The right choice depends on your assets, your family dynamics, and how important privacy, speed, and probate-avoidance are to you.

What’s included in both types of plans?

• Power of Attorney (financial/legal authority during your lifetime if you can’t act)
• Health Care Proxy / Health Care Representative document (someone to make medical decisions)
• Living Will / Advance Directive (your treatment preferences and end-of-life wishes)
• HIPAA Authorization (so loved ones can speak with doctors and access information)
• Guardianship nominations (especially important for parents of minor children)

The Differences: What happens When You Die?

A will-based plan

A Last Will and Testament directs where your assets go at death but in many cases, it requires probate (a court process) to transfer assets that are titled in your individual name.

Probate is not always “bad,” but it can be:

• slower than families expect,
• more procedural than they realize, and
• public (many filings become part of the public record).

A revocable trust-based plan

A revocable living trust is created during your lifetime. You typically serve as your own trustee while you’re alive, and you name a successor trustee to step in if you become incapacitated or pass away.

The advantage: assets titled in the trust can usually pass to beneficiaries without probate.
That means:

• faster administration,
• more privacy, and
• fewer court-related headaches especially for out-of-state property.

Will vs. Revocable Trust: Benefits and Trade-offs

1) Probate avoidance and efficiency

Will-based plan:

• Probate is commonly required for individually titled assets.
• Timing depends on court schedules, paperwork, and complexity.

Trust-based plan:

• Trust assets generally avoid probate, which can streamline administration.
• Your successor trustee can often act more quickly than an executor waiting on court authority.

If avoiding probate is a top priority, a trust-based plan is usually the stronger tool.

2) Privacy

Will-based plan:

• Probate filings may become part of a public court file.

Trust-based plan:

• Trust administration is typically private, with far less public exposure.

Bottom line: If you value discretion (family dynamics, sensitive distributions, second marriages, etc.), trusts often offer a privacy advantage.

3) Incapacity planning (during your lifetime)

Both plans include Power of Attorney and medical documents but a trust-based plan often adds a practical layer:

Will-based plan:

• If assets are solely in your name, your agent under a POA may need to manage everything.
• Some institutions can be strict about older POAs or form compliance.

Trust-based plan:

• If assets are titled in the trust, a successor trustee can step in to manage trust assets if you’re incapacitated often with fewer roadblocks.
• This can reduce the chance of needing a court guardianship proceeding.

A trust can make incapacity management smoother, especially for clients with substantial assets or complex finances.

4) Multi-state property

If you own real estate in more than one state, a trust-based plan can be a game-changer.

Will-based plan:

• You may face probate in your home state and an additional court process in the other state (often called ancillary probate).

Trust-based plan:

• Properly funded trust ownership can help avoid multiple probate proceedings for real estate.

If you own property in both New York and New Jersey (or elsewhere), ask about a revocable trust.

5) Upfront cost vs. long-term cost

Will-based plan:

• Often lower upfront legal cost.
• Probate and estate administration costs may be higher later.

Trust-based plan:

• Typically higher upfront cost because it involves:
  • drafting the trust and “pour-over” will,
  • planning for funding,
  • and coordinating beneficiary designations and titles.
• Administration may be easier and less expensive after death if probate is reduced or avoided.

A will can be cost-effective now; a trust can be cost-effective over time especially when probate avoidance matters.

6) The “funding” requirement (the most overlooked issue)

A trust only controls what it owns.

Will-based plan:

• No “funding” step assets pass under the will (subject to probate).

Trust-based plan:

• You must retitle appropriate assets into the trust (and coordinate beneficiaries), such as:
  • real estate,
  • non-retirement brokerage accounts,
  • certain bank accounts (sometimes),
  • and other individually held assets.
• Most trust plans still include a pour-over will as a safety net to move any missed assets into the trust via probate.

Trusts are powerful but only when properly implemented. Good estate planning includes clear funding guidance.

A Revocable Trust is Not a “Medicaid trust”

A revocable trust generally does not provide asset protection from long-term care costs, nor does it typically remove assets from your taxable estate. It’s primarily about control, privacy, and probate avoidance.

If your goal is asset protection or Medicaid planning, that’s a more complex estate planning goal.

Talk with a New York & New Jersey estate planning firm

Estate planning isn’t just about documents it’s about making sure your plan actually works when your family needs it most.

If you’re deciding between a will-based estate plan and a revocable trust-based estate plan, Lau & Nicolello can help you compare options, avoid common pitfalls (like incomplete trust funding), and build a plan aligned with your goals.

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Lawsuit Summary

In the last week, Atlas Data Privacy Corporation, along with individuals who requested their data removed from hundreds of websites, have filed nearly 150 different lawsuits against multiple online data broker websites in New Jersey. These websites often consolidate and sell public data of individuals. While this practice was generally legal, recent legislation has made an exception for law enforcement officers, those who work in the courts or corrections, and their family members.

