaw today.

Will our Future Caregivers be Robots?

Posted on: March 3rd, 2017 by Mark R. Friedman

America has an aging population. As the baby boomer generation grows older (and wiser) and lifespans continue to increase, more and more people are going to need long term care. Today, long term care is invariably provided by humans – by family members, home health aides, and staff at nursing homes and assisted living facilities.

But how much long term care can be provided in this manner? Taking care of a family member is difficult, and often takes a toll on the caregiver’s own health and productivity. Professional caregivers are expensive – home health aides often cost around $25 / hour, and nursing homes commonly cost more than $10,000 per month. At FriedmanLaw, we often help families figure out how to pay for long term care, with Medicaid and other resources. But as the population of people who need long term care grows, there may come a point where there simply aren’t enough caregivers.

Providing long term care to everyone who needs it will require creativity. One of the more interesting solutions is robotic caregivers, which are being developed by companies across the world. It may sound like something from a bizarre science fiction movie, but in the near future, robot caregivers in people’s homes may be able to administer medication, check vital signs, teleconference doctor and family visits, assist with mobility, perform household chores, and even provide companionship. Robots may replace human caregivers, or allow human caregivers to care for more patients in less time. Robots may allow people to stay in their homes longer instead of going into long term care facilities.

I’ll leave the technical aspects to other people. But from a legal and financial standpoint, an obvious question arises: Who’s going to pay for all these robots?

If a robot caregiver prevented someone from going into a nursing home, it would save tens of thousands of dollars per year. Often, much of that cost ultimately falls to the government, through the Medicaid program. So the government may determine that it’s cheaper to provide robot caregivers to people, and include robot caregivers as a benefit under Medicare. Perhaps insurers also would pick up the tab, if robot caregivers prevented emergency room visits. It’s a potential gold mine for a company that can develop a practical, useful robotic caregiver, with a huge market and a deep-pocketed buyer.

Robots certainly can’t take care of everyone. Some people have demanding, constant medical and safety needs, and the only safe setting is a nursing home or assisted living facility. And of course, people are scared of robots. Robot caregivers would have to be developed with whom people feel comfortable. But if robots can be created that alleviate some of the need for human caregivers, that would be a major step towards solving a looming problem.

In the mean time, if you or a loved one may need long term care in the future, contact FriedmanLaw to discuss care options and how to pay for them.

What you Can and Cannot Do with a Qualified Income Trust

Posted on: February 15th, 2017 by Mark R. Friedman

People who seek New Jersey Medicaid for long term care (in a nursing home, assisted living facility or with home health aides) are often told they should use a Qualified Income Trust (QIT, aka Miller Trust). However, I’ve heard a lot of misconceptions lately about what a QIT is, and what it’s used for. There appears to be some misinformation floating around, so with this blog post, I’ll try to clear it up.

A QIT is a trust that allows a person to become eligible for Medicaid despite their income being higher than the Medicaid limit. To be eligible for Medicaid, applicants must have income within the “income cap,” the income eligibility limit. (There is also a resource cap, medical eligibility and other requirements.) The current income cap in New Jersey is $2,205 per month.

Anyone with total gross monthly income over $2,205 must use a QIT to be eligible for long term care Medicaid. A QIT can be created by a lawyer (including FriedmanLaw), and the trustee (who manages the QIT) should open a bank account for the QIT. Then, income should be direct deposited to the QIT bank account, or transferred every month, and spent every month according to QIT rules. If everything is done correctly, then the income in the QIT won’t disqualify the person for Medicaid.

So a QIT is used to establish Medicaid eligibility for people with high incomes who need long term care. A QIT is not used to shelter excess resources or assets. You can’t put your house in a QIT, or your bank account balance or investments. You can’t use a QIT to hide your assets and then go on Medicaid.

If someone is facing substantial long term care costs and wants to preserve their assets for their family, there may very well be ways to do that through Medicaid planning. If you’re interested in that, feel free to call or email FriedmanLaw for more information. But a QIT isn’t the way to do it.

How ObamaCare’s Repeal will Affect People with Disabilities

Posted on: January 17th, 2017 by Mark R. Friedman

With the inauguration of President-Elect Trump on Friday, Republicans in control of both houses of Congress, and an open Supreme Court seat, it’s very likely that the Affordable Care Act (ACA) will soon be repealed.

No one knows quite how this will shake out, or exactly what the ACA will be replaced with.  If the ACA is repealed, there will likely be winners and losers.  However, unless the ACA is replaced with something similar, it’s very likely that some of the biggest losers of the ACA’s repeal will be people with disabilities.

That’s because people with disabilities were some of the biggest winners under the ACA.  The ACA (popularly called ObamaCare) includes strong protections for people with disabilities who have or want private health insurance.  Insurers are required to insure people with pre-existing conditions, which includes many people with long-term disabilities and other medical conditions.  Insurers must cover habilitative therapies, mental health treatment and substance abuse treatment.  Insurers cannot put a lifetime limit on how much they will pay for someone’s treatment, which for some people who need expensive medical care long-term, is quite literally a life-saver.

However, the dirty truth is that all of these extra benefits are expensive, and to pay for them, insurers have had to charge healthy people more.  Insurers have raised premiums, and introduced “high-deductible” plans where customers must pay a large amount out of their own pocket before the insurer will pay anything.

But with the repeal of the ACA looming, the benefits above, which disproportionately help people with disabilities, may soon go away.  So perhaps would the ACA’s Medicaid expansion, which expands Medicaid eligibility beyond aged, blind and disabled people with very limited assets and income, to any adult with income less than 138% of the federal poverty level.

The ACA gave people with disabilities the option to buy private health insurance, and another avenue to obtain public insurance through Medicaid.  But both of those options may soon disappear.  That means that for people with disabilities, Medicaid may (again) soon be the only way to obtain healthcare coverage.  And that in turn means that establishing and preserving eligibility for Medicaid is now more important than ever.  People with disabilities should consider how special needs trusts and ABLE accounts can preserve eligibility, parents with children with disabilities should explore special needs estate planning, and lawyers working with people with disabilities should consider how settlements / recoveries will affect Medicaid eligibility.

Special Needs Trusts are now Easier to Create

Posted on: December 16th, 2016 by Mark R. Friedman

This past Tuesday, President Obama signed into law the 21st-century Cures Act.  This new law is broad and sweeping, and passed with bipartisan support.  It includes funding for new medical research, Vice President Biden’s “cancer moonshot” program to find a cure for cancer, and, critically for our work, passage of the Special Needs Trust Fairness Act, which remedies a long-standing problem with special needs trusts.

There are two kinds of special needs trusts (SNT’s) – first-party special needs trusts, and third-party special needs trusts.  For first-party SNT’s, the trust is funded using the beneficiary’s own money.  In other words, a person with disabilities is putting his own money in trust.  With third-party SNT’s, the money comes from someone else, a third party.  For example, if parents want to leave money to their child with disabilities when they pass away, their will should include a third-party SNT.  By contrast, if a person with disabilities wins money in a lawsuit, that’s his own money and it should be held in a first-party SNT.

