38 THE QUEENS COURIER • HEALTH • JANUARY 4, 2018 FOR BREAKING NEWS VISIT WWW.QNS.COM
health
The Elder Law Minute TM
Protecting One’s Home When Planning for Medicaid
BY RONALD A. FATOULLAH, ESQ.
AND STACEY MESHNICK, ESQ.
ELDER LAW
Oft entimes the main concern for clients
who are thinking about engaging in Medicaid
planning is how they can protect their homes.
It is, unfortunately, a widely held misconception
THE FUTURE AND AGING
Today, in general, Americans are living
longer than their predecessors. Yet those who
make policy have been slow to recognize the
implications of this unprecedented increase
in longevity. As a result, social institutions
(i.e.: educational organizations, healthcare
providers and work settings) have not fully
adapted to the challenges and opportunities
posed by America’s aging population.
It has been projected by 2030, the U.S.
will experience an accelerated growth in its
aging population. It has also been projected
that by 2050, the number of U.S. citizens
65 and older, will reach 88.5 million. Th at’s
more than double the 40 plus million that was
originally reported in a federal document on
“aging in society.”
It is a fact that as the older population ages,
they will become a more diverse segment of
society. Th is projected growth will present a
challenge to policy makers and entitlement
programs such as Social Security, Medicare
and Medicaid. It will certainly eff ect families
with relatives acting as caretakers and healthcare
providers.
By 2050 the U.S. is projected to grow from
an estimated 320 million to 439 million. Th e
population is also going to age with nearly 1
in 5 U.S. residents in that 65+ age category.
Many of these changes are being driven by
the “arrival” of baby boomers who are shaping
our current and future outlook.
Th e new and emerging technology will
also play a signifi cant role that must be dealt
with by utilizing those key skills that will be
needed for providing care to a growing aging
cohort.
More broadly, there will be greater demand
on the introduction of telemedicine with its
remote monitoring of numerous medical systems
that can assist in providing homebased
care. Th is will enable physicians to provide
advice to their homebound patients.
Further, various industries concerned with
aging issues and patient care have begun
focusing on product development for individuals
with conditions such as stroke and early
dementia. Two examples are memory assistance
programs and chronic disease management
as part of the current wellness practices.
Catastrophes representing the old business
of old age have begun emerging into the new
business of old age. How? By providing services
that promote the practice of wellness
care, prevention programs such as smoking
cessation, and projects pertaining to the concept
of social connectivity to an aging society.
Aging is a phenomenon which requires new
tools that give new hope to that aged individual.
I ask that we consider the healthy years
defi ned not as years without periodic illnesses,
but as years in which people can take care of
themselves in the most eff ective way by focusing
on the following points:
by avoiding the mental and physical loneliness
that is associated with despair and
depression;
by focusing on positive cognitive and
physical functioning;
by designing strategies to forestall decline
in one’s ability;
by maximizing intellectual vigor (i.e.:
reading, conversing, etc.).
Healthcare systems need to adjust to the
new realities and the surfacing of the new
technologies. Society will also need to address
the ever-present problem of ageism as defi ned
by myths and stereotypes that are heard and
spoken daily in our homes, work places, and
public gatherings.
Th e underlying basis for ageism is the
unfounded dread and fear of growing old,
becoming ill and relying on others. In short –
dependency and the loss of personal control.
Ageism denies any opportunity for the process
of positive aging to fl ourish in our midst.
Th e following is but one example of ageism:
less than 2% of prime time TV characters are
65 or older, although they comprise 13% of
this segment of the U.S. population. In other
words, fi lm and TV industries help to perpetuate
ageism whether they are aware of it or not.
I would like to close by referring you to
the poet Tennyson who said it best in his
greatest of poems, Ulysses. Ulysses was the
great adventurer who found his way back to
his home in Ithaca and to his beloved wife
Penelope. He speaks as an old man and discovers
that even his love for home and wife are
not enough. Here are his words:
“How dull it is to pause, to make an end, to
rust unburnished, not to shine in use as tho to
breathe were life.”
Ulysses learns:
that idleness in old age can be a burden
rather than a gift - he therefore yearns ‘to
shine in use’;
that love and fruitful work speak the same
truth without the poetry;
and that continued active engagement
with life is essential, f or without these essentials,
adults in old age can lose the power of
their physical, mental, and social eff ectiveness.
