FAQs – The Law Office of Stephanie Konarski

Please be advised that the following information is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation.

What is elder law?

Elder law is defined by the client to be served rather than being defined by technical legal distinction. A lawyer who practices elder law may handle a range of issues but has a specific type of clientsâ€”seniors and disabled persons. Elder law attorneys focus on the legal needs of the seniors and disabled persons, and work with a variety of legal tools and techniques to meet the goals and objectives of the older and/or disabled client. Under this holistic approach, the elder law practitioner handles general estate planning issues and counsels clients about planning for incapacity with alternative decision making documents. The attorney would also assist the client in planning for possible long-term care needs, including nursing home care. Locating the appropriate type of care, coordinating private and public resources to finance the cost of care, and working to ensure the client’s right to quality care are all part of the elder law practice.

Why hire an elder law attorney?

Legal problems that affect seniors are growing in number. The laws and regulations are ever changing and becoming more complex. It is important for attorneys dealing with seniors to have a broad understanding of the laws that may have an impact on a given situation, to avoid future problems. Elder law attorneys have the specialized skills and knowledge to help their clients plan for long-term care and for incapacity. They can also help clients create wills, trusts, durable powers of attorney, health care proxies and other estate planning documents. In addition, elder law attorneys can help clients with issues revolving around public benefits, such as Medicaid, Medicare and Social Security. Elder law attorneys know about the applicable consequence of transferring assets. They can also help refer you to other resources and services available to the elderly.

What is Medicare?

Medicare is a health insurance program run by the Federal government which offers limited coverage for skilled nursing care in a nursing home to allow rehabilitation and assessment of ongoing needs after a hospitalization lasting at least three days. Medicare pays for the first twenty (20) days of skilled nursing care after discharge from an acute-care hospital, and then covers a portion of the cost of nursing home coverage until either the patient completes rehabilitation and is discharged from the nursing home, or an outside reviewer “deskills” the patient by determining that the patient will not see further benefit from a rehabilitation program. In either case, Medicare will make co-payments for a maximum of eighty (80) additional days, while the patient’s Medex or Medicare HMO coverage would pick up most of the co-payment until Medicare terminates its skilled nursing care benefits. If the patient remains in the facility, the cost will be covered either by the patient’s own funds or from long-term care insurance until he financially qualifies for Medicaid.

Who determines if I am eligible for Medicare?

The Social Security Administration is charged with making eligibility determinations. If you meet the age eligibility requirement, or are applying on the basis of disability or end-stage kidney disease, then eligibility simplyrequires name and age identification.

When should I apply for Medicare benefits?

You may apply for Medicare benefits three months before your 65th birthday.

If I apply for Medicare during the General Enrollment period, will Medicare coverage start immediately?

No. If you enroll during the General Enrollment period, your Medicare coverage will begin on July 1st of that year.

What benefits do I receive under Medicare Part “A”?

Medicare Part “A” pays for inpatient hospital care, limited post hospital skilled nursing care, home health care, and hospice care.

What benefits do I receive under Medicare Part “B”?

Medicare Part “B” pays for doctor’s fees, lab fees, home healthcare services, or other medical services or items not covered under Part “A”. When you apply for Part “A” Medicare you will automatically be enrolled in Part “B”. It is important to know that Medicare Part “B” pays only 80% of approved services, leaving the remaining portion to be paid by you or your Medigap policy, if you have one.

What doesn’t Medicare pay for?

Medicare does not cover most nursing home care; dental care and dentures; routine checkups and the tests directly related to these checkups (some screening, Pap smears and mammograms are covered); most immunization shots (someflu and pneumonia shots are covered); most prescription drugs; routine foot care; tests for, and the cost of, eyeglasses or hearing aids; personal comfort items, such as a phone or TV in your hospital room; and services outside the U.S.

How do I apply for Medicare?

One is eligible for Medicare Part A upon turning 65 years old. You are automatically qualified if you receive social security or railroad benefits upon turning 65. You also qualify if you have been receiving social security disability benefits for 24 months. You may also qualify on a spouse’s record, even if you are divorced. Government employees not covered by social security who paid the Medicare part of social security tax also qualify, as do people who have permanent kidney failure that requires maintenance dialysis or a kidney replacement if they are insured or if they are the spouse or child of an insured worker. Anyone who is eligible for free Medicare hospital insurance (Part A) can enroll in Part B by paying the monthly premium. Part B is optional and costs $96.40 per month (in 2008) if you choose to enroll.

What is Medigap Insurance?

Medigap Insurance is a supplemental insurance policy offered by private insurers to fill some of the “gaps” not covered by Medicare. Plans may also cover the amount of your Part “A” and Part “B” deductibles, at home recovery needs and other benefits.

What is Medicare Part D?

The Medicare Part D program provides beneficiaries with assistance paying for prescription drugs. Unlike coverage in Medicare Parts A and B, Part D coverage is not provided within the traditional Medicare program. Instead, beneficiaries must affirmatively enroll in one of many hundreds of Part D plans offered by private companies. The Annual Enrollment Period for Part D runs from November 15 â€“ December 31. During this period people with Medicare can enroll in a plan or change their enrollment from one plan to another. Individuals who are already in a plan should decide whether it will be right for them in the coming year; if they do not choose to switch they will remain in their current plan. All plans will have different costs and benefits from year to year, thus it is advisable for all beneficiaries to consider their options and make the best choice they can for the coming year.

What is Medicaid?

Medicaid is a public health insurance program financed by both the state and federal governments that pays for medical treatment for eligible low and medium-income residents. It is called “MassHealth” in Massachusetts. For all practical purposes, it is the only “insurance” plan for long-term care. To be eligible for Medicaid, you have to meet certain medical eligibility and financial requirements.

If covered by Medicaid, won’t I or my loved one get subpar care?

Most facilities have a mixture of private paying and Medicaid patients. There are not specific facilities for those whose care is covered by Medicaid, and the actual caregivers at these facilities are typically unaware of whose treatment is covered by Medicaid and whose is not. In addition, every facility must abide by both Federal and state standards of care when treating patients. Regardless, the more involved the family is, the better the patient’s treatment will be.

What is Social Security?

Social Security is an insurance program that covers most of the United States work force. It is often thought of as a retirement plan to which other benefits are added. It provides retirement, disability, survivor and Medicare benefits.

What is long-term care?

Long term care is care provided to persons with long term diseases or disabilities, and includes health and social services, rehabilitative, skilling nursing, and other supportive care of supervision provided over an extended period of time. The goal of long term care is to help people with disabilities be as independent as possible.

What is home health care?

Home health care allows persons with disabilities to stay in the comfort of their own homes, while providing support to and reducing stress on family caregivers. Services are tailored to the specific needs of the patient, and may include personal care and housekeeping, care management and other social services, physical therapy and skilled nursing.

What are adult day health programs?

Adult day health services provide patients with a safe place to go for social and intellectual stimulation in a controlled and nurturing environment. Activities are designed to promote well-being through social and health related services. Adult day health programs are generally during daytime hours, Monday through Friday. They provide seniors an opportunity to get out of the house and give caregivers a much-needed break.

What are Assisted Living Facilities?

Assisted living facilities (ALFs) offer residents studio and one bedroom apartments, housekeeping, community meals, and limited personal care (such as helping with getting dressed, supervising medication administration or assisting with wound care). Thus, they are well-suited for persons who need assistance with one or more activities of daily living, but who are not as sick as most nursing home residents.

What is hospice?

Hospice is a medical benefit program which focuses on maintaining the best quality of life once it is certain that chronic and debilitating illness shall limit its quantity. Hospice programs thus shift the focus away from curative treatment toward palliative care, pain management, social services, and emotional support for the patient and their family. Most hospice care is delivered at home, but it can also be provided in a hospital, a skillednursing facility, or in a hospice-managed residence. Medicare and most private insurance plans cover the vast majority of the costs associated with hospice care.

What are the requirements for hospice care?

Patients must meet certain eligibility requirements to qualify for hospice benefits. Although the specific criteria vary according to the diagnosed illness, the common requirement is that the patient’s doctor must certify that the patient has a life expectancy of six months or less due to illness. Should the patient live longer than six months, benefits will continue as long as the doctor certifies that the patient’s life expectancy is limited.

Will the nursing home put me out on the street if I am unable to pay?

Before the nursing home can force you to leave, they must provide you a written notice stating the reasons for discharge. You can request that a review be conducted by the Division of Aging. If you have a Medicaid Application pending, the nursing home may not discharge your for non-payment.

If my loved one has been private paying in a nursing home and later
qualifies for Medicaid, is the nursing home allowed to move him to a “Medicaid” bed?

Once a person is assigned to a bed in a nursing home for long term care, that bed is considered that person’s home and the person cannot be moved except under very specific circumstances. Some of those circumstances include if the person is a danger to himself or herself or others or if the person needs specialized care (such as a move to an Alzheimer’s unit of the nursing home). If the nursing home is trying to move your loved one to another room or bed, you should consult with the Elder Law attorney and/or the nursing home ombudsman to correct the situation.

What is an “Estate”?

Your “estate” consists of all property owned by you at the time of your death, including:

Real estate
Bank accounts
Stocks and other securities
Life insurance policies
Personal properties such as auotmobiles, jewelry, and artwork

How Can an Estate Plan Help?

Regardless of your age, or the size and complexity of your estate, an estate plan can accomplish the following:

Identify the family members and other loved ones that you wish to receive your property after your death.
Ensure that your property will be transferred to those you have identified, as quickly and with as few legal hurdles as possible
Minimize the amount of taxes that will need to be paid in order for your property to pass to others after your death.
Avoid the time and costs associated with the probate process by utilizing estate planning devices like living trusts and “payable on death” bank accounts.
Dictate the kinds of life-prolonging medical care you wish to receive should you be unable to make your wishes known when the time comes.
Set forth the kind of funeral arrangements you would like, and how related expenses are to be paid.

What documents should I have for a comprehensive estate plan?

Will
Trust, depending on circumstances
Durable Power of Attorney
Health Care Proxy
Advance Directive (LIving Will)
HIPAA Release
Standby or Emergency Guardianship Proxy, if minor children

Homestead Declaration

What is a Will?

A will is a valuable legal document which directs who receives your property at your death and it appoints a personal representative to make certain that your wishes are carried out. If you have minor children, a will enablesyou to appoint a guardian for their care.

What happens to my property if there is no Will?

If you die without a will you are said to have died intestate and your property will be distributed to your heirs at law according to a statutory formula. In other words, the state will determine who receives your property atyour death. These intestacy rules are inflexible and make no exceptions for those in unusual need. If you do not want your property distributed according to the state’s formula, it is crucial that you have a will which clearly dictates how your property is to be distributed.

Are there limitations on dispositions by Will?