SNT’s must comply with Medicaid and Social Security regulations in order for the beneficiary to qualify for disability benefits.  There are much more stringent requirements on first-party SNT’s than on third-party SNT’s.  First-party SNT’s must comply with 42 USC 1396p(d)(4).  That provision said that, for the most common type of first-party SNT, the trust must be established by a parent, grandparent, guardian or court.

This meant that the beneficiary could not establish his own trust, even if he had capacity to do so.  Oftentimes, beneficiaries would have to go to court to establish a first-party SNT, increasing the cost and difficulty of doing so.  This requirement always seemed arbitrary, unnecessary and unfair, and the recent 21st-century Cures Act eliminated it.  Beneficiaries can now establish their own first-party SNT’s.  This is a positive step for our clients, and we look forward to using this provision to help our clients protect their eligibility for Medicaid, SSI and other disability benefits.

Medicaid Increases Spousal Asset Limit

Posted on: December 5th, 2016 by Mark R. Friedman

If a person applies for long term care Medicaid (such as in a nursing home or assisted living facility), and his spouse still lives independently in the community, then even though the Medicaid applicant must have assets under $2,000, the community spouse may be able to keep some of the couple’s assets.  The idea is to avoid impoverishing the community spouse, and forcing that spouse to go on Medicaid as well.

Generally, the community spouse is allowed to keep one home that she lives in, one vehicle that she uses, and half of the assets the couple owned when the other spouse became institutionalized (e.g., entered care in a nursing home).  However, there are limits on the “half of the assets” prong – a ceiling and a floor.  That ceiling and floor gets changed occasionally, based on the federal poverty rate.

The Centers for Medicare and Medicaid Services just updated those figures for 2017.  Under Community Spouse Resource Standards, you can see that the new minimum is $24,180, and the new maximum is $120,900.  In other words, if one spouse goes into long term care and applies for Medicaid, the other spouse should be able to keep a minimum of $24,180, and may be able to keep up to a maximum of $120,900 (depending on assets when the other spouse became institutionalized).

This is an increase from 2016’s standards, and a positive development for our clients.

In addition, the SSI maximum benefit is increasing slightly to $735 (which New Jersey also increases slightly).  The substantial gainful activity limit is also increasing modestly, which will make it easier for folks to qualify for disability benefits.   The community spousal housing allowance has increased modestly as well, which means community spouses are able to keep more of their institutionalized spouse’s income.

Overall, these figures are an improvement for our clients who seek Medicaid and other benefits.  If you’re interested in Medicaid or other benefits, we can explain how they apply to your situation if you call or email us.

Scared, Stressed and Exhausted: What I Learned from My Elder Law Experience

Posted on: November 21st, 2016 by Mark R. Friedman

Recently, I had to take a family member to the hospital for what turned out to be a long-term stay.  From there, my family member was transferred to in-patient rehabilitative care, for an even longer stay.

Eventually, my family member was discharged and returned home.  Many of my clients experience a similar sequence of events, except that often, instead of going home, their family members are transferred into nursing homes or other long term care facilities.  I didn’t experience that.  But nonetheless, this experience made me realize how important it is to have a professional advisor to guide you.

This series of events was completely unexpected, and we were not prepared for it.  My family member was scared and in pain, and I was stressed and exhausted.  Under these conditions, it’s very difficult to make a rational, calm decision.

As an elder law attorney, part of my job is to view my clients’ situations through a clinical lens and make a logical assessment based on my legal knowledge.  But what this situation drove home, is that when you’re on the other side of the table, facing fear, stress and uncertainty, it’s very hard to perform that logical analysis and evaluate your options.  I’ve seen this plenty of times, people making rash decisions when they’re scared and upset.  But I now realize how easy it is to make a rash decision when you’re thrust unprepared into a difficult situation.

So, I’ve come to the conclusion that the advantages of working with an elder law attorney or other professional advisor are two-fold.  First, we have knowledge that you probably don’t, about Medicaid regulations, healthcare laws, trusts and estate planning considerations, etc.  Second (and this is what I just realized), we can view your situation through a distance.  We can advise you and help you analyze your options.  And we can do it in a way that may be difficult to do when you’re scared, stressed and exhausted.

 

How does the Presidential Election Affect Special Needs Law?

Posted on: November 4th, 2016 by Mark R. Friedman

The President of the United States is the leader, executive and commander in chief of the most powerful nation in human history.  Who serves as president, and the policies and vision he or she brings to the job, directly affects your life in myriad ways.  You can find some of those ways in the many, many articles and reports that have been written about this presidential election thus far.  But I want to focus on one aspect of the election near and dear to FriedmanLaw:  how the next president will affect our special needs clients.

Hillary Clinton has made representing people with disabilities a visible part of her campaign, while Donald Trump has had well-publicized spats with the community.  But beyond their personalities, each candidate brings different policy visions to the table.  The most obvious and important one is their differing views on the Affordable Care Act (aka, ObamaCare).

I have written extensively about how the Affordable Care Act affects people with disabilities. There are winners and losers to the Affordable Care Act (“ACA”), and some of the biggest winners are people with disabilities who need a lot of medical care.  People with long-term disabilities benefit immensely from the pre-existing condition requirement – that insurers can’t refuse to insure someone because they have a pre-existing condition.  Likewise, they also benefit from the ACA’s prohibition on insurers setting a maximum limit on lifetime care.  That’s because some people born with disabilities need an enormous amount of medical care over their lifetimes, such that from a commercial perspective, insurers would never be willing to insure them.  The ACA requires that insurers cover these folks.  This means that private insurance is an option for many people with disabilities where it wasn’t before, which opens up a variety of benefits and planning opportunities.  Instead of relying on Medicaid and its limited network, a person with disabilities might be able to see a world-renowned doctor covered by insurance.

The ACA is essentially the healthy subsidizing the sick and the young subsidizing the old.  The reason premiums have increased so much is that millions of people with pre-existing conditions have signed up for insurance, and America is aging and more of the population has age-related health problems.  Insurers have to spend more to cover their customers’ costs, and they pass that on to all of us in the form of higher premiums.

Now, where do the candidates stand on the ACA?  Hillary Clinton has said she wants to build on the ACA and expand it.  Her vision likely includes a public option for health insurance, similar to Medicare.  Donald Trump has said he wants to repeal and replace the ACA.  He hasn’t been specific of what he wants to replace it with, but he has said that he wants to keep the ban on insurers refusing to insure pre-existing conditions.  More broadly, he said during one of the Republican primary debates that we can’t have a system that allows people to die in the streets.

