Trusts come in lots of flavors.  They can accomplish all sorts of fancy tax planning, can include certain family members but not others, can run scholarships or foundations – the things you can do with a trust are endless.  But most clients in my office need what I call the “plain vanilla” trust.  That’s a straight-forward revocable family trust.  Mind you, it’s still twenty pages long and takes hours to put together, but within the world of trusts, this is the simple one.  The one that most of us should have, the one that I have set up for my family.

A revocable family trust serves two main purposes.  The first goal – the one everyone thinks about – is that it will distribute your stuff after you die.  It substitutes for the will.  Within your trust, you do what you typically think of as the will’s job – you say how your want your estate distributed after you die.  Usually people split their assets equally among their children, but that’s not always the case.  We can designate whomever you want and in whatever portions you want under your trust (we can do that under a will, too, but right now we are talking about trusts).

So why would we use a trust instead of a will?  Simple answer: it will save your family lots of headaches. If you don’t direct your assets to a trust, and instead just leave all your assets in your own name, then when you die those assets will be governed by your will.  So far so good.  But after you die, there has to be a legal process of changing title on your assets from your name to the people you’ve named in your will.  That legal process is called the “probate process.”  It requires that your children work with an attorney, go through the court’s system (which can take at least a year, quite often longer), complete lots of paperwork, and spend plenty of money on court fees and attorney’s fees.  If you instead set up a trust now and take the time to transfer your assets to your trust now, then after your death, your children have precious little to do.  The trust will already own the assets.  Now the trustee (probably one of your children) just has to review bank statements, sell the home, and cut checks to all your beneficiaries.  The trustee will have some work to do, but an awful lot less work compared to taking all of your assets through the probate process.

Another reason to have a trust – and this is the reason that no one thinks about except us lawyers who think of all the “what if’s” – is to protect you while you are living.  If you transfer your assets to your trust now, and you go on vacation or are in the hospital or develop dementia, then your successor trustee (usually a child, sometimes a sibling or best friend) can take over managing your assets.  Bills will be paid, that CD will be renewed when the maturity notice comes in the mail, etc.  Your successor trustee steps into your shoes and manages your money, so things continue seamlessly, even though you are unable to manage your own affairs.  What a relief.

I should clarify what it means to “transfer your assets to your trust.” That’s really a fancy way of saying that you are “changing the name” on your accounts.  For example, if you have a money market at the bank in your name, then after you sign the trust, I would tell you to call the bank and have them change the owner of the money market from you individually to the revocable family trust that you just signed.  They will probably have you complete a new signature card.

Since you will be the trustee of your trust, nothing will feel any different on a day to day basis – you are still the one accessing your accounts, reviewing statements, paying bills, etc.  The difference is that you have a Plan.  If you need help managing your assets during your lifetime, you have empowered your successor trustee to step in and take care of you.  And you have lined up your assets so that your family will not have to deal with the hassle and cost of probate after you pass away.  A plan.  Feels good, doesn’t it?

Help your friendly neighborhood caregiver take a break.  Happy Holidays!

Here is what I received from the Alzheimer’s Association:

A friend who works in the State House took this photo of me with
Justice Louis Brandeis!

You may already know that MassHealth has a 5-year “lookback.”  That means that if you ask MassHealth to pay your nursing home bill, they look back over the last five years to see if you have made any transfers, or gifts.  If you have, then MassHealth will deny your application for benefits, the rationale being that you should have known that you would need a nursing home within five years and would need that money.

Technically, the law instructs MassHealth to deny applications where the applicant gave her money away with the “intent” of qualifying for MassHealth.  But what about the situations where people are healthy, don’t anticipate medical deterioration in the near future, and are following the natural instinct to help their kids, for example, with college, a wedding, or tough times?

I was asked to testify on a case I have currently, which I can’t describe much because of client confidentiality.  Let’s just say that Mrs. Beautiful has lived a very difficult life, financially and emotionally.  About three years ago, she won a settlement in a class-action lawsuit, and even though she had so little money of her own, she immediately gave it to her grandchildren for college.  She was determined that they would have a better shot at life than she had.  At that time, her health was fine, with no hint of an upcoming turn.

About six months ago, her health suddenly declined and her mind slipped.  Staying at home didn’t work, and she moved to a nursing home.  She and her husband have very little money, so they applied for MassHealth.  They of course denied her application, since she had given money to her grandchildren.  Despite what the law says, MassHealth didn’t bother to consider whether Mrs. Beautiful gave that money away for the purpose of getting out of paying her future nursing home bill, or if she did it driven by an instinct to do right by her grandchildren, during a time when her health was fine.

MassNAELA’s bill would clarify the law and create a more precise process by which MassHealth must determine whether an applicant transferred assets with the intent of qualifying for MassHealth or whether they made gifts to their family during times of good health, for all the right reasons that families help each other.

This program is available to non-residents on a space-available basis.  Find more info here (jump down to page 23 of the pdf).

Fair winds to you!

