Massachusetts Estate Planning & Asset Protection Blog

Can Your Will Protect You When You Don't Die?

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Thu, Aug 07, 2014

 

What Happens When You Don’t Die?

medicare, medicaid, wills, spouse

 

Is your “I love you” will capable of protecting you or your spouse from long-term care costs?

You know the kinds of wills we’re talking about: The husband leaves everything to the wife, the wife leaves everything to the husband and after they both die, everything goes to the kids. This works well in situations where the spouses are healthy one day and are deceased the next. 

However, as most of us know, life usually doesn’t work that way very often. Research indicates that nearly 70% of individuals over 65 will require some kind of long-term care in their lifetimes.

Thus, many spouses worry that if they predecease an ill spouse who is currently in a nursing home or will require long-term care at some point in the near future, there will be insufficient funds available to provide for their institutionalized spouses’ needs. This is an especially relevant concern for expenses that are not covered under Medicaid such as: care managers, private nurses, single rooms, as well as certain therapies and drugs.

Another concern is that the availability of funds from “I love you” wills and trusts will disqualify the surviving ill spouse from eligibility for Medicare benefits. As you know from prior articles, Medicare (MassHealth in Massachusetts) is the only long-term-care governmental program in the United States and does not cover long-term custodial care.

To solve this problem many of our clients rely on a “testamentary trust”. This is a trust built into the will of each spouse. For many estate planners, this is counterintuitive because much of the estate planning occurs within the context of a revocable living trust. In order to preserve access to Medicaid eligibility without requiring that the surviving spouse spend down the assets and lose the chance to maintain a “rainy day fund”, creating a testamentary trust in the will of the pre-deceasing spouse is essential.

What this means is that around age 55, you have to completely revise your wills and trusts to accommodate a different paradigm of thought. The thinking process is no longer “What happens when I die?” Now the question becomes “What happens if I don’t die and live a long time with expensive long-term care?”

The new paradigm requires a new estate plan. If you consider yourself middle-class (meaning that your net worth will be significantly impacted by the cost of long-term care for you and/or your spouse) and are over age 55, we suggest that you revise and update your estate plan to reflect your current and future needs as soon as possible.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

 Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: will, living will, Estate Planning, Estate Planning, Alzheimer's Disease, Elder Law, asset protection, long term care, Medicaid, in-home care, Health Care, estate reduction, estate, elder care journey, hospice, Alzheimers Disease, medicaid qualification, Wills, assets, Medicaid penalties, alzheimer's activities, in home, incapacity, Elder Law, Attorney, myths, Alzheimer's, alzheimers, financial, Attorney, income, Alzheimer's, federal, health, surviving spouse, in-home care, long term care insurance

Great News About Long Term Care Planning for You and Your Loved Ones

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Aug 01, 2014

More Good News: Estate Planning and Long-Term Care Planning

 Medicare family

Our firm has helped people and their families with long-term care planning for more than 20 years. While helping people, it is very important to help focus  on the health, long term care and estate and life planning needs for the individual and family. This is a holistic approach that helps families plan for obtaining the best quality care in their home, the community or perhaps assited living. Many people we help are also concerned  about the devastating cost of a Medicaid spend down of assets due to a long-term nursing home stay.

 

We have also had other success in Medicaid crisis planning relying on other strategies that are available in Massachusetts law,unlike some other states, that allow  citizens to pay part of their costs with their assets and eventually qualify for long-term care assistance to the Medicaid program.

 

Some people also have a long-term care insurance policy to help pay fort care at home, in the community and many times their plan will even will provide a care coordinator. Thus, we do recommend you contact your insurance advisor to look into the possibility of obtaining long-term care insurance while you can still qualify under medical underwriting.

 

If any of these topics concern or interest you please contact our office at 781-237-2815 to consult with our attorneys or request a copy of our Seniors and Boomers Guide to Health Care Reform & Avoiding Nursing Home Poverty for $14.95 or is available from www.DSullivan.com. We would be happy to be your guides on your Estate Planning/Elder Care journey.

 

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: Estate Planning, Estate Planning, Elder Law, asset protection, long term care, Medicare, durable power of attorney, estate reduction, Estate Planning Tip, estate, estate tax, Massachusetts, senior, Medicare, asset, Estate Planning Recommendations, Dennis Sullivan, long term care insurance

Avoiding Massachusetts Estate Taxes, NOT Just for the Rich

Posted by Wellesley Estate Planning Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Aug 19, 2011

When you pass away, who do you want as the primary beneficary of your estate, your loved ones or the government?