The problem with Trump’s plan is that, in order for insurers to insure people with pre-existing conditions without going bankrupt, they need a lot of healthy and young people to sign up.  So far, not enough healthy young people have signed up, which is why the ACA has had problems.  So if Trump wants to keep the ACA provision about pre-existing conditions (which is broadly popular), whatever he replaces the ACA with will have to include a similar mandate that everyone must sign up for insurance.  (Otherwise, the health insurance companies will never support his plan.)  And ultimately, we’ll end up with something similar to the ACA.

So, each candidate has a different vision regarding the Affordable Care Act, which will affect people with disabilities.  Whoever you support, make sure you vote on Tuesday, November 8!  You can find your New Jersey polling place here:

https://voter.njsvrs.com/elections/polling-lookup.html

US bars Arbitration Clauses in Nursing Homes

Posted on: September 29th, 2016 by Mark R. Friedman

The New York Times today reported that the Centers for Medicare and Medicaid Services, the federal agency that administers Medicaid, issued a new rule today barring nursing homes and assisted living facilities that accept Medicaid from requiring residents to resolve disputes through arbitration.

This is big news, because it lets seniors and people with disabilities quite literally have their day in court.

Arbitration is a forum for dispute resolution that’s used as an alternative to the judiciary.  With arbitration, instead of filing a lawsuit, going to court and arguing before a judge, you argue your case before a private arbitrator or panel of arbitrators.  There is less due process, no right to an appeal, and the proceedings are usually kept confidential.  Arbitration is generally considered more favorable to businesses, and less favorable to consumers.

Chances are good that you are subject to arbitration clauses now.  Your credit card agreement probably includes one, as do many licensing agreements for software, and other product agreements.

A previous New York Times investigation found serious problems where nursing homes required residents to sign arbitration clauses.  In one case, a 100-year-old woman was strangled to death by her roommate.  Her son alleges that the nursing home knew his mother’s roommate was a risk, yet his efforts to hold the nursing home accountable went nowhere because they went to arbitration.

Now, this rule from the Centers for Medicare and Medicaid Services will severely tamper the use of arbitration clauses.  Most long term care facilities in New Jersey accept Medicaid and will be subject to this rule.  This is a win for consumers, for seniors and people with disabilities, and will allow some of our most vulnerable citizens and their families to literally have their day in court.

 

What Questions will your Estate Planning Attorney Ask?

Posted on: June 17th, 2016 by Mark R. Friedman

We try to make our clients as comfortable as possible (just ask our mascot dog, Pebbles), but nonetheless, meeting an attorney for the first time can be intimidating. Often, people don’t know what to expect. So, in this post, I’ll set forth a few questions that we might ask you if you’re interested in working with us to create an estate plan. I previously did a post like this for elder law / Medicaid planning. So, without further ado, here are questions we typically ask our estate planning clients:

Your Family
Are you married? Is it a first marriage for you? For your spouse? Do you have children? Do you have any children from a prior marriage? Does your spouse have any children from a prior marriage? Are your children married? Do they have children? Are you on good terms with all of your children? Is your spouse? Do your children get along with each other?

Your Wishes
After you die, how do you want your property distributed? To whom should it go? If they aren’t around to receive your property, is there anyone else you would want instead? What are your wishes regarding medical care? Artificial life support?

Agents and Fiduciaries
Who should manage your estate after you die? If you have minor or disabled children, who do you want to be their guardian? If you were unconscious or unable to make decisions, who do you want to make medical decisions for you? Is there anyone you want to make financial decisions for you?

Pre-Existing Documents
Have you ever made a will in the past? How about a healthcare directive (aka living will) or power of attorney? How long ago? Were the documents drafted by an attorney? Have your wishes changed since then? (If possible, please bring any pre-existing documents when you meet with us)

Inheritance Issues
Is there a reason why any of your heirs (spouse, children, grandchildren or anyone else who might inherit from your estate) shouldn’t get his or her inheritance outright? Are any of your heirs disabled? Do any have issues with alcohol, drugs or gambling? Are any facing a major liability, like a lawsuit or divorce?

Estate and Tax Issues
What is the total value of your assets? Do you own property jointly with anyone else? Do any of your assets have a named beneficiary (e.g., retirement accounts and life insurance), to whom the asset goes automatically when you die? If so, does that affect how you want to distribute your other property? Do you have any debts?

There are many more specific questions we’ll ask in particular situations, but these are some basics to give you a sense of what you should think about when working with an attorney on your estate plan.  If you’re interested in creating a will, power of attorney or healthcare directive, or other estate planning, please feel free to call or email FriedmanLaw today.

NJ Medicaid reduces penalty divisor

Posted on: June 8th, 2016 by Mark R. Friedman

New Jersey Medicaid has reduced the penalty divisor for 2016, from $332.59 / day to $332.50 / day.

Let’s back up a bit.  If you apply for long term care Medicaid, to pay for long term care in a nursing home, assisted living facility or at home with aides, you have to disclose to Medicaid any gifts that were made in the past five years.  You also have to submit five years worth of records for any financial accounts you owned during that time.  Medicaid will review the records to verify whether any gifts were made.

If you have made gifts in the past five years, Medicaid will assign a gift penalty.  Medicaid uses the penalty divisor to determine the penalty.  You lose Medicaid for a period of time, based on the size of the gift.  If the penalty divisor is $332.50, you lose one day of Medicaid for every $332.50 you give away (roughly one month lost for every $10,000 gifted).  During the penalty period, Medicaid will not pay for your long term care, and you’ll have to pay for it yourself.  The penalty period doesn’t begin until you’re otherwise eligible for Medicaid (you’re medically eligible, your Resources are below $2,000, etc.) and you’ve applied.

The penalty divisor is based on the cost of nursing home care in New Jersey.  The cost usually increases, so Medicaid usually increases the penalty divisor.  When Medicaid decreases the divisor, that’s bad for applicants, as it means gift penalty periods will be longer.

There are a few different theories on why the penalty divisor was reduced this year.  One is that Medicaid has switched from a raw average calculation to a weighted average calculation.  Another is that Medicaid is more accurately counting the cost of care, figuring in less expensive nursing homes from outside New Jersey’s urban core.

Whatever the answer is, we’ll continue to help clients preserve live savings within their families rather than losing it all to long term care costs.

Special Needs Trusts must be well-drafted

Posted on: May 27th, 2016 by Mark R. Friedman

The Social Security Administration (SSA), which acts as a gatekeeper for disability benefits for many people, has been reviewing both new special needs trusts (SNT) and old, long-settled SNT’s with a fine-tooth comb.  SSA looks for technicalities that they allege violate SSA rules, and use that as a basis to deny disability benefits, even to people who are already receiving benefits.

SSA’s rules regarding special needs trusts are very technical, and can be found in the Program Operations Manual System (POMS).  SSA has been applying these rules very harshly of late.  For example, with first-party SNT’s (often used to hold lawsuit proceeds), when the beneficiary dies, the SNT must be used to repay the State for the cost of Medicaid over the beneficiary’s lifetime.  Many trust agreements include provisions providing that, after Medicaid is repaid, if any trust funds remain, those funds can be used to pay for funeral expenses.  Those provisions have never caused problems in the past, but now SSA is reportedly claiming in some cases that those provisions violate Medicaid repayment rules, and the beneficiary therefore is disqualified from disability benefits.  There are numerous other examples of provisions that never caused problems in the past, but that SSA is now claiming disqualify the trust beneficiary from public assistance.

I suspect this is the result of political and financial pressure on SSA to rein in costs, which they’re doing by trying to pare back the number of Supplemental Security Income (SSI) beneficiaries.  The take-away for lawyers and people with disabilities is that SSA is reviewing trusts more closely than ever now, so it’s of paramount importance to get a well-drafted special needs trusts that complies with the POMS.

To learn more about special needs trusts or discuss your situation, feel free to call or email FriedmanLaw today.

What to do when you represent a Medicare beneficiary in a lawsuit

Posted on: May 19th, 2016 by Mark R. Friedman

If you are a Medicare beneficiary filing a lawsuit, or an attorney representing a Medicare beneficiary in a lawsuit, you should be aware of your obligations to Medicare.

By law Medicare is a secondary payer, meaning that if Medicare makes payments for which someone else is ultimately responsible (such as a tortfeasor, liability insurer or worker’s compensation insurer), Medicare will demand reimbursement.

In other words, if you suffer an injury and need care, Medicare may make payments for your care.  But if you later recover on that injury, whether it’s in a lawsuit settlement, judgment, or worker’s compensation award, Medicare may demand repayment of those conditional payments (so called because Medicare’s payments are conditioned on being repaid if someone else is ultimately responsible to pay for care).

If you don’t comply with legal requirements to repay Medicare, you may be charged interest, or sued by the government, or Medicare may refuse to pay for further care for you.  The penalties are stiff, so it’s important to comply.

When the lawsuit is first filed, you should inform Medicare’s Benefits Coordination and Recovery Center (BCRC).  You can do so by mail or fax, but the quickest way is by phone at 855-798-2627.  BCRC’s contact info is listed online.

Once BCRC initially processes your case, they will send you a Rights and Responsibilities letter.  At that point (or about three days after notifying BCRC by phone) you can call BCRC and request a Case ID Number.  With the Case ID Number in hand, you can log on to the Center for Medicare and Medicaid Services’ (CMS) online recovery portal, the Medicare Secondary Payer Recovery Portal (MSPRP), to manage the case going forward.

While the case is ongoing, you can use the MSPRP to request an interim Conditional Payment letter, which shows the current amount for which Medicare will demand repayment.  The amount in the interim letter may not be final, as Medicare may make more conditional payments while the case is ongoing.  Once the case settles (or a judgment is issued or worker’s compensation award made, or other resolution), you should notify Medicare via the MSPRP and request a final Conditional Payment letter showing the final payoff amount.  You should review the final Conditional Payment letter to make sure all of the payments are for care related to the injury on which the lawsuit was based.  The letter should contain instructions on appealing if you want to challenge the payoff amount, e.g., if not all the payments were for care related to the injury.

Beneficiaries of Medicare, Medicaid and other government benefits programs may have strict obligations when pursuing a legal claim.  At FriedmanLaw we advise beneficiaries of public assistance and their attorneys on how to comply with program requirements and maximize benefits.  For advice on your situation, call or email us today.

Does everyone in a nursing home need to be there?

Posted on: May 3rd, 2016 by Mark R. Friedman

The New York Times today reported that the US Department of Justice will investigate whether the state of South Dakota is unnecessarily moving people into nursing homes.

The government has launched a number of these investigations in recent years, driven by advocates who claim that thousands of Americans with disabilities are unnecessarily living in nursing homes.  According to advocates, many working-age people with less severe disabilities are driven into nursing homes because that’s all that these states’ Medicaid programs will pay for.  Instead, some of these Americans could be living in a less restrictive environment with the right support, which often costs a fraction of what nursing homes cost.

It’s part and parcel of a broader debate on how much the government should pay for institutional care vs. home and community based care services (HCBS), and the answer varies with each state.  In the past, New Jersey had more restrictions on Medicaid paying for long term care in the community.  It was easier to get Medicaid funding for care in a nursing home than in an assisted living facility or at home with aides.  Some people went into nursing homes simply because it was the only care option they could afford; even though nursing homes are generally the most expensive setting, they couldn’t get Medicaid elsewhere.

Fortunately, New Jersey has a number of programs now that can help people who need less robust care stay in their homes, including MLTSS, JACC, PACE, DDD services and more.  There are also fewer restrictions on getting Medicaid to pay for an assisted living facility.

People who need long term care generally prefer to get it in the least restrictive environment possible.  Remaining at home may be the most comfortable setting, while an assisted living facility, group home or other alternative institution may provide a more independent and social lifestyle than a nursing home.  There are a lot of folks with severe medical needs for whom a nursing home is the only setting that can provide appropriate care.  But for people who can get the care they need in a more independent setting, it’s good that our state has some programs in place to help them.

If you’re interested in how Medicaid, disability benefits and other programs can provide care for you or a loved one, call or email FriedmanLaw today.

What Questions will your Elder Law Attorney Ask?

Posted on: April 29th, 2016 by Mark R. Friedman

We try to make our clients as comfortable as possible, but nonetheless, meeting an attorney for the first time can be intimidating. Often, people don’t know what to expect. So in this post I’ll set down a few questions that we’ll typically ask elder law clients (or their families) who are interested in Medicaid and long term care planning.  If you have a loved one who may need long term care, it would be helpful for you to bear these questions in mind.

Questions We’ll Ask You:

Your goals?
What are you looking to accomplish by seeing a lawyer? From a legal / financial standpoint, if we could wave a magic wand and fix everything, what would you want us to do?

Your family?
Are you married? How many children do you have? Are your children married? Do they have children? Are any family members helping you? Do you have good relations with everyone in your family? Does everyone in your family have good relations with each other? Is anyone in your family disabled?

Your care needs?
Why do you need care? Are your medical issues physical, mental, or both? Do you use a wheelchair? Are you able to live at home with aides? If so, how much help do you need from aides? Can anyone else help with your care? If you have to go into a facility, can you get the care you need in an assisted living facility, or is a nursing home necessary?

Your finances?
What are your finances? Do you own your home? If so, what is the value, and is there a mortgage on it? What are your assets – bank, investment and retirement accounts, insurance and annuities, etc.? What is your monthly income, and what are your monthly expenses? How much do you expect your care needs will cost? Have you made any gifts in the past five years?  Do you expect to get any windfall money (lawsuit, inheritance, etc.)?

