Elder & Disability Law FAQ

What is Elder Law?
Elder Law is a focus on life care planning to insure that the total health care and estate planning needs of an individual are addressed from a multi-disciplinary perspective that includes the following range of services:

• Asset protection planning
• Medicare and Medicaid planning
• Interplay of long-term care and financial planning
• Use of long-term care insurance
• Health care decision making and health care proxies
• Estate planning
• Wills and real estate strategies to protect the family home
• Housing options and alternatives to nursing homes

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What are the essential Estate Planning documents every family should know about?

• Wills
• Health Care Proxy
• Power of Attorney
• Deeds with Life Estates and Realty Trusts
• Revocable and Irrevocable Trusts
• Gift Giving Plans
• Asset Protection Plans

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How can I protect my family home and avoid the state from placing a lien on the home if I enter a nursing home and require Medicaid?
A Medicaid lien is only collected if the home ends up in the eligible individual’s probate estate.  There are many ways to legally avoid the lien including gifting a remainder interest in the home to someone else or certain trusts well in advance of eligibility, transferring the home to an allowable transferee such as a spouse, disabled child, sibling co-owner, or caretaker child before death, or purchasing a qualified long term care insurance policy.  The rules are very specific and advice from an expert should be obtained to determine the best method for you.
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How can I ensure I can live at home or in the community and not enter a nursing home?
Remaining in the community indefinitely if you have a serious long term illness or debilitating medical condition usually requires careful planning.  It may require the right type of insurance, supportive family members, the right type of public benefits, or just living off of your savings to pay for care.  The current modern treatment models try to keep you in a community setting for as long as possible.  Evaluating your present medical coverage and progressive medical needs are key to developing a support plan.  Planning for eligibility for public benefits is often an essential ingredient to this protection.
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How can I protect my estate and life savings?
Asset protection involves planning ahead to avoid spending your savings on medical care or preventing it from going to someone whom you do not wish to receive it.  There are many ways to protect your assets, but the most successful involve early planning while you are relatively healthy and the most options are available.  Most planning techniques involve trusts and trusted family members, but there are a variety of options that fit many different situations.  Going over your options with a skilled and experienced attorney is the best way to fully protect your assets and ensure your wishes are carried out.
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How can I avoid probate and pay the least estate taxes?
Whatever you own solely in your own name upon your death needs to go through probate.  Options to avoid the probate procedure include putting property in trust, joint ownership with rights of survivorship, and naming of successor beneficiaries on certain instruments such as life insurance policies and retirement accounts.  Some methods are safer and more flexible than others.  Care should be taken to choose the right method for you.   There are both state and federal estate taxes for decedents’ estates to consider in Massachusetts.  Often times, the easiest avoidable estate tax liability is for married couples to plan ahead for the time when the survivor of them dies and the property is to go to the children or other heirs.  There are many techniques including regular and measured gifting during your lifetime and many forms of trusts.  Each situation and need is somewhat different, and the tax laws have been changing regularly, so it is important to consider and choose the option that is right for the size of your estate, age, marital status, and health. 
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What is Probate?
Probate is a process that takes place when someone dies with property in their name alone. Joint accounts and property held by husband and wife as tenants by the entirety are not probate property. Joint property and property held as tenants by the entirety passes to the remaining co-owner(s) immediately upon the death of a co-owner.  Tenancy in common means that the property is held in equal shares and passes to the individual's estate upon death with all tenants in common having equal rights.

