Monday, February 22, 2016

Review of the Major Municipal Court Cases 2015-2016

March 2, 2016 at 12 noon, followed by monthly meeting of

Retired Police & Fire Middlesex & Monmouth Local 9 meeting NJRPFAAt South Amboy Fire Dept.- Enterprise Truck 8107 George St, South Amboy, New Jersey 08879

       For information or membership in Local 9, contact President Mike Burns  732-721-7474 Retired Police & Fire Middlesex & Monmouth Local 9 meeting NJRPFA. This pre-business meeting is not limited to just Middlesex & Monmouth. Any interested active and retired law enforcement can attend the update on Municipal Court.  Please share

This is an opportunity for both Retired and active Police and Fire to meet members of Local 9 and receive a quick update in cases affecting law enforcement. Retired and active Police can also discuss issues regarding COLA and the pending legal battles in Trenton.

Speaker: KENNETH VERCAMMEN, Esq. of Edison         Contributing writer for the NJ Police Chief Magazine    Editor: NJ Municipal Court Law Review        Past President Middlesex Municipal Court Prosecutors Assoc

Some of the featured cases will include:
- Warrantless auto search permitted on probable cause gives police greater power State v. Witt overrules Pena Flores
-Accident with unconscious driver was exigency for police to take blood. State v. Jones
-Police have pc if odor of pot State v Myers  
- No DWI dismissal even if form not given to DWI suspects S v Sorensen    
- Driver is not subject to criminal driving while suspended if DWI suspension period expired prior to driving, still subject to traffic dws State v Perry  [handled by Ken V]

New Jersey Retired Police & Firemen's Association, Inc.

Friday, February 19, 2016

Edison Library Wills, Estate Planning & Probate Seminar March 8 at 7pm

Edison Library Wills, Estate Planning & Probate Seminar March 8 at 7pm
Free community program
SPEAKER: Kenneth Vercammen, Esq. Edison, NJ (Author- Answers to Questions About Probate) The NJ Probate Law made a number of substantial changes in Probate and the administration of estates and trusts in New Jersey.
Main Topics:
1. The New Probate Law and preparation of Wills
2. 2016 changes in Federal Estate and Gift Tax
3. NJ Inheritance taxes on estates over $675,000
4. Power of Attorney
5. Living Will
6. Administering the Estate/ Probate/Surrogate
7. Questions and Answer
COMPLIMENTARY MATERIAL: Brochures on Wills, "Answers to Questions about Probate" and Administration of an Estate, Power of Attorney, Living Wills, Real Estate Sales for Seniors, and Trusts.
To register go to
340 Plainfield Ave.Edison, NJ 08817
About the speaker: Kenneth A. Vercammen is a trial attorney in Edison, NJ. He is co-chair of the ABA Probate & Estate Planning Law Committee of the American Bar Association Solo Small Firm Division. He is a speaker for the NJ State Bar Association at the annual Nuts & Bolts of Elder Law & Estate Administration program. He is writing a book for the ABA on Wills and Estates.He was Editor of the ABA Estate Planning Probate Committee Newsletter. Mr. Vercammen has published over 150 legal articles in national and New Jersey publications on litigation, elder law, probate and trial topics. He is a highly regarded lecturer on litigation and probate law for the American Bar Association, NJ ICLE, New Jersey State Bar Association and Middlesex County Bar Association. His articles have been published in noted publications included New Jersey Law Journal, ABA Law Practice Management Magazine, and New Jersey Lawyer. He established the NJlaws website which includes many articles on Estate Planning, Probate and Wills. He is a member of the AARP and often lectures to groups on the importance of an up to date Will, Power of Attorney and Living Will.
KENNETH VERCAMMEN & ASSOCIATES, PCATTORNEY AT LAW2053 Woodbridge Ave.Edison, NJ 08817(Phone) 732-572-0500 (Fax)

Thursday, February 18, 2016

Uniform Trust Code enacted in NJ

         Uniform Trust Code enacted in NJ
   The governor signed the NJSBA-drafted Uniform Trust Code into law on Jan. 19, as part  of bills approved on the final bill enactment day of the last session. The law becomes effective on July 17.

This bill, as amended, titled the “Uniform Trust Code,” would supplement and revise the State’s existing laws concerning trusts. The bill is largely based upon model legislation prepared by the Uniform Law Commission (formerly the National Conference of Commissioners on Uniform State Laws), with some parts modified or altogether not included in order to better fit within New Jersey’s existing scheme on trust law. Most significantly, the model code contained two articles which have not been included in this bill: Article 2 concerning the jurisdiction of the court, as these matters are controlled by court rule and not statutory law; and Article 9 concerning prudent investor standards, as such standards are already part of the statutory law in this State, known as the “Prudent Investor Act,” P.L.1997, c.26 (C.3B:20-11.1 et seq.).