Some property generally cannot be disposed of by will. For instance, property held jointly passes to the surviving joint owner by law and does not become part of the estate affected by the will. Similarly, life insurance proceeds and retirement benefits pass outside the will to the named beneficiaries. The only person who cannot be disinherited from your will is your spouse. If your spouse is excluded from your will, he or she may exercise an election to receive a statutory share of property within a prescribed amount of time. Although your children do not have a statutory right to a share of your estate, if you want to exclude a child you must express that intention clearly in the will.

How often should a Will be reviewed?

A will is valid until it is changed or revoked, and it may be changed or revoked as often as you wish, so long as you are competent. However, changes in your personal and/or financial circumstances and changes in the law may require changes in your will to ensure that your will is fully effective. A will should be reviewed at least every 3 years to make sure that it accomplishes your desires. It may be necessary to review it more frequently if:

You marry, divorce or separate (marriage revokes a will entirely, while divorce revokes the provisions concerning the spouse).
A child or grandchild has been born.
You have sold or bought a house or other significant asset.
There is a change in tax laws.
Your assets have substantially increased or decreased in value.
Your relationship with a beneficiary has changed or a beneficiary’s needs have changed.

How can I change my will once it has been signed?

A will can be changed, revoked or replaced by a new will at any time, so long as you are competent and you follow the formalities of signing a valid will. To be considered competent, you must understand the nature of your act. You can also change you will through the use of a codicil, which is an amendment or supplement to a will.

What are estate taxes?

Estate taxes are a form of death tax levied against your estate by the federal and state governments. The tax is levied on any property in which you had any incident of ownership at the time of death, i.e., life insurance, jointly held property, annuities, etc. You can use a combination of strategies to minimize tax consequences including credit shelter trusts and passing property through your will into trusts.

Will I owe estate taxes?

Massachusetts imposes an estate tax on any estate over $1,000,000
The Federal government imposes an estate tax on any estate over $2,000,000. In 2009, this amount will increase to $3,500,000. Unless Congress enacts new legislation, the estate tax is scheduled to disappear in 2010. However, in 2011, it is scheduled to return for any estate over $1,000,000.
Any property left to your spouse outright is not taxed until the death of your spouse.

Can I just give all of my property away before I die to avoid estate taxes?

It depends. If you give away your property during life, you may be subject to a “gift tax.” While making smaller gifts which are not taxable during life can yield substantial estate tax savings, you should be wary of giving away all of your possession during your lifetime, as you may run the risk of needing the assets for your care later in life.

What is a gift tax?

When you give away assets before you die for less than the assets are worth, you have made a “gift.” The federal government may impose a gift tax on this type of transfer.

Is every gift subject to a gift tax?

No. Each year you can gift a certain amount (known as the “annual exclusion”) tax free. This amount changes each year. Other types of gifts that are not taxed include: charitable gifts, gifts made to a spouse, and gifts in the form of direct tuition payments or medical expense payments made on behalf of another.

How can I limit my estate tax liability?

It is important for those with large estates to create a Trust to make sure that each spouse takes full advantage of his or her estate tax exemptions. Otherwise, when the second spouse dies, his or her estate will include all of the assets, but there will only be a single exemption.

What is a Trust?

A trust is a separate legal entity in which property is given to a “trustee” to hold and manage for your benefit or the benefit of others (the “beneficiary”). The trustee holds legal title or interest and is responsible for managing, investing and distributing the property of the trust. The beneficiary holds an equitable or beneficial interest. A trust can be either a testamentary trust or a living trust. A testamentary trust is created by will and transfers property to the trust only after your death. A living trust is created during your life, can be funded while you are living or after your death, and can be set up to continue after your death or to terminate and be distributed upon your death.

What are the benefits of establishing a Trust?

Depending on your situation, there can be several advantages to establishing a trust. One of the principal advantages of a living trust is avoiding the cost and delay of probate. In a living trust which terminates on your death, any property in the trust prior to your death passes immediately to your beneficiaries by the terms of the trust without requiring probate. This can save time and money for the beneficiaries. Certain trusts can also result in tax advantages for both you and your beneficiaries if your estate exceeds $1 million dollars. Or they may be used to control use or disposition of your property long after you are deceased, to provide for children or any other person you wish to inherit during minority or if disabled, to protect your beneficiaries from creditors, to avoid ancillary probate for property located in another state, or to help you to qualify for Medicaid. Living trusts are also private documents and only those with a direct interest in the trust need know of the trust asset and distribution.

What are the disadvantages of establishing a Trust?

One of the most important potential disadvantages of a living trust is the possibility for mismanagement by a trustee because of the lack of court supervision that would otherwise apply to the probate of a will. However, careful selection of trustees and requiring regular and detailed accountings to the beneficiaries under the terms of the trust agreement can minimize the risk of trustee mismanagement or malfeasance. Legal fees for drafting the trust instrument and assisting in funding the trust are more costly than those for drawing a will. All of your property being transferred to the trust must be re-titled in your trustee’s name. Some trusts may require periodic maintenance during your lifetime, result in loss of flexibility and/or control over your property, may complicate subsequent dealings with the property in the trust, and may have an adverse impact on eligibility for public benefits such as Medicaid.

What is a Revocable Trust?

A Revocable Living Trust, also called a Revocable Trust or Living Trust, is simply a type of trust that can be changed at any time. In other words, if you have second thoughts about a provision in the trust or change your mind about a trust beneficiary or fiduciary, then you can modify the terms of the trust through what’s called a trust amendment. Or, if you decide that you don’t like anything about the trust at all, then you can either revoke the entire agreement or change the entire contents through an amendment and restatement. The down side to a revocable trust is that assets funded into the trust will still be considered your own personal assets for creditor and estate tax purposes. This means that a revocable trust offers no creditor protection if you’re sued and all assets held in the name of the trust at the time of your death will be subject to both state and federal estate taxes. Revocable trusts are often used to avoid probate since assets held in the name of the trust at the time of a person’s death will pass directly to the beneficiaries named in the trust agreement. They also protect the privacy of your property and beneficiaries after you die. Unlike a will, your trust agreement does not become a public document.

What is an Irrevocable Trust?

An irrevocable trust is a permanent trust. It cannot be revoked, amended, or changed after the agreement has been signed. With an irrevocable trust the grantor departs with ownership and control of property. Usually this involves a gift of the property to the trust. The trust then stands as a separate taxable entity and pays tax on its accumulated income. Trusts typically receive a deduction for income that is distributed on a current basis. A typical Revocable Living Trust will become irrevocable when the grantor dies and can be designed to break into separate irrevocable trusts for the benefit of a surviving spouse or into multiple irrevocable lifetime trusts for the benefit of children or other beneficiaries. Irrevocable trusts can take on many forms and be used to accomplish a variety of estate planning goals, including estate tax reduction, asset protection, and charitable gifting.

What is a Credit Shelter Trust?

Also called a “bypass trust,” a credit shelter trust is normally established to take advantage of the applicable federal exclusion amount. This is the amount you can pass free from tax for federal estate tax purposes. The credit shelter trust is normally established upon the death of the first spouse to die and the estate is divided into two parts: one part is placed in the credit shelter trust to benefit the surviving spouse and/or other family members without being subject to tax at his or her death or at the death of the surviving spouse. The other part is passed outright to the surviving spouse or is placed into a marital deduction trust.

What is a Marital Deduction Trust?

Established solely to benefit the surviving spouse, it is structured to qualify for the unlimited federal estate or gift tax marital deduction.

What is an Irrevocable Life Insurance Trust?

An Irrevocable Life Insurance Trust generally prevents life insurance proceeds from being subject to estate tax. The proceeds on any life insurance policy under which you are insured will not be included in your taxable estate provided that the proceeds are not paid to your estate, you do not own the policy and you have no “incidents of ownership” over the policy. Incidents of ownership include the right to change or add beneficiaries, the right to borrow against the policy’s cash value or to cancel or surrender the policy. By establishing an irrevocable life insurance trust, the insurance will be excluded from your estate because you will not own the insuranceat the time of your death; rather, the trust will own the insurance.

What is a Durable Power of Attorney?

A Durable Power of Attorney is a written instrument by which you designate someone (your agent) to act on your behalf in financial and related matters. The attorney-in-fact, in effect, stands in the shoes of the principal and acts for him or her on financial and business matters. The attorney-in-fact can do whatever the principal may do-withdraw funds from bank accounts, trade stock, pay bills, cash checks- except as limited in the power of attorney. This does not mean that the attorney-in-fact can just take the principal’s money and run. The attorney-in-fact must use the principal’s finances as the principal would for his or her benefit.

Why do I need a Durable Power of Attorney?

This document is valuable in that it allows you to choose who shall act for you in the event that you become incapacitated rather than allowing a court to make this determination. In most cases, having a Durable Power of Attorney will avoid the need to seek appointment of a guardian or conservator if you later lose the ability to handle your affairs. A Durable Power of Attorney is effective only during your lifetime.

When does my Agent acquire the right to act on my behalf?

Typically, a durable power of attorney provides your agent the immediate right to act on your behalf since this makes it more likely that third parties will honor the instrument. However, the document is designed to be used if you become incapacitated and your agent has a legal obligation to act in your best interests. If you are uncomfortable with granting immediate authority you may execute a springing power, which would take effect only when you become incapacitated, or a copy of your power of attorney can be placed in escrow. Placing your document in escrow provides the appearance of an immediate power without risking a premature assumption of authority.

If I give a power of attorney to another, do I give up the right to manage my own affairs?

You retain full control over your affairs so long as you are competent.

How do I change or revoke a Durable Power of Attorney?

You can change or revoke a Durable Power of Attorney as long as you remain legally competent. If you wish to revoke or change your durable power of attorney, you should properly execute a new Durable Power of Attorney. In addition, it is vitally important that you give written notice to your agent and all other interested parties of the change or revocation.

Can an attorney-in-fact be held liable for his or her actions?

Yes, if the principal has agreed to pay the attorney-in-fact. In general, the attorney-in-fact is entitled to “reasonable” compensation for his or her services. However, in most cases, the attorney-in-fact is a family member and does not expect to be paid. If an attorney-in-fact would like to be paid, it is best that he or she discuss this with the principal, agree on reasonable rate of payment, and put that agreement in writing. That is the onlyway to avoid misunderstandings in the future.

Can an attorney-in-fact be compensated for his or her work?

What if there is more than one attorney-in-fact?

Depending on the wording of the power of attorney, you may or may not have to act together on all transactions. In most cases, when there are multiple attorneys-in-fact the power of attorney document specifies that they can each act independently of one another. Nevertheless, it is important for them to communicate with one another to make certain that their actions are consistent.

Can the attorney-in-fact be fired?

The principal may revoke the power of attorney at any time. All he or she needs to do is send the attorney-in-fact a letter to this effect. The appointment of a conservator or guardian does not immediately revoke power of attorney. But the conservator or guardian, like the principal, has the power to revoke the power of attorney.

What kind of records should the attorney-in-fact keep?

