Matthew J. Leonard, Esq. has devoted his practice to handling the legal needs of individuals and their business interests through all stages of life. As an attorney with the law firm of Salter McGowan Sylvia & Leonard, Inc., he has been engaged to handle matters from basic to sophisticated involving Estate Planning, Elder Law, Medicaid Planning, Probate, Trust and Estate Administration, Real Estate, Business Transactions, Business Creation and related litigation.
NEW ALLOWABLE INCOME LIMIT and MONTHLY PENALTY DIVISOR
Rhode Island Department of Human Services – Medicaid Long Term Support Services – has advised that The Allowable Income Limit for 2022 through 3/31/2023 is $9.961 per month. Effective August 1, 2023 the new allowable income limit will be increased to $10,190.00 per month.
This figure is also used as the Penalty Period Divisor for calculating disqualifying transfers of assets. Meaning, for every $10,190 of assets transferred away where something of value was not received in return, will cause a disqualification of one (1) month of LTSS Medicaid benefits for the Applicant for those benefits.
You can receive Medicaid coverage while still keeping an ownership interest in your home. However, at your death the state will have the right to recover from your probate estate—essentially your home—whatever it pays out for your care. Your home could escape this claim if it were transferred to one or more of your children. A problem with doing this is that under the general transfer penalty rule, you would be ineligible for Medicaid benefits for up to 60 months following the conveyance.
The Caretaker Child Exception to the transfer penalty can be a valuable tool to preserve the home of parents.
However, an exception to the transfer penalty allows a Medicaid applicant to transfer his or her home to a qualified caregiver child. The law defines a caregiver-transferee as a child of the Medicaid applicant “who was residing in the applicant’s…home for a period of at least two years immediately before the date of the applicant’s…admission to the institution, and who (as determined by the DHS) provided care to the applicant…that permitted him or her to reside at home rather than in an institution. “ In order to qualify under this exception, an applicant should be prepared to submit a certification by his or her attending physician which basically states that, but for the caregiver, the applicant would have had to move to a nursing home.
If you can get the necessary certification, and if you would feel comfortable with the property in your caretaker’s name solely, it is recommend that you transfer your interest in your home to your caretaker child. No transfer penalty would be triggered and, in addition, the unit would not be subject to any reimbursement claim by the state. Once the transfer is made, your caretaker child would be free to sell the house or simply rent it out. If you choose to transfer the house to your caretaker child, you should discuss the form of conveyance—trust, life estate, or outright ownership—and the tax consequences to each approach.
If you decide to make the transfer, you will have the option of doing so after you qualify for Medicaid, or before you submit the application. To make the transfer before you have qualified for Medicaid may prolong the application process. For that reason, it may be easier to make the transfer after you have been determined eligible for Medicaid. However, we have submitted applications where the home was transferred before and after and all were approved.
Want to discuss how to take advantage of the Caretaker Child Exception with your family? Call us to schedule a no obligation consultation.
The RI Medicaid program covers assisted living services in State-licensed Assisted Living Residences (ALRs) that are certified to participate in the long-term services and support (LTSS) program. Covered services include on-site, 24-hour personal care assistance, homemaker and chore services, medication management, therapeutic, social and recreational activities, and health-related transportation. The amount of these services a person receives may differ based on the scope of their needs.
Medicaid does not cover ALR room and board and add-on services. A person who chooses this Medicaid LTSS option must pay from other resources housing charges and any non-Medicaid covered services (like cable and internet access) they choose to receive from the ALR. To ensure individuals applying can afford these costs, the dollar amount a certified ALR can charge for housing each month is capped. Rhode Island also has a State Supplemental Payment (SSP) program that provides financial help to low-income Medicaid beneficiaries living in ALRs. Depending on the scope of a person’s needs, access to some of the Medicaid certified assisted living residences may not be available.
How to receive services
Case management agencies contracted by the Office of Healthy Aging assist individuals in completing a Medicaid LTSS application, assess the scope of their needs, and assist them in developing a person-centered plan of care. These agencies are also responsible for monitoring the delivery of services in the plan of care and coordinating linkages to benefits across community-based health and social service agencies.
Nursing and skilled therapy services are not part of the Medicaid-assisted living services but may be authorized by Medicaid and/or other health insurance, as ordered by a physician.
Who is Eligible?
Adults 19-65 with disabilities, or anyone 65 or older who is eligible for Medicaid LTSS.
Need Assistance Applying?
For more information about Medicaid covered assisted living services and to apply for the same, call THE POINT at 401-462-4444.
On July 15, 2022, Xavier Becerra, Secretary of the Department of Health and Human Services, announced that the public health emergency related to COVID-19 still exists and therefore the public health emergency determination originally announced on January 31, 2020, continues. The determination continues in 90-day increments.
