State Can Recover From Entire Value of Property in Which Medicaid Recipient Had Life Estate


The Idaho Supreme Court rules that the state may recover Medicaid benefits from the entire value of a property that a Medicaid recipient transferred to his daughter while retaining a life estate for himself. In re Estate of Peterson (Idaho, No. 40615, Aug. 13, 2014).

Melvin Peterson deeded property to his daughter, retaining a life estate for himself. He then applied for Medicaid benefits. When he died, Mr. Peterson had received a total of $171,386.94 in Medicaid benefits.

The state filed a claim against the estate to recover the Medicaid benefits it paid for Mr. Peterson’s care. Under Idaho law, the state may recover any property that passes outside of probate, including any property that that the Medicaid recipient had a legal interest in that passes to a survivor through a life estate or “other arrangement.” The trial court ruled that the life estate remainder interest, but not the retained life estate, was an estate asset, and the appeals court affirmed. The estate appealed, arguing Mr. Peterson had no interest in the life estate at his death, so it could not be subject to recovery.

The Idaho Supreme Court affirms in part holding that both the life estate and the remainder interest were estate assets subject to Medicaid recovery. The court determines that Mr. Peterson’s life estate interest in the property was transferred to his daughter when he died, and under state law “when assets of a Medicaid recipient are conveyed to a survivor, heir or assign by the termination of a ‘life estate,’ the assets remain part of the recipient’s ‘estate'” for purposes of Medicaid recovery. In addition, the court rules that the remainder interest Mr. Peterson’s daughter received is also part of Mr. Peterson’s estate as an “other arrangement.”

For the full text of this decision, go to:

The above article is an example of why you need to understand the full spectrum of Medicaid Planning options. For more information on how we can help you protect your assets for feel free to call me at 212-268-8200 or email

Regards, Brian


Why Irrevocable Trusts vs outright Gifting

People often wonder about the value of using irrevocable trusts in Medicaid planning. Certainly gifting of assets can be done outright, not involving an irrevocable trust. Outright gifts have the advantages of being simple to do with minimal costs involved.

Brian Raphan, P.C.

So, why complicate things with a trust? Why not just keep the planning as simple and inexpensive as possible?

The short answer is that gift transaction costs are only part of what needs to be considered. Many important benefits that can result from gifting in trust are forfeited by outright gifting. These benefits are what give value to using irrevocable trusts in Medicaid planning.

Key benefits of gifting in trust are:

  1. -Asset protection from future creditors of beneficiaries. Preservation of the exclusion of capital gain upon sale of the Settlors’ principal residence (the Settlor is the person making the trust).
  2. -Preservation of step-up of basis upon death of the trust Settlors o Ability to select whether the Settlors or the beneficiaries of the trust will be taxable as to trust income.
  3. -Ability to design who will receive the net distributable income generated in the trust.
  4. -Ability to make assets in the trust non-countable in regard to the beneficiaries’ eligibility for means-based governmental benefits, such as Medicaid and Supplemental Security Income (SSI).
  5. -Ability to specify certain terms and incentives for beneficiaries’ use of trust assets.
  6. -Ability to decide (through the settlors’ other estate planning documents) which beneficiaries will receive what share, if any, of remaining trust assets after the settlers die.
  7. -Ability to determine who will receive any trust assets after the deaths of the initial beneficiaries.
  8. -Possible avoidance of need to file a federal gift tax return due to asset transfer to the trust.

If you have questions about any of the above items, please call me, Brian A. Raphan, Esq at 212-268-8200. There are additional measures available and your individual situation should be assessed before making any financial decision.


Trusts Attorney – New York, NY.  AVVO Legal Guide Contribution

New: Visiting Lawyer Services for Elder New Yorkers

Visiting Lawyer Services

Why should the elderly that aren’t as mobile as they used to be, or live in an assisted living facility or are even at home wheelchair bound, not have easy access to the same professional legal care as others? Well, they should. And now they do.

