Attorneys helping to plan for your future

Special Needs Trusts serve a vital role in safeguarding the future of your loved ones with disabilities, providing essential support, and preserving government benefits. What makes special needs trust planning even more remarkable is its versatility; it can take different shapes, tailored to your specific circumstances and needs.

Special Needs Trusts (SNTs) are a legal tool designed to benefit individuals with disabilities without jeopardizing their eligibility for crucial government benefits such as Supplemental Security Income (SSI) and Medicaid. Whether the individual's disability stems from birth or later in life, SNTs can provide a safety net that ensures their financial well-being and quality of life.

Special needs trust planning is not a one-size-fits-all solution. It can be customized based on various factors, including the creator of the trust, the beneficiary's needs, and the family's financial situation. Let us share three types of SNTs you may encounter as you meet with an experienced special needs planning attorney to discuss your goals:

One of the primary purposes of special needs trust planning is to protect the essential government benefits of a loved one with disabilities needs. Without proper planning, an inheritance or a sudden windfall could disqualify them from these critical programs, leaving them without vital support. SNTs ensure that your loved one can continue to receive Medicaid, SSI, and other essential benefits while still enjoying an enhanced quality of life.

Perhaps the most comforting aspect of special needs trust planning is knowing that there will be a lifetime of support around those you love, even when you are not here. By carefully crafting the trust's provisions and appointing a trustworthy trustee, you can create a lasting legacy of care and protection for your family member. This enduring support can include medical expenses, therapy, education, accessible housing, and even recreational activities that enrich their life experience.

In conclusion, special needs trust planning is a powerful tool for protecting and enhancing the lives of with disabilities individuals. It offers flexibility, safeguards government benefits, and provides peace of mind to families who want to ensure their loved ones receive the support they need, both now and in the future. Estate planning, especially when it comes to special needs planning, is a complex and highly individualized process. 

We understand that planning for end of life, disability, or aging can be complicated and emotional. Porzio Planning’s experienced team of attorneys are here to help you navigate through this challenging time and make sure you feel secure and confident in your planning to ensure you reach your goals. Contact us today for the support you need.

When it comes to estate planning, trusts are powerful tools that can help you protect and manage your assets, minimize estate taxes, and ensure a smooth transfer of wealth to your beneficiaries. A crucial role in the trust management process is that of the trustee.

But what does a trustee really do, and why is it important to have an attorney experienced in both trust creation and trust administration? Let's delve into these questions and answer them so you can gain a better understanding of the trustee's role in estate planning.

At its core, a trustee is a fiduciary who holds legal title to assets for the benefit of one or more beneficiaries. The trustee is tasked with managing and administering the trust according to the terms and instructions outlined in the trust document. This role carries significant responsibilities, and trustees are legally bound to act in the best interests of the beneficiaries. Let us share the key responsibilities of a trustee:

1. Asset Management. One of the primary duties of a trustee is managing the assets held within the trust. This may involve investing assets, overseeing real estate holdings, and making financial decisions aimed at preserving and growing the trust's value.

2. Record Keeping. Trustees must maintain accurate records of all trust transactions, including income, expenses, and distributions. This transparency is crucial to ensure accountability.

3. Communication. Trustees are responsible for keeping beneficiaries informed about the trust's status, financial performance, and any distributions. Open communication helps build trust and transparency.

4. Tax Compliance. Trustees must ensure that the trust complies with all applicable tax laws. This includes filing tax returns and managing any tax liabilities.

5. Distribution of Assets. Depending on the trust's terms, a trustee may be responsible for distributing assets to beneficiaries at specified times or under certain conditions.

6. Conflict Resolution. Trustees often play a role in resolving disputes among beneficiaries or addressing any conflicts that may arise during the administration of the trust.

Given the intricate nature of trust administration, it's essential to have an attorney who is well-versed in both trust creation and trust administration. Your attorney’s expertise is invaluable in two parts. First in the creation of your trust. When creating a trust, an experienced attorney can help you design a trust that aligns with your specific goals and wishes. They can assist in choosing the right type of trust, drafting the trust document, and ensuring that your intentions are clearly stated.

Second, in the actual trust administration. During the trust administration phase, an attorney with experience in this area can guide the trustee through their responsibilities, ensuring compliance with legal requirements and the trust's terms. Your attorney, whether they drafted it at the outset or not, can offer legal advice on asset management, tax planning, and resolving any challenges that may arise.

In summary, a trustee's role is multifaceted, involving asset management, communication, and legal compliance. To navigate the complexities of trust administration effectively, it's essential to have an attorney who is experienced in both trust creation and trust administration by your side. With their guidance, you can ensure that your trust serves its intended purpose, protecting your assets and benefiting your loved ones according to your wishes.

Porzio's Wealth Preservation Group is made up of attorneys from the law firm of Porzio, Bromberg, & Newman, P.C., a full-service law firm headquartered in Morristown, New Jersey with additional offices in New York, Pennsylvania, Delaware, Massachusetts, and Puerto Rico. Our team of attorneys created Porzio Planning as a dedicated resource to better serve and provide valuable information to our clients and community. As part of Porzio, Bromberg, & Newman, we have the convenience and vast resources to call upon when you have questions and needs outside of wealth preservation planning. Your goal is our goal. Our experienced attorneys are here to help you, as a trustee, navigate through this challenging time and make sure you feel secure and confident in your trust administration responsibilities to ensure you reach your goals. We encourage you to contact us today.