It is very important that the attorney-in-fact keep good records of his or her actions under the power of attorney. That is the best way to be able to answer any questions anyone may raise. The most important rule to keep in mind is not to commingle the funds that the attorney-in-fact is managing with his or her own money. Keep the accounts separate. The easiest way to keep records is to run all funds through a checking account. The checks will act as receipts and the checkbook register as a running account.

What is a Health Care Proxy?

A Health Care Proxy is a written instrument giving authority over all decisions regarding your healthcare to your designated agent but only when you are incapable of making or communicating those decisions yourself. The health care agent may make decisions concerning the use or terminating the use of life support systems.

Why should I have a Health Care Proxy?

In case you ever become incapacitated, it is important that someone has the legal authority to communicate your wishes concerning medical treatment. This is true especially if you were to disagree with family members about your treatment. The Health Care Proxy is designed to avoid conflicts regarding difficult decisions during medical crises and to ensure that the direction you have given your agent will be carried out in the event of such conflicts. In the event that you do not have a Health Care Proxy, your family members must petition the court for a guardian to be appointed to make such decisions.

Who should I appoint as my agent?

Since your agent is going to have the authority to make medical decisions for you in the event you are unable to make such decisions yourself, it should be a family member or friend that you trust will follow your wishes. You should choose someone who understands your wishes regarding medical treatment and end-of-life decisions and who understands that they will exercise their best judgment based on your personal values. Before executing a Health Care Proxy, you should talk to the person that you want to name as your agent about your wishes concerning medical decisions, especially life sustaining treatment.

When does my Agent acquire the right to act on my behalf?

Health Care Proxies take effect only when you are deemed incapable to make or communicate your health care decisions by a physician. The law allows you to contest such a determination in court. In addition, if you regain the capacity to make or communicate medical decisions, the proxy will have no effect.

Who should have a copy of my health care proxy?

Your agent(s) and your physician(s) should have a copy with your medical records.

How do I change or revoke a Health Care Proxy?

You can change or revoke a Health Care Proxy as long as you remain legally competent. If you wish to revoke or change your health care proxy, you should properly execute a new proxy. In addition, it is vitally important thatyou give written notice to your agent and all other interested parties of the change or revocation.

What is an Advance Directive?

An Advance Directive informs others what medical treatment you desire if you become terminally ill or permanently unconscious and are unable to make or communicate decisions regarding treatment. The Advance Directive is used by those persons who wish to express their feelings about the withholding or withdrawal of life-sustaining treatment that prolongs the process of dying. The Advance Directive may state your intent that extraordinary measures not be use to sustain your life if there is no chance of returning to health; or it may state your intent that all available measures be administered. Although, as current law stands, such a document is not legally binding in Massachusetts, it provides valuable evidence of your intent if you cannot speak or refuse medical treatment and can provide your health care agent with some guidance as to what your feelings are about these sensitive matters. This instrument is especially important if you do not have a person to appoint as your health care agent or if the person you have is unavailable. Without it, a court could be required to determine your wishes regarding withholding or withdrawing life-prolonging treatment.

What is a HIPAA Release?

This document appoints a personal representative to receive any and all information, including confidential information, concerning your medical condition(s). Your personal representative is authorized to receive the same information that you would be entitled to receive.

What is a Standby or Emergency Guardianship Proxy?

An emergency guardianship proxy allows a parent or parents to appoint another person to be the guardian of their child for up to 60 days without court approval. These proxies are useful when parents anticipate being unable to care for their child due to illness, travel, or any other reason. A standby guardianship proxy allows a parent or parents to nominate a guardian of a minor child and obtain court approval in advance of a future event, such as the death or incapacity of the parents. This type of guardianship provides for concurrent authority over the child. It does not limit the parents’ rights to care for the child or the custody of the child.

What is a Homestead Declaration?

A Homestead Declaration, once recorded at the appropriate Registry of Deeds, protects your home (within certain limits) up to $500,000 from the unsecured claims of creditors. A Homestead Declaration will protect you or your surviving spouse and dependent children against attachment, levy on execution, or sale to satisfy debts, so long as you occupy or intend to occupy such property as your principal place of residence. Only one spouse can file a Homestead for their family. However, should the parent who declares the Homestead die, the law protects the residence until the youngest unmarried child reaches the age of eighteen (18) and until the surviving spouse dies or remarries.

What is asset protection?

Asset protection is a field of law designed to minimize the risk of potential liability and to preserve your assets. Asset protection can shield your assets from the claims of creditors, from having to be spent down in connection with entry into a nursing home, from the imposition of taxes, from legal proceedings being brought against you, and a host of other reasons. Some asset protection techniques include:

Creating special needs trusts to protect assets from jeopardizing government benefits.
Creating living trusts or other estate planning devices to protect asset transfers to children from a previous marriage.
Creating trusts to minimize estate tax liability.
Establish a business as a corporation or Limited Liability Company (LLC) to protect potential liability of the business owners.
Creating irrevocable trusts or other documents to protect an individual’s assets when moving into a nursing home or other facility that requires Medicaid planning.

Can I protect assets by transferring them to my kids?

NO. If your children get into financial trouble, the assets become available to their creditors. If your children go through divorce, the assets may become available to their spouses through divorce settlements. If your children have health problems, the assets may be at risk, as well. In any case, by transferring your assets, you are losing control of them.

What should I do if my spouse is entering or expected to enter a nursing home?

If your spouse has become ill and you can foresee that they might need nursing home care in the future, it is critical to reexamine your estate plan. Many spouses have wills which leave everything to their spouse. In addition, they typically have powers of attorney and health care proxies naming their spouse as agent. If your spouse requires nursing home care and obtains Medicaid benefits, it is important to consider the risk that you, as the healthy spouse, could die first. Should this happen, all of your assets would pass to your spouse in the nursing home, placing these assets at risk. An Elder Law attorney can assist you in revising your estate plan so that regardless of what the future brings, you are protected. Specifically, it may make sense for you to change your will, leaving assets to a specially drafted trust designed so that your spouse can benefit from the assets, but Medicaid cannot get them. An Elder Law attorney can also advise you on re-titling your assets so they are protected from your spouse’s care costs.

Should I transfer my assets into joint ownership?

Joint ownership (with right of survivorship) will cause property to pass outside of probate to the surviving co-owners upon your death. Because the property passes outside of probate, it will be insulated from claims for reimbursement of Medicaid benefits paid on the death of the applicant. Although a lien may be placed on an applicant’s home during the applicant’s lifetime in the event the home is sold, the claim is limited to the value of the interest owned by the applicant at the time of the sale or transfer. In general, joint ownership is not recommended. It may cause you to lose control of your assets. Joint ownership puts you at risk to creditors of the co-owner, to a co-owner’s divorce, bankruptcy, or legal proceedings and the co-owner can access your assets for his or her own purposes. If the jointly owned property is a home, the co-owner is entitled to move in, sell their share, or file an action to partition the property and thereby force a sale. For Medicaid purposes, there is the risk that the joint owner may predecease the applicant. If a home has not been sold or transferred during the applicant’s lifetime, and the joint owner dies before the applicant then the property passes by survivorship back to the surviving applicant. This causes the entire property to be subject to a Medicaid lien on the surviving applicant’s death.

Will a revocable living trust provide asset protection?

A revocable living trust allows you to avoid probate and arranges for the distribution of your assets at the time of your death. However, a creditor can break right through it. Further, a revocable trust will not protect your assets from Medicaid. Assets in revocable trusts are considered “available” under the Medicaid rules. An applicant will not be eligible for Medicaid benefits until the assets are removed from the trust and spent-down. If a home is in a revocable living trust, the home must be transferred back into the applicant’s name and will then be subject to a Medicaid lien. However, a properly structured living trust can protect your children from their creditors.

What is an annuity and how does it work?

An annuity is a right to receive periodic payments in return for a single premium payment. It is one means of protecting assets exceeding Medicaid’s limits. The purchase of an annuity transforms excess assets that would otherwise make the nursing home spouse ineligible for Medicaid into a noncountable stream of income for the community spouse. The annuity must be irrevocable and have a term certain – a guaranteed number of years of payment – that is shorter than the life expectancy of the healthy spouse. In addition, the money paid back by the annuity over the life expectancy of the annuitant must be equal to or greater than the amount initially paid for the annuity. The annuity should not be purchased until the spouse enters a nursing home.

What is a Life Estate?

A deed with a reserved life estate allows you to transfer your property to someone upon your death, but during your life you continue to live in the property. You cannot be kicked out by the future interest holder. Even if a creditor has a claim against the future interest holder’s interest in the property, the property is not subject to partition and cannot be sold absent the life tenant’s consent. A life estate allows you to avoid probate. Because the property passes outside of probate by operation of law, it may not be subject to a Medicaid claim after the death of the applicant. One disadvantage of the life estate is that the life tenant cannot sell, mortgage, refinance or in any way encumber the property without the consent of the future interest holder. If the life tenant wishes to sell the home, he or she is entitled to only a portion of the proceeds. If the house is sold, the capital gains exclusion would only apply to the proportion of gain attributable to the life tenant’s interest in the property. Thus, capital gain taxes could be assessed against the future interest holder’s share of the property. From a Medicaid perspective, if the house were sold, the percentage of the life tenant’s proceeds of the sale would be considered an available asset.

How can an Irrevocable Trust protect my assets?

By placing assets into an irrevocable trust, the grantor is giving up complete control over, and access to, the trust assets and, therefore, the trust assets can’t be reached by a creditor of the grantor. An irrevocable trust is commonly made for the benefit of the surviving spouse, as well as children and grandchildren. Because it cannot be changed, it is off limits to your surviving spouse’s new spouse, the creditors of your spouse and children, and will not be lost to spendthrift, irresponsible offspring or their ex-spouses. The trust can be made discretionary, such as providing that no distributions will be made if the beneficiary is addicted to alcohol or drugs. For Medicaid purposes, assets transferred to a properly drafted irrevocable trust will be protected from a claim. For assets to be protected,, the applicant cannot be trustee and there must be no circumstances under which principal payments can be made to or for the benefit of the MassHealth applicant. The property of these trusts is not considered to belong to the applicant. Once the trust is signed into existence, it cannot be revoked or amended. Thus, once an asset is put into the trust, the applicant cannot demand that the asset be taken out of the trust and be returned to him or her. Also, the trustee cannot have the power to give it back or use any part of the principal for the benefit of the applicant. If a home in an irrevocable trust were sold during the applicant’s lifetime, the proceeds of the sale would be held by the trust and would be protected from being treated as a countable asset preventing the need for any spend-down. The home in trust would be insulated against a lien during the applicant’s lifetime because the applicant would not have an ownership interest in the home. It would also not be subject to a lien upon the applicant’s death, since it is not part of the probate estate.

What is a Homestead Declaration?

How am I protected if I am 62 or older, or disabled?

