October 29

It’s Official: Estate Exclusion to Rise to $5.45M in 2016

The IRS has announced that the basic estate tax exclusion amount for the estates of decedents dying during calendar year 2016 will be $5.45 million, up from $5.43 million for calendar year 2015.  This figure is in line with earlier projections.

Also, if the executor chooses to use the special use valuation method for qualified real property, the aggregate decrease in the value of the property resulting from the choice cannot exceed $1,110,000, up from $1,100,000 for 2015.

The increase in the estate tax exclusion means that the lifetime tax exclusion for gifts will also rise to $5.45 million, as will the generation-skipping transfer tax exemption. The annual gift tax exclusion will remain at $14,000 for 2016. 

For details on many of these and other inflation adjustments to tax benefits, go to: https://www.irs.gov/pub/irs-drop/rp-15-53.pdf

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October 26

Preparing for Senior Care: Learn about Your Resources & When to Use Them

On Tuesday, November 10th, elder law attorney Harold Grodberg, Esq. will be offering a special seminar to discuss preparing for senior care, with topics including Veteran’s Benefits, Medicare in 2016, and how to avoid the many pitfalls of Medicaid eligibility, .

Waterview Center
536 Ridge Road
Cedar Grove, NJ 07009

November 10, 2015
5:30 PM – Meet & Greet, Refreshments
6:00 PM – Seminar

Please RSVP at (973) 239-9300.

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October 5

Ohio High Court Rules That Interspousal Transfer of Home Prior to Medicaid Eligibility Is Improper

A narrowly divided Ohio Supreme Court rules that the transfer of a home between spouses prior to Medicaid eligibility is an improper transfer and is subject to the community spouse resource allowance (CSRA) cap.  Ohio ElderLawAnswers member Thom L. Cooper of Cooper, Adel & Associates was among those representing the plaintiff. Estate of Atkinson v. Ohio Department of Job and Family Services (Ohio, No. 2013–1773, Aug. 26, 2015).

In 2000 Marcella Atkinson and her husband transferred their home into a revocable living trust. In April 2011, Mrs. Atkinson entered a nursing home and soon applied for Medicaid benefits. In August 2011, following Medicaid’s “snapshot” of the couple’s assets, the home was removed from the trust and placed in Mrs. Atkinson’s name. The next day, Mrs. Atkinson transferred the house to her husband. The state determined an improper transfer had occurred and imposed a penalty period.  Mrs. Atkinson passed away, and her estate appealed to court, arguing that under federal and state statutes a spouse is not ineligible for Medicaid for transferring a home to the other spouse and that an institutionalized spouse may transfer unlimited assets to the community spouse between the date the spouse is institutionalized and the date that the spouse’s Medicaid eligibility is determined. The estate lost at both the trial court and the Ohio Court of Appeals, and the estate appealed.  

In a 4-3 decision, the Supreme Court of Ohio rules that transfers between spouses are not unlimited after the snapshot date and before Medicaid eligibility and that such transfers are proper only up to the amount that fully funds the CSRA. The court rejects the estate’s reliance on the Sixth Circuit Court of Appeals’ holding in Hughes v. McCarthy (6th Cir., No. 12-3765, Oct. 25, 2013) that an annuity purchased by a community spouse before a Medicaid eligibility determination is not an improper transfer, finding that the purchase of annuities are subject to special rules and “not applicable under these facts.”  The court, however, remands the case for review of the penalty imposed because the Medicaid agency may have applied the wrong statute.  “Neither federal nor state law,” the court writes, “supports the agency’s confiscation, after the CSRA has been set, of the entire amount of transferred assets, some or all of which may have already been allocated to the community spouse on the snapshot date.”

A dissent joined by three justices states that “What this family did is and was permitted by state and federal law. . .  the home is explicitly excluded from the definition of ‘resources’ for purposes of establishing the CSRA.” [emphasis in original]

For the full text of this decision, click here.

For an earlier article on the oral arguments in the case and a link to the video of those arguments, click here.

For a brief commentary on the Ohio court’s decision by Penn State Dickinson Law professor Katherine C. Pearson, click here.

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October 1

Efforts to Change Will Using Photocopy and Then Downloaded Form Are Ineffective

In a case that serves as a cautionary reminder to those thinking of changing their estate plan on their own, a Minnesota appeals court rules that a testator’s alleged attempts to revoke her original will by first marking up a photocopy of it and later trying to make a new will using an online form were invalid, and the original will stands.  In re the Estate of Sullivan (Minn. Ct. App., No. A14– 2112,Aug. 17, 2015).

Esther Sullivan validly executed a will on January 19, 2006, that devised 50 percent of her property to a former employee of Ms. Sullivan’s, Tara Jean Johnson, and a contingent share to Ms. Sullivan’s grandson, Joseph VanHale.  On October 11, 2008, Ms. Sullivan allegedly made handwritten changes to a photocopy of the 2006 will, writing her initials next to each alteration and signing and dating the bottom of each page. She allegedly wrote on top of the 2008 photocopy, “[t]he Will dated January 19, 2006 is void and to be replace[d] with this and all written in changes.” Among the changes was that Ms. Johnson was replaced by Mr. VanHale as a 50 percent beneficiary. On October 30, 2010, Ms. Sullivan allegedly attempted to execute another will using a downloaded form and filling in the provisions by hand. This document named Mr. VanHale as Ms. Sullivan’s sole beneficiary. 

Following Ms. Sullivan’s death in 2013, Mr. VanHale contended that the 2010 document was a valid will, while Ms. Johnson argued for the 2006 will. The district court held that the 2008 photocopy and 2010 document were invalid because they did not comply with will formalities. The court held that Ms. Sullivan arguably intended to revoke the 2006 will, but did not successfully “revoke with a properly executed document.” The district court applied the doctrine of dependent-relative revocation because of Ms. Sullivan’s intent to revoke the 2006 will, and admitted it into probate. Mr. VanHale appealed, arguing that Ms. Sullivan clearly intended to revoke the 2006 will and that the 2010 document was valid.

The Court of Appeals of Minnesota admits the 2006 will to probate but on somewhat different grounds. The court finds that the district court did not err by finding that Ms. Sullivan’s alleged attempt to revoke the 2006 will was ineffective and that the 2010 document was not validly executed.  However, the court rules that a revocatory act must be performed on a properly executed will, not a photocopy.  Because Ms. Sullivan never revoked the 2006 will, the court holds that the district court erroneously applied dependent relative revocation to revive it.

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