The complaint involves Atlas, alongside other plaintiffs, against named and unnamed defendants over violations of Daniel’s Law.

Daniel’s Law

Daniel’s Law was established to protect the personal information of public servants, including judges, law enforcement officers, and prosecutors, along with their families. It aims to prevent the disclosure of home addresses and unpublished phone numbers by data brokers. When a public servant notifies a data broker to takedown their information, the data broker has 10 business days to comply.

These lawsuits follow the tragic incident leading to the enactment of Daniel’s Law, where Daniel Anderl, the son of a New Jersey federal judge, was murdered by a gunman who obtained the judge’s home address through data broker services. Following this, both New Jersey and federal legislation were passed to protect the personal information of judicial and law enforcement personnel.

Atlas Data Privacy and Their Daniel’s Law Claim

The plaintiffs argue that the defendant data brokers operating websites, have failed to comply with the law by continuing to disclose protected information, endangering the lives and safety of the plaintiffs and their families. The violations occurred when the data broker websites were inundated with tens of thousands of takedown emails and failed to remove the plaintiff’s data within ten business days.

Atlas is able to bring these lawsuits because as part of their business model, they allow claimants to assign their claim of damages to Atlas.

The plaintiffs, including law enforcement officers and a corporation representing thousands of covered persons, seek injunctive relief, statutory damages, and compliance with Daniel’s Law from the defendants, who remain unnamed due to their efforts to conceal their identities.

Potential Liability

The defendants in these lawsuits face tens of millions in damages since the damages are calculated as the greater of actual damages or $1,000 per violation. The plaintiffs are also seeking attorney fees which can be significant in such a large and widespread area of litigation.

If your company has been sued by Atlas you view your case on the New Jersey Courts website, but you will need a qualified attorney to represent you or your business. Please fill out our form to discuss your case. Since these lawsuits were recently filed, an answer must be timely filed.

In the constantly changing area of estate planning and taxation, understanding the implications of new tax rules is crucial for both estate planners and beneficiaries. The Internal Revenue Service (IRS) Revenue Ruling 2023-02, issued on March 29, 2023, brought significant changes to the treatment of assets held in irrevocable grantor trusts, particularly affecting the step up in basis provision. We will explore the nuances of this ruling, its impact on estate and capital gains taxes, and considerations for estate planning strategies, especially in light of current estate tax exemption amounts.

For a quick rule of thumb, if an asset is counted in a person’s estate, and subject to estate taxes, it would qualify for a step up in basis, though there are limited exceptions to this. Even if an asset is subject to estate taxation, the tax may be zero if the value is below the estate tax exemption.

Understanding Step Up in Basis:

The step up in basis is a tax provision that resets the tax basis of an inherited asset to its fair market value (FMV) at the time of the owner’s death. This adjustment can significantly reduce the capital gains tax liability when the beneficiary (the person who inherits the assets) eventually sells the asset. For instance, if an asset originally purchased for $100,000 appreciates to $500,000 at the time of the owner’s death, the beneficiary’s tax basis becomes $500,000. If the beneficiary later sells the asset, capital gains tax would apply only on the appreciation above $500,000, not from the original purchase price.

IRS Rev. Rul. 2023-02: A Game Changer:

Revenue Ruling 2023-02 specifically addresses assets in irrevocable grantor trusts. It states that the step up in basis under Section 1014 of the Internal Revenue Code generally does not apply to assets in such trusts not included in the deceased grantor’s gross estate for federal estate tax purposes. In essence, assets transferred into an irrevocable trust during the grantor’s lifetime, and thus removed from their estate, do not qualify for the step up in basis at the time of their death.

Estate Taxes vs. Capital Gains Taxes:

The ruling brings distinction between estate taxes and capital gains taxes into focus. Estate taxes are levied on the transfer of the deceased’s assets to their heirs, based on the overall value of the estate. As of 2025, the federal estate tax exemption amount for an individual was $13.99 million, allowing many estates to avoid estate taxes entirely. However, capital gains taxes apply on the profit made from selling an asset and are determined by the basis of the asset. So careful planning should be done to help avoid paying unnecessary taxes.

Implications for Estate Planning:

The ruling primarily impacts affluent individuals who might have previously used irrevocable grantor trusts to pass assets while minimizing taxes. With the elimination of the step up in basis for these trusts, careful planning is required to balance the potential capital gains tax against the estate tax.

Estate planners may need to reconsider the use of irrevocable trusts or explore alternative strategies. For example, retaining certain high-appreciation assets in the estate might be more tax-efficient, given the large estate tax exemption and the potential for step up in basis and reduction in capital gains.

The role of life insurance as a tool to provide liquidity for paying estate taxes or capital gains taxes may become more prominent.

