According to a US Census Bureau report, couples in which one or both spouses are foreign-born account for 20% of all marriages in the United States. Of these foreign-born spouses, approximately 60% are naturalized and 40% are noncitizens. The Bureau links this trend to both the growth of the US immigrant population and the increased number of Americans traveling and living abroad. This demographic faces unique estate and tax planning issues.
For a promissory note to be used successfully as a strategy for long-term care planning, it must meet certain requirements.
The Nebraska Court of Appeals filed a Memorandum Web Opinion in 2019 regarding a failed attempt by a Medicaid applicant to use a promissory note to exclude a portion of her assets from eligibility considerations. Appellant argued that the promissory note in question should not have counted towards her Medicaid asset limit. The Court, however, found that the promissory note did not meet the requirements of 42 USC § 1396p(c)(1)(I) regarding acceptable or exempt transfers of assets for Medicaid purposes.
Freeman entered into long-term care on February 1, 2015. She applied for Medicaid benefits, with the help of her attorney, on March 31. Her income included Social Security payments and an annual income from her interest in a rental. On March 27, she had disposed of more than $12,000 and executed a promissory note, “FOR VALUE RECEIVED,” as a loan to her lawyer for an additional $5,547. She also had other limited resources less relevant to the court’s decision.
The United States Supreme Court rarely addresses trusts and estates issues. The purview of the states, issues arising in intergenerational wealth transfers, are generally outside federal jurisdiction. To reach the U.S. Supreme Court, trusts and estates cases typically involve federal preemption or the constitutionality of a state’s law; the latter has brought the most recent trusts and estates case before the Court.