How can co-owned cash assets be used during a Medicaid lookback period?

Additional Information:

My grandmother and I live in Danvers, MA.  We are co-owners of a mutual fund account. She purchased it around March of 2005 and thought she had named me as co-owner, but truly named me as beneficiary. We caught the mistake and had my name added as joint owner about 2.5 years ago. She is currently in assisted living but may require nursing care in the future. She tells me to take the money (as my family is in financial need), but my father tells me to leave it because if she were to go into a nursing home under Medicaid, the state would come back for it. If I am co-owner, can I use that money without needing to pay it back should she go on Medicaid?


The down and dirty answer is that no, you should not be spending the money on yourself.

When an applicant applies for Medicaid, the applicant must report any gifts made within the past 5 years. Once the applicant is “otherwise eligible” for MassHealth, MassHealth imposes a disqualification period for the gift. For a single person, this means less than $2,000 of liquid assets. [Read more…]

Check the new rules for 2011 tax planning opportunities

Sunset was postponed last December, at least in the world of taxes. Many existing laws, which had been due to expire, or “sunset” at the end of 2010, were extended through 2012. At the same time, new rules that can impact your tax planning came into effect. With so many changes, you’ll want to make sure you understand the possibilities available to you as you undertake your tax planning for 2011. Here are some suggestions.

Business tax planning

There’s a new twist on an existing option for accelerated write-off of assets you purchase from September 9, 2010, through December 31, 2011. You can choose to expense 100% of the cost of new equipment, such as machinery, some vehicles, and computers, under expanded “bonus” depreciation rules. [Read more…]

April 18 is a major tax day

Monday, April 18, is a red letter day in the world of taxes. It is the deadline for filing certain returns and taking certain tax-related actions. Here are the major deadlines.

  • Filing 2010 income tax returns for individuals. If you cannot file your return by this deadline, be sure to file an extension request by April 18. The automatic extension (you don’t need to explain to the IRS why you need more time) gives you until October 17, 2011, to file your return. An extension does not, however, give you more time to pay taxes you still owe. To avoid penalty and interest charges, taxes must be paid by April 18. [Read more…]

Larger tax deductions for long-term care insurance

The amount you can deduct on your taxes as a result of buying long-term care insurance has been increased by the IRS for 2011.

Generally, you can deduct part of your premiums if the premiums, together with your other unreimbursed medical expenses, amount to more than 7.5 percent of your adjusted gross income.

The maximum amount of premiums you can deduct each year depends on your age at the end of the year:


Age Maximum deduction
40 or less $340
41-50 $640
51-60 $1,270
61-70 $3,390
Over 70 $4,240


For policies issued in 1997 or later, the premiums are deductible so long as the policies meet certain requirements. For instance, they must give you the option of “inflation protection” and “non-forfeiture protection.” (You don’t have to choose these options, but the policy has to offer them.)

For policies issued before 1997, the premiums are deductible if the policies were approved by the state insurance commissioner. The rules for deductibility are different if you’re self-employed. In that case, you can generally take the deduction as long as you made a net profit, even if your medical expenses don’t exceed 7.5 percent of your income.

Average cost of a nursing home tops $83,000 a year

Nursing home and assisted living costs increased much faster than the rate of inflation from 2009 to 2010, according to a survey by MetLife. The average cost of a private room in a nursing home rose 4.6 percent to $83,585 a year – or $229 a day. The average cost of an assisted living facility climbed 5.2 percent, to $39,516 a year or $3,293 a month.

The average charges for home health care aides and adult day care were unchanged, after both jumped about 5 percent the year before. Home care aides average $21 per hour and adult day care services average $67 per day. [Read more…]

The federal estate tax is back in 2011

The federal estate tax is back in effect as of January 1, 2011. Originally, the tax was to apply to all estates over $1 million, at a rate of 55%.

The exact details have been in flux. By the time you read this, there might be a deal in Congress that would raise the limit and lower the rate. However, any such deal is likely to be temporary – which means that the $1 million limit and the 55% rate will be scheduled to return in a couple of years or so. And this means that it’s important for many people to begin to plan for the estate tax now, if they haven’t already done so. [Read more…]

New problem for seniors when moving from a hospital to a nursing home

A growing number of Medicare beneficiaries who are transferred from a hospital to a nursing home are discovering that Medicare won’t pay for the first 20 days of their nursing home stay.