Navigating Trust Structures:

Understanding the specific types of trusts and their tax implications becomes even more critical. Certain trusts may still offer benefits in terms of estate tax planning, but with different capital gains tax consequences.

What is The Bottom Line?

The IRS Rev. Rul. 2023-02 represents a significant modification in estate planning, particularly for those with sizable estates and complex trust structures. It underscores the importance of regularly reviewing an existing estate plan and strategy. Particularly with this ruling, what was once thought to be a tax efficient estate plan may no longer be the best or optimal option.

IRS Rev. Rul. 2023-02 brings to light the intricate interplay between estate taxes and capital gains taxes in estate planning. Understanding these nuances is essential for effective estate planning. With the elimination of the step up in basis for assets in certain trust structures, it’s important for individuals to have their estate plan reviewed, modified, or created by qualified estate planning attorneys. Being proactive after this ruling could potentially save you or your loved ones a significant amount of tax liability. Should you have any questions about your existing estate plan or if you need one, please contact us.

Long Term Services and Supports

Long Term Services and Supports (LTSS) are services which a person would need to perform activities of daily living (ADL) such as bathing, dressing, grooming, or eating. Retirees, specifically, will need LTSS due to age, physical, cognitive, developmental, or chronic health conditions that limit their ability to care for themselves. LTSS can be provided institutionally in nursing homes or through home and community-based services (HCBS).

Statistically, You Will Need LTSS

Reaching 65 and being able to retire financially are great accomplishments. If you have saved enough to finally take a step back from your career and focus on yourself then you deserve it. However, reaching 65 also has its drawbacks. Aging takes its toll on the body and unfortunately ailments are discovered even though you may be in great health.

It is estimated that 70% of all people 65 years or older will require severe help or LTSS with activities of daily living such as dressing or bathing. And again, this help will either be in a nursing home or within the home or community. If you believe you will not need LTSS, then would you invest your retirement savings in something that has a 70% of becoming worthless? Would Warren Buffet make that bet?

Additionally, of the 70% who need LTSS, nearly 50% of them will receive paid services. The 50% who do not receive paid services will rely on family and friends for unpaid help with their daily activities. While it is great someone may have family to take care of their daily needs, such care can become burdensome, especially for those with progressive ailments.

Length of Long Term Care

On average, women who receive LTSS need it for about 44 months, while men require 26 months. Of all people requiring LTSS, about 20% will need it for more than 5 years.

Costs of LTSS

In 2021, LTSS cost Americans as a whole $467 Billion. This includes all forms of LTSS and whether self-pay or through government benefits.

In New Jersey, one on one home care typically ranges from $18 to $24 per hour, and most caregivers require a 4 hour minimum. For 24 hour live in care the cost can range up to $350 per day, nearly $100,000 per year. For nursing home care the estimated average monthly cost is about $13,000.

So for example, let’s assume someone needs help for 12 months in their home, which is below the average need of 44 months and 26 months for male and females, respectively. They hire an aide at $21 per hour for 4 hours each day. This is equal to $84 per day or $30,660 for the length of care. For nursing home level of care, that same 12 month duration would cost $156,000.

For most retirees living on a fixed income, these added expenses are not included in their budgets. Even for people not on a fixed income, these costs can significantly eat into discretionary spending or even create a financial hardship. It is unlikely most people can afford to pay for LTSS out of their own pockets, even with modest savings and retirement accounts. And unfortunately, most retirees have too much money to qualify for government programs.

How to Pay for LTSS

LTSS can either be paid out of pocket, through VA benefits, by long term care insurance, or by governments benefits such as Medicaid. An important note is that Medicare will only pay for a short term stays in a facility for specific reasons. For LTSS, Medicare is not an option. We’ll discuss both long term care insurance and Medicaid.

Long Term Care Insurance for LTSS

If you were insightful enough to purchase long term care insurance (LTCI) when you were younger, then you are in the minority, but you had great intentions. The idea of long term care insurance, pay premiums throughout your lifetime and have your home based or nursing care paid by your policy, seems great, the reality is long term care insurance isn’t as good as it was cracked up to be when you signed up.

First, premiums for LTCI are often expensive and become more expensive as you get older, and if you don’t use the LTCI, then you paid into a program you never got to use.

Second, if your policy does not have an inflation protection clause, meaning the benefit payments increase with inflation, then the payments you receive may not be enough to cover care when you need it.

Third, it is possible your claims will be denied for certain conditions such as dementia, or you will be forced to self-pay for a period before your benefits contribute to your care.

Lastly, the insurance company may no longer be in business by the time you need your benefits.

So it is true long term care insurance may be a good investment, but it is not guarantee you will be able to use when you need it.

