Are you having trouble loading this page? Click here to view a text-only version.

handoff2.jpg
handoff3.jpg
golf-center.jpg
walkers2.jpg

Legal Notes

Updating Durable Powers of Attorney

Pam OddyAttorney Pamela Oddy, Athol, Mass., 978-249-7511At a recent conference for seniors, I was told by a member of the audience that a lawyer had suggested to this person that the Powers of Attorney that were signed eight years ago should be updated. The question from this person was essentially asking whether or not this recommendation was a valid one. The answer is yes; it is a valid suggestion.

Durable Powers of Attorney are, theoretically, valid until the person who has signed the Power has died or the Power has been rescinded or revoked or supplanted by a guardianship/conservatorship process.

Unfortunately, I am finding that financial institutions, such as banks, are wanting the Power of Attorney to be no older than five years. To compound the problem, other financial institutions such as those that handle stock sales or transfers are not comfortable with a Power of Attorney that is older than six months.

Some individuals may have become incapacitated since the Power of Attorney was signed and if the document was a “durable” Power of Attorney, it remains in force even if the principal (person who signed it) has become incapacitated.  Another way to satisfy the concerns of entities such as financial institutions is to have the agent appointed by the durable power of attorney sign an affidavit in the presence of a notary, assuming these statements are true, that states: 

  1. The attached copy of the Durable Power of Attorney document is a true and accurate copy of the original.
  2. The power granted is in full force and effect and has not been revoked.
  3. The Grantor, (name of principal), is alive.

Although updating Powers every six months is not feasible, if the principal remains able to do so, I do recommend to my clients that they update their Powers every five to six years. Incidentally, that is also a good time to glance at your Will to be sure it is the way you want it to be.

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.

Qualified charitable distributions

Seunghee Cha ProfileAttorney Seunghee ChaAre you over 70.5 years old? Are you charitably inclined? Do you have an individual retirement account (IRA)? If so, you can give up to $100,000 annually to charity directly from your IRA without the distribution being treated as part of your adjusted gross income (AGI) or taxable income. This type of charitable donation is called a Qualified Charitable Distribution (QCD).

Through the Consolidated Appropriations Act of 2016, Congress made the QCD permanent. Normally, distributions from your IRA are attributable to your AGI. If you make a charitable donation with funds after withdrawing them from your IRA, the donation reduces your taxable income (which is distinct from AGI) by the amount of the donation up to 50% of your AGI; however, your AGI is not reduced by the donation, because the IRA distribution is still added to your AGI. By contrast, if you give to charity directly from your IRA and meet the requirements for such donation to be treated as a QCD, the amount of the donation does not increase your AGI.

The exclusion of your charitable contributions from your AGI is significant, because the AGI affects your itemized deduction, credit, and exemption phase outs, Roth contribution eligibility, the net investment income Medicare surtax, Medicare premium costs, and taxability of Social Security retirement income. You can take advantage of QCDs even if you don’t itemize deductions: You can exclude your QCD from taxable income and take the standard deduction. Charitable giving is deductible if it is less than 50% of your AGI, and QCDs reduce your AGI even if the total amount would be otherwise greater than 50% of your AGI. Moreover, QCDs count toward the minimum required distributions from IRAs, which is attractive for those who continue to work and do not depend on IRA distributions or are in a higher income tax bracket.

Individuals over 70.5 years old who would benefit from QCDs:

  • You are charitable and do not itemize deductions.
  • Your IRA distributions push you into the 15% federal capital gains bracket. QCDs are excluded from taxable income, thus you continue to enjoy 0% federal capital gains tax.
  • Most of your assets are in an IRA(s).
  • You do not need your minimum required distributions.

President Trump’s proposed tax plan would reduce or eliminate certain taxes, deductions, and rates that affect the AGI and taxable income; however, minimum required distributions from IRAs and charitable deductions would not be affected under his plan. With the permanence of the QCD, for people over 70.5 years old who are charitably inclined, incorporating QCDs into your IRA withdrawal strategy can yield tax savings to leverage greater payout to charities.

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.

MassHealth rules and proposed legislation – income, assets, and care

Members of the Massachusetts State House and Congress have introduced legislation that will impact elders in our community.

The three bills below under consideration by Massachusetts legislators provide protections for the uninformed individual who engages in financial transactions unaware that they have created a serious problem for themselves when they need long-term care MassHealth benefits. Please contact your state legislator if you want them to support these bills.

Current MassHealth regulations penalize applicants who transferred assets within 60 months of the application for benefits, regardless of the reason. HD2927/SD1387 (An Act Relative to Transfer of Assets by MassHealth Members) establishes criteria to be used by MassHealth to determine whether a transfer should result in a period of disqualification for eligibility and clarifies that a period of ineligibility will not apply if the transfer was for an intent other than to qualify for MassHealth. For example, many applicants may be able to show that the transferred assets were part of a regular pattern of small gifts, or that they were for a child’s unexpected illness or financial crisis.

HD3066/SD981 (An Act to Protect MassHealth Applicants Facing Undue Hardship) protects individuals who made innocent transfers, waiving the ineligibility period if certain criteria are met. MassHealth could not impose a penalty where 1) it would create a risk of serious harm to the individual, 2) the transferred assets are irretrievable from the recipient, and 3) there is no affordable alternate care available to the individual.