 A-2915/S-2035 (Lagana, McKeon, Ciattarelli/Bateman, Barnes) - "Uniform Trust Code"
ARTICLE 1 (3B:31-1 THROUGH 3B:31-12): This article provides the definitions and general provisions to be used throughout the bill, which would largely comprise a new chapter in Title 3B of the New Jersey Statutes. Among the provisions of general applicability are those detailing mandatory requirements for the creation and operation of trusts that cannot be modified or eliminated by the agreed upon terms of a trust; these would include the duty of a trustee to act in good faith, the rights of certain creditors and assignees to reach a beneficiary’s trust interest, and the periods of limitation for commencing judicial proceedings. The article also covers the means for determining which jurisdiction’s law governs a trust, as well as determining the location of a trust’s principal place of administration. Additionally, the article would permit the nonjudicial settlement of a trustee’s accounts and other matters related to trust administration, so long as any such settlement does not produce a result contrary to what is allowed in trust law, including, but not limited to, the modification or termination of a trust in an impermissible manner.
ARTICLE 2 (3B:31-13 THROUGH 3B:31-17). Article 2 sets out guidelines with regard to the representation of a trust in a transaction or proceeding. Representation may be provided by the holder of general testamentary power of appointment, by a fiduciary or a parent, or by virtual representation. Virtual representation allows a minor, incapacitated person, unborn individual, or a person whose identity or location is unknown to be represented by another having a substantially identical interest concerning a particular question or dispute. If a court determines that an interest is not represented or that available representation might not be adequate, the court may appoint a guardian ad litem or other representative for a minor, incapacitated person, unborn individual, or person whose identity or location is unknown.
ARTICLE 3 (3B:31-18 THROUGH 3B:31-34). This article details the methods and requirements for the creation, modification, and termination of a trust.
The methods to create a trust would be: (1) the transfer of property to a trustee under a written instrument during the life of a settlor (a person who creates or contributes property to a trust), or by will or disposition upon the settlor’s death; (2) a written declaration by the owner of property that the owner holds identifiable property as trustee; or (3) a written power of appointment in favor of a trustee. A trust would only be created if there is a definite beneficiary for the trust, or the trust is a charitable trust, a trust for the care of an animal, or a trust for a noncharitable purpose. The written instrument creating a trust or transferring property to a trust would not be invalid or ineffective because the transferee is identified as the trust rather than the trustee thereof.
A trust may generally be enforced if its purposes are lawful, not contrary to public policy, and possible to achieve. Any trust, to the extent its creation was induced by fraud, duress, or undue influence, would be void to such extent.
As to the modification and termination of a trust, the article sets forth the means by which a trustee or beneficiary may commence proceedings to approve or disapprove a proposed trust modification or termination. Additionally, a trust is subject to termination to the extent it is revoked or expires pursuant to its own terms, no purpose of the trust remains to be achieved, or the purposes of the trust have become unlawful, contrary to public policy, or impossible to achieve.
A trustee for a trust consisting of property valued at less than $100,000 may, after notice to qualified beneficiaries, terminate the trust if that trustee concludes that the value of the trust property is insufficient to justify the costs of administration.
A court may modify the administrative or dispositive terms of a trust or terminate the trust if, because of circumstances not anticipated by the settlor, modification or termination would further the purposes of the trust. To the extent practicable, any such modification should be made in accordance with the settlor’s probable intent. The court may also reform a trust, even if unambiguous, to conform the terms to the settlor’s probable intent if it is proved by clear and convincing

