Mass. Supreme Court Reverses Ruling on Trust Home Usage

Reversing a lower court, Massachusetts’ highest court ruled that two Medicaid applicants’ trusts were not available assets even though the applicants retained the right to use the houses that were put into the trusts. Daley v. Secretary of the Executive Office of Health and Human Services (Mass., No. SJC-12200, May 30, 2017) and Nadeau v. Director of the Office of Medicaid (Mass., No. SJC-12205, May 30, 2017).

James and Mary Daley created an irrevocable trust. They conveyed their interest in their condominium to the trust, but retained a life estate in the property. Seven years later, Mr. Daley was admitted to a nursing home and applied for Medicaid benefits. The state denied him benefits after determining that the trust was an available asset. Lionel Nadeau and his wife created an irrevocable trust and transferred their house into the trust. The trust provided that the Nadeaus had the right to use and occupy the house, which they did until Mr. Nadeau entered a nursing home and applied for Medicaid benefits. As with the Daleys, the state considered the trust a countable asset and denied benefits.

The Daleys and the Nadeaus appealed, but following hearings the state ruled that the trusts were available assets because the Daleys and Nadeaus had the right to occupy and use the properties that were in the trusts. In separate rulings, Massachusetts trial courts held that both trusts were available assets. (Daley v. SuddersMass. Super. Ct., No. 15–CV–0188–D, Dec. 24, 2015 and Nadeau v. ThornMass. Super. Ct., No. 14-DV-02278C, Dec. 30, 2015). The Daleys and Nadeaus appealed and the Massachusetts Supreme Judicial decided both cases together.

The Massachusetts Supreme Judicial court reversed the judgement, holding that the trusts are not available assets. According to the court, “where a trust grants the use or occupancy of a home to the grantors [as in the Nadeau’s case], it is effectively making a payment to the grantors in the amount of the fair rental value of that property.” The court adds that these payments “do not affect an applicant’s eligibility for Medicaid long-term care benefits, but they may affect how much the applicant is required to contribute to the payment for that care.” In the Daleys’ case, the court rules that because the Daleys hold a life estate, their use of the home is not considered income and “the continued use of the home by the applicant pursuant to his or her life estate interest does not make the remainder interest in the property owned by the trust available to the applicant.”

Maryland ElderLawAnswers member attorney Ron M. Landsman joined the briefing and argument.

In reaching its conclusion in the Daley case, the court cites the Elder Law section of West’s Massachusetts Practice series, written by Harry S. Margolis and Jeffrey A. Bloom of the Boston firm of Margolis & Bloom, LLP.

For the full text of this decision, go to:

This article was reprinted with the permission of  If you have any questions regarding the material and how it applies to Iowa residents, please contact Pearson Bollman Law at 515-727-0986.

Guardianship and Conservatorship

Every adult is assumed to be capable of making his or her own decisions unless a court determines otherwise. If an adult becomes incapable of making responsible decisions due to a mental disability, the court will appoint a substitute decision maker, often called a “guardian,” but in some states called a “conservator” or other term. Guardianship is a legal relationship between a competent adult (the “guardian”) and a person who because of incapacity is no longer able to take care of his or her own affairs (the “ward”).

The guardian can be authorized to make legal, financial, and health care decisions for the ward. Depending on the terms of the guardianship and state practices, the guardian may or may not have to seek court approval for various decisions. In many states, a person appointed only to handle finances is called a “conservator.”

Some incapacitated individuals can make responsible decisions in some areas of their lives but not others. In such cases, the court may give the guardian decision making power over only those areas in which the incapacitated person is unable to make responsible decisions (a so-called “limited guardianship”). In other words, the guardian may exercise only those rights that have been removed from the ward and delegated to the guardian.


The standard under which a person is deemed to require a guardian differs from state to state. In some states the standards are different, depending on whether a complete guardianship or a conservatorship over finances only is being sought. Generally a person is judged to be in need of guardianship when he or she shows a lack of capacity to make responsible decisions. A person cannot be declared incompetent simply because he or she makes irresponsible or foolish decisions, but only if the person is shown to lack the capacity to make sound decisions. For example, a person may not be declared incompetent simply because he spends money in ways that seem odd to someone else. Also, a developmental disability or mental illness is not, by itself, enough to declare a person incompetent.


