Massachusetts Estate Planning & Asset Protection Blog

Understanding Long Term Care Planning

Posted by Dennis Sullivan & Associates on Fri, Jan 19, 2018

Facing the enormity of long term care, whether it is the financial, healthcare, emotional or psychological issues, it is so overwhelming. 

It's needs a team effort!  With the help of family, friends and our team here at Dennis Sullivan and Associates you can make the enormity of long term care manageable 

 

What exactly is "Long Term Care Planning" ? 

Here's one way to look at long term care planning: 

In today’s world, the question is no longer only, “What happens when I die?, but now we need to plan for “What happens if I live?” An estate plan covers the scenario of, What happens when I die.  But long term care covers a large variety of other factors and scenarios that sometime families forget to consider such as what happens if I live but am not healthy and have increased health-care costs and need to rely on others for assistance, either temporarily or on a permanent basis. The estate plan does not address this need. An estate plan can help you answer the first question, but a long-term care plan can help you answer both the first and second questions. Let’s put it another way. An estate plan insures that if you have assets when you die they will be passed in the manner you wish. The key word is “if.” The plan will not, however, guarantee that there will be anything left at that time to pass. Your assets could be mostly or entirely wiped out by a lengthy illness, hospital, and/or nursing home stay, leaving your spouse and other heirs with nothing.

 long Term Care and Medicaid:

I had a conversation last week with a married couple for whom we are preparing a Medicaid application. John is in a nursing home, and Mary is healthy and living at home. I explained to them that Mary can keep half of their countable assets, in their case $75,000, but that they must spend down to below that dollar amount by the last day of the month directly preceding the month we want to qualify John for Medicaid. I have had this conversation numerous times with clients in John and Mary’s situation, and know all too well that this simple instruction is not always followed. The largest part of most spend downs typically goes to the nursing home. But, as most people do, myself included, we wait until we get a bill before we pay it. If I owe you money, I’m not going to chase after you for a bill. Whenever you get around to it and invoice me, then I’ll pay it. The longer the money stays in my bank account, the happier I am. However, this can get you into big trouble and cost you tens of thousands of dollars if you wait for the nursing home bill. If we want John to be eligible for Medicaid next month and we know that he owes the nursing home $20,000 for the past two months of care, but the nursing home hasn’t yet presented Mary with a bill, it does not matter that Mary and John legitimately owe the facility the money. If that $20,000 is still sitting in their bank account next month, causing their account balance to exceed $75,000, John cannot qualify for Medicaid. Even worse than that, he can’t even qualify for next month. He has to wait until the following month, which means they will owe the facility another $10,000, leaving Mary with $65,000 to live on.


So Much to Discuss

For more information on Long Term Care Planning we encourage you 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. January sessions are filling up fast call or register on line to reserve your seat today.  

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


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

Tags: Dennis Sullivan, Elder Law, Estate Planning, Estate Planning Recommendations, Estate Planning Tip, Financial Planning, Retirement, coverage, senior, Attorney, Baby Boomers, Capital Gains Tax, GST tax, Massachusetts, New estate tax law, IRS, Massacusetts Estate Tax, Tax Savings, federal, new regulations, tax, tax reform, tax deductions, taxes, tax liability, tax exemption, New Tax Bill, Tax Bill, 2018 Tax Bill

New Tax Bill: What you need to know

Posted by Dennis Sullivan & Associates on Fri, Jan 05, 2018

How does the new tax bill affect you and your family now and in the future?

The new tax bill has officially been passed by Congress and signed by President Trump, what does this mean for us?  The answer to this depends on many variables discussed here. 

 

First of all, these changes don’t apply until you file your 2018 taxes, meaning that you won’t have to worry about the new law when filing your 2017 income tax returns this spring.  That being said, still we will be experiencing the greatest overhaul of the tax laws in more than 30 years.  The last major changes having been made under President Reagan in 1986. 

One change you can expect to see is that both corporate tax rates and personal income tax rates will drop.  There are also other changes which limit or eliminate personal deductions.   The changes that affect corporate tax rates are permanent, and the changes that affect individual tax rates and deductions are not.

