On May 3, 2015, Nebraska’s governor signed into law Legislative Bill 72, which affects transfers to trust beneficiaries after the death of the trustor. Proceedings for determination of Nebraska inheritance tax are also affected by the Bill. The following analysis provides guidance for those insuring transactions: in which distributee/beneficiaries are selling real estate that was an asset of the trust.
1. The trustee of a revocable trust that has become irrevocable upon death of the Trustor is prohibited from transferring any trust property (including real estate) to a beneficiary prior to satisfaction of all claims for Medicaid reimbursement under the Medical Assistance Act (§68-919, Neb. Rev. Stat.).
2. The Department of Health and Human Services (DHHS) may waive this restriction on transfer if it determines that there is no reimbursement due or that there will be sufficient assets remaining to satisfy any claims for reimbursement. Any waiver will occur upon application by the trustee and within 60 days following trustee’s request for the waiver if DHHS determines no medical reimbursement is due.
3. Certain trustees may distribute prior to receipt of the DHHS waiver if the trustee is:
a. A financial institution as defined under applicable law (§77-3801, Neb. Rev. Stat.);
b. A trust company chartered pursuant to the Nebraska Trust Company Act; or
c. An attorney licensed to practice law in Nebraska,
And signs a recital, under oath and mailed by certified mail to DHHS, stating the decedent’s name and social security number, and if available, the name and social security number of the decedent’s spouse, if deceased, and that the trustor was not a recipient of medical assistance and no claims for medical assistance exist.
d. A knowingly false recital by such trustee will subject the trustee to personal liability.
4. LB 72, as passed and approved, imposes new requirements for proceedings to determine Nebraska inheritance tax. The Bill will require that, if the decedent
a. was 55 years of age or older; or,
b. resided in a medical institution,
A notice of the filing of the petition shall be mailed to DHHS with the decedent’s social security number and, if reasonably available, the social security number of the decedent’s spouse if the spouse is deceased.
A certificate of mailing must be filed in the inheritance tax proceeding by an attorney for the petitioner, or if no attorney, then by the petitioner prior to entry of an inheritance tax order.
Because it was passed without an emergency clause, LB 72 will become effective 90 days following adjournment of the Unicameral, making such effective date approximately September 5, 2015.
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