evidence that there was a mistake of fact or law, whether in expression or inducement.
Provisions in the article further provide that the court may modify the terms of a trust to achieve a settlor’s tax objectives, so long as done in a manner that is not contrary to the settlor’s probable intent.
ARTICLE 4 (3B:31-35 THROUGH 3B:31-41). This article establishes guidelines concerning creditor’s claims, and spendthrift and discretionary trusts.
A spendthrift provision restricts a beneficiary’s creditor from attaching the beneficiary’s interest in the trust until there is a distribution to the beneficiary. A spendthrift provision is created by a reference to a “spendthrift trust,” or words of similar import, in the trust instrument, that would restrain both voluntary and involuntary transfer of the beneficiary’s trust interest.
If there is no spendthrift provision in a trust, a creditor may reach a beneficiary’s interest by attachment of future or present distributions before the trust is distributed, subject to New Jersey law concerning wage executions (N.J.S.2A:17-50 through N.J.S.2A:17-56, and sections 3 and 4 of P.L.1981, c. 203 (C.2A:17-56.1a and C.2A:17- 56.6)).
The article also addresses a type of trust for the young, the elderly, or the disabled, known as a “special needs trust,” or “OBRA ’93” trust. Such a trust would limit distributions during the term of the trust to benefit one or more “protected persons,” such as a person who is aged, blind, disabled, developmentally disabled, or a person under the age of 18, or over the age of 18 and a full-time student, with a serious disability that may prevent self-sufficiency.
A creditor could not reach or attach an interest in a special needs trust, nor require the trustee to distribute to satisfy a creditor’s claim. A special needs trust would not be required to repay government aid provided to the protected person unless the aid was provided on the basis that the trust would repay the aid when the person dies, the trust is terminated, and the special needs trust instrument expressly calls for such repayment. This provision would not apply to first-party, self- settled OBRA’93 trusts.
Also, a creditor may not compel a trustee to make a distribution to a beneficiary that is discretionary.
Regardless of any spendthrift provision in a trust, the property of a revocable trust is subject to claims by a settlor’s creditor during the settlor’s lifetime. With respect to an irrevocable trust, a creditor (or assignee of the settlor) may obtain the maximum amount available that can be distributed to or for the settlor’s benefit. After the settlor’s death, and subject to the settlor’s right to direct the source from which liabilities are paid, the property of a trust revocable at the settlor’s death is subject to creditor claims, cost of administration of the settlor’s estate, the expenses of the settlor’s funeral and disposal of remains, and to a surviving spouse or civil union partner and children

to the extent the settlor’s probate estate is inadequate to satisfy those claims, costs, and expenses.
ARTICLE 5 (3B:31-42 THROUGH 31-45). This article addresses the use of revocable trusts as alternatives to wills and seeks to clarify certain issues in connection with the use of revocable trusts. A revocable trust is one in which the settlor retains the power to control, amend, revoke, or add property to the trust similar to a will. The article sets forth the circumstances in which a settlor, a settlor’s attorney in fact, or guardian may revoke or amend a revocable trust. A trust is revocable unless the terms of a trust expressly provide that it is irrevocable, or unless there is clear and convincing evidence that it is irrevocable. The trustee of a revocable trust is responsible only to the settlor of the trust. The article establishes time limits on contesting the validity of a revocable trust after the death of the settlor, which generally conform to the time limits for contesting the probate of a will. The bill also protects a trustee who makes distributions from the trust after the settlor’s death, unless the trustee knows of a pending or possible contest concerning the validity of the trust.
ARTICLE 6 (3B:31-46 THROUGH 3B:31-53). This article provides a series of default rules concerning the office of trustee, many of which are already established in chapters 11, 14 and 18 of Title 3B of the New Jersey Statutes, New Jersey Rules of Court, and New Jersey case law. Except for the court’s authority to issue letters of testamentary trusteeship and to order bond, all of the provisions of Article 6 are subject to modification by the express terms of the governing trust instrument.
The article addresses the process of qualifying a trustee, including procedures for accepting or declining the office of trustee and bonding the trustee. It also establishes the duties and responsibilities between or among co-trustees, and provides standards for addressing various issues that may arise with co-trustees. For example, provisions would permit co-trustees to act by majority action and specify how and what happens when one of several trustees dissents from a course of action, as well as the extent to which the others must act when one is unable or has properly delegated performance of a function.
The article addresses changes in the office of trustee including: when and how a vacancy is filled, the procedure for resignation, grounds for removal, and the duties and obligations of a resigning or removed trustee. The settlor, a co-trustee, a beneficiary or the court on its own initiative may request that a trustee be removed on grounds as set forth in N.J.S.3B:14-21 (such as failing to file an inventory, render an account, refusal to abide by a court order, embezzlement, or neglect, refusal, or inability to perform trustee duties).
The article also prescribes standards for reimbursement for expenses advanced by the trustee. Since the matter of trustee compensation is addressed comprehensively in chapter 18 of Title 3B
of the New Jersey Statutes, the provision in the Uniform Trust Code concerning trustee compensation has not been included in the bill.
ARTICLE 7 (3B:31-54 THROUGH 3B:31-70). This article sets forth the basic duties and powers of trustees. The basic duty is the duty of loyalty which requires a trustee to manage the trust solely in the best interests of the beneficiaries and to avoid conflicts of interest between the interests of a trustee and that of a beneficiary. The other duties include the duty of impartiality, the obligation of prudent administration, the obligation to incur only reasonable costs, and the obligation to apply the trustee’s special skills when there is reliance on those skills in the naming of the trustee. A trustee may delegate certain duties and powers, but is held to a prudent standard of appointment in so doing. The agent of any such delegation is held to the fiduciary standard of the trustee in the exercise of the trustee’s delegated duties and powers.
With regard to the trustee’s duty to disclose and make reports, provisions require the trustee to keep qualified beneficiaries reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests.
The article also includes a section, not included in the model legislation, concerning the powers of fiduciaries to direct investment decisions for a trust. When a governing instrument gives authority to one or more persons to direct, consent to, or disapprove a fiduciary's actual or proposed investment decisions, such persons would be considered to be investment advisers and fiduciaries when exercising such authority unless the governing instrument otherwise provides.
The section provides that if a governing instrument states that the fiduciary is to follow the direction of an investment adviser, and the fiduciary acts in accordance with such a direction, then except in cases of willful misconduct or gross negligence, the fiduciary would not be liable for any loss resulting directly or indirectly from any such act. Except to the extent that the governing instrument provides otherwise, the fiduciary, acting under the instrument to follow the investment adviser’s direction, would have no duty to: (1) monitor the conduct of the investment adviser; (2) provide advice to the investment adviser or consult with the investment adviser; or (3) communicate with or warn or apprise any beneficiary or third party concerning instances in which the fiduciary would or might have exercised the fiduciary's own discretion in a manner different from the manner directed by the investment adviser.
If the governing instrument provides that a fiduciary is to make decisions with the consent of an investment adviser, then except in cases of willful misconduct or gross negligence on the part of the fiduciary, the fiduciary would not be liable for any loss resulting directly or indirectly from any act taken or omitted as a result of such investment adviser's failure to provide such consent after having been requested to do so by the fiduciary.