If you are 62 years of age or older, regardless of marital status, or a disabled person, regardless of age, your home is protected against attachment, seizure or execution of judgment to the extent of $500,000. For elderly and disabled individuals, the protection up to $500,000 is for each person’s ownership interest. That is, both spouses may declare a homestead so long as they are 62 years of age or disabled. The homestead protection applies only to the individual, rather than the family. This means if a husband declares a Homestead, the Homestead protection ends at the death of the husband and does not pass to the wife.

Is there anything the Homestead will not protect me from?

The following are exempt from Homestead protection: federal, state and local taxes, assessments, claims and liens; first and second mortgages held by financial institutions and others; any and all debts, encumbrances or contracts existing prior to the filing of the declaration of Homestead; an execution issued from the probate court to enforce its judgment that a spouse pay for the support of a spouse or minor children; where buildings on land not owned by the owner of a Homestead estate are attached, levied upon or sold for the ground rent of the lot whereon they stand.

Can my Homestead be terminated?

Your claim of Homestead will be terminated upon the sale or transfer of your home during your lifetime, upon the death of you and the remarriage of your surviving spouse and upon each child reaching the age of majority or by a release of the Homestead estate duly signed, sealed, and acknowledged by you and recorded at the Registry of Deeds, or when the property ceases to be the principal residence.

Will my Homestead Declaration protect my home from being taken if I go into a nursing home?

No. Liens imposed by the Massachusetts Department of Medical Assistance, as a result of the payment of Medicaid benefits, are exempt from the Homestead protection. However, there may be other ways that you may be able to protect your home.

Does the Homestead protection take the place of home insurance?

No. The Homestead protection is not a substitute for home insurance or any other type of liability insurance.

What is long-term care?

What options do I have for long term care?

There are a number of options available for long term care depending on your medical condition and location.

Homecare: Most people want to remain at home as long as possible. If you need medical care at home, you can pay privately which can be very expensive depending on how much care you need. You can also purchase a long term care policy with a home care component or you can apply for Medicaid. Medicare also covers some limited home care.
Assisted Living: You can choose to reside in an assisted living facility which will provide meals and a room and activities to keep you active. In most assisted living facilities, you must be able to walk. This option is not covered by Medicare or Medicaid. You would have to pay privately for this option.
Continuing Care Retirement Community: This living arrangement provides a continuum of care ranging from independent living to assisted living to nursing home care all in the same community. Generally, there is a large up-front fee followed by a monthly fee. This option is not available to persons who cannot afford the up-front fee and the monthly fee.
Nursing Home: Sometimes this is the only option for persons whose medical condition requires a lot of supervision and/or care. While you can pay privately for a nursing home, current average nursing home costs are around $9,000 per month which will eat up your assets very quickly. Many people do Medicaid planning so they can apply for Medicaid to cover this cost.

What is Long Term Care insurance?

Long term care insurance (LTCI) is designed to pay for custodial long-term care services required due to a chronic illness or a condition lasting a prolonged period of time. This type of insurance covers skilled care and, more importantly, custodial care or personal care â€“ i.e., when a person needs assistance with certain daily activities such as bathing, dressing and eating. LTCI is not designed to cover acute care services or to be a substitute for Medicare, Medigap or senior HMO plans. Long-term care can be provided at home, in the community, in assisted living facilities or in nursing homes.

How much does long term care insurance cost?

The cost of the insurance will vary significantly, depending upon the type of insurance you purchase, your age and medical status at initial purchase, the amount of the nursing home benefit, the percent of home/community-based benefits, the duration of the policy, and the length of the elimination period (the deductible paid for by the policyholder before the policy starts to pay out). If you purchase a “tax-qualified” policy, however, the premiums are tax-deductible to the extent that you spend in excess of 7.5% of your adjusted gross income on medical expenses.

Do I need to protect my assets if I have Long Term Care insurance?

A person may be exempt from Medicaid’s recovery rules if he or she purchases a long term care policy that meets certain specific minimum requirements. The minimum requirements for a policy to satisfy the Medicaid exemption rules include the following: (1) the policy must cover nursing and custodial care in a nursing facility licensed by the Massachusetts Department of Public Health; (2) the policy must have available benefits of at least $125 per coverage day in a nursing facility; (3) the policy must have benefits sufficient to cover two years in a nursing facility; and (4) the elimination period may not be longer than one year. For example, if you bought a three-year policy and use one-and-a-half years worth of benefits at home before going to a nursing home, the MassHealth Recovery Exemption will not be available, because you will not have two years’ worth of benefits in your policy when you enter the nursing home. Even if you have such insurance, however, you should still consult with an Elder Law attorney. Commonly, we find the policy is insufficient to pay for the daily cost of care even when combined with your income. If your policy only covers a short time period and your assets will then be exposed, additional asset protection planning may be necessary.

What if I do not qualify for Long Term Care insurance or it is too expensive?

If this is the case, you should meet with an Elder Law attorney to discuss options for protecting your assets since Medicaid may be your only option to pay for long term care.

What is Medicaid Planning?

Medicaid Planning helps individuals facing nursing home care protect their hard earned assets. Nursing home care is expensive and can often deplete an individual’s entire life savings.

What is the cost of nursing home care?

In Massachusetts, nursing home care costs between $90,000 up to about $120,000 per year.

Won’t Medicare pay for nursing home care?

Medicare will only pay for a maximum of 100 days in the skilled nursing facility if you meet certain requirements. You must have moved to the nursing home within 30 days of the hospital discharge and the hospital stay must have lasted at least three (3) days. Also, if you receive a skilled level of care, Medicare will pay completely for the first twenty (20) days. For days twenty-one (21) through 100, they will pay less a co-payment, which is set each year. In most situations, people receive less than the full 100 days of benefits. After that point, you either have to pay privately with your own funds or obtain Medicaid eligibility.

Won’t my health insurance cover the cost of the nursing home?

Private health insurance usually does not pay for extended nursing home care. Only policies purchased specifically for long term care needs cover nursing home costs.

How does Medicaid work?

Medicaid will pay for nursing home care only for those who meet the financial and medical eligibility requirements. You will not receive coverage unless the Division of Medical Assistance (DMA) determines that the applicant’s medical condition requires nursing home care and the applicant is sufficiently impoverished under the Division’s guidelines. As part of the application process, the nursing home will complete a questionnaire showing whether the applicant requires at least one skilled nursing activity and help with at least three activities of daily living. “Activities of daily living” are routine self-care tasks such as bathing, dressing, grooming, transferring oneself to and from a chair or bed, eating, and toileting.

How do I get Medicaid?

Obtaining Medicaid is a complicated application and eligibility process. A knowledgeable Elder Law attorney is aware of all the intricacies of Medicaid law can show you the best way to protect your assets and can take you through the maze of Medicaid requirements.

If Medicaid pays for my care will I be in a poor quality nursing home?

No. Today, you can receive care at highly rated facilities regardless of whether you pay privately or by Medicaid.

How much money can I have and still qualify for Medicaid?

An unmarried individual seeking coverage for nursing home long term care must have $2,000 or less in countable assets. If you have more than $2,000, an Elder Law attorney can advise you on how to spend down your excess resources in the most beneficial way. A married individual seeking nursing home coverage must have $2,000 or less in countable assets also to qualify for nursing home long term care. However, his or her spouse is entitled to keep up to approximately $109,000 (in 2009). If the couple’s assets exceed this amount, we can often take steps to protect excess assets. Even when the couple’s assets are below $109,000, it is important to meet with an Elder Law attorney to ensure your assets are protected.

What does it mean to spend-down assets?

In order to qualify for Medicaid benefits, an applicant must spend down his or her assets to the allowable limit. Certain allowable non-countable transfers may be made for the purchase of services or goods for personal use for fair market value, creation of a supplemental needs trust for a disabled adult child, payment of legally incurred debts, or for certain other expenses expressly allowed in the Medicaid regulations. The following are commonly allowed non-countable transfers that will not affect Medicaid eligibility:

Prepay anticipated income taxes, insurance, medical, nursing, legal or accounting fees.
Pay off lawsuit judgments and settlements.
Establish and fund a supplemental needs trust for a disabled adult child (the regulations do not permit funding of a supplemental needs trust for a disabled grandchild).
Pay deposits and ongoing costs for assisted living facilities or nursing homes.
Pay off existing credit card bills and other debts for goods and services previously purchased for fair market value.
Purchase an irrevocable prepaid burial contract.
Establish a bank account of up to $1,500 to fund an irrevocable burial trust. Interest earned on that account will not be counted so long as the money is used solely for funeral-related expenses.
“Stock up” on personal items for future use. Clothing, especially shoes and underwear, disappear from nursing home residents at a fast rate. You can store these items for your father “just in case.”
Purchase items which may make you more comfortable but may not be covered by Medicare or Medicaid, such as a new television, radio, or a specialized chair.

Will I have to sell my house to pay for nursing home care?

No, in most cases, you do not need to sell your home to pay for nursing home care. However, the Division of Medical Assistance may place a lien on the property to recover what they paid out for your Medicaid costs.

What is a Medicaid Lien?

A lien is the legal right to hold an interest in the property of another until some debt is paid. Federal and state law allow Medicaid to place a lien on the homes of persons who received long term care Medicaid benefits or who received Medicaid benefits on or after his or her 55th birthday to recover what they paid out for care. The Division of Medical Assistance may place a lien on the house during the applicant’s lifetime. This lien will prevent a subsequent transfer or conveyance o the residence without first reimbursing Medicaid for the money it has expensed for that resident’s care. The Division of Medical Assistance can also make a claim against the probate estate of the deceased applicant for reimbursement for the amount of Medicaid benefits paid. Medicaid cannot file a claim is there is a surviving spouse, an unmarried child younger than 21 or a blind or totally disabled person living in the home.

How are the assets of a husband and wife counted?

The assets of both husband and wife are considered together. All of the countable assets owned by either spouse are totaled as of the first day one spouse enters a hospital or nursing home for long-term care. The total assets are then divided equally between them. The spouse at home (“community spouse”)is permitted to retain a maximum of $109,000 in the year 2009. This amount changes every year. It may be possible for the community spouse to obtain additional assets through a court order or an administrative hearing decision. In addition, assets received by the community spouse after Medicaid qualification have no effect on the nursing home spouse’s continued eligibility for Medicaid.

If my spouse requires Medicaid, will I lose all of my assets?

No. Medicaid will allow a spouse living in the community to keep their home and a modest amount of the couple’s savings. However, Medicaid does cap the amount of assets the spouse in the community can keep regardless of whose name the assets were in when the couple first applied. For this reason, it is critically important for a couple to speak with an elder law attorney to ensure that the assets are protected.

What is the “look-back period”?

Medicaid applicants are required to disclose all financial records for the past five years, called the “lookback period.” A recipient is required to list and verify all transfer of assets made during the lookback period as well.

Can I transfer assets to make myself eligible for Medicaid?