Also in the new tax bill you will find a “sunset” provision, meaning that the new law – as it applies to individuals – will expire on December 31, 2025.   That is, unless Congress agrees to extend the law.  That, of course, will depend on the political and economic climate 8 years from now, including whether the economy responds the way Republicans say it will

       Now let’s take a look at the changes that are likely to affect the average senior.  Good news, the tax rates have been lowered a bit.  There are still 7 tax brackets but the rates have changed with the top rate lowered from 39.6% to 37% and the threshold at which each rate is reached has been altered. (The corporate rate reduction is much greater, from 37% to 21%).

       Some of the most significant changes relate to deductions.  The standard deduction has been doubled to $12,000 for a single person and $24,000 for married couples but personal exemptions have been eliminated.  The deduction for state and local taxes will be capped at $10,000, something that could hurt many Massachusetts residents and especially homeowners because we have high real estate and state income taxes.  


So Much to Discuss:

For the first time in decades major overhauls to the tax system are happening! This is an enormous change that can affect your estate planning and asset protection as well. Be sure to stay tuned as we will discuss more about this new tax bill in our next blog post!    

For more information 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. January sessions are filling up fast call or register on line to reserve your seat today.  

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


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

Tags: Dennis Sullivan, Elder Law, Estate Planning, Estate Planning Recommendations, Estate Planning Tip, Financial Planning, Retirement, coverage, senior, Attorney, Baby Boomers, Capital Gains Tax, GST tax, Massachusetts, New estate tax law, IRS, Massacusetts Estate Tax, Tax Savings, federal, new regulations, tax, tax reform, tax deductions, taxes, tax liability, tax exemption, New Tax Bill, Tax Bill, 2018 Tax Bill

The High Cost of Seniors Living Longer

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Sep 05, 2014

 

The Cost of Living Longer | Massachusetts Eldercare Attorney

 

 planning, estate, eldercare

 

A Pachyderm of Problems

Every day, we see clients for whom long-term care is the elephant in the room. They feel they can’t afford the costs, but they also feel they can’t afford not to have it either. So their solution is to pretend they don’t see the elephant and try to ignore the problem until it goes away on its own. This unfortunately often leads to our metaphorical elephant trampling their life savings and any future inheritance they are trying to leave behind. The older you are, the more expensive a long-term care policy gets and if you get sick before you have long-term care protection in place, it’s too late. Insurance companies are looking out for their bottom line, and an already ill senior will scare them off.

The costs for these policies are rising faster than inflation too. Therein lies the conundrum for Boomers and seniors: They’re living longer than their parents did but that means they need more money to make it through “old age”. Finding long-term care is a tough and complicated process. You’ll need to find a place that cares for people with your (or your loved one’s) circumstances. You need to find a place with the right facilities and staff, a place that leaves you with a good, safe feeling. And you have to be able to afford it too. This is not any sort of one-size-fits-all situation. Everyone has their own specific services and conditions that they or their loved ones will need met. Remember, what we call “long-term care” is a broad category, with options ranging from live-in facilities to your own home.

Lurking Complications With Long Term Care

The greatest threat to the financial security of Boomers and seniors is the cost of long-term care (and Obamacare will not assist with this). Assisted-living facilities are now climbing toward the $7,500-a-month mark. Many have started bundling more services together, rather than charging for each individually. Bundling might be a good idea from the nursing home’s perspective, but just like pre-packaged cable TV you will wind up paying for a lot of services you don’t need and don’t want. A private room at a nursing home will range from $500 - $600 a day.

The cost of home healthcare is rising, too. Some people choose independent-living apartments. These facilities typically don’t require lump-sum payments, and residents can contract with home health-services independently. Medicaid may be there for those who qualify but if you ever want to learn the true meaning of “jumping through hoops” just try qualifying! The best thing, of course, is long-term care insurance, but that’s getting more expensive too as companies raise their rates while cutting back on their coverage. In addition, this insurance is getting more complicated, now encompassing aspects such as protection of the surviving spouse, caregiver issues, scams/ID theft, and making sure you have an advocate to fight for your rights in a system that’s slanted against you.