Absent clear and convincing evidence to the contrary, the actions of the fiduciary pertaining to matters within the scope of the investment adviser's authority, such as confirming that the investment adviser's directions have been carried out and recording and reporting actions taken at the investment adviser's direction, would be presumed to be administrative actions taken by the fiduciary solely to allow the fiduciary to perform those duties assigned to the fiduciary under the governing instrument. Such administrative actions would not be deemed to constitute an undertaking by the fiduciary to monitor the investment adviser or otherwise participate in actions within the scope of the investment adviser's authority.
ARTICLE 8 (3B:31-71 THROUGH 3B:31-81). This article addresses the liability of a trustee and the rights of persons dealing with the trustee. It provides for remedies when there is a breach of an obligation by the trustee and specifies how money damages are to be determined. It also specifies certain trustee defenses, including the addition of a statute of limitations for claims alleging breach of trust. Generally, a beneficiary could not commence a proceeding for breach of trust against a trustee more than six months after the date the beneficiary (or beneficiary’s representative) received a report disclosing the existence of a potential claim. If such a report was not applicable to a potential claim, the claim would have to be filed within five years of the following first-occurring event: (1) the removal, resignation, or death of the trustee; (2) the termination of the beneficiary’s interest in the trust; or (3) the termination of the trust. However, the foregoing would not bar any proceeding by a beneficiary until five years after such beneficiary has attained majority, has knowledge of the existence of the trust and has knowledge that such beneficiary is or was a beneficiary of the trust, if these factors were applicable to the beneficiary’s situation.
ARTICLE 9 (3B:31-82 THROUGH 3B:31-84). Miscellaneous administrative provisions are addressed in this final article, such as clarifying the status of the proposed code’s provisions under the federal statutory law regarding electronic records and signatures. The article also provides a severability clause so that if any provision of the code is held invalid, the invalidity does not affect other provisions of the code.
The provisions of the code, as stated in this article, would apply to trusts created before, on, or after the effective date of the bill.
In addition to the new supplemental chapter, described above, the bill amends existing law, at N.J.S.3B:14-37, clarifying that a person, other than a beneficiary, who in good faith assists a fiduciary or deals with the fiduciary for value is protected as if the fiduciary properly exercised his power. A similar provision would be added to the section concerning a person who in good faith assists a former trustee,