Ordinarily, Medicare covers nursing home stays entirely for the first 20 days as long as the patient was first admitted to a hospital as an inpatient for at least three days. But here’s the problem: A lot of people are discovering that there were never actually “admitted” to the hospital for three days, but rather were in the hospital only under “observation.” [Read more…]

City orders townhouse owners to remove their top floor

Here’s a real estate owner’s nightmare: After a couple built a brand new sixth floor atop their five-story townhouse, the city ordered them to remove the whole thing.

The building, on Manhattan’s Upper West Side, was within a “landmark” district. The city’s Landmark Preservation Commission decided that the addition didn’t comply with the city’s landmark rules, and ordered it removed.

The addition included a kitchen, dining room and terrace, and was designed to turn the fifth-floor rental unit into a duplex. [Read more…]

Someone else might own your land if they use it long enough

A little-known rule of law says that if you use someone else’s land for a long enough period of time, you can actually acquire legal title to it.

This rule is called “adverse possession.” In order to claim adverse possession, a person must use someone else’s property for a period of years. In some states, it’s just a few years, but other states require up to 20 years or more. During that time, the person’s use of the property must meet several criteria:

  • They must demonstrate actual possession by changing the land in some way – building a fence, cutting trees, mowing – as opposed to just walking on it.
  • Their use must be so open that it would be obvious to an observer that they’re using the property as their own.
  • They must act without the owner’s permission, to the exclusion of the owner and in a way that’s contrary to the owner’s interests.
  • They must use the land relatively continuously – as opposed to cutting a few trees once a year, say, and then leaving the property alone at all other times. [Read more…]

How is your real estate titled? It makes a big difference

When two or more people own real estate, the relationship between the owners is known as a “tenancy.” There are a number of different kinds of tenancy. Understanding the differences is important, because different kinds of tenancy can mean different rules for whether an interest in the property can be inherited outside of probate and whether creditors can claim the property.Tenancy comes in three main forms: tenancy in common, joint tenancy, and tenancy by the entirety. Each form has its advantages and disadvantages.

Tenancy in common. With a tenancy in common, each owner has a percentage interest in the property and can transfer that interest however he or she wants. For instance, one tenant might own 60% of the property, another might own 35%, and a third might own the remaining 5%. The owner of the 5% can sell that interest, or leave it to someone in a will. The person who buys or inherits the land will then become a tenant in common with the other owners. The main advantage of a tenancy in common is that it allows the owners the greatest flexibility to transfer the property as they wish. [Read more…]

Congress makes major changes to mortgages

Sweeping changes to the way home mortgages are structured and approved have been passed by Congress and signed into law by President Obama. The changes are included in the recent financial regulatory reform law. Although the main goal of the law is to change the way Wall Street banks are regulated, a large section of it is aimed at mortgage reform.

Here’s a brief summary of the most important changes:

  • One of the key goals is to reduce the number of “risky” mortgages that led to the recent housing bubble, such as mortgages that don’t require full documentation of the borrower’s income, mortgages that have “balloon” payments (large one-time payments at some point in the future), and “option ARM” mortgages that keep initial costs low by allowing borrowers to defer payments of principal and interest. [Read more…]

What is a ‘trust protector,’ and do you need one?

A new idea for people who set up long-term trusts is that of the “trust protector.”

A trust protector is different from a trustee. A trustee’s job is to administer the trust on a day-to-day basis according to how it is written. A trust protector’s job is to “protect” the trust by making very occasional changes to its rules as needed to further its goals.

The idea is to keep a long-term trust serving the purposes you intended, despite inevitable changes in family situations and tax laws. [Read more…]

Bank pays $64,000 for not honoring a power of attorney

Clarence Smith Sr., a Florida resident, decided he no longer wanted to have to manage his finances. He signed a power of attorney document authorizing his son to handle his affairs. Clarence owned a bank account jointly with a female friend from his retirement community. His son became suspicious about some withdrawals from the account and contacted the bank. He asked the bank to transfer $64,000 from the joint account into an account owned solely by Clarence.

Before doing so, the bank contacted the joint owner. She objected to the transfer. She also told the bank that Clarence’s son was trying to steal his money. The bank then refused to transfer the funds.

Shortly afterward, the “friend” withdrew all the money in the joint account, leaving Clarence with nothing. Clarence died a few weeks later. His son sued the bank on behalf of Clarence’s estate. A jury sided with the estate, finding that the bank acted wrongly in refusing to honor the son’s power of attorney, and awarding the estate $64,000 in damages.

