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Legal Notes

Pam OddyAttorney Pamela OddyThe topic of funerals is not the most pleasant one to discuss; however, the idea of a prepaid funeral is gaining more prominence especially when it comes to spending down one’s assets in order to become eligible for MassHealth. To not count toward the asset limit for these programs, the prepaid funeral arrangement must be “irrevocable,” that is, it cannot be changed. There is no “lookback” period for the purchase of a prepaid funeral.

It is always a wise choice to prepay a loved one’s funeral if that loved one (for example, a spouse or a parent) enters a nursing home for permanent placement. If a spouse is the one who must enter the nursing home on a permanent basis, it makes good sense to prepay the funerals of both spouses (i.e. the one who is in the nursing home as well as the spouse who remains in the home). Prepaying both funerals may become part of the spend down for MassHealth eligibility. Although it is a sensitive topic, I have found the area funeral directors to be quite helpful in guiding people in choosing funeral arrangements. I counsel my clients to be sure to have the funeral director include in the prepaid funeral the cost of minister/priest/rabbi as well as the cost of multiple death certificates.

In addition to prepaying the funeral, one may establish a burial fund account with a local bank. The total amount that can be deposited into this account is $1500. This expenditure is also an allowable one for MassHealth eligibility and may become part of the spend down. One may ask the question: why set up a burial fund account if the funeral is already prepaid? Theoretically, the burial fund account may be used to pay for a funeral luncheon and flowers and various extras that fall outside the parameters of a funeral. This account may not be touched until the person’s passing or else all of the money in the account becomes countable toward the MassHealth asset limit.

Prepaying a funeral will serve to take the burden off your loved ones because you will be the one making the decision as to what you want as well as which funeral home directs the arrangements. It will also settle any disagreement as to what you want and what your family members want for you; for example, you may want to be buried, but your family, if the decision were left to them, might have you cremated. If the funeral is prepaid, then the choice is already made, you have covered the expense and saved your family the financial burden and you will receive the funeral that you paid for.

The topic of funerals is not one any of us look forward to discussing but it is becoming increasingly important in any advanced planning.

The views expressed in this column represent general information. To address your particular and specific needs consult your own attorney. If you need help with referral to an attorney, contact the Franklin County Bar Association at (413) 773-9839 or the Worcester County Bar Association at (978) 752-1311. Elder law resources may be found through the National Academy of Elder Law Attorneys, Massachusetts Chapter, at massnaela.com or 617-566-5640.

Community Legal Aid (CLA) provides legal services free to people age 60 and older for civil legal matters with an emphasis on access to health care coverage (MassHealth and Medicare) and public benefits as well as tenants’ rights. A request for legal assistance can be made by phone at 413-774-3747 or toll-free 1-855-252-5342 during their intake hours (Monday, Tuesday, Thursday, and Friday from 9:30 a.m. to 12:15 p.m. and Wednesday from 1:30 p.m. to 4:15 p.m.) or any time online by visiting www.communitylegal.org.

Seunghee ChaAttorney Seunghee ChaWith the graying of baby boomers, and an estimated one out of eight expected to develop Alzheimer’s disease, the cost of medical expenses, including long-term care, has become an essential aspect of preparing for aging.

Health Savings Accounts

An emerging strategy is the Health Savings Account (HSA), a medical savings account designed to defray the cost of medical expenses not covered by insurance. It was established as part of the Medicare Prescription Drug, Improvement, and Modernization Act and signed into law in December 2003.

To be eligible to contribute to an HSA, you must be enrolled in a High Deductible Health Plan (HDHP). Once you turn age 65 and enroll in Medicare, you are ineligible to contribute. Contribution limits in 2019 are $3,500 for single coverage and $7,000 for family coverage, with an additional $1,000 catch-up contribution for people age 55 and older.

