Omaha, Nebraska Attorney
Elder Law • Estate Planning • Probate
I am dedicated to serving my clients, and welcome the opportunity to meet with you and discuss how I may serve you and your family. I take pride in being a counselor and advisor for my clients and I will always take the time to understand you, your concerns and your goals before I make any recommendations. I work collaboratively with my clients’ financial and other trusted advisors to make sure we establish an estate planning strategy that works.Contact Us
Meet Leroy Peterson
My name is LeRoy Peterson and I come from a very close rural Nebraska family and my family is THE most important aspect of my life. That is why I chose to dedicate my practice and career helping other families plan and navigate through the most stressful and emotional personal challenges they will face. I want to help you get through these times, whether you are a:
- Young family putting in place an estate plan to make sure you name a Guardian for your minor children in case something were to happen to you;
- Stressed out adult child dealing with the financial issues of your aging parents;
- Senior that is faced with the prospect of burning through your life savings and losing your house to Medicaid to pay for Long Term Care; or
- Family that has lost a loved one and now face the Probate Process
I would like to help you navigate your way through your difficult situation.
Many of our clients have little or no previous experience with estate and or long-term care planning or with the probate process. Below are some common questions about these topics and their answers. For any additional questions or to discuss a potential issue, call us at 402-718-8888.
Nebraska is one of just a few states that still have an inheritance tax. The inheritance tax is basically a tax imposed on the transfer of property from an individual that passes away (the “Decedent”) to the recipient or beneficiary of such property. The inheritance tax will apply to all property of the Decedent if the Decedent was domiciled in Nebraska. However, the tax will also apply to “tangible property” located in Nebraska (usually real estate) regardless of where the Decedent was domiciled. So, if a non-Nebraska resident owns real estate in Nebraska at the time of his/her death, then such real estate is subject to the Nebraska Inheritance tax even if it passes to a non-Nebraska beneficiary.
The applicable exemption amount and tax rate depend upon the relationship of the beneficiary to the decedent. For example, estate property to be distributed to the surviving spouse or to a charity is exempt and not subject to the inheritance tax. Estate property to be distributed to “immediate” relatives (such as the decedent’s children, parents, grandparents, siblings, or any lineal decedent or the spouse of such person) will receive a $40,000 tax exemption (for each such “immediate” relative) and be subject to a 1% tax. For example, if the estate will be distributed to the decedent’s three children, each child will receive a $40,000 exemption and then an inheritance tax of a 1% would apply.
Distributions to more “remote” relatives (aunts, uncles, nieces, nephews and lineal descendants and the spouse of any such person) will each receive a $15,000 tax exemption and be subject to a 13% tax. Distributions of estate property to “non-relatives” will each receive a $10,000 tax exemption and be subject to an 18% tax.
Before the inheritance tax is calculated, the taxable estate is first reduced by certain expenses named in the statute. The most common are the decedent’s debts, funeral expenses, attorney and accountant fees, costs of probate and closing costs for selling property. It is important to file the return in a timely fashion. A penalty of 5% per month (up to a total penalty of 25% of the unpaid tax) is added for failure to file within one-year of death. The tax also accrues at the rate of 14% if not paid within one year of death.
There are specific financial criteria that must be met in order to qualify for Medicaid long-term care assistance and every asset owned by the applicant and/or their spouse must be disclosed in the application process, even if it is owned jointly with someone else. The applicant’s assets are categorized as “countable assets” or “excluded assets” and there is a limit on the dollar amount of countable assets an applicant may have in order to qualify for Medicaid long-term care assistance.
Generally, you do not have to sell your home in order to “qualify” for Medicaid long-term care assistance because the applicant’s home can be treated as an “excluded resource” with certain limitations. First, to qualify for the exemption, the home must have been the applicant’s primary residence. Also, for a single (non-married) applicant, the home will be excluded from the countable resources if the equity in the home does not exceed $536,000 and the applicant can demonstrate the intent to return to the home if health conditions improve and care is no longer needed. Note that it is the amount of the equity interest, not the value of the home itself. If the equity interest in the home is above the limit, the applicant will need to reduce the equity interest for the home to be excluded. If the applicant is married and the spouse occupies the home, then the home will continue to be exempt while it is actually occupied by the spouse without a limitation on the equity.
