Probate & Trust Administration

A durable power of attorney (DPOA) is a written document, authorized by M.G.L. c. 201B, whereby a person (the “principal”) designates another individual as his or her attorney-in-fact ( the “agent”) and contains words evidencing the principal’s intent that the powers granted under the document remain in effect notwithstanding the principal’s subsequent disability or incapacity.  The DPOA allows the agent to manage the principal’s property on the principal’s behalf, including, but not limited to, signing checks, entering into contracts, buying and selling real and personal property, depositing and withdrawing funds, running the principal’s business, and most other actions a principal could take on his or her own behalf.

In one word: Yes.  Everyone should execute a Will in order to provide for the orderly administration of their estate, the proper passing of their property, the appropriate accommodation and care for their minor or disabled children and many additional reasons.  It is especially important to execute a Will if you have minor children, you have substantial assets, you, or your spouse, are in a second marriage, you or your spouse have children with a previous partner, you have children, or family member(s) with special needs, or you have specific desires for the distribution of your property.

It depends.  A revocable trust is an effective means to allow for your property to pass outside of the probate court, to provide for a prolonged, and specific, administration of assets for your designated beneficiaries when necessary (such as with young and/or disabled beneficiaries), to lawfully avoid estate taxes up to a set threshold, and to provide for a more private administration and distribution of your property that is outside of direct probate court oversight and is not a public record.  In addition, a revocable trust is amendable and revocable during a donor’s life, and therefore can be changed or terminated as a donor’s situation changes.

A health care proxy is a written document, authorized by M.G.L. c. 201D, whereby a person (the “principal”) provides another individual (the “agent”) with the authority to make health-care decisions on his or her behalf in the event the principal lacks the capacity to make, or communicate, such decisions on his or her own.  By statute, the agent is given a broad mandate to act on the principal’s behalf in making health-care decisions provided that the principal is incapacitated, except that such authority is limited by any limitations expressed, orally or in writing, by the principal and that the agent is required to honor any express wishes of the principal.

A special needs trust is a vehicle to provide for the needs of a beneficiary without endangering his or her eligibility for Medicaid, social security and other government benefits.  The trustee of the special needs trust, following the provisions of the trust, manages the assets for the benefit of the disabled beneficiary in a manner that satisfies all state and federal regulations, and therefore does not disqualify the beneficiary from receiving government benefits.

In Massachusetts, a homeowner receives an automatic homestead in his or her primary residence in an amount of $125,000.00.  In addition, a homeowner can execute and record a written Declaration of Homestead, which provides a total of $500,000.00 of protection in his or her primary residence.  The Declaration of Homestead protects the homeowner’s primary residence, up to the relevant amount, from many debts and liabilities incurred by the homeowner, though there are certain important exceptions, including purchase money mortgages.

In the event that you have a three-day hospital admission and go to a nursing home for rehabilitation, Medicare will cover your expenses for up to the first 100 days. In the event that you do not go directly from a three-day hospital stay, Medicare will not pay any portion of your nursing home expenses.

There are three ways to pay for a nursing home. The first is to be a private pay patient, which would cost in the range of $9,000 to $12,000 per month. Medicare, as set forth above, will pay for the first 20 days in full of nursing home care, if you have gone directly to the nursing home from a three-day hospital stay. During the remaining 80 potential days of coverage, there is a co-payment that will be picked up by your Medicare supplemental insurance, if you have that. The final way to pay is to qualify for Medicaid benefits.

Medicare is a health insurance benefit that you receive as a result of having paid into the system over the years. It is essentially an elder health care plan. Medicaid is a welfare benefit. If you qualify under the Medicaid guidelines, both as to your income and your assets, Medicaid will pay for nursing home expenses.

