Planning for Life

Should You Do Estate Tax Planning in Massachusetts?

Posted by Harry S. Margolis on June 13, 2021

By Harry S. Margolis


With the federal estate tax threshold now at $11.7 million, very few people need to do federal estate tax planning any more. (The threshold was at $1.5 million as recently as 2005.) President Biden has proposed ratcheting back this limit to $3.5 million, but together through "portability" married couples would still be able to shelter $7 million from estate taxation. (The threshold will automatically drop to about $6 million in 2026 even with no new legislation since the Trump-Ryan increase had a 10-year sunset.)

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Topics: estate taxes

'Take Me Out and Shoot Me' Plan Leads to Family Squabble

Posted by Harry S. Margolis on June 7, 2021

By Harry S. Margolis


Several years ago, I acted as mediator in a family dispute resulting from the failure of a senior and her family to plan ahead for her potential disability. At the time, she was disabled and living with one daughter who, with her husband, hired caretakers to take care of her mom. The dispute was over how much of the mother’s estate should go to the daughter and her husband for the sacrifice they were making.

Marilyn's Long-Term Care Plan

The mother, who I will call Marilyn, made no plans for her possible need for long-term care. Her family reports Marilyn to have said that she would never go to a nursing home and if she ever had to, her family should “take me out to the backyard and shoot me.”

After her husband died, Marilyn was living alone in the family home and was very lonely. She and one of her daughters, who I will call Nancy, agreed that Nancy and her husband would purchase a larger house with financial assistance from Marilyn so that they could all live together. While there was some discussion of how the finances would work and what would happen if Marilyn needed care. Everyone was counting on everyone else’s good faith.

Nancy and her husband purchased the larger house. Marilyn moved in and paid about half of what would be her share of the purchase price based on the size of the in-law apartment she occupied. Then, unfortunately, she became ill and needed increasing levels of assistance. Nancy had to give up her part-time job and there was a great strain on the entire family caring for Marilyn.

Family Disagreement

Nancy’s brother and sister appreciated the sacrifice Nancy and her family made and agreed that she should be compensated as a result, but they couldn't agree on the extent of such compensation.  Nancy was offended by suggestions that some of what she did was simply what daughters do for mothers and shouldn’t be fully paid for.

The biggest disagreement was over what would happen after Marilyn's death, since at that point Nancy and her husband would be living in a bigger house than they would need or could have afforded on their own without Marilyn's contribution.  Nancy and her husband saw large financial costs and risks in living in this bigger, more expensive house. Nancy’s brother and sister saw Marilyn’s money — all of which might disappear in payments to Nancy and paid caregivers — as helping Nancy and her family have a bigger, nicer house than they could have had on their own. And these decisions were made among Marilyn, Nancy, and Nancy’s husband without the participation of Nancy’s siblings, who were presented with a fait accompli.

Given the different perspectives, some hurtful comments were made in the negotiations causing feelings that caused a rupture in the family. (It didn't help that Nancy was rather dogmatic about how to go about caring for Marilyn. While it's often true that the child on the scene knows the situation better than other children in other parts of the country who may have ill-informed, but strong opinions about the care the parent should receive, in this case Nancy refused even to consider alternatives that might reduce the cost of caring for Marilyn.)

Plan Ahead and Put it in Writing

While there are no guarantees, it is more likely that this could have been avoided had Marilyn planned ahead and if the entire family had been involved in the planning. While it often works well for older family members to move in with their children, or vice versa, a full discussion of how the living arrangement will work when and if the parent begins to need care could help avoid problems in the future.

It also helps to put the plan in writing for several reasons. First, it makes sure everyone is in agreement or brings disagreements or different understandings into the open. Second, it serves as an aid to memory, since years later different people may have different memories of what they had discussed and agreed to. And, third, the act of putting decisions in writing raises issues that the parties might not have considered otherwise. It's better that these be discussed earlier rather than later.

But even with a written plan, everyone needs to be flexible. Unanticipated situations arise and circumstances change. The child who agreed to take the parent into his house may not be able to do so if he moves across country due to a new job opportunity, or gets divorced, or faces his own medical challenges.


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MassHealth Planning and Real Estate

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Topics: family dispute, family caregiver agreement, family caregiving, home care

More Baby Boomers Postponing Retirement Provides Longevity Protection

Posted by Harry S. Margolis on June 2, 2021

By Harry S. Margolis


According to a study recently released by the Center for Retirement Research at Boston College, fewer Baby Boomers are claiming Social Security benefits at the first possible moment—age 62—than prior generations. While more than half of men and almost 60% of women who turned 62 in 1985 claimed their Social Security retirement benefits immediately, just over a quarter of both men and women did so in 2019, with most of the decline occurring after the year 2000.

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Topics: social security

End Estate Recovery Now!

Posted by Harry S. Margolis on May 27, 2021

By Harry S. Margolis


As we've reported, MassHealth recently has loosened up its rules permitting hardship waivers from estate recovery. A move is now afoot to get rid of estate recovery entirely because it falls largely on those who can least afford it -- those who don't have the wherewithal or foresight to hire elder law attorneys to plan to avoid it's bite.

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Topics: estate recovery

Move Out of Your House Before It's Too Late!

Posted by Harry S. Margolis on May 25, 2021

By Harry S. Margolis


According to an AARP study, 76% of Americans age 50 and older want to remain in their own homes as they age. But they're not totally unrealistic about this. Just 46% expect to do so. Yet, the reality is that this will be difficult for most, if not for them, then for their caregivers.

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Topics: baby boomers, caregiving, healthcare, home care

How Does Your Homestead Protection Work in Practice?

Posted by Harry S. Margolis on May 20, 2021

By Harry S. Margolis


If you a file a homestead declaration at the registry of deeds, you can protect up to $500,000 of equity (or up to $1 million if you're married and one or both of you are over age 62 or disabled and you file separate declarations). But how does this work in practice?

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Topics: homestead protections

MassHealth to Broaden Estate Recovery Hardship Exception

Posted by Harry S. Margolis on May 18, 2021

By Sarah G. Henry


As of May 14, new MassHealth regulations have expanded the group of heirs who may be eligible for a hardship waiver from estate recovery. These regulations significantly expand what has been a draconianly narrow exception to estate recovery.

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Topics: estate recovery

What to Do About Hospital Observation Status Under Medicare

Posted by Harry S. Margolis on May 2, 2021

By Harry S. Margolis


If you are a Medicare patient and need emergency hospital care, there's a risk that you will be treated as an out-patient in the hospital for "observation" rather than being formally admitted as an in patient. While you may notice no difference in terms of your care, this can have a significant effect on your hospital and post-hospitalization Medicare coverage.

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Trust May Be Reformed to Avoid MassHealth Payback

Posted by Harry S. Margolis on April 29, 2021

By Harry S. Margolis


A mistake many non-elder law and special needs practitioners made, especially early on, was to use so-called (d)(4)(A) trust forms for third-party special needs trusts. The problem with doing so is that it unnecessarily subjects any funds remaining upon the beneficiary's death to repayment to Medicaid (MassHealth in Massachusetts) for the cost of services covered.

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Topics: estate recovery, (d)(4)(A) trust

John Oliver Takes on the Long-Term Care Industry

Posted by Harry S. Margolis on April 26, 2021

By Harry S. Margolis

rusty-watson-yIGinlYA6t8-unsplashIn an excellent (if somewhat profane) program, John Oliver takes down the for-profit long-term care industry. He describes understaffing, underpay, and the difference between Medicare and Medicaid reimbursement.

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Topics: nursing homes, assisted living regulations, assisted living, skilled nursing facility

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