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Legal Notes

ABLE Account: an investment vehicle for grandchildren with special needs

Seunghee Cha ProfileAttorney Seunghee ChaI often do estate planning for clients with a relative who has an intellectual or developmental disability. Quite a few of them are grandparents who contribute money to college savings accounts for their typically developing grandchildren. Over the years, some have expressed regret that they cannot do the same for a grandchild with special needs who is not expected to attend college. What could they do that is fair and thoughtful? They explore establishing a trust for the grandchild, even paying for the grandchild’s parents’ estate plan to help the family prepare for uncertainties.

Grandparents now have an additional new tool: the Achieving a Better Life Experience (“ABLE”) account. Modeled after the 529 college savings account, the ABLE account is a bipartisan accomplishment amending the federal tax law to permit a tax-favored investment vehicle for individuals with disabilities, thanks to advocacy by dedicated parents of children with Down syndrome.  

To open an ABLE account, the account owner and beneficiary must have a disability that began before age 26 and receive SSI or SSDI, or be medically certified to have a degree of disability that would medically qualify the person for SSI or SSDI. Each individual is permitted to have one ABLE account, to which anyone, including the individual, can contribute cash up to a combined annual total, from all contributors, of the annual gift tax exclusion amount ($15,000 in 2018). The funds are income-tax free at withdrawal, both at federal and state levels, if used for “qualified disability expenses” to increase the individual’s health, independence, and quality of life. Non-qualified disability expenses are subject to income tax and 10% penalty.

Examples of qualified disability expenses are education; housing; health, prevention, and wellness; transportation; personal support services; employment training and support; and assistive technology. The account assets are generally non-countable for eligibility for means-tested governmental benefits. The maximum account limit is the state’s 529 college savings plan limit ($400,000 for Massachusetts). For SSI recipients, up to $100,000 in the account is a non-countable asset. For people who receive Medicaid benefits, at death the remaining account assets are subject to state Medicaid estate recovery for Medicaid benefits received after opening the account.

The ABLE account is currently available in 28 states, 20 of which are national programs open to residents of any state. The Massachusetts program (open to residents of any state) is managed by Fidelity Investments and became available in May. If you are interested in opening an ABLE account for your grandchild, it’s worth shopping around for a suitable program. For more information and a comparison of the state programs, visit the ABLE National Resource Center.

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.

Free legal services for elders

LifePath supports Community Legal Aid (CLA) in providing free legal services to residents of Franklin County and Athol, Petersham, Phillipston, and Royalston in Worcester County who are age 60 and over. We want you to know more about these services and how to access them. This help is available because the Federal Older Americans Act provides funding to the Massachusetts Executive Office of Elder Affairs for civil legal assistance throughout the Commonwealth, and some of that money goes to LifePath, which then provides a grant to CLA.

Because the funding isn’t enough to allow us to provide full representation in response to each request for legal assistance, we are only able to assist with certain types of legal problems. The areas in which we are more likely to be able to provide advice or other assistance include:

  • denials or terminations of MassHealth
  • housing matters (such as evictions, denials or terminations of rental subsidies, and foreclosure)
  • denials, terminations or reductions of public benefits (such as unemployment insurance, SNAP/Food Stamps, Social Security/SSI/SSP, and state veterans services or ch. 115 benefits)
  • coverage denials and enrollment issues with Medicare

We also work with elders seeking assistance with issues of autonomy, abuse and exploitation.

In addition to looking at the type of problem for which our assistance is being sought, we try to:

  • determine the seriousness of the elder’s situation to ascertain whether we will provide a phone consultation to the caller
  • provide some level of legal assistance, which could involve representation in court proceedings
  • initially investigate the situation further on behalf of the elder before determining the role we can play
  • provide some referral information, if possible

Low-income elders with family law matters such as divorce would be referred to our Family Law Unit for a case acceptance decision, and those seeking assistance with bankruptcy would be referred to our Volunteer Lawyers Service for free assistance from an attorney in private practice.

CLA is open for telephone-assisted screening Monday, Tuesday, Thursday, and Friday, from 9:30 a.m. to12:15 p.m., and Wednesday, 1:30 p.m. to 4:15 p.m. Elders may call toll free at 1-855-252-5342. CLA also has an online application at www.communitylegal.org, which can be accessed at any time. Elders can also go to the Massachusetts Legal Resource Finder website, www.MassLRF.org, which identifies what types of legal problems are appropriate for referral to CLA. The Legal Resource Finder can also help elders locate additional resources on a wide variety of legal topics.

We at Community Legal Aid look forward to assisting you with your legal questions and concerns. We accommodate clients with mobility and transportation challenges by meeting with them in our satellite office in Greenfield or in their home, medical facility, or in another mutually convenient location.

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.

The risk of real estate transfers

It has been a challenging month for several of the families with whom I am working. In each case, an elderly person transferred real estate to protect it from nursing home expenses and, in each case, it created a mess! Sadly, their stories are common.