A person dies "testate" with a will and "intestate" without a will. A will should be filed within 30 days of the date of death but is often filed much later without penalty. An individual named as Executor under the will must be appointed by the Probate Court in the county where the deceased resided.  If a person dies intestate with property, the property passes by the state law of intestacy upon a petition to the Probate Court appointing an Administrator. Intestate property passes 50% to a surviving spouse and 50% to children, and if no children, all to the spouse, or if no spouse, to the children equally. If no spouse or children, then it passes to the next level of heirs starting with parents, then siblings, then nieces and nephews, etc.
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How can I ensure my family will inherit my estate and there will be something to pass on upon my death?
You can easily make sure that what you own upon your death will go to the individuals that you choose under the conditions that you desire through proper use of a Will or trust.  However, the size of your estate upon your death depends on whether you will be able to preserve your property from being spent, taken by certain family members during your lifetime if you lose the competence to manage it yourself, or die with liens on the property.  All of these factors need to be considered, especially the high cost of your care as your health decreases.  A focused asset protection plan including use of trusts, long term care insurance, eligibility for certain government benefits, and trusted fiduciaries can all preserve your estate.   Planning ahead with an elder law attorney experienced in asset protection will ensure your plan meets your current and future needs
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What should I do if I think my mom was coerced into changing her Will?
Although it is presumed that an individual is competent when they sign a Will, it is possible to prove that undue influence or coercion was used.  Typical factors include poor health or dementia, undue dependency on a particular individual, threats of abandonment or institutionalization, preventing the individual from associating with other family members, or even forgery.  During your mother’s lifetime, bringing this to the attention of Elder Protective Services and the court may provide a remedy.  Upon death, all heirs at law and interested parties need to be notified that the Will is to be probated.  An objection to allowance of the Will and appointment of the Executor needs to be made to the Court within the limited time period after the notice is issued.  An attorney is almost always necessary to prepare the case and prove that the Will was not the individual’s own intent. 
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How do I become eligible for a program that will pay for nursing home care?
Medicare will only pay for a very limited period of coverage in a skilled nursing or rehabilitation facility following a covered hospital stay.  Medicaid, called MassHealth in Massachusetts, pays for long term nursing home care.  Eligibility for nursing home level MassHealth is based upon meeting certain income and asset limitation requirements.  The countable asset limitation is only $2,000.  The eligibility requirements are fairly lenient for a member of a couple with excess assets up to a certain level, but more difficult to achieve for single individuals.   Due to asset gifting penalties, if assets are not given to a spouse, disabled child, or other allowable party, then a gifting penalty may apply, and the excess assets may need to be spent down on nursing home care.  Advance planning five or more years in advance is the most successful for individuals, but there are a number of more immediate planning techniques that also work for partial savings.  A skilled and experienced elder law attorney is necessary to do this planning.
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What are my Federal Estate Tax obligations?

The federal and state government may levy estate taxes of the last to die of a husband and wife or from the estate of an unmarried individual.  There is a 100% tax exemption for bequests between spouses, but when the surviving spouse eventually dies, a higher, graduated tax may be owed on the entire estate. Proper planning is required to avoid this outcome.

The Federal estate, gift, and generation-skipping transfer (GST) taxes form a transfer tax system that was formerly "unified" but that has been separate since 2003.  Estate taxes are assessed at one's death, and gift taxes are assessed at the time a gift is made or transferred during one's lifetime.  The GST tax exists in order to make sure property does not skip a generation without a transfer tax.  While the Federal gift tax exemption is $1,000,000, unlimited marital and charitable deductions may be made from this exemption.  The Federal Estate and GST tax exemption will be valued as of the year of death of the individual, as follows:

• 2009                 $3,500,000.00
• 2010                   Unlimited
• 2011                  $1,000,000.00
  

The current estate "exemption" for Massachusetts is $1,000,000.  There is no Massachusetts gift tax.  There is much confusion about "tax-free" gifts.  A change in federal law allows each person to now make a tax free gift of $13,000 (with small cost of living increase each year) to each appropriate individual, every year.  A married couple can make joint gifts of up to $26,000 to each individual every year.  If a person or couple is not concerned about estate taxes, then gifts in excess of $13,000 (or $26,000 for a couple) per person may be given with no adverse consequences to the donor or donee, up to the lifetime exemption amount which is currently $1,000,000.  A qualified accountant, or a Certified Public Accountant (CPA), can advise you as to whether a gift tax return should be filed and can provide you with filing instructions.

