Sometimes Your Home Can Be Transferred to a Child Without a Medicaid Penalty

By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Medicaid Attorney

You are a daughter or son of a sick and aging parent. Assume you have been caring for your mother and/or father for a number of years. You may even live in their home. Mom has severe COPD and dad has dementia. What needs to be done to protect Mom and Dad’s home if one or both of them need to be placed in a nursing home?

There’s good news for you. If structured correctly and properly documented, your parents can transfer the house to you without a penalty under New Jersey Medicaid laws. Generally, a transfer causes up to five years of ineligibility for Medicaid coverage. However, you can qualify for the so-called “caretaker child” exception to Medicaid’s rules governing the transfer of the home. In states like NJ, to qualify for this exception you need documented medical proof and affidavits from a doctor saying that for at least the past two years were it not for the care you provided to your parents, they would have had to move to a nursing home. If you think you qualify, reach out to us to better understand your rights and what must be done to assert your claim.

To discuss your NJ Medicaid matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.

 

What Happened to Mom’s Diamond Earrings

By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Wills Attorney

I have drafted many hundreds if not thousands of Last Wills and Testaments for clients over the years. I have represented executors and administrators in the estates of individuals who have passed on. Based upon my experience, I can say with certainty that one common issue that often presents itself had to do with “personal property”.

Why is it that personal property becomes the source of so many problems since often the property has little to no monetary value. I can’t answer that except to tell you that personal property is the property that causes the most mess!

Personal property is typically comprised of items such as jewelry, furniture, paintings, and collections (stamp collections, baseball card collections).

Personal property doesn’t have its own “legal title”. In other words, a car has a title, so it is clear who owns the car. A house has a deed, so it is clear who owns the house. But personal property has no title. If someone runs off with the decedent’s diamond earrings, it is difficult to prove this because there is no title to the jewelry. It is also difficult to value the jewelry with any certainty, unless you sell the jewelry, or find it and have it appraised.

Despite what some people may believe, personal property (in the vast majority of cases) has little to no monetary value. Old jewelry typically is not worth that much. Furniture is almost always of little to no value. Collectibles typically have far less value than the collector (now deceased) believed it had.

Yet, in administering an estate and watching and listening to cases in NJ Chancery Probate Court, I have seen personal property be the most contested issue by all sides. I have seen beneficiaries claim that the executor did not properly distribute the personal property, or wrongly disposed of it without consent. Beneficiaries will claim that items of personal property (a painting, a piece of jewelry, etc.) are of unique sentimental value. Beneficiaries will also claim that the executor sold items of personal property that they wanted, or that the decedent promised to them.

I have seen executors and beneficiaries claim that another family member stole items of personal property after the person died, yet cannot document that it existed at time of death.

I have seen beneficiaries give an executor a difficult time because the executor wants the beneficiaries to take the personal property from the decedent’s house, and the beneficiary doesn’t want to be bothered retrieving the property (but will assuredly complain if the executor disposes of the property).

It’s irrational. Basically, the goal seems to be, I will take whatever position on the personal property that allows me to be difficult to the executor or the other beneficiaries, as the case may be.

As I mentioned earlier, since personal property has no title and its monetary value is debatable, the executor or beneficiary who is being accused of mishandling or misappropriating the item of personal property must try to prove that the item had little or no value, while the disgruntled accuser will claim that the personal property item had irreplaceable sentimental value: “That was mom’s dresser. I wanted that dresser to remind me of mom.”

It’s a no-win situation for both the accused and the accuser.

Courts address fights over personal property often in probate cases. They do not have a lot of patience over these skirmishes. If the court held a trial every time someone claims theft, coercion or mishandling of mom’s earrings, the court system would be even more dysfunctional than it often is.

There is no absolute solution for these “war of the roses” because in most cases, the accuser is simply making an accusation in order to cause problems. That’s why I add language in Last Wills that orders personal property to be sold if the beneficiaries cannot agree within 120 days of the decedent’s death.

Still many clients tell me, “My children won’t do that. They get along.” But you never know, so you should prepare for the worst and hope for the best.

To discuss your NJ Last Will Testament, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.

