Frequently Asked Questions
Q. Is there a way to live in my home but gift most of the home’s value to my children, in case I ever need long-term care?
A. Yes, one option is to consider a life estate deed, which would provide that the homeowner has the right to live in the property (the life estate interest), while retaining their right to claim all applicable senior, veteran and homestead rebates and incentives, as long as he or she is able but the deed would also provide that the close relatives of the homeowner would take the remainder interest in the property. This deed has advantages for both Medicaid planning and income tax planning. Another option is a caregiver agreement, which is typically used where a child provides care to a parent in exchange for compensation that is documented in the agreement. A properly drafted caregiver agreement can protect the parent’s assets in the family and avoid the Medicaid penalties that typically accompany transfers by potential Medicaid applicants. Additionally, some clients may qualify for the caregiver exception to the Medicaid regulations, which would allow a parent to transfer the parent’s home to the caregiver child who provided nursing home level of care to the parent for at least two years.
Q. What is the difference between estate and inheritance (or death) taxes?
A. Estate taxes are assessed on an estate based on the value of the estate. It is possible to have both state and federal estate taxes assessed on an estate. Inheritance taxes are assessed in New Jersey on estates where the beneficiaries are not the spouse, children or grandchildren of the decedent.
Disclaimer: We hope that this FAQ page provides you with some useful baseline legal information. However, please note that legal information is not the same as legal advice, and that no relationship of attorney and client is inferred or implied by furnishing the information contained on this website. Application of law must take into consideration an individual’s specific circumstances and any changes in law as they arise. Although we go to great lengths to make sure the information provided on our website is both accurate and useful to our readers, you should not rely solely upon this information in making legal decisions. Instead, we recommend that you retain counsel to review and serve your legal Estate and Medicaid planning needs and concerns.