Your estate plan is a crucial document that ensures your assets are distributed according to your wishes after you're no longer here. While creating an estate plan is an important first step, it's equally vital to regularly review and update it to reflect changes in your life, your assets, and the law. Let us share with you the key reasons why it may be time to review your estate plan.

1. Major Life Events. Life is full of significant changes, such as marriage, divorce, the birth of a child or grandchild, or the loss of a loved one. These events can impact your estate plan significantly. For instance, you may want to include new beneficiaries, update your will, or change the terms of your trust to accommodate these life changes.

2. Changes in Finances. Significant changes in your financial situation, such as an inheritance, a substantial increase in assets, or a business sale, can necessitate a review of your estate plan. Ensuring your plan aligns with your current financial status is essential to protect your wealth and minimize tax implications.

3. Tax Laws and Regulations. Tax laws and regulations are subject to change. What was a sound estate plan in the past may not be as effective today due to shifting tax laws. Periodically reviewing your plan with a professional can help you take advantage of any new strategies or updates that align with current tax laws.

4. Healthcare Wishes. Your healthcare directives, including a living will and a durable power of attorney for healthcare, should be reviewed regularly. You may have new preferences or wishes regarding your medical treatment, and it's crucial to ensure that your documents accurately reflect your current desires.

5. Beneficiary Designations. Many assets, such as retirement accounts and life insurance policies, pass directly to beneficiaries outside of your will or trust. It's essential to review these beneficiary designations to ensure they align with your overall estate plan.

6. Changes in Future Decision Makers. Your choice of personal representative, trustee, or guardian may require updates over time. Make sure the individuals you've selected are still willing and able to fulfill their roles.

7. Location and Asset Changes. If you've relocated to another state or acquired assets in different jurisdictions, it's essential to review your estate plan to ensure it complies with the laws of your current location and accurately reflects your asset distribution wishes.

8. Time Interval. Even if you haven't experienced any major life changes, it's generally a good practice to review your estate plan every three to five years. This regular check-up can help you catch any overlooked details and ensure that your plan remains up-to-date.

In conclusion, reviewing your estate plan periodically is a responsible and prudent step to take. Life is dynamic, and your plan should evolve with it. By staying proactive and working with your experienced estate planning attorney, you can ensure your estate plan continues to protect your assets and fulfill your wishes long into the future.

We understand that planning for end of life, disability, or aging can be complicated and emotional. Porzio Planning’s experienced team of attorneys are here to help you navigate through this challenging time and make sure you feel secure and confident in your planning to ensure you reach your goals. Contact us today for the support you need.

Crystal West Edwards, principal on our Wealth Presentation team, was quoted in the Refi.com article "What Happens to Your Mortgage After You Die?" The article emphasizes estate planning, potential challenges during probate, and the advantages of a living trust.

Click here to read the full article.

Estate planning is a crucial aspect of financial and familial security, ensuring that your assets are distributed according to your wishes and your loved ones are protected. In today's world, do-it-yourself (DIY) solutions are increasingly popular, with many online tools and templates available to create wills and estate plans.

While this approach may seem convenient and cost-effective, DIY estate planning can lead to serious mistakes that may result in unintended consequences. In New Jersey, where estate laws can be complex, it's essential to understand the potential pitfalls of DIY estate planning.

1. Inadequate Understanding of New Jersey Laws. One of the most significant mistakes with DIY estate planning is not fully grasping the intricacies of New Jersey's estate and probate laws. These laws are subject to change and can be complex, making it easy to overlook critical details when drafting your own documents.

2. Failure to Update Your Plan. Life is ever-changing, and your estate plan should reflect that. DIY estate planning tools may not adequately guide you on the importance of regularly reviewing and updating your plan to accommodate changes in your financial situation, family structure, or tax laws. There is no substitute for the advice of an attorney experienced in this area of planning when it comes to frequently updating your estate plan as needed.

3. Improper Beneficiary Designations. Mismanaging beneficiary designations on retirement accounts, life insurance policies, and other assets can lead to significant problems. DIY tools might not provide sufficient guidance on the importance of aligning these designations with your overall estate plan.

4. Ambiguity in Legal Language. DIY estate planning often involves using generic templates that may not cover all your specific needs. It also may inadvertently involve legal language and rules from states that are not relevant in New Jersey. This can result in ambiguities or vague language in your documents, potentially leading to disputes or misinterpretations among beneficiaries.

5. Taxation Errors. New Jersey has inheritance tax, which can be complicated to navigate. Failing to consider the tax implications of your estate plan or missing out on available exemptions can lead to unnecessary tax burdens for your heirs.

6. Lack of Professional Guidance. DIY estate planning lacks the valuable insight and expertise of an experienced estate planning attorney. An attorney can help you make informed decisions, ensure your documents adhere to state laws, and provide solutions tailored to your unique circumstances.

In New Jersey, estate planning is a serious matter that should not be entrusted to generic DIY tools. Instead, it's wise to seek guidance from an experienced estate planning attorney who understands the intricacies of the state's laws. An attorney can tailor your estate plan to your specific needs, ensure it complies with current regulations, and provide peace of mind that your wishes will be carried out correctly.