If you’re hiring home help, beware of the ‘nanny tax’

If you or an elderly relative is hiring someone to provide care in their home, you should be aware that the “nanny tax” may apply.

Generally, the tax applies if you hire someone and pay them $1,700 or more a year. Here’s what’s involved:

  • You must pay the employer’s share of Social Security and Medicare taxes for the employee. That’s 6.2% of wages for Social Security and 1.45% for Medicare. [Read more…]

Sometimes it can be smart to turn down a bequest

Here’s something you probably never thought about: Just because someone leaves you money or other assets in a will, that doesn’t mean you have to take it. You can also just say, “No, thanks.”

(Actually, you have to do more than that. You have to sign an official document called a “disclaimer.”)

Why on earth would someone turn down a bequest? Well, it turns out that in some cases, doing so can save a family money in the long run. [Read more…]

It might be time to update your health care proxy

A health care proxy states who you want to make medical decisions for you if you’re not able to make them yourself. A living will provides a roadmap as to how you want those decisions to be made. It’s a very good idea to create these documents, and to review them on a regular basis.

Here are some things to consider:

Has your state recently adopted a “standard” health care proxy form? Some states have adopted a particular form by law. It might not be necessary to use this form, but you might want to do so, because doctors and hospitals will be more familiar with it and using it might avoid delay and confusion about whether to accept a document. [Read more…]

Property’s boundary was the ‘tree line’ – despite the deed

A Minnesota man sold part of his property, then planted trees along what he thought was the boundary line. He and his neighbors treated the trees as the boundary line for 23 years, until a new neighbor looked up the deed and discovered that the actual property line was six feet over the “tree line” onto the man’s side.

The two went to court, but the court sided with the man. [Read more…]

Your hobby might be a ‘business’ and subject to zoning rules

Many cities and towns have zoning rules that limit people’s ability to operate a business on their property. But sometimes it can be difficult to tell whether a homeowner’s activity is a business or a hobby. If there’s any doubt, you might want to talk with an attorney.

For instance, a New Jersey woman had a four-acre home on which she bred German Shepherd show dogs. She obtained a permit to build a storage building on her property. She used the building to house dogs, and she built dog runs outside it. [Read more…]

Condo board is limited in dealing with owner’s offensive behavior

A condominium owner might have behaved in an extremely offensive manner to his neighbors and to the condo manager, but the condo board can’t sue him for creating a nuisance, according to a Massachusetts court.

Over a period of five years, the owner did almost everything he could to offend his neighbors and the building manager. He cursed at them and left them vulgar and derogatory voice-mails, posted offensive messages on signs in the laundry room, shouted profanities at condo meetings, wrote highly insulting messages on his condo fee checks, made obscene gestures when passing people in the hall, made obscene gestures when passing the building’s security cameras, propped open fire doors, and twice left bags of dog feces outside a neighbor’s door. [Read more…]

Homeowners must be allowed to rent to college students

A New Jersey town might have been upset about rowdy college students in rental properties near the school, but it didn’t have a right to deal with the problem by passing new zoning rules that limited rentals, says a New Jersey appeals court.

The town of Ewing, N.J. had tried to limit “Animal House”-type rentals by adopting rules for rental properties that required a minimum amount of space per renter and that required one parking space for each renter who was a licensed driver. The idea was to limit the number of people who could rent a given house, thus discouraging “party houses.” [Read more…]

Tenant couldn’t be evicted just because guest had drugs

A landlord can’t evict a tenant just because a guest of the tenant brought drugs onto the property, according to an appeals court in Tennessee.

The tenant, a single mother, had invited three friends over to watch videos and spend the night. During the night, police investigated a nearby burglary asked permission to enter and search the apartment. They discovered that one of the guests had placed a small amount of marijuana under a sofa cushion. [Read more…]

Tips for selling a home in today’s market

Selling a home in today’s market can be tough. Here are a few suggestions that might help:

Get your own home inspection. Potential buyers who are serious will hire a home inspector to discover any flaws in the property. Consider hiring your own inspector first. You might discover things you can do to enhance the value of the home, such as installing more energy-efficient windows. You’ll also be prepared for any “surprise” problems that the buyer can use to back out of the deal or negotiate a lower price. Typically, the cost of fixing minor problems ahead of time yourself is a lot less than what a buyer will demand if the problems are discovered during an inspection. [Read more…]

Deaf employee may be entitled to interpreter

An employer may be obligated to provide a deaf worker with a sign language interpreter at staff meetings, disciplinary hearings and training sessions, according to a California federal appeals court. The worker was employed by UPS as an accounting clerk. He sued under the Americans with Disabilities Act, claiming that an interpreter was a “reasonable accommodation” for his disability.

