Tag: special needs planning

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Helping Someone With Dementia Sell the Home

On By Jane Fearn-Zimmer, Esq.In Dementia, Elder Law, Estate Planning, Guardianship, Long-term care, MedicaidLeave a comment

Selling the home through guadrianship

Sometimes, a home must be sold, but the homeowner is no longer able to sign a listing or sale agreement due to cognitive impairment, confusion, advanced dementia or severe and persistent addiction issues (i.e., Wernicke-Korsakoff syndrome), or new onset dementia after recovering from COVID-19.  covid-19-pneumonia-increases-risk-of-dementia-study-says  Others may be temporarily incapacitated due to cardiac issues, surgery, or severe illness.  These conditions can prevent an adult from being temporarily or permanently able to make important financial, medical or legal decisions.  Adults who can no longer make decisions may be incapacitated.  And in real estate bubble with many residential properties reaching their peak value, it’s critical to act fast to accept the best home sale offer.

Unfortunately, incapacitated adults are unable to enter into a binding contract, such as an agreement to list or sell the home. When this happens, one option may be to use a general durable power of attorney or a real estate power of attorney to sell the home.  But that can only be successful where there is already a valid general durable power of attorney or real estate power of attorney in place.  If there is a power of attorney, and the homeowner is able to make decisions, the home cannot be sold through a power of attorney without the homeowner’s consent to the sale.  Giving a power of attorney to a trusted adult child or friend is like giving them an extra set of keys to the car. You can always take back the keys when you wish.

More to the point, a power of attorney is an important legal document by which the principal (i.e., the person signing the power of attorney) gives authority to an agent to carry out the affairs of the principal.  The catch-22 is that in order to make a power of attorney, the principal must have legal capacity.  Unfortunately, there are many incapacitated persons who never bothered to obtain a power of attorney before they lost capacity.   Another risk is that there may be a valid power of attorney, but the agent named may be deceased, very ill, or no longer available to serve.  Once again, there is no one with legal authority to sign the home sale agreement and the house cannot be sold even if there is a buyer.

The solution is to seek a court order for authority to sell the home.  This involves filing a lawsuit in the Superior Court for a judgment of incapacitation and award of guardianship.  The guardianship process is not a simple one. There are several different types of guardianships and the correct type must be selected.  Various court rules, required information and forms must be complied with.

The guardianship process requires doctor’s reports and an investigation into the finances and health of the alleged incapacitated person. As part of the process, the Superior Court judge appoints an independent attorney to investigate these matters and to write a report.  This attorney is referred to as the court-appointed attorney.  Often, that attorney’s report carries great weight with the court.  Testimony by the doctors may be waived, or if the guardianship is disputed, there may be an adversarial hearing.  If the evidence, any testimony and the court-appointed attorney’s report indicates that the alleged incapacitated person cannot make any significant decisions as to his person or property, then a plenary guardianship may be awarded.

But this is only the first step in obtaining court-authority to sell the home of the incapacitated person, who may urgently need the anticipated net home sale proceeds to pay for long-term care.  The next step is to file a motion with the court to sell the home through the guardianship.  The court can potentially award the requested order.  Only when such an order is in place, can the home be legally sold.

Not surprisingly, this process requires additional legal work and documentation.  The guardian must show that the proposed sale is fair and reasonable and in the “best interests” of the incapacitated person. In deciding whether this standard is satisfied, the judge may consider whether the incapacitated person will ever be able to return to the home to live there independently or with the assistance of paid caregivers, provided there are sufficient funds.  The fair market value and the tax-assessed value of the home will also be considered, as will the outcome of any prior attempts to sell the property, the cost of continued homeownership, and whether the anticipated net house sale proceeds are needed to pay for long-term care. In many cases, the home must be sold as a condition of Medicaid eligibility for the former homeowner in a nursing home.

This process takes time.   In limited cases where the safety of the alleged incapacitated person is endangered, or a very good purchase offer may be lost without swift court approval, the guardianship process can be expedited in New Jersey.

The bottom line, is that when capacity is in issue, selling the home a general durable power of attorney or a real estate power of attorney is much more efficient than through a guardianship. However, selling the home through a guardianship can be done in the difficult cases where there is no legal authority in place to sell the home.

Questions, or if you need help clearing title to sell a home through a guardianship? Let Jane know.

