News from Samuel, Sayward & Baler LLC for April 2020 includes the articles: Samuel, Sayward & Baler is Still Operating, Just A Little Differently, Imaginative and Unique Estate Planning Provisions, Five More Important Numbers to Know When Applying for Long-Term Care Medicaid Benefits, Start Your Spring Housecleaning With Some Estate Planning, Resources for Challenging Times, Put Your Estate Plan on Your To Do List, and What’s New at Samuel, Sayward & Baler LLC.
Despite the uncertainty, pain and loss associated with COVID-19 there are some opportunities that have emerged in the long-term care space as well. This ordeal is affecting us all – requiring that we slow down, re-evaluate our priorities, take care of ourselves, our families and friends, and importantly attack that closet that’s been exploding with junk! This is also a great time to re-evaluate financial and estate plans with respect to long-term care. If I or my loved one needs nursing home care or long-term care, assets will be consumed in no time. Can we do anything to prevent that?
The answer is yes, and this is the time to do it! Right in the middle of COVID-19, believe it or not, when the market is depressed.
Although it may not feel good now, we can actually take advantage of this decrease in the market by protecting assets from the cost of long-term care. How can we do this? By creating and funding an irrevocable trust now with “depressed assets” which are likely to increase in value when the market rebounds.
Let’s look at the numbers around long-term care in Massachusetts.
Nursing homes are expensive!
* According to a study conducted by Genworth in 2019, the monthly median cost of a semi-private room in Massachusetts was $12,473 and a private room was $13,212. So, roughly $150,000 per year on the low end!
* 52% of people over age 65 will require long term care/nursing home care
* 62% of all nursing home beds are paid for by Medicaid
What is the difference between Medicare and Medicaid?
In short, Medicare is the federal health insurance program designed principally for Americans age 65 years of age or older. Medicare Part A is hospital insurance that covers part of the cost of inpatient hospital care, hospice care and limited time in a skilled nursing home facility.
If you ask a Medicare attorney, What nursing home costs will Medicare cover? The short answer? Not a lot.
Medicare will cover 100% of the cost for the first 20 days you are in a nursing home IF, AND ONLY IF:
- You had a recent inpatient hospital stay of at least 3 days;
- You are admitted to a Medicare-certified nursing facility within 30 days of your hospital stay; and
- You need skilled care such as physical therapy or skilled nursing services.
If all three criteria are met, Medicare will pay 100% of the costs for the first 20 days of your stay in the nursing home. For days 21-100, you pay up to $170.50 per day and Medicare pays at least a portion of the balance. There are criteria that must be met and Medicare can end sooner than 100 days. After 100 days, you are fully responsible for the entire cost for each day that you remain in the facility.
Let’s talk about Medicaid now.
Medicaid is a federal public assistance program (MassHealth is the state program) for low income people. Medicaid/MassHealth pays for health care services for people with very low income or high medical bills relative to income and assets. Eligibility is based on income and assets.
In order to qualify for Medicaid/MassHealth as a single person, a single applicant can have no more than $2,000 in resources (this includes retirement accounts, stocks, bonds, CDs, life insurance policies with a cash value and bank accounts). Real estate that is your primary residence is exempt up to an equity value of $893,000 in 2020. Married couples can retain an additional $128,640 in assets (unless both spouses are in the nursing home).
So now what? What can we do? What’s the strategy?
Although it is not the right planning strategy for everyone, a long-term care planning strategy that is appropriate for some people to protect assets from having to be spent on long-term care costs is to create and fund an irrevocable trust. You and your long-term care attorney (and perhaps your financial advisor) will decide what assets and how much of those assets to transfer into this irrevocable trust, keeping in mind that once assets are transferred to an irrevocable trust, you cannot take them back or use those assets in any way that benefits you.
If you don’t apply for Medicaid/MassHealth for at least five (5) years after the date you transferred assets to the Trust, the entire value of the trust assets will not be included when MassHealth determines your financial eligibility (remember $2,000 for a single person and an additional $128,640 for a married couple), and will be protected for distribution to your family or intended beneficiaries following your death.
The silver lining in all of this Medicaid estate planning (and what makes this is a perfect time to implement some proactive planning) is that when the market rebounds, that gain or increase in value in your assets titled in your irrevocable trust is also protected from the cost of long term care if you apply for Medicaid/MassHealth.
So, while the stress of COVID-19 is difficult, it is also presenting a unique opportunity to capture some upside for your long-term care planning from this downturn in the market. Take advantage of this opportunity to protect your assets (or those of your loved ones), and proactively plan for the future. This will yield yet another silver living during this ongoing crisis – peace of mind and the knowledge that you will have taken a big step in protecting assets for your children, your spouse or other beneficiaries.
Attorney Julia Abbott is 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. 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.
© 2020 Samuel, Sayward & Baler LLC
From your Samuel Financial LLC Team
We hope you are staying safe and finding ways to make the best of your time at home during the COVID-19 public health emergency. Previously, we’ve sent an outline of the government stimulus programs to ensure you are aware of the financial help available to both individuals (unemployment, including for self-employed persons) and forgivable loans for companies (Paychecks Protection Program and others). The government’s programs also include waiving the Required Minimum Distributions from all individual and company retirement accounts and extensions of time to repay loans from company retirement plans, for just two more examples of the help available.
