Attorney Suzanne Sayward

Attorney Suzanne Sayward’s Smart Counsel interview with Steve Pepe from Longbridge Financial, LLC.

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This week we feature Attorney Suzanne Sayward’s Smart Counsel interview with Steve Pepe from Longbridge Financial, LLC. Sue and Steve discuss Reverse Mortgages and how you might use one to help you in your planning. We appreciate Steve taking the time to share his experience and knowledge with us.

Longbridge Financial, LLC is a leading lender devoted to responsibly advising retired homeowners in reshaping their retirement plans by educating them on Home Equity Conversion Mortgages (HECM) — and assisting them in unlocking the strength of their home.

Learn more: https://agents.longbridge-financial.com/steve-pepe/

5 Things to Know about Your Home and Paying for Long-term Care

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May is recognized as Elder Law month by the National Academy of Elder Law Attorneys (NAELA) and members are encouraged to provide education about the particular legal challenges that older Americans face to bring awareness of these to the public at large. One of the most frequent concerns I hear from older clients is about protecting their home from loss to long-term nursing home care costs.  Given that a nursing home can cost $16,000 per month or more, this is a valid concern.  

There are essentially three ways to pay for long-term care:  1) private pay – recipients of care pay the cost from their funds; 2) long-term care insurance – this is insurance purchased and maintained by the care recipient the purpose of which is to pay for long-term care costs; and, 3) Medicaid (sometimes called MassHealth in Massachusetts).  Medicaid is the state and federally funded program that will pay the medical costs, including nursing home care costs, for individuals who are both medically and financially eligible for the program. 

Here are 5 things to know about how the home is treated for purposes of determining financial eligibility for Medicaid benefits to pay for long-term nursing home care costs. 

 

1. You don’t have to sell your home, but there will be a lien.  Many people think that they must sell their home in order to be eligible for Medicaid benefits.  Sometimes they believe this because they have been told so by the long-term care facility caring for their loved one.  This is not the case. The home is so-called ‘non-countable’ asset (up to $1,097,000 of equity in 2025) for purposes of determining Medicaid eligibility.  That means that a person may receive Medicaid benefits to pay for nursing home costs and still own his home.  However, the Commonwealth will file a lien against the property with the registry of deeds.  The amount of the lien is the amount the state pays on behalf of the Medicaid recipient. As such, the house cannot be sold without re-paying the state.   In addition, if the recipient is a single person and dies owning their home after receiving Medicaid benefits to pay for care, the state will file a claim against the recipient’s estate and seek repayment from the estate.

 

2. Keeping the home can be challenging.  Although the regulations permit a Medicaid recipient to own her home, this can be challenging since all but a small amount of the recipient’s monthly income must be paid to the nursing home each month toward the cost of care.  As such, the recipient’s income is not available to pay the real estate taxes, insurance, utility bills and the cost of upkeep on the home.  In some cases, family members will pay these expenses and hope to be reimbursed when the home is eventually sold. In other cases, the home will be rented and the rental income used to pay the property expenses.  Both of these options present challenges and should be thoughtfully considered before embarking on either. 

 

3. Transferring ownership of the house to the spouse in the community is usually advisable.    Many married couples own their home as tenants by the entirety which is a special form of joint ownership for married couples.  This form of ownership means that when one spouse dies, the house belongs entirely to the surviving spouse without the need for probate.  Although the house is a non-countable asset and the state is not permitted to file a lien against the property if there is a spouse residing in the home, it is usually prudent to transfer the home into the name of the community spouse when one spouse needs long-term nursing home care.  The reason for this is to protect the home from a lifetime lien or post-death claim (see #1 above) in the event the community spouse predeceases the nursing home spouse. There is no ineligibility period imposed for transfers of assets between spouses (see #4 below).

 

4. Special rules for certain transfers of the home.    The general rule for eligibility for Medicaid to pay for nursing home care costs is that if the applicant (or his or her spouse) gives away assets within the 5-year period preceding the application for benefits, he or she will not be eligible for benefits.  This penalty applies to transfers of the home as well as other assets even though the home is a non-countable asset.  However, there are some exceptions to this transfer penalty rule.   The most commonly used exception is the exception for transfers between spouses.  The Medicaid regulations permit assets, including the home, to be transferred between spouses without the imposition of any penalty period.  Taking advantage of this exception is a good way for a married couple to protect the home from a Medicaid lien when one spouse needs long-term care.  Other exceptions to the transfer penalty include transfers to a blind or disabled child and to certain types of trusts.  

 

5. Planning 5 years in advance of applying for Medicaid can preserve the home for your beneficiaries.   For people who want to preserve the value of their home for their children or other beneficiaries, planning in advance is the best way to achieve that goal.  Transferring the home to an irrevocable trust that complies with the Medicaid rules is a common planning strategy.  However, there are consequences to such a transfer that need to be considered to determine if this is the right planning for your situation.  

 

For many families, the home is their most valuable asset and they want to pass that value to their beneficiaries when they die.  The prospect of losing one’s home to long-term care costs worries many people.  Being informed of the Medicaid eligibility rules and how those rules apply in your situation is the first step in determining your options for preserving your home from loss to nursing home care costs. If we can help you navigate the rules and your options, please don’t hesitate to contact our office and make an appointment with one of our attorneys. 

