Estate Planning Bits

MA at-home (community) spouse can now keep more money when a spouse is institutionalized

Finally, we have some good news in Massachusetts for an adult who is healthy and living at home with a spouse who is not so healthy and living in a nursing home. After significant lobbying with the Massachusetts Legislature, the National Academy of Elder Law Attorneys Massachusetts Chapter with other senior groups, was able to convince the legislature to include in the budget the right for an at-home, community spouse (CS) to keep $99,540.00 regardless of the amount of money the couple had before one was institutionalized

For some time in MA, in the event that a person entered a nursing home, the CS was entitled to keep one-half (½) of the assets, up to $99,540.00 (the amount for 2006 as adjusted every year on January 1). Therefore, if a couple had $100,000.00, the CS was entitled to keep $50,000.00 and the institutionalized spouse (IS) was allowed to keep $2,000.00. Thus $48,000.00 would have to be spent on the IS’s care.

Under the new provision, the CS can now keep the full $99,540.00. Therefore, if a couple had $100,000.00, the CS would be able to keep $99,540.00, and since the IS is entitled to $2,000.00, they would be able to keep their entire amount of liquid savings. Despite the fact that the Governor vetoed this increase, through significant lobbying, the Mass House and Senate have overridden the veto.

The $99,540.00 is in addition to other funds that may be kept such as burial accounts, prepaid funerals, or spend-downs on necessary expenses for either the CS or the IS. This is a major victory for the elders in Massachusetts.

In the event that any situation occurs at the time when the CS is spending down funds for the IS’s care, there should be an immediate review of the circumstances to protect as much CS funds as possible.

The override of the veto was to be effective for the fiscal year beginning July 1, 2006, but the Division of Medical Assistance, that administers the Medicaid program in MA, has yet to establish a procedure and adjust for the allowance of this amount. Therefore, case workers may have to perform a manual calculation to provide the CS with the larger sum.

It is important to note that the amount of $99,540.00 is for countable and accessible assets, and there are some assets that may not be allowable. In addition, there are assets such as the home which do not enter into the equation, so it is best to speak with a qualified estate planning attorney.

While this law is now effective in MA, it is hopeful that other states will take note of the benefit that may now be approved by a state legislature, and they will make the change that permits the at-home spouse to have a larger sum in the unfortunate event that their spouse is institutionalized.

By: Hyman G. Darling, Esquire

Unlocking the Mystery of Trusts

Revocable trusts, also known as an Inter-Vivos Trusts or Living Trusts, are among the most useful estate planning tools for the management and distribution of family assets. Trusts serve a wide range of functions and may be appropriate for a variety of family financial circumstances and goals.

A common misconception is that Trusts are only for the super rich. Actually Trusts can be used in variety of different circumstances, and are fairly simple to draft with assistance from counsel. They are a powerful way to manage assets.

Forming a trust consists of several steps.

1. There is a Grantor, the person who creates the trust.
2. The trust is funded, which means, the Grantor’s assets are placed into the trust. Assets can be stocks, bonds, mutual funds, real estate, bank accounts, etc.
3. The trustee(s) accept the responsibilities as expressed in the Trust document. The trustee can be the Grantor during his or her lifetime.
4. There is the Trust itself, which contains dispositive provisions to tell the trustee how to manage the investments and how to distribute income or principal to the beneficiaries. This is the roadmap detailing how your property is distributed.
5. There are the beneficiaries who are chosen to benefit from the trust. This is typically the Grantor during his or lifetime and family, friends or charities upon the Grantor’s death.

There are a number of helpful functions that trusts can perform.

1. They can help with business succession when it is desired that certain
   parties run the business and others benefit from its gain.