Many transfers would make you ineligible for Medicaid. These are called “disqualifying transfers”. A disqualifying transfer is a transfer made for less than adequate consideration (i.e. a gift or a partial gift) which is made for the purpose of making you eligible for Medicaid. Medicaid imposes an ineligibility period if an applicant or their spouse transfers or gives away assets prior to entering a nursing home. This is true regardless of the kind of asset is given away and regardless of the value. There are many exceptions to the transfer of asset rules. Transferring assets to certain recipients will not trigger a penalty period. These recipients include: (1) a spouse; (2) a blind or disabled child; (3) a trust for the benefit of a blind or disabled child; and (4) a trust for the benefit of a disabled individual under age 65 even for the benefit of the applicant under certain circumstances). Special rules apply with respect to the transfer of a home. In addition to the ability transfer one’s home to his or her spouse, a blind or disabled child, or into trust for the benefit of a disabled individual, the applicant may freely transfer his or her home to: (1) a child under age 21; (2) a sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home; or (3) a “caretaker child,” defined as a child of the applicant who has lived in the house for at least two years prior to the applicant’s institutionalization and who, during that period, provided such care that the applicant did not need to move to a nursing home.

Can I still give $12,000.00 a year away?

No. Not without it being considered a transfer. Many people mistakenly believe that because you can give away $12,000.00 per person per year tax free, that this is the same case with Medicaid. Unfortunately, it is not, and the gift may affect your eligibility.

What are some options for protecting my home and assets if I need to apply for Medicaid?

Currently, in order to qualify for Medicaid in a nursing home, you can only have $2,000 in your name and certain other assets like an irrevocable prepaid funeral plan. For every $8,010 you give away to a person (other than your spouse with certain other exceptions) or an irrevocable trust, you are not eligible to receive Medicaid for one month. This is called the “penalty period”. This means that the greater the assets you want to protect, the earlier you should start planning. The biggest asset most people try to protect is their house. An outright transfer to family members is usually not suggested because you lose all control and there are capital gains consequences to your family. A better option is to deed the house to family members with a retained life estate for yourself. This gives you the right to live in the house for the rest of your life and continue to receive all senior citizens exemptions. Upon your death, the house passes automatically to the beneficiaries and they do not have to pay capital gains tax when they sell the house at your death. This is not suggested if you want the option of selling the house while you are alive for reasons which should be discussed with your attorney. A deed with a retained life estate is subject to a five year lookback period. However, in the event you need Medicaid benefits prior to the expiration of the ineligibility period, the home can be transferred back to the applicant to obtain benefits. The best option which affords maximum flexibility is to transfer the house to an irrevocable trust. An irrevocable trust is an agreement between you and a trusted person who acts as trustee to take care of your assets. Such a trust can give you the right to live in the house for the rest of your life and continue to receive all senior citizens exemptions. At your direction, the trustee can sell the house and purchase another house for you. You would be entitled to all the income from the trust depending on how it is drafted. One disadvantage is that you must give up complete control over the assets in the trust. The transfer into the trust would be subject to a five year lookback period. In the event that the applicant needs MassHealth benefits prior to the expiration of the ineligibility period, the home cannot be transferred back to the applicant to obtain eligibility. Cash assets can be transferred outright to family members. However, by doing this, you relinquish all control. Sometimes, a better option is to use an irrevocable trust as described above. Highly appreciated assets such as stock should not be transferred outright if possible. Instead, it is better to use an irrevocable trust so that upon your death, the stock can be sold and the beneficiaries will not have to pay capital gains tax. All of these options can create a Medicaid penalty period and should be explored with a knowledgeable Elder Law attorney first before you make any transfers of property. The best time to do Medicaid planning is when you are well. Planning in a crisis situation does not always allow for complete protection of your assets.

How long is the penalty period?

The length of the penalty period is calculated using a penalty divisor determined by MassHealth, based on the average monthly cost of nursing homes in Massachusetts. The penalty divisor increases annually to reflect the change in nursing home rates. The current penalty divisor is approximately $8,000 per month. If one transfers $100,000, he or she is ineligible for Medicaid coverage for approximately thirteen months ($100,000 Ã· $8,000 = 13.02). The Deficit Reduction Act of 2005 states that this ineligibility period begins when the applicant is “otherwise eligible” for Medicaid. Applicants are “otherwise eligible” if they meet three requirements: 1) they must reduce their assets below $2,000; 2) they must require a nursing home level of care; and 3) they apply for MassHealth and receive a denial notice. The new law does not apply to transfers made prior to February 8, 2006. Because Medicaid only considers transfers made during the five year lookback period, there is an effective cap of five years on the ineligibility period. However, without proper planning, the ineligibility period can extend far beyond five years.

Do I get to keep my income if I am on Medicaid?

No. You are required to pay to the nursing home your total monthly income, minus $72.80 for personal needs and an amount equal to your premium for health insurance. Income received from Social Security, pensions, interest, dividends and rents must be use to pay for your care.

What happens to my spouse if I need Medicaid and his or her income is significantly less than mine?

In some cases, the community spouse is also entitled to share in all or a portion of the monthly income of the nursing home spouse. Medicaid determines an income floor for the community spouse, known as the Minimum Monthly Maintenance Needs Allowance (MMMNA), which is calculated for each community spouse, based on his or her housing costs. Where the community spouse can show hardship, Medicaid may award a larger MMMNA, but only after a hearing. If the community spouse’s income falls below his or her MMMNA, the shortfall is made up from the nursing home spouse’s income.

Is my spouse required to pay for my nursing home care?

The income of the community spouse will continue to be undisturbed and he or she will not have to use his or her income to support the spouse receiving Medicaid benefits.

What is Probate?

Probate is the judicial process of proving the validity of a will and ensuring that the debts of the estate are paid and final distributions are made to the heirs. It generally takes at least one year to probate a will. Probate can be avoided by having your property held in a form that will pass title to others after your death by operation of law. Your property should be held in a trust or a joint account to avoid probate. However, avoiding probate should not be the only factor to consider in developing an estate plan. There are other factors which might affect how you hold your property. Nevertheless, regardless of whether you are planning to avoid probate you should have a will.

What happens if I die without a will?

If you fail to plan your estate and die without a will, the laws of the Commonwealth of Massachusetts will create an estate plan for you. This is known as “intestate” succession and is delineated by statute. The law prescribes both the persons to whom your property will pass and the division of your estate among those persons. The distributions provided by law are inflexible and may not satisfy your desires as to distribution of your estate. If you die without a will and you are survived by your spouse and children, one half of your probate assets will pass to your surviving spouse and the remaining half of your probate assets will pass to your children. If you die without a will and are survived by your spouse alone, leaving no children, the statute dictates that part of your estate will pass to your parents. Again, such a division of your property may not accurately reflect your wishes. If you die and are survived by your children alone with no surviving spouse, then your entire estate will pass to your children. If your children are minors, a guardianship will be necessary to manage their property.

What property is subject to the probate process?

The probate estate includes all property owned individually at death in the decedent’s name and that have no expressly named beneficiaries. Examples include:

Stocks
Personal property held individually, such as an automobile
Cash

What property is not subject to the probate process?

Property that is not subject to the probate process is called nonprobate property. Nonprobate property includes assets that are held in a way that the very terms of ownership dictates where the property will go after you die. In other words, the document that establishes ownership includes a provision that designates who will receive the property after the owner’s death. Examples include:

Life insurance policies with a beneficiary designation
Retirement accounts with a beneficiary designation
Assets held in joint tenancy with survivorship rights
Assets with transfer of death (TOD) designations
Assets with payment on death (POD) designations
Interests in trust

What are the types of Probate?

There are two types of probate: small/informal and large/formal. The type of probate is determined by the size of the estate. For estates consisting entirely of personal property of a total value of less than $15,000, together with a motor vehicle, an informal proceeding may be used instead of a formal one. An informal probate proceeding does not require notice, inventory or accounting where a formal proceeding does.

How is the probate process started?

First, a petition for probate of the will must be filed with the probate court, along with the original will and a certified copy of the death certificate. If there is no will, a petition for administration must be filed with the probate court along with a certified copy of the death certificate. Notice must be mailed to all of the decedent’s heirs at law (usually the surviving spouse, children and children of any deceased children), to those named as beneficiaries in the will, and, if a charity is involved or there are no heirs at law, to the Attorney General. Notice must be also published in a local newspaper. If no one objects by a deadline set by the court, the executor named in the will or the administrator is appointed by the court.

Should I try to avoid Probate?

Probate is simply a means to transfer ownership of property upon death. Massachusetts’ system of probate proceedings for decedent’s estates is quite efficient compared to many other states. However, there are four reasons to avoid probate:

To save money: The cost of planning to avoid probate is usually less than the cost of probate proceedings after a person dies. If you own property in more than one state, it is generally much less expensive to avoid probate than to administer the property in two separate locations.
To save time: Probate proceedings generally take at least one year to complete. Planning to avoid probate can significantly reduce the time it takes for property to be distributed to heirs.
For privacy: Probate proceedings are public. Any interested person can review a probate court file, including a will, the plan of distribution, the identity of the heirs, and the property owned by a decedent. Keeping an estate out of probate will keep your family matters private.
For convenience: Probate administration can be inconvenient for many people. There are accounts to keep, hearings to attend in some cases, property to distribute, and a myriad of other details associated with a person’s duties as personal representative. Avoiding probate may reduce the inconvenience of administering a decedent’s estate.

What is an Executor or an Administrator?

An “executor” is appointed by the probate court if you have a will. An “administrator” is appointed by the court if you do not have a will. Your executor or administrator serves as the primary representative of your estate.

Who should I appoint as Executor of my estate?

People usually choose to appoint a spouse, a trusted family member or a close friend as their executor. If you have a particularly complex estate, you may want to choose a professional, such as a bank or an attorney. Either way, you should choose someone who is trustworthy and competent.

What does the Executor or Administrator do?

The executor or administrator is responsible for collecting the probate property and for paying any debts of the estate. The executor/administrator must file with the probate court an itemized list, known as an “inventory,” of the probate property, including the value of each item. The executor/administrator must file an estate tax return within nine months of the date of death. This is true even if no estate tax is owed, if the decedent owned real estate or the executor wants his or her final accounting allowed by the probate court. Creditors of the estate have one year to bring claims against the estate. Executors/administrators generally wait until this claim period has expired to complete distribution of the estate according to the terms of the will. As his or her final responsibility, the executor/administrator must file an accounting with the probate court showing the income and expenditures of the estate administration.

Who pays for probate?

The decedent’s estate pays for probate administration. The fees and costs associated with probate administration must be paid before any property is distributed to heirs.

How long does the probate process take?

Probate proceedings typically take at least one year to complete, although some cases are open for much longer. However, most of this time is spent waiting for creditors to make claims against the estate. Creditors have one year from the date of death to make claims. Nevertheless, some property may be available for distribution to heirs prior to the end of the period for creditors to make claims. This is determined by the personal representative on a case-by-case basis.

