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The below answers are provided as general information and are not intended to provide legal advice. Legal advice can only be provided after discussing your specific circumstances in detail with a qualified attorney.
 


 
 

 

 

 

 

 

 

 

 


 


What is the “Lookback Period”?
Medicaid looks back 60 months from the date of a Medicaid application to determine whether you have made any gifts. The lookback period is only an audit period during which time Medicaid has the right to review all of the financial records of the applicant (and the spouse of the applicant, if applicable).

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Am I Ineligible For Medicaid If I Have Transferred Assets Within The Lookback Period?
Whether a period of ineligibility applies depends on the amount and date of the gift, the identity of the recipient, and the type of Medicaid benefit you seek. Transfers to spouses and disabled children are not subject to a penalty and additional exceptions may apply if the applicant transferred his or her residence. The transfer penalty is only for nursing home care and the LTHHC (“Long Term Home Health Care”) Program. The transfer penalty can be shorter or longer than 60 months. There is no transfer penalty for Medicaid home care.

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Are Gifts Under $12,000 Excluded from the Medicaid Transfer Penalty?
A gift of under $12,000 is subject to the Medicaid transfer penalty rules for nursing home care and the Long Term Home Health Care program even though the gift is excluded for federal gift tax purposes.

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Do Gifts in Excess of $12,000 Require a Gift Tax Payment?
Gifts in excess of $12,000 are subject to Federal gift tax, but the amount of the gift will be offset by the $1,000,000 Federal gift tax exclusion. Therefore, no gift tax is actually due unless the donor’s total lifetime gifts exceed $1,000,000. New York State no longer has a gift tax.

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Are Life Insurance Proceeds Tax Free?
Generally, the receipt of life insurance proceeds are income tax free but not estate tax free. Proper planning can be undertaken, however, so that life insurance proceeds are also estate tax free. For example, an Irrevocable Insurance Trust can be utilized.

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Should I have a Durable Power of Attorney?
It is advisable to have a Durable Power of Attorney if you have at least one person whom you trust implicitly who is also willing to manage your financial affairs in the event you become incapacitated. If you become incapacitated and you have not executed a proper Durable Power of Attorney, a costly guardianship proceeding would likely be necessary to obtain authority from the court to manage your affairs.

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Do Revocable Trusts Avoid Estate Taxes?
A Revocable Trust does not avoid estate taxes although it may avoid the probate process. The Trust assets will be part of the grantor’s estate for estate tax purposes. Nonetheless, married couples can save estate taxes by having Revocable Trusts which contain a Credit Shelter Trust (also known as a By-Pass Trust.)

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Can Revocable Trusts Protect Assets from Medicaid?
A Revocable Trust does not protect assets from Medicaid and the nursing home. The Trust assets are considered available for the purpose of determining Medicaid eligibility. Creditors such as a nursing home can also make a claim against the Trust assets. Only a properly drafted Irrevocable Trust will protect the assets from Medicaid and the nursing home.

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Is Estate Planning Necessary For Individuals With Under $1,000,000 In Assets?
Everyone should implement estate and long term care planning to protect one’s assets and to preserve one’s dignity. A Durable Power of Attorney, Health Care Proxy and Living Will can ensure ongoing decision making in the event of a disability. Wills and Trusts can ensure a proper disposition of your assets at the time of your death. Long Term Care Planning can protect your assets from Medicaid and the nursing home. There are also Federal and State income tax issues which affect people with under $1,000,000 that should be addressed (for example, IRA distributions, basis rules, and capital gains on the sale of a residence).

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Once My Estate Plan Is Implemented Am I Done?
An individual’s estate plan is always changing due to life circumstances as well as changes in the law. It is important to review your estate plan on an annual basis or upon the happening of an event such as the birth of a child or grandchild, divorce, a medical emergency, incapacity, receipt of an inheritance, the passing away of a loved one, or in contemplation of a new marriage.

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When Can I Challenge a Will?
Whether you can challenge a person’s Last Will and Testament generally depends on whether you are an interested party. An interested party is a person who is a distributee (the closest relative who would receive the decedent’s assets if a Will had not been executed) or a person who can demonstrate they had a greater interest under the decedent’s prior Will. Additionally, a person challenging a Will must generally prove either that the decedent did not have capacity at the time the Will was signed, that the Will was improperly executed (a presumption applies that the Will was properly executed if an attorney supervises the execution of the Will), the decedent was unduly influenced, or that the Will was the result of fraud.

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