There are two important strategies for couples to consider that would need to be done while both of you are alive.
Qualifying for MassHealth
If you need nursing home care and want to qualify for MassHealth, you can do so in most cases by shifting all your assets to your spouse, even at the last minute. If the surviving spouse owns all the assets and needs to go into a nursing home, everything but the home will need to be spent down to less than $2,000 before qualifying for MassHealth. In the alternative, if the spouse who dies first has a trust as part of the will, your assets can be protected for the benefit of the surviving spouse and not be spent down to qualify.
Estate tax avoidance
Due to escalating real estate values and large IRAs, most people die with assets exceeding $1 million, which is when the Massachusetts estate tax applies. You can eliminate that tax by directing up to $1M to a trust for the benefit of the surviving spouse. The surviving spouse can be the trustee of that trust, and can have access to those assets, which will not be taxed when the second spouse dies, thus avoiding the estate tax. To get this benefit, you must have your estate plan structured properly prior to the death of the first spouse.
It’s important to plan ahead and work with an elder law attorney who can help develop a plan that is suited for your goals and needs. For more information, visit Frank and Mary’s YouTube channel, youtube.com/elderlawfrankandmary. These programs also air on MVTV (Comcast Channel 13), along with “Frank and Mary on Martha’s Vineyard,” where Sandie Corr-Dolby and I address common issues facing seniors and available resources. If you have any questions, please contact me at 508-860-1470 or firstname.lastname@example.org.
Arthur P. Bergeron is an elder law attorney in the trusts and estates group at Mirick O’Connell.