Massachusetts Estate Planning & Asset Protection Blog

Does Massachusetts Homestead Protect From Nursing Home Costs?

Posted by Wellesley Estate Planning Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Thu, Aug 25, 2011

 

The Question: Homstead...Protection?

Q: My 93 y/o grandfather who is in good health moved in with my family 9 months ago. My (absentee) Brother and I are the only heirs. My husband and I are Homestead Asset Protectionpurchasing a new home to increase space for our new family.  He wants to give us 200k toward the house and to spend down a portion of his cash savings. Should we include him on the deed and homestead him or simply receive as a "gift"? My husband and I are financially independent and while we appreciate the gift, we do not need the gift to purchase new home.

The Answer: Homestead in Massachusetts

A: There is a 5 year look back period for Medicaid.  Any asset transfers, including gifts, made within this 5 year look back window will trigger a penalty period of ineligibility to receive Medicaid benefits.  There are ways to avoid triggering these penalties but an outright gift is not one of the ways. 

 As an example of the problem with making an outright gift, if your grandfather gifts to you $200,000 today and in 3 years requires skilled care, the gift of $200,000 will render him ineligible for Medicaid benefits for a significant period.  During the period of ineligibility he, or you, will have to pay for any nursing home care.

 

In Massachusetts, the homestead protection will not keep your grandfather’s $200,000 from the reach of nursing homes, but a primary residence is often an exempt asset for Medicaid (Mass Health).  In Massachusetts however, the nursing home or skilled care facility will be able to put a lien on your home if you use a portion of his $200,000 gift to purchase the home and put his name on the deed.  

If your grandfather is truly seeking to protect assets from the reach of nursing homes, setting up an asset protection trust is often the recommended option.  Creating an irrevocable trust starts the 5 year look back clock as soon as the trust is funded.  Once the property is in the trust, your grandfather can make any type of gift or transfer he so chooses without “resetting” the 5 year look back period.  In addition the irrevocable trust allows your grandfather to protect ALL of his assets while allowing access to income.  As another added benefit, your grandfather’s life savings will be left to his loved ones without the need for probate. 

Take the crucial 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: Estate Planning, Elder Law, homestead protection, asset protection

New Massachusetts Homestead Law

Posted by Dennis Sullivan & Associates on Mon, Feb 28, 2011

On March 16, the new homestead law took effect in Massachusetts.  The new law signed by governor Deval Patrick in 2010, clarifies and strengthens the existing MA homestead law.    

Here is a quick rundown of the new law:

1. Even if you don't file a homestead exemption, you get some protection. All MA homeowners will receive an automatic homestead exemption of $125,000, this protects against certain creditors claims on their principal residence.

2. If you file a homestead exemption, you get more protection. MA homeowners that file a declared homestead exemption, are eligible for a $500,000 homestead exemption.  

3. Homestead protection is now available for 2-4 family homes, and for homes in trust.

 4. If you have a homestead as a single person, and later become married, the homestead automatically protects your new spouse.

5. You do not have to re-file a homestead after a refinance.

6. For married couples, each spouse will not have to sign the declaration of homestead.

 For more information, see the Secretary of State's website for a brief summary of the new law. To read more, check out the recent Boston Globe article: New Law Clarifies Mass. Homestead Protections.

Of course, protecting your home with a homestead declaration is a step in the right direction for protecting your assets.  At Dennis Sullivan & Associates, we help people protect their families, homes, life savings, and assets from the rising cost of nursing home and health care. To find our how you can protect your home, family and life savings, reserve your seat at a free Trust, Estate and Asset Protection Workshop in Wellesley.

Tags: 2011, homestead protection, asset protection

New Federal Case Law Provides Opportunities For Increased Protection for Massachusetts Homeowners and Their Families

Posted by Dennis Sullivan & Associates on Thu, Jun 10, 2010

                              

 

A new case decided by the federal bankruptcy court in Massachusetts will provide the opportunity for increased protection for Massachusetts homeowners who have a trust and would like to have that trust own their home to avoid probate, minimize taxes or plan for disability and protect their home for themselves and their family. Especially in 2010, with the rollercoaster of the financial markets and tax changes, protection of the home and other assets is more important than ever.

 

Until recently in Massachusetts, it was not possible to have homestead protection for your home in a trust due to an old State Appeals Court case. People had a difficult choice to make—did they want to take advantage of homestead protection or the tax savings and probate avoidance of their trust? Unfortunately, the state law made it impossible to do both, since trust property was not eligible for homestead protection if the deed to the trust was recorded. Now, with the new federal case, people can get both trust and homestead protection, but it is critical to review your documents and make sure you will qualify for both based on the new law.

 

We have unique workshops to review this opportunity as well as other trust, estate and asset protection improvement opportunites. To learn more, register for a workshop.

 

In Massachusetts a homestead can protect up to $500,000 in equity on a primary residence from lawsuits, creditors or bankruptcy! However, a homestead won’t protect you if you or your spouse needs nursing home care. If you are concerned about rising nursing home costs (currently averaging $12,000 per month or about $150,000 a year and rising), learn about additional steps that will protect not only your home, but your life savings, your spouse and your legacy. To watch videos on how to avoid nursing home poverty click here.

 

If you are unsure about your homestead protection, now is the time to review whether or not your homestead is effective.  Another major change people need to be aware of is the 2011 Federal Estate Tax scheduled to affect estates over $1 million at a rate of 55%.  Now is the time to review your estate plan for important tax savings opportunities.

 

Review your plan to see if it protects you, your spouse, your home as well as your life savings for your children and grandchildren. Call us at 781-237-2815 to set a time to review your planning. If you waited to record your trust deed to your home or if you recorded the deed and gave up your homestead, or did not record at all, it is time to take a second look!

 

We have also helped many people with our unique 19 point Trust, Estate and Asset Protection Review. You can  also sign up online to reserve a seat at an upcoming workshop where we will review the current asset protection laws, major tax changes and how you can begin the 19 point Trust, Estate and Asset Protection Review of your existing plan. 

 

If you take control of your planning, your family will avoid nursing home costs and eliminate the IRS from being a major beneficiary of your estate.

Tags: Massachusetts estate tax, Nursing Home Costs, homestead protection, asset protection

Sign-Up Below To Receive Your Free Report

Follow Me

Browse by Tag



Follow DennisBSullivan on Twitter