Medicaid for Long Term Services and Supports

For people over 65 years old, Medicaid is an option to pay for LTSS. Medicaid is a federal program administered by individual states. Medicaid provides health coverage to older adults who have little to no income or resources. It covers health services, hospital stays, doctor visits, and long-term care services. In addition, Medicaid includes coverage for long-term care in nursing homes and home and community-based services.

Eligibility for Medicaid for those over 65 typically depends on income and asset limits set by each state. In New Jersey the income cap for an individual is $2,829 per month and an asset limit of $2,000. New York’s Limits are $1,677 per month in income and $30,182 in assets. The limits in place are quite low since the program is for low-income individuals.

As you can see, obtaining Medicaid as a retiree may be difficult since Social Security alone may disqualify you. And in most cases, if an individual is receiving LTSS, they will have to expend all of their assets before Medicaid contributes to their care. But there are methods that can be used to qualify someone while preserving at least some of their assets. Also, there are exceptions to what is counted as an asset when applying for Medicaid. Medicaid is particularly important for those who require services not covered by Medicare, such as long-term care and LTSS.

So yes, there is the potential for severe financial ruin if someone would require significant and lengthy Long Term Services and Supports. There are different ways to pay for LTSS, and we believe Medicaid is one of the most viable options. It is not for everyone, but a talk with a professional familiar with Medicaid Planning can help you decide and help preserve some of your financial legacy.

If you are interested in learning more about Medicaid Planning, or Estate Planning in general, please fill out our contact form below and we will be more than happy to help you.

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New Jersey’s 2024 Income and Resource Standards for Medicaid Only and 2024 Rates for Home and Community Based Services were announced on December 26, 2023. Effective January 1, 2024 the new amounts will take effect. While the changes do not amount to much, the changes are still significant and relevant to Medicaid recipients, applicants, and their spouses. It is important to know these figures if you are in need of Medicaid or you are researching Medicaid Planning.

The changes are based on the federal cost of living adjustment to the SSI eligibility standard, which is a 3.2% increase. A brief summary of the changes is highlighted below.

Income and Asset Caps for Medicaid Eligibility

First, the maximum gross income cap (before any deductions) for an individual seeking institutional or nursing home care has increased from $2,742 per month to $2,829 per month. However, the personal needs allowance, the amount a Medicaid recipient in nursing home care can keep, has remained at $50 per month and the asset limit for an individual applicant stays at $2,000 and at $3,000 for married couples seeking coverage.

Second, the spousal impoverishment standards have also increased for 2024. Spousal impoverishment rules ensure that the spouse of a Medicaid recipient who is not in nursing home care has enough income and resources to not be impoverished. For the limits on income of the community spouse, The Minimum Monthly Maintenance Needs Allowance remains unchanged at $2,465 per month, while the Maximum Monthly Maintenance Needs Allowance increases from $3,715.50 per month to $3,853.50 per month.

The Minimum Monthly Maintenance Needs Allowance can be increased up to the Maximum amount of $3,853.50 using the Shelter Standard, or Excess Shelter Allowance, of $739.50 per month (unchanged from 2023) and the Standard Utility Allowance of $850 per month.  (up from $730).

For the limits on resources, or countable assets for a spouse of an individual receiving Medicaid in a nursing home, the Minimum Community Spouse Resource Allowance increases from $29,724 to $30,828. The minimum amount can change however since the community spouse can claim half of the couple’s countable assets, up to a Maximum Community Souse Resource Allowance of $154,140, which increased from $148,620 in 2023.

Primary Residence Exclusion

Third, the amount of equity in a primary residence which may be excluded from available resources for Medicaid eligibility has increased from $1,033,000 to $1,071,000. Finally, an important note is that the Divestment Penalty Divisor, the number used to determine the period of ineligibility for transferring or divesting countable assets when applying for Medicaid, has remained unchanged at $384.57 per day. So for every $384.57 transferred during the 5 years prior to a Medicaid application, the applicant will be ineligible for coverage for one day.

Summary Table

Below is a summary of the 2024 amounts:

Max Gross Income Cap – $2,829.00

Personal Needs Allowance – $50.00

Individual Resource Allowance – $2,000.00

Married Couple Resource Allowance (Both in Nursing Home) – $3,000.00

Minimum Monthly Maintenance Needs Allowance – $2,465.00

Maximum Monthly Maintenance Needs Allowance – $3,853.50

Shelter Standard (Excess Shelter Allowance) – $739.50

Standard Utility Allowance – $850.00

Minimum Community Spouse Resource Allowance – $30,828.00 (or half of total marriage assets up to $154,140)

Maximum Community Spouse Resource Allowance – $154,140

Home Equity Limit – $1,071,000

Divestment Penalty Divisor – $384.57 per day

If you have any questions or need clarification on anything in this article, please send us a note below or call our office. We are here to help you and your family with planning for Medicaid eligibility and to establish an estate plan for that fits your and your family’s needs.

