NJ Estate Tax to be eliminated on Estates under $2,000,000 as of January 1, 2017

NJ Estate Tax to be eliminated on Estates under $2,000,000 as of January 1, 2017

         10/14/2016 Approved P.L.2016, c.57.

NJ Chapter Law c.57. reduces the sales and use tax rate from 7 percent to 6.875 percent on January 1, 2017 and reduce the rate from 6.875 percent to 6.625 percent on January 1, 2018. The law will revise the special transition provisions for taxing sales transactions that extend across the tax rate change dates. 

     The law will phase out the estate tax over two rather than four years, by first replacing the current $675,000 threshold with a “true” exclusion amount established at $2.0 million for decedents dying on or after January 1, 2017, and then eliminating the estate tax for decedents dying on and after January 1, 2018.  The law will also eliminate provisions of the bill that provided for the imposition of the estate tax on the New Jersey property of nonresident decedents. 

     The law will eliminate provisions of the bill that allowed an annual gross income tax deduction for State fuel taxes paid by taxpayers on purchases of motor fuel for the operation for personal use of the taxpayer’s motor vehicles and not otherwise reimbursed. 

     The law will cap the proposed increase in the gross income tax pension and retirement income exclusions to $100,000 for joint filers, $75,000 for individuals, and $50,000 for married but filing separately upon the full, four-year phase-in, by January 1, 2020, of the enhanced exclusion.  Under the law will, the phase in of the increase is as follows: 

Filer Type	Present	2017	2018	2019	2020
Joint	$20,000	$40,000	$60,000	$80,000	$100,000
Individual	$15,000	$30,000	$45,000	$60,000	$75,000
Separate	$10,000	$20,000	$30,000	$40,000	$50,000

The law will also eliminate the provision, for taxable years beginning on or after January 1, 2021, that allowed a taxpayer with income of more than $100,000 but not over $125,000 to exclude 50 percent of the amount of pension and retirement income otherwise allowed and a taxpayer with more than $125,000 but not more than $150,000 of gross income to exclude 25 percent of the amount otherwise allowed.

     The law will provide for an increase in the New Jersey Earned Income Tax Credit (NJ EITC) under the gross income tax to 35 percent, rather than 40 percent, of the federal benefit amount beginning in Tax Year 2016. The current statutory benefit amount under the NJ EITC is equal to 30 percent of the federal benefit amount.  

     The law will change the “2016 implementation date” for the new petroleum products gross receipts tax rates for most highway fuels to the later of November 1, 2016, or the 15th day after the date of enactment of the bill. The bill previously had anticipated a 2016 implementation date of September 1, 2016 or the 15th day after the date of enactment.

54:38-1 is amended to read as follows:

     54:38-1.  a. In addition to the inheritance, succession or legacy taxes imposed by this State under authority of chapters 33 to 36 of this title (R.S.54:33-1 et seq.), or hereafter imposed under authority of any subsequent enactment, there is hereby imposed an estate or transfer tax:

     (1)   Upon the transfer of the estate of every resident decedent dying before January 1, 2002 which is subject to an estate tax payable to the United States under the provisions of the federal revenue act of one thousand nine hundred and twenty-six and the amendments thereof and supplements thereto or any other federal revenue act in effect as of the date of death of the decedent, the amount of which tax shall be the sum by which the maximum credit allowable against any federal estate tax payable to the United States under any federal revenue act on account of taxes paid to any state or territory of the United States or the District of Columbia, shall exceed the aggregate amount of all estate, inheritance, succession or legacy taxes actually paid to any state or territory of the United States or the District of Columbia, including inheritance, succession or legacy taxes actually paid this State, in respect to any property owned by such decedent or subject to such taxes as a part of or in connection with the estate; and

     (2)   (a)   Upon the transfer of the estate of every resident decedent dying after December 31, 2001, but ²[after December 31, 2016,] before January 1, 2017,² which would have been subject to an estate tax payable to the United States under the provisions of the federal Internal Revenue Code of 1986 (26 U.S.C. s.1 et seq.) in effect on December 31, 2001, the amount of which tax shall be, at the election of the person or corporation liable for the payment of the tax under this chapter, either 

     (i)    the maximum credit that would have been allowable under the provisions of that federal Internal Revenue Code in effect on that date against the federal estate tax that would have been payable under the provisions of that federal Internal Revenue Code in effect on that date on account of taxes paid to any state or territory of the United States or the District of Columbia, or

     (ii)   determined pursuant to the simplified tax system as may be prescribed by the Director of the Division of Taxation in the Department of the Treasury to produce a liability similar to the liability determined pursuant to clause (i) of this paragraph reduced pursuant to paragraph (b) of this subsection.

