Long-term Medicaid has income eligibility requirements (in addition to resource limits and other requirements) in certain states such as Texas (an “income cap” state). As of January 1, 2022, the income cap is $2,523 per month. If an individual, who is applying for Medicaid, has income over the cap, then a Qualified Income Trust can be created to place the income (not resources) to pass such eligibility requirement. Qualified Income Trusts are also known as “QITs” or “Miller Trusts.”
It depends on the income of the respective spouses and what strategy is employed. If the income of the community spouse is greater than what is called the minimum monthly maintenance needs allowance (“MMMNA” is $3,435 as of January 1, 2022), then there are limited situations when a court order can be obtained to divert income from his or her institutionalized spouse so that his or her income is above the MMMNA. If there is a “spend down” of countable resources, then there can be a diversion of income to the community spouse so that the community spouse has income up to the MMMNA. However, it is often best to not “spend down”, so this situation must be carefully reviewed with your experienced elder law attorney.
Under the Texas Medicaid Estate Recovery Program, the state has a right to make a claim against the probate estate of the Medicaid recipient to the extent that Medicaid benefits have been advanced if the Medicaid recipient applied for Medicaid on or after March 1, 2005. There are several exceptions to the rule (i.e., if there is a surviving spouse, if there is an unmarried adult child living in the home for one year prior to the death of the Medicaid recipient, if there is a Ladybird deed or Transfer on Death deed, or if there is a beneficiary designation on a vehicle, etc.). Furthermore, there are some Medicaid programs such as the Community Attendant Services and Qualified Medicare Beneficiary (QMB) which are excluded from estate recovery. Presently, there are also several planning methods to avoid the claim of the state against the home (not to mention other non-countable resources such as a car and a business).
Transferring assets can result in a penalty causing ineligibility for long-term care Medicaid. There are some exceptions to the rule (particularly with regard to disabled children). As a result of the Deficit Reduction Act of 2005 (“DRA”) signed by President Bush on February 8, 2006 (which was implemented in Texas on October 1, 2006), the rules regarding transfers for less than fair market value have changed for transfers that occur on or after February 8, 2006. Transfers for less than fair market value on or after February 8, 2006 are subject to a 5 year look-back period. For transfers on or after February 8, 2006, the transfer penalty period resulting in ineligibility for long-term care Medicaid starts from the date of application and from when one is otherwise eligible for long-term care Medicaid. Under DRA, the presumption is that any uncompensated transfer (even a gift to a charitable organization) within the 5 year look-back period was done for the purpose of obtaining Medicaid benefits. So, under DRA, if you made a gift to a charitable organization and 4 years later you had a stroke and applied for Medicaid, the presumption is that the gift 4 years earlier was for purposes of obtaining Medicaid and the period of ineligibility would start when such person applied (assuming it was within 5 years of the uncompensated transfer) and is otherwise eligible for long-term care Medicaid and not from when one made the transfer. The applicant would need to rebut the presumption by claiming it was done for a purpose other than for purposes of qualifying for Medicaid. Notwithstanding DRA, there are still planning strategies presently available for asset preservation – even for transfers within the 5-year look-back period. The transfer penalty divisor (representing the average daily cost of a nursing home in Texas) is $237.93.
See above. The annual gift tax exclusion ($16,000 per person in year 2022) under Internal Revenue Code Provisionsis still subject to the Medicaid transfer penalty rules. So, the transfer could result in a transfer penalty – depending on when the uncompensated transfer was made and if there was an existing transfer penalty and if the transfer was to a disabled child or under some other exception to the transfer penalty rules.
Most assets that can be converted to cash are considered countable (such as the cash surrender value of life insurance policies if the face value of the policy exceeds $1,500, stocks, mutual funds, bank accounts, deferred annuities, etc.) and can be used for your support. Such resources are considered in determining Medicaid eligibility. Excluded (non-countable) resources, for Medicaid eligibility include, but are not limited to, the homestead; one car; pre-need funeral; a burial space for the applicant and family members; term life insurance; personal property items; traditional IRAs and making minimum required distributions (RMDs); or IRA where no RMD is required (i.e. Roth or under the age for RMD) if the investment within the IRA is an annuity; a business essential for self-support; or certain mineral interests if limited value, etc.
It is assumed that the account all belongs to the applicant unless it could be proven otherwise.
It depends on the factual situation. With the rule change which became effective as of September 1, 2004, “Medicaid annuities” became more popular when there is an institutionalized spouse and a community spouse, and their total non-countable resource income exceeds or is close to the MMMNA ($3,435 as of January 1, 2022). Before one makes a decision one should consider all of the options. Be wary of anyone who advises this is the only option. Under DRA, there have been additional requirements in the use of this type of annuity.