States must maintain Medicaid eligibility standards and cannot make procedures more restrictive than they were on January 31, 2020. In addition, if a Medicaid recipient is validly enrolled in any Medicaid program, then continuous enrollment applies. If a recipient is validly enrolled and reports a change in circumstance, then the change is processed as a redetermination but the individual is still deemed as being validly enrolled.
Rhode Island Increases the Amount of Retirement Income You Can Receive Without Paying Income Tax
A Rhode Island personal income tax modification applies for income from private sector pensions, government pensions, 401(k) plans, 403(b) plans, and other such sources.
For eligible taxpayers, up to $20,000 of their federally taxable income from sources such as pensions, 401(k) plans, and annuities, may be excluded as income subject to Rhode Island personal income tax.
Rhode Island is making it easier on retirees and income taxes
The retirement income exemption applies to qualified taxpayers who:
• Have a federal adjusted gross income (AGI) that includes taxable income from sources such as pensions, 401(k) plans, and annuities;
• Have reached “full retirement age” as defined by the Social Security Administration; and
• Have a federal AGI below a certain amount.
This new law increases the current amount of taxable pension and/or annuity income that can be exempted from $15,000 to $20,000 starting with tax year 2023.
Any military pension included in federal adjusted gross income should not be included within this modification. In this case, taxpayers should refer to subsection 11.
Citation: House Bill 7123, Substitute A as amended
Many older adults and people with disabilities who want to stay in their own homes cannot do so without help. The programs that can help you or someone you care for live comfortably and safely at home are called Home and Community Based Services.
Some programs can help you fill prescriptions or get meals or rides. Other programs will help you out at home with activities like personal grooming or getting in and out of bed. The programs you use will be based on your needs.
Medicaid LTSS provides medical care and covers most of the services and supports people need to stay in their homes or a community-setting. People who have the highest or high level of need may get Medicaid LTSS in the home or community setting.
Need to apply for LTSS Medicaid home waiver for a loved one? Contact us.
The IRS released Revenue Procedure 2021-45 which announces the increase in 2022 of the estate, gift and generation-skipping transfer tax applicable exclusion amounts from $11.7 million to $12.06 million. The applicable exclusion amounts currently remain scheduled to expire on December 31, 2025, which would result in a reduction in the exclusion amounts to $5 million (adjusted for inflation). However, there is always a possibility that new law will be passed that could adjust these exclusion amounts sooner.
Federal Gift Tax Exclusion for 2022
In addition, in 2022, the gift tax annual exclusion amount for gifts to any person (other than gifts of future interests to trusts) will increase to $16,000, while the gift tax annual exclusion amount for gifts to a non-citizen spouse will increase to $164,000.
Because of an inflation adjustment prescribed by statute, the Rhode Island estate tax credit amount will be $74,300 for decedents dying on or after January 1, 2022, up from the current credit amount of $70,490 (which applies for decedents dying in calendar year 2021).
As a result, the Rhode Island estate tax threshold will be $1,648,611 for decedents dying on or after January 1, 2022, up from the current threshold of $1,595,156 (which applies for decedents dying in calendar year 2021).
Thus, in general, for a decedent dying in 2022, a net taxable estate valued at $1,648,611 or less will not be subject to Rhode Island’s estate tax. Due to the inflation adjustment, fewer estates will be
subject to Rhode Island’s estate tax in 2022. (In certain circumstances, the Rhode Island estate tax will not apply regardless of the estate’s size: Rhode Island General Laws Chapter 44-22 provides full details on the computation of the tax, including such factors as the marital and charitable deductions.)
◼ ESTATE TAX – NEW FORM
A new Rhode Island estate tax form will be used starting January 1, 2022. It’s Form RI706. Form RI-706 will replace Form RI-100A and Form RI-100 for all Rhode Island estate
Until January 1, 2022, there are two main estate tax forms: Form RI-100 (typically used for estates that are not over the applicable estate tax threshold) or Form RI-100A (typically used for estates that are over the applicable estate tax threshold).
Effective January 1, 2022, Form RI-706 becomes the main estate tax form, essentially combining Form RI-100 and Form RI-100A into one unit. Each estate valued at more
than $1.3 million must complete the entire Form RI-706. Each estate valued at below $1.3 million are only required to complete portions of pages 1 through 4 of the form.
▪ On and after January 1, 2022, use Form RI-706 for all estates with a date of death on or after January 1, 2015.
▪ Before January 1, 2022, use Form RI-100A or Form RI-100 (whichever applies) for estates with a date of death on or after January 1, 2015.
▪ The $50 filing fee still applies for each estate return filed on or after January 1, 2022, including those returns filed for estate tax lien release.
▪ All other estate tax forms (including the extension form, lien release form, and payment voucher) remain the same.
Levies on the post-mortem transfer of property originated in Egypt around 700 BC, according to a IRS history They were later imposed, around the time of Christ, by the Roman emperor Caesar Augustus, and then by feudal lords in Europe. America’s first death tax—that’s what it was officially called—was imposed as part of the Stamp Act of 1797 to cover the cost of US military skirmishes with France. The federal government charged 25 cents on postmortem bequests of $50 to $100, 50 cents on $100 to $500, and $1 on each additional $500.