Visiting Lawyer Services (VLS) is now available to New Yorkers that are homebound or unable to travel to a lawyer. With VLS our lawyers come to you. There’s no longer a need to coordinate aides, transfers or transportation as you won’t need it The same practice areas of elder law firm are the same available with VLS.  Most of the services that we handle in our office can be handled at your place. For example; signing of your Will, Living Will, Health Care Proxy, revising a Will, Estate Planning, Medicaid Planning or setting up a Trust. If witnesses are needed for signing documents we also arrange them to be with us as well. Other family members or loved ones may be present as well.

Visiting Lawyer Services

You remain in the comfort of your home, apartment or nursing facility and we’ll bring all the necessary documents. This has been very helpful for elder couples–as is often the case with elders, one spouse may be healthy and agile yet the other quite limited.

‘Not being burdened by travel time or hindered by physical ability also allows seniors to focus better on their legal needs. We’ve taken our hands-on approach, compassion and legal prowess to the next level’

For more information on how our Visiting Lawyer Services can help, feel free to call me at 212-268-8200. – Brian

Heir tight: The dos and don’ts of creating rock-solid trusts

Good article via Jennifer Woods at cnbc

Imagine working for decades so that one day you could pass your assets on to your children or grandchildren.

Wouldn’t you like to know that when the day comes, they won’t lose it all on bad investments or to a gold-digging spouse—or simply because they have no idea how to properly manage large sums of money?

Whether you’re bestowing assets during your lifetime or leaving them as an inheritance, creating trusts with well-thought-out terms can ensure your money lands in the right hands and isn’t squandered.

“When you write a will and leave money outright to your heirs … once it’s inherited, there are no controls on how that money is being handled, and you don’t know what will happen,” said certified financial planner Ian Weinberg, CEO of Family Wealth and Pension Management.

“Using trusts helps protect your heirs against future catastrophes—[such as] bankruptcies, money-hungry predators disguised as friends, family looking for loans or business bailouts and other financial challenges—and can also provide for certain special needs of your children or grandchildren,” he said.

Many trusts make multiple payouts over time, the hope being that spacing out distributions will prevent the beneficiary from blowing it all in one shot.

Read More Busting age-based investing myths

Russ Weiss, a certified financial planner with Marshall Financial Group, said that when it comes to setting the distribution terms with clients, “the conversations become tricky.”

In many cases, his clients use age-based payouts, in which a percentage of assets is distributed at various ages.

“The child doesn’t get it all at once,” he said. “If they are irresponsible with money, hopefully they can manage [with spread-out distributions].”

Distribution options

Payouts at 25, 30 and 35 years of age have historically been common, though experts warn that in this day and age, 25 is too young to properly manage large sums of money.

Weiss also has clients who schedule periodic payouts after the benefactor dies, so beneficiaries may get a distribution, for example, every five years following the death.

Who needs a trust?

  • Trusts are not just for the ultrarich. If your heirs stand to inherit even a few hundred thousand dollars, a trust is worth considering.
  • People with young children could benefit from a testamentary trust, established in a will and effective upon one’s death. It dictates how assets will be distributed at later dates. The drawbacks? These trusts go through probate, delaying disbursements, and the records are public.
  • Revocable trusts, or living trusts, are often a better option. You allocate, access and manage assets, and amend terms while you’re alive. When you die, the trust can convert to an irrevocable trust with unchangeable terms. Other pluses: They’re easy to set up, are flexible and protect privacy.—J.W.
  • For more info regarding the proper use of Trusts feel free to email me. Sincerely, Brian

Understanding the Differences Between a Will and a Trust

Brian Raphan

Everyone has heard the terms “will” and “trust,” but not everyone knows the differences between the two. Both are useful estate planning devices that serve different purposes, and both can work together to create a complete estate plan.

One main difference between a will and a trust is that a will goes into effect only after you die, while a trust takes effect as soon as you create it. A will is a document that directs who will receive your property at your death and it appoints a legal representative to carry out your wishes. By contrast, a trust can be used to begin distributing property before death, at death or afterwards. A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to property for another person, called a “beneficiary.” A trust usually has two types of beneficiaries — one set that receives income from the trust during their lives and another set that receives whatever is left over after the first set of beneficiaries dies.