Yes, so there should be planning which is often why some create Special Needs Trusts within a will. It should also be noted that Texas permits reformation of Wills if public benefits of the beneficiary are jeopardized as a result of the inheritance.
Depending on the income of the community spouse and other factors, often the answer is “Yes”.
As of October 18, 2018, the answer is “no” unless the Applicant’s resources were below the resource limit of $138,488 as of January 1, 2022. Transfers prior to October 18, 2018 are not penalized. Since the home (if less than 2 acres) is generally not a countable resource, the transfer of a home is not penalized. If the applicant (called the claimant) sells their home, eligibility could be lost so often certain trusts are established to prevent loss of eligibility. There is no look-back period or transfer penalty if you transferred assets prior to October 18, 2018. Transfers on or after October 18, 2018 are penalized unless the claimant was below the resource limit when the transfer was made. As of October 18, 2018, there is a 3-year look-back period (i.e., to trusts or just making a gift). Tax issues, changes in the VA rules and potential need in the future for Medicaid (since often more is saved for long-term care through the use of Medicaid especially if the applicant is likely to be in a nursing home within 5 years) should also be considered.
Yes, assuming the surviving spouse was not divorced from the Veteran at the time of the Veteran’s death and did not remarry.
No. This different than the Medicaid rules as explained above.
Single Veteran – $2,050 (as of January 1, 2022); married Veteran with one dependent – $2,431 (as of January 1, 2022); surviving spouse of Veteran – $1,317 (as of January 1, 2022); VA Pension that is A&A – $821 (as of January 1, 2022) and VA Pension that is A&A for surviving spouse – $492 (as of January 1, 2022).
Probate is the process where a court confirms death and determines who has the authority to collect assets of the estate of the deceased, pay creditors of the estate and distribute the assets of the estate either under the terms of a valid will or under law if there is no will.
No. Beneficiary designations (i.e., naming a beneficiary of your retirement account, life insurance policy, bank accounts, etc.) supersede probate. Also, if you have a joint account with right of survivorship, then probate is avoided as to that account.
You should probate if the deceased spouse had children from a different relationship. If there are no debts and the will is consistent with the laws of intestacy, then probate can sometimes be avoided. Furthermore, sometimes titling of the deed (i.e., subject to survivorship agreement) or vehicle designation can supersede probate. A trust also avoids probate. There are many other exceptions.
If the deceased had a will, usually the person named as Executor files an application for probate. If there is no will, typically an heir will make an application to determine the heirs and the court will appoint an additional attorney to investigate and report to the court to determine the heirs.
Generally, four (4) years from the date of death. There are some exceptions (i.e., will not found until after four (4) years), but if the will is probated after four (4) years it may only be probated as a muniment of title under Texas law. If the will is not probated, property could pass by the laws of intestacy instead of the will.
If there are no debts or other need for an executor, the court can issue an order so that the will is determined valid and property can be distributed directly to the beneficiary or beneficiaries. Since probate as a muniment of title is something unique to Texas, often out-of-state financial institutions must be given an explanation.
Typically, if assets such as stocks, bonds, investment accounts are in an individual account of the deceased (with no beneficiary designation), the financial institution (or title company if real estate is owned by the deceased) will require Letters Testamentary to show that the court has authorized the Executor to act on behalf of the estate to gather and transfer the assets. The Executor would also have the authority to deal with taxing authorities and to reimburse for those who advanced funeral expenses, last illness expenses, etc. If there is no valid will and heirs can agree, an Independent Administrator can be appointed by the Court and Letters of Administration can be granted so that the Administrator can act on behalf of the estate. If there is no agreement between the heirs on who can act on behalf of the estate, then the Court would have a Dependent Administration and the court would oversee payment of bills, whether property could be sold, require an annual accounting, etc.
Under Texas law, if the assets of the estate are under $75,000, then the heirs and two (2) disinterested witnesses could sign and submit a Small Estates Affidavit without the necessity of going to court (although the Affidavit would be filed with the Court) and having to go through the process of probate. This is useful in situations when there is no will and there are little or no debts.
Since an executor has a duty to beneficiaries and creditors, the courts usually require an executor be represented by an attorney.
The original will (if located), death certificate, statements of all accounts, beneficiary designations, deeds, life insurance policies, stocks, bonds, car titles, boat titles, and some courts request driver’s license and Social Security information.
It depends on several questions – Will the Last Will be contested? Are there creditor claims that will be contested? How long will it take to be in control or collect assets belonging to the estate? However, generally if these are not a problem, the process often takes less than six (6) months.
Uncontested wills can often be probated by Zoom or teleconference (varies by court) due to a temporary order issued by the governor. As a result, at the present you don’t have to physically go to court! However, during the pandemic, the court process to post notice of citation of a hearing, to set a hearing, or to receive letters testamentary, etc., is often longer.