The government’s assistance programs are new and sometimes not clear enough. For example, many self-employed persons are not aware that they are now permitted to apply for unemployment and receive $600 per week, in addition to the amount paid by Massachusetts or other states of residence, for many weeks. If you have a question about whether you are eligible for government programs, we’d be happy to hear from you and help resolve your questions.
Courtesy of colleagues at Nationwide and our own staff, we are sharing some website resources that may help you stay well stocked, safe and maybe even entertained:
Grocery Delivery Services:
Wal-Mart Grocery Delivery https://grocery.walmart.com/
Amazon Prime Now Grocery Delivery https://primenow.amazon.com/
Food Delivery Services:
Uber Eats https://www.ubereats.com/
CDC’s Official Website for COVID-19 Updates:
Massachusetts’s Official Website for COVID-19 Updates:
Nationwide Care Concierge for Annuity Contract Owners, Spouses, Children, Parents and Parents in Law
Tips for Working at Home:
Ideas and Free Educational Materials for Kids at Home:
Scholastic’s Free Learn at Home
Khan Academy Free Learning
Crash Course YouTube Channel
Best wishes from Samuel Financial LLC
Steve Samuel, Chad Gutner, Nancy Mann, Kevin Cotton, Veronica Garzone, Sarah Newell and Stephanie Gallegos
Samuel Financial LLC is located at 858 Washington Street, Dedham, MA 02026 and can be reached at 781.461.6886. Securities and advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment adviser. Fixed Insurance products and services offered through CES Insurance Agency.
Over the holidays, I had the pleasure of seeing the movie Knives Out in the theater. Knives Out is about an elderly author who dies shortly after a family gathering, and the subsequent inheritance of his multi-million-dollar estate. The plot slowly reveals that the author’s death and his relationships with his family members and employees may not all be as they first seem. Naturally, I was curious to see the extent of artistic license taken versus my “real world” perspective as an estate planning attorney and probate administration attorney with regard to the inheritance and dealing with large estates. Here are a few do’s and don’ts of estate planning according to the movie Knives Out in comparison to the actual practice of estate planning and administration (warning – spoilers ahead).
Do Update Your Estate Plan Regularly to Reflect Your Wishes. In the movie, the author updates his Last Will and Testament shortly before his death and drastically changes who will inherit his estate from his family to an employee, thereby cutting off his family members from receiving any portion of his estate.
Practically, his family members could contest his Last Will and Testament in court for several different reasons in an effort to invalidate the Will and inherit the estate instead. To combat an anticipated challenge to the Will, a so-called “no contest” provision (also known as an “in terrorem” or “poison pen” provision) may be included in a Will. The no contest provision basically states that if any person who stands to inherit a portion of your estate challenges the Will he or she will receive nothing. Such a provision is most effective when a person has something to lose in the event of a contest and it is clear that the Will creator intended to include the provision. Not all states recognize these provisions as valid but Massachusetts does. Incidentally, part of Knives Out was filmed in Massachusetts at the Ames Mansion in Borderland State Park located in the towns of Easton and Sharon.
Don’t Tell Your Family Members That They Are Disinherited Otherwise It May Result in Your Untimely Demise If You Are A Rich Author. The author tells some of his family members that they are disinherited from his estate and will no longer receive financial support from him while he is alive. This leads to the author’s demise, which is investigated by an eccentric and cunning southern gentleman detective to determine if the author was, in fact, murdered, and by whom. The detective’s quest to discover the murderer leads him to the employee who is named to inherit the estate, which brings us to the last avenue by which the family could inherit the author’s estate: the so-called “slayer statute”. Under the slayer statute, if the person who stands to inherit from an estate is convicted of the deceased’s first-degree murder, second-degree murder or manslaughter, he or she is prohibited from receiving the inheritance (G.L.c. 265, §46).
In reality, it is your decision as to the information you wish to share with your family members about your estate plan. If it is important to you to be transparent about your wishes and you are comfortable sharing that information, you may wish to speak with each family member alone or hold a family meeting or simply provide copies of your estate plan. At the very least, provide your family members with your estate planning attorney’s contact information so they know who to call for guidance after your death.
Do Share Information About The Inheritance After The Person’s Death If You Are The Personal Representative. The Personal Representative (Executor) of the deceased’s estate must administer the estate according to the deceased’s Will or the state intestacy laws. One of the Personal Representative’s administrative duties is to inform those who will be receiving inheritances from the estate. The Personal Representative should work closely with an attorney to administer the estate properly, including filing probate pleadings, to ensure he or she completes all the necessary tasks according to certain deadlines to reduce the risk of liability.
Don’t Expect A Reading of The Will To Learn About Your Inheritance. The reading of the author’s Will is a pivotal and dramatic moment in Knives Out. In reality, readings of Wills rarely take place after the deceased’s death. Instead, copies of the Will are provided to the recipients of the estate by the Personal Representative. Additionally, the original Will is filed with the probate court along with the pleadings and becomes public record.
If you have some free time and enjoy movies with well-crafted dialogue delivered by a talented multigenerational cast, surprising plot twists and turns, and filmed in Massachusetts, I suggest you see Knives Out. It is not only entertaining but also highlights the importance of having an up-to-date estate plan in place.
Attorney Abigail V. Poole is an associate attorney 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 such as long-term care planning. She is an active member of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (NAELA). 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.
© 2020 Samuel, Sayward & Baler LLC