Documents and Insurance?
Have you ever executed a will? Have you given anyone power of attorney? Do you have an advance directive for healthcare (aka medical power of attorney)? Do you have long term care insurance?

There are many more specific questions we’ll ask in particular situations, but these are some of the broader general questions that folks should keep in mind when working with an elder law attorney.  If you’re interested in Medicaid and long term care planning, FriedmanLaw is here to help, call or email us today.

Assisted Living Facility Contracts can Limit Medicaid Planning

Posted on: April 22nd, 2016 by Mark R. Friedman

If you or a loved one is entering a long term care facility, you should be aware that the admission agreement may impose onerous obligations.  Nursing home agreements may include liability waivers and binding arbitration clauses that limit your ability to sue if the nursing home injures you.  Admission agreements may also include provisions that expose family members to liability if the resident can’t pay.  If your parent, spouse or other loved one is entering a nursing home and you sign as responsible party, the nursing home may try to collect against you if your parent has an unpaid bill.

In addition, one particular issue arises with admission agreements to assisted living facilities.  Assisted living facilities often require new residents to show they have enough funds to pay privately for a number of years before going on Medicaid (as Medicaid pays a lower rate than the private pay rate) – often two years.  In admission agreements, new residents are often required to disclose assets to prove that the resident can fund their care at the assisted living facility for two years.  The problem is these contracts also often include provisions to the effect that any assets disclosed on the application will be used to pay for the assisted living facility.  If you disclose more than you have to on the contract, this may limit your opportunities to do Medicaid planning.

Medicaid will pay for long term care, but only if you meet the various eligibility requirements.  One is that applicants must have less than $2,000 in Resources.  A major goal of Medicaid planning is to employ your savings to meet that $2,000 limit, without wasting your savings.  In other words, to spend the money in a way that meets your goals, meeting your needs and saving any excess for your family.  However, if your money is already committed to an assisted living facility, you may not be able to save that money through Medicaid planning, and may lose money to long term care costs that otherwise could have been saved.

All of this emphasizes the importance that before you sign an admission agreement to a nursing home or assisted living facility, you should review it with an attorney to make sure you understand what you’re signing, since the contract may affect your rights.

Retirement Advisors required to put Customers’ Interests First

Posted on: April 6th, 2016 by Mark R. Friedman

The federal government will issue a new rule holding financial professionals who manage retirement accounts to a fiduciary standard.

This means that advisers will have to put clients’ interests before their own.  For example, if there were a choice between two identical funds, and one had a higher fee for the client and higher commission for the broker, while the other offered a lower fee for the client and lower fee for the broker, the adviser would have to recommend the lower-cost fund.

The New York Times quotes Department of Labor secretary Thomas E. Perez saying:  “The marketing material I see from many firms is, ‘We put our customers first.’  That is no longer a marketing slogan.  It’s the law.”

This rule will have a big impact on the $14 trillion Americans have invested in retirement accounts.  The government expects the rule will save Americans $17 billion per year in fees, and analysts expect to see a shift in retirement accounts to lower-cost investments.

Also expected is upheaval in the financial services industry.  The new rule is expected to make operating more difficult for smaller advisory firms, because of new reporting requirements that will require more overhead costs.  There is also some confusion on whether the fiduciary standard will apply before a client invests with a firm – e.g., in an initial meeting.

Despite these issues, I think this is a positive development both for financial advisers and for their clients.  Millions of Americans have the bulk of their savings invested in their retirement accounts.  Many of these folks have no idea how their money is invested and rely on their advisers for guidance.  The best advisers already put their clients’ interests before their own, and with this new rule, the rest of the industry will have to follow suit.

As a segue into what we do… a lot of retirement accounts pass outside a will, directly to designated beneficiaries.  It’s important to make sure that your retirement account is invested wisely, and that it’s coordinated with the rest of your estate plan.  For guidance on estate planning and retirement account, call or email FriedmanLaw today.

Dying while Divorcing in New Jersey: the “Black Hole”

Posted on: March 24th, 2016 by Mark R. Friedman

New Jersey has laws meant to protect a person from becoming impoverished if his or her spouse is no longer in the picture.

New Jersey’s elective share law protects a spouse from being disinherited when the other spouse dies. For example, imagine a man writes a will leaving his entire estate to his siblings and nothing to his wife. If he dies, his wife still has the right to take a minimum “elective share” from his estate, equal to roughly one-third of the estate (with many caveats). The law is meant to protect the surviving spouse from becoming impoverished.

New Jersey’s divorce law also provides for equitable distribution to divorcing spouses. With equitable distribution, the marital assets are divided between spouses in a manner that is supposed to provide fairly for the financial future of both spouses.

But what happens when one spouse dies in the middle of divorce proceedings? After the divorce papers are filed in court, but before the divorce is finalized (which can take years).

Currenty, New Jersey law (N.J.S. 2A:34-23(h)) provides for equitable distribution only upon a judgment of divorce. So if one spouse dies in the middle, equitable distribution may be off the table. At the same time, the elective share law (N.J.S. 3B:8-1) states that a spouse does not have a right to an elective share if the spouses were living in circumstances that would give rise to a divorce.

In other words, under current law, where spouses are divorcing, and one spouse dies in the middle, the other spouse can fall into a “black hole” where neither an elective share or equitable distribution are available. The surviving spouse may be completely locked out of the dying spouse’s assets and may become completely impoverished, when that’s the opposite of what the law intended.

The New Jersey State Bar Association has put forth a proposal to remedy the “black hole” problem. This proposed legislation would change the law so that, where one spouse dies in the middle of a divorce, no elective share can be claimed, but equitable distribution can still be made. This would remove ambiguity in the law, and solve an unfair problem that can leave surviving spouses with a very raw deal.

If you’re getting divorced, you should make sure you have estate planning documents in place that reflect your wishes.  If you’re interested in creating a custom-tailored estate plan, FriedmanLaw is available to help

Be Careful when Signing Nursing Home Contracts

Posted on: February 29th, 2016 by Mark R. Friedman

Take care when signing a contract, and always know what you’re signing.

That’s advice that leapt to mind  when I read the recent New York Times article on a nursing home killing.  According to the Times, an elderly woman in a nursing home was suffocated to death by her roommate, an elderly woman with mental health issues.  Per the article, nursing home workers had previously reported that the roommate may pose a danger to others.  The victim’s son has been trying to hold the nursing home accountable for years, but has faced an obstacle:  the nursing home admission agreement.

According to the Times, the agreement included a mandatory arbitration clause, requiring that any dispute with the nursing home would be resolved through arbitration rather than a lawsuit in the courts.  Arbitration is perceived as being more favorable to companies in disputes with consumers, because, as the article says, “there is no judge or jury and the proceedings are hidden from public scrutiny.”  While arbitration clauses are sometimes struck down as unconscionable or unenforceable, normally the clause is upheld and disputes must go to arbitration.

