New Law Punishes RetireesKoldin Law Center E-Mail Newsletter On December 21, 2005, the United States Senate, by a vote of 51 to 50 with Vice President Cheney breaking the tie, passed the “Deficit Reduction Act of 2005 ”. On February 1, 2006, The House of Representatives passed this Act by a vote of 216 to 214. According to the website of the National Academy of Elderlaw Attorneys (www.naela.org), the President is expected to sign this Bill into Law on February 8, 2006. This planned signing date could change. When the President does sign, it will likely be reported on the front page of most newspapers. Most provisions of this Law take effect on the date it is signed by the President. However, This legislation makes numerous changes to the Medicaid laws which will be very detrimental to individuals who are faced with long term illnesses. One major change is the Medicaid transfer penalty rules. Under the old law, transfers made to an Irrevocable Trust were subject to a 5 year lookback period. Transfers made to individuals were subject to a 3 year lookback period. Transfers made within the lookback period could be protected under a special “federal credit formula” at a rate of approximately $6,000 per month in Upstate New York. This rate varied depending on your region of residence. For example, if you transferred $60,000 to your children or to an Irrevocable Trust within the lookback period, your transfer would be protected in 10 months ($6000 credit times 10 months equals $60,000). This credit formula made it possible for you to make periodic transfers over time and protect your assets incrementally. Under the new law, all transfers to a Trust or to individuals will be subject to a 5 year lookback period. The federal credit formula for transfers made within the lookback period has been abolished. Any transfer made will now be subject to a straight 5 year waiting period before it becomes protected. For example, if you make a $60,000 transfer either to your Trust or to your children, this transfer will no longer be protected in 10 months. It will take 5 years before this transfer becomes protected. This new law takes effect immediately upon its enactment and only applies to transfers made on or after the effective date of the law. Any transfers made before this law is enacted are grandfathered under the old rules. Therefore, it is still possible to make transfers under the old law before the apparent February 8, 2006 planned presidential signing ceremony. Under this new Law, estate planning in advance of an illness becomes even more critical. If you are already ill, your options are now more limited, but there are still steps that can be taken to protect some of your assets which should be considered. If you are a client of our office and wish to discuss your file, please call your legal assistant. If you are not a client and want to review your options, please contact our office to schedule an appointment. There is no fee for the initial consultation. This newsletter is not intended to provide legal advice, but is intended to alert you of an important legal development. We Appreciate Your Referrals We have been told by many clients who are in a crisis that they wish they had known about our firm much sooner. We are proud of the many families we have helped in times of crisis. We are also proud of the many families we helped avoid financial crisis by doing estate planning in advance. We all share the responsibility for making our family and friends aware of the planning options available to them. Your referral to the Koldin Law Center could make a major difference in the lives of your family and friends if they are someday faced with a long term illness. Remember that the Koldin Law Center offers many services for clients of all ages. Our services range from basic estate planning such as a simple will to complex estate planning including asset preservation planning. There is no fee for the initial consultation.
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