In short, we’re living longer, and unlike previous generations, people are generally not living with or even near their children. Seniors are going to need more money for this longer life and for any unforeseen medical problems that may arise.

A Magic Trick No One Wants to See

Do you know the fastest way for a Boomer or senior couple to become an impoverished Boomer or senior couple is? Simple, one of them just needs to become ill before they get long-term care insurance. We see it every day, people who’ve worked hard and saved money all their lives are forced to see it wash away in a flood of medical bills as they age. It is truly heart-breaking, because, if you’ve managed to squirrel some money away, you could probably have afforded long-term care. 

The Downside to Living Longer

Our life expectancies are going up these days and so is the cost of healthcare, the distance seniors are living from their children and families, and the financial pressures on Medicare and Medicaid. The new Affordable Care Act, in fact, stipulates $500 billion in Medicare cuts over the next decade! Where do you turn if you or your spouse gets ill? Home health care? Adult day-care? Assisted-living? A nursing facility? Respite-care services, which allow the caregiver to drop off the senior for a limited period? Who’s going to pay for it? And for how long?  These are the questions to ask now, while you still have time to plan. If you haven’t purchased long-term care before you or your spouse become ill…forget about it. No one will insure you once you’re sick! If this happens to you, you’re going to be out of time, out of options, and very quickly out of money. And if you’ve planned to leave something for your heirs, there may be nothing left to leave to them other than a pile of bills. 

 

It’s an old (but true) cliché: those who fail to plan, are planning to fail. When it comes to healthcare expenses as you age, you fail to plan at the risk of yourself and those you love.  

 

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique 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: living will, Estate Planning, Estate Planning, asset protection, Massacusetts Estate Tax, long term care, life insurance, Medicaid, MassHealth, in-home care, marriage, Estate Planning Tip, seniors, assisted living, life-care plan, hospice, Massachusetts, assets, in home, incapacity, asset, home, surviving spouse, Estate Planning Recommendations, in-home care, long term care insurance, Inheritance

Unequal Inheritance, A Problem with Communication

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Aug 22, 2014

The Problems with Unequal Inheritance | Massachusetts Estate Planning Attorney

Inheritance, family, unequal 

Just Because It Makes Sense to You…

Sometimes clients want to leave more to one of their children than another. Their reasons may vary, ranging from their child’s current financial wellbeing, to any special needs they may have or even which of their kids is their favorite. What does not seem to change though is their concern that this may cause discord in their family once they find out.

It can be an uncomfortable subject to talk about with your family and you can never be certain how people will react, but the alternative of finding out only after their loved one has already passed, can be far more devastating. The reasons you use to make the decision of who-gets-what may be perfectly clear to you, but your children may not know what you based your decision on and they will never get a chance to ask you about it. The emotional fallout from this can rip once close-knit families apart.

 

Money Does Not Equal Love

This is because of the often mistaken tendency to equate love and money. If you leave more money to one of your children their siblings may think that you loved them more. After all, if you had some sort of logical reasoning behind the decision, why wouldn’t you have simply told them? You may have had very good reasons for why you did not talk to your children about this before but the lack of communication can have devastating effects on your family once you are gone.

 

Explanations Make Everything Easier

For example, you leave three quarters of your estate to your youngest child but only one quarter to your oldest, but you still make them the executor of your will. The older child will have a hard time not feeling resentment towards their sibling and their new responsibilities without any explanation from you. Simply explaining your reasons can go a long way towards preventing a bitter legal fight once you are gone. We recommend sitting down with all parties and explaining your reasoning to them in person. However, we know that not all families are comfortable talking about money, in those cases we recommend leaving a detailed letter explaining your reasons why you divided your estate the way you did.

Expanding on the earlier example, you may have decided to name your oldest child as executor simply because you know it will be more convenient for them to meet with your estate planner since your younger child has moved several hours away for work. Just telling your child this will lighten the burden on them. Likewise, you may have left more of your estate to your youngest because they need the boost starting their own business or because you know their financial situation isn’t as strong and they may need some help. A simple explanation can prevent a lot of needless stress from ever arising in your family.  

