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Moving in With Your Adult Children
Patricia Bloom-McDonald • Feb 26, 2015

If there are circumstances under which you have asked, or your adult children have inquired, if you would like to move in with them, you may want to consider the psychology, financial reality, and likely scenarios before taking this step. For example, are your minor grandchildren still living with your children, how large is the home, and do you get along with your child and in-law? There are a host of other factors to consider also when pondering whether such an arrangement is realistic or workable.

1.  Will you need home assistance? If you do need an aide, then your children probably realize this but must be assured the aide is reputable. If you do not need one now, there may come a time when you may need one so there must be a financial source to pay the worker. If your child or spouse is a stay-at-home parent or works at home, will that person be the caretaker? If so, how much assistance will you need and is this person able to do what is required? This can be a less costly alternative than moving into an assisted living apartment facility.

2.  Will your child’s house need renovations to accommodate you? This may entail installing guardrails in the bathroom or other areas of the house, an escalator for the stairs, installing ramps or removing or widening doors and entrances.

3.  What are the financial and tax consequences? As a parent you may own or have an interest in your child’s home or may wish to gift your interest to your child. A contract should be drawn up regarding payment to your children for certain expenses, contact your estate planning lawyer to assist you with preparing one. An attorney should be consulted to advise you how the property interests can be protected or transferred – such as in a trust so that your receipt of Medicaid or other public benefits are not jeopardized. Also, if your child provides for more than half of your support, then he or she may be able to claim you as a dependent and get a tax deduction.

4.  Be prepared for the emotional challenges. If you have any unresolved or ongoing issues with your children or their spouses, these may well be intensified if you live together. You may not want to feel indebted or dependent on your child or feel that you must do or agree with whatever your child says or does regarding your welfare. You also should want to live there and your child and family should be welcoming as well.

5.  If there are small children at home, prepare them for your arrival. You will need to be prepared for dealing with noisy and energetic children. If you are still able, you can take them on outings and provide some relief for your adult children or babysit for them.

6.  Look into other services and organizations. You do not have to be entirely dependent on your children for all your needs. There are meals programs, shuttle services to recreational events, churches, and synagogues as well as programs for seniors and home health workers who can come to the house.

7.  Have an alternative plan. Although this arrangement may work in theory, it may well fail once reality sets in and you are not getting along or the arrangement is causing more difficulties. All parties should at least try to make adjustments or compromises before deciding that some other arrangement has to be found, since openly communicating concerns can often lead to acceptable solutions. Before you move in, discuss with your children the possibility that this may not work and if there is a feasible alternative for you.

Consult Elder Law and Estate Planning Attorney Patricia Bloom-McDonald

Before you move in with your adult children, consider having an estate plan drawn up by elder law attorney Patricia Bloom-McDonald . Your plan can include the establishment of a trust, Last Will and Testament, Durable Power of Attorney, Health Care Directive, living will documents, as well as get other advice regarding the administration of your estate. She will advise you on how to protect your assets for possible receipt of Medicaid and other public benefits. If you need advice on what to expect when moving in with your adult children, she can offer suggestions for you and them to make the transition easier and perhaps more affordable.

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Using a Credit Card When You Have a Special Needs Trust

25 May, 2023
A special needs trust (SNT) allows you to meet your needs while receiving government benefits, such as Medicaid/MassHealth and Supplemental Security Income (SSI). When you have a special needs trust, you can use it to pay for goods and services government benefits do not cover, such as therapy, education,and housing. Since receiving income directly from your trust would jeopardize your eligibility for benefits, your trustee cannot give you cash from your SNT. When you use a credit card for permitted transactions, and your trustee pays off the balance with funds from your trust, these payments to a credit card company are not considered income. An SSI or Medicaid/MassHealth recipient who is capable of managing their own affairs can therefore use a credit card to make small purchases, and the trustee of the special needs trust need not micromanage every transaction. In the past, beneficiaries of SNTs sent their bills to their trustees for payment. Today, an individual with an SNT who qualifies for a personal credit card may find that using a credit card is more convenient. Credit cards have several benefits. Using a credit card to manage payments from your special needs trust allows you to maintain independence, gain access to some of the advantages of a credit card, and easily keep records while preserving your eligibility for Medicaid/MassHealth and SSI. Although credit cards can help people manage their special needs trusts, there are also several important restrictions and considerations to keep in mind. Consult with a special needs planner to ensure all transactions are acceptable under the trust's rules and comply with government regulations. The Benefits of Using Credit Cards When You Have a Special Needs Trust If you have a special needs trust, using a credit card has many benefits, including: Independence : Allowing you to maintain your independence. You can use your card to make qualifying purchases yourself. Your trustee does not have to make the transactions for you. Access to the Typical Advantages of a Credit Card : Using it responsibly can help you establish or build credit history, which may be important for your future financial needs. Record-Keeping : Credit cards provide easy record-keeping and a convenient way to monitor transactions from your special needs trust, which can also help special needs trustees fulfill their duty to maintain records. When you use your card, your trustee can observe your purchases and ensure that all expenses are allowable under the trust’s rules. Your statements can help your trustee keep track of funds leaving the trust. Benefits Eligibility : While adhering to Medicaid/MassHealth and SSI’s income and asset limits, you can access funds from your SNT. Credit cards can help prevent your trustee from accidentally providing you with cash payments that could affect your eligibility for government benefits. Considerations When Using a Credit Card for Your Special Needs Trust While you can use a credit card to access funds from your special needs trust for certain transactions , restrictions apply. If your trustee sees a charge on your card that could affect your benefits eligibility , