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October 9, 2024
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Linking Northern and Central NJ, Bronx, Manhattan, Westchester and CT

Protecting Your Assets for Your Golden Years

Hidden in plain sight is a very real risk to your lifetime savings.
This interview may serve as smelling zaltz to spur families into action.

Everyone worries about the future. Most worry about health, financial security and their children’s well-being, while others worry about what the world will look like and other matters we have little control over.

But what if in all our planning, we leave a massive blind spot that threatens to destroy what we’ve worked decades to build? Whether it is the home we own or investments we’ve amassed, we stand to lose everything by merely growing old and almost inevitably requiring long-term care.

The obscene costs of a nursing home stay, assisted living, and the costs of home health aides are not covered by Medicaid for those who hold assets in their name. Such costs can easily amount to several hundred thousand dollars a year. This means that until these assets are completely exhausted, Medicaid will not provide any care or services, no matter how dire the patient’s health.

To remedy this, elder law attorneys like the industry leaders at Haas and Zaltz LLP offer legal solutions to preempt this looming threat. This week, we speak with Ari J. Zaltz to learn more about what people can do to protect themselves and their loved ones.

For those who are unfamiliar with your practice, what is it that your firm does?

We are a law practice, led by Emanuel Haas and myself, that specializes in estate planning and elder law services. We help people plan and prepare for those financial matters and decisions they’d rather not think about, but are an inevitable part of life. We’ve been around since 1982 and are passionate about helping our clients avoid some of the pitfalls that have destroyed so many families’ finances.

What do you feel families don’t know and should?

Every American over the age of 65 is eligible for Medicare, but while this covers skilled care for a short period of time (at most 100 days), it doesn’t cover long-term or custodial care that helps people live at home or in a nursing facility. Now, among other services, Medicaid (not to be confused with Medicare) does indeed cover such care, but one cannot qualify if they have a certain amount of income or assets. A common misconception is that only wealthy people need estate planning to circumvent this problem. However, for the most part, anyone who owns a home should do this kind of planning, and a staggering number of people are unaware of this until it’s too late. They’ll need to spend all of their assets, including savings and eventually their home, on care before Medicaid will kick in.

There’s nothing that can be done once the individual is already closer to needing care?

Yes and no. Medicaid has implemented what they call a 5-year lookback period to ensure that applicants don’t just give their assets away to family members or sell them well below market value in order to become eligible. Medicaid will go back 60 months and review all asset transfers to see if anything was offloaded in a way designed to get around their eligibility policies. And if they find something, they will penalize the applicant with a period of ineligibility. There are complicated techniques and strategies that can always be employed to save at least 50 percent of the assets. However, with proper foresight, one can protect all of the assets.

So what do you do to get out ahead of it?

I won’t bore you with a course in elder law, but in short, one of the most significant parts of our operation is the creation of what’s called a Medicaid Asset Protection Trust. This trust is irrevocable and places a person’s home and other assets that qualify into a trust managed by a third party—generally that person’s child(ren). They can choose who manages the trust and choose who inherits the assets that it holds, but legally, the property is no longer theirs and does not count against their eligibility.

You mentioned that your firm offers estate planning and elder law services. What else is included in that?

There are a great number of components to this. Because we are so experienced in these matters, we assess each person’s circumstances and come up with a plan to meet their particular needs. There are a myriad of issues that we address including probate avoidance, powers of attorney, health care proxies and special needs planning. We also provide services to help potential inheritors avoid the obligation for ridiculously expensive estate taxes. And the list goes on…

Can you explain briefly why these are so important?

Sure. If someone passes away without a will, their family will eventually receive their inheritance, but there are so many legal hurdles they will have to go through until it’s all settled. A health care proxy/power of attorney details what happens if, chas v’shalom, they are incapacitated, precluding the need to involve the courts where one may even be saddled with a judge-appointed third-party guardian.

Our planning for a special needs family member who relies on government support is crucial. Will they lose it when they inherit assets? And who will manage it for them since they can’t?

How does Halacha fit into the picture in your practice?

This is a very important point: Everything we do is 100 percent consistent with applicable law and Halacha. In our practice’s four decades, we have worked with leading rabbanim across the spectrum to ensure that every trust and every document adheres to Halacha. In fact, many rabbanim refer families to us in times of dispute or when they require guidance.

Can you share an example of where Halacha applies to your work?

Here’s one important example, one that we work on regularly. The Torah states that when a person dies, their sons, and not their daughters, inherit what they left behind. According to Chazal, even if one writes in his will that his daughters, too, shall receive a share, it is invalid. The Rema writes of a way where a person can leave an inheritance to his daughters via a mechanism called a shtar chatzi zachar. Without getting too deep into the weeds, these shtaros today have a parent write over a large debt to their daughters that will come due shortly before they die. The estate will then inherit this debt, but the parent includes a stipulation that it can be absolved by paying the daughter their share of the inheritance. This is Halachically valid and has helped us avoid so much potential family machlokes.

Final message to our readers?

Don’t wait! If you or your parents are middle-aged or older, you can’t afford not to make a plan. Life happens, and you have to be ready for it. Otherwise, you may face a world of financial heartbreak that was completely avoidable.

To schedule a consultation, please contact the office of Haas & Zaltz LLP at (845) 425-3900.

By Y. Blooming

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