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MassHealth Case StudyBlog, Trust & Estate Planning
Posted in on June 16, 2015
Susan and John have been happily married for 51 years. They raised two kids and enjoyed spending time with their grandchildren. They were worried about their estate plan because Susan had recently been diagnosed with Parkinson’s disease and they did not want the costs of her anticipated care to bankrupt them. In 2006, Susan and John met with Attorney Lawrence DiNardo to create an estate plan that would protect their hard earned savings.
Susan and John wanted to have a plan in place in the event that Susan’s Parkinson’s disease progressed to the point where she required nursing home care. Nursing homes in Massachusetts average roughly around $12,000.00 per month, therefore as part of their estate plan, Susan and John decided to place their house into an Irrevocable Trust. Pursuant to MassHealth regulations, assets transferred into an Irrevocable Trust, carefully drafted so the Grantors (Susan and John) are not beneficiaries of the Trust, are not countable in determining MassHealth eligibility after five (5) years. By placing their house into an Irrevocable Trust, the five (5) year MassHealth look-back period was started. MassHealth is a Federal program administered by the Commonwealth of Massachusetts that pays for long term care costs for those who qualify. After five (5) years, should Susan need long term care in a nursing home, their house would no longer be considered an asset because they relinquished title to the house to the Irrevocable Trust. Susan and John were Trustees of their Irrevocable Trust, but the Trust was written explicitly to prohibit them from ever being beneficiaries.
Fast forward to April, 2014; not only had Susan’s Parkinson’s progressed, but she has also suffered a stroke. She was in a rehabilitation facility and needed to be placed in a long term care facility as the care she needs is far more than John can provide for her. Because they had done advanced planning and it has been over five (5) years, Susan and John were able to qualify for MassHealth to assist in the cost of Susan’s long term care. John met with Attorney DiNardo and Attorney Elizabeth Caruso to begin the long and arduous MassHealth application process.
Susan was initially denied MassHealth benefits because she and John were Trustees of their Irrevocable Trust. MassHealth argued that because Susan and John were the Trustees of the Trust, this gave them the opportunity to make themselves beneficiaries of the Trust, terminate the Trust and then fully benefit from the property. Attorneys DiNardo and Caruso appealed the decision, and at a Fair Hearing successfully argued that this line of reasoning is contrary to Trust law and the fiduciary obligations that Trustees have. They further argued that this reasoning could open the Trustees up to a lawsuit. A Trustee has a fiduciary obligation to act in the best interest of the beneficiaries. Since their children were the beneficiaries of the Trust, not Susan and John, it would have been a breach of their fiduciary duty as Trustees to make themselves beneficiaries of the Trust or to terminate the Trust. Susan was granted MassHealth eligibility.
If you or someone you know is thinking about estate planning or is worried about the potential costs of nursing home care, please contact our experienced trust and estate planning attorneys at Baker, Braverman, & Barbadoro P.C.. We can not only implement a carefully drafted estate plan that qualifies you for any benefits that you should need, but also guide you through the MassHealth Application process and any appeals that may be necessary.