Yes, Medicaid does consider your income. A single person will be allowed to keep $72.80 per month to cover their personal needs, which is everything from getting a haircut to buying a newspaper, paying for cable TV or purchasing clothing. If the individual has a Medicare Supplemental Health Policy, that individual will be able to retain enough funds to keep that policy in effect each month. The remainder is paid to the nursing home as the “patient paid amount.” If that individual is otherwise qualified for Medicaid, the state government will pay the balance of the monthly nursing home costs. If the institutionalized person has a spouse, the spouse gets to keep all of his or her income, and may, if he or she falls beneath the monthly minimum needs amount established by the state government, the community spouse may, in those circumstances, get to keep a portion of the institutionalized spouse’s income to bridge that gap to the minimum monthly needs amount.

Medicaid divides your assets into countable and noncountable assets. Typically, your home, furniture, furnishings, clothing, jewelry, automobile, annuities that are making monthly payments, a prepaid funeral and a small burial account are not counted. There are, of course, detailed rules that apply to these categories, which would take too long in this format to set forth. Typically, the rest of your assets are counted. That is, bank accounts, CDs, IRAs, 401K, cash value in life insurance policies, stocks, bonds and mutual funds, and annuities that are not currently making monthly payments, are counted as assets. An individual may keep $2,000 of countable assets. If that individual has a spouse, that spouse may keep an additional $119,220. If an unmarried individual has more than $2,000 in assets that are countable, or a couple has more than $121,220 in countable assets ($2,000 for the institutionalized spouse and $119,220 for the community spouse) then that person is ineligible to receive Medicaid, until the countable assets are spent down to the limit.

If an annuity is held as a lump sum and not paying out, it will be treated as a countable asset.  If it is paying out on a monthly basis, and the guaranteed minimum payment is no longer than the life expectancy, by certain life expectancy tables, of the recipient, then it will be considered income rather than as a countable asset.

Under certain circumstances you may do so. When you apply for Medicaid, there is a five-year look-back period. Any gifts that you have made within that five-year period cause you to be disqualified from receiving Medicaid for a period of time based on the amount of the gift you gave away. Therefore, if you have made gifts more than five years prior to your entry into the nursing home, you will not have a problem with these gifts. If, however, you have made such gifts, you will need to be a privately paying patient for a period of time until your ineligibility is exhausted.

If you are an unmarried individual, your house will not be a countable asset, as long as it is worth less than $814,000. It is, however, lienable by the state. By that, we mean that if you qualify for Medicaid, upon your death, the state will require your heirs to sell the house and pay back the state whatever the state put out for your nursing home care. In the event that you have a spouse or a child who qualifies under the caretaker/child rules, the house may be conveyed to the spouse or to the caretaker/child, and no lien will attach. The value limit remains at $814,000.

No, it does not matter. The Medicaid application requires the disclosure of all assets, no matter whose name they are held in.

Actually, that number is $14,000 per year, but that only refers to taxation and not to Medicaid eligibility.

If the asset consists of a bank account, it will all be counted as your asset, unless you can prove that the child contributed money to the account, in which case the child’s contributions will not be counted. The presumption, however, is that all of the money came from you. If you have a joint stock or mutual fund account, then one-half of that account would be counted as your asset and one-half would be the child’s asset. There is no logical explanation as to why stock accounts are treated differently from bank accounts.

No, the homestead exemption is ignored.

If your assets are put into a revocable trust, Medicaid will ignore that trust. If the trust is irrevocable, and you have no ability to receive the principal, the assets may be protected. Please remember, however, that if you have put the assets into this trust less than five years before your nursing home admission, this will be considered the same as a gift, and cause an ineligibility.

It is very complicated and the rules change periodically. It is our suggestion that you consult with an estate planning professional who specializes in Medicaid planning at Coogan Smith, LLP, in order to plan more than five years in advance for nursing home admission. If, however, you have not done any planning, and are in the crisis mode, where a parent or spouse has been admitted to a nursing home, there are still a number of techniques that can be used to minimize the impact of these rules and attain eligibility. You should consult a Medicaid Planning Specialist at Coogan Smith, LLP, in this regard.