HD1478/SD419 (An Act to Support Equal Access to Community Care for Elders and the Disabled) helps seniors who are clinically eligible for nursing home care, but wish to remain home. Currently, if an applicant for in-home benefits has gross income less than $2,205/month, the applicant will receive MassHealth services at no cost. However, if an applicant’s income exceeds $2,205/month, even by $1, the applicant may retain only $542/month and must contribute the balance to the cost of care. No one can live on $542/month! This bill would allow applicants to keep all income up to $2,205/month, with only any excess contributed to the cost of care.

Congress has a bill pending (H.R. 180) which will eliminate retroactive coverage under the Medicaid program (called MassHealth in Massachusetts). Currently, MassHealth applicants 65 years of age and over or in a nursing home may be approved for up to four months of retroactive benefits. This bill would limit the benefit start date to the month in which the application is filed. This will particularly impact individuals who do not have family or others to quickly file an application for healthcare benefits on their behalf, leaving them financially liable for the higher private rates they currently have. Please contact your federal legislators to ask them to vote against this bill if you are concerned about this national change.

Finally, MassHealth has issued sweeping changes in regulations related to community (in-home) benefits which will severely restrict eligibility. Most significantly, spousal income and assets, which were previously ignored, will now be considered when determining whether a married applicant is financially eligible for MassHealth benefits. Many couples will be required to contribute more toward the cost of care than they can afford, forcing individuals who wish to remain home into nursing homes (with the additional expense borne by taxpayers).

Contact information for legislators may be found 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, 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.

MassHealth is again considering not allowing over-65 Pooled Trusts

by Attorney Peggy Torello, South Deerfield, 413-772-5900

Pooled Trusts are supplemental needs trusts administered by a nonprofit for the benefit of disabled individuals on Supplemental Security Income (SSI), a (d)(A) trust, and those over age 65, a (d)(4)(C) trust. Federal Medicaid and MassHealth regulations permit a deposit of any excess funds that exceed the $2,000.00 asset limit into a pooled trust, without loss of eligibility of benefits. The funds in a pooled trust can only be used to supplement the needs and comfort of the disabled or elderly person such as entertainment, dental care, a paid companion or extra health care worker, and other extra quality of life expenditures. As a requirement, MassHealth must be named first beneficiary and it is reimbursed from any remaining funds in the pooled trust at death of the beneficiary.

Massachusetts, nineteen other states, and the District of Columbia allow pooled trusts for MassHealth beneficiaries over age 65. Eight years ago MassHealth proposed changing its rules regarding the (d)(4)(C) pooled trusts for those over age 65 (not the trusts for those disabled individuals under age 65). That proposed rule change was to comply with a 2008 Medicaid bulletin that stated pooled trusts for those over 65 are subject to transfer penalties. Thankfully, MassHealth was thwarted on changing its rules in 2008.

In the January 3, 2017, edition of the Boston Globe, staff writer Deirdre Fernandes published an article about a MassHealth public hearing held in December. MassHealth is again considering changing its rules by disallowing pooled trusts for those over age 65 because of that 2008 MassHealth guideline and also to help ease the financial burden on the state budget. Ms. Fernandes’ article included a story about an 81-year-old gentleman from Newburyport. His 82-year-old brother is in a nursing home in Chicopee and has a pooled trust. The funds in his brother’s pooled trust paid for much-needed dental expenses and pay for a companion to visit weekly to take him out for meals and other entertainment. Because of this gentleman’s age, he cannot travel to Chicopee often, and he is grateful the funds in the pooled trust pay for someone to be there to check on his brother and bring joy to his life.

A call or letter to your state legislator, even though this is not a legislative matter but an agency matter, would let them know how their constituents feel. Advocacy to your legislators will inform them about the need to have MassHealth continue to allow over-65 pooled trusts. They are of little cost to the state, yet enhance a nursing home resident’s quality of life.

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.

Is your Will relevant?

Pam OddyAttorney Pamela Oddy, Athol, Mass., 978-249-7511When I give speeches to local senior groups, I always ask the question: “Does everyone in this room have a Will?” My next question is usually: “When was the last time you read your Will?” On the surface, these questions seem simple enough and I am finding that, today, more and more people have Wills. However, I am also discovering that people are not reviewing their Wills with any frequency. Perhaps we think that if we have a Will then we are all set. Nothing could be further from the truth. It is not enough to have a Will, though it is hugely important; you should read your Will every three to five years to be sure it is exactly the way you want it to be. Often, life has a habit of changing us and the paths we are taking, and we need to be sure that our Wills accurately reflect what our last wishes are. In other words, we need to be certain that our Wills are relevant.

Below is a list of sample reasons to re-examine and potentially re-draft your Will:

  1. Has anyone died that you have mentioned in your Will?
  2. Do you have a specific item, such as your house or a camp, that you want a specific person to have?
  3. Do you have a child that you may want to remove from your Will? Or do you have a child that you had eliminated from your Will that you now want brought back in?
  4. Do you now have grandchildren that you would like to leave something to?
  5. Are you now raising your grandchildren so that you need to offer them some degree of economic protection in the event of your death?
  6. Do you want someone else to be your Personal Representative (formerly known as Executor)?

Although the above questions are merely sample reasons to re-examine your Will, the point holds true: you should read your Will every three to five years to be sure it is exactly the way you want it to be. In other words, make sure your Will is relevant.

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.