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What is a Health Care Proxy?
Since December 18, 1990, individuals in Massachusetts can complete binding Health Care Proxies.  The purpose is to permit you to designate in advance who will make your health care decisions should you become incapacitated or unable to make your own health care decisions. The Agent, or person you appoint, must be 18 years of age or older and will be permitted to make a wide range of medical decisions on your behalf if you are unable to make or communicate your wishes.
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What are the differences between a Health Care Proxy and Living Will?
A Living Will is a legal document that specifies in advance any life-sustaining measures a person refuses to undergo if there is no reasonable expectation of recovery.  Typically, a person may refuse the use of feeding tubes, respirators and cardiac resuscitation.  The Living Will makes an incapacitated individual's treatment preferences known in a set of limited and specific circumstances.  It serves as a guide in medical decisions but is NOT legally enforceable.  The Health Care Proxy is not limited to a specific set of circumstances but allows an Agent the flexibility to make treatment decisions in a wide range of situations.  For these reasons, the Health Care Proxy is the recommended method for medical decision making in the event of incapacity.
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Who will make medical decisions if no Health Care Proxy exists?

If you become unable to make or communicate treatment decisions to health care providers and you do not have a proxy or agent, then decisions will often be made by a court appointed guardian, who is usually a close family member.  The guardianship process is a slower and more costly process than if a health care proxy is in place because the guardianship requires court intervention.  More importantly, treatment decisions made by a guardian and health care professionals may not reflect your values and beliefs.  In sum, the health care proxy assists in having your treatment preferences carried out in the most efficient manner possible and your wishes being implemented.

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What is Durable Power of Attorney?
In certain situations individuals may authorize another person or persons to legally act on their behalf in handling their property.  When accomplished through a written legal document, a Power of Attorney is created.  The person creating the power, the Principal, specifies in the legal document the specific authority they want the other person, the Attorney in Fact, to possess.  "Durable" means that the Power of Attorney will remain in effect even if the Principal becomes incompetent.  A Power of Attorney can be revoked by a competent principal at any time.
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What can a Durable Power of Attorney do?
An Attorney in Fact (the person acting on behalf of the Principal) will only have those powers specifically granted to him or her by the Principal.  The Principal can authorize the Attorney in Fact to complete a broad range of activities, including signing checks, making investment decisions, entering into contracts, making gifts, creating trusts, and transferring property.  The Principal can grant to the Attorney in Fact the power to do most things the Principal could have done for him or herself.  This is a very powerful estate planning tool and should be granted with discretion and care.
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What is the difference between Durable and Non-Durable Power of Attorney?
The regular, or non-durable, Power of Attorney, is effective immediately, but automatically terminates when the Principal becomes incompetent.  If incompetency does occur, perhaps the time when a Power of Attorney is most necessary, in order to manage the incompetent individual's estate, that individual's family would need to seek the appointment of a guardian or conservator from the Probate Court.  Alternatively, if a Durable Power of Attorney exists, the power of the Attorney-in-Fact to act on the Principal's behalf continues even after the Principal becomes incompetent.
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What is the difference between a Springing and Present Durable Power of Attorney?
In Massachusetts, Durable Powers of Attorney are governed by statute.  There are two basic forms a Durable Power of Attorney can take: (1) a present Durable Power of Attorney; and (2) a "springing" Durable Power of Attorney.  A present Durable Power of Attorney authorizes the Attorney in Fact to act for the Principal as soon as it is executed.  A springing Durable Power of Attorney becomes effective only upon the incapacity or incompetency of the Principal
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What is a Homestead Declaration?
The homestead declaration protects the equity in one’s home from claims of creditors up to $500,000, which was increased on October 26, 2004 from $300,000.  A homestead recorded prior to the date the homestead rate was increased is retroactive to the date of the filing, except in regard to debts that were recorded prior to the date of the increase.  The purpose of the homestead is to protect the home of a debtor, debtor’s spouse, or debtor’s minor children from creditors and their claims. To secure this protection, the homeowner must file a declaration with the registry of deeds where the deed to the property is recorded.  The filing fee is $35.00.  The law permits only one homestead declaration for co-owners under age 62 and two or more homestead declarations for co-owners who are disabled or age 62 and above.  Therefore, homeowners who are disabled or age 62 and above can protect up to $1,000,000 in equity in their homes if both owners file separate declarations of homestead.
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What will a Homestead Declaration not protect the house from?