Congress enacted a second round of death taxes in the Revenue Act of 1862 to raise funds for the Union to fight the Civil War. Lawmakers did so again in 1898 to bankroll the Spanish-American War. These taxes were not burdensome. In the latter case, if a wealthy man left behind $10 million—a staggering fortune—to a sibling, child, or grandchild, his estate owed the government just over 2 percent, about $219,000. All three taxes were repealed after the hostilities ceased.
By the late 1800s, however, America was transitioning rapidly from an agrarian economy to an industrial one. The old federal patchwork of tariffs and property taxes was leaving the fortunes of Gilded Age industrialists like Andrew Carnegie and John D. Rockefeller largely untouched. Reformers began calling upon the government to tax these “robber barons,” while the businessmen, as today, countered that such a move would stifle growth and quash innovation. The Revenue Act of 1916, in anticipation of the coming war effort, levied a tax of up to 10 percent on inheritances of $50,000 or more (about $1.1 million today); the levy was increased to 25 percent the following year, although it was later repealed. But Rockefeller never paid a penny. He just signed his fortune over to his son before he died, because Congress hadn’t yet passed a gift tax.
It wasn’t until 1976, after another six decades of tweaks, that Congress finally put in place a comprehensive, integrated gift-and-estate tax similar to what we have today. But the endless squabbling over the estate tax, which was expected to bring in just $16 billion last year, continues to this day.
Do you or a loved one need to discuss the impact estate taxes may have on your Estate? Call us for a no-obligation consultation.
So What Happens To My Facebook Page and On-Line Accounts When I die?
When we think about what will happen to our “things” when we die, we often do not consider our Facebook, twitter, google, or snapchat accounts. Technology is often the last thing on our minds.
It may be time to consider putting together a tech checklist so that your loved ones can have access to digital files like photos, videos, and other memories. Given the continuous growth in technology, it is more important than ever before to make a plan for your digital assets. This has often been referred to as a “digital legacy.”
Below is a checklist to help you put together your digital legacy plan:
1. Take inventory of your digital assets
2. Add a digital executor to your will [Note: It is problematic whether a court will allow bifurcation of an executor’s duties.]
3. Add digital heirs to your accounts
4. Plan to pass on your passwords
5. Record your stories
This will be a great start for putting together a solid plan for your digital assets.
Still have more questions and want to develop a plan for your digital and non-digital assets? Call us for a free consultation.
As an attorney that practices in areas of law that have both local and national scope – reading and reviewing scholarly writings and recent case decisions is critical to staying current. From these readings, we come to learn and respect the work done by other attorneys and how they are best representing their clients and their interest.
One such article came across my desk entitled “Medicaid Planning Technique Didn’t Work Exactly as Intended” a link to the full article can be found HERE.
The article examines what could be best described as a case study of one attorneys recommendations to a client who was retained to assist the family with Medicaid planning and qualification. As the title infers, the plan did not work out as explained and the clients goals and objectives were not carried out with the suggested plan proposed and enacted by the attorney. Fraud ruins any thought of a clever estate plan – and once that genie is let out of the bottle – it is hard to get it back in.
If it seems too good to be true – it probably is
The case is a lesson for both client and attorney. Just because you can do something – does not always mean you should. Deciding on an estate plan with the goal of qualifying for Medicaid benefits is something that must weigh all of the factors and rules. Knowledge of family dynamic, conflicts, tensions, and history are as important as understanding the rules of Medicaid eligibility, assets and income.
Fraud is a badge that does not wash off easily. Having to defend yourself or others from being accused of absconding with the assets of an elderly loved one is not something anyone wants to envision. There are legal consequences – which translate into strained relationships and possibly property and certainly financial penalties with the ultimate loss of liberty.
The author of the article makes the following suggestions when selecting an elder law attorney to work with:
Be careful about selecting your lawyer. Do you want someone who really knows estate planning and/or Medicaid planning? Check out their reputation, their online information, and recommendations from friends and colleagues. Did you meet the lawyer at a promotional seminar at the public library or a local restaurant? Make sure you’re not being sold something you don’t really want or need.
Does a particular Medicaid planning technique sound almost too good to be true? Be suspicious and ask for input from others.
When a lawyer agrees to meet with you and your family member together, that suggests something troublesome. We are supposed to represent just one person, not a whole family. Recognize that your interests and those of your family member might differ, and respect the lawyer’s efforts to maintain that separation.
Recognize that even though an idea — and particularly a Medicaid planning technique — might work, it might also have unintended secondary effects.
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About Mathew J. Leonard ESQ.
Matthew J. Leonard's practice is concentrated in business law, estate and asset protection planning, elder care, civil and probate litigation and real estate. He is a member of the Rhode Island, Massachusetts and Florida bars. He is a frequent lecturer and has authored and spoken on in many occasions through the state.