Will my assets be tied up in court?

Probate proceedings typically take at least one year to complete. However, some property may be available for distribution to heirs before the proceedings are complete. This is determined by the personal representative on a case-by-case basis.

What is a breach of fiduciary duty?

A fiduciary duty refers to the obligation of individuals in certain capacities to treat others equitably and honestly and to act in their best interest. Such a duty is imposed on individuals such as trustees, executors or administrators of an estate, and guardians. A number of different acts can be considered a breach of fiduciary duty, including negligence, fraud, or failure to perform.

What do I do if I am named as an Executor of someone’s will?

If you are named as an executor, it is your choice to serve or decline to serve. If you decline to serve and there is no alternative executors named in the will, the court will appoint an executor. If you choose to serve, you should contact an attorney who can help you file the appropriate documents in the Probate Court. You will then have to wait until you are approved by the Probate Court before you can officially act as executor.

Can my Executor act during my life?

No. An Executor is only authorized to act after you have died and after the court has authorized the Executor to act, by issuing a certificate of appointment. A durable power of attorney allows you to authorize someone to act on your behalf while you are living.

What assets are subject to creditors’ claims against the decedent?

Generally, assets the decedent owned individually at death are subject to creditors’ claims.

On what grounds can a will be challenged?

There are five grounds that a will can be held invalid:

Undue influence â€“ assertion that a third party coerced the testator into creating the will.
Mental incapacity â€“ assertion that the testator was mentally incapable of understanding the significance of creating the will.
Will formalities were not followed â€“ assertion that the will was not executed in compliance with the law, perhaps due to the fact there were no witnesses, or that the testator did not actually sign the will.
Subsequent revocation â€“ assertion that the challenged will was revoked, either by a more recent will or by operation of law (for instance, a subsequent marriage).
Fraud or mistake â€“ assertion that the testator was deceived by a third party by a misrepresentation, and the challenged will would never have been created but for that misrepresentation.

How does Social Security define a disability?

To be eligible for benefits, a person must be unable to do any kind of substantial gainful work because of a physical or mental impairment (or a combination of impairments), which is expected either to last at least 12 months, or to end in death.

What is the difference between SSI and SSDI?

Social Security Disability Insurance (SSDI), which is based on prior work under Social Security, and Supplemental Security Income (SSI). Under SSI, payments are made on the basis of financial need. Social Security Disability Insurance (SSDI) is financed with Social Security taxes paid by workers, employers, and self-employed persons. To be eligible for a Social Security benefit, the worker must earn sufficient credits based on taxable work to be “insured” for Social Security purposes. Disability benefits are payable to blind or disabled workers, widow(er)s, or adults disabled since childhood, who are otherwise eligible. The amount of the monthly disability benefit is based on the Social Security earnings record of the insured worker. Supplemental Security Income (SSI) is a program financed through general revenues. SSI disability benefits are payable to adults or children who are disabled or blind, have limited income and resources, meet the living arrangement requirements, and are otherwise eligible. The monthly payment varies up to the maximum federal benefit rate, which may be supplemented by the State or decreased by countable income and resources.

When should I, or can I, apply for SSDI?

When you believe you qualify or will qualify under the definition. You do not have to wait until you have been disabled 12 months, it must only be expected to last at least 12 months or result in death.

How much money will I receive if I qualify for SSDI?

For disability insurance benefits, your monthly benefit is based on how much you’ve worked and earned over the years. A disabled claimant will receive the same monthly benefit that he or she would receive had he or she retired at full retirement age (65 years old or more depending on age). (Currently the most an individual can receive is $2323 (2009) per month).

I am disabled. Can I apply for, and receive SSDI, even if I have money in the bank?

Yes. For a person eligible to receive SSDI benefits, overall wealth does not factor into the monthly benefit amount.

I received a notice from Social Security saying it over paid me. Do I have to return the money? It was their error.

No, if you appeal their decision and win the appeal or if the mistake was theirs and it would be a hardship for you to repay the amount, you can apply for and receive a waiver of the overpayment.

What if I’m not permanently disabled? Can I still receive SSDI?

It depends upon the nature of your disability. If your disability will not last 12 months, then you are not eligible. If your disability does not prevent you from doing any kind of substantial gainful employment, then you are not eligible.

Can I work and earn “any” income while on SSDI?

Substantial gainful employment is defined in 2009 as $980.00 per month if you are disabled or $1,640 if you are blind. If you have nominal earnings that do not exceed that amount, you can earn the money. But if you are able to maintain substantial gainful employment, you are no longer eligible.

What is a “trial work” period?

A trial work period is an opportunity to try and go back to work to see if you can do it without jeopardizing your benefits. A trial work period last for 7 months and must be reported to the Social Security Administration. If you are unable to maintain substantial gainful employment, your benefits will not be terminated because you tried to go back to work.

What is the Supplemental Security Income (SSI) Program?

The Supplemental Security Income program is funded by the general revenues of the Federal Treasury and is intended to provide a minimum level of income to persons who are age 65 or older, disabled, or blind and demonstrate economic need. The SSI program is meant to supplement any income an individual might already have to ensure a certain level of income to meet basic living expenses. The dollar amount received in SSI on a monthly basis varies from person to person and is computed each month, taking into account an individual’s current financial situation. You can be eligible for SSI even if you have never worked in employment covered under Social Security.

Can I receive Social Security benefits and SSI benefits?

You may be able to receive SSI in addition to monthly Social Security benefits, if you Social Security benefit is low enough to qualify.

How much can I receive in SSI?

The amount of your SSI benefit depends on where you live. The basic SSI check is the same nationwide. Effective January 2009, the SSI payment for an eligible individual is $674 per month and $1,011 per month for an eligible couple. However, many states add money to the basic check. Generally, the more income you have, the less your SSI benefit will be. If your countable income is over the allowable limit, you cannot receive SSI benefits. Some of your income may not count as income for the SSI program, however. For example, the first $20 per month of your Social Security benefits may be excluded in determining your eligibility to SSI

What are the eligibility requirements that a person must meet to qualify for SSI benefits?

For an individual to be eligible for SSI they must be disabled, or blind, or aged and have little or no income and resources.

Is there an Income or Asset Test for SSI?

Yes. To be eligible for SSI a person must meet an income as well as resource test. SSI resource limits are set by statue and a person’s countable or real personal property, including cash, must not exceed the specified amount to qualify. The current resource limit is $2,000 for an individual and $3,000 for a couple. Income includes earned income (which refers to monthly gross earnings), and unearned income such as Social Security Disability Insurance (SSDI) or any other type of benefit or monetary support a person receives.

How are SSI cash benefits affected by work and earnings?

Once eligible, the amount of SSI an individual receives on a monthly basis depends solely on their income and resources. While their SSI check will decrease as earnings increase, an SSI recipient will continue to get a cash benefit until their earnings increase to the point at which their SSI check is reduced to zero. This is referred to as the break-even point.

In addition to earnings, are their other factors that affect the dollar amount of an individual’s SSI check on a monthly basis?

Yes. SSI is an economic need based program intended to supplement any income or resources an individual already has to ensure that they have a minimum level of income each month. Therefore, the dollar amount of a SSI benefit received in a given month depends on the dollar amount of other income and resources that an individual has for that particular month. In January of each year Congress establishes the Federal Benefit Rate (FBR) which is the maximum dollar amount that an individual or couple can receive in SSI cash benefits on a monthly basis. How much of the FBR a person receives depends on all of the following factors:

resources — a person with resources over the allowable limits at the beginning of a month is ineligible for SSI benefits that month;
living arrangements and in-kind support — a person whose food and shelter expenses are paid for by someone else is considered to be receiving in-kind support. This is considered by SSA to be one type of unearned income and results in the person’s SSI check being reduced by one-third of the amount of FBR.
unearned income — the more unearned income, such as SSDI and Veterans benefits, a person receives, the greater the reduction in the SSI check.
earned income — the more earnings a person has, the greater the reduction in the SSI check
work incentives – utilizing available work incentives such as PASS and IRWE may assist an individual in either maintaining or increasing the dollar amount of their monthly cash benefit

What will happen to our adult disabled child after my husband and I pass away?

With a properly prepared trust, assets can be set aside and your child can remain eligible for government sponsored benefits such as housing and Medicare so your child’s needs will be taken care of even after your death.

What is a supplemental needs trust?

Supplemental needs trusts (also known as “special needs” trusts) are drafted so that the funds will not be considered to belong to the beneficiary in determining his or her eligibility for public benefits, such as Medicaid, Supplemental Security Income (SSI), or public housing. These trusts are designed not to provide basic support, but instead to pay for comforts and luxuries that could not be paid for by public assistance funds, such as education, recreation, counseling, and medical attention beyond what is required simply to maintain an individual.

What are the advantages of a supplemental needs trust?

The primary advantage a supplemental needs trust offers over a direct gift or inheritance is that, if arranged properly, the assets in the trust do not actually belong to the beneficiary. In this way, the trust can provide benefits to an individual but not cause the individual who has a disability to be disqualified from government programs. If a disabled beneficiary is left an outright gift, either by will or through the intestate laws, he or she would lose eligibility for SSI and Medicaid until the funds are spend down to the allowable limit. A supplemental needs trust holds title to property for the benefit of a child or adult who has a disability. The supplemental needs trust can be used to provide for the needs of a person with a disability and to supplement benefits received from various governmental assistance programs. A trust can hold cash, stocks, personal property, and real property. It can own and/or be the beneficiary of life insurance. Supplemental needs trusts also can be used to protect personal injury settlements or judgments from jeopardizing government benefit eligibility. Most importantly, they can help parents coordinate their estate plans and provide peace of mind that their child will be provided for.

Who can create a supplemental needs trust?

A supplemental needs trust can be set up by anyone for the benefit of a disabled individual. Very often supplemental needs trusts are created by a parent or other family member for a disabled child (even though the child may be an adult by the time the trust is created or funded). But the disabled individual can often create the trust himself or herself, depending on the program for which he or she seeks benefits.

Must the supplemental trust be irrevocable?

Yes, if it is created and funded by the person seeking public benefits himself or herself. No, if it is created and funded by someone else for the benefit of the person receiving or seeking public benefits.

What kinds of expenses can a supplemental needs trust pay for?

Each public benefits program has restrictions that must be complied with in order not to jeopardize the beneficiary’s continued eligibility for public benefits. A supplemental needs trust may provide for medical and dental expense, eye glasses, annual independent check-ups, transportation, equipment, training programs, education, maintenance, insurance, rehabilitation and dietary needs. The trust may also allow the trustee to give the beneficiary money for various forms of entertainment, electronic equipment, trips and vacations, computer equipment, companion services and home health aide and other items to enhance self esteem.

What expenses should a supplemental needs trust not pay for?