While DIY projects can be a fun and cost-effective way to approach various aspects of life, estate planning should not be one of them. The potential pitfalls and long-term consequences of mistakes in DIY estate planning can far outweigh any short-term savings.

We understand that planning for end of life, disability, or aging can be complicated and emotional. Porzio Planning’s experienced team of attorneys are here to help you navigate through this challenging time and make sure you feel secure and confident in your planning to ensure you reach your goals. Contact us today for the support you need.

By Crystal West Edwards, Esq., CELA

Tis the Season to be ... PREPARED. The holiday season is upon us and excitement fills the air as we begin to visit family, friends and loved ones again. This holiday season, many of us will be cheerful to reconnect with those we love, while others will be mourning difficult losses that occurred this year (and in years prior!). Recognizing that estate and long term care planning do not bring the same volume of laughter as the family's annual game of Taboo!, the time we spend together is a perfect opportunity to communicate fears, wishes, and desires with those we love.

Here are 10 Questions to Ask Your Aging Loved Ones as we come together this holiday season:

1. Have you appointed someone to make legal and financial decisions for you if you are unable to make such decisions for yourself?

Talking Point – this is called a Power of Attorney. It is not enough for mom to say "absolutely son, I appoint you to make decisions for me." Be deliberate in explaining to mom that she must sign a Power of Attorney in the presence of a notary public. Really, we recommend that she sign a Power of Attorney in the presence of two disinterested witnesses and a notary.

2. Have you appointed someone to make medical decisions for you if you are unable to make decisions for yourself?

Talking Point – this is called a Medical Power of Attorney or a Healthcare Proxy. It is not enough for dad to say "certainly, your sister can make whatever decision she wants because you know mom will never be able to make a decision for me." Dad needs to understand that if his desire is for your sister to make decisions for him, he needs to state so in writing. A Healthcare Proxy can be signed in the presence of two witnesses, or a notary. We recommend both!

3. Do you want to be kept alive on machines and/or tubes? Do you want us to pull the plug if your doctors believe there is no medical likelihood you could be restored to a meaningful life?

Talking Point – this is called a Living Will or an Instruction Directive. Reassure mom that you will not pull the plug prematurely! 🙂 All jokes aside, people are often concerned that a medical professional will "jump the gun" and turn the machine off too quickly. These fears can be eased by understanding that you can choose the standard for others to follow before pulling the plug. For example: "If I am brain dead or in an irreversible coma for a period not less than three (3) months, I wish to withhold or withdraw all life-sustaining treatment."

4. Do you have a Will? If so, where is the original and who did you appoint as the Executor? If not, would you consider speaking with an elder law attorney to ensure your desires are implemented after your death?

Talking Point – this is called a Last Will and Testament. Now is NOT the time to remind dad that your brother has done nothing to assist with his day-to-day needs or that your sister could not care any less either since she has not visited in 3 years. This could be considered undue influence and at a later time we can discuss how it will derail the best estate plans!

5. How do you want to live your twilight years? Would you like to live independently? Have you considered whether to downsize or upgrade your home to be more accessible if you have physical limitations in the future?

Talking Point – this conversation typically goes one of two ways: "Daughter, you do everything in your power to keep me out of a facility for the rest of my life. If you put me in a home, I will haunt you every day of my afterlife." Or, "daughter I do not want to be a burden on you and your family... when I start to lose it, drop me off at the nearest place and just make sure my peppermints are at my bedside!"

The point of this discussion is to make sure that mom has thought about future living options and the anticipated cost to live comfortably in whatever setting she has envisioned.

6. How will we pay for long term care costs in the future? Do you have long term care insurance? Are you willing to talk to an elder law attorney about ways to protect your assets?

Talking Point – this is a difficult conversation for the average person because the starting position is "I am not worried about long term care costs since I am never going to a nursing home". Please explain to dad that we never plan to put someone in a nursing home. We plan to keep them as comfortable as possible in the care setting they prefer (typically at home). However, we must be prepared for the worst-case scenario, which is the dreaded "what if?"

The reality is the average cost of a semi-private (shared) room in a New Jersey nursing home is approximately $11,000 per month. In other words, even though dad has built a significant nest egg for himself, we need to ensure it is protected and distributed in a way that is satisfactory to him. Long term care planning allows us to do that.

7. Who should I call (or where should I look) to get information about your finances if something happens to you unexpectedly and you are unable to participate in any decision-making?

Talking Point – this is your opportunity to ask about mom's trusted advisors. Does she have a financial advisor who manages (or has information about) her asset holdings? Does she have a long time accountant or attorney that could point you in the right direction in the event of crisis?

You get bonus points if mom introduces you to these trusted advisors after the holidays!

8. Where can I find a list of your account numbers and passwords to ensure your accounts stay current if you are unable to devote the attention needed?

Talking Point – it is critical to reassure dad that you are not trying to violate his privacy while he still has his mental facilities. This question is intended to encourage dad to make the information easily accessible in the event of a crisis, while at the same time, respecting his privacy while he is fully capable of making decisions for himself.

9. How do you want to be remembered? Do you have strong feelings about funeral services? Public viewings? Burial? Cremation?