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When applying for Medicaid, the look-back period is often the most complex part of the process.  There are plenty of misconceptions and a great deal of confusion about Medicaid’s five-year look-back period, especially when it comes to long-term care in New Jersey.

This article aims to explain this complex topic to those who are navigating these waters either for themselves or their loved ones. We must caution though that Medicaid planning is not a do-it-yourself process.

What Is The Five-Year Look-Back Period?

The five-year look-back period is an important concept in Medicaid planning. It refers to the period of time that Medicaid reviews when an individual applies for assistance with long-term institutional care or home and community-based services. In New Jersey, this period is five years (or 60 months) prior to the date of the Medicaid application.

Why Does It Matter?

The primary purpose of this look-back is to ensure that applicants have not transferred assets below market value to qualify for Medicaid. If such transfers are found, they can lead to a penalty period, during which the individual is ineligible for Medicaid benefits and must pay for care out of their own pocket until the penalty period is over. These payments can be very significant.

Costs Of Care

Understanding the costs of institutional or home-based care is essential when considering Medicaid planning:

Institutional Care: This typically includes nursing home care. In New Jersey, the cost can be significant, often exceeding $10,000 per month.

Home And Community-Based Services: These services are intended to help individuals stay in their homes. While generally more affordable than institutional care, they can still be substantial.

What Assets Count?

Exempt And Non-Countable Assets

Not all assets are considered in determining Medicaid eligibility. In New Jersey, certain assets are exempt or non-countable. Below are a few assets which are considered “non-countable.”

Primary Residence: Up to a certain equity limit (New Jersey is $1,033,000), if the applicant intends to return or if a spouse or dependent relative lives there.

One Vehicle: Used for transportation of the applicant or a family member.

Personal Belongings And Household Effects: These are typically exempt.

Prepaid Funeral And Burial Expenses: If certain conditions are met.

Certain Types Of Trusts: Depending on their structure and terms.

Countable Asset Limits

When applying for Medicaid, the applicant’s countable assets must be below a certain threshold. As of the time of writing, an individual applicant in New Jersey is allowed to have $2,000 in countable assets. It’s important to note that these figures can change and vary depending on specific circumstances, such as if the applicant is married.

Strategies Used To Qualify

Elder law attorneys use various strategies to help clients qualify for Medicaid while preserving as much of their clients’ assets as possible. While we will give some examples of some common strategies used in Medicaid planning, it is important to consult with a qualified attorney.

Spending Down Assets

This involves reducing the countable assets to meet Medicaid’s eligibility threshold. It’s done by spending the assets on non-countable items or services.

For example, spend down strategies include paying off debt, home improvements, buying a car, paying for medical expenses, prepaying funeral expenses, and purchasing household goods or personal items.

Asset Conversion

Assets conversion involves converting countable assets into exempt assets. This strategy is often used in tandem with the spending down approach.

Often conversion is done by using cash (a countable asset) to pay off a mortgage or to make home modifications. Another example is purchasing an annuity that complies with Medicaid’s rules, thus turning a liquid asset into an income stream.

Establishing Trusts

Certain types of trusts can be used to protect assets. There are irrevocable trusts designed to hold assets outside of the Medicaid applicant’s estate.

Examples of such trusts is an Irrevocable Income Only Trust (IIOT) where the individual does not have direct access to the principal but may receive income generated by the trust.

Caregiver Agreements

Formal agreements where a family member is paid for providing care. This must be a formal and legally binding agreement that stipulates the scope of services and compensation.

A common scenario would be a contract between a parent and an adult child who provides caregiving services, with compensation that is in line with local rates for similar services.

Utilizing Exemptions For Spouses

Protecting the financial stability of the healthy spouse through spousal impoverishment rules.

This can be done by setting aside a certain amount of assets and income for the non-applicant spouse, known as the Community Spouse Resource Allowance (CSRA) and the Minimum Monthly Maintenance Needs Allowance (MMMNA).

Gifting And The Look-Back Period

Gifting assets can lead to penalties if done within the look-back period. However, small, carefully planned gifts might sometimes be used in certain planning strategies. Gifts are usually highly scrutinized.

Purchasing Long-Term Care Insurance

Long-term care insurance can help cover the costs of care without depleting assets, potentially avoiding the need for Medicaid entirely.

The five-year look-back period is a complex aspect of Medicaid planning, but understanding it is crucial when preparing for the potential need for long-term care. Hiring an elder law attorney to tailor these strategies to you or your loved one’s specific circumstances can potentially save thousands of dollars. The complexities of Medicaid rules and the variations by state necessitate careful planning and legal guidance. Working with a knowledgeable elder law attorney can ensure that these strategies are implemented effectively, preserving the dignity and financial stability of the elderly while ensuring they receive the care they need. If you have any questions, please call our office, or send us a call-back request.

