Personal Injury & Estate Planning Q&A

The transfer of assets will trigger a period of ineligibility. This disqualification period is computed by dividing the value of the property transferred by a monthly amount established by the government to arrive at the period of ineligibility. Any transfer of assets (other than to your spouse) allows the government to utilize a 60 month "look-back" period to determine eligibility. Proper advance planning by the use of trusts, spend-down strategies, and the disabled and caretaker child exceptions are available to establish medicaid eligibility.

You should consider the transferring of assets to a Trust for several reasons. However, if assets are transferred to a Revocable Trust, since the Grantor still retains control over the assets, the benefits are limited. It is true that transferring assets to a Revocable Trust would avoid the Probate process as described above. However, if assets are transferred to an Irrevocable Trust, so that the assets are no longer available to the Grantor, the assets in the trust will be protected from the nursing home (after 5 years); the assets will avoid probate, the stepped-up basis of the property is available; income tax reporting by you is the same, and the capital gains exclusion may still be available to you as grantor. Although you may not have control over the assets in the trust in the sense that you are not able to access principal, you may receive any income generated by the trust assets, you may borrow against the trust assets, and the assets are protected from creditor claims, assets in an irrevocable trust may not be considered marital property for division in the event of a divorce and assets in an irrevocable trust may not affect qualifying for college financial aid.

In addition to a Will, you should have a Durable Power of Attorney and a Health Care Proxy. In each document you name an agent to act on your behalf, and an alternate, should the first person you name be unable to serve.

Having a Durable Power of Attorney and Health Care Proxy avoids the need to have a Probate Court appoint a guardian or conservator on your behalf, which is expensive and imposes a duty to file cumbersome annual accountings with the Court.

One document people don't have, but should, is a Declaration of Homestead. Once executed, it is filed with the Massachusetts Registry of Deeds where the property is located. The primary purpose of a Homestead Declaration is to provide protection of your home from creditors. Learn more about Homesteading on our Estate Planning page