Financial Support for an Adult Disabled Child

On By Jane Fearn-Zimmer, Esq.In Disability Law, UncategorizedLeave a comment

Financial Support for an Adult Disabled ChildEven with child support payments from the non-custodial parent, raising a special needs child on a single parent’s income can be very challenging. N.J.S.A. 2A:17-56.67, a relatively new New Jersey emancipation law, requires termination of child support at age 19 unless otherwise provided in a court order or a judgment. As a practical matter, this means that the parents of adult disabled children who have prior court orders mandating continued child support after age nineteen, must either submit a written request for the continuation of the child support obligation prior to the nineteenth birthday of the child in question, or, if the child’s nineteenth birthday has already passed, the custodial parent must petition the Probate Court, rather than the Family Court, for continued financial support of the adult disabled child, even though the support obligation is already provided for in the court order.

The new law, enacted in 2015, further provides that the obligation to pay child support must terminate by operation of law when the child (who may be a special needs child) reaches the age of twenty-three. The custodial parent of an adult special needs child then bears the burden of seeking a court order for financial maintenance or reimbursement, as authorized by law.

The custodial parent is frequently the economically disadvantaged parent and the new law and the proposed new court rule will likely disproportionately impact these families. Among other things, the custodial parent must learn to navigate an entirely different set of legal rules and will no longer have the enforcement mechanism of the Probation Department.

Recently, I worked together with other elder and family law attorneys to advocate for the disability community on these issues. The Elder and Disability Law Section of the New Jersey State Bar Association presented this letter to the New Jersey State Bar Association, with the goal of making the process of obtaining continued financial support for an adult disabled child after the age of 23 as easy and cost-effective a process as possible.

Questions? Let Jane know.

Jane Fearn-Zimmer is an Elder and Disability Law, Taxation, and Trusts and Estates attorney. She dedicates her practice to serving clients in the areas of elder and disability law, special needs planning, asset protection, tax and estate planning and estate administration. She also serves as Chair of the Elder & Disability Law section of the NJSBA.

Involuntary Commitment Proceedings –Who Pays for That?

On By Jane Fearn-Zimmer, Esq.In Disability LawLeave a comment

social worker.jpg

An involuntary commitment, or civil commitment, proceeding, is a summary legal action filed in order to obtain a court order to require a mentally ill individual to receive necessary psychiatric treatment against his or her wishes, pursuant to N.J. Rule of Court §4:74-7 and N.J.S.A. §30:4-27.2.  Typically, the involuntary commitment process is initiated through a mental health screening, but the process can also be filed by a prosecutor or the Attorney General. Only individuals who are shown by clear and convincing evidence to present a danger to themselves may be involuntarily committed.

An order for involuntary commitment must be issued within 72 hours, and the hearing itself must be held in no more than 20 days.  The individual who is the subject of an involuntary commitment hearing has the right to an attorney to represent her in the commitment proceedings. The existence of involuntary commitment proceedings does not mean that an individual has been adjudicated incapacitated, nor does it mean that her rights, such as the right to bear arms, the right to drive, the right to have visitors, to receive medical treatment, and to fresh air and exercise, are removed or restricted.  The only mechanism to restrict these rights is to obtain a guardianship order from the Superior Court, which is an entirely different proceeding governed by different rules.

By law, the State of New Jersey is required to bear ninety percent of the cost of an involuntary commitment, leaving the remaining ten percent to be borne by the involuntarily committed individual. The financial evaluation process is undertaken by the county adjuster’s office. If it is determined that the individual can afford to pay for the cost of their psychiatric care, the county adjuster seeks a court order requiring the individual to pay for the cost of psychiatric care, which can impose a heavy financial burden on the former patient.

It is important to know that hospitals and the county adjuster’s office are required to follow strict regulations in collection matters arising from emergency hospital admissions and psychiatric emergency screening services.  Charity care regulations apply where a financially eligible patient becomes involuntarily committed as the result of a hospital emergency room admission. Newton Medical Center v. D.B., No. A-5101-15T4 (N.J. Super. App.Div., January 17, 2018.  The case involved an uninsured patient who was admitted to a hospital emergency room during a psychotic episode, and was involuntarily committed. After the patient’s release, the medical center billed the patient the sum of $65,000 bill for the eleven days of care, reduced the bill due to the patient’s lack of insurance, and attempted to collect on the reduced bill. At the trial level, the Court entered summary judgment in favor of the hospital.  The Appellate Division reversed the trial judge’s decision, ruling that the hospital could not recover from the former patient, because it did not contact the patient as required by the charity care regulations.

Questions? Let Jane know.

Jane Fearn-Zimmer is an Elder and Disability Law, Taxation, and Trusts and Estates attorney. She dedicates her practice to serving clients in the areas of elder and disability law, special needs planning, asset protection, tax and estate planning and estate administration. She also serves as Chair of the Elder & Disability Law section of the NJSBA.

