Archive for May, 2018

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.

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.
Interior photo: Somerset hills pastoral scene by Lawrence Friedman.