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Top 10 Concerns of Retirees

Will I be required to sell my house in order to pay for nursing care if my spouse becomes sick and requires a stay in a nursing home?

If you need Medicaid assistance to pay for nursing home care for your spouse, the marital residence will be an exempt asset, up to equity value of $750,000, as long as you (the "community" spouse) continue to live there. Additionally, if there is a mortgage or home equity loan outstanding against the residence, excess resources can be used to pay down those loans without resulting in a penalty period for the Medicaid applicant.

What will happen to my estate if I do not have a Will?

If you do not have a Last Will & Testament, the rules of intestacy will govern the distribution of your estate. If you have a spouse but no children, then the estate passes to the surviving spouse. If you leave a surviving spouse and children, the first $50,00 plus one-half of the remainder will pass to your spouse and the other one-half in equal shares to the children. If you have no surviving spouse or children, then your estate passes to your parents or your parents' descendants.

Why is it important to have a Living Will and Health Care Proxy?

Under the existing NYS Public Health Law, doctors cannot make any determination regarding the quality of life for a patient. Therefore, if you wish to give someone the ability to refuse medical treatment on your behalf, you must grant that power under a written Living Will to a designated individual, known as your Health Care Proxy.

Why do I need a Power of Attorney?

A General Durable Power of Attorney allows you to designate an individual of your choice to make decisions regarding your financial and personal affairs. This is a very important document because, if you do not have an existing Power of Attorney and you become unable to handle your own affairs, the court must then conduct a hearing to determine who should serve as your Guardian. Guardianship proceedings can be very costly and lengthy, and can be avoided by simply designating a General Durable Power of Attorney.

How can I make sure that my disabled child is taken care of after I am no longer able to oversee his/her care?

Disabled children can be specifically provided for under the terms of a properly drafted trust provision contained in your Last Will & Testament, commonly known as "Supplemental Needs Trust." This type of trust allows you to set aside an unlimited amount of funds for the benefit of a disabled child.

What are the tax consequences if I sell my house and move into an apartment or if I make a sizable gift to my children?

A taxpayer of any age can now exclude up to $250,000 ($500,000 for joint filers) of gain on sale of their primary residence with no limitation. However, if the proceeds from the sale or other assets are used to make gifts to the children or other family members, there will be a requirement that a gift tax return be filed if the gift to any single individual exceeds the annual exclusion amount of $12,000 ($24,000 if the gift is from a married couple).

What is required in settling my estate after I die and what are the tax consequences?

The process of settling your estate after you die is largely dependent on the arrangements you have made during your lifetime. If the majority of your assets are jointly held or have a designated beneficiary these assets will not require a "probate" through the court and will simply transfer to the named individual by operation of law. If your estate exceeds the federal unified credit amount applicable in the year of your death ($2 million in 2006) your estate will be obligated to pay federal estate taxes ranging from approximately 41% to 46% of the amount exceeding the taxable limit.

Where do I start when making burial arrangements?

Burial arrangements made directly with a NYS licensed funeral home to allow you to set up a pre-paid burial account through the use of an irrevocable trust agreement with the funeral home. If correctly set up, these accounts are not counted as a resource for Medicaid eligibility purposes and there is no limitation on the amount that can be set aside.

Can I protect my assets for my children and still make sure that I will have access to nursing home care if required?

The Medicaid qualification process involves a two-step process in order to determine your eligibility for nursing home care. The first step is an examination of all your financial transactions during the "look-back" period. The look-back period is currently five years. The second step is to determine whether any gifts occurred during the "look-back" period, and if so, to calculate a penalty period based on the amount of the gift. the theory here is that the Medicaid agency is attempting to determine how many months you could have paid for you own care in a nursing home if you had not given away the funds.

What can I do to protect myself from becoming a physical or financial burden to my children?

All of these steps outlined in the previously questions, when implemented correctly and with appropriate consideration given to your individual family circumstances will help you to provide a structured plan which will protect yourself and your family members from the often catastrophic and unexpected burdens that long tern care can impose.

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