If you typically file taxes, be sure to remind your preparer to check your eligibility for the Circuit Breaker Tax Credit.  And if you weren’t planning to file taxes?  The state will actually mail you a check in the amount of the Circuit Breaker – you simply need to file a one-page form with the Massachusetts Department of Revenue (that’s the state equivalent of the IRS).

If you need help filing for the Circuit Breaker Tax Credit, here’s more good news – each year, AARP trains volunteers who help seniors with their tax preparation.  Call your local senior center to make an appointment with an AARP volunteer.  Spots fill up fast – call soon.

A healthcare agent is the person you name in your Health Care Proxy to make medical decisions for you when you cannot make them for yourself.  This person will talk to doctors, manage your medical care, authorize treatment, and possibly even make life and death decisions.  Knowing all this, it is important to choose someone who thinks clearly under pressure, is not intimidated with medical problems, and who will keep the medical staff in check.  But beyond choosing the right person, it is essential to discuss your wishes with your agent ahead of time.

Executing a healthcare directive and nominating a healthcare agent is not just about choosing the right person to make the big life-and-death decisions for you, it’s also about taking care of the loved ones you leave behind.  Most people have strong wishes about life-support and end-of-life care, but rarely do they want those wishes carried out at the expense of their loved ones.  Creating a healthcare directive which outlines those wishes—and discussing those wishes with your agent and your family—is important not only for your own peace of mind, but also to ensure the peace of mind of your loved ones, those who will be left to mourn your absence after you’re gone.  As a health care directive, I give each client the “Your Way” workbook.

And if you don’t name an agent in a Health Care Proxy?  Your family will be forced to go to court and spend thousands of dollars pursuing a guardianship.

Before you scoff that you aren’t wealthy enough to need a trust, consider that there are many different kinds of trusts, each of which may be used for specific situations.  Some trusts are complicated and extensive, created by wealthy families to preserve assets through generations.  Other trusts are simple and to the point, created by young parents to ensure that their minor children will be provided for.  What kind you will need will depend on a number of factors, including the size of your estate, your goals for that estate, the age of your children, your marital status, whether you have a special needs child or grandchild, and many, many more.

Most trusts created for estate planning purposes are revocable living trusts (or RLTs).  An RLT is a document created not simply to distribute your property, but to own your property during your lifetime, to be invested and spent for your benefit or the benefit of your named beneficiaries.  As such, a trust takes effect as soon as you sign it, and your property is protected by it, as soon as you place your assets in the name of your trust.  There is a lot of flexibility available with a revocable living trust, and yours can be created to fit your unique situation.  Most RLTs name the trust creator (you) as the initial trustee, nominating individuals or banks to take over as trustee when you become incapacitated or pass away.

One of the primary benefits of a trust is that when you pass away, property is not merely distributed and that’s the end of it; you can instruct the trustee to distribute the money slowly and in any number of ways, for example, keeping it out of the hands of a spendthrift child or protecting it for the benefit of a special needs child.

You may not have a Back Bay penthouse or an Italian villa, but you do have a family to protect.  We’d like to help.  Contact our office to find out if your family needs a trust.

The frontal lobe of the brain is responsible for impulse control, decision-making, planning out tasks, and the like. It doesn’t fully develop until we are in our 20’s. Essentially, it is the last part of our brain to mature. If you recall the questionable decisions you made in your teens and college years, you will most likely agree.

Are you caring for someone with dementia? Decreasing ability to control impulses, make decisions, and plan tasks – sound familiar? Many dementias attack the frontal lobe. Interesting, isn’t it?

There are a lot of benefits to Continuing Care Retirement Communities (CCRC’s), also called “Buy-In’s.” These are the places where you put down a substantial sum (maybe $250,000 or more) as an entrance fee, and you plan to stay there for life – they have independent apartments, various levels of assisted living, and skilled nursing (nursing home), all on campus. There is definitely something appealing about the promise of being cared for for life.

But will they really care for you for life? There are some big questions right now about the nursing home units at CCRC’s. For example, when describing the nursing home to you, a potential customer, the sales staff will explain that if you run out of money, they will help you apply for Medicaid. Well, as it turns out, sometimes the CCRC makes you spend down even further than the Medicaid rules do.

For example, for a married couple, if one spouse needs nursing home but the other is still in the community (ex. in her own apartment or in the assisted living), MassHealth rules permit the community spouse to keep about $110,000 to live on. But guess what – before letting the husband move into a MassHealth nursing home bed, the CCRC might make the wife spend her own money down even further than the $110,000, maybe allowing her to keep only $50,000 for herself. And what did they have her spend it on? The husband’s private pay bed in the CCRC nursing home. And how much longer can she last in the community with only $50,000 to her name?

The sales team might also tell you that if a couple really runs out of money, there is a benevolent fund that will help you pay your monthly fees. I’d be a lot more comfortable moving into a CCRC if I saw the balance sheet for that benevolent fund – is there really enough in it for all the residents who might need help? And do they ever really expend from the benevolent fund?

Before committing to a CCRC, do your research. Dig around to make sure that what the sales staff is telling you is true. Two sources of hands-on experience with the nursing home units are going to be (1) local families who have been through the nursing home, and (2) local elder law attorneys who have helped clients navigate the CCRC nursing home experience.