 

 

New Jersey is Penalizing Rules for Gifts Made to Loved Ones

By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Medicaid Attorney

In order to be eligible for Medicaid long term care, you cannot transfer your assets as gifts to family members, loved ones, friends or any organizations even if charitable in nature within 5 years of application. The state does not want you to move into a nursing home after you have given all of your money to your children (or whomever) and qualify for Medicaid soon afterwards. So it has imposed what is known as a “penalty” on people who transfer their assets without receiving fair value in return.

A “penalty period” is a calculated length of time during which a Medicaid applicant who transfers assets will be ineligible for Medicaid. The penalty period is determined by dividing the amount transferred by what Medicaid determines to be the average cost of nursing home care in New Jersey.

Here’s an example of how it works: In New Jersey the average monthly cost of care (according to the state) is $9,369+. If you give away property worth $100,000, you will be ineligible for Medicaid benefits for 10 months ($100,000 ÷/ $9,369 = 10.67 months).

Restated, for every approximate $9,300+ transferred, a Medicaid applicant is ineligible for nursing home benefits for one (1) month. There is no limit on the number of months a person can be ineligible. Theoretically, the penalty period could be 10 years or more, but there are practical ways to prevent that from ever happening.

A person applying for Medicaid must disclose all of his or her financial dealings (income and expenses) within 5 years of filing an application. This 5 year period is frequently called the “look-back period.” Your County Board of Social Services then determines whether the applicant transferred any assets for less than fair market value during this period.

Under New Jersey Medicaid eligibility laws, the 5 year penalty period does not begin until (1) the person making the transfer has moved to a nursing home, (2) he has spent down to $2,000 ($3,000 for a couple) which is the asset limit for Medicaid eligibility, (3) has filed an application for Medicaid coverage, and (4) has been otherwise approved for Medicaid except for the gift.

Not All Transfers Are Penalizing

Transferring assets to certain beneficiaries will not trigger a period of Medicaid ineligibility. These exempt beneficiaries include the following:

  • A spouse
  • A blind or disabled child
  • A trust for the benefit of a blind or disabled child
  • A trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances).

In addition, special exceptions apply to the transfer of a home. The Medicaid applicant may freely transfer his or her home without incurring a transfer penalty to the following persons:

  • The applicant’s spouse
  • A child who is under the age of 21 or who is blind or disabled
  • A trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances)
  • A sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home
  • A “caretaker child,” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.

Exemptions from penalties are highly restricted and subject to close review and examination by your County Board of Social Services, so be careful. Remember, my position on the state’s approach to applications… delay, frustrate and then deny.

To discuss your NJ Medicaid matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.

 

 

How to Challenge a Medicaid Denial for Gifts Made Within Five Years

By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Appealing Denial of Medicaid Attorney

With each passing day, more and more citizens apply for Medicaid benefits when they can no longer pay for or provide necessary services for themselves.

At its very core, there are two main hurdles for Medicaid applicants in New Jersey to overcome: the $2,163.00/month income limit for Global Options (soon to be abolished on or about October 1, 2014) and the $2,000.00 asset limit. While seemingly straightforward, each limit is stringently monitored to ensure that Medicaid benefits are awarded to those eligible applicants and not to applicants who transfer and gift away their finances with the intention of qualifying for Medicaid. Great scrutiny is placed on compliance with the asset limit since it is much easier for individuals to adjust. It is in this way that the government applies a sixty (60) month “look-back” period to determine if a Medicaid applicant is truly eligible or attempting to avoid a period of ineligibility. Any transfers made for less than fair market value within this sixty (60) month look-back period will result in a period of ineligibility (called a “penalty period”) for a duration determined based on the amount transferred and the average monthly cost of nursing home care within New Jersey.

But what about unique and truly extenuating circumstances? For instance, what is to happen to an individual healthily enjoying the later years of their life when suddenly disaster hits? Individuals caught in such a situation have no opportunity to plan ahead for times of need and may face lengthy periods of ineligibility for gifts given to family members without any intention of circumventing the Medicaid resource limits. Fortunately, New Jersey permits asset transfers made within the 5 year look-back period when the gifts were not intended to unlawfully circumvent the Medicaid resource cap, for eligibility purposes.