Talking Point – Brace Yourself!! This is a judgment-free zone. If mom wants all of her funeral guests to wear blue while she is dressed in head-to-toe yellow, you say "yes ma'am" and let it happen!

10. What are your greatest life accomplishments that you would want others to know from your childhood, teenage years, young adulthood, and adulthood in general?

Talking Point – Think about it... how much do you know about your father? You know him as your father but others know him as a husband, son, brother, uncle, cousin, friend and colleague. Your perspective of him is just that...your perspective. This is how you get all the juicy details that will make grieving family members and friends smile (or laugh!) during services.

If you or someone you love needs assistance working through these questions or implementing these recommendations, we are here to help!

A Comparative Approach to Planning for Aging Adults With Intellectual and Developmental Disabilities

By Crystal West Edwards and Ryann M. Siclari

As published in the December 2022 Elder Law edition of New Jersey Lawyer, available at njsba.com.

New Jersey provides numerous services to support individuals who are financially needy, medically needy, aging, blind or disabled. Both the New Jersey Division of Medical Assistance and Health Services ("Medicaid") and the New Jersey Division of Developmental Disabilities (DDD) provide a suite of services, each having separate and distinct eligibility criteria. Individuals with Intellectual and Developmental Disabilities (I/DD) must coordinate services to assist with major activities of daily living. This is compounded by the typical aging processes including physical and/or cognitive decline. This article will discuss Medicaid and DDD services available to aging adults with I/DD and the unique challenges faced when selecting services.

Adults With I/DD

DDD provides services to I/DD adults beginning at age 21. There are several requirements an individual must meet to qualify for services through the DDD. First, they must have a developmental disability as defined in N.J.A.C. 10:46-1.3. Second, the person must be eligible for Medicaid under one of numerous paths to eligibility. Third, they must enroll in one of the two Medicaid waiver programs administered by the DDD: the Supports Program or the Community Care Program (CCP). Typically, an individual will be enrolled in the Supports Program once the other eligibility criteria are met.[i]

Developmental Disability

I/DD is more than "(i) an education classification of neurological impairment, (ii) attention deficit hyperactivity disorder, (iii) learning disorder, (iv) oppositional defiant disorder, [or] (v) conduct disorder.[ii] Instead, I/DD is "a severe, chronic disability" ... "which (i) is attributable to a mental [and/or] physical impairment ..., (ii) manifest[s] before age 22, (iii) is likely to continue indefinitely, (iv) results in substantial functional limitations in three or more ... areas of major activities of daily living, and (v) reflects the need for a combination and sequence of special interdisciplinary or generic care, treatment, or other services, which are of lifelong or extended duration and are individually planned and coordinated."[iii] Such areas of major activities of daily living include self-care, receptive and expressive language, learning, mobility, self-direction, capacity for independent living, and economic self-sufficiency.[iv]

Medicaid Eligibility

By way of background, each state that participates in Medicaid is required to have a state plan which complies with the Medicaid Act.[v] The states are permitted to amend their state plan, with approval by the Centers for Medicare and Medicaid Services (CMS). One comprehensive amendment to the state plan is known as a Section 1115 Demonstration Waiver.[vi] New Jersey elected to amend its state plan accordingly, which outlines numerous paths to Medicaid eligibility ("1115 Waiver").[vii] These paths include, but are not limited to, New Jersey Care, Workability, Supports Program, CCP, and Managed Long Term Services and Supports (MLTSS). Each of these programs provides a baseline of services, known as a Plan A package of services.[viii] Additionally, certain waiver programs (i) provide additional services to the Plan A service package[ix] and/or (ii) have eligibility criteria less restrictive than federal law.[x] However, federal law prohibits an individual from enrolling in two waiver programs simultaneously.[xi]

The Plan A service package includes, but is not limited to, physician and advanced practice nurse services, including primary and specialty care, preventive health care, optometrist, optical appliances, emergency care, audiology and hearing aid services, inpatient hospital care, home health agency services, outpatient hospital care, hospice agency services, lab services, durable medical equipment, prescription drugs, organ transplants, rehabilitative care, dental services, prosthetics and orthotics, inpatient rehabilitation services, mental health/substance abuse services for clients of the DDD, medical day care, Personal Care Assistance (PCA) including the Personal Preference Program (PPP), and ambulance for medical emergency.[xii]

Supports Program

The Supports Program provides employment support, day services and individual/family support services and is typically the first level of services offered to DDD recipients. Commonly, individuals live with family members or independently in unlicensed settings.

For individuals who require a nursing facility level of care but wish to remain in a community setting, there is an additional program called Supports Program + PDN. PDN stands for private duty nursing and is available to those who require skilled nursing facility level of care.[xiii] Supports Program + PDN includes assistive technology, behavioral supports, cognitive rehabilitation, community inclusion services, day habilitation, occupational therapy, prevocational training, support coordination, supported employment, and private duty nursing. Essentially, this program allows a DDD recipient to use their DDD Supports Program services (and underlying service delivery budget) while at the same time use a Medicaid service otherwise available under the MLTSS waiver program. Since federal law prohibits enrollment in two waiver programs (i.e., the Supports Program and MLTSS), the Supports Program + PDN is ideal for many medically needy adults with I/DD who reside in the community.