Louise was 95 years old, frail, and had no liquid assets, but still lived at home. Last fall, she decided to sell her house to her niece and, since her niece was having financial difficulties, Louise offered to give her a $14,000 discount on the sale price and hold the mortgage. The attorney they met with agreed to prepare the deed and mortgage. The problem? Only a few months later, Louise needed a nursing home and was ineligible for MassHealth benefits, because both the discount and the 30-year mortgage (considering Louise’s life expectancy) were considered gifts. MassHealth imposes a period of disqualification for gifts made within sixty (60) months prior to application, which would jeopardize Louise’s ability to receive care.

Bob had transferred his home to his daughter many years ago, reserving a life estate for himself. The transfer would not jeopardize his eligibility for MassHealth because it happened more than sixty (60) months ago. However, his daughter lives in the house and, earlier this year, wanted to refinance the mortgage. The attorney they met with recommended that Bob, now 85 years old, give up his life estate to simplify the financing process. The problem? Bob is now in a nursing home, has no cash resources, and his release of the life estate will be treated as a gift for MassHealth purposes. His application will be denied.

Last year, Mary and Frank, a married couple, were both in their 90s and Mary was showing signs of significant cognitive decline. They told their attorney that they wanted to add their son to their deed, as a joint owner. The problem? Mary is now in a nursing home and adding their son to the deed is considered a gift (1/3 of the value), so any MassHealth application will be denied.

In all of these cases, there were alternatives which would have ensured that the elder would qualify for MassHealth to pay for nursing home care. It is critical that anyone who is considering sale or transfer of real estate or cash assets inform themselves about potential consequences of the action they are considering, including the impact on MassHealth eligibility. Attorneys knowledgeable about estate planning options, particularly for homeowners, are an important resource to avoid future problems.

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.

Vehicle titles

Pam OddyAttorney Pamela OddyMany people assume that adding another name, such as a daughter’s or a son’s, to the title of their vehicle will automatically create a joint tenancy. The purpose of establishing joint ownership of the vehicle is to avoid probate upon the death of the parent.

Unfortunately, the DMV (Department of Motor Vehicles) does not consider a second name, other than a spouse, on the vehicle’s title to be a co-owner. Therefore, if a parent adds a child’s name to the title, the vehicle will not automatically revert to the person whose name is listed second on the title. Instead, the vehicle will be considered to be owned by the parent in his/her name alone and will have to go through probate upon the death of the parent.  After the parent has died, the task of transferring the vehicle becomes the responsibility of the (probate) court appointed Personal Representative.

On the other hand, the DMV considers a vehicle which is titled in the names of two spouses to be jointly-owned. And a vehicle owned by one spouse in that person’s name alone will be easily transferred, upon death, to the surviving spouse by providing specific documents, including a form certified by the insurance company that insures the car, even though the surviving spouse’s name is not on the title.

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, online 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.

Foreign lottery “sweepstakes” – no winners in this far too common scam

Last August a Massachusetts federal district court judge sentenced a New York man to more than four years in prison and to repay more than $733,000.00 to his victims, one a Massachusetts man, in a foreign lottery scam. Foreign lottery scams are all too common. Some victims of these scams lose their entire life savings.

The scam begins with a mailing or telephone call informing the victim that they have won a foreign sweepstakes. Scammers then inform their victims that they first need to send a certain sum of money for “fees” and/or “taxes” on these “winnings.” Once a person responds and sends money, the scammers continue to repeatedly request more funds, with each request giving differing types of bogus reasons to release the funds. The scammers may also send a victim a fake, authentic-looking check that they claim is to pay for the fees or taxes. The victim is instructed to deposit this check into their bank account. That “check” will bounce. By the time it is discovered that this check is fraudulent, the funds have already been collected by the scammers from the victim’s account, and the victim has not only lost the amount of the check, but is also responsible for the bounced check fees. Many of these foreign lottery scams originate from Nigeria and other African countries, Canada, some Central American countries, and Jamaica and other Caribbean countries.

These scammers are excellent con artists and can be very charming and very convincing. They may send very official looking documentation complete with legitimate looking stamps and seals. There may also even be a call from someone claiming to be a legitimate governmental authority. Their victims are not necessarily people who suffer from cognitive impairments. Many are competent adults, who are well-educated, well-read, and intelligent. Victims of these scams can be anyone of any age, but senior citizens are usually targeted. Family and friends can become estranged from these victims because they were unable to convince the victims that they were scammed. Victims may also become angry and distrustful of the very people who are trying to help them.

Other scammers also purchase the contact information of victims. To prevent being a victim, never respond to any correspondence or phone call that claims you won a foreign lottery or any contest that you never legitimately entered. If you already had phone contact with a scammer, hang up when called again. It is not rude to hang up on a criminal.

Foreign lotteries are illegal in the U.S., and playing a foreign lottery is a violation of federal law. Furthermore, winners of legitimate contests or legal lotteries are never required to pay any fee or pre-pay taxes on any winnings.

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.