Special needs trusts are designed to supplement, not replace, the kind of basic support provided by government programs like Medicaid and Supplemental Security Income (SSI). Special needs trusts pay for comforts and luxuries — “special needs” — that could not be paid for by public assistance funds. This means that if money from the trust is used for food or shelter costs on a regular basis or distributed directly to the beneficiary, such payments will count as income to the beneficiary. This can affect eligibility for government benefits like Medicaid and SSI. One of the trustee’s most important jobs is to use discretion in making distributions from the trust so as not to jeopardize the beneficiary’s eligibility for these government benefits. For example, if the beneficiary receives SSI, there are some basic expenses that should not be paid through a supplemental needs trust without consultation with a special needs attorney including, cash given directly to the beneficiary for any purpose, food or groceries, restaurant meals, rent or mortgage payments, property taxes, homeowners or condo association dues, homeowners insurance if the insurance is a mortgage requirement , utilities such as electricity, gas, and water, and utilities hookup or connection charges. However, many of these payments will only cause a one-third reduction in SSI benefits. The trustee may determine that the benefit of the trust making these payments far outweighs the loss of income.

Will trust income affect SSI eligibility?

Under current Federal law, any inheritance of more than $2,000 disqualifies individuals with disabilities from most federal needs based assistance, including Supplemental Security Income (SSI) and Medicaid. Benefits from state public assistance programs may also be affected. Income paid from a supplemental needs trust to a beneficiary will reduce SSI benefits by one dollar for every dollar paid to him or her directly. In addition, payments by the trust to the beneficiary for food or housing are considered “in kind” income and, again, the SSI benefit will be cut by one dollar for every dollar of value of such “in kind” income. Some attorneys draft the trusts to limit the trustee’s discretion to make such payments. Others do not limit the trustee’s discretion, but instead counsel the trustee on how the trust funds may be spent, permitting more flexibility for unforeseen events or changes in circumstances in the future. The difference has to do with philosophy, the situation of the client, and the amount of money in the trust.

How Do You Choose a Trustee?

Choosing a trustee is one of the most important and difficult issues in supplemental needs trusts. The trustee must have the necessary expertise to manage the trust, including making proper investments, paying bills, keeping accounts, and preparing tax returns. A professional trustee will have these skills, but may be unfamiliar with the beneficiary and his unique needs. For those who may be uncomfortable with the idea of an outsider managing a loved one’s affairs, it is possible to simultaneously appoint both a professional trustee and a family member as co-trustees. It’s also possible to hire a trust “protector,” who has the power to review accounts and to hire and fire trustees, and a trust “advisor,” who instructs the trustee on the beneficiary’s needs. However, if the trust fund is small, a professional trustee may not be willing to serve. Make sure that whomever you choose is financially savvy, well-organized, and, most important, ethical.

How can I fund a special needs trust?

A parent with a child with special needs should consider buying life insurance to help fund the special needs trust set up for the child’s support. What may look like a substantial sum to leave in trust today may run out after several years of paying for care that the parent had previously provided. The more resources available, the better the support that can be provided to the child. And if both parents are alive, the cost of “second-to-die” insurance — payable only when the second of the two parents passes away — can be surprisingly low.

Can a disabled individual fund his or her own supplemental needs trust?

In many cases, funds belonging to, or about to be received by, a disabled individual can be used to create a supplemental needs trust for that individual. The rules, however, are much more restrictive and sometimes require a court order to create this trust. Further, the rules may only permit an individual to create his or her own supplemental needs trust if under age 65. We call this kind of supplemental needs trust, when funded with the disabled individual’s own money, a “Self-Settled Supplemental Needs Trust”. The other kind, referring to a supplemental needs trust created by a parent or grandparent, is sometimes called a “Third Party Supplemental Needs Trust”. However, once created, both kinds of supplemental needs trusts operate by the same rules, with one important exception: the self-settled supplemental needs trust requires, to the extent of any funds remaining on the death of the disabled beneficiary, payback to the state up to the amount of Medicaid benefits paid out. There is currently no payback for SSI payments and no payback requirements for third party supplemental needs trust.

Can others contribute to my child’s supplemental needs trust?

One key benefit of creating a trust now is that your extended family and friends can make gifts to the trust or include the trust in their estate planning. You can also consider whether making the trust the beneficiary of a life insurance policy makes sense now, while you are healthy and insurance rates are low. In these cases, the supplemental needs trust should be irrevocable rather than revocable.

Why is it important to work with an Attorney who specializes in supplemental needs trusts?

It is important that supplemental needs trusts not be unnecessarily inflexible and generic. Although an attorney with some knowledge of trusts can protect almost any trust from invalidating the child’s public benefits, an attorney without special needs experience may not customize the trust to the particular child’s needs, and the child may not receive the benefits that the parent provided when they were alive. Another mistake attorneys without special needs experience make time and time again is putting a “pay-back” provision into the trust rather than allowing the remainder of the trust to go to others’ upon the special needs child’s death. While these “pay-back” provisions are necessary in certain types of supplemental needs trusts, an attorney who knows the difference can save your family hundreds of thousands of dollars, or more.

What are the alternatives to a supplemental needs trust?

You can choose to disinherit the disabled child, and leave the funds to your other children with the understanding that they will provide for their disabled brother or sister. Sometimes this plan works effectively. However, the siblings are not under any legal obligation to use the money for this purpose. Also, it is difficult to predict the future. This money could be subject to your children’s creditors, divorce, business failures, lawsuits. The money that you had intended to provide for your disabled child may not be used as you had wished. Sometimes siblings feel more secure knowing that there is an established plan defining their responsibilities.

My disabled child is about to turn 18, what should I do?

Once a child reaches the age of 18, he or she has the right to make decisions about health care and where to live, even if the child is not competent to do so. You will need to obtain court-ordered guardianship of a developmentally disabled child after the child reaches the age of 18. Guardianship can authorize you to make placement, financial and medical treatment decisions.

What is guardianship?

Guardianship is a legal relationship whereby the Probate Court gives a person (the guardian) the power to make personal and/or financial decisions for another (the protected person). This may include making decisions concerning his or her personal and/or medical needs. A guardian may be appointed when a Probate Court determines that an individual is unable to care for himself or herself by reason of minority, mental illness, mental retardation or physical incapacity. A guardian may determine where the ward will live, what type of medical treatment he or she receives, and most other aspects of the protected person’s life.

What is conservatorship?

Conservatorship is a legal relationship whereby the Probate Court appoints a person (the conservator) the power to take financial responsibility and control over the assets of another person (the protected person). A conservator may be appointed when a Probate Court determines that an individual is unable to care for his or her finances by reason of minority, mental illness, mental retardation or physical incapacity. A conservator may take possession of the protected person’s assets and is obligated to protect, invest and use them for the protected person’s benefit.

When is a guardianship and/or conservatorship necessary and appropriate?

If you have not given anyone legal authority to act in your place (via the use of a durable power of attorney and/or a health care proxy) and you are no longer able to make your own decisions regarding health care and financial matters, the court might be asked to appoint someone to take responsibility for your affairs. However, if there are disagreements regarding placement or medical care, a guardianship may be needed even when there is a durable power of attorney or health care proxy. Guardianship and/or conservatorship are appropriate only when impaired judgment or capacity poses a major threat to a person’s welfare. Neither is appropriate when a person merely shows poor judgment or has difficulty making decisions. A medical evaluation by a licensed physician is required to establish the proposed protected person’s condition. However, because guardianships and conservatorship result in a substantial loss of liberty for the protected person, only a court can determine the need for a guardian or conservator.

How can I become a guardian or conservator?

Assuming that a physician will attest to the protected person’s incompetence, a petition must be filed with the Probate Court requesting the appointment of a guardian and/or conservator. Two petitioners must sign the petition and the proposed guardian/conservator must file a bond with or without sureties with the court. Then, the court directs that the heirs of the protected person and the protected person himself or herself receive notice of the filing of the petition of guardianship. The court sets a date by which anyone wishing to object may do so, including the proposed protected person. A hearing is then held where a judge decides whether a guardian and/or conservator should be appointed.

How long does this appointment last?

A temporary appointment can last 90 days. A permanent appointment may last until the death of the protected person or the guardian/conservator, until the protected person is able to establish that he or she is competent, or until the guardian/conservator resigns or is removed by the Probate Court.

What authority does the guardian have?

There are full and limited guardians. The guardian has only the powers specified by the court. Unless limited by the court, the guardian has complete control over the personal decisions of the protected person. This includes deciding where the protected person will live, determining how the protected person’s funds will be spent and making routine medical decisions for the protected person. However, the guardian must seek the approval of the court (1) for medical decisions involving extraordinary medical care, (2) the administration of anti-psychotic drugs, or (3) commitment to a mental health facility.

What authority does the conservator have?

There are full and limited conservators. The conservator has only the powers specified by the court. Unless limited by the court, the conservator has complete control over the financial decisions of the protected person. This includes taking possession of the protected person’s assets, paying bills, filing and paying taxes, protecting, investing and using the protected person’s assets for his or her benefit. However, the conservator must seek the approval of the court for the sale of the ward’s real estate or other property.

What are the responsibilities of the guardian?

The guardian is responsible for the protected person’s care, comfort, health, and maintenance. The guardian makes routine medical decisions for the ward. The protected person has no more authority to make these decisions for himself for herself.

What are the responsibilities of the conservator?

The conservator must account carefully for all of the protected person’s income and any expenditures made on his or her behalf. This is accomplished by the conservator filing an inventory listing the protected person’s assets with the court as of the date of appointment and by filing annual accounts with the court detailing all the income and expenses the protected person has. A final account must be filed when the conservatorship is terminated. The conservator is liable for her acts until the court approves the account.

What are the alternatives to guardianship and/or conservatorship?

When a guardian or conservator is appointed, the protected person loses independence and autonomy, as well as the power to exercise many legal rights. There are several less restrictive alternatives to guardianship and/or conservatorship. These include durable powers of attorney, representative payees, trusts and health care proxies. Each of these options may avoid or delay the need of a guardian or conservator. However, a person needs to execute these documents while he or she has the requisite mental capacity to do so.

What is a Roger’s Guardianship?

A Rogers guardianship enables the guardian to obtain specific authority to make decisions for extraordinary medical treatment of a ward. Extraordinary medical care includes invasive medical care, treatment with antipsychotic medication, admission to a mental health facility, or withholding of treatment.

Do I need a real estate attorney when I am buying or selling a home?

Yes, absolutely and following are the reasons. 1. When you are Purchasing a home: This is the biggest purchase you will probably make in your lifetime. The sales contract you signed is long and complicated and many protections you might have are time-driven. Once the time expires your protections are lost. Some of the time frames last from a couple of days to 30 days. If you are not ready to close, for example you cannot get a mortgage (which is more involved than a pre-approval), you could lose your earnest money, and in addition you could be sued. 2. When you are selling a home: When you sell your property, an attorney will provide many services, from ordering and clearing title to drafting closing documents including the deed. Your attorney orders payoff for your mortgages, the survey, zoning and water certification. Additionally, if your property is a condominium, there are several documents needed from your condo association before you close.