A will covers any property that is only in your name when you die. It does not cover property held in joint tenancy or in a trust. A trust, on the other hand, covers only property that has been transferred to the trust. In order for property to be included in a trust, it must be put in the name of the trust.

Another difference between a will and a trust is that a will passes through probate. That means a court oversees the administration of the will and ensures the will is valid and the property gets distributed the way the deceased wanted. A trust passes outside of probate, so a court does not need to oversee the process, which can save time and money. Unlike a will, which becomes part of the public record, a trust can remain private.

Wills and trusts each have their advantages and disadvantages. For example, a will allows you to name a guardian for children and to specify funeral arrangements, while a trust does not. On the other hand, a trust can be used to plan for disability or to provide savings on taxes. As your elder law attorney I can tell you how best to use a will and a trust in your estate plan. Feel free to email me with any questions.

Regards, Brian A. Raphan, Esq.

The Law Offices of Brian A. Raphan, P.C.

7 Penn Plaza, New York, NY 10001

Free Download: 2014 Benefits Guide for Seniors: NYC

NYC Department of Aging, senior citizens, aarp
Free download. NYC Department of Aging resources. Free benefits guide for senior citizens.









For 2014, this guide from  is a helpful resource for benefits available to senior citizens of New York.

Table of contents include:

Social Security 1

Supplemental Security Income 2

Veterans Benefits 3

New York Prescription Saver Card 3

Public Assistance 4

Medicare 5

Medicare Savings Program 6

Medicare Part D 7

Affordable Care Act 7

Medicaid 8

Food Stamps (Supplemental Nutrition Assistance 9 Program SNAP)

Reduced Fare 10 Senior Citizen Rent Increase Exemption (SCRIE) 11

Senior Citizen Homeowners Exemption (SCHE) 12

Real Property Tax Credit (IT-214) 13

Home Energy Assistance Program (HEAP) 14

Heating Equipment Repair or Replacement 15

Elderly Pharmaceutical Insurance Coverage (EPIC) 15

New York State School Tax Relief Program (STAR) 16 

Regards, Brian


Some FAQ’s about Health Care Proxys

As an Elder Law attorney  for over 25 years  I have recently been getting more and more questions about Health Care Proxys. Below are some answers as well as a link to a Free Sample Draft so my readers can see what it’s all about:

 Why you need a will
Living Will

What is a Health Care Proxy?

A Health Care Proxy is someone you appoint to make health related decisions for you, in the event you can not.

Who decides that I’m not able to make my own healthcare decisions?

Your attending physician will decide whether you lack the capacity to make health care decisions. The decision is made in writing. A second doctor also must be consulted in the case of decisions to withdraw or withhold life-sustaining treatment.  You will be given notice of these decisions if there is any indication that you can understand it. If you object to this decision or to a decision made by your agent, your objection or decision will prevail unless a court determines that you are unable to make health care decisions.


What if I recover the ability to make my own healthcare decisions?

Your doctor is required to decide whether you can make your own health care decisions and confirm it in writing each time your doctor plans on acting on your agent’s health care decisions. If you have recovered the ability to make your own decisions, your agent will not be able to make any more decision for your unless you again lose the abilities to make them. 


How do I complete a Healthcare Proxy?

In New York State, laws set forth the requirements for completing a health care proxy. You must be at least 18 years old and have the capacity to make your own decisions at the time you complete the proxy.

You must state your name and the name of the person you want to act as your agent, and state that your want the agent to have the authority to make health care decisions for you. You also must sign and date your health care proxy in the presence of two adult witnesses who are not names as your agent and have the witnesses sign the proxy. Please note that there are also special rules for the execution of a proxy by residents of psychiatric facilities.

Please note that you do not need to have a lawyer draft your health care proxy, however, you may wish to consult with a lawyer for advice about a health care proxy.


When will my Healthcare Proxy end?

You can create a proxy that lasts for a limited period of time by including in the document the dates you want the proxy to be valid. You can also revoke your proxy if you wish and you are competent to do so.