Medicaid and Gifts

On By Jane Fearn-Zimmer, Esq.In Elder Law, Medicaid & GiftsLeave a comment

Medicaid in New Jersey

Medicaid will not pay for long term or home and community based care during a Medicaid penalty period. A penalty period will generally be imposed where uncompensated gifts have been made during the five years immediately preceding the filing of the Medicaid application. This period is known as the Medicaid lookback.  The length of the penalty period is computed based on the total amount of gifts during the look back period. Under the current Medicaid divisor, approximately one month of ineligibility is imposed for every $10,000 given away during the lookback period.

Many applicants are unaware that there is a rule, which applies to Medicaid applications filed in New Jersey after May 26, 2010, as well as to Medicaid applications filed in other states, including Ohio, preventing recalculation of the penalty period where some, but not all of the gifts made during the lookback period, were returned. The rule, as stated in New Jersey, is found in Medicaid Communication 10-06 and requires that the penalty period cannot be decreased for the returned gifts unless all of the assets given away have been returned.  This rule can have very harsh consequences, which are illustrated in a recent case from Ohio.

In Paczko v. Ohio Dept. of Job & Family Servs., (2017 OH 9024 (Oh. Ct. App., 8th Dist., Cuyahoga County, No. 105783, Dec. 14, 2017), an elderly woman transferred the sum of $146,122 to a trust, which would benefit her children. She later applied for Medicaid during the five year lookback period. The sum of $89,227.38 was returned from the trust to the elderly woman to pay for her care. She sought to reduce the original Medicaid penalty period computed on the total transfers during the preceding five years, by the sum of the returned gifts.  At the Board level, the Ohio Medicaid agency gave her limited for her returns, and denied her request for additional credit for all of the gifts returned. Her appeal was denied at both the Staff Hearing Officer and Court of Common Pleas levels.

While the Paczko case is not binding on the New Jersey courts, the case is a good illustration of what can happen when there is a partial return of gifts without further planning and a Medicaid application is filed within the five year lookback period. The take away from Paczko is that, in New Jersey, as in Ohio, applicants for Medicaid re well-advised to be mindful of the “no credit for partial returns” rule and to consult an attorney before filing any Medicaid application, or proceeding to a Medicaid Fair Hearing, to determine what solutions may be available.

Questions? Let Jane know.

Gifts and Medicaid: Gifting to Children and Grandchildren

On By Jane Fearn-Zimmer, Esq.In Elder Law, Medicaid & Gifts, UncategorizedLeave a comment

Gifts and Medicaid in New Jersey

Clients often ask me, can they make gifts to their children and grandchildren without a problem concerning Medicaid?  Often, what they have in mind is the $15,000 annual exclusion, which is a federal provision, not a Medicaid regulation. The $15,000 annual exclusion permits a taxpayer to give up to $15,000 away per year without being required to file a gift tax return. Married couples may split gifts and currently give up to $30,000 per person per year if they both agree.

But the federal tax rules and the Medicaid rules are “apples and oranges” in this case. Different rules apply here for Medicaid than for tax purposes. While a gift of less than $15,000 would not require a federal gift tax return, even small gifts, payments of medical and educational expenses of others, and gifts to children and grandchildren and others, of any amount, can jeopardize Medicaid coverage for long-term care for New Jersey residents.  This is because of the rules which apply during the five year Medicaid look back period. If there are any gifts made by the Medicaid applicant within the five years immediately preceding the filing of the applicant’s first Medicaid application, all of the gifts made during that five year period will be totaled and a Medicaid penalty period corresponding to the value of the total gifts will be imposed. Due to the Medicaid penalty period, Medicaid will generally deny coverage for long-term care, for a period of time corresponding to the total amount of all of the gifts made during the five years immediately prior to the filing of the Medicaid application.  Under the current New Jersey policy, even if some of the gifts are returned, the total amount of all of the gifts made during the lookback period can be subject to a Medicaid penalty period. This can have disastrous results on a Medicaid application.

For example, assume that Billy and Sue are husband and wife and they together make $92,000 in gifts to their children between February 1, 2012 and January 31, 2017. If a Medicaid application was filed for Billy in the month of February, 2017, even if $90,000 of the gifts are returned by the children back to Billy and Sue, a Medicaid penalty in the sum of $92,000 can be imposed on Billy and Sue because that was the amount of the total gifts made during the five year Medicaid look back period for Billy.

Fortunately, there are sometimes strategies available to push back against this very harsh result.  When filing any Medicaid application in New Jersey, consulting with an experienced elder law attorney is advised.

Questions? Let Jane know.