New Jersey Medicaid FAQ If a person is going to transfer assets, do they need to do it more than five (5) years prior to entering a nursing home?

 

No. The five (5) years is simply a look back. If transfers occurred more than the five (5) years look back, there is no penalty. If transfers occurred during the five (5) year look back, there is a penalty. In most instances, the penalty is significantly shorter than five (5) years.

 

Is it too late to do Medicaid Planning if someone is already in a nursing home?

 

No. Medicaid Planning can be done even after someone has already entered a nursing home.

 

Under Medicaid is it alright to transfer $13,000 to each family member every year?

 

No. The $13,000 per year gifting limit is part of the federal gift tax law, not the Medicaid law. Medicaid does not permit any transfers within a look back period without them being subject to penalty. On the other hand, if gifts made for Medicaid purposes exceed $13,000 per person, per year, this does not necessarily trigger payment of a gift tax.

 

It simply means that a gift tax return will have to be filed. Beginning in January 2002, a person can gift $1,000,000 during his lifetime or on death in addition to the $13,000 per person per year without paying any tax.

 

TESTIMONIALS I knew I needed an attorney, but could I afford one? Would he or she be experienced and someone I could trust and talk to openly and in confidence?   I was referred to Fredrick P. Niemann. I was warmly greeted and my appointment promptly kept. I was given all the time I needed to ask questions and talk about my needs and concerns. I was quoted a fee that was appropriate and reasonable for my matter. My attorney gave me answers and advice. He was a counselor at law and in life. Calling Mr. Niemann was the right decision. —Nick Alfano, Morganville, NJ   I didn’t know who to turn to for legal advice. There are so many lawyers, but who was the right one for me? I wanted someone who would listen to me and someone I could afford. I knew I couldn’t afford to be without an attorney and then I remembered an old cliché...”you get what you pay for”. But there can be a difference between high price and high value. With Fred, I got a terrific attorney who really worked with me. He was with me every step of the way. His fees were fair and our interpersonal relationship great. I would recommend Fred Niemann to anyone who wants a caring attorney. —Josephine Pysniak, Woodbridge, NJ

 

Does the person receiving the gift for Medicaid Planning purposes have to pay income taxes on the gift?

 

No. A gift is not taxable income. The person receiving the gift does not declare the gift on their 1040 tax return. However, if the person receiving the gift invests the gift, they must report the investment income from the gift on their 1040.

 

Are there any income tax issues to be considered in Medicaid Planning?

 

Yes. If a person withdraws money from an IRA, it is taxable income. If a person liquidates certain Bonds, it is taxable income. If a person liquidates H Bonds, which have been converted from E or EE Bonds, it generates taxable income. If a person withdraws money from an annuity, a portion of the withdrawal is taxable income. If a person assigns an annuity, it triggers immediate income tax on the deferred income. These are a few of the many examples of events which trigger income tax. Carryover basis, step up in basis and tax on sale of home are some of the others. Good Medicaid Planning incorporates good tax planning.

 

Can trusts be used for Medicaid asset transfer purposes?

 

Yes. The Federal Government has approved the use of certain types of trusts for Medicaid Planning purposes.

 

Is it true that a home is not counted for Medicaid eligibility purposes?

 

In some cases, a home is not counted as an asset for Medicaid eligibility purposes. However, the home must always be considered in Medicaid Planning. Even if it is not counted as an asset for Medicaid eligibility purposes, New Jersey will file a lien on the home upon the Medicaid applicant's death, under certain circumstances.

 

Is there a way I can transfer my home to my children but insure that I can live there for the rest of my life?

 

Yes. There is a technique known as a life estate or use and occupancy agreement. Under a life estate, or a right or use and occupancy, the parent transfers a remainder interest in the home to the children but reserves the right to live there for the rest of the parent's life. The children cannot sell the home out from under the parent or mortgage it without the parent's consent.

 

Is an annuity a good Medicaid Planning technique?

 

Under current New Jersey law, purchasing a commercial annuity may be treated as a transfer of assets or subject to estate recovery. This issue is in litigation in the federal courts.  Using an annuity may but may not be a good Medicaid Planning technique. Contact Fredrick P. Niemann, Esq. at fniemann@hnlawfirm.com or (888) 800-7442 for the latest update on this issue.

 

Is it important to address legal planning documents in Medicaid Planning?

 

Yes. It is always important to review Wills, Living Wills and Powers of Attorney. These documents are usually not designed for situations in which a family member will be applying for Medicaid. For example, if there is a husband and wife and the husband is entering the nursing home, the wife's Will usually leaves her assets to the husband. This needs to be changed.

 

 

Medicaid Attorneys serving these New Jersey Counties:

 

Monmouth County, Ocean County, Essex County, Cape May County, Mercer
County, Middlesex County, Bergen County, Morris County, Burlington County,
Union County, Somerset County, Hudson County, Passaic County

Call Fredrick P. Niemann, at 888-800-7442 or e-mail him at fniemann@hnlawfirm.com