If you have appointed your husband or wife as your agent, and then you divorce or legally separate, the appointment will be revoked unless you specify that you do not wish to revoke it. You should review your proxy periodically to be sure that it continues to reflect your wishes. 


 Where should I keep my Proxy?

It’s best to give a copy of your proxy to your doctor as well as to the agent named in your proxy. If you revoke your proxy, be sure to notify whomever you gave a copy of the proxy. Upon entering a hospital you may give it to an administrator in charge, as your doctor, or attending physician may not be there when you arrive. Also, keep a copy with your other important documents such as a Power of Attorney and Will. All should be reviewed every couple of years.

What if I don’t want a Healthcare Proxy?

You can’t be required to execute a health care proxy as a condition of receiving health care services or insurance. Also, the lack of a health care proxy or other specific instructions does not crate any presumptions regarding your wishes about health care.

If you have any questions feel free to contact me! You can also visit this page on our website and download a FREE SAMPLE DRAFT of a health care proxy.

Regards, Brian

The Law Offices of Brian A. Raphan, P.C.

7 Penn Plaza, New York, NY 10001

Court Ruling: Transfers Made Years Before Needing Care Were Not Made in Order to Qualify for Medicaid

Doing Medicaid Planning for clients, I often get asked the question: “How does medicaid determine if my gifts were made to qualify for medicaid or not?” Saavy clients have a long history of gifting to show a pattern meant for gifting not medicaid spend down. This recent decision should be of interest.

medicaid planning, appeal

A New York appeals court holds that a Medicaid applicant who transferred funds several years before needing long-term care and kept enough resources to care for herself rebutted the presumption that the transfers were made in order to qualify for Medicaid. Safran v. Shah (N.Y. Sup. Ct., App. Div., 2nd. Dept., 2013-04373, 20166/12, July 2, 2014).

While she was living independently and didn’t require long-term care, Louise Kornhaber transferred funds to her family as gifts. Several years later, Ms. Kornhaber entered a nursing home. Due to the unexpected theft of her remaining resources, Ms. Kornhaber applied for Medicaid. The state assessed a penalty period based on the uncompensated transfers.

Ms. Kornhaber appealed, arguing that the transfers were made for a reason other than to qualify for Medicaid. The state affirmed the penalty period, and Ms. Kornhaber appealed to court.

The New York Supreme Court, Appellate Division, orders the state to provide Ms. Kornhaber with Medicaid benefits, holding that the penalty period was not appropriate. The court rules that because Ms. Kornhaber still had enough resources to maintain herself for years after she made the transfers, she rebutted the presumption that the transfer was made in order to qualify for Medicaid.

Medicaid Planning takes the experience and legal expertise of a qualified attorney. The detailed process of medicaid planning needs to avoid errors and mistakes that can make you ineligible of cost you possibly tens of thousands of dollars in delays or penalties. Click here to read: 8  Medicaid Mistakes to Avoid,

For the full text of this decision, go to:

Any questions? Send me an email: or call 212-268-8200 during the day for a free consultation.

Regards, Brian

Heir Liable for Reimbursement of Mother’s Medicaid Expenses

medicare denialA California appeals court rules that the heir of an estate who sold her interest in her mother’s house to her brother is liable to the state for reimbursement of her mother’s Medicaid expensesEstate of Mays (Cal. App., 3d, No. C070568, June 30, 2014).

Medi-Cal (Medicaid) recipient Merver Mays died, leaving her house as her only asset. Ms. Mays’ daughter, Betty Bedford, petitioned the court to be appointed administrator of the estate, but she was never formally appointed because she didn’t pay the surety bond. The state filed a creditor’s claim against the estate for reimbursement of Medi-Cal expenses, and the court determined the claim was valid.  A dispute arose between Ms. Bedford and her brother, Roy Flemons, over ownership of the house. After the court determined Mr. Flemons owned a one-half interest in the property, Ms. Bedford and Mr. Flemons entered into an agreement in which Mr. Flemons paid Ms. Bedford $75,000 and transferred the house to his name.

