Protecting assets from long term care facilities, like nursing homes, is often a top priority for most people when sitting down to meet with their estate planning or elder law attorney. When a married couple comes in looking to protect assets when one spouse is applying for MassHealth benefits, a Will with testamentary Supplemental Needs Trust is often discussed.
What is a Will with a testamentary Supplemental Needs Trust?
A Will with a testamentary Supplemental Needs Trust (SNT), is a long term care planning technique used when one spouse of a married couple needs MassHealth to pay for their care (Institutional Spouse). The care can be either at home (Frail Elder Waiver or FEW), or in a nursing home (Long Term Care or LTC).
Wills and Probate
A Will is a set of instructions to the Probate Court for what to do with your probate assets when you pass away. A Probate asset is an asset owned individually in your own name, meaning, there are no joint owners (on real estate or financial accounts), and no beneficiaries listed. In order for this property to be inherited, it must pass through the public process of Probate before it can be inherited by the beneficiaries named in the Will. (Click here to read more about Wills and Probate)
How the testamentary Trust is utilized.
In many traditional estate plans for married couples “I Love You Wills” are used, meaning each of the couple’s Wills leave everything to their surviving spouse first, and then to other beneficiaries. However, MassHealth planning for married couples often involves moving all assets into the sole name of the spouse who is not the one applying for benefits (this spouse is known as the Community Spouse). If the Community Spouse, dies before the Institutional Spouse, this can create an unwanted consequence…all assets being left to the Institutional Spouse. This results in the Institutional Spouse losing their much needed benefit and the need to spenddown all the assets before they can qualify again.
A Will with a testamentary Supplemental Needs Trust can be utilized to avoid this issue. If the Community Spouse predeceases the Institutional Spouse, all the Community Spouse’s probate assets (assets owned individually) will be placed (funded) into the SNT for the Institutional Spouse’s benefit. The Trust is drafted in such a way that it will not affect MassHealth eligibility. After the Institutional Spouse passes away, anything remaining in the Trust can be inherited by the other named beneficiaries. If the Institutional Spouse predeceases the Community Spouse, the Trust will not be funded, and everything can be inherited by the named beneficiaries as stated in the Will. Although this planning technique will result in the Community Spouse’s estate having to be probated at the time of their death, it will ensure that assets are available for their surviving spouse but held in a protected trust vehicle for their benefit.
To determine if a Will with testamentary Supplemental Needs Trust is right for you and your spouse, talking to your estate planning or elder law attorney would be the best first step.
Founded by a nurse attorney and with offices in Acton, Burlington, and Sudbury, Massachusetts, Generations Law Group helps families navigate the complex areas of estate planning, elder law, and probate to inform and protect loved ones of every generation.