What is a purchase and sale agreement?

A purchase and sale agreement is a standard document between the buyer and seller that states the terms and conditions under which the property is sold.

What is a title?

A title is the evidence that you have outright ownership and possession of land. It is possible that someone other than the owner has a legal right to the property. If his or her right can be established, he or she can claim the property outright or make demands on the owner as to its use.

What can make a title defective?

Any number of problems that remain undisclosed even after the most meticulous search of public records can make a title defective. These hidden “defects” are dangerous because you may not learn of them for many months or years. They could force you to spend substantial sums on legal defense and still result in the loss of your property.

Do I need title insurance?

Title insurance insures the record title and protects an owner of property from losses arising from defects occurring prior to the date of the policy. There are two types of Title Insurance â€“ a Lender’s Policy and an Owner’s Policy. Your lender likely will require you to purchase a Lender’s Policy. While an Owner’s Policy is not legally required, it is highly recommended. It is a means of protecting yourself from financial loss in the event that problems develop regarding the rights to ownership of your property. There may be hidden title defects that even the most careful title search will not reveal. In addition to protecting you from financial lost, title insurance pays the cost of defending against any covered claim.

If the lender already requires title insurance, won’t that protect me?

Not necessarily. A Lender’s Policy only insures that the financial institution has a valid, enforceable lien on the property. Most lenders require this type of insurance and typically require the borrower to pay for it. An Owner’s Policy, on the other hand, is designed to protect you from title defects that existed prior to the issue date of your policy such as forgery, undisclosed but recorded prior mortgages, bankruptcies, liens or divorces, deeds not properly recorded, missing wills or heirs and inadequate property descriptions. Such title problems could put your home equity at serious risk. If a valid claim is filed, an Owner’s Policy protects you from financial loss up to the face amount of the policy and covers the full cost of any legal defense of your title.

How much does title insurance cost?

The cost of title insurance is set by the Title Insurance Company. An Owner’s Policy is a one-time only premium directly related to the value of your home. Although it is a one-time only expense paid when you purchase your home, it continues to provide coverage for as long as you or your heirs own the property.

What is not covered by title insurance?

Title insurance provides valuable protection for property buyers. Like all forms of insurance, however, it does not cover every conceivable problem and it is important to understand its limitations. Title insurance is based on examination of the county real estate records, and generally will not cover problems arising from facts outside of the recorded chain of title. One common problem not covered by title insurance is boundary line issues, which would be revealed by a survey of the property (for example, it turns out that your fence is actually two feet onto your neighbor’s property). Unrecorded mechanics’ liens and unpaid public utility bills are other examples. The title insurance policy will describe many of the situations it does not cover; these same limitations will generally be found in an attorney’s title examination. A qualified real property attorney can assist in helping a buyer understand the limits of a title policy and can take care of issues not covered by the policy.

What is a lien?

A lien is any legal claim on real property that acts as a security for the payment of a debt or other obligation. If the debt is not repaid as promised, the lender or the lien holder can foreclose its claim on the property and force a public sale to pay the debt. The most common form of a lien on property is a mortgage. While all mortgages are liens, not all liens are mortgages. Other types of liens are commonly encountered and part of the work of the real property attorney is to check for outstanding liens at the time a real estate transaction closes. These include such things as judgment liens resulting from a court judgment against the owners, mechanic’s liens resulting from recent improvements to the property, liens for unpaid taxes, and liens for unpaid municipal utilities such as water and sewer.

What is an easement?

An easement allows another person the right to use your land for a specific purpose. The most usual easements are those granted to public utility or telephone companies to run lines on or under your private property and to neighboring houses to use a common driveway to give access to their home.

Should I arrange for a house inspection before closing?

YES. To avoid legal headaches and expensive repairs later, you should arrange for a professional inspection before finalizing the purchase of a new home. A satisfactory inspection may also be required by your lender or insurer. Be sure to consult with an experienced real estate attorney for guidance on how to word the contract of sale to protect your interests in case the inspection reveals unexpected defects.

What happens during a closing?

The deed and other closing papers are prepared
The title passes from the seller to buyer, who pays the balance of the purchase price
A closing statement (HUD Settlement Statement) is prepared prior to the closing indicating the debits and credits to the buyer and seller
The deed, note, mortgage instrument and other closing documents are signed. The note evidences the debt; the mortgage secures the real estate to the note in case you do not pay; and the deed transfers title.

What are closing costs?

home. They include upfront loan points, title insurance, escrow or closing day charges, document fees, prepaid interest and property taxes. Unless, these charges are rolled into the loan, they must be paid when the home is closed. Typical buyer costs include:

Home Inspections
Surveys
Pro rate share of yearly property taxes, property association dues and other similar fees (prorated for date of closing)
Attorney fees for title search and closing
Title insurance policies, home insurance, lender fees, flood zone certificate fees, recording costs
Initial deposit for escrow accounts for property taxes and home insurance

Typical seller costs include:

Deed preparation
Tax stamps, an excise tax based on sales price
Prorated share of yearly property taxes, property association dues and other similar fees (prorated for date of closing)
Fees associated with loan payoff or transferring funds (overnight fees, EFTs)
Any costs seller agrees to share with the buyer.

What form of money should I bring to the closing?

Buyers should bring a bank check or certified funds to closing. If one of these options is not available, buyers should make arrangements to wire funds directly to the closing attorney at least one business day prior to the day of closing. If verifiable funds are not presented at the time of closing, the recording of the documents will be delayed and the buyer may not be able to move into the new home. Personal checks are acceptable in nominal amounts.

What obligations are there as a Seller of property?

The Seller is obligated to produce a Smoke Detector and Carbon Monoxide Detector Certificate at the time of closing. To obtain a certificate, the seller or its agent must contact the fire department for the municipality in which the property lies to conduct the inspection.

Will I receive a survey of the property at closing?

No. In Massachusetts, a lender may require a plot plan of the property which does not formally located all of the property boundaries, but it does locate the house in particular vicinity within the boundary lines.

Will I receive an appraisal of the property at the closing?

You are always entitled to a copy of the lender’s appraisal if there is a lender involved on your behalf as a buyer. The appraisal is often presented at the closing or it can be requested in writing.

What is adverse possession?

Adverse possession is a right to use or own property that is the result of continued use and occupancy over a period of time, generally ten to twenty years depending on the state. If a non-owner of property occupies and uses the property without the permission of the actual owner for long enough, the law will find that the actual owner has lost his or her rights in the property and ownership has transferred. Since the doctrine of adverse possession results in taking property without payment, the principle is applied very carefully by the courts and only if certain specified conditions are met. Thus, for example, the adverse use must be obvious to the real owner. And the use must be hostile, meaning that it is without the permission of the real owner. Use of another’s property with the permission of the owner will never create a right of adverse possession.

Where can I get copies of deeds and other documents relating to property?

The Registry of Deeds of the county in which the property is located is the place where deeds are recorded and kept on record. Any member of the public can examine the deeds, mortgages and various liens and other real estate records that are on file there. Copies can also be made for a small fee.

What is a Homestead Declaration?

Can (a) trustee(s) file for home Homestead protection?

The Massachusetts Land Court has determined that registered land held in trust cannot be given Homestead protection. There is no such limitation regarding recorded land.

What happens to my Homestead if I should re-mortgage or take out a second mortgage or home equity loan?

In some cases, the lending institution may require that your Homestead be released. In that case, once the mortgage is recorded or registered, you can record a new Homestead. The statute, in some cases, exempts first and second mortgages from Homestead rights, so the chances are you will not have to release a Homestead to refinance or obtain a home equity loan. Also, most standard mortgage forms used today have a specific release of Homestead rights for that particular transaction, which negates the necessity to file a general release of Homestead.

Search FAQs

Please be advised that the following information is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation.

Estate Planning FAQs

Elder Law FAQs

Asset Protection FAQs

Long Term Care and Medicaid FAQs

Probate and Estate Administration FAQs

Disability and Special Needs Planning FAQs

Guardianship and Conservationship FAQs

Real Estate FAQs

What is elder law?

Why hire an elder law attorney?

What is Medicare?

Who determines if I am eligible for Medicare?

When should I apply for Medicare benefits?

If I apply for Medicare during the General Enrollment period, will Medicare coverage start immediately?

What benefits do I receive under Medicare Part “A”?

What benefits do I receive under Medicare Part “B”?

What doesn’t Medicare pay for?

How do I apply for Medicare?

What is Medigap Insurance?

What is Medicare Part D?

What is Medicaid?

If covered by Medicaid, won’t I or my loved one get subpar care?

What is Social Security?

What is long-term care?

What is home health care?

What are adult day health programs?

What are Assisted Living Facilities?

What is hospice?

What are the requirements for hospice care?

Will the nursing home put me out on the street if I am unable to pay?

If my loved one has been private paying in a nursing home and later qualifies for Medicaid, is the nursing home allowed to move him to a “Medicaid” bed?

What is an “Estate”?

How Can an Estate Plan Help?

What documents should I have for a comprehensive estate plan?

What is a Will?

What happens to my property if there is no Will?

Are there limitations on dispositions by Will?

How often should a Will be reviewed?

How can I change my will once it has been signed?

What are estate taxes?

Will I owe estate taxes?

Can I just give all of my property away before I die to avoid estate taxes?

What is a gift tax?

Is every gift subject to a gift tax?

How can I limit my estate tax liability?

What is a Trust?

What are the benefits of establishing a Trust?

What is a Revocable Trust?

What is an Irrevocable Trust?

What is a Credit Shelter Trust?

What is a Marital Deduction Trust?

What is an Irrevocable Life Insurance Trust?

What is a Durable Power of Attorney?

Why do I need a Durable Power of Attorney?

When does my Agent acquire the right to act on my behalf?

If I give a power of attorney to another, do I give up the right to manage my own affairs?

How do I change or revoke a Durable Power of Attorney?

Can an attorney-in-fact be held liable for his or her actions?

Can an attorney-in-fact be compensated for his or her work?

What if there is more than one attorney-in-fact?

Can the attorney-in-fact be fired?

What kind of records should the attorney-in-fact keep?

What is a Health Care Proxy?

Why should I have a Health Care Proxy?

Who should I appoint as my agent?

When does my Agent acquire the right to act on my behalf?

Who should have a copy of my health care proxy?

How do I change or revoke a Health Care Proxy?

What is an Advance Directive?

What is a HIPAA Release?

What is a Standby or Emergency Guardianship Proxy?

What is a Homestead Declaration?

What is asset protection?

Can I protect assets by transferring them to my kids?

What should I do if my spouse is entering or expected to enter a nursing home?

Should I transfer my assets into joint ownership?

Will a revocable living trust provide asset protection?

What is an annuity and how does it work?

If my loved one has been private paying in a nursing home and later
qualifies for Medicaid, is the nursing home allowed to move him to a “Medicaid” bed?