It drives home the point that you should know what you’re signing.  If a loved one is going into a facility, it’s often a tiring and emotionally draining process.  Family members often sign contracts on behalf of a resident with little knowledge of what they’re signing.  That can be a costly mistake.

In addition to arbitration clauses, admission contracts may include provisions that subject family members to liability if the resident can’t pay.  Nursing homes and assisted living facilities have sued people who signed contracts on behalf of a relative, seeking the relative’s unpaid bills.  While it’s not clear whether the facility would be successful in that situation, it’s a lot cheaper to not agree to that portion of the contract than to litigate the issue.  Admission contracts can also limit Medicaid planning opportunities and include other unfavorable provisions.

If you or a loved one is going into a nursing home or assisted living facility, it would be very wise to have a lawyer review the admission agreement to make sure you understand what you’re signing, and if appropriate, negotiate on unfavorable provisions.  For more information, call or email FriedmanLaw.

 

Medicaid Gifts and the Simplified Application

Posted on: February 11th, 2016 by Mark R. Friedman

Last week, New Jersey Medicaid announced a simplified process for applying for Medicaid for people with income below the federal poverty level who haven’t made gifts.  We wrote about that in a blog post last week.

This simplified process for some applicants is a welcome development.  Unfortunately, however, as is often the case with Medicaid, it’s not as simple as it appears.

The process involves applicants being able to use an affidavit to attest that no gifts were made, instead of having to submit five years of financial records for the Medicaid agency to review.  However, it’s not always clear what’s a gift, and transfers that wouldn’t be gifts in other contexts are gifts for Medicaid.

Under Medicaid rules, a gift is a transfer of assets for less than fair market value.  A gift can be any amount and to any recipient.  Unlike with tax, there is no $14,000 exemption, and charitable donations can be counted as gifts.

For example, if Jane gives a $10,000 wedding present to her son, it’s a gift.  If she transfers $50,000 in stocks to her daughter, it’s a gift.  If she makes a donation of $5,000 to her church, it’s a gift.  If she sells her car to her sister for $4,000, when the car is worth $10,000, it’s a $6,000 gift.

Gifts incur a Medicaid penalty – in the long term care context, for every $10,000 you give away, you lose roughly one month, during which Medicaid will not pay for your care.  However, some gifts are exempted from incurring a penalty, including certain gifts to your spouse, a child with disabilities, and others in certain specific situations, as well as gifts outside the Look Back Period.  (Since exempt gifts are very technical, you should consult with a lawyer on specific questions.)

It’s not clear whether someone who has made an exempt gift can use the affidavit.  It’s a technical question, and hopefully the answer will become clear as this simplified process sees more use.  However, you certainly don’t want to be in the position of unintentionally lying to the government in an affidavit, so if you have any questions about whether you’ve made gifts, you should speak with elder law attorneys like FriedmanLaw about your specific situation.

Medicaid simplifies Application Process for Some Applicants

Posted on: February 4th, 2016 by Mark R. Friedman

Today, New Jersey Medicaid issued a MedComm (Medicaid Communication) saying that applicants with incomes under the federal poverty level (currently $983 / month) can use an affidavit in lieu of the lookback review.

When applying for long term care Medicaid benefits, the Medicaid agency usually requires you to submit five years’ worth of statements for all financial accounts.  A Medicaid worker reviews these statements to determine whether you’ve made any gifts in the past five years.  Gifts incur a penalty, a period of time during which you lose Medicaid benefits.

This review of financial records is very burdensome for all involved.  It’s onerous for applicants, who must gather five years of records and explain their entire financial life to a stranger.  And it’s arduous for the Medicaid worker, who has to review all the statements and verify each significant deposit and withdrawal.

According to the new MedComm, applicants with income under the federal poverty level who haven’t made any gifts in the past sixty months will now be able to submit an affidavit attesting so.  In doing that, the applicant will avoid having to submit financial records for the past sixty months.  This will make the Medicaid application process worlds easier for applicants with modest income who haven’t made gifts.  This is especially true where a third party is trying to assemble the records, for example, a child-caretaker trying to piece together their parent’s financial records.

The affidavit can only be completed by the individual, or his or her spouse, guardian or agent under a power of attorney.  So for a widow who lacks capacity to sign the affidavit herself and never created a power of attorney, her children (or others) would have to apply for guardianship in order to use the affidavit.  This drives home the need to have a well-drafted power of attorney, especially if you may need long term care.

We have yet to see how this shakes out, but if things go as stated in this MedComm, then we at FriedmanLaw are excited to be able to offer some of our clients a simpler way to apply for Medicaid.

For specific information on Medicaid or long term care, please call or email us today.

Pre-Mortem Probate may be coming to New Jersey

Posted on: January 18th, 2016 by Mark R. Friedman

The idea is being floated that New Jersey create a mechanism for “pre-mortem probate” – a court approving your will before you die.

When an individual dies, their will must be probated, or approved by a court, before the assets under their will can be distributed. Usually probate is a smooth and easy process, but occasionally there is a dispute regarding the will. This sometimes happens when the testator (the person whose will is being probated) had an estranged child, or a new spouse and children from a prior marriage, or left money to close friends instead of distant relatives.

When someone brings a will contest, challenging the validity of a will, the court has to determine whether the will really reflects the testator’s intent, or whether someone unduly influenced the testator, or the testator lacked capacity, or other cause exists to invalidate the will. The problem is, these questions revolve around the testator’s state of mind, and the testator is no longer around to ask.

Pre-mortem probate allows a testator to submit a will to court for approval before he dies. That way, the judge can ask the testator delicate questions about undue influence and capacity while he’s still alive, instead of relying on extrinsic evidence. The idea is to prevent will contests and ensure that the testator’s wishes are carried out.

This idea has its flaws, but all in all, I’m in favor of it. Occasionally we have clients who are concerned a relative will challenge their will. We’re able to offer our clients some options to head off will contests, but none are as bulletproof as having a court probate the will in advance. Pre-mortem probate would give people a new way to ensure that their wishes are carried out, and have the peace of mind that comes with that certainty.

Five states, including New Hampshire, have passed laws allowing pre-mortem probate. New Jersey may eventually join that list.

For specific advice on wills, probate or estate administration, call or email us.

NJ ABLE Act becomes Law

Posted on: January 11th, 2016 by Mark R. Friedman

The New Jersey ABLE Act became law today.

Under the ABLE program, persons who became disabled before age 26 can open an ABLE account, and become the beneficiary of that account.

The beneficiary and their family or friends can contribute up to the amount of the annual gift tax exclusion to an ABLE account (currently $14,000 per year). The ABLE account holds that money, and is managed and invested by the state. Any growth on the money in the ABLE account is tax-free, provided it is spent on “qualified disability expenses” for the beneficiary. Qualified disability expenses are defined broadly, and include things like education, healthcare and professional services.