Community Care Program

The CCP provides residential placement (i.e. group home placement, supportive apartments, etc.) or in-home support services for DDD recipients who have greater support needs. There is a significant wait list for services under this program unless an emergency exists such that the recipient is at risk of imminent peril or homelessness.[xiv]

For an individual to receive services under the CCP, they must (i) meet all of the general eligibility criteria as the Supports Program, (ii) demonstrate the need for an Intermediate Care Facility for Individuals with Intellectual Disabilities (ICF/ID) clinical level of care, and (iii) reach the top of the waiting list.[xv] The ICF/ID level of care requires an individual to have "substantial functional limitations which require care and/or treatment in an ICF/ID" or alternatively, in a community program under the DDD Community Care Program.[xvi]

An individual who qualifies for the CCP can choose to receive services in a residential setting or remain at home with their family. Depending on the individual's tier classification, 24/7 coverage may be provided in the home setting; however, this does not apply if PDN is needed. In other words, if someone requires private duty nursing, their service options are limited to Supports Program + PDN or an institutional setting. The CCP does not cover private duty nursing.[xvii]

Aging Adults

The Social Security Act, the Medicare and Medicaid Act, and the State of New Jersey all define aged as 65 years or older.[xviii] In fact, there is a 70% chance that an individual turning 65 will need some form of long-term care during their life.[xix] Long-term care may be in the form of home and community based services, such as home health aide assistance or an assisted living facility, or it may be in a skilled nursing facility. Regardless of the care setting, the only government benefits program available when an aged person needs long-term care is MLTSS.

MLTSS covers long-term custodial care in a skilled nursing facility or a home and community based setting such as an assisted living facility or at home. Individuals who are enrolled in MLTSS at home receive the Plan A package of benefits (i.e. the benefits available under all Medicaid programs) and an additional package of benefits which includes home-delivered meals, medication dispensing devices, personal emergency response system, and private duty nursing, among others.[xx]

One of the most common services needed by an aged person living at home is home health aide assistance, which is referred to as Personal Care Assistance (PCA).[xxi] PCA includes assistance with activities of daily living such as bathing, dressing, and ambulating, but it also includes instrumental activities of daily living such as house cleaning, grocery shopping, and medication monitoring. [xxii] Interestingly, PCA is a Plan A service which means it is available under MLTSS or any other Medicaid program.[xxiii] PCA can be serviced in one of two forms: (1) through an agency that contracts with the Managed Care Organization or (2) through the Personal Preference Program which allows the Medicaid recipient to hire an employee who is paid by Medicaid.[xxiv]

Applicants for the MLTSS program must be found eligible clinically and financially.[xxv] Clinical eligibility is defined as needing Nursing Facility Level of Care which is established if the individual "(i) requires limited assistance or greater with three or more activities of daily living; and/or (ii) exhibits problems with short-term memory and is minimally impaired or greater with decision making ability and requires supervision or greater with three or more activities of daily living; or (iii) is minimally impaired or greater with decision making and, in making himself or herself understood, is often understood or greater and requires supervision or greater with three or more activities of daily living.”[xxvi] In order to be financially eligible, income and assets must be below the respective caps. Once an individual meets both the clinical and financial test, they will be deemed eligible for the MLTSS program.

Aging Adults With I/DD

What happens when someone is both aged and has a developmental disability? The intuitive answer would be to apply for benefits under both programs; however, that is not the case. An individual cannot be eligible for both MLTSS and the Supports Program or CPP.[xxvii] Accordingly, they must pick the program based on level of care and the types of services needed.

The program an individual selects depends initially on level of care. As discussed above, both MLTSS and Supports Program + PDN require a nursing facility level of care. If an aged person with a developmental disability does not meet nursing facility level of care, the decision as to which program to be on is quite simple: they must receive services under the Supports Program. Conversely, an individual cannot enroll in the CCP if they require institutional level of care and "cannot be maintained safely in the community."[xxviii] In the situation where someone requires institutional level of care due to a combination of age and disabilities, they should transition to the MLTSS program.

In conclusion, the Supports Program and CCP often provide more robust services in the community to younger individuals with I/DD. On the other hand, the MLTSS program often provides more robust services once someone needs nursing facility level of care in a skilled nursing or assisted living facility. Essentially, the physical and cognitive limitations that come with aging compound the pre-existing, lifelong need for support and often dictate when to transition to the MLTSS program.

Crystal West Edwards is a principal with Porzio, Bromberg & Newman in Morristown. She is a former member of the Board of Directors for the National Academy of Elder Law Attorneys (NAELA), a Past President of the New Jersey Chapter of NAELA, a Past President and Life Member of the Garden State Bar Association, and a member of the Elder and Disability Law Section of the New Jersey Bar Association. She is certified as an Elder Law Attorney by the ABA Accredited National Elder Law Foundation.

Ryann M. Siclari is counsel with Porzio, Bromberg & Newman in Morristown. She is the Chair of the Elder and Disability Law Section of the New Jersey Bar Association, a member of the National Academy of Elder Law Attorneys (NAELA) and serves as the Legislative Committee Co-Chair of the New Jersey Chapter of NAELA. She is certified as an Elder Law Attorney by the ABA Accredited National Elder Law Foundation.

