Spring is a useful time to take stock of where your estate and elder law planning stands. The first quarter of the year brings final numbers on tax obligations, Social Security benefit updates take effect at the start of the year, and for families with longer-horizon planning concerns, the calendar is a useful prompt to ask whether anything needs to be revisited. This issue covers several areas that merit attention in the months ahead.
The elder law and special needs planning team at Mandelbaum Barrett PC prepared this newsletter to keep clients and families current on developments that may affect their planning. We welcome questions about any of the topics covered here.
The Approaching Estate Tax Exemption Sunset
The significantly elevated federal estate tax exemption amounts put in place by the Tax Cuts and Jobs Act of 2017 are scheduled to sunset at the end of 2025, reverting to roughly half their current levels. For the 2024 tax year, the federal estate tax exemption is $13.61 million per individual, or $27.22 million for married couples. If Congress does not act, that exemption is expected to drop to approximately $6 to $7 million per individual in 2026, adjusted for inflation.
For families whose estates fall in the range that would be affected by a reduced exemption, the window for completing large transfers at current exemption levels is narrowing. Strategies that use today’s exemption to move assets out of the taxable estate, including completed gifts, grantor retained annuity trusts, and other structures, require time to implement properly. Families who delay until late 2025 to address decisions that can be made now risk a compressed timeline that limits their options. If your estate may be affected by the sunset, this is the year to have that conversation with an estate planning attorney.
Medicaid Planning and Asset Protection in New Jersey
New Jersey’s Medicaid program for long-term care covers nursing home and home-based care for individuals who meet financial eligibility requirements. The income and asset limits are modest, and the five-year look-back on prior transfers makes Medicaid planning a multi-year process rather than something that can be addressed when care is already needed.
For New Jersey residents, the community spouse resource allowance permits a spouse living at home to retain a portion of the couple’s combined assets when the other spouse applies for Medicaid. The exact amounts are adjusted periodically, and understanding how these rules interact with the applicant’s other assets and income is essential for accurate planning. Families who wait until a crisis to engage an elder law attorney typically have significantly fewer options than those who plan ahead, often by several years.
Guardianship and Alternatives for Aging Parents
When an aging parent or family member loses the capacity to make financial or healthcare decisions, and no advance planning documents are in place, the family may need to seek court-appointed guardianship. The guardianship process in New Jersey requires a formal court proceeding, the appointment of a guardian ad litem, and ongoing court oversight. It is more time-consuming, more expensive, and more burdensome than the advance planning that could have avoided it.
Powers of attorney and healthcare proxies, executed while a person still has capacity, allow families to avoid guardianship entirely in most cases. A comprehensive healthcare directive also documents the person’s wishes about medical treatment, which reduces the burden on family members who must make decisions without clear guidance. According to the National Institute on Aging, having these conversations and documenting preferences in advance significantly reduces distress for both the individual and their family. If your parents do not have these documents in place, or if documents they signed years ago have not been reviewed recently, this is a practical step that can make an important difference when the time comes.
Contact Mandelbaum Barrett PC
Whether you are looking at the estate tax exemption sunset, beginning Medicaid planning for yourself or a family member, or need to put advance directives in place, the elder law and special needs planning team at Mandelbaum Barrett PC works with families throughout New Jersey and New York on every aspect of this work.
To speak with a member of our team, contact Mandelbaum Barrett PC today. Our attorneys are ready to assist with your planning questions.