An ABLE account can hold up to $100,000 per year without disqualifying the beneficiary from Supplemental Security Income (SSI), and an unlimited amount without disqualifying the beneficiary from Medicaid. When the beneficiary dies, any remainder in the ABLE account has to be used to repay Medicaid for the amount it spent on the beneficiary.

ABLE is a welcome tool for people with disabilities and there families. But an ABLE account is not a replacement for a special needs trust. For large inheritances or lawsuit awards, the $14,000 annual contribution limit and $100,000 total limit would be problematic. Moreover, third-party special needs trusts have no obligation to repay Medicaid, while ABLE accounts do.

There remain a number of open questions on ABLE – how will New Jersey administer accounts, how will the money be invested, how will beneficiaries make withdrawals and how will the state decide whether withdrawals are qualified disability expenses, among other questions. It looks like ABLE won’t take effect until October 2016, so hopefully these questions will be resolved before then.

Happy new year!

Posted on: December 31st, 2015 by Mark R. Friedman

Happy New Year!  Welcome to 2016.  It’s the season for new year resolutions, and in addition to losing weight and quitting smoking, we have a suggestion: getting your legal affairs in order.

That could mean creating an estate plan for the first time.  Having a quality will, power of attorney and healthcare directive is important, and makes things much easier for your family if something happens to you in the coming year.  It might also mean updating an old estate plan.  We suggest that clients update their estate plan once every ten years or so.  It may also be wise to update documents when circumstances change – for example a marriage, birth or death in the family, or if a loved one becomes disabled or contracts a serious illness.

It could also mean considering long term care planning.  A lot of people try to delay unpleasant matters until after the holidays.  Perhaps while your family was gathered, it became clear that an elderly parent might soon be unable to care for herself independently.  If that’s the case, now would be a good time to consider options for long term care, such as home care aides, an assisted living facility or a nursing home.

If long term care may be on the horizon, then it’s also a good time to think about how to pay for it.  With nursing home costs in New Jersey around $10,000 per month, long term care is exceedingly expensive.  But with Medicaid and long term care planning, we can often help people pay for long term care without impoverishing family members.

Perhaps you have a child with disabilities who is growing up.  At age 18, every child becomes an adult and has the legal authority to make decisions for himself, regardless of whether he’s disabled or lives with his parents.  Banks, hospitals, schools, government agencies and other institutions have to listen to your child’s instructions instead of yours.  If you want to continue caring for your child after age 18, it’s important to apply for guardianship.

Now is the perfect time to get your legal affairs in order, and FriedmanLaw is here to help.  If you’re interested in knowing more about any of the above or other legal matters, call or email us.

Special Needs Trusts and Child Support

Posted on: December 11th, 2015 by Mark R. Friedman

Can a special needs trust hold child support? Yes, but only if it’s the correct kind of trust.

There are two categories of special needs trusts (SNT) – a first-party trust and a third-party trust.

A first-party trust holds money that belongs to the beneficiary. For example if Susan is disabled and wins a lawsuit, and the defendant has to pay him $100,000, that money belongs to Susan. If Susan wants the money to go into a SNT so thats he won’t lose disability benefits, it will have to be a first-party SNT, because it’s Susan’s money going in.

A third-party SNT holds money that belongs to someone other than the beneficiary. For example, if Susan’s parents want to leave her an inheritance of $100,000 in their will, they can leave that money into a third-party SNT for Susan, because the money belongs to a third-party, Susan’s parents.

It’s better for the beneficiary to have a third-party SNT than a first-party SNT. That is because a first-party SNT has to comply with special requirements under federal and state law. A first-party SNT must be irrevocable, must provide for any trust remainder to repay Medicaid when the beneficiary dies, and, in New Jersey, must report expenditures over $5,000 to the State, among other requirements.

Under Social Security Administration regulations, child support payments are considered income to the child. Therefore, for families that wish to use an SNT for child support, the payments must be made into a first-party SNT. A third-party SNT, such as the kind designed as part of an estate plan, will usually not be sufficient to hold child support payments.

There may be other options as well for parents to avoid disqualifying a child with disabilities from benefits. For example, parents could agree that payments will be made in lieu of child support, which would not count as income to the child. However, the parents probably would be under no obligation to use such payments to support the child, so in many cases this option would not be attractive.

FriedmanLaw is available to help with special needs trusts and disability benefit issues, and we encourage you to call or email us today.

NJ Medicaid may soon Pay for Advance Care Planning

Posted on: December 4th, 2015 by Mark R. Friedman

Following the federal government’s lead, New Jersey may soon allow Medicaid to cover advance care planning.

Medicare recently announced that it would pay for beneficiaries to have conversations with their doctors regarding their wishes for end of life care (called advance care planning in medical / legal parlance).   Following suit, the New New Jersey Senate passed a bill that provides for Medicaid to cover advance care planning (see the underlined language on page 4 of the linked PDF).  The bill still must be passed by the assembly and signed by the governor, but I’m optimistic that will happen.

To clarify, Medicare and Medicaid are both government programs that cover healthcare, but have different requirements for to qualify.  Medicare is a federal program that requires beneficiaries to have worked a certain number of years and paid into Social Security; Medicaid is a state-federal program that requires beneficiaries to have modest assets and income.

Allowing New Jerseyans on Medicaid to access advance care planning is a big step in the right direction, one which I applaud.  I’ve written about this before, and it bears repeating.

We all have to die eventually, and most Americans say they want to do so at home, in their bed, surrounded by family and friends.  Yet in reality, many Americans die in a hospital bed surrounded by doctors and nurses, often being poked and prodded or hooked up to machines.

One of the most intimate decisions in life is how it should end, yet far too many people never get the chance to make it.  The law offers all of us the opportunity to express our wishes regarding end-of-life care, with an advance directive for health care, as well as physician orders for life sustaining treatment (POLST).  Everyone should have a healthcare directive, and providing New Jerseyans on Medicaid with access to advance care planning will help make that so.

If you want to create a healthcare directive for yourself, or a will or power of attorney, or other elements of an estate plan, contact FriedmanLaw to discuss your goals and options.

Medicare to Pay for Advance Care Planning come January

Posted on: October 28th, 2015 by Mark R. Friedman

Medicare as of January 1, 2016 will start paying for patients to have conversations with their doctors about how they would like to die.

In a thought-provoking New York Times article, Pulitzer Prize-winning journalist Tina Rosenberg makes a powerful argument for why people should take advantage of this new provision.

I’ve written about advance care planning before, and it bears repeating. We all have to die eventually, and most people say they want to do it at home, in their own bed surrounded by friends and family. Yet in reality, most Americans die in a hospital bed surrounded by doctors and nurses, often being poked and prodded with machines.

One of the most intimate decisions in life is how it should end, yet far too many people never get the chance to make it.