In most states, anyone interested in the proposed ward’s well-being can request a guardianship. An attorney is usually retained to file a petition for a hearing in the probate court in the proposed ward’s county of residence. Protections for the proposed ward vary greatly from state to state, with some simply requiring that notice of the proceeding be provided and others requiring the proposed ward’s presence at the hearing. The proposed ward is usually entitled to legal representation at the hearing, and the court will appoint an attorney if the allegedly incapacitated person cannot afford a lawyer.

At the hearing, the court attempts to determine if the proposed ward is incapacitated and, if so, to what extent the individual requires assistance. If the court determines that the proposed ward is indeed incapacitated, the court then decides if the person seeking the role of guardian will be a responsible guardian.

A guardian can be any competent adult — the ward’s spouse, another family member, a friend, a neighbor, or a professional guardian (an unrelated person who has received special training). A competent individual may nominate a proposed guardian through a durable power of attorney in case she ever needs a guardian.

The guardian need not be a person at all — it can be a non-profit agency or a public or private corporation. If a person is found to be incapacitated and a suitable guardian cannot be found, courts in many states can appoint a public guardian, a publicly financed agency that serves this purpose. In naming someone to serve as a guardian, courts give first consideration to those who play a significant role in the ward’s life — people who are both aware of and sensitive to the ward’s needs and preferences. If two individuals wish to share guardianship duties, courts can name co-guardians.

Reporting Requirements

Courts often give guardians broad authority to manage the ward’s affairs. In addition to lacking the power to decide how money is spent or managed, where to live and what medical care he or she should receive, wards also may not have the right to vote, marry or divorce, or carry a driver’s license. Guardians are expected to act in the best interests of the ward, but given the guardian’s often broad authority, there is the potential for abuse. For this reason, courts hold guardians accountable for their actions to ensure that they don’t take advantage of or neglect the ward.

The guardian of the property inventories the ward’s property, invests the ward’s funds so that they can be used for the ward’s support, and files regular, detailed reports with the court. A guardian of the property also must obtain court approval for certain financial transactions. Guardians must file an annual account of how they have handled the ward’s finances. In some states guardians must also give an annual report on the ward’s status. Guardians must offer proof that they made adequate residential arrangements for the ward, that they provided sufficient health care and treatment services, and that they made available educational and training programs, as needed. Guardians who cannot prove that they have adequately cared for the ward may be removed and replaced by another guardian.

Alternatives to Guardianship

Because guardianship involves a profound loss of freedom and dignity, state laws require that guardianship be imposed only when less restrictive alternatives have been tried and proven to be ineffective. Less restrictive alternatives that should be considered before pursuing guardianship include:

Power of Attorney. A power of attorney is the grant of legal rights and powers by a person (the principal) to another (the agent or attorney-in-fact). The attorney-in-fact, in effect, stands in the shoes of the principal and acts for him or her on financial, business or other matters. In most cases, even when the power of attorney is immediately effective, the principal does not intend for it to be used unless and until he or she becomes incapacitated.  (For more on powers of attorney, click here.)

Representative or Protective Payee. This is a person appointed to manage Social Security, Veterans’ Administration, Railroad Retirement, welfare or other state or federal benefits or entitlement program payments on behalf of an individual.

Conservatorship. In some states this proceeding can be voluntary, where the person needing assistance with finances petitions the probate court to appoint a specific person (the conservator) to manage his or her financial affairs. The court must determine that the conservatee is unable to manage his or her own financial affairs, but nevertheless has the capacity to make the decision to have a conservator appointed to handle his or her affairs.

Revocable trust. A revocable or “living” trust can be set up to hold an older person’s assets, with a relative, friend or financial institution serving as trustee. Alternatively, the older person can be a co-trustee of the trust with another individual who will take over the duties of trustee should the older person become incapacitated.

This article was reprinted with the permission of  If you have any questions regarding the material and how it applies to Iowa residents, please contact Pearson Bollman Law at 515-727-0986.

Retirement of Phyllis Pearson

I am retiring on December 1st of this year, after 38 years of practicing law.

I am retiring at a time when Pearson Bollman Law is thriving.  We have two offices – one in West Des Moines and a new office in Marion, and two satellite offices, one in Cedar Rapids and one in Dubuque.  This allows us to represent clients all over the state of Iowa.

I am leaving you and your families in good hands.  Upon my retirement, my partner of seven years, Matt Bollman, will be taking over the firm.  Matt is thoroughly committed to the continued and ongoing service of our clients.  Pearson Bollman Law will remain the name of the firm.

Pearson Bollman Law will continue to specialize in Estate Planning (Wills, Trusts, and Powers of Attorney), Probate and Trust Administration, and Elder Law (Medicaid and the VA Aid and Attendance Benefit).

Before I retire, we invite you to come in and meet with me one last time.  You can bring me up to date on your matters and meet the members of our firm.  There will be no charge for the meeting.

When I started out as an attorney, I had no idea how much my clients (you) would mean to me.  I have enjoyed getting to know each and every one of you and am truly going to miss you.

My husband is retiring from Adventureland (40 years) on the same day.  We will be traveling and spending time with our family, friends and dogs.


Phyllis Pearson

What to Do When a Loved One Dies, Part 2

In my last blog post, I discussed what to do immediately upon a loved one dying.  In this article, I am going to discuss what to do later, after the funeral.

Locate Will or Trust Agreement.  The Will or Trust Agreement may be in a safe in the home or in a bank safe deposit box.   Or some other designated place.  I was on the way to a baseball game one afternoon when my uncle told me that his important papers were kept in a box on the floor of the closet in the mud room of his house.  I would have never found them! 

If you are unable to locate them, contact your loved one’s attorney, who should at least have a copy.  Some attorneys make it their practice to keep original Wills so that you will have to use them for probating the estate.

Make appointment with Attorney. Make an appointment with a trust and estate attorney to help you with transferring your loved one’s assets and going through probate, if necessary.  Even though your loved one’s attorney’s name is all over the Will or Trust Agreement, and even if that attorney has the original Will, it is not necessary for you to hire that attorney.

Determine assets.  Before you go in to see the attorney, you should try to determine what assets your loved one had at the time of his or her death.  Sometimes this is easy; he or she has a list of the assets and then has a file for each of the assets.  Wouldn’t that be great!  But, generally, you are not that lucky.  You may have to look through all the papers in the home to determine what he or she owned at the time of his or her death.  This is made more difficult by the fact that people keep things like insurance policies that are no longer in force.

Transfer of assets.  After the death of your loved one, your loved one’s assets need to be transferred to his or her beneficiaries or heirs at law.

Assets with named beneficiaries. Some assets will have named beneficiaries, which, upon getting a death certificate, will be transferred to those beneficiaries.  Examples are life insurance policies, annuities, 401(k)s and IRAs.

Assets held jointly with right of survivorship.  These assets will automatically, upon presenting a death certificate, pass to the joint tenant.  Examples are the residence, bank accounts, automobile.

Assets payable on death.  Bank accounts are sometimes “payable on death” which means that upon death and upon presenting a death certificate, the proceeds of the account pass to whoever is listed as payable on death.

Assets transferred on death.  Brokerage accounts can be “transferred on death” which is similar to payable on death.

Trust Assets.  Assets held by a trust are distributed according to the terms of the trust.

The rest of the assets.  Your loved one may have had assets that are none of the above, and simply held in the name of your loved one.  These assets can only be transferred by going through the probate process, which is the court administered process for transferring assets.  This is true even if your loved one had a Will.

For my next blog, I am going to discuss how to simplify this whole process for those you love.

What to Do When a Loved One Dies, Part 1

My mother died recently, so I know what to do when a loved one dies.  But she was 92 years old and had been in a nursing home for more than a year.  Two weeks before her death, she was put on hospice, so her death was no surprise.  And she lived a good long life.

My brother and I had everything ready.  We had prepaid for her cremation.  We knew what funeral home to call.  The stone for her monument had not only been paid for, it had been installed and was only waiting for her date of death to be inscribed.

A day or so before her death, hospice called to tell me that she was “actively dying” and could die at any moment.  When she died, hospice took care of everything – having her declared dead and calling the funeral home to retrieve her body.

But what if your loved one dies unexpectedly in your home?  And no arrangements or even thoughts about arrangements have been made?  What do you need to do?

The following is a checklist of what to do when a loved one dies unexpectedly.

Call 911.  Since your loved one died unexpectedly, you don’t have a doctor or hospice nurse who can declare your loved one dead.  You will need to call 911.