• Medicaid lien if the owner requires nursing home care
• Federal, state, and local taxes, assessments, claims and liens
• First and second mortgages
• Debts, encumbrances, or contracts existing PRIOR to the filing of the declaration of homestead
• Judgment that spouse pay support to the other spouse or for minor children

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If I already have a Homestead Declaration recorded, do I have to record a new one when I turn 62 in order to get the added protection?
Yes.  The two homestead exemptions come under separate sections of the statue and require separate declarations. A new filing revokes all previous, so it is important that both owners are 62 before refiling.
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What if I deed the house to my children and reserve a Life Estate, do I lose the homestead?
Yes, but you can declare a homestead on your reserved life estate.
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What is a deed with a Reserved Life Estate?

A deed is a document showing proof of ownership of real property.  A deed with a reserved life estate is used when you wish to live in and maintain control of the property until your death, and then at that point, you wish to pass your real property to loved ones.  A deed with reserved life estate allows you to live on the property with the responsibility to keep up and maintain the property.  A benefit of this type of deed is that the “remainder” is passed immediately upon your death to whomever you appoint by avoiding the probate process.  A disadvantage is that the property cannot be fully sold without the assent of the life and remainder estate holders. 

 

While a step up in basis for capital gains tax purposes will be realized upon the death of the life estate holder, the remainder estate holder will not benefit from the Section 121 capital gains tax exclusion if the real property is sold while the life tenant is living unless the real property is the remainder estate holder’s primary residence as well.  Under current Medicaid estate recovery law, individuals who receive Medicaid in the community who are age 55 and older or any age in a nursing facility will have a lien placed on any property in which they have an ownership interest, including a life estate.  If it is sold during their lifetime, the lien will be collected.  If the life estate owner dies owning the property, their ownership ends without passing through their estate, and therefore the lien will end and there will be no recovery.

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What is the difference between Medicaid and Medicare?
Medicare is a federal health insurance program associated with Social Security Insurance benefits for the elderly and disabled that assists in paying for medical expenses but does not pay for extended nursing home care or prescription drugs. Medicaid is a joint federal-state assistance program based on financial need, which comprehensively pays for the medical and health maintenance needs of those receiving coverage.  It also pays for long-term nursing home care for individuals and members of couples.
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How can I tell if I am eligible for Medicaid?
Medicaid is available to the elderly, disabled, blind, children, and other groups in need of coverage who meet the financial eligibility rules, and for those persons eligible for Supplemental Security Income (SSI).  The criteria for Medicaid eligibility differs by category, but for those age 65 and over, the asset limitation is $2,000 for an individual.  The income limit for an applicant age 65 and over living in the community is $903 per month for standard community Medicaid, although excess income may be “spent down” on medical care to receive benefits.  For nursing home coverage, all monthly income over $72.80 must be paid to the nursing home, although there are exceptions if there is a spouse still living in the community.
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If I need a nursing home, but my spouse does not, will I still be able to get Medicaid?

As of January 1, 2009 and through 2010, the “community spouse resource allowance” or CSRA is $109,560.  This is the amount that the community spouse may keep when the Medicaid applicant enters a nursing home.  There are various techniques available to save additional funds.

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