Here’s a list of some of the most frequently asked questions we hear at the office:
1. Do I need a lawyer for my estate plan?
Answer: To do it right, yes you do. I can’t tell you how many times I have reviewed documents from websites, or canned software, and they end up having to be completely scrapped and re-done. If you can only afford that solution, go ahead, it’s better than nothing. But the realty is that you get what you pay for in estate planning – custom documents are the key, even though it costs more.
2. What happens if I don’t have a Will?
Answer: You are leaving your loved ones with a substantial hardship when dealing with your assets. Most people think that, if there’s no Will, everything goes to the spouse. THIS IS NOT TRUE!! Under MA law, if there’s no Will, there is a split between the spouse and children, meaning your spouse could have to give up some of what was thought to be theirs! Even if you have taken care to save money or property for your loved ones after you are gone, the process for reaching that property is much more difficult if there is no Will to submit to the Court. The Commonwealth of Massachusetts has very specific rules regarding “who gets what” if you die without a Will, and the new MUPC has imposed even greater restrictions. In addition, the amount to be distributed to your children will require a cumbersome and costly legal guardianship if the children are minors at the time of your death. Having a proper & up-to-date Will ensures that what you leave behind goes where you want it to.
3. How do I pay for long term care?
Answer: There are all types of long term care, including in-home care, assisted living, and nursing home care. If you are faced with the possibility of nursing home care, there are three ways you can pay for it. First, you can private pay. That means that you would use all of the money that you have, to pay for the nursing home. Second, you can purchase a long-term care insurance policy that would pay for your nursing and home care, or life insurance with an appropriate Rider. Lastly, you can position assets to financially qualify for Medicaid, which is run through “MassHealth” in Massachusetts. To qualify, a single person cannot have more than $2,000.00 in assets BUT, through proper use of Trusts, there are ways to exclude assets from this limit . Further, you can be penalized for any gifts that are made during the five years prior to applying for benefits.
4. How do I qualify for Medicaid / MassHealth?
Answer: You have to apply, and the application process is grueling. Typically, an attorney is needed to help with the application, which is voluminous and detailed. A single person cannot have more than $2,000.00 in assets and a spouse that stays in the home can have up to $123,600.00 in 2018. While that sounds like a lot, the number drops right back down to $2,000.00 if that spouse ends up needing nursing home care too. We can provide an evaluation to tell you your liklihood of qualifying, and we utilize a service that can help you gather documents needed for the application. Contact us or click HERE for a free list of documents you’ll need to gather before applying.
5. What is an Irrevocable Trust and how can it help me?
Answer: Transfer of property into an Irrevocable Trust, sometimes called a transfer the interest into a Medicaid Trust, can sometimes protect that property form a long term care stay. One example is for your home, and a transfer of your home into such a Trust, reserving the right to live at the property for your lifetime and control the position of trustee of the trust, can, in some circumstances, remove that property as a :countable asset” when applying for Medicaid / MassHealth. This transfer would be subject to the five-year look-back. If done properly, and you are able to go for five years without needing MassHealth, then the transferred property could then be off-limits to MassHealth’s asset calculation. Further, downsizing the home part way through would not change anything.
6. What is a Durable Power of Attorney?
Answer: It is a written document in which you, as the principal, designate someone you trust, such as your spouse, another family member, a friend or a professional, as “your attorney in fact” or “agent” – sometimes referred to as a POA or DPOA. Your attorney in fact is authorized to perform certain acts on your behalf; you to authorize another individual or entity to manage your affairs. You may give as much or as little power to your attorney in fact as you see fit. Generally, a power of attorney terminates on the disability of the principal. If the power of attorney is “durable”, it will not be affected if you become disabled or incapacitated. Not all powers of attorney are durable, and it must specifically state as such. A DPOA can be hugely important when trying to move assets for a spouse that is seeking Medicaid / MassHealth benefits, however, your DPOA must specifically allow for such transfers (which is again why we don’t like fill-in or canned documents – they usually miss this part).
7. What is a Health Care Proxy?
Answer: A health care proxy is a document where you designate an individual to make decisions concerning your health care. So long as you are competent, only you are in charge of these decisions, but if you become incapacitated or don’t have your mental faculties, the proxy acts on your behalf. The proxy should include special revisions regarding nursing home admittance and care.
8. Can Medicaid take my house?
Answer. Medicaid does not “take” the house. They will never force a spouse to move out, and they won’t force a sale so long as you indicate on your application that the nursing home spouse intends to return home. BUT, they can certainly apply a lien against the house for all of the care that they pay for, and they can seek recovery of their payments from that lien and in certain circumstances also from the nursing home resident’s estate after passing.
9. Can my spouse keep any money if I need Medicaid / MassHealth to pay for long term care?
Answer. Yes. If one spouse goes into nursing home care, applies for Medicaid / MassHealth and the other spouse stays home, the at-home spouse (called the “Community Spouse”) can keep $123,600.00 in assets (in 2018 – this number changes annually). However, if that healthy spouse needs to later enter a nursing home, that asset limit number drops right down to $2,000.00, so the community spouse ends up having to spend all of that money on their own nursing home care. That’s why protecting money in a proper trust can be so valuable.
10. Will I have to pay estate taxes?
Answer. It’s possible. The federal exemption has gone way up, to over $11 Million Dollars. But the Massachusetts threshold is $1 Million, including your home and your life insurance. If you’re close to the limit, especially when adding in your life insurance, there are planning techniques to help. For example, a Life Insurance Trust or a Credit Shelter Trust. Contact us to discuss those and other options.