Sheldon Ornstein Ed.D, RN, LNHA
Dr. Sheldon Ornstein is a
registered professional nurse
with a doctoral degree in
nursing organization. He
has specialized in the care
of older adults and has
published many articles on
the subject. He has done
post-graduate work in gerontology
and has taught
at several universities. In
2013, he was inducted into
the Nursing Hall of Fame at
Teachers College, Columbia
University.
that the only option is to sell a home and
spend down the proceeds in order to qualify
for Medicaid.
Rather, it is oft en recommended to transfer
the home in advance in order to protect
the asset from being used to fund future longterm
care costs. However, before transferring
real property there are options that should be
considered.
In order to qualify for Medicaid, one can
transfer property to another individual (e.g., a
child) or to an irrevocable trust. When applying
for nursing home Medicaid, the Medicaid
agency looks at any transfers made within fi ve
years of the application, and such transfers
may create a period of ineligibility (“penalty”).
It is important to know that there are certain
individuals to whom assets can be transferred
without the imposition of a penalty
period. Th e following are individuals to whom
a home may be transferred without penalty: a
spouse, a child under 21 or a blind or disabled
child, a trust for the sole benefi t of a disabled
individual, a sibling with an equity interest in
the home who has resided there for at least
one year prior to the applicant’s institutionalization
in a nursing home, and a “caretaker
child” who has resided in the house for at least
two years prior to institutionalization and who
provided care.
If one is in need of nursing home care
immediately, a transfer to any of the above
individuals will not aff ect Medicaid eligibility.
However, if there is time to plan in advance
without immediate need for nursing home
care, there are some very critical issues to take
into consideration.
If one transfers a house to a child, the asset
may be vulnerable to some unforeseen consequences,
namely potential lawsuits, creditors
or a divorce. Th e child’s name will be
on the deed, which is public record, so any
liens of the child could potentially attach to
the property.
In addition, transferring a home to an individual
who does not reside in the home may
result in signifi cant capital gains tax ramifi
cations. If Mom sells a home for $500,000
that she purchased for $100,000, Mom has
$400,000 of gain. However, if Mom has owned
and occupied the property for 2 out of the last
5 years, Mom would be eligible for $250,000
exclusion of gain. Hence, Mom would pay
tax on $150,000 of the gain rather than the
$400,000 in gain.
If Mom transfers to Daughter that same
house she purchased for $100,000, Daughter’s
“cost basis” will be $100,000 (same as Mom’s)
but Daughter is not entitled to the $250,000
exemption (because she doesn’t meet the
residency and ownership requirements).
Hence, if Daughter sells the property for
$500,000, Daughter will pay capital gains tax
on the $400,000 gain. Daughter will not get the
$250,000 exemption to which Mom is entitled.
A fi nal note on capital gains tax is that if
someone inherits a property, they will get a
“step up” in tax basis, which means the basis,
or starting point for calculating taxes, will
be the fair value of the property on the date
of death. In the above example, if Daughter
inherits the home and it is worth $500,000
on Mom’s death, Daughter’s basis will be
$500,000. If Daughter sells for $500,000 she
will not incur any capital gains tax.
Transferring property to an irrevocable
trust may allow an individual to retain the
$250,000 capital gains tax exclusion that one is
entitled to when selling a home in which one
lives. Transferring to an irrevocable trust may
also avoid the property being subject to another
person’s creditors, divorce, etc. Finally, the
ultimate benefi ciaries of property transferred
to an irrevocable trust will inherit the property,
thereby getting the “step up” in basis discussed
above.
Due to the many considerations when transferring
property in contemplation of requiring
long term care, it is important to consult with
a knowledgeable elder care attorney.
Ronald A. Fatoullah, Esq. is the principal
of Ronald Fatoullah & Associates, a law
fi rm that concentrates in elder law, estate
planning, Medicaid planning, guardianships,
estate administration, trusts, wills, and real
estate. Stacey Meshnick, Esq. is a senior staff
attorney at the fi rm who has chaired the fi rm’s
Medicaid department for over 15 years. Th e
law fi rm can be reached at 718-261-1700,
516-466-4422, or toll free at 1-877-ELDERLAW
or 1-877-ESTATES. Mr. Fatoullah is
also a partner with Advice Period, a wealth
management fi rm, and he can be reached at
424-256-7273.
RONALD FATOULLAH
ESQ, CELA*