The state petitioned the court for an order requiring Ms. Bedford to account for her administration of Ms. Mays’s estate. The court determined Ms. Bedford was liable to the state for the amount she received from Mr. Flemons because although she wasn’t formally appointed administrator, she was acting as administrator. Ms. Bedford appealed.

The California Court of Appeal, 3rd Appellate District, affirms on different grounds. The court rules that Ms. Bedford cannot be held liable due to her failure as administrator of the estate because she was never formally appointed administrator. However, the court holds that Ms. Bedford is liable as an heir of the estate who received estate property. According to the court, Ms. Bedford’s settlement with Mr. Flemons was “essentially an end-run around the creditor’s claim and the estate process” and “the $75,000 payment represented proceeds of the estate that would otherwise be available to satisfy creditors’ claims.”

Planning wisely, accurate and legally is key in Medicaid Planning. Make sure you use an attorney with experience, knowledge and is extremely familiar with rules in your state. Read 8 Medicaid Planning Mistakes to Avoid by clicking here.  You can also download a FREE GUIDE to Medicaid’s Asset Transfer Rules on the right hand column of this page on my website.

If you have any questions regarding Medicaid Planning feel free to give me a call.

Regards, Brian


The New New York Estate Tax Beware A 164% Marginal Rate

Some timely tax news from Forbes staff writer Ashlea Ebeling:

It’s no April Fool’s joke. New York state doubled its estate tax exemption as of today. And it’s set to rise gradually through 2019—if you hang on that long–to eventually match the generous federal exemption, projected to be $5.9 million by then. That will sure make planning much easier for a lot of folks, but there are still big traps in the new law to watch out for.

One trap in New York is a new “cliff,” so called because if it’s triggered you basically fall into a state estate tax abyss.

As of April 1, 2014, the exemption amount is $2,062,500.  That shields way more people from the state levy. But if you die with just 5% more than $2,062,500, you face a cliff. That means you’re taxed on the full value of your estate, not just the amount over the exemption amount.


Here’s an example of how the new law could translate into a marginal New York estate tax rate of nearly 164%, courtesy of the New York State Society of CPAs in this comment letter on the proposed law. By the time the exemption is $5.25 million in 2017 and 2018, a decedent with a New York taxable estate of $5,512,500 (that’s 5% more than the exemption), would pay New York estate tax of $430,050. In effect, there is a New York estate tax of $430,050 on the extra $262,500. “We do not believe that this cliff is consistent with the Governor’s objectives of making New York a more favorable environment for New Yorkers during their golden years,” the letter says. Oh well.

Here’s the rundown of the new exemption schedule:

For deaths as of April 1, 2014 and before April 1, 2015, the exemption is $2,062,500.

For deaths as of April 1, 2015 and before April 1, 2016, the exemption is $3,125,000.

For deaths as of April 1, 2016 and before April 1, 2017, the exemption is $4,187,500.

For deaths as of April 1, 2017 and before January 1, 2019, the exemption is $5,250,000.

As of January 1, 2019 and after, the exemption amount will be linked to the federal amount, which the IRS sets each year based on inflation adjustments—it’s projected to be $5.9 million in 2019. The top rate remains at 16%. (The original budget and the Senate bill had proposed a top rate of 10%.)

In addition to the cliff, there are other problems with the new law. For one, there is no portability provision like in the federal law—that allows a surviving spouse to shelter twice as much without the use of complicated trusts–notes Sharon Klein, managing director of Family Office Services & Wealth Strategies with Wilmington Trust.

There’s a three-year look-back for taxable gifts (those gifts are pulled back into your estate) for gifts made on or after April 1 and before Jan. 1, 2019, but not including any gift made when the decedent wasn’t a New York state resident.

There are basis questions, depreciation questions, and different treatments of estate planning transactions under federal and New York income tax laws, says Donald Hamburg, an estate lawyer with Golenbock Eiseman Assor Bell & Peskoe in New York City. “What’s troubling is that there are so many open questions. It’s a highly complex set of rules,”  he says.


Regards, Brian


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