     (b)   The amount of tax liability determined pursuant to subparagraph (a) of this paragraph shall be reduced by the aggregate amount of all estate, inheritance, succession or legacy taxes actually paid to any state or territory of the United States or the District of Columbia, including inheritance, succession or legacy taxes actually paid this State, in respect to any property owned by such decedent or subject to such taxes as a part of or in connection with the estate; provided however, that the amount of the reduction shall not exceed the proportion of the tax otherwise due under this subsection that the amount of the estates's property subject to tax by other jurisdictions bears to the entire estate taxable under this chapter.

     (3)   (a)   Upon the transfer of the estate of each resident decedent dying on or after January 1, 2017, ²[but before January 1, 2020,]² whether or not subject to an estate tax payable to the United States under the provisions of the federal Internal Revenue Code (26 U.S.C. s.1 et seq.), the amount of the taxable estate, determined pursuant to section 2051 of the federal Internal Revenue Code (26 U.S.C. s.2051), shall be subject to tax pursuant to the following schedule:

On any amount up to $100,000 . . . . . .	0.0%
On any amount in excess of $100,000, up to $150,000  . . . . . . . . . . . . . . .	0.8%  2of the excess over $100,0002
On any amount in excess of $150,000, up to $200,000. . . . . . . . . . . . . . . .	$400 plus 1.6% of the excess over $150,000
On any amount in excess of $200,000, up to $300,000. . . . . . . . . . . . . . . .	$1,200 plus 2.4% of the excess over $200,000
On any amount in excess of $300,000, up to $500,000. . . . . . . . . . . . . . . .	$3,600 plus 3.2% of the excess over $300,000
On any amount in excess of $500,000, up to $700,000. . . . . . . . . . . . . . . .	$10,000 plus 4.0% of the excess over $500,000
On any amount in excess of $700,000, up to $900,000. . . . . . . . . . . . . . . .	$18,000 plus 4.8% of the excess over $700,000
On any amount in excess of $900,000, up to $1,100,000. . . . . . . . . . . . . . .	$27,600 plus 5.6% of the excess over $900,000
On any amount in excess of $1,100,000, up to $1,600,000. . . . .	$38,800 plus 6.4% of the excess over $1,100,000
On any amount in excess of $1,600,000, up to $2,100,000. . . . .	$70,800 plus 7.2% of the excess over $1,600,000
On any amount in excess of $2,100,000, up to $2,600,000. . . . .	$106,800 plus 8.0% of the excess over $2,100,000
On any amount in excess of $2,600,000, up to $3,100,000. . . . .	$146,800 plus 8.8% of the excess over $2,600,000
On any amount in excess of $3,100,000, up to $3,600,000. . . . .	$190,800 plus 9.6% of the excess over $3,100,000
On any amount in excess of $3,600,000, up to $4,100,000. . . . .	$238,800 plus 10.4% of the excess over $3,600,000
On any amount in excess of $4,100,000, up to $5,100,000. . . . .	$290,800 plus 11.2% of the excess over $4,100,000
On any amount in excess of $5,100,000, up to $6,100,000 . . . .	$402,800 plus 12.0% of the excess over $5,100,000
On any amount in excess of $6,100,000, up to $7,100,000 . . . . .	$522,800 plus 12.8% of the excess over $6,100,000
On any amount in excess of $7,100,000, up to $8,100,000 . . . . .	$650,800 plus 13.6% of the excess over $7,100,000
On any amount in excess of $8,100,000, up to $9,100,000 . . . . .	$786,800 plus 14.4% of the excess over $8,100,000
On any amount in excess of $9,100,000, up to $10,100,000 . . . .	$930,800 plus 15.2% of the excess over $9,100,000
On any amount in excess of $10,100,000. . . . . . . . . . . . . . . . . . .	$1,082,800 plus 16.0% of the excess over $10,100,000

     (b)   A credit shall be allowed against the tax imposed pursuant to subparagraph (a) of this paragraph equal to the amount of tax which would be determined by subparagraph (a) of this paragraph if the amount of the taxable estate were equal to the exclusion amount.

     For the transfer of the estate of each resident decedent dying on or after January 1, 2017, but before January 1, 2018, the exclusion amount is  ²[$1,000,000] $2,000,000².

     ²[For the transfer of the estate of each resident decedent dying on or after January 1, 2018, but before January 1, 2019, the exclusion amount is $2,000,000.]²

     ³[For the transfer of the estate of each resident decedent dying on or after January 1, ²[2019] 2018² , but before January 1, 2020, the ²[exclusion amount is $3,000,000] tax imposed by this section shall be based upon the applicable exclusion amount determined pursuant to subsection (c) of section 2010 of the federal Internal Revenue Code (26 U.S.C. s.2010), as amended or adjusted by federal law, rule or regulation² .]³

     (c)   The amount of tax liability of a resident decedent determined pursuant to subparagraphs (a) and (b) of this paragraph shall be reduced by the aggregate amount of all estate, inheritance, succession or legacy taxes actually paid to any state of the United States, including inheritance taxes actually paid this State, in respect to any property owned by that decedent or subject to those taxes as a part of or in connection with the estate; provided however, that the amount of the reduction shall not exceed the proportion of the tax otherwise due under this subsection that the amount of the estate's property subject to tax by other jurisdictions bears to the entire estate taxable under this chapter.