 

Attorney Suzanne R. Sayward is a partner with the Dedham firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate settlement and elder law matters. She is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts.  This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020. 

 

May, 2025

 

© 2025 Samuel, Sayward & Baler LLC

Five Estate Planning Myths

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As in most areas, myths, misconceptions, and misunderstandings abound in the estate planning arena.  Read on for five common estate planning myths. 

Myth No. 1 – If you have a Will your Estate will not need to go through Probate.   Many people think that if they create a Will, their estate will avoid probate.  This is not true. Probate is the court process of changing the title on assets when someone passes away.  Assets that are owned in a deceased person’s individual name and for which there is no named beneficiary are no longer accessible once the owner of the asset has died.  This is the case whether or not the owner of the asset had a Will.  A Will allows the maker of the Will to choose who will receive his or her probate assets.  However, a Will does not avoid probate.  

Myth No. 2 – A Couple that lives together for 7 years in Massachusetts will be deemed Married under Common Law. While common-law marriage does exist in some states, Massachusetts is not one of them. No matter how long a couple lives together, neither Massachusetts nor the federal government will recognize them as married.  This is important to understand because a non-spouse has no inheritance rights (unlike a spouse), nor is a non-spouse partner entitled to Social Security benefits or pension benefits that a spouse is entitled to receive.  Of course, partnered couples are not prohibited from leaving assets for the benefit of each other.  The key is they must take steps to make that happen; it will not happen under the intestate law in Massachusetts.  

Myth No. 3 – If a Trust is irrevocable, no distributions can be made from the Trust.    An Irrevocable Trust is an excellent planning tool for some circumstances such as tax planning and long-term care planning.  Many people think that if a Trust is irrevocable that means that no distributions may be made from the Trust.  This is not true.  For example, an Irrevocable Income Only Trust is an irrevocable Trust often used to preserve assets from needing to be spent down on long-term care costs.  The way that it works is that the maker of the Trust transfers assets to a Trust that strictly prohibits distributions of principal from the Trust to the Trust maker but permits distributions of income.  For example, if I had rental real estate and transferred it to an irrevocable Trust, I could continue to receive the rental income, but I could not receive a distribution of the property.

Myth No. 4 – The law authorizes a Parent to collect an Inheritance on behalf of their Minor Child.   Leaving money directly to a minor (under age 18) creates an administrative nightmare and should be avoided.  A minor is not legally able to own assets.  As such if a minor is the beneficiary of an estate or is named as a beneficiary of a retirement account or life insurance policy, a legal representative for the child will need to be appointed by the court in order to collect that inheritance.  While the parent of the child may be the best person to serve in that role, it is not automatic.  The parent must petition the court to be appointed as the child’s conservator.  The court will investigate whether the parent is a suitable person to receive the funds for the minor and if the Judge finds the parent a suitable custodian for the funds, the court will issue a decree appointing the parent as the child’s conservator.  At that point, the parent may collect the inheritance on behalf of the child.  But it doesn’t end there.  The parent, in her capacity as the conservator for the minor child, must file a report (called an accounting) with the court on an annual basis itemizing all of activity in the child’s account (i.e., earnings and disbursements) during the prior calendar year. The court may appoint a guardian ad litem to review the accounting submitted by the parent-conservator and that person may challenge the parent’s management of the funds.  All of this is time-consuming, expensive and aggravating.  To add insult to injury, once the minor turns 18, he or she is entitled to receive the assets outright and is free to do with them as he or she wishes (think fast cars, spring break, and lots of shopping).  Creating a Trust to receive assets passing to a minor, or even to a young adult beneficiary, is the best way to ensure that the court is not involved in the process, that the person you want to manage assets for the beneficiary is able to do so, and that the beneficiary may use the assets only for purposes you decide are important and/or at ages that you dictate.

Myth No. 5 – Just because you are an Heir does not mean you are Entitled to Anything.    For the most part, people in our country have the right to leave their estate to whomever they wish.  There are some exceptions to this general rule.  For example, in Massachusetts we have a statute that protects a surviving spouse from being disinherited.  In addition, there may be situations where someone is legally obligated to benefit someone via their estate (e.g., a divorce agreement to leave assets to a former spouse or for the benefit of children).  Assuming those situations do not exist, a person is free to leave their estate to whomever they wish; they are not obligated to leave their estate to their family members, not even to their adult children. While an heir may have the right to contest a Will or challenge a Trust, there are specific and limited reasons that someone will be successful in doing so.  

The above are just five of the many misconceptions we hear from clients who are starting the estate planning process.  If you have been relying on your friends and neighbors to advise you about your estate plan, you may want to reach out to an experienced estate planning attorney to learn the real scoop.  Please call us or email us to schedule an appointment with one of our experienced estate planning attorneys who will debunk those myths and advise you about the best way to plan your estate.  

Attorney Suzanne R. Sayward is a partner with the Dedham law firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate and Trust settlement and elder law matters. She is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts.  This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit our website at www.ssbllc.com or call 781/461-1020.

February, 2025

© 2025 Samuel, Sayward & Baler LLC

Wills • Trusts • Elder Law • Long-Term Care Planning • Estates

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