Organ donation.  Did your loved one indicate on his or her driver’s license that they wanted to be an organ donor?  If so, arrangements need to be made immediately for that to be done.

Funeral home. The funeral home will retrieve the body as soon as your loved one is declared dead, and any organ donation has been completed, so you need to decide which funeral home to call.

Cremation or traditional.  Who makes the decision?  Under Iowa law, a person can sign a form (Declaration of Designee for Final Disposition) saying who he or she wants to make the decision regarding disposition of the remains.  Since this was an unexpected situation, we are going to assume that wasn’t done.  Without that form, under the law, the spouse can decide.  If there is no spouse, under the law, a majority of the children can make the decision.  Some funeral homes require that all children must agree to cremation, in writing, even if that isn’t required under the law.

Write obituary.  The funeral home will give you direction on what to write in the obituary.  Then decide where, and how many days, the obituary is going to be published.

Plan funeral and memorial services.  This will depend on whether you are having a traditional funeral followed by burial or cremation.  Another option is to have a direct cremation with no funeral involved.  Then a memorial service at a later time.

Death Certificates.    How many are you going to need?  Basically, you need one original for each life insurance policy, annuity, and every asset that is payable on death or held jointly with another person.  Usually, the original will be sent back to you so you can use the originals more than once.  This is a difficult question if you weren’t expecting the death and have no idea what life insurance policies, annuities, etc. that your loved one had. 

This checklist deals with what you need to do immediately.  For my next article, I will have a second checklist which deals with what you need to do after the funeral.

Scams Targeting the Elderly – What to Look For

In the last month, two clients have received letters regarding sweepstake winnings – and each showed signs of a well-conceived scam. One for $850,000 and the other for $600,000. Both clients are in their mid 80’s; both deny being elderly.

Supermarket Customer Sweepstakes Raffle Draw

The first one was supposedly a drawing of all customers in the USA, Canada and Europe of Safeway, Wal-Mart, Super Value, Costco, Kroger, Delhaize, Target, CVS Pharmacy, Sears, etc. that used Visa, Master Card, American Express, Discover or personal check. A really large group! What would be the odds of being selected from that group?

Publishers Clearing House

The second one was a letter from Deborah Holland, Executive Vice President, of Publishers Clearing House, a position she has held for more than 30 years.

Processing fees

Both winnings required payment of processing fees before receiving the prize. In both cases, checks were enclosed to help fund the processing fee. For example, to receive the $850,000 prize, the processing fee was $3,680. A check for $3,882 was enclosed to help fund the processing fee. Supposedly, an advance on the $850,000 in winnings.

How it works

You write a check for the processing fee and mail it in. At the same time, you deposit the check they sent you. Your check to them clears right away. Two or three weeks later you receive notice from your bank that their check was returned for insufficient funds or closed account.

How do you now it isn’t real

You know it isn’t real and likely a scam if you are asked to send a “processing fee.”

In the case of Publishers Clearing House, you know it isn’t real because Publishers Clearing House does not telephone, email or send letters to winners. Just like you see on TV, Publishers Clearing House shows up at your home with a van full of balloons!

Internet search

We had a lot of fun reading both letters and searching the internet. That’s how I know that Deborah Holland is actually the Executive Vice President of Publishers Clearing House.

That first letter was from a company located in “Durbank,” California. We thought it should have been Burbank, but checked to see if there is a city in California named “Durbank.” There is not. Then we called the phone number listed in the letter. The person who answered wanted to know why we were calling. As soon as he found out, he hung up.

We used Google to search the phone number listed in the Publishers Clearing House letter. What came up was FRAUD.

It can happen to anyone

Recently I received a call asking for a donation to Hillary Clinton’s campaign. The caller told me there was an anonymous donor that would match my donation, but only if I donated within the next 24 hours. That appealed to me! I went to get my credit card and, on the way back to the phone, realized how easy it was for some unknown person to run a scam like this to get my credit card number.

As the sergeant told his men on Hill Street Blues, “Be careful out there.”

What If My Husband Moves To A Nursing Home?

The decision to move a spouse into a nursing home is one many couples have to face. Taking the time to prepare in advance can help alleviate some of the stress and uncertainty that comes with this process. Here’s an overview of the details regarding nursing homes and other long term care options:

Will we lose all of our assets? How will I be able to live?