[i] See N.J.A.C. 10:46-1.2.

[ii] See N.J.A.C. 10:46-2.1(b)(2).

[iii] See N.J.A.C. 10:46-2.1(b)(1).

[iv] See N.J.A.C. 10:46-1.3.

[v] 42 U.S.C. § 1396a.

[vi] See 42 U.S.C. § 1315.

[vii] See NJ FamilyCare Comprehensive Demonstration, available at medicaid.gov/medicaid/section-1115-demonstrations/downloads/nj-1115-request-ca1.pdf (“Waiver”).

[viii] See 1115 Waiver, Table A at 12.

[ix] See 1115 Waiver, Table A at 12.

[x] See 42 U.S.C. § 1396a(a)(10)(C)(i)(iii).

[xi] See 1115 Waiver, Special Term and Condition 32(C) at 27 and 34(D)(1) at 30.

[xii] See N.J.A.C. 10:49-5.2(a).

[xiii] See 1115 Waiver, Special Term and Condition 32(D)(8) at 28.

[xiv] See NJ Division of Developmental Disabilities Community Care Program Policies & Procedures Manual sec 5.1, page 23.

[xv] See NJ Division of Developmental Disabilities Community Care Program Policies & Procedures Manual sec 5.1, page 23 and see 1115 Waiver, Special Term and Condition 38.

[xvi] See NJ Division of Developmental Disabilities Community Care Program Policies & Procedures Manual sec 5.1, page 23 and See 1115 Waiver, Special Term and Condition 38(F)(1) at 37.

[xvii] See NJ Division of Developmental Disabilities Supports Program Policies & Procedures Manual sec. 4.1, page 23 found at nj.gov/humanservices/ddd/documents/supports-program-policy-manual.pdf

[xviii] See 42 C.F.R. § 416.101, 42 C.F.R. § 435.520, and N.J.A.C. 10:72-3.4(a)(5).

[xix] See HHS Office of the Assistant Secretary for Planning and Evaluation, What is the Lifetime Risk of Needing and Receiving Long-Term Services and Supports?, April 2019 available at aspe.hhs.gov/sites/default/files/migrated_legacy_files//188046/LifetimeRisk.pdf.

[xx] See 1115 Waiver, Special Term and Condition 32(F) at 28 and Attachment D at 137.

[xxi] See N.J.A.C. 10:60-3.3.

[xxii] Id.

[xxiii] See 1115 Waiver, Special Term and Condition 27 at 26.

[xxiv] See generally N.J.A.C. 10:60 and N.J.A.C. 10:142, respectively.

[xxv] See 1115 Waiver under Special Term and Condition 32

[xxvi] Id. at 26. See also N.J.A.C. 8:85-2.1 ("dependent in several activities of daily living (bathing, dressing, toilet use, transfer, locomotion, bed mobility, and eating).")

[xxvii] See 1115 Waiver, Special Term and Condition 32(C) at 27 and 34(D)(1) at 30.

[xxviii] See 1115 Waiver, Special Term and Condition 38(C)(2) at 37.

By Deirdre R. Wheatley-Liss, LL.M, CELA

There are times that married people are on a journey together, and then they find they no longer wish to be on the journey together, ultimately choosing to divorce.

Consider the Long-Term Care Implications of Divorce

When a person is living alone, in the event they become either physically or mentally ill, they are faced with the question of how they are going to get the care they need. Without a spouse or domestic partner, there's no one “built in” to help care for them.

I advise my clients – especially those considering divorce in later years – to consider this carefully and to look at how this will affect their financial security.

This is particularly important for women. Statistically, women live seven years longer than men do. This is reflected in the cost of long-term care insurance. Long-term care insurance costs about 30% more for women as it does for men that are of same age.

“Equitable Distribution”

When you get divorced in later life, assuming there are no children involved or the children are emancipated, the main concern is about dividing the property which the couple owns. This involves collecting information about what's in the marital estate and filling out a financial statement. What do you have? What assets are there? In whose name are they titled and what are they worth? And then the liabilities – the same thing.

This is called the process of equitable distribution, and it is a three-step process: identification, valuation and distribution. In New Jersey, it is assumed that property will be divided in equal shares. That is to say, whatever was accumulated between the date of the marriage and the date somebody filed for divorce will be divided 50-50.

Alimony

In New Jersey, the alimony laws changed in 2014, and for any marriage that is less than 20 years, the length of the alimony term can be no more than the length of the marriage. If you were married for 13 years and alimony is an issue in your divorce, your alimony cannot be longer than 13 years – the length of your marriage.

Also, if you're over the age of 60, there's a presumption under the new alimony statute that when you reach your normal retirement age according to the Social Security Administration you no longer have an obligation to pay alimony. However, if you have a continuing ability to pay (and your former spouse has a continuing financial need), it’s possible you may still have to pay. It really depends on the circumstances specific to the couple getting the divorce.

Will Creation

In New Jersey, if you file for divorce, you are allowed to enter into a new will, even though you aren't yet divorced. And because of the fact that you have what's called a cause of action for divorce, you are able to eliminate your spouse's elective share claim. (For a discussion of “elective share,” see my previous blog post, “Graying Marriage and Divorce, Part 2 – Creating a Prenuptial Agreement.”) That is to say, even though you are still married to each other, you cannot take that one third of your spouse’s assets. But that only applies to assets that are in your own name, not assets that have beneficiary designations.

