Planning for Life

By Harry S. Margolis

A common MassHealth planning technique for spouses of nursing home residents to protect assets is to purchase a qualifying annuity to shelter their assets above the spousal asset limit of approximately $130,000. (Read our legal guide Using Annuities for MassHealth Planning for Nursing Home Residents.) In order for such purchases not to be treated as a disqualifying, transfer it must be "actuarially sound" and it must name the Commonwealth as the remainder beneficiary "for at least the total amount of medical assistance, paid on behalf of the institutionalized individual."

By Harry S. Margolis

Life estates have long been a prime long-term care planning device for protecting the home from MassHealth estate recovery because they're quite simple to create. MassHealth recently changed its rules in terms of how it measures life estates when they are created or when property held in a life estate is sold.

What is a Life Estate?

A life estate is a form of joint ownership of real estate where ownership interests are divided by time. The so-called "life tenant" has the right to occupy the property during his or her life and to collect any rental income earned from the property. The life tenant also has the obligation of maintaining the property.

By Harry S. Margolis

Applicants for MassHealth who have done advance planning involving sheltering assets in irrevocable trusts have been plagued by MassHealth denials of eligibility based on specious legal arguments. This results in fair hearing and court appeals that can sometimes take years. Two of our clients recently received favorable resolution of their cases before the MassHealth Board of Hearings.

By Harry S. Margolis

Most married nursing home residents can obtain MassHealth coverage by using excess assets to purchase a qualifying immediate annuity. Rather, to be totally accurate, it's the spouse of the nursing home resident who must buy the annuity. The reason this works is that while MassHealth imposes limits on the amount of assets the nursing home resident and his spouse may own, there's no limit on the healthy spouse's income. This can be an important device to protect the financial security of spouses of nursing home residents.

By Harry S. Margolis

Two recent cases decided by the Supreme Judicial Court, Morse v. Kraft (466 Mass. 92, 2013) and Ferri v. Powell-Ferri (476 Mass. 651, 2017), have confirmed and arugably expanded the power of trustees to transfer trust assets to new trusts to better carry out the goals of the trust grantors in creating the trusts in the first place. The Ferri case permitted the trustee to transfer funds into a new, more restrictive trust even though the trust beneficiary had the right to withdraw the funds from the original trust, since the trustee had the power to distribute the funds to other beneficiaries.

By Harry S. Margolis

Everyone who is retired or considering retiring faces the question of whether they have enough money, especially now that few people have pensions that pay for life. This involves a number of unknowns, including how long they'll live, their investment returns and their living costs. But the biggest uncertainty is whether they'll need long-term care.

The Query

Following are excerpts from an email I recently received from a long-time client:

The only thing that frightens me is that I will run out of funds sooner than later. Let me reassure you first of all. I feel fine, in fact I’m in very good health, active, living independently, driving, traveling, socializing, etc etc. I’m now 88 years old (89 in January) and people “can’t believe how well I look”!

By Harry S. Margolis

In his most recent personal finance column, New York Times reporter Ron Lieber addresses "The Ethics of Adjusting Your Assets to Qualify for Medicaid." As Lieber explains in this and prior articles, Medicaid has become the primary source of payment for long-term care services in the United States. But it is essentially a health care program for the poor and has set asset, and sometimes income, limits for determining if someone is poor enough to qualify for benefits.

By Harry S. Margolis

In its long-awaited decision in the Daley and Nadeau cases released on May 30th, 2017 ( Daley v. Secretary of the Executive Office of Health and Human Services (Mass., No. SJC-12200, May 30, 2017) and Nadeau v. Director of the Office of Medicaid (Mass., No. SJC-12205, May 30, 2017)), the Supreme Judicial Court rules that MassHealth cannot count assets owned by irrevocable trusts as available to an applicant for MassHealth unless and only to the extent the trustee may distribute principal to the applicant or his or her spouse. MassHealth had argued that the right of the applicant or his or her spouse to use and occupy a residence owned by a trust makes it available and countable. 

By Harry S. Margolis

I recently received the following inquiry from a colleague:

I’m working with a client whose mother has been self-pay in a nursing home for several months as she spends down her savings. They applied for MassHealth in January and they anticipate she’ll run out of funds by mid-March. There’s the possibility that they will incur a penalty period since in June 2012, their mother gave about $80k to her daughter.

My understanding is that the lookback period is 5 years and that period begins on the date the application was filed, as opposed to when she will become eligible for Medicaid once her money is spent down. Is that understanding correct? The family just needs to know what to expect and is considering asking the sister to recoup the cost but wish to avoid undue conflict if possible.

By Harry S. Margolis

A life estate is a deed that divides ownership by time. The "life tenant" has full rights to the property during his life, but at his death full rights pass to the "remaindermen." Both the life tenant and the remaindermen are owners of the property, but their interests are different.