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Importance of an Estate Plan

Estate planning isn’t only planning for what happens with our things after we die, but it is also about planning what to do with our things if we can’t tell anyone while we are alive. Having this talk with a loved one, parents in particular, can be difficult and confrontational, but it shouldn’t be. So how should this conversation be started and what can you do to get the process started? I’ll give you some ideas that can build on themselves and hopefully get your loved ones a full estate plan in place. Please keep in mind small steps over time can be very helpful, but trying to get this done in one day can be overwhelming.

Ask Them For Advice About Your Estate Plan

Parents typically love giving advice to their children, and what better advice to ask them than how to plan for your own family. Casually mention to them you were looking at life insurance policies and ask what type, company, and policies they use and if they recommend them or not. Then ask who the beneficiaries should be. Ask who their beneficiaries are to compare. Do the same for any retirement accounts. Ask them who should be the primary beneficiaries or secondary beneficiaries and see who their beneficiaries are. If they mention aunt grace, who’s been dead for 13 years, is their beneficiary or they don’t know, say “maybe you should take a look.”

If the only thing you get out of this process is your parent or loved one adds or updates their beneficiaries, then that is a huge win. Adding beneficiaries, especially to retirement accounts, avoids the account going into their estate upon death and being subject to creditors, but also has very favorable tax benefits.

Ask Them About Where They Want To Live

Having a simple conversation with your loved one or parent about where they want to live can give you some very valuable information. Do they want to down-size, live with other people their age, or not have to worry about maintenance? This can give you a clue into how they think they are doing physically and financially.

If they do want to move, then it could be a good opportunity to have further discussions about setting up the new home properly for planning purposes. It could be as simple as asking the real estate attorney handling the transaction their opinion, or preferably, calling an attorney who specializes in estate planning or Medicaid planning. This will at least get your loved one thinking that perhaps there are some strategies they are unaware of maybe it is worth considering looking into.

If they don’t want to move, then the conversation can end there. Or you can simply ask what they want to do with the house or who they would want to get the house when they pass and if there is any plan set up for it. Again, this may get them thinking about some planning, and while a will would be helpful here, a simple solution could be making a minor change the deed.

What Should We Do If Something Happens?

Ask your parent if they thought about what they want to happen if they ended up unexpectedly in the hospital and if anyone knows what should be done. If they say to you they want a “do not resuscitate order”, or they want life sustaining treatment, suggest to them that it should be in writing. Ask them if there is anyone they would want to make healthcare decisions if they can’t speak or communicate.

Let’s Talk Finances

In estate planning, I believe the most difficult conversations with aging parents or loved ones involve finances and the appearance of giving up control. So conversations involving money and “power of attorney” can become heated or argumentative. Keeping the conversation level is important in keeping your loved one engaged in the discussion.

Present your loved one with the same problem as being in the hospital and unable to communicate. If they can’t tell you what they want done medically, what about taking care of their finances? How is someone going to pay their bills, transfer money from their savings to their checking account, or write a check to their landlord? Explain to your loved one that having someone able to do that can let them focus on getting better. Instead of having to worry about paying their bills, your loved one’s “assistant” can take care of their affairs. Something as simple as writing a check becomes very difficult once someone can’t do it for themselves.

It can also be helpful and set their mind at ease to explain that having someone they trust, or two people they trust, to take care of their finances while they are unable to is of utmost importance. Additionally, while I prefer drafting durable powers of attorney that are effective immediately, there are also options to have the power of attorney only come into effect upon incapacity. This option may be attractive to someone who may have trust issues, but still be effective in times of necessity.

Did You Get Their Attention?

An estate plan and end of life planning are difficult conversations and not something really anyone wants to talk about. However, it is inevitable we will all die. Getting an estate plan in place can make it significantly easier and less stressful for our loved ones. Starting the conversation can be awkward and emotional but taking a few of these tiny steps a little at a time may help get your parents or loved ones a proper plan or at least thinking about it. Eventually it is best to involve a competent estate planning attorney. Think of hiring an attorney as an investment that can save time and money in the long run.

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New York proposed to amend its Medicaid section 1115 demonstration, also known as the New York Medicaid Redesign Team (MRFFCRAT) waiver.

The amendment seeks to implement a 30-month transfer of assets lookback period for coverage of community-based long-term care (CBLTC) services, and approval to exclude certain enrollees from these rules. This is similar to the current 60 month look back period for institutional based (nursing home and assisted living) Medicaid benefits. Currently, New York does not consider assets transferred in determining eligibility for community based long-term care services.

The earliest date that the state will seek implementation is March 31, 2024, due to the federal Covid-19 public health emergency declaration and the maintenance of effort requirements under the Families First Coronavirus Response Act (FFCRA). However, importantly, there has been an unofficial announcement that the look back period will not be implemented until at least 2025. These dates have been moving for quite some time and we will continue to monitor them.