     (4)   For the transfer of the estate of each resident decedent dying on or after January 1, ³[ 2020] 2018³ , there shall be no tax imposed.

     ³[(5)  Upon the transfer of the real or tangible personal property within New Jersey of each nonresident decedent dying on or after January 1, 2017, but before January 1, 2020, which tax shall bear the same ratio to the entire tax which that estate would have been subject to pursuant to subparagraphs (a) and (b) of paragraph (3) ²and paragraph (4)² of this subsection if that nonresident decedent had been a resident of this State, and all of the decedent’s property, real and personal, had been located within this State, as the taxable property within this State bears to the entire estate, wherever situated.]³

     b.    (1)   In the case of the estate of a decedent dying before January 1, 2002 where no inheritance, succession or legacy tax is due this State under the provisions of chapters 33 to 36 of this title or under authority of any subsequent enactment imposing taxes of a similar nature, but an estate tax is due the United States under the provisions of any federal revenue act in effect as of the date of death, wherein provision is made for a credit on account of taxes paid the several states or territories of the United States, or the District of Columbia, the tax imposed by this chapter shall be the maximum amount of such credit less the aggregate amount of such estate, inheritance, succession or legacy taxes actually paid to any state or territory of the  United States or the District of Columbia.

     (2)   In the case of the estate of a decedent dying after December 31, 2001, but before ²[December 31, 2016] January 1, 2017², where no inheritance, succession or legacy tax is due this State under the provisions of chapters 33 to 36 of this title or under authority of any subsequent enactment imposing taxes of a similar nature, the tax imposed by this chapter shall be determined pursuant to paragraph (2) of subsection a. of this section.

     (3)   In the case of the estate of a decedent dying on or after January 1, 2017 the tax imposed by this chapter shall be determined pursuant to paragraphs (3) ³[,] and³ (4) ³[, and (5)]³ of subsection a. of this section.

     c.     For the purposes of this section, a "simplified tax system" to produce a liability similar to the liability determined pursuant to clause (i) of subparagraph (a) of paragraph (2) of subsection a. of this section is a tax system that is based upon the $675,000 unified estate and gift tax applicable exclusion amount in effect under the provisions of the federal Internal Revenue Code of 1986 (26 U.S.C. s.1 et seq.) in effect on December 31, 2001, and results in general in the determination of a similar amount of tax but which will enable the person or corporation liable for the payment of the tax to calculate an amount of tax notwithstanding the lack or paucity of information for compliance due to such factors as the absence of an estate valuation made for federal estate tax purposes, the absence of a measure of the impact of gifts made during the lifetime of the decedent in the absence of federal gift tax information, and any other information compliance problems as the director determines are the result of the phased repeal of the federal estate tax.

(cf:  P.L.2002, c.31, s.1)