without knowledge that the trusteeship was terminated, to protect that person from liability as if the former trustee were still a trustee.
Lastly, the bill repeals four sections of existing law that are unnecessary or are inconsistent with the bill’s provisions: N.J.S.3B:11- 5 (trustee’s death or failure to act; appointment of new trustee by court; powers); N.J.S.3B:11-6 (vacancy in trusteeship upon discharge or removal); N.J.S.3B:11-7 (power of new, substituted or additional trustees); and section 1 of P.L.2001, c.144 (C.3B:11-38) (trust funds for pets).
The bill, as amended and reported by the committee, is identical to Assembly Bill No. 2915 (1R), also amended and reported today by the committee.
The committee amendments to the bill:
         -  add a definition for “beneficiary,” to specify that the term includes persons: who have any present or future trust interest, vested or contingent; who, in a capacity other than that of a trustee, hold appointment power over trust property; who are owners in a trust interest by assignment or other transfer; or who, relating to a charitable trust only, are entitled to enforce the trust;
         -  expand the definition of “trustee” set forth in existing law to include a corporate entity in its capacity as a trustee or co- trustee where two or more are appointed;
         -  provide that a nonjudicial settlement of a trust matter cannot be used to produce results contrary to the statutory trust law, including, but not limited to, attempts to terminate or modify a trust in an impermissible manner;
         -  indicate that a settlor may not represent and bind a beneficiary with respect to the termination or modification of a noncharitable irrevocable trust;
         -  clarify that a trustee’s power to select a beneficiary from an indefinite class is not void pursuant to section 14 of P.L.1999, c.159 (C.46:2F-10), which repealed the Uniform Statutory Rule Against Perpetuities, or any other applicable rule against perpetuities or restraint on alienation;
         -  eliminate a provision which would have allowed a settlor general authority to bring a proceeding to approve or disapprove a proposed modification or termination of a trust; instead, a settlor may only act to modify a charitable trust;
         -  provide that a noncharitable irrevocable trust may be modified or terminated upon consent of the trustee, not the settlor as originally provided in the underlying bill;
         -  add, regarding a trust spendthrift provision, that such a provision does not prevent the appointment of interests through the exercise of a power of appointment;

         -  grant, to a trustee of a special needs trust, broad discretion to make trust distributions, and require that such a trust have at least one protected person as a beneficiary;
         -  remove language concerning creditor claims on an irrevocable trust, so that assets of such a trust may still be subject to a creditor’s claim even when a trustee’s authority to pay taxing authorities directly, or reimburse the settlor for trust income tax payable by the settlor, is solely discretionary;
         -  add a new section, to be allocated within the proposed new chapter on trusts in Title 3B, concerning the investment functions of fiduciaries, as described in the statement above;
         -  require that a trustee keep qualified beneficiaries reasonably informed about the administration of a trust and of the material facts necessary for them to protect their interests;
         -  provide that the provisions establishing a general five-year statute of limitations on actions against a trustee would not bar a proceeding by a beneficiary until five years after such beneficiary has attained majority, has knowledge of the existence of the trust and has knowledge that such beneficiary is or was a beneficiary of the trust, if these factors were applicable to the beneficiary’s situation;
         -  include references throughout the bill to “partner in a civil union” whenever only the term “spouse” appears, to reflect the equal status between marriages and civil unions per the provisions of P.L.2006, c.103 (C.37:1-28 et al.), which established civil unions in this State; and

                  -  correct references to the term “co-trustee,” as well as correct and update internal cross-references and external references to existing trust law and other relevant applicable law. 

Medicaid Has Lien on Special Needs Trust in NJ

Medicaid Has Lien on Special Needs Trust in NJ
Waldman v. Condia NJ Super. ______(App. Div. 1999) (A-347-8712 and A-681-8712, decided January 28, 1999).

The State is entitled to recover Medicaid payments in full from the settlement of a beneficiary's tort claim. The right to reimbursement may not be defeated or postponed by dedicating proceeds of the settlement to establishing a special - needs trust. For purposes of Medicaid recovery, an award to a beneficiary's parents on account of injuries for the treatment of which Medicaid funds were paid is considered an award to the beneficiary. Under the New Jersey Medicaid statute, a court is not authorized to allocate the proceeds of a settlement to specific categories of damages or to compromise a Medicaid lien.

Medicaid and Nursing Homes in NJ

Medicaid and Nursing Homes in NJ
Compiled by Kenneth Vercammen from various sources