There’s 3 main criteria that must be met to qualify for Medicaid long-term care assistance. First, the applicant must be at least 65 years old and a US citizen. It is possible to qualify if you are younger than 65 and/or not a US citizen, but that’s a different topic beyond the scope of this overview. Further, to qualify in Nebraska you must also be a resident of the state of Nebraska. Residency is generally defined as living in the state of Nebraska with the intent to make it your home. There is no specified period of residency prior to application, but it can become an issue if a person comes to Nebraska and then immediately enters a long-term care facility.
The dollar amount applicant’s “resources” is the second criteria that must be met. To qualify, the applicant cannot exceed a certain level of wealth or assets. Since the rules contemplate countable resources this naturally means there are assets that are not counted and these assets are called excludable resources. The countable resource number is subject to change, so for purposes of this overview, assume a single or individual applicant is generally limited to about $4,000 of countable resources. For married couples where only one spouse needs care, there are rules that will allow the non-institutionalized spouse or well-spouse (commonly referred to as the community spouse) keep a portion of the couple’s assets.
Since there are rules that limit the dollar amount of resources an applicant can have to qualify naturally there are rules that limit the ability to give assets away. Generally, this is known as the deprivation of resources or the 60 month look back rule.
Finally, the dollar amount of the applicant’s income is the third criteria. Basically, if the applicant’s income exceeds the cost of the care to be provided then obviously, you don’t qualify because you can pay for the care yourself. The “income” criteria differs from the “countable resources” rule in the sense that all assets of a married couple (regardless of how they are titled) are contemplated in the countable resources analysis; where generally income paid to the non-institutionalized spouse is not included in income analysis.
Paying for long-term care and qualifying for Medicaid is a complicated topic and I would encourage you to contact our office to schedule a strategy consultation – this is one path you do not want to walk alone.
Like anything in life, you will have more and better options the earlier you plan. However, it is never too late to plan for Medicaid and ultimately qualify for assistance as soon as possible. It is even possible to qualify for Medicaid if the individual is currently residing in a community and receiving long-term care.
The reason most people believe it is too late to implement a plan to qualify for Medicaid is because they know there is a “5-year look-back rule” that they assume will prevent them from transferring assets in order to qualify Medicaid. While it is true that there is a 5-year transfer rule, it does not mean there are not planning options available. So, if you are worried that your spouse’s long-term care costs may impoverish you, I would encourage you to investigate your options, even if care is sooner than later.
The TOD deed will operate in a similar fashion to a payable on death (“POD”) bank account. The beneficiary will not have any current ownership interest in the property during the life of the owner and will only receive ownership when the owner dies (or in the case of joint tenancy ownership) when all of the owners have died.
To use the TOD deed, the real estate must be located in Nebraska, but the owner and beneficiary do not have to be residents of Nebraska. The owner must have the capacity to execute the TOD deed, just as an individual must have capacity to execute a will. The TOD deed must be properly signed, witnessed and notarized and the statute places very specific requirements on each. The TOD deed must also be filed of record in the county where the real estate is located before the owner’s death and within thirty (30) days after it is executed. The owner of the real estate may also revoke the transfer on death beneficiary designation subject to the same signature, witness, notary, and filing requirements.
During the lifetime of the owner, the TOD deed does not affect any rights of the owner. The owner can still transfer, sell or pledge the real estate. Obviously, if the owner transfers the real estate, by sale of otherwise, the beneficiary interest of the TOD deed will terminate. The TOD deed does not impact any rights of any current or future secured or unsecured creditors. Also, the TOD deed does not impact the owner’s homestead or real estate tax exemption status. Finally, the TOD deed is subject to Medicaid’s right to recover against the real estate for long-term care costs.
A will is the most basic and common type of estate plan and basically names who is in charge (the Personal Representative) and how your property will be distributed after your death. A will does not avoid probate. A will is actually your written instructions to the probate court for who you wish to name as the person in charge of your estate and how you wish to have your “probate” property distributed. “Probate property is basically any property an individual owns in their own name (and not jointly) at the time of their death and which does not pass pursuant to a beneficiary designation or a “payable on death (POD) or “transfer on death” (TOD) designation.
Sometimes you may want to avoid the time and expenses of a probate proceeding by conveying your property to a trust, so that the property is no longer “probate Property” because it is owned by the trust rather than in your own name. Trusts are not just for the mega wealthy. The concept of a trust may be confusing at first, but it can be extremely valuable to help accomplish many personal and financial goals. I would encourage you to contact our office to schedule a strategy consultation to determine the type of estate plan that is right for you. Or, request a free Estate Planning 101 Consumers Guide.