Blogs from June, 2024

A common misconception is that a last will and testament avoids the probate process altogether. This is not the case. The reality is that a will must go through probate after someone’s passing for any assets remaining in their name, without a joint owner or beneficiary designation. However, having a properly drafted will in place makes the probate process significantly easier and more efficient for your loved ones. With a valid will, you control how your estate is distributed according to your wishes instead of state intestacy laws. You can name an executor to oversee the process, designate guardians for minor children, specify transfers of particular assets, and more. While a will does not avoid probate, it provides crucial instructions and legal powers that streamline things for your heirs and beneficiaries.

What is Probate?

Probate is the legal process that takes place after someone dies. It includes validating the deceased person’s will, identifying and appraising their assets, paying off any debts and taxes, and distributing the remaining assets to the rightful heirs or beneficiaries. The probate court oversees this process.

Even with a valid will in place, probate is generally still required. The key difference is that with a well-drafted will, the probate process tends to be shorter, easier, and less expensive compared to not having a will at all.

How a Will Helps with Probate

While a will doesn’t bypass probate, it does provide vital instructions for the probate court. Specifically, a will allows you to:

• Name an executor to oversee the estate and probate process
• Designate guardians for minor children
• Specify how assets should be distributed among heirs/beneficiaries
• Potentially minimize taxes and other costs through proper planning

Without a will, the court will appoint an administrator (which may or may not be a family member) to handle your estate. Your assets will also pass to your closest relatives as defined by state intestacy laws, rather than according to your own wishes.

By having a clear, legally-valid will in place, you provide crucial directions that can streamline and simplify the probate process. Your named executor can take the lead, assets can be transferred per your wishes with less court oversight, and the overall process is likely to be shorter and less costly.

While having a Last Will and Testament is crucial, there are additional estate planning strategies that can further streamline the distribution of your estate and potentially avoid the probate process.

The Takeaway

A will is an essential estate planning tool that makes the probate process easier on your loved ones after you’re gone – even though it doesn’t completely avoid probate. Working with an estate planning attorney can ensure your will is properly created to maximize its benefits.

If you’re looking to help out your grandchildren financially, or simply wish to be generous, you may be wondering how gifting money could affect your eligibility for Medicaid long-term care benefits down the road. The short answer is that gifting can make you ineligible for Medicaid for a period of time due to the program’s asset transfer rules. However, there are certain allowances and strategies to be aware of.

The Medicaid Look-Back Period

To receive Medicaid coverage for nursing home care, assisted living, or in-home care, there are strict limits on the amount of assets you can have. This is because Medicaid is a needs-based program intended for those with limited resources.

Any gifts or asset transfers made within a specified “look-back” period before applying for Medicaid can trigger a penalty period of ineligibility. The federal look-back is 60 months (5 years).

*Side note: Although Medicaid is a federal program, the rules in each state vary. While all states implement the 60 month look-back for nursing home Medicaid eligibility, and most for community based services (including home care and assisted living care) as well, historically, New York did not have a look-back for community-based services. In 2020, New York State enacted a 30 month look-back but has delayed implementation and as of this writing, there is no definite date of its implementation for community based services.

So if you gift cash to your grandchildren, that amount gets totaled along with any other assets you’ve transferred during the look-back. Medicaid then determines how long you’ll be ineligible based on the transfer amount.

For example, let’s say you gift $112,000 to your grandkids, and the Medicaid nursing home regional rate in your county is $14,000. Your ineligibility period, the “penalty period,” would be around 8 months ($112,000 / $14,000 per month). Medicaid will not seek the penalty from your grandchildren, but you will have to figure out a way to come up with paying the nursing home privately during the penalty period before Medicaid begins to cover your bill.

There is a misconception that gifts under the federal annual gift exclusion amount would not be penalized by Medicaid. For 2024, the amount of the federal annual gift tax exclusion amount is $18,000. For example, some people believe that if they give $54,000 to three grandchildren this year, it won’t affect their Medicaid eligibility. That is not true. The IRS federal gifting rules are very different than the Medicaid penalty rules. Read more here.

Careful Planning is Key

While gifting to grandkids can be penalized for Medicaid purposes, if it is your wish to continue gifting while protecting your assets for Medicaid eligibility, there are strategies that an elder law attorney can develop for you.

Getting advice from an experienced elder law attorney is highly recommended to understand the complex rules and protect your eligibility.

Reach out to us; we would love to help you.

Owning a home is a major investment, and unfortunately, property fraud is a real risk that homeowners need to guard against. Fraudulent transfers involve someone illegally transferring ownership of your property without your knowledge or consent. This can enable scammers to take out mortgages against your home, sell it, or commit other fraud.

There are companies that offer property monitoring services for a fee to alert you to any suspicious activity on your property’s records. However, many county governments provide similar alert systems that homeowners can sign up for directly at no cost.

For example, in New York State, Nassau County, Suffolk County and New York City provide free notification systems to alert homeowners about any recorded land record documents affecting their properties.

• Nassau County Property Fraud Alert Sign Up
• Suffolk County Homeowners WatchList “HOWL”
• New York City Notice of Recorded Document

These alert systems help keep homeowners informed about any activity on their property records and it the sign-up process is simple and quick.

While availability varies by location, many other county and municipal recorders’ offices provide similar automatic alert services related to property records. Check with your local county or town to see if they have a fraud alert system you can sign up for. It’s an easy, free way to stay informed and safeguard your home against fraudulent transfers.

Of course, signing up for alerts is just one precautionary step which shouldn’t preclude taking other protective measures to ensure that your property and title are secure.

Further, in addition to protecting your home from fraudulent activity, it’s important to protect your home equity from other threats that may especially affect elderly homeowners:

Long-Term Care Costs – Having to pay for extended nursing home care or in-home assistance can rapidly deplete a senior’s savings and home equity if proper planning, such as Medicaid planning, isn’t done.

Taxes – Elderly homeowners can face heavy tax burdens when selling or passing down their home due to capital gains, estate taxes, and other costs if done incorrectly.

Predatory Tactics – Unscrupulous lenders, relatives, caretakers or scam artists may use deceptive tactics to unlawfully gain control over a senior’s home title and assets.

While signing up for free county alerts is wise, a multi-layered approach combining proactive estate planning and asset protection steps is prudent to fully secure your home’s title and equity against the range of threats facing homeowners, and particularly elderly homeowners.