The law does offer all of us the chance to have some input into how we die, by creating an advance directive for health care. A healthcare directive is a legal document in which you can appoint an agent to make health care decisions when you’re unable to. You can also set forth your wishes regarding medical treatment, including end of life care, which healthcare providers must follow.

However, Rosenberg argues that creating a healthcare directive is only the start of advance care planning, and I agree with her. People on Medicare should take advantage of the new program and talk to their doctors about what end-of-life care really entails. (Insurers will probably start paying for these conversations as well, so soon everyone will be able to talk to their doctors about end-of-life care.)

Most importantly, everyone should talk to their family about their wishes regarding end-of-life care. The conversation may be daunting or seem morbid, but if your family has to make a decision for you, it will be vastly easier for them to make peace with that decision if they can follow your wishes, instead of wondering ever after what your wishes were.

What to Do if your Spouse needs Long Term Care

Posted on: October 21st, 2015 by Mark R. Friedman

If your spouse is losing the ability to care for himself / herself and needs long term care, in a nursing home, assisted living facility or with home care aides, there are a lot of steps to take, like Medicaid planning and changing your estate plan.  We’ve written extensively about those steps on this blog, and today I want to focus on one particular and often overlooked step:  changing title to joint property.

For many people, the only way to pay for the high costs of long term care is through Medicaid.  If your spouse is on Medicaid and you are not, it’s very important that you don’t own assets jointly with your spouse, for two reasons.

First, when someone is on Medicaid, they can’t have more than $2,000 worth of assets (Resources).  If they have more than $2,000 in any month, they lose Medicaid.  If you own property jointly with your spouse, and you die, the property passes entirely to your spouse, and he will lose Medicaid.  Instead, in many cases that property could go to your children or other family members without causing your spouse to lose Medicaid.

Second, people over age 55 who receive Medicaid (called “beneficiaries”) are subject to Medicaid estate recovery.  That means that when a Medicaid beneficiary dies, any property they own goes to the government, in order to repay the government for the Medicaid assistance it provided to the beneficiary.  If you own property jointly with your spouse (or parent, child, sibling, etc.) on Medicaid, and your spouse dies, that joint property may become subject to Medicaid estate recovery and may have to be sold to repay the government.

If your spouse needs long term care and will go on Medicaid, it may be wise to change title to joint property.  That may involve doing a new deed to your house, changing bank account ownership, designating new beneficiaries for life insurance or retirement accounts, etc.

To learn more about what to do if your spouse is going on Medicaid, call or email FriedmanLaw.

Women Bear Majority of Costs for Alzheimer’s, Study Finds

Posted on: October 9th, 2015 by Mark R. Friedman

Women bear the majority of costs for Alzheimer’s disease, according to a new study from researchers at Emory University.  As reported by Pacific Standard, women bear six times as much of the cost for caring for Alzheimer’s patients.

The study’s authors look at direct costs – spending money on fees for home care aides or long-term care facilities – as well as indirect costs, like lost productivity due to serving as caretaker for a spouse or parent with Alzheimer’s disease.

Women bear so much more of the costs for a variety of reasons.  First, women are likely to contract Alzheimer’s disease, both because women live longer, and because women appear more susceptible to the disease for reasons unknown.  Second, women are more likely than men to serve as a caretaker for a loved one who has Alzheimer’s.

As the baby boomer generation ages and more people suffer from Alzheimer’s, lost productivity of caretakers could become a significant drain on the economy.  This is particularly true when caretakers are adult children taking care of their parents.  These caretakers are often in their working years, and may also be taking care of their own children.  Taking care of an Alzheimer’s patient is a draining role to which family-caretakers often devote more than twenty unpaid hours per week.  If more women are forced to shoulder this burden during their peak working years, it could have an impact on the economy.

The study raises an interesting and provocative question:  If men bore as much of the cost of Alzheimer’s as women, would there be more effort and resources put into finding a cure?  Alzheimer’s is the sixth leading cause of death in the United States, according to the CDC.  At any given time, there are five million people in the country suffering from Alzheimer’s.  Yet research efforts on the disease receive a fraction of the resources of other diseases, and much less than researchers say is needed to make meaningful progress towards a cure.

In any event, it’s certainly true that Alzheimer’s disease imposes significant costs on patients and their families, but government programs are available to help, including the Medicaid long term care benefit.  For more information on coping with the costs of Alzheimer’s, call or email FriedmanLaw today.

Medicaid and Elective Share Claims in New Jersey

Posted on: September 17th, 2015 by Mark R. Friedman

In New Jersey, if your spouse dies, you have a legal right to take what is called an “elective share” from his estate.

The elective share is the minimal amount that a spouse is entitled to by law.  It’s meant to prevent someone from disinheriting his or her spouse and leaving the spouse destitute.  For example, the elective share would prevent a man in a second marriage from leaving everything to his children from a prior marriage, and leaving his second wife bereft.

The amount of the elective share is determined through a complicated formula, per N.J.S.A. 3B:8-1 et seq.  Essentially, the elective share is equal to one-third of the deceased spouse’s estate, plus certain property the decedent gave away while he was alive, minus the property the surviving spouse owns.

In short, the elective share is the minimum that one spouse can leave to the other when he or she dies.  This is great for scorned spouses, but not as good for Medicaid beneficiaries.

To qualify for Medicaid, you generally must have less than $2,000 in assets.  So if you are on Medicaid, and your spouse isn’t, and your spouse dies and leaves an elective share to you, then that property will disqualify you from Medicaid until it’s spent down (or otherwise disposed).  If you’re receiving long term care Medicaid, that property will likely be lost to long term care costs.

However that’s a lot better than the alternative.  Most people in first marriages leave all of their property to their spouses, not just the elective share.  That means all the property will be lost to long term care costs.  Instead, if your spouse is on Medicaid and you aren’t, you can create a new estate plan that leaves the minimum elective share to your spouse, and the rest of your property to your children, siblings or other heirs.

For information about your specific circumstances, call or email FriedmanLaw today.

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As this website provides general information and isn’t tailored to your particular situation, it doesn’t constitute legal advice and may not take into account rules and exceptions that affect you. Although updated from time to time, this website may not take account of recent legal developments or differences in laws from state to state. For safety sake, obtain individual legal advice before you act! You assume all risk of acting on information contained in this website. This website doesn’t constitute legal advice, and no attorney-client relationship exists unless FriedmanLaw and you execute a written engagement agreement. Please contact us at 908-704-1900 to discuss engaging FriedmanLaw to help resolve your legal concerns.
Homepage photo: Cows grazing at Meadowbrook Farm, Bernardsville, NJ by Siddharth Mallya. October 23, 2012. http://en.wikipedia.org/wiki/File:Autumn_Leaves_13.jpg.
Interior photo: Somerset hills pastoral scene by Lawrence Friedman.