HSAs offer significant tax advantages:

  • Funds contributed by an employer’s payroll deposit are pre-tax contributions and not subject to federal income tax (some employers also contribute to their employees’ HSAs).
  • In most states, including Massachusetts, your contributions to an HSA are excluded from your gross income.
  • You can invest the money in your HSA, which grows tax-free, and use it for qualified medical expenses for you, your spouse, and qualifying dependents.
  • Withdrawals for qualified medical expenses are tax-free; withdrawals for unqualified expenses are subject to income tax—if you are under age 65, a 20% penalty applies also.
  • Starting at age 65 you can withdraw funds for non-medical expenses tax-free and without penalty.
  • Funds in an HSA can be used to purchase long-term care insurance (limits apply and increase with age), which is important for taxpayers who cannot itemize deductions—premiums for long-term care insurance paid with non-HSA funds are deductible but only for taxpayers who take itemized deductions.
  • At your death if you name your spouse as beneficiary, the HSA can continue in their own name even if your spouse is not enrolled in a HDHP; alternatively, your spouse can take the remaining funds in a lump sum tax-free (non-spouse beneficiaries cannot continue the HSA in their own name and are taxed on the entire remainder account in the year of your death).

The tax-free advantages, with the enhanced benefits for people age 65 and older, make the HSA a more attractive investment vehicle than a taxable account like a 401(k) for savers who can maximize contributions and invest in long-term investments. HSAs incentivize saving for future medical expenses and can make long-term care insurance more affordable. If you are eligible to contribute to an HSA, start early, and it should be an integral part of a comprehensive plan for retirement and aging well.

The views expressed in this column represent general information. To address your particular and specific needs consult your own attorney. If you need help with referral to an attorney, contact the Franklin County Bar Association at (413) 773-9839 or the Worcester County Bar Association at (978) 752-1311. Elder law resources may be found through the National Academy of Elder Law Attorneys, Massachusetts Chapter, at massnaela.com or 617-566-5640.

Community Legal Aid (CLA) provides legal services free to people age 60 and older for civil legal matters with an emphasis on access to health care coverage (MassHealth and Medicare) and public benefits as well as tenants’ rights. A request for legal assistance can be made by phone at 413-774-3747 or toll-free 1-855-252-5342 during their intake hours (Monday, Tuesday, Thursday, and Friday from 9:30 a.m. to 12:15 p.m. and Wednesday from 1:30 p.m. to 4:15 p.m.) or any time online by visiting www.communitylegal.org.

Massachusetts MOLST Form, Massachusetts Health Care Proxy, & Living Wills – explanations of these important medical documents

The Massachusetts MOLST Form, the Massachusetts Health Care Proxy, and a Living Will are three very important documents necessary for health care planning. There are similarities between these health care documents, but each document has specific purposes. The MOLST Form and Living Will are primarily used for end-of-life decisions. A Health Care Proxy is recommended for every legal adult as soon as they turn eighteen years old.

MOLST: Medical Orders for Life Sustaining Treatment

MOLST stands for Medical Orders for Life Sustaining Treatment. It is a medical document best suited for persons who are currently medically frail, have an advanced illness, a progressive illness, or a serious injury. It is also suitable for persons who may require a Do Not Resuscitate or Comfort Care form because of their present serious medical condition. It can only be signed either by an individual who has the mental capacity to make their own decisions based on their present medical condition, or their named health care agent in their Health Care Proxy on their behalf if they are mentally or physically incapacitated and their Health Care Proxy is invoked. In addition to being signed by the individual, or their health care agent, their physician also signs the MOLST form. It is not a legal document, which means it is advisory but not enforceable.

Massachusetts Health Care Proxy

The Massachusetts Health Care Proxy is a legal document. The Massachusetts Health Care Proxy law allows individuals to prepare a document naming a health care agent to make their medical decisions for them should they ever become incapacitated and thus unable to make their own medical decisions. A Health Care Proxy is strongly recommended for every person age eighteen and older. It is signed by the individual in the presence of two witnesses. Preparing for possible mental and/or physical incapacity is a subject matter not only for older adults to give serious consideration. Even young adults can become seriously ill or severely injured and become mentally and/or physically incapacitated. If an incapacitated person with a serious illness or injury has not signed a valid Health Care Proxy, a court proceeding naming a legal guardian is required so the court appointed guardian can have the authority to make all the medical decisions for that incapacitated person. This can be costly and takes time.

Living Wills

Living Wills, although not legally recognized in Massachusetts, are strong evidence of a person’s intentions as to the withholding or withdrawal of treatment for end-of-life decisions. These intentions can be incorporated within the Health Care Proxy itself or can be spelled out in a separate document attached to the Health Care Proxy. A Living Will gives your health care agent clearer directions to guide your named health care agent to act on your behalf for those medical decisions.