Medicaid and Nursing Homes

Compiled by Kenneth Vercammen from various sources WHAT IS MEDICAID?.......... Medicaid is a Federal medical bills assistance program that pays medical bills for eligible, needy persons. It is administered by each state. All payments are made directly to the providers of medical and other health care services. The Medicaid-eligible person does not pay the health care provider for services. The only exception is a patient in a Medicaid-approved nursing facility who may be required to contribute part of his/her income toward the cost of care. Medicaid Planning After Reform By Thomas D. Begley, Jr. Congress has passed the Deficit Reduction Act of 2005 which seriously curtails Medicaid Asset Transfers and makes it much more difficult for people to become eligible for Medicaid. The Bill was backed by the Insurance Industry and the Pharmaceutical Industry with AARP opposing the bill on the side of consumers. The vote was 216 to 214 in the House of Representatives and Dick Cheney had to break a tie in the Senate. 1. NEW LAW. The new law is known as the Deficit Reduction Act of 2005 1.1. 6011 - Lengthening Lookback Period; Change in Beginning Date for Period of Ineligibility. 1.1.1. Lookback. The lookback period is extended to 5 years. 1.1.2. Beginning Date. The beginning date of the period of ineligibility has changed from the date the transfer was made to the later of the date of the transfer was made or the date the individual: would be eligible for medical assistance; and would otherwise be receiving institutional level care based on an approved application for such care, but for the application of the penalty period, whichever is later; and which does not occur during any other period of ineligibility. 1.1.3. Commentary. The effect of these provisions will be to make it much more difficult to transfer assets and to obtain Medicaid eligibility. 2. 6012 Disclosure & Treatment of Annuities. 2.1. Disclosure of Annuities. 2.1.1. Disclosure. At the time of a Medicaid application or re-certification of eligibility the applicant must disclose a description of any interest the individual or community spouse has in an annuity. The state may require the issuer to notify the state when there is a change in the amount of income or principal being withdrawn. 2.2. Treatment of Annuities. 2.2.1. State Named as Beneficiary. Transfer of an annuity shall be treated as a transfers of assets for less than fair market value unless: Remainder Beneficiary. The state is named as remainder beneficiary in the first position for at least the total amount of medical assistance paid on behalf of the annuitant; or Second Position. The state is named as a beneficiary in the second position after the community spouse or minor or disabled child and is named in first position if such spouse or a representative of such child disposes of any remainder for less than fair market value. 2.2.1.1. Design of Annuity. Annuities are not subject to the transfer of assets provisions if: it is owned by IRA or purchased with the proceeds from an IRA, an SEP, or a Roth IRA; or the annuity is: _ irrevocable _ non-assignable _ actuarially sound as determined in accordance with the actuarial publications of the Office of Chief Actuary of the Social Security Administration; and provides for payments in equal amounts during the term of the annuity with no deferral and no balloon payment. Commentary. This means only that the purchase of an annuity is not subject to the transfer of asset penalties. The issue as to whether the annuity is a countable asset is not addressed. 3. 6013 Income First. States must follow the income first rule when calculating an expansion of the Community Spouse Resource Allowance. Commentary. New Jersey has always followed the Income First Rule. 4. 6014 Home Equity. 4.1. Limits. A person is ineligible for Medicaid if he has equity in the home in excess of $500,000 or at state option $750,000. This number is indexed for inflation. EXCEPTION: The maximum amount does not apply if the home is occupied by: spouse child under age 21 child who is blind or permanently and totally disabled 4.1.2. Loan. The applicant is encouraged by the Act to obtain a reverse mortgage or home equity loan to reduce equity. Commentary: This restriction is not as severe as it may first appear and may actually present some planning opportunities 5. 6015 CCRC Contracts. This section clarifies the treatment of CCRC Contracts and entrance fees. 5.1. Transfer Provisions. Provisions in CCRC contracts restricting transfers of assets are enforceable. Commentary: Many lawyers simply ignored provisions in CCRC contracts restricting transfers. These are now clearly enforceable under the new law. 6. 6016 Additional Reforms of Medicaid Asset Transfer Rules. 6.1. Partial Month Penalties. Partial month penalties are mandated. 6.2. Accumulation of Multiple Transfers. Fractional transfers of assets in more than one month are accumulated. Transfers during all months are treated as one transfer. Commentary: This makes small gifts impossible in many situations. 6.3. Notes and Other Loan Assets. For transfer of assets purposes promissory notes, loans and mortgages are included unless: they include an actuarially-sound repayment term as calculated by the Office of the Chief Actuary of the Social Security Administration; and payments are made in equal amounts with no deferral or balloon payment; and the document prohibits the cancellation of the balance upon the death of the lender. 6.4. Purchase of Life Estates. The purchase of a life estate is not considered to be a transfer of assets if the purchaser resides in the home for a period of at least one year. Commentary: There may be situations where this portion of the statute presents additional planning opportunities. There are some serious risks involving the due on sale clause in mortgages and capital gains tax considerations for the parent and child that need to be considered, but in the right situation this will present a planning opportunity. 7. PLANNING OPPORTUNITIES ELIMINATED. Opportunities that have been eliminated include the following: Transfer Assets/Wait Three Years Half-a-Loaf Transfer Monthly Transfers Lookback Period Transfers from Retirement Plans within a Lookback Period SCIN - By definition a SCIN is a loan that cancels on the death of the lender. 