Archive for the ‘Estates General’ Category

No Expanded Estate Recovery!

We  blogged recently about the status of the legislation in New York expanding the definition of “estate” for Medicaid recovery purposes. This legislation would enable Medicaid to recover its costs from assets including those jointly held, life estates and even possibly retirement accounts.

We are very happy to report that the Governor and the Legislature have agreed to repeal the legislation expanding estate recovery.  They have also rejected a proposal to eliminate spousal refusal.

Medicaid recipients and future Medicaid applicants will benefit greatly from this repeal of expanded estate recovery and the continuation of spousal refusal.

A Retained Life Estate May No Longer Avoid Medicaid Recovery

A retained life estate is itemized in new Medicaid law and regulations as a type of non-probate asset now included in the definition of “estate” for Medicaid recovery purposes. Therefore, a deceased Medicaid recipient’s interest in a retained life estate may now be available for Medicaid recovery on the death of the Medicaid recipient.

The potential recovery of this interest was not anticipated when many parents even years ago transferred their home by deed to a child or children and retained a life estate.  We expect that Medicaid’s legal right to recover from a life estate interest will be challenged in court in the near future. However, we do not know what the results of that litigation might be and as of now the retained life interest is a recoverable asset.

The owner of a retained life estate may have options available to protect the life estate interest.  This will depend upon the individual’s particular situation.

Beneficiary Designations Can be Tricky

We often name beneficiaries on different funds including retirement accounts, insurance policies, bank accounts, brokerage accounts. It is very important to properly designate the beneficiaries on these accounts in order to assure they will ultimately go to the intended beneficiaries.

For example, bank accounts with beneficiaries are called Totten Trusts. If the account owner of a Totten Trust dies with two named beneficiaries on the account, one of whom predeceased the account owner, the result is that one half of the account will go to the surviving beneficiary and the other half will fall into the account owner’s estate. If the account had been set up with the beneficiaries names as joint with right of survivorship, then the full account on the account owner’s death would pass to the surviving beneficiary.

Beneficiary designation forms provided by insurance companies and brokerage firms must be read very carefully.  The account owner may inadvertently indicate  beneficiaries in a way that was never intended. These forms may have default provisions which may take over if the account owner did not sufficiently or clearly indicated how the account is to be distributed.

All beneficiary designations should take into consideration the owner’s estate plan to be sure that these designations will not unintentionally supersede plans created in a will or trust.

It is very important to give careful consideration to naming beneficiaries, and when unsure of the proper way to accomplish estate objectives, ask for guidance.

Coping With The Loss of A Spouse

The passing of a beloved spouse is an awful thing.  The emotional loss coupled with the disappearance of the day to day companionship leaves the surviving spouse trying to fill a cavernous space.  In her June 15, 2010 New York Times column, Jane E. Brody  writes of the challenging job a surviving spouse has in making an emotional adjustment to the loss.  I think you will find the column interesting and you can access it at http://www.nytimes.com/2010/06/15/health/15brod.html. Ms. Brody not only addresses the difficulties of the emotional issues surrounding the loss of a spouse but  she concludes her column by remarking on the concerns many widows and widowers have in regard to what will happen as they age and perhaps grow ill and require long-term care. This is a real concern.  One way to assuage these fears is to learn about what the options are in regard to receiving long-term care and how to pay for long-term care.