Many spouses come into our office with these questions. We even had an elderly woman who was leaving our office to interview for retail clerking jobs in order to support herself after her husband moved to a nursing home.

No, you will not lose all of your assets.

Nursing homes are costly. For example, my mother is paying $8,000 per month. Paying at this rate rapidly depletes the life savings of an elderly couple, leaving the spouse at home with nothing to live on.

Spousal Impoverishment Protection Law: In 1988, Congress enacted provisions to prevent “spousal impoverishment;” that is, leaving the spouse at home with little or no income or resources. These provisions help ensure that this situation will not occur and that community spouses are able to live out their lives with independence and dignity.

Definition of Assets

Exempt Assets: There are certain assets that are exempt and may be kept by the spouse at home. Those assets are: the home, one car and prepaid funerals.

Countable Assets: All other assets are countable, whether owned by the husband or wife or held jointly. This includes checking accounts, savings accounts, stocks, bonds, CDs, mutual funds, revocable trusts, cash value of life insurance policies, IRAs and real estate other than the home.

Under the Spousal Impoverishment Protection Law, the spouse at home gets to keep half of all countable assets, up to a maximum of $119,220 in 2016, but not less than $24,000.


In addition to assets, the spouse at home gets to keep his/her own income. If the spouse at home has less income than $2,980.50 per month, he/she will also keep part of the nursing home spouse’s income up to a maximum of $2,980.50 per month.

Example: Ellen can no longer care for her husband and he has been admitted to a nursing home. They have $200,000 in countable assets. Ellen will be able to keep $100,000 of the assets, in addition to their home, one car and prepaid funerals for Ellen and her husband.

Ellen and her husband are both on social security with no other source of income other than from their investments. Ellen receives $1,500 from social security and her husband receives $1,600 from social security. Ellen will be able to keep her own income and $1,480.50 of her husband’s income, so that her total monthly income will be $2,890.50.

Need guidance on planning for situations like these? Give us a call at (515) 727-0986.

Implementing a Business Succession Plan

If you’ve owned a business, you know it’s a decision you’ll ultimately have to face: how can business succession planning help you make a graceful exit?

When I turn 70 at the end of 2017, I will officially retire. However, since announcing these intentions on January 1, 2015, I’ve been taking the steps towards the transition one at a time by having three years to put business succession plans in place.

This has left me with three priorities to check off my “to do” list:

  1. Get help with my workload
  2. Go on vacation without taking work with me
  3. Have a succession plan for my practice

By announcing my retirement well in advance of the official date, I’ve hoped to create comfort with clients by giving them ample time for the news to settle in. But this advanced notice has given us plenty of time for transitioning the workload to other members of our team, as well as put buy-sell agreements in place.

So who’s taking over Pearson Bollman Law once I retire?

Leadership in the practice will be transitioning to Matt Bollman who has been a partner in the firm for 5-1/2 years. Our succession plan has allowed the transition to be a slow and deliberate process rather than a frantic and abrupt one. This has allowed Matt to ease in to the role as well as tap my experience when questions arise or the inevitable hiccup occurs.

This deliberate pace has also given us the opportunity to add another attorney to our team – Michelle Triplett. With adequate time for us to work together, Michelle has appreciated how smooth the transition has gone because she’s had the time to get thoroughly grounded and put her own systems in place.

These steps will help the firm continue forward in my absence. This process has also given our clientele plenty of notice of my retirement plans so they can make adjustments of their own, get acquainted with other members of our team and warmed up to the idea long before I exit the working world.

So we’ve put a succession plan in place. And added new staff to help lighten my workload.

Now, about those vacations where I leave work at home…

– Phyllis

Need guidance on Estate Planning? Have an Elder Law question or need? Give us a call at (515) 727-0986.

Estate Planning Odds ‘n Ends

Estate planning is all about the details. Here are some scenarios – wills, gifting, Medicaid, powers of attorney, etc. – that have come up recently in helping our clients work through their estate planning decisions.

Jointly Held Property vs. Will

The day before Christmas, I received a call from a woman who was recently widowed. At the time of her husband’s death, she and her husband owned a house, a car, checking and savings accounts – and a pickup. All of the assets were jointly held (with right of survivorship). Upon her husband’s death, she automatically owned these assets outright.