8. CONCLUSION. There are a number of planning opportunities that remain under the new law, but many of them will not have been tested. Clients may be required to apply for Medicaid, be rejected, apply for a Fair Hearing and in some instances appeal to the New Jersey Appellate Division and possibly even the New Jersey Supreme Court before these strategies are validated. Medicaid Planning is no longer for the faint of heart. Elder Law will become much more of a litigation practice than a transactional practice. Clients should consult an experienced Elder Law attorney who is not easily intimidated. About the Author: Begley & Bookbinder, P.C. is an Elder & Disability Law Firm with offices in Moorestown, Stone Harbor and Lawrenceville, New Jersey and can be contacted at 800-533-7227. The firm services southern and central New Jersey and eastern Pennsylvania. Thomas D. Begley, Jr. lectures with Kenneth Vercammen for the NJ State Bar Association. Thomas D. Begley, Jr. provides services in connection with protecting assets from nursing home costs, Medicaid applications, Estate Planning and Estate Administration, Special Needs Planning and Guardianships. If you have a legal problem in one of these areas of law, contact Thomas D. Begley, Jr. at 800-533-7227. Mention you were referred by Kenneth Vercammen. Esqs email newsletter. Resource and Income Limitations for Spouses of Medicaid Applicants by Dana E. Bookbinder, Esquire Now that the President has signed the Deficit Reduction Act of 2005, it is even more crucial for families to be proactive in protecting their loved ones health care options and financial savings. Often individuals are lulled into thinking that the government will not aggressively pursue their assets if they dont engage in legal planning, but the opposite is in fact true. In cases of married couples, the healthier spouse often mistakenly believes that his or her assets are safe while only the ill spouses assets have to be paid to a nursing facility for that spouses care. Again, this is incorrect, and early legal planning can save the family much grief in addition to substantial assets. While both married and single individuals can substantially benefit from early legal planning, under Congress new budget saving scheme, married couples, in particular, would be passing up the opportunity to protect their savings if they failed to seek legal counsel since the asset and income limitations they would face for Medicaid eligibility are low. The resource allowance permitted to be retained by the spouse of a benefits recipient is known as the Community Spouse Resource Allowance (CSRA). This allowance was established by the Medicaid Coverage Catastrophic Act (MCCA), enacted to apply to individuals institutionalized on or after September 30,1989 to protect spouses against impoverishment. The amount of the community spouse resource allowance is generally based on one half (1/2) of the couples combined total countable resources as of the first period of continuous institutionalization. A resource assessment of the couples countable assets as of the first period of continuous institutionalization of one of the spouses will be undertaken when a Medicaid application is filed. By law, it must also be done upon the request of the Medicaid applicant, the applicants spouse, or the personal representative of the applicant or the spouse. A continuous period of institutionalization is broken by absences from the institution for thirty consecutive days. For 2006, the CSRA is subject to a maximum of $99,540 and a minimum of $19,908. These numbers are adjusted on an annual basis. In addition to a resource allowance, the spouse of a Medicaid recipient is entitled to a monthly income allowance. Generally, the income of an individual who is institutionalized must be forwarded to his nursing home on a monthly basis. However, this spouse is allowed to retain her own income plus, depending on the amount of her income, a monthly allowance to be taken from the institutionalized spouses income. This allowance is called the Minimum Monthly Maintenance Needs Allowance (MMMNA). Currently, the amount is based upon the difference between $1,604 and the community spouses income plus an additional amount to cover shelter expenses for the community spouse. The shelter expenses are based upon the actual mortgage and real estate taxes that must be paid plus certain allowances for utilities. These figures upon which the MMMNA calculation are based are adjusted annually. Failure to plan ahead for the long-term care costs of a spouse can severely impact the healthy spouses financial status. However, elder law attorneys can increase both the spouses resource and income allowances through agency hearings. Additionally without a hearing, elder law attorneys can help their clients maintain their standards of living, enabling them to continue living independently in their homes. Begley & Bookbinder, P.C. is an Elder & Disability Law Firm with offices in Moorestown, Stone Harbor and Lawrenceville, New Jersey and can be contacted at 800-533-7227. The firm services southern and central New Jersey and eastern Pennsylvania. The Firm provides services in connection with protecting assets from nursing home costs, Medicaid applications, Estate Planning and Estate Administration, Special Needs Planning and Guardianships. If you have a legal problem in one of these areas of law, contact Begley & Bookbinder at 800-533-7227. WHO QUALIFIES FOR MEDICAID?........ -Aged persons 65 and over, blind persons or disabled persons who apply through their Social Security District Office and who receive monthly Supplemental Security Income (SSI) checks. -Aged persons 65 and over, blind persons or disabled persons who may not be eligible for SSI due to excess income but who meet the income and resource criteria for New Jersey Care.... Special Medicaid Programs. -The Medically Needy segment of New Jersey Care....... Special Medicaid Programs provides limited services to certain needy individuals who are not eligible for Medicaid due to excess income but may not be able to afford health care services. Contact the Department of Human Services for other eligible requirements. WARNING.......... The following acts are crimes under Federal and State Law and persons found guilty of the acts can be fined up to $10,000 or put in prison for up to 3 years or both. -Lending your Medicaid card; - Giving any information known to be false in order to gain Medicaid benefits; - Hiding any information about the occurrence of an event that you know will bear on your right to Medicaid benefits or the right of another person for whom you applied and who is receiving Medicaid coverage; - Applying for Medicaid for another person and using the benefits for yourself or someone else who is not eligible. See Medicaid, what is it by NJ Department of Human Services, Division of Medical Assistance. Your Responsibilities when applying for Medicaid You must give complete and factual information on the application. You must provide or apply for a Social Security Number. You must promptly notify the county welfare agency whenever there is a change in your existing income, or an additional income or resource, such as: * income from a new job or loss of an old one * change in wages from full or part-time job * Workers Compensation * unemployment or temporary disability benefits * Social Security or Veterans benefits * pension or other retirement benefits * Supplemental Security Income (SSI) * interest on savings * accident claims or settlements * support payments * an inheritance of money or property * money from the sale of property * funds received in settlement of s claim or legal suit * lottery winnings or other awards * any other change in income or resources * court action related to any of the above See Medicaid, what is it by NJ Department of Human Services, Division of Medical Assistance. If you are residing in a nursing facility, you must also report: * when you obtain or drop health insurance coverage * changes in health insurance premiums * changes in spousal income, if you are paying spousal maintenance The Law requires that all health and accident insurance benefits, including Medicare, Workers Compensation and No Fault Auto Insurance must be used before Medicaid in the payment of health care. You must agree to assign to the Commissioner any rights to payment from any third party. When applying to the county welfare agency for special institutional services including nursing home care, you must make an accurate report of your actual income. Normally, that income ( except for a personal needs allowance and certain disregards, if applicable) must be applied to the cost of your care. You must authorize the county welfare agency to contact any source that may have knowledge about your circumstances ( including IRS, Social Security wage and benefits files, and state wage and employment files), for the sole purpose of verifying the statements that you make on the application. See Your Rights and Responsibilities when applying for Medicaid by NJ. Department of Human Services, Division of Medical Assistance and Health Services. If you or a spouse have to enter a nursing home to receive custodial type care, your assets (other than your residence and various personal items which may be exempt under certain circumstances) are worth less than $2,000, and the income of the person entering the home (including Social Security) is no more than $1,410 per month for 1996, then you may be eligible for this government program which can pay for substantially all of the cost of the nursing home. Moreover, it is possible for a married spouse who remains at home to preserve a significant portion of the assets of the couple if the other spouse is institutionalized. In 1996, the law permits a minimum of $15, 348 of such assets to be protected. And, depending upon the amount of such assets, a maximum of one-half (but not exceeding $76,740) may be preserved. In addition, in the case of married persons, it may be possible to have some of the income of the spouse in the nursing home paid to the at home spouse without affecting eligibility for Medicaid Only. When considering an application for Medicaid, one should bear in mind that the rules are fairly complicated, and that transfers of assets to third parties (such as gifts to children) in order to become eligible for the program can result in a penalty period being imposed during which payments by the State will not be made for nursing home care. ____ The penalty is a period of ineligibility for Medicaid, determined by dividing the value of the assets transferred by the average cost of a nursing home in New Jersey. States must apportion the period of ineligibility between spouses so that only one penalty applies. In the case of joint assets, a withdrawal by one party is considered a transfer. The new law subjects transfers of income to a period of ineligibility. Transfer penalties can be avoided by returning all of the assets which were transferred. The law made significant changes in the area of trusts. However, certain types of trusts are still permitted. The Secretary of Health and Human Services was directed to promulgate regulations concerning annuities. As of this writing, those regulations have not yet been promulgated. States are now mandated to recover payments from the estates of Medicaid recipients. Hearings If your application for Medicaid benefits is denied, if your Medicaid eligibility is terminated, or if Medicaid refuses to pay a claim, you have a right to a fair hearing before a New Jersey Administrative Law Judge. At that hearing you have a right to be represented by counsel and to present evidence including testimony to support your case. The judge makes a recommendation to Medicaid regarding your case. Then, if Medicaid still denies your claim, you have a right to appeal to the Appellate Division of the Superior Court of New Jersey. In a situation where Medicaid has advised you that it intends to discontinue the payment of benefits, you may have a right to have benefits continued until your appeal has been decided. At the time of this printing, the Federal and State Governments are considering substantial changes in both Medicare and Medicaid. See New Jersey State Bar Foundation, Law Points for Senior Citizens. We recommend the purchase of Long Term Health Insurance/ Nursing Home Insurance]