What Are Community-Based Long-Term Care Services and Why Are They Important?

CBLTC services help individuals with chronic conditions or disabilities to live independently and avoid institutionalization. These services include personal care, home health care, adult day health care, private duty nursing, consumer directed personal assistance, and managed long-term care. CBLTC services are essential for improving the quality of life and health outcomes of many Medicaid beneficiaries, especially older adults and people with disabilities.

What is The 30-Month Transfer of Assets Lookback Period for Medicaid, Who Will Be Affected?

The 30-month transfer of assets lookback period is a policy that requires Medicaid applicants to disclose any transfers of income or resources that they or their spouses made within the 30 months prior to the month of application for CBLTC services.

If the state determines that a transfer was made for less than fair market value and was not for a valid purpose, such as paying for medical expenses or supporting a dependent, the state will impose a penalty period during which the applicant will not be eligible for CBLTC services.

What Are the Penalty Periods?

The penalty period is calculated by dividing the amount of the transfer by the average monthly cost of nursing home care in a particular region of the state, which ranges from $11,328 (Central) to $14,012 (Long Island). For example, if someone on Long Island transferred $280,240 to someone during the lookback period, their penalty period would be 20 months of ineligibility ($280,240 /$14,012 = 20 months). During the 20 months, they would be responsible for paying for services out of pocket.

The 30-month transfer of assets lookback period will apply to certain categories of non-institutionalized individuals who are aged, blind, or disabled and subject to non-magi budgeting rules. These include the ticket to work basic group, the ticket to work medical improvement group, and the medically needy aged, blind, and disabled.

The State is seeking approval to exclude individuals enrolled in Mainstream Managed Care and Medicaid Advantage from the 30-month transfer of assets lookback period, regardless of whether they are in a category that is subject to the lookback.

When is The New Rule Effective?

If the effective date for Community-Based Long-Term Care transfer rules is March 31, 2024, and an application CBLTC services  is made April 1, 2024, then a penalty period would be assessed for any transfers made in the previous 30 months.

New York’s addition of a lookback period for asset transfers when applying for Community Based Long-Term Care services brings its program in line with most of the other states. However, this change can have eligibility consequences for those who have too many assets when trying to qualify for Medicaid.

What Should You Do If You Need CBLTC Services and Medicaid?

You should definitely speak to a competent Medicaid planning attorney to avoid common mistakes which can impact eligibility and have possible tax consequences. A short consultation with an attorney can answer many questions and potentially save you thousands of dollars or get you qualified for Medicaid quicker.

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What Is A Healthcare Proxy and Advance Directive?

In the state of New Jersey, individuals have the right to make decisions about their healthcare through an advance directive and a healthcare proxy. These legal documents allow individuals to specify their medical preferences, ensuring their wishes are respected, even if they become unable to communicate or make decisions.

Here we will go through some of the key provisions of New Jersey’s regulations governing advance directives and healthcare proxies. We hope this can help you and your loved ones understand and plan for the future. If you have any questions, please contact us.

Advance Directive Execution (26:2h-56):

New Jersey law allows individuals (declarants) to execute an advance directive for healthcare at any time. The document must be signed and dated in the presence of two adult witnesses who attest to the declarant’s sound mind and freedom from duress. Alternatively, the directive can be notarized, and it may also include audio or video recordings. Specific provisions apply to female declarants regarding pregnancy-related instructions.

Reaffirmation, Modification, And Revocation (26:2h-57):

Declarants can reaffirm, modify, or revoke their advance directives. Revocation can be done through notification or by executing a subsequent directive. Various conditions, such as divorce or legal separation, trigger automatic revocation of a spouse’s designation as a healthcare representative.

Designation Of Healthcare Representative (26:2h-58):

Declarants can designate a healthcare representative, excluding certain individuals associated with healthcare institutions. Alternate representatives can be appointed, and limitations on authority, especially pertaining to pregnancy, can be specified.

Operative Conditions (26:2h-59):

An advance directive becomes operative when transmitted to the attending physician or healthcare institution, and it is determined that the patient lacks the capacity to make a specific healthcare decision. Treatment decisions require a reasonable opportunity for diagnosis and prognosis confirmation.

Determination Of Patient’s Capacity (26:2h-60):

The attending physician assesses the patient’s decision-making capacity, which may be confirmed by other physicians. Specialized training is required if the incapacity is due to mental or psychological conditions. Patients are informed of the determination and their right to contest it.

Authority To Make Healthcare Decisions (26:2h-61):

If a patient lacks decision-making capacity, a healthcare representative, designated in the advance directive, has the authority to make healthcare decisions on their behalf. The representative must act in good faith, keeping the patient’s best interests in mind.