The specific statute on this matter is N.J.A.C. 10:71-4.10(e)(6)(ii), which states that “[t]he application of a transfer penalty as set forth in this section shall not apply when: A satisfactory showing is made, to the State that: The assets were transferred exclusively for a purpose other than to qualify for medical assistance.” Thus, upon proof that any transfers made by a Medicaid applicant, including any gifts or payments to family members, were made prior to any contemplation of Medicaid eligibility whatsoever, then it should follow that no transfer penalty shall apply.

According to N.J.A.C. 10:71-4.10(j), “[a]ny applicant or beneficiary may rebut the presumption that assets were transferred to establish Medicaid eligibility by presenting convincing evidence that the assets were transferred exclusively (that is, solely) for some other purpose.” As previously mentioned, a Medicaid applicant retains the ability to contest the assumption that any transfers made within the sixty (60) month look-back period were done with any intent to qualify for Medicaid eligibility. In order for the applicant to meet their burden, they must successfully prove that the rationale behind any transfer was purely for purposes of which do not include circumventing the Medicaid resource cap. See Id.

In order for an applicant to support a claim that transfers made within the look-back period were for reasons other than becoming Medicaid eligible, the applicant will be required to produce evidence explaining the nature of the transfer, any documents relating to the transfer, and statements from any individuals with information relating to the transfer. The burden of proof is on the applicant to show that the transfer was executed without for reasons of which do not include establishing Medicaid eligibility.

In E.S. v. Division of Medical Assistance Health Services, 412 N.J. Super. 340 (2010), the court examined the appropriateness of a transfer penalty imposed by DMAHS on a Medicaid applicant where the transfer in question was premeditated payment on a life care contract (“LCC”) from the applicant to her daughter. DMAHS concluded that the payment of $56,550 to the applicant’s daughter in lieu of services to be rendered in accordance with the LCC was a transfer of assets for less than fair market value during the look-back period intended to permit the applicant to qualify for Medicaid. In E.S., it seems as though the court placed a heavy burden on overcoming the agency’s presumption that the transfer involved an intent to become Medicaid eligible.

In order to permit an applicant to launch a successful appeal to any denial of Medicaid benefits stemming from his or her alleged transfers, he or she will need to make a strong case that any transfers conducted before their circumstances or deteriorating health required financial assistance were for reasons other than Medicaid compliance. The argument to be made is as follows: an applicant made gifts or transfers for less than fair market value while he or she was in good physical health and at a time when he or she was in no way contemplating an application for Medicaid. Unfortunate circumstances have lead to the applicant’s rapid demise in health and have since necessitated Medicaid assistance to ensure his or her future wellbeing. Therefore, in order to substantiate such claims the applicant will likely need to produce any copies of checks or transfers made out to their recipients, health records from both the time in which the transfers were made and after the applicant’s circumstances necessitated Medicaid assistance, and statements from both the applicant and anyone who received a transfer from him or her.

Though the burden is high, upon a sufficient showing that any transfers made in good health were devoid of the intent to qualify for Medicaid assistance, an applicant can avoid a penalty period of ineligibility.

To discuss your NJ Appealing Medicaid denial matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.

 

Does Applying for Medicaid on an Incapacitated Person’s Behalf Require a Guardianship?

By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Medicaid Application Attorney

Consider the following hypothetical situation. Mother is in a nursing home and is mentally and physically incapacitated. She has advanced vascular dementia. She has no more money left and needs to apply for Medicaid. Her daughter does not have a power of attorney or a guardianship in place. She intends to supply the information requested by Medicaid for the application. Is it necessary for her to have a guardianship for her before she can receive Medicaid?

That’s a good question and the answer is “maybe”. Some facilities just want someone to file the Medicaid application so they can get paid and really don’t care about a power of attorney or guardianship. Others are more demanding. While it may depend on your county’s Medicaid office, the real question is whether you can get them the information they need and gain access to her funds to pay her monthly income to the nursing home. If you’re able to accomplish this without being appointed guardian, it shouldn’t be necessary for purposes of Medicaid. However, the facility may still want someone to become guardian in order to make health care decisions for your mother. Your situation is a prime example of why I urge everyone to execute a durable power of attorney and health care directive.

To discuss your NJ Medicaid application, power of attorney or guardianship questions, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.