 

 

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, family, executor, Massachusetts, Wills, senior, Inheritance, children, unequal

Three Ways to Pay for Long Term Care part 2

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Aug 15, 2014

Three Ways to Pay for Long Term Care continued

Long term care insurance, IRA, trust

In our last post we were discussing the difficulties in funding long term care through either insurance or Medicaid.  Most insurance companies seem to be getting out of the long term care market entirely or drastically raising premiums.  Medicaid, the primary government program that covers long term care, is still a fall back for many.  But, there are gaps in terms of what it will and will not cover, and it is increasingly difficult for many to navigate the Medicaid system.

This is especially so given the two objectives most of our clients want to achieve: making sure they have enough money to meet their own needs as well as passing on a legacy to their children and grandchildren.  Without proper planning for long term care, however, the first objective may overwhelm the second, making it unachievable.

That’s where long term care insurance has sometimes helped.  It’s also where our specialty of setting up 5 year planning using trusts, has also helped.  But, sometimes there is no long term care insurance, it’s too late to get it and the legal solution can only go so far.

Self-funding with asset based long term care financial products just might be the answer.  As some insurance companies have left the long term care insurance market, others are now offering alternative ways to fund the care, such as life insurance or annuities.

These products allow your money to grow tax deferred.  It can then be used to pay for long term care and, unlike traditional long term care insurance you don’t have to worry about “using it or losing it”.  A death benefit is paid to your heirs if you don’t use it (or only use some).

The longer you wait until you start drawing out the investment, the more time to build up the account value for use as long term care.  While these investments don’t return the higher rates that can be gained in the market, they also don’t put your principal at risk, meaning you won’t lose any of it if there is another 10 to 30% market correction.  For those who have their money sitting in CDs and cash earning less than 1%, the higher rates are a clear bonus.

Many of these products do not have the same underwriting requirements that exist for long term care insurance.  Whereas a diagnosis of dementia or being age 75 or older would preclude Long Term Care Insurance entirely, these asset based products may still be an option, even as late as age 85.

For our clients with large IRA accounts who want to protect some of that account for loved ones, moving the money to a trust results in a large income tax bill because the account can no longer remain tax deferred.  However, purchasing asset based long term products within the IRA can allow the account to remain tax deferred, increase the income value significantly if long term care is needed, and provide a death benefit for your loved ones if not needed.

 

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: Nursing Home Costs, long term care, veterans benefits, VA benefit, VA benefits, Massachusetts, Nursing Home, Veteran, VA, Nursing Home, long term care insurance

There Are Three Ways to Pay for Long Term Care

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Tue, Aug 12, 2014

The Three Ways to Pay for Long Term Care

VA Long Term Care

As we always explain to people, there are 3 ways to pay for long term care:  The first way is to use your own money.  The second source is long term care insurance and the third is government benefits, primarily Medicaid and the VA Aid and Attendance program.

We have written before in this blog about government benefits, especially Medicaid.  Because long term care is so expensive and so many people run out of money, Medicaid, as a last resort, must always be considered. Unfortunately, the economy is still struggling and tax revenues, which provide the funding for Medicaid, are down.  State and Federal governments are always looking for ways to cut costs and Medicaid is likely to continue to be a target for them.  The VA Aid and Attendance benefit, which has been a help to some, is not a total solution by itself and is also likely to be more restrictive.  Of course, VA benefits have never been an option for the non-Veteran senior population.  As we see fewer World War II veterans, there are fewer Korean veterans behind them, and still fewer Vietnam veterans coming behind them.

Long term care insurance is an important piece as well, unfortunately, all too often we find that too many people don’t have it, and when they do seriously consider purchasing the insurance, just as they start to think that they just might need long term care, it’s too late. They are now too old or too ill to pass insurance underwriting requirements.