Her husband also had a Will. The Will stated that the grandson (from the husband’s prior marriage) received the pickup. The grandchild’s mother (the widow’s stepdaughter) has been harassing the widow, stating that the Will gives the pickup to the grandson.

I advised the widow that no assets jointly held passed under the Will. It is her pickup; it does not pass to the grandson.

Annual Gifting and the Medicaid 5-Year Lookback Rule

We were giving a presentation about Medicaid (Title 19). A participant was continually trying to get the speaker’s attention. When he was called on, he stated that everyone can give $14,000 per donee per year and then qualify for Medicaid. He heard this from an “elder law” attorney.

Yes, you can give $14,000 per donee per year. However, that is only an exclusion from filing a gift tax return. It is not an exclusion from anything else. For Medicaid (Title 19) purposes, a question on the application is whether there have been gifts within the last 5 years. This is referred to as the 5-year lookback rule. Just because a gift is excluded for gift tax purposes does not mean it is excluded from being counted as a transfer within the last 5 years. It will be counted.

When should I update my Will?

A 93-year woman came into my office for estate planning. We did a Will and Powers of Attorney (Healthcare and Financial), naming her son as Executor and as her agent for the Powers of Attorney. If her son wasn’t able to serve, her brother was named to serve in his stead. Given her age, that looked like an estate plan that would work until her death.

Her grandson came in last week. His father, the woman’s son, had just died. So that would make her brother the Executor and agent for her Powers of Attorney. But, surprisingly, ten years had passed since we did the original estate planning. The woman is now 103 and her brother is 94. It is time to update her Will and Powers of Attorney! Luckily, the woman, who is still living at home, is competent and able to sign new documents.

Powers of Attorney terminate upon death

Powers of Attorney reflect a principal-agent relationship. The person making a Power of Attorney is the principal and the person they name to act on their behalf is the agent. A Power of Attorney terminates upon death of the principal. That means that if you have been using a Power of Attorney to act on behalf of the principal in writing checks and paying bills, that ability will terminate immediately upon the death of the principal.

How to Avoid Probate

What is probate?

Probate is the court supervised procedure for transferring ownership of an individual’s assets after death.

Why not go through probate?

First of all, it is slow (1 to 3 years). Second of all, it is costly – 2% – 4% of the gross assets of the estate.

How to avoid probate

Common methods: jointly held property, beneficiaries on life insurance, annuities, 401(k)s and IRAs, Payable on Death designations for bank accounts and Transfer on Death designations for investment accounts.

What about Trusts?

In 1965, more than 50 years ago, Norman F. Dacey wrote a book entitled How to Avoid Probate! The book advocated using trusts to avoid probate. At the time the book was written, almost every estate went through the probate process. Very few estates were structured to avoid probate.

Mr. Dacey was not an attorney, and the book infuriated attorneys all over the United States. Several states charged him with “practicing law without a license.”

Nevertheless, the book was extremely popular. Two million copies of the book were sold. It went through five editions, with the final edition being 1993, almost 30 years from the first edition.

The long term result is that today trusts are commonly used to avoid probate.

I recently found the book How to Avoid Probate! by Norman F. Dacey at a used book store. Besides its history, it is an early example of what people do today with LegalZoom and other on-line do-it-yourself websites. The book is 8 ½” by 11” and contains 238 forms which can be torn out and completed. Also for every form there is a duplicate of the form so that you can simply insert carbon paper and make a duplicate.

What should you do?

You can avoid probate on most of your assets by adding beneficiaries to your life insurance, annuities, 401(k)s and IRAs and by making your bank accounts Payable on Death and your investment accounts Transfer on Death.

However, for real estate, there is no way to list beneficiaries. A trust will need to be established and your real estate transferred to the trust, in order to avoid probate.

There are different types of trusts. Mr. Dacey had 23 types of trusts in his book. You need to see an attorney, preferably one specializing in estate planning, for legal advice on what type of trust, who should be the trustee, who should be the successor trustee, who are the beneficiaries, what if a beneficiary dies before you, and other issues. Then assets need to be moved to the trust in order for the estate plan of avoiding probate to work. This is not a Do-It-Yourself (DIY) project.

If you have any questions about the role probate may play in your estate planning and how to avoid the time and expense of this process, contact Pearson Bollman Law at (515) 727-0986 for a consultation.