Medicaid is a Federal medical bills assistance program that pays medical bills for eligible, needy persons. It is administered by each state. All payments are made directly to the providers of medical and other health care services. The Medicaid-eligible person does not pay the health care provider for services. The only exception is a patient in a Medicaid-approved nursing facility who may be required to contribute part of his/her income toward the cost of care.
Medicaid Planning After Reform
By Thomas D. Begley, Jr.
Congress has passed the Deficit Reduction Act of 2005 which seriously curtails Medicaid Asset Transfers and makes it much more difficult for people to become eligible for Medicaid. The Bill was backed by the Insurance Industry and the Pharmaceutical Industry with AARP opposing the bill on the side of consumers. The vote was 216 to 214 in the House of Representatives and Dick Cheney had to break a tie in the Senate.
1. NEW LAW. The new law is known as the Deficit Reduction Act of 2005
1.1. 6011 - Lengthening Lookback Period; Change in Beginning Date for Period of Ineligibility.
1.1.1. Lookback. The lookback period is extended to 5 years.
1.1.2. Beginning Date. The beginning date of the period of ineligibility has changed from the date the transfer was made to the later of the date of the transfer was made or the date the individual:
would be eligible for medical assistance; and
would otherwise be receiving institutional level care based on an approved application for such care, but for the application of the penalty period, whichever is later; and
which does not occur during any other period of ineligibility.
1.1.3. Commentary. The effect of these provisions will be to make it much more difficult to transfer assets and to obtain Medicaid eligibility.
2. 6012 Disclosure & Treatment of Annuities.
2.1. Disclosure of Annuities.
2.1.1. Disclosure. At the time of a Medicaid application or re-certification of eligibility the applicant must disclose a description of any interest the individual or community spouse has in an annuity. The state may require the issuer to notify the state when there is a change in the amount of income or principal being withdrawn.
2.2. Treatment of Annuities.
2.2.1. State Named as Beneficiary. Transfer of an annuity shall be treated as a transfers of assets for less than fair market value unless:
Remainder Beneficiary. The state is named as remainder beneficiary in the first position for at least the total amount of medical assistance paid on behalf of the annuitant; or
Second Position. The state is named as a beneficiary in the second position after the community spouse or minor or disabled child and is named in first position if such spouse or a representative of such child disposes of any remainder for less than fair market value. Design of Annuity. Annuities are not subject to the transfer of assets provisions if:
it is owned by IRA or purchased with the proceeds from an IRA, an SEP, or a Roth IRA; or
the annuity is:
_ irrevocable
_ non-assignable
_ actuarially sound as determined in accordance with the actuarial publications of the Office of Chief Actuary of the Social Security Administration; and
provides for payments in equal amounts during the term of the annuity with no deferral and no balloon payment.
Commentary. This means only that the purchase of an annuity is not subject to the transfer of asset penalties. The issue as to whether the annuity is a countable asset is not addressed.
3. 6013 Income First. States must follow the income first rule when calculating an expansion of the Community Spouse Resource Allowance.
Commentary. New Jersey has always followed the Income First Rule.
4. 6014 Home Equity.
4.1. Limits. A person is ineligible for Medicaid if he has equity in the home in excess of $500,000 or at state option $750,000. This number is indexed for inflation.
EXCEPTION: The maximum amount does not apply if the home is occupied by:
child under age 21
child who is blind or permanently and totally disabled
4.1.2. Loan. The applicant is encouraged by the Act to obtain a reverse mortgage or home equity loan to reduce equity.
Commentary: This restriction is not as severe as it may first appear and may actually present some planning opportunities
5. 6015 CCRC Contracts. This section clarifies the treatment of CCRC Contracts and entrance fees.
5.1. Transfer Provisions. Provisions in CCRC contracts restricting transfers of assets are enforceable.
Commentary: Many lawyers simply ignored provisions in CCRC contracts restricting transfers. These are now clearly enforceable under the new law.
6. 6016 Additional Reforms of Medicaid Asset Transfer Rules.
6.1. Partial Month Penalties. Partial month penalties are mandated.
6.2. Accumulation of Multiple Transfers.
Fractional transfers of assets in more than one month are accumulated.
Transfers during all months are treated as one transfer.
Commentary: This makes small gifts impossible in many situations.
6.3. Notes and Other Loan Assets. For transfer of assets purposes promissory notes, loans and mortgages are included unless:
they include an actuarially-sound repayment term as calculated by the Office of the Chief Actuary of the Social Security Administration; and
payments are made in equal amounts with no deferral or balloon payment; and
the document prohibits the cancellation of the balance upon the death of the lender. 6.4. Purchase of Life Estates. The purchase of a life estate is not considered to be a transfer of assets if the purchaser resides in the home for a period of at least one year.
Commentary: There may be situations where this portion of the statute presents additional planning opportunities. There are some serious risks involving the due on sale clause in mortgages and capital gains tax considerations for the parent and child that need to be considered, but in the right situation this will present a planning opportunity.
7. PLANNING OPPORTUNITIES ELIMINATED. Opportunities that have been eliminated include the following:
Transfer Assets/Wait Three Years
Half-a-Loaf Transfer
Monthly Transfers
Lookback Period
Transfers from Retirement Plans within a Lookback Period
SCIN - By definition a SCIN is a loan that cancels on the death of the lender.
8. CONCLUSION. There are a number of planning opportunities that remain under the new law, but many of them will not have been tested. Clients may be required to apply for Medicaid, be rejected, apply for a Fair Hearing and in some instances appeal to the New Jersey Appellate Division and possibly even the New Jersey Supreme Court before these strategies are validated. Medicaid Planning is no longer for the faint of heart. Elder Law will become much more of a litigation practice than a transactional practice. Clients should consult an experienced Elder Law attorney who is not easily intimidated.