Life Insurance and Retirement Account Beneficiaries

If you are in the middle of getting a divorce, you cannot change the beneficiary of your life insurance or retirement account. Court rules prohibit any changes during the pendency of the divorce. In fact, if you change any beneficiaries within the 90-day period before you or your spouse filed for divorce, you have to change it back.

Divorce and Pensions

If you've been married, and you and/or your spouse have a pension or retirement account, the value of the pension or retirement account will be considered as part of the divorce settlement.

If the pension was accumulated during the marriage, it doesn't matter whose name the asset is titled in. Even though the pension was in your spouse's name, as long as part of that pension was accumulated after you married, you are entitled to a part of that. The amount that was accumulated during the marriage is marital. And that gets divided – in most cases equally.

When the calculation has been made regarding how to divide a retirement account, we use a special type of court order called a Qualified Domestic Relations Order (QDRO, pronounced “quadro”) to transfer your share of the pension to you. If your spouse is already retired and is collecting benefits, it is still possible to have the pension distributed.

Estate Planning Twice When There’s a Divorce Situation for Someone Over Age 60

To be sure that all of the important details are handled fully and completely, I tell clients that when someone over the age of 60 divorces, they should look at their estate plan twice: once at the time the divorce filing happens and again just after it is final.

At time of filing, you can change your will to get rid of the elective share. At the same time, you may wish to change your power of attorney because you probably named your spouse under your power of attorney and you gave them the right to make unlimited financial decisions for you. Presumably, if you're in the midst of a divorce, you don’t want that person to have the right to be able to make unlimited financial decisions for you.

You can also change your medical power of attorney (also called a “health care proxy”) – unless you want your soon-to-be former spouse to remain in that role. These are the sorts of estate planning decisions that you handle at the beginning of the divorce.

At the end of the divorce, you will have a different pool of assets than you had when you started. You no longer have the restriction on who it is that you can name as the beneficiary. You need to review what you have and make sure your estate plan addresses that pool of assets.

Maybe you never really had a retirement account before, but as a result of the divorce, you have a large retirement account because half of the retirement account of your former spouse came to you through a QDRO. If so, you need to consider your beneficiary designations for that account – and all of the other assets you end up with.

Taxes

One very important thing with regard to planning out a divorce is that transfers of property incident to divorce (including distribution of a pension by means of a QDRO) are not subject to income tax under the tax code.

However, it’s important to handle those transfers of property promptly. I have worked with clients who bring me documents from a divorce that is several years old where some elements of the property distribution were not finalized. In some cases, after time has passed, dividing up that property can no longer be accomplished without incurring a tax liability. For this reason, especially if you're an individual where there is a private business interest, you need to make sure that tax counsel is involved so that you're able to stay within the protections that are available if you have a transfer of property that is incident to a divorce.

In sum, if you are considering getting married or divorced – especially if you are over the age of 60 – I highly recommend getting detailed, personal legal counsel and financial planning advice. With more information, you are in a position to make better decisions. If you know more, you can now do more, and you can keep more of your money for yourself and have more options in your later years.

This post is for general informational purposes only. The specifics of your situation could affect the applicability of the information provided in this blog post. For a video presentation of this information, please visit Graying Marriage and Divorce, here. For more detailed information, please visit www.porzioplanning.com or contact us for a free 20 minute telephone consultation.

By Deirdre R. Wheatley-Liss, LL.M, CELA

For many couples who marry later in life, it makes sense to very carefully separate the assets each had before the marriage (each keeping those as their own) while also providing a way for them to share some assets going forward. With this type of approach, each spouse waves the elective share (see “Graying Marriage and Divorce – Part 2: Creating a Prenuptial Agreement” for a discussion of the concept of “elective share”) in an arrangement I sometimes call:

Yours is yours. Mine is mine. Ours is ours.

If the couple chooses to buy a new residence and put it into joint name, they both know that whoever lives longer will end up with the property. But their separate assets, if agreed in the prenuptial, can still pass to their respective children or other beneficiaries.

Often people are married for a long time. Because your assets can grow over time, you may wish to give more assets to your spouse than you envisioned at the time you created your prenuptial agreement. That’s not a problem – a prenuptial is not going to prevent you from doing that. It sets a minimum threshold, not the maximum that you're able to give. But in your will, you want to make sure that you reference that there is a prenuptial agreement and spell out the key terms of it which apply to your will.

Also, you want to make sure that your survivors – children, your spouse and/or other beneficiaries – can very clearly see why you did what you did.

Other Important Estate Planning Considerations

Guardianship. As soon as you get married, your spouse has preference to act in certain roles for you, particularly as a guardian. What is that? A guardianship is….

We all know or have heard of people who are suffering from dementia and they did not see their estate planning attorney and they do not have a power of attorney in place, but they are not competent to be making financial decisions. When that is the case, and somebody needs to make financial decisions for them, the way to do that is through a guardianship proceeding with the courts. Under the law, a spouse has preference to be the person who is named the guardian.

In a second marriage situation, however, you may not want your spouse to be named the guardian. If you're keeping your financial affairs separate, you might want one of your children to be making those financial decisions – or one of your children together with your spouse. If this is the case, it’s important to have it written down in your prenuptial agreement.