Rights And Responsibilities Of Healthcare Professionals (26:2h-62):

Healthcare professionals have specific rights and responsibilities, including making inquiries about the existence of an advance directive, noting its presence in medical records, and respecting the right of professionals to decline participation based on personal or professional convictions.

Decision Making Under An Advance Directive (26:2h-63):

The attending physician, healthcare representative, and additional physicians discuss the patient’s medical condition and treatment options. The healthcare representative prioritizes the patient’s wishes, seeking to make decisions in line with the patient’s intent.

Effect Of Instruction Directive (26:2h-64):

If a patient has an instruction directive but no designated representative, or if the representative is unavailable, the directive is legally operative. Clear and unambiguous directives are honored, while less specific ones may be interpreted in consultation with the attending physician.

Additional Rights And Responsibilities Of Healthcare Institutions (26:2h-65):

Healthcare institutions have rights and responsibilities, including routine inquiry about advance directives, providing informational materials, educating patients and families, establishing dispute resolution procedures, and respecting the rights of healthcare professionals.

Resolution Of Disagreements (26:2h-66):

Disagreements among patients, healthcare representatives, and attending physicians can be resolved through institutional procedures, consultation with an ethics committee, or legal means.

Circumstances For Withholding Or Withdrawing Life-Sustaining Treatment (26:2h-67):

Life-sustaining treatment may be withheld or withdrawn in specific circumstances, such as experimental or futile treatment, permanent unconsciousness, terminal condition, or a serious irreversible illness where risks outweigh benefits.

Understanding New Jersey’s advance directives and healthcare proxies rules helps individuals to plan ahead and ensure their healthcare preferences are respected. These legal instruments allow individuals to make decisions about their medical care, even when they are unable to communicate or decide for themselves. By familiarizing yourself with the regulations outlined in New Jersey law, you can take control of your healthcare and estate planning journey and provide clear guidance for your loved ones and healthcare professionals. Please contact us if you would like to discuss how we can help plan you or your loved one’s estate.

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Introduction to The Acts

Retirement planning underwent significant changes with the introduction of the Secure Act in 2020 and its subsequent enhancement, Secure 2.0, in 2023. These legislative updates brought about profound adjustments, especially concerning the rules governing inherited individual retirement accounts (IRAs). We will explore the reverberations of the secure act, highlighting key modifications, and delve into the additional guidance provided by the Secure 2.0 act.

Key Secure Act 2.0 Highlights

1. Mandatory Distributions and Age Adjustments:
   • Distributions from IRAs, including those inherited, remain taxable income.
   • The SECURE Act raised the age for mandatory minimum distributions (RMDs) from 70 ½ to 72 for IRA owners.
   • SECURE 2.0 further extends the age for RMDs for original IRA owners from 72 to 73, with subsequent increases to 75 starting in 2033.
2. Changes in the 10-Year Rule:
   • The SECURE Act introduced the 10-year rule for designated beneficiaries, replacing the previous stretch-out provision.
   • Under the 10-year rule, most designated beneficiaries must complete required distributions within 10 years of the plan participant’s death.
   • See-through trusts with individual designated beneficiaries are also subject to the 10-year rule.
3. IRS Proposed Regulations and Notice 2022-53:
   • The IRS proposed regulations in February 2022 aimed to clarify distribution rules, especially concerning the 10-year rule.
   • Notice 2022-53, issued in October 2022, further clarified these regulations, stating that they would become final in 2023.
4. Surviving Spouses and Eligible Designated Beneficiaries:
   • Surviving spouses receive favorable treatment, with options to become the new owner of the IRA, roll it into an existing IRA, or remain an inherited beneficiary.
   • Eligible designated beneficiaries, including surviving spouses, disabled individuals, chronically ill individuals, and those not more than 10 years younger than the deceased, generally have the option to stretch out minimum distributions over their lifetimes.
5. Changes in RMD Schedule for Surviving Spouses:
   • Surviving spouses must now elect to treat an IRA as their own by the end of the calendar year when they reach age 72 or the end of the calendar year following the plan participant’s death.
   • The February 2022 proposed regulations offer surviving spouses the choice of the 5-year or 10-year rule.
6. Special Considerations for Disabled and Chronically Ill Beneficiaries:
   • Disabled beneficiaries must provide proof of disability, meeting specific criteria outlined in the IRS regulations.
   • Chronically ill beneficiaries must obtain certification from a licensed healthcare practitioner, indicating the inability to perform certain activities of daily living.

Understanding the intricate web of regulations surrounding inherited IRAs is crucial for beneficiaries and financial professionals alike. The SECURE Act and subsequent SECURE 2.0 Act have reshaped the landscape, requiring careful consideration of age, beneficiary status, and proposed IRS regulations. Staying informed about these changes ensures effective estate planning and compliance with the evolving rules governing retirement accounts. If you are interested in hearing more about Estate Planning or Medicaid Planning, please contact our office.