About the Author: Begley & Bookbinder, P.C. is an Elder & Disability Law Firm with offices in Moorestown, Stone Harbor and Lawrenceville, New Jersey and can be contacted at 800-533-7227. The firm services southern and central New Jersey and eastern Pennsylvania.
Thomas D. Begley, Jr. lectures with Kenneth Vercammen for the NJ State Bar Association. Thomas D. Begley, Jr. provides services in connection with protecting assets from nursing home costs, Medicaid applications, Estate Planning and Estate Administration, Special Needs Planning and Guardianships. If you have a legal problem in one of these areas of law, contact Thomas D. Begley, Jr. at 800-533-7227. Mention you were referred by Kenneth Vercammen. Esqs email newsletter.
Resource and Income Limitations for
Spouses of Medicaid Applicants
by Dana E. Bookbinder, Esquire
Now that the President has signed the Deficit Reduction Act of 2005, it is even more crucial for families to be proactive in protecting their loved ones health care options and financial savings. Often individuals are lulled into thinking that the government will not aggressively pursue their assets if they dont engage in legal planning, but the opposite is in fact true. In cases of married couples, the healthier spouse often mistakenly believes that his or her assets are safe while only the ill spouses assets have to be paid to a nursing facility for that spouses care. Again, this is incorrect, and early legal planning can save the family much grief in addition to substantial assets. While both married and single individuals can substantially benefit from early legal planning, under Congress new budget saving scheme, married couples, in particular, would be passing up the opportunity to protect their savings if they failed to seek legal counsel since the asset and income limitations they would face for Medicaid eligibility are low.
The resource allowance permitted to be retained by the spouse of a benefits recipient is known as the Community Spouse Resource Allowance (CSRA). This allowance was established by the Medicaid Coverage Catastrophic Act (MCCA), enacted to apply to individuals institutionalized on or after September 30,1989 to protect spouses against impoverishment.
The amount of the community spouse resource allowance is generally based on one half (1/2) of the couples combined total countable resources as of the first period of continuous institutionalization. A resource assessment of the couples countable assets as of the first period of continuous institutionalization of one of the spouses will be undertaken when a Medicaid application is filed. By law, it must also be done upon the request of the Medicaid applicant, the applicants spouse, or the personal representative of the applicant or the spouse. A continuous period of institutionalization is broken by absences from the institution for thirty consecutive days. For 2006, the CSRA is subject to a maximum of $99,540 and a minimum of $19,908. These numbers are adjusted on an annual basis.
In addition to a resource allowance, the spouse of a Medicaid recipient is entitled to a monthly income allowance. Generally, the income of an individual who is institutionalized must be forwarded to his nursing home on a monthly basis. However, this spouse is allowed to retain her own income plus, depending on the amount of her income, a monthly allowance to be taken from the institutionalized spouses income. This allowance is called the Minimum Monthly Maintenance Needs Allowance (MMMNA). Currently, the amount is based upon the difference between $1,604 and the community spouses income plus an additional amount to cover shelter expenses for the community spouse. The shelter expenses are based upon the actual mortgage and real estate taxes that must be paid plus certain allowances for utilities. These figures upon which the MMMNA calculation are based are adjusted annually.
Failure to plan ahead for the long-term care costs of a spouse can severely impact the healthy spouses financial status. However, elder law attorneys can increase both the spouses resource and income allowances through agency hearings. Additionally without a hearing, elder law attorneys can help their clients maintain their standards of living, enabling them to continue living independently in their homes.

Begley & Bookbinder, P.C. is an Elder & Disability Law Firm with offices in Moorestown, Stone Harbor and Lawrenceville, New Jersey and can be contacted at 800-533-7227. The firm services southern and central New Jersey and eastern Pennsylvania.
The Firm provides services in connection with protecting assets from nursing home costs, Medicaid applications, Estate Planning and Estate Administration, Special Needs Planning and Guardianships. If you have a legal problem in one of these areas of law, contact Begley & Bookbinder at 800-533-7227.