2. A trust can assure continued management of a business or personal finances.


3. It can direct the trustee to provide full management in the event of incapacity.


4. Assets held in a trust avoid probate and its delay and cost.


5. Dearly loved pets can be cared for upon death or incapacity.


6. The trust can be part of overall estate planning and allow for control
   of assets even after death.

A trust has a number of beneficial attributes. The trust, and therefore its assets, can be professionally managed if you name a bank or trust company as its trustee. Certain tax benefits can be gained, especially for married couples. Financial privacy is maximized when your estate avoids the public process of probate. The only downside to the trust is the initial legal fee and the trustee’s administrative fee, if applicable. Therefore, you should give serious consideration to implementing one of the most useful tools ever devised for the management and distribution of family assets, a Trust.

By: Brett A. Kaufman, Esquire

Long–Term Care Insurance – can you afford to be without it?

Of all Americans who are aged 65 or older, approximately 43% will enter a nursing home during their lifetime. Given that the average nursing home cost equals approximately $88,000 per year, and that the average nursing home stay will last about 2 ½ years, recognizing and planning for this need is very important.

Ongoing long term care expenses are not covered for by Medicare or Medicare Supplemental Insurance. While Medicare may provide benefits for a short time period, the bulk of costs are paid directly from the pockets of those in need of care. Once an individual is unable to pay, they may then qualify for the government welfare program known as Medicaid, which pays for ongoing long-term care costs. In order to qualify for Medicaid, clinical and financial criteria must be met.

Securing long term care insurance can alleviate the draining of assets and provide increased financial stability. A wide range of policies are available, with unique combinations of benefits and pricing structures. For example, some policies will pay for assisted living or home health care expenses, thus increasing one’s long term care options. These options can include a live-in caregiver, companion, housekeeper, therapist or private-duty nurse up to 7 days a week, 24 hours a day.

Additionally, many policies provide that if long term care benefits are not used, the premium may be refunded or applied as a death benefit.

Although this may be a difficult issue to address, taking the steps necessary to prepare for a possible future catastrophic illness will help protect you and your family from substantial medical costs.

By: Gina M. Barry, Esquire

Contesting a Will

Many people believe that if they are unhappy with the dispositions made in a Will, they have sufficient grounds to contest the Will and change the distribution of the estate. This is not the case.

While unhappiness alone is not sufficient, there are various grounds upon which a Will may be successfully contested. Knowledge of these grounds is crucial when deciding whether a Will contest should be undertaken. The most common grounds for challenging a Will include lack of mental competence, undue influence and fraud.

With respect to mental competence, the question is whether the person making the Will was of sound mind at the time the Will was executed. When determining whether a person had the requisite capacity to execute a Will, the Court considers whether the person had the ability to understand and carry in his mind the nature and situation of his property and his relations to persons who would naturally have some claim to his remembrance.

If those basic understandings are lacking, then there is no legal ability to sign a Will, and the Will may be successfully challenged; however, a successful challenge requires securing the opinion of a physician as to the mental condition of the person who executed the Will at the time it was executed.

When contesting a Will using the theory of undue influence, the person challenging the Will must prove that coercion has taken place. Whether mental, physical, or moral, the coercion must overtake the sound judgment and genuine desire of the person making the Will. In order to prove undue influence, the person contesting the Will must show that:

1. An unnatural disposition has been made
2. By a person susceptible to undue influence to the advantage of someone
3. With an opportunity to exercise undue influence, and
4. Who in fact has used that opportunity to procure the contested disposition through improper means.

Undue influence often occurs in private. As such, it is usually very difficult to prove.

A Will may also be contested based upon fraud. Proving fraud requires evidence that the person making the Will was affected by a false representation of fact. Further, the false representation must have induced the person making the Will into executing the Will.

For example, a document is placed in front of the person making the Will and they are told that it is their Will as they reviewed it prior to signing; however, it is not that Will, it is a revised version with different provisions. The person relies on that representation and executes the Will fully believing that they executed the Will they intended to execute and not a revised version.

Contesting a will is never an easy task, emotionally or legally. Understanding the grounds for challenging the validity of a Will is the first crucial step when deciding whether to proceed with a challenge.

By: Gina M. Barry, Esquire