UPS argued that it had fulfilled its legal obligations by providing the worker with meeting agendas, notes and summaries. But the court said that it was up to a jury to decide whether the written information gave the employee the same benefits that other employees received from attending and participating in weekly staff meetings.


Male worker can sue for sexual harassment

A male airport employee can sue for sexual harassment where he received repeated romantic overtures from a female co-worker and the employer didn’t put a stop to it, says a federal appeals court in San Francisco. The company argued that this wasn’t “harassment” because most men in the employee’s position would have been flattered and delighted by the co-worker’s romantic interest. But the court said that even if “most men” would have been flattered, the question was whether this particular employee – a recent widower – welcomed the constant flirting.

The law against sexual harassment “is not a beauty contest,” the court said, and even if the co-worker “looks like Marilyn Monroe, [the employee] might not want to have sex with her, for all sorts of possible reasons.”

Employer sued for worker’s death due to dangerous machinery

An employer can be sued for the death of a laundry worker if it knew that employees routinely violated safety rules in order to improve productivity, a federal court in Oklahoma has ruled. The worker was employed at a Cintas plant in Tulsa that used automated machinery to clean uniforms. He died when he fell into a dryer while attempting to clear a conveyor jam. Cintas argued that it couldn’t be sued and that the worker’s family was limited to collecting workers’ compensation.

But the court said that that the company could be sued if it intentionally acted in a way that it knew was likely to cause the death. In this case, there was evidence that company managers knew that workers routinely tried to fix equipment while it was still operating, and that this practice had led to accidents at other plants.

Company can’t fire executive and his wife

A receptionist at a Minnesota cabinetmaking company was married to the president of the company. When business plummeted, the owner terminated the president, and terminated his wife as well. The wife sued under a state law that prohibits “marital status discrimination.” She argued that she was fired because of her marital status – that is, the only reason she was let go was because she was married to the president.

She claimed that the CEO of the parent company told her that “it would probably be awkward” for her to stay since her husband was leaving, and that her position was eliminated because she would probably have to relocate with her husband. The Minnesota Court of Appeals allowed the lawsuit, saying the woman had made a good argument that the company discriminated against her because of the identity of her husband.

Can employer require arbitration if it went to court first?

Many employment agreements these days say that in the event of a dispute, both sides will go to arbitration. But this raises a question: Sometimes, if an employee files a lawsuit, the employer will respond in court, perhaps thinking it can get the court to dismiss the suit quickly. Only later will it insist on going to arbitration instead. So…is this valid, or does an employer that spends a long time fighting a lawsuit give up the right to stop in mid-stream and start over in a different forum?

That’s not entirely clear, but two federal appeals courts recently addressed the issue. In one case, a Ricoh employee claimed he was fired because he reported fraud at the company. Ricoh responded to the lawsuit, but five months later it demanded that the case go to arbitration. [Read more…]

Businesses are under fire over background checks

Companies that conduct background checks on job applicants are increasingly facing scrutiny, and need to be careful that they are following the law. A growing number of companies have been routinely conducting credit checks and criminal background checks, in part because new technology has made it easier to do so.

However, the federal Equal Employment Opportunity Commission recently released a legal advisory letter warning that the use of credit checks to screen job applicants could be illegal if it leads to the disproportionate exclusion of women, minorities or other protected groups. [Read more…]

More workers are suing their employers for ‘retaliation’

It’s illegal for an employer to retaliate against a worker who complains of discrimination. This is true even if the employer genuinely believes that the worker’s claim is untrue. What’s more, workers who are retaliated against – through changes in their job, or having to endure a hostile environment – can sue in court for damages. And these days, more and more workers are doing just that. In fact, “retaliation” is now the single most common type of complaint filed with the federal Equal Employment Opportunity Commission, making up 36 percent of all claims last year.

That means there are more claims for retaliation than for any of the specific underlying types of discrimination, such as race, sex, age or disability. In the past, many workers would sue for discrimination and “add on” a claim for retaliation, more or less as an afterthought. But these days, a growing number of workers are filing lawsuits that focus almost entirely on what the employer did after the initial complaint about job bias was made. [Read more…]