Wills & Estate Administration

Wills & Estate Administration
SAVE MONEY AND PROVIDE FOR YOUR LOVED ONES
As average Americans, we work 80,000 hours in a lifetime, or 45 to 55 years. In spite of all the resources and assets we earn, the vast majority of us do not take the time to create a will.
National statistics indicate that 80% of Americans die without leaving a will. There are several reasons for this: fear of death; procrastination; and misinformation (people presume that only the rich need to have wills). Whatever the excuse, it is clear that people would benefit from having a will.
In the absence of a will or other legal arrangement to distribute property at death, the state must step in to administer the estate. The result can be lengthy delays before the rightful heirs receive their property. And because the state has no instructions from the deceased, no charitable gifts will be made.
IF YOU HAVE NO WILL:
If you leave no Will or your Will is declared invalid because it was improperly prepared or is not admissible to probate:
* State law determines who gets assets, not you * Additional expenses will be incurred and extra work will be required to qualify an administrator * Judge determines who gets custody of your children * Possible additional State inheritance taxes and Federal estate taxes * If you have no spouse or close relatives the State may take your property * The procedure to distribute assets becomes more complicated-and the law makes no exceptions for persons in unusual need or for your own wishes. * It may also cause fights and lawsuits within your family When loved ones are grieving and dealing with death, they shouldn’t be overwhelmed with Financial concerns. Careful estate planning helps take care of that.
THE FOLLOWING IS A SAMPLE OF A VARIETY OF CLAUSES AND ITEMS WHICH SHOULD BE INCLUDED IN A WILL:
1ST: DEBTS AND TAXES 2ND: SPECIFIC BEQUESTS 3RD: DISPOSITION TO SPOUSE 4TH: DISPOSITION OF REMAINDER OF ESTATE 5TH: CREATION OF TRUSTS FOR SPOUSE 6TH: CREATION OF TRUST FOR CHILDREN 7TH: OTHER BENEFICIARIES UNDER 21 8TH: EXECUTORS 9TH: TRUSTEES 10TH: GUARDIANS 11TH: SURETY OR BOND 12TH: POWERS 13TH: AFTERBORN CHILDREN 14TH: PRINCIPAL AND INCOME 15TH: NO ASSIGNMENT OF BEQUESTS 16TH: GENDER 17TH: CONSTRUCTION OF WILL 18TH: NO CONTEST CLAUSE
A will must not only be prepared within the legal requirements of the New Jersey Statutes but should also be prepared so it leaves no questions regarding your intentions.
WHY PERIODIC REVIEW IS ESSENTIAL
Even if you have an existing Will, there are many events that occur which may necessitate changes in your Will. Some of these are:
* Marriage, death, birth, divorce or separation affecting either you or anyone named in your Will
*Significant changes in the value of your total assets or in any particular assets which you own
* A change in your domicile
* Death or incapacity of a beneficiary, or death, incapacity or change in residence of a named executor, trustee or guardian of infants, or of one of the witnesses to the execution of the Will
*Annual changes in tax law
MAY I CHANGE MY WILL?
Yes. A Will may be modified, added to, or entirely changed at any time before your death provided you are mentally and physically competent and desire to change your Will. You should consider revising your Will whenever there are changes in the size of your estate. For example, when your children are young, you may think it best to have a trust for them so they do not come into absolute ownership of property until they are mature. Beware, if you draw lines through items, erase or write over, or add notations to the original Will, it can be destroyed as a legal document. Either a new Will should be legally prepared or a codicil signed to legally change portions of the Will.
SAVE MONEY
Your estate will be subject to probate whether or not you have a Will and in most cases, a Will reduces the cost by eliminating the requirements of a bond. With a well-drawn Will, you may also reduce death taxes and other expenses. Dont pinch pennies now to the detriment of your beneficiaries. We have attempted to briefly explain in this article some of the issues, techniques, and decisions involved in Wills, Estate Planning, and Administration of an Estate. Because the matters covered are complicated and the Federal and New Jersey laws frequently change, this article can only outline some of the many legal issues you should consider.
The proper preparation of a Will should involve a careful analysis of the clients assets, family and his/her desires. Estate Planning is the process of examining what will happen to your property when you die and arranging for its distribution in such a manner as will accomplish your objectives. The cost of a Will depends on the size and the complexity of the estate and the plans of the person who makes the Will.
A properly drawn Simple Will without Trust costs approximately $100.00 to $500.00. It is one of the most important documents you will ever sign, and may be one of the best bargains you will ever have. Be sure your Will takes into account the 1997 Federal Tax changes and all New Jersey Inheritance Tax changes. Also, ascertain if your Will is “self-proving”, which would dispense with having to find the Willís witnesses after death.
WHAT IS A WILL?
“A Will is a Legal written document which, after your death, directs how your individually owned property will be distributed, who will be in charge of your property until it is distributed and who will take care of your minor children if the other parent should die . You should remember that the term “property” under the law includes real estate as well as other possessions and rights to receive money or items of value.” Everyone who has at least $3,000 in assets should have a Will. You do not have to be wealthy, married, or near death to do some serious thinking about your Will.
ADMINISTRATION OF AN ESTATE
If you are named the executor or executrix, you must visit the County Surrogate to probate the Will. You will need the following items: 1. The Death Certificate 2. The Original Will 3. Names and Addresses of decedents, next of kin and will beneficiaries 4. Minimum of $80.00 for Surrogate fees
A state inheritance tax return must be filed and the tax paid on the transfer of real or personal property within eight months after death.
OTHER ITEMS OF CONCERN TO BE PREPARED BY YOUR ATTORNEY -Trusts (and Medicare Trusts) -Power of Attorney- to allow a trusted person to administer your assets during your lifetime, either upon disability or now -Living Wills- to state your wishes concerning medical care in the event of your serious illness