Estate Tax Facts

Many people, as you may guess, do not want their life savings and legacy to be swallowed by estate taxes.  What most people are not aware of however, is the fact that if they passed away today their heirs would be forced to pay state and federal estate taxes, even if the deceased is far from what most would consider "wealthy".  They also do not realize that an experienced estate planning attorney can help them AVOID taxes ENTIRELY.  

Massacusetts Estate Tax

Massachusetts taxes every dollar in an estate above the $2 million threshold, recently increased from $1 million.  What Estate Tax this means is in an estate worth $2.5 million dollars, $500,000 will be subject to a Massachusetts estate tax.  Many are concerned with budget cuts and sweeping reform that state legislators will consider dropping the tax exempt amount, thus subjecting more estate to a tax.  within the last 10 years, the federal estate tax exemption, which now stands at $5 million, has been as low as $675,000.  

If your current estate exceeds the state and federal tax exempt amount, without proper planning you can expect to lose 50 cents of every dollar to the government. 

You may be reading this, thinking that your estate is not in jeopardy of being destroyed by taxes because you are well under the exemption amount.  You may think your estate is well under, but there are several catagories of non-obvious wealth you need to include in your estate valuation.  The most common of these are life insurance death benefits and retirement accounts such as 401(k)'s and IRA's.

An Example on the Impact of Estate Taxes

Person A is married, has 2 college age children and belives his estate to be worth $700,000.  Person A failed to take into consideration his IRAs and life insurance policies.  Believing their net worth to be well below the $2 million Person A and his wife executed simple wills with no consideration paid to tax planning. 

Tragedy stirkes and Person A dies.  After his death his wife collects a $2 million life insurance benefit and his $500,000 IRA.  In another tragic turn, Person A's wife dies shortly after him.  Their estate, which they believed to be under the Massachusetts exempt amount, is now worth $3.2 million, leaving $1.2 million subject to estate tax, even if the state and federal thresholds are not lowered.

Avoid Massachusetts Estate Tax

Luckily, many people like Person A and his family can completely avoid paying any estate taxes.  To take steps to protect your life savings from the reach of state and federal estate taxes, register online to attend a free educational workshop hosted by Dennis B. Sullivan, Esq, CPA, LLM or by calling 800-964-4295 (24 hours a day).  You can also check out Free Elder Law Guides developed by the team of professional at Dennis Sullivan & Associates.  By planning now you can save you and your family the stress of having to worry about the future. 

Tags: will, Estate Planning, trusts, Estate Planning, Massacusetts Estate Tax, Baby Boomers, Tax Savings, estate reduction, legacy, elder care, budget cuts, tax deductions, tax liability, estate, estate tax, tax exemption, tax reform, taxes, Debt Ceiling, 2011, Massachusetts estate tax

Grandparents Can Help Their Family With College Bills

Posted by Dennis Sullivan & Associates on Mon, May 09, 2011

If you are a grandparent wanting to help your grandchildren with the future costs of college tuition, pay attention now. Recent tax changes are making it easier for you to help pay education bills for your grandchildren – and even future generations. The generous exemption increases in the federal gift and generation-skipping taxes are in effect now through 2012. Most experts believe this federal generosity may be short-lived, so now may be an excellent time to plan.

Tuition rates are rising steadily, and helping your grandchildren (or great grandchildren) obtain a good education without the burden of hefty loans is an excellent way to give them a “leg up” in the world. Finding a tax-savvy way of doing it is even better – especially for you!

Directly paying tuition is the simplest technique, and the most efficient. A grandparent is allowed to pay an unlimited amount of their grandchild’s tuition directly to the school without incurring the gift tax or eating away at their gift tax exemption and, if you’re looking at a school like Harvard, this also could be a potent estate reduction technique. Some schools also allow you to pay upfront for all four years, lock-in tuition rates, and avoid future increases (pre-paying tuition does not guarantee admission).

A less direct route comes in the form of 529 college-savings plans, by which you plug money into a trust especially designed for education. The advantage here is that the 529 plan can outlive you, and for that reason can serve as the better model if you are funding a toddler’s future education. This grants greater leverage but there are, of course, tax liability and ownership issues. For more information, download our

Attending one of our Trust, Estate & Asset Protection workshops is a good starting point, but you are well-advised to seek competent counsel before giving away any assets or establishing any type of irrevocable planning.

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Tags: estate reduction, college planning, 529 plans, family

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