ERISA. The full name of the law that governs your retirement plan is the Employee Retirement Income Security Act, commonly abbreviated as ERISA. This law governs your 401-K or 403-B and most other types of employer-sponsored retirement plans.

Importantly, according to ERISA, when you die, your spouse is the beneficiary of those accounts unless they have waived their rights in a notarized document saying that they have waived their rights.

This condition does not apply to IRAs. With IRAs, whomever you list as beneficiary is the beneficiary. A spouse does not take precedence over the beneficiary you have designated.

This post is for general informational purposes only. The specifics of your situation could affect the applicability of the information provided in this blog post. For a video presentation of this information, please visit Graying Marriage and Divorce, here. For more detailed information, please visit www.porzioplanning.com or contact us for a free 20 minute telephone consultation.

By Deirdre R. Wheatley-Liss, LL.M, CELA

Medicaid is governed by federal law. Marriage and divorce are governed by state law.

When a married individual seeks to qualify for Medicaid in New Jersey, the couple’s house is an exempt asset. The person looking to qualify for Medicaid cannot have more than $2,000 of assets. The spouse cannot have more than approximately $125,000 in assets.

In New Jersey, retirement plans are not excluded from that calculation. You can be forced to spend down your entire retirement security to get down to that magic 5,000 number.

I am often asked if one can get around these limitations by transferring assets – between spouses or to children or others.

Under Medicaid rules, you can't qualify for Medicaid if you have given away any money within five years of applying for it. The federal government takes the approach that, in order for a divorce not to be a transfer of assets, it must have taken place more than five years before an individual applies for Medicaid benefits.

Example: You have a prenuptial agreement which says that one spouse gets 80% of the assets and the other spouse gets 20% of the assets and you've been married for 20 years. Medicaid will take the position that the person with the 20% – assume this is the person who needs the long-term care – intentionally gave away 30% in order not to have to spend it down before qualifying for Medicaid. In this case, a prenuptial agreement is irrelevant because eligibility for Medicaid is defined by the federal government, which imposes this “spend down” requirement.

Again, this is why we talk about long-term care insurance, because marriage brings the support obligation. Long-term care insurance is helpful because it can provide you with the money that you need for care at the time that you need it, and it protects the wealth of the other spouse because they are not forced to reduce their assets to pay for long-term care.

(Note: One option to secure long-term care insurance is to buy a life insurance policy with a long-term care rider, which may be more affordable than a standard long-term care policy.)

Tip #1: Other Options to Protect Your Assets Against Medical Costs

Given the marital obligation to pay for the care of an ailing spouse, besides the purchase of long-term care insurance, it’s worth considering additional options to protect your assets:

Tip #2: Have You Thought About a Domestic Partnership?

In New Jersey, the law recognizes a domestic partnership as a very specific relationship: two people who are over the age of 62 who cohabitate and are financially responsible for each other.

To create a domestic partnership, you go to the clerk in your city and register as domestic partners and the clerk gives you documentation of the partnership.

A domestic partnership allows you to file joint state income tax returns and, if you inherit assets from your domestic partner, you do not pay New Jersey inheritance taxes. This is particularly helpful when it comes to passing your ownership interest in a house. If you have a domestic partnership and you die, the house will pass to your domestic partner with no inheritance tax and, since you are not married, you do not incur the duty to provide care.

Tip #3: Co-habitation Agreements within Prenuptial Agreements

Many people, by the time they reach 60, have multiple homes. In the course of crafting a prenuptial agreement, it can be advantageous to write a co-habitation agreement into the prenuptial which designates one of the houses as the marital home.

Essentially, the agreement says this house belongs to one spouse, it is always going to belong to that spouse, the other spouse is going to live in it also, and the spouses are going to share expenses according to a certain formula which is laid out in the agreement. That way, the agreement is clear that spouses are sharing the costs of living in the house, but ownership remains with the spouse that owned the house before the marriage.

Tip #4: Consider Moving to a Neighboring State

Eligibility requirements for government assistance vary from state to state.

For example, New York and Pennsylvania do not have the same rules as New Jersey regarding whether retirement accounts must be included in an applicant’s assets when calculating eligibility for government benefits. In Pennsylvania, as an example, as long as the retirement account is in payment status, it is not deemed an asset that needs to be spent down to $2,000, as is the case in New Jersey.

I have had clients who, if they were looking at aging issues (particularly issues related to degenerative diseases such as Parkinson's or Alzheimer's) considered moving across the border to Pennsylvania as a financial strategy. Doing so could put them in a more financially secure position as they faced paying for long-term care for degenerative conditions and other prolonged illnesses.

New York has a rule called “spousal refusal.” In New York, unlike New Jersey, you can choose not to support your spouse. In some instances, then, it could be advantageous to relocate to New York when planning for the expenses associated with long-term care.

This post is for general informational purposes only. The specifics of your situation could affect the applicability of the information provided in this blog post. For a video presentation of this information, please visit Graying Marriage and Divorce, here. For more detailed information, please visit www.porzioplanning.com or contact us for a free 20 minute telephone consultation.

We understand that planning for the end of life, a disability or aging can be complicated and emotional. We are here to help you.