What we have also seen, and what we have written about in the past, is the change occurring as a result of an aging population and poor forecasting by the insurance industry.  Many companies have dropped out of the long term care market altogether.  Others have presented their policyholders with large premium increases with the promise of more to follow each year.  America’s seniors are faced with the choice of paying the increases or cutting their coverage.

So, what other options are there for seniors looking for coverage?  Let’s go back to the first way to pay for care, self-funding or using your own money.  We see so many seniors who fall into one of two categories:  Some have their savings heavily invested in the stock market and other investments that are too risky for someone who could need large amounts of principal to pay for long term care.  If the market drops by 25% or more again like it did a few years ago, many seniors won’t have the ability to hold on till their investments recover. Others have gone the other way and put their savings in bank accounts and CDs that earn less than 1%.  The principal is safe from market fluctuations but they are getting a next to nothing rate of return.  Coupled with Social Security and small pensions, most seniors today have income in the $2000 to $4000 per month range; not enough to meet their monthly expenses without dipping into the principal.

So, is there are another way?  The answer, happily, is yes.  With asset based long term care products, there is a way to self-fund the cost of long term care and have something left for your spouse, children and loved ones.  We’ll tell you more about it in our next blog post, so be sure to watch for it.

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: massachusetts estate planning strategies, Nursing Home Costs, long term care, Nursing Homes, VA benefit, VA benefits, Massachusetts, Nursing Home, incapacity, senior, Veteran, VA, Nursing Home, 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

Things You Need To Know About Hospital Admissions and Long term care

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Tue, Jul 29, 2014

 

Medicade Estate Planning Asset Protection

 

The Bad News: The Three Midnight “admission” Stay Requirement Can Destroy Medicare Coverage for Rehab (the cost could be from $8,000 to 10,000 a month)

 

Alas, notwithstanding all the controversy about the Three Midnight Stay Rule (That you must be on “Admitted” status not on “Observational” status) to qualify for the subsequent Medicare coverage, we still do not see any relief.

 

There is legislation pending to change this so that people are very clear as to when they are on admission status versus observation status, the latter of which does not qualify towards the Three Midnight Stay required by Medicare for coverage in a subsequent rehabilitation center. This has surprised, shocked and disappointed a large number of seniors. Don’t let it happen to you!

 

The Good News: The Old “Improved Standard” for Medicare Coverage is out and the new “Maintain Standard” is in!

 

As a result of the recent court decision in Jimmo v. Sibelius that was decided in 2013, Medicare clarified that maintenance coverage under the skilled nursing. Home health, skilled therapy and outpatient therapy benefit does not depend on whether the patient can improve. Eligibility for Medicare depends solely on whether skilled care is required and whether the actual services are reasonable and necessary.

 

This means that you no longer need to demonstrate that you will be improving every day during treatment. With chronic diseases such as MS, Parkinson’s and other health matters, improvement may not actually be possible. However, healthcare providers humanely try to help patients maintain and sometimes this maintenance is dependent on their skilled care. Now, as decided in the class action lawsuit mentioned above, you will qualify for Medicare.

 

Clients and patients should be made aware that they may request a review for all Medicare claims for skilled care or therapy denied before January 13, 2011.

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, MassHealth, Estate Planning Tip, elder care, elder care journey, Massachusetts, Elder Law, Estate Planning Recommendations, Massachusettes, 2014

The Bank Says I Need Guardianship For My Parents

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Thu, Jul 10, 2014

Estate Planning, POA

 

The bank told Jane they would not honor her parent’s power of attorney (POA),  designating her as agent.  They instead insisted she would need to apply for guardianship.  Last time, I told you that the bank’s position violates Massachusetts law.

Why?  Because they did not have a specific reason for refusing to honor Jane’s POA.    Instead they said they won’t honor any POA s which are not one of “their own”.  Massachusetts’s law on powers of attorney specifically states that “banking institutions shall accept and rely on a power of attorney which conforms to this act and shall permit the agent to act . . . provided that the banking institution shall refuse to rely on [the POA] if (1) the signature of the principal is not genuine, or (2) the employee of the banking institution . . . has received actual notice of the death of the principal, of the revocation of the POA or of the disability of the principal at the time of the execution of the POA.”    The bank is not obligated to rely on the POA if it believes in good faith that one of these reasons is present.