-Aged persons 65 and over, blind persons or disabled persons who apply through their Social Security District Office and who receive monthly Supplemental Security Income (SSI) checks.
-Aged persons 65 and over, blind persons or disabled persons who may not be eligible for SSI due to excess income but who meet the income and resource criteria for New Jersey Care.... Special Medicaid Programs.
-The Medically Needy segment of New Jersey Care....... Special Medicaid Programs provides limited services to certain needy individuals who are not eligible for Medicaid due to excess income but may not be able to afford health care services. Contact the Department of Human Services for other eligible requirements.
The following acts are crimes under Federal and State Law and persons found guilty of the acts can be fined up to $10,000 or put in prison for up to 3 years or both.
-Lending your Medicaid card;
- Giving any information known to be false in order to gain Medicaid benefits;
- Hiding any information about the occurrence of an event that you know will bear on your right to Medicaid benefits or the right of another person for whom you applied and who is receiving Medicaid coverage;
- Applying for Medicaid for another person and using the benefits for yourself or someone else who is not eligible.
See Medicaid, what is it by NJ Department of Human Services, Division of Medical Assistance.
Your Responsibilities when applying for Medicaid
You must give complete and factual information on the application.
You must provide or apply for a Social Security Number.
You must promptly notify the county welfare agency whenever there is a change in your existing income, or an additional income or resource, such as:
* income from a new job or loss of an old one
* change in wages from full or part-time job
* Workers Compensation
* unemployment or temporary disability benefits
* Social Security or Veterans benefits
* pension or other retirement benefits
* Supplemental Security Income (SSI)
* interest on savings
* accident claims or settlements
* support payments
* an inheritance of money or property
* money from the sale of property
* funds received in settlement of s claim or legal suit
* lottery winnings or other awards
* any other change in income or resources
* court action related to any of the above
See Medicaid, what is it by NJ Department of Human Services, Division of Medical Assistance.

If you are residing in a nursing facility, you must also report:
* when you obtain or drop health insurance coverage
* changes in health insurance premiums
* changes in spousal income, if you are paying spousal maintenance
The Law requires that all health and accident insurance benefits, including Medicare, Workers Compensation and No Fault Auto Insurance must be used before Medicaid in the payment of health care.

You must agree to assign to the Commissioner any rights to payment from any third party.

When applying to the county welfare agency for special institutional services including nursing home care, you must make an accurate report of your actual income. Normally, that income ( except for a personal needs allowance and certain disregards, if applicable) must be applied to the cost of your care.
You must authorize the county welfare agency to contact any source that may have knowledge about your circumstances ( including IRS, Social Security wage and benefits files, and state wage and employment files), for the sole purpose of verifying the statements that you make on the application. See Your Rights and Responsibilities when applying for Medicaid by NJ. Department of Human Services, Division of Medical Assistance and Health Services.
If you or a spouse have to enter a nursing home to receive custodial type care, your assets (other than your residence and various personal items which may be exempt under certain circumstances) are worth less than $2,000, and the income of the person entering the home (including Social Security) is no more than $1,410 per month for 1996, then you may be eligible for this government program which can pay for substantially all of the cost of the nursing home. Moreover, it is possible for a married spouse who remains at home to preserve a significant portion of the assets of the couple if the other spouse is institutionalized. In 1996, the law permits a minimum of $15, 348 of such assets to be protected. And, depending upon the amount of such assets, a maximum of one-half (but not exceeding $76,740) may be preserved. In addition, in the case of married persons, it may be possible to have some of the income of the spouse in the nursing home paid to the at home spouse without affecting eligibility for Medicaid Only.

When considering an application for Medicaid, one should bear in mind that the rules are fairly complicated, and that transfers of assets to third parties (such as gifts to children) in order to become eligible for the program can result in a penalty period being imposed during which payments by the State will not be made for nursing home care.
____ The penalty is a period of ineligibility for Medicaid, determined by dividing the value of the assets transferred by the average cost of a nursing home in New Jersey. States must apportion the period of ineligibility between spouses so that only one penalty applies. In the case of joint assets, a withdrawal by one party is considered a transfer. The new law subjects transfers of income to a period of ineligibility. Transfer penalties can be avoided by returning all of the assets which were transferred. The law made significant changes in the area of trusts. However, certain types of trusts are still permitted. The Secretary of Health and Human Services was directed to promulgate regulations concerning annuities. As of this writing, those regulations have not yet been promulgated. States are now mandated to recover payments from the estates of Medicaid recipients.
If your application for Medicaid benefits is denied, if your Medicaid eligibility is terminated, or if Medicaid refuses to pay a claim, you have a right to a fair hearing before a New Jersey Administrative Law Judge. At that hearing you have a right to be represented by counsel and to present evidence including testimony to support your case. The judge makes a recommendation to Medicaid regarding your case. Then, if Medicaid still denies your claim, you have a right to appeal to the Appellate Division of the Superior Court of New Jersey. In a situation where Medicaid has advised you that it intends to discontinue the payment of benefits, you may have a right to have benefits continued until your appeal has been decided.
At the time of this printing, the Federal and State Governments are considering substantial changes in both Medicare and Medicaid. See New Jersey State Bar Foundation, Law Points for Senior Citizens.
We recommend the purchase of Long Term Health Insurance/ Nursing Home Insurance]