In a postdeath trust administration, beneficiaries are often most concerned with the distribution of assets. Who gets what and when? Trustees, and attorneys counseling trustees, must recognize the importance of when, or more importantly, when not to distribute trust property. The trustee’s proper timing of final distributions to beneficiaries can make all the difference in whether a trust administration concludes smoothly or becomes unnecessarily complicated. Generally, distributions should not be made until all debts and taxes have been paid and any remaining expenses of administration are reasonably accounted for with a reserve. 

All states impose a penalty period for a Medicaid applicant who has transferred assets for less than fair market value during the applicable look-back period. In all states but California, the look-back period is 60 months. In California, the look-back period is 30 months. To determine the penalty period amount, the fair market value of the transferred asset is divided by the penalty divisor, which is usually the average private-pay cost of nursing home care in the state or in a specific region of the state.

When the transferred asset is real property, how is the value of that asset determined? Can an appraised value be used? Should the tax assessor’s value be used? If the property is in disrepair, what type of evidence is required to prove the decreased value of that property? These issues were the topic of a recent case out of New Jersey.

Before the increase in the federal estate tax exemption amount, brought in by the enactment of the American Taxpayer Relief Act (ATRA) in 2013 and raised by the Tax Cuts and Jobs Act of 2017, estate planning attorneys focused primarily on how to avoid the impact of estate tax.