It might be the family wealth that is based on the beauty of living in Freehold, NJ, the people, the place, and the investment. The amount of time and money you invested in that equity is decades-old.
This is the challenge that every New Jersey homeowner needs to reckon with, though:
The average nursing home in New Jersey is fast approaching over 12,000 a month. The cost of a long-term care need without a plan may compel you to sell your most loved asset, the home equity.
We at New Century Planning feel that your home ought to be left as a home by your family, and not as a source of finances to fund your long-term care expenditures. The secret of this protection lies in an accurate time-based strategy based on strict Medicaid regulations in New Jersey.
The Critical Timeline: What the 5-year Lookback reveals about New Jersey
In order to be eligible for New Jersey Medicaid (long-term nursing home care), a person has to have a definite amount of assets (which is usually extremely low). The 5-Year Lookback Period is a potent weapon that the state uses to make people not simply give away their money and property to be eligible.
The Rule: When you apply to Medicaid, the state will look at all the financial transactions, transfers, and gifts you have made within the 5 years (60 months) just before the date on which you apply to Medicaid.
Any non-exemptive transfer of assets (such as gifting your home to a child) that takes place during this period shall be subject to a penalty period of ineligibility. This is one of the most significant differences: you will not be covered for several months, being forced to pay out-of-pocket, and possibly exhausting the same equity you have been trying to save.
The Lesson Learned: Crisis Planning is expensive. Proof against Protection is Proactive Planning. In order to secure the equity of your Freehold home, you should take action before the time when the care is necessary. The planning clock is a sound method of beginning a five-year process five years before you expect that you may require a Medicaid application.
Your Freehold House: Ineligibility Exempt, but Recovery Prone
You should realize the two stages of asset protection of your main house:
Exempt for Eligibility: Your primary residence is also (mostly) an exempt asset in terms of Medicaid eligibility in the State of New Jersey (with a certain amount of equity, which varies annually but is usually high enough to cover most Freehold homes). This implies that you have a chance to own your house and get benefits.
Exposed to Estate Recovery: The actual risk is a post-mortem. The Medicaid Estate Recovery Program can attempt to recover the care costs paid on your behalf through your estate in the State of New Jersey. The home is really the only substantial asset remaining in the hands of the majority of families, and the state is allowed to tax it to make a sale unless it has certain safeguards in place.
The Two Strong Equipments in Home Equity Protection
It is high time to do it now, and far beyond the 5-Year Lookback Window.
The Medicaid Asset Protection Trust (MAPT)
This forms the basis of forward-looking planning. You place your home in an Irrevocable Trust and assign the legal title of your home to it. You can still spend the rest of your life in your abode.
The Goal: After the 5-Year Lookback Period has elapsed, the home is not legally your countable asset. It is also safeguarded against Medicaid recovery in the event of your death and is not considered in your eligibility.
Word of Caution: You forfeit the right to sell the property or borrow money against it without the consent of the Trustee, which is typically a family member of some degree of trust. This is what an irreversible step entails, aimed at maximum security.
Spousal Protections
Assuming that you are married and that the spouse of the married couple (the Community Spouse) still has the Freehold residence, it is completely exempt and insurable so long as the life of the spouse who is put into the institution. Nevertheless, there is still a need to plan in order to secure the home against the Medicaid Estate Recovery in case of the death of the surviving spouse. It is not a place and leave it alone solution.
Your Timeline of Essential Planning
These are time-dependent measures to ensure that you have secured your Freehold house rather than waiting till a crisis strikes:
Intervention at Five Years old (or Earlier): See an Expert. This is when one should schedule an appointment with a financial consultant and an elder legal counselor who focuses on NJ Medicaid. You must have a tailored approach that is made based on your family and its specific assets and objectives.
Possible Action in 5 Years: Implement the Transfer. You must transfer the deed of your home and other non-exempt property to the Irrevocable Trust with the assistance of a lawyer. This is what the 5-Year Lookback clock begins with.
Action Years 1-4: Keeping Track of Time. Now, your task is not to receive any significant non-exempt gifts and transfers that can restart or complicate the lookback period. New Century Planning: You have a team that will review your plan every year to be compliant.
Action at Year 0: Peace of Mind. With the advent of long-term care requirements, your home equity is legally insured, and you are all set to seek Medicaid eligibility without any penalty period.
Get the high cost of long-term care out of the way of your Freehold home. The first step of protection is a plan designed to follow the rules of New Jersey and the inheritance of your family.