For more information and a toolkit including a Health Care Proxy form, go to Honoring Choices Mass. MOLST info and forms are here.

The views expressed in this column represent general information. To address your particular and specific needs consult your own attorney. If you need help with referral to an attorney, contact the Franklin County Bar Association at (413) 773-9839 or the Worcester County Bar Association at (978) 752-1311. Elder law resources may be found through the National Academy of Elder Law Attorneys, Massachusetts Chapter, or 617-566-5640.

Community Legal Aid (CLA) provides legal services free to people age 60 and older for civil legal matters with an emphasis on access to health care coverage (MassHealth and Medicare) and public benefits as well as tenants’ rights. A request for legal assistance can be made by phone at 413-774-3747 or toll-free 1-855-252-5342 during their intake hours (Monday, Tuesday, Thursday, and Friday from 9:30 a.m. to 12:15 p.m. and Wednesday from 1:30 p.m. to 4:15 p.m.) or any time online.

Revocable Living Trusts

Pam OddyAttorney Pamela OddyRevocable Living Trusts are a nifty device to avoid probate, to provide continuity of ownership and to protect the person who establishes the Trust. Anyone who is trying to establish an estate plan or who already has an estate plan but is looking to review it should seriously consider the benefits of a Revocable Living Trust.

It is called a Living Trust because it is drafted and becomes effective while the person is alive (hence, living) and it may own certain assets such as real estate or checking and savings accounts as well as some stock portfolios. Oftentimes, when the trust is drafted, the home is the most common asset that is deeded into the trust. However, vacation homes and bank accounts, including Certificates of Deposit, may be owned by the Trust as well.

The person who establishes the Trust (the settlor) is often the Trustee and the beneficiary. For tax purposes, it is a grantor trust so that any income tax deduction that the settlor received prior to the establishment of the Trust may still be claimed on the settlor's individual tax return. In other words, the Trust does not require its own separate tax identification number nor does it require its own tax return.

Succession is built into the Trust so that it is clear who becomes Trustee if the initial trustee/settlor dies or becomes incompetent. The Trust also has provisions that define how and to whom and in what proportions the trust assets are to be distributed after the death of the settlor. As part of the overall estate plan, a settlor's Will is often re-drafted to state that all assets are left to the Trust. It is called a "pour over'' Will.

The Trust is revocable so that the settlor may change the terms of the Trust, including who the successor trustee is as well as the beneficiaries. The Trustee may also add assets to the trust at any time.

There is a lot to like about this type of trust including the fact that the Trustee is in complete control of the trust and assets that are owned by the Trust avoid probate and pass on to the person(s) named as the beneficiaries in the Trust.

The most serious drawback of this Trust is that the assets owned by the Trust count toward the asset limit for most needs-based public benefits, including MassHealth.  If more than $2,000 is owned by the Trust, a person could not qualify to receive MassHealth benefits.

However, it is still worth exploring this trust with an attorney with estate planning expertise to ascertain whether or not it would be beneficial.

The views expressed in this column represent general information. To address your particular and specific needs consult your own attorney. If you need help with referral to an attorney, contact the Franklin County Bar Association at (413) 773-9839 or the Worcester County Bar Association at (978) 752-1311. Elder law resources may be found through the National Academy of Elder Law Attorneys, Massachusetts Chapter, at massnaela.com or 617-566-5640.

Community Legal Aid (CLA) provides legal services free to people age 60 and older for civil legal matters with an emphasis on access to health care coverage (MassHealth and Medicare) and public benefits as well as tenants’ rights. A request for legal assistance can be made by phone at 413-774-3747 or toll-free 1-855-252-5342 during their intake hours (Monday, Tuesday, Thursday, and Friday from 9:30 a.m. to 12:15 p.m. and Wednesday from 1:30 p.m. to 4:15 p.m.) or any time online by visiting www.communitylegal.org.

Your rights if a creditor sues you

CLA logo slogan 01It can be terrifying to be served with court papers because you owe money. Most often these lawsuits are brought by a credit card company or collections agency in a small claims session of a District Court. The first thought is – I need a lawyer. But there are steps you can take to protect yourself, and this article will explain those steps. If you have access to a computer in your home or at your local public library, you can get more details at www.masslegalhelp.org/consumer. Please note, however, that when you owe certain debts such as child support, taxes, alimony, or criminal fines, the protections described below are not available.