The  statute goes on further to state that if the bank refuses to honor the POA, it must provide in writing the reason for its rejection to the address provided to it by the agent.  In Jane’s case, the bank has not acted in good faith.  Jane’s parents are still alive.  The bank has no basis to believe they revoked the document or that they were disabled at the time of the signing (that they lacked the legal capacity to sign).  Her parents signed the documents in my office and I notarized them so it is clear the document is genuine.

As I said, the bank isn’t using any of those reasons.  But, the law doesn’t allow it to reject the POA for any other reasons.  I asked Jane for the phone number of the person at the bank she had been dealing with.  When I called, that person put me in touch with someone in their legal department.  Sure enough I got the same explanation of their “policy”.    When I pointed out the language in the statute and that if we had to pursue guardianship, we would ask the court to order the bank to pay all attorney fees and court costs associated with an unnecessary legal action, he started to back pedal.  “Maybe we can accept the POA,” he told me.

After an internal conversation within the bank, he called back and said everything would be OK.  Jane would be able to access her parent’s account using our POA.  Of course, it shouldn’t have been this difficult.  The law is pretty clear on what a bank can and can’t do.  But, the bank was looking out for its own interests in this case to the detriment of its customer.   They are concerned about potential fraud.  Requiring a court ordered guardian to be appointed in each case covers the bank.  But the bank imposed a more restrictive process than what the law requires.  What they can’t do is make their own rules if those rules violate state law.

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, durable power of attorney, Massachusetts

What To Do When Medicaid Comes For You Part 2

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Wed, Apr 09, 2014

Medicaid, Masshealth, Estate Planning

Last time I was telling you about Noah’s problem with Medicaid.  After his Dad died he received a Medicaid estate recovery letter from the State of Massachusetts looking to recoup $150,000 in benefits.

He was not happy when I explained to him that under Medicaid rules they are owed that money.  When Noah purchased Dad’s house, he did not pay fair market value for it.  That’s because he reduced the purchase price by $300,000 to pay for repairs and upgrades that benefitted Noah, not Dad.  In essence, Dad made a transfer for less than fair value which is subject to a Medicaid penalty.

So, why then did Medicaid approve the application and pay for Dad’s care for 3 years?  Because the state never came back to check on whether the home was sold.  Remember I told you that Noah first put the home on the market to try to sell it so the State processed Dad’s application and approved it.  They just never checked backed to see the status of the sale until after Dad died.

It’s never easy telling someone they have a $150,000 bill to pay but Noah was actually financially much better off than had he sold the home for fair market value before applying for Medicaid.  If he sold the home and netted $300,000 for Dad before he applied for Medicaid, then that money would have been spent on Dad’s nursing home care at a rate more than double what the State was paying.  In approximately 2.5 years the money would have run out, at which time Noah would then have filed a Medicaid application.

Instead, he applied for Medicaid before the house sold.  Once Dad died Massachusetts came looking to be reimbursed but for only half of what Dad should have netted from the house sale, which means Noah can keep the rest.  He also received what is the equivalent of an interest free loan, since the State is not charging him interest on the money it paid out in benefits.

With all the improvements he made, Noah told me the home is now worth probably $600,000 or more.  If he doesn’t have the cash to pay the State, he can take a mortgage on the home.  And again, he is still $150,000 ahead.

I knew it would take time for it to sink in but I told Noah he was lucky.  What it did end up to be the best move from a Medicaid standpoint.  He just didn’t know it at the time.  Noah’s story is a cautionary tale.  He went through the Medicaid system blindly and, albeit, with a repayment of $150,000 to Medicaid, it turned out OK.  It certainly could have been a lot worse.

Keep in mind that each situation is different.   What was the right move for Noah and his Dad may not be the right one for the next person.  Each situation has its unique set of facts and circumstances and is why I always tell people there is too much at stake to try this on your own.

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: Medicaid, MassHealth, Massachusetts, Medicaid penalties, 2014

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