Estate Planning Wills & Estate Administration

Estate Planning

Wills & Estate Administration SAVE MONEY AND PROVIDE FOR YOUR LOVED ONES As average Americans, we work 80,000 hours in a lifetime, or 45 to 55 years. In spite of all the resources and assets we earn, the vast majority of us do not take the time to create a will. National statistics indicate that 80% of Americans die without leaving a will. There are several reasons for this: fear of death; procrastination; and misinformation (people presume that only the rich need to have wills). Whatever the excuse, it is clear that people would benefit from having a will. In the absence of a will or other legal arrangement to distribute property at death, the state must step in to administer the estate. The result can be lengthy delays before the rightful heirs receive their property. And because the state has no instructions from the deceased, no charitable gifts will be made. IF YOU HAVE NO WILL: If you leave no Will or your Will is declared invalid because it was improperly prepared or is not admissible to probate: * State law determines who gets assets, not you * Additional expenses will be incurred and extra work will be required to qualify an administrator * Judge determines who gets custody of your children * Possible additional State inheritance taxes and Federal estate taxes * If you have no spouse or close relatives the State may take your property * The procedure to distribute assets becomes more complicated-and the law makes no exceptions for persons in unusual need or for your own wishes. * It may also cause fights and lawsuits within your family When loved ones are grieving and dealing with death, they shouldn’t be overwhelmed with Financial concerns. Careful estate planning helps take care of that. THE FOLLOWING IS A SAMPLE OF A VARIETY OF CLAUSES AND ITEMS WHICH SHOULD BE INCLUDED IN A WILL: 1ST: DEBTS AND TAXES 2ND: SPECIFIC BEQUESTS 3RD: DISPOSITION TO SPOUSE 4TH: DISPOSITION OF REMAINDER OF ESTATE 5TH: CREATION OF TRUSTS FOR SPOUSE 6TH: CREATION OF TRUST FOR CHILDREN 7TH: OTHER BENEFICIARIES UNDER 21 8TH: EXECUTORS 9TH: TRUSTEES 10TH: GUARDIANS 11TH: SURETY OR BOND 12TH: POWERS 13TH: AFTERBORN CHILDREN 14TH: PRINCIPAL AND INCOME 15TH: NO ASSIGNMENT OF BEQUESTS 16TH: GENDER 17TH: CONSTRUCTION OF WILL 18TH: NO CONTEST CLAUSE A will must not only be prepared within the legal requirements of the New Jersey Statutes but should also be prepared so it leaves no questions regarding your intentions. WHY PERIODIC REVIEW IS ESSENTIAL Even if you have an existing Will, there are many events that occur which may necessitate changes in your Will. Some of these are: * Marriage, death, birth, divorce or separation affecting either you or anyone named in your Will *Significant changes in the value of your total assets or in any particular assets which you own * A change in your domicile * Death or incapacity of a beneficiary, or death, incapacity or change in residence of a named executor, trustee or guardian of infants, or of one of the witnesses to the execution of the Will *Annual changes in tax law MAY I CHANGE MY WILL? Yes. A Will may be modified, added to, or entirely changed at any time before your death provided you are mentally and physically competent and desire to change your Will. You should consider revising your Will whenever there are changes in the size of your estate. For example, when your children are young, you may think it best to have a trust for them so they do not come into absolute ownership of property until they are mature. Beware, if you draw lines through items, erase or write over, or add notations to the original Will, it can be destroyed as a legal document. Either a new Will should be legally prepared or a codicil signed to legally change portions of the Will. SAVE MONEY Your estate will be subject to probate whether or not you have a Will and in most cases, a Will reduces the cost by eliminating the requirements of a bond. With a well-drawn Will, you may also reduce death taxes and other expenses. Dont pinch pennies now to the detriment of your beneficiaries. We have attempted to briefly explain in this article some of the issues, techniques, and decisions involved in Wills, Estate Planning, and Administration of an Estate. Because the matters covered are complicated and the Federal and New Jersey laws frequently change, this article can only outline some of the many legal issues you should consider. The proper preparation of a Will should involve a careful analysis of the clients assets, family and his/her desires. Estate Planning is the process of examining what will happen to your property when you die and arranging for its distribution in such a manner as will accomplish your objectives. The cost of a Will depends on the size and the complexity of the estate and the plans of the person who makes the Will. A properly drawn Simple Will without Trust costs approximately $100.00 to $500.00. It is one of the most important documents you will ever sign, and may be one of the best bargains you will ever have. Be sure your Will takes into account the 1997 Federal Tax changes and all New Jersey Inheritance Tax changes. Also, ascertain if your Will is “self-proving”, which would dispense with having to find the Willís witnesses after death. WHAT IS A WILL? “A Will is a Legal written document which, after your death, directs how your individually owned property will be distributed, who will be in charge of your property until it is distributed and who will take care of your minor children if the other parent should die . You should remember that the term “property” under the law includes real estate as well as other possessions and rights to receive money or items of value.” Everyone who has at least $3,000 in assets should have a Will. You do not have to be wealthy, married, or near death to do some serious thinking about your Will. ADMINISTRATION OF AN ESTATE If you are named the executor or executrix, you must visit the County Surrogate to probate the Will. You will need the following items: 1. The Death Certificate 2. The Original Will 3. Names and Addresses of decedents, next of kin and will beneficiaries 4. Minimum of $80.00 for Surrogate fees A state inheritance tax return must be filed and the tax paid on the transfer of real or personal property within eight months after death. OTHER ITEMS OF CONCERN TO BE PREPARED BY YOUR ATTORNEY -Trusts (and Medicare Trusts) -Power of Attorney- to allow a trusted person to administer your assets during your lifetime, either upon disability or now -Living Wills- to state your wishes concerning medical care in the event of your serious illness  More info at http://www.njlaws.com/wills_and_estate_administration.html?