First, make careful note of dates on the first court papers you get, called a Summons and Complaint. The Complaint will list who is bringing the lawsuit against you (called the plaintiff) as well as the amount of money they say you owe. The Summons will state the number of days you have to provide a written response to both the plaintiff and to the courthouse (called an “answer”) and it may give a date to go to court. It is essential that you go to court on the date given even if you do not have the money to pay the debt. If you do not go to court, a default judgment will be entered against you; that is, you will automatically lose (and it will be hard to undo the results).

The Court looks at your income and assets to determine if you can be ordered to make payments out of your income or to sell an asset to pay the judgment against you. If all your income and property (“assets”) are protected, you are “collection proof” regardless of age or disability status and you cannot be ordered by the court to make payments to satisfy the debt. Payments by the Social Security Administration (SSA), unemployment compensation, and state and federal veterans payments, for example, are “exempt” income (meaning a court cannot order you to pay a judgment using those benefits). Other types of income, such as wages, are not exempt but are protected from collection up to a certain amount. Other amounts of income, if not already protected as exempt or up to a certain amount, can be protected because they are used for a “special purpose,” such as paying your rent.

If you are age 60 or over or a person with a handicap, state law further protects you from collection lawsuits if you only receive exempt income and own exempt property. In both situations it is your responsibility to gather the documents that prove you qualify for this protection and to bring them to court. To establish your age, a birth certificate, driver’s license or state ID will work. If you are under age 60, you have to establish that you are “handicapped.” If you receive payments based on disability (Supplemental Security Income [SSI] and/or Social Security Disability Insurance [SSDI]), a letter from the Social Security Administration should be sufficient to establish “handicap.” If you do not get payments from the SSA based on disability, a letter from your physician stating that you have physical and/or mental impairments that severely limit or prevent you from participating in at least one major life area may be used to establish your handicap and right to protection from a collection lawsuit. Major life activities are breathing, walking, talking, hearing, seeing, sleeping, caring for one’s self, performing manual tasks, and working as well as major bodily functions.

Exempt assets (that is, property that you own) for elders and individuals with disabilities include one car (up to $15,000 in wholesale retail value) and one’s home to the extent the Massachusetts homestead law protects it. The homestead law protects your home if it is your primary residence. If you file a declaration of homestead at the Registry of Deeds you can get increased protection for the equity in your home, above the automatic protection of $125,000. Manufactured (mobile) homes are also protected by this law.

If you believe you qualify as age 60 or over or as “handicapped” and only have exempt income and assets, you may choose to contact the lawyer representing the company suing you (or the person suing you if there is no lawyer involved). It doesn’t hurt to let them know that you are protected from the lawsuit because of your age/handicap and lack of nonexempt income/assets and that the court will dismiss the case so it is most efficient for all involved for them to dismiss the case now. Be aware, however, that even if they say they will dismiss the case, you will want to confirm with the court that the case has been dismissed. ALWAYS GO TO COURT ON A COURT DATE unless you have confirmed with the court that your hearing is not happening.

If you have further questions about a new or pending collections action against you, you can contact the Massachusetts Senior Helpline at 800-342-5297, Monday through Friday, 9 a.m. to 12 p.m. They can provide advice and written materials; they do not provide representation by attorneys.

The views expressed in this column represent general information. To address your particular and specific needs consult your own attorney. If you need help with referral to an attorney, contact the Franklin County Bar Association at (413) 773-9839 or the Worcester County Bar Association at (978) 752-1311. Elder law resources may be found through the National Academy of Elder Law Attorneys, Massachusetts Chapter, at massnaela.com or 617-566-5640.

Community Legal Aid (CLA) provides legal services free to people age 60 and older for civil legal matters with an emphasis on access to health care coverage (MassHealth and Medicare) and public benefits as well as tenants’ rights. A request for legal assistance can be made by phone at 413-774-3747 or toll-free 1-855-252-5342 during their intake hours (Monday, Tuesday, Thursday, and Friday from 9:30 a.m. to 12:15 p.m. and Wednesday from 1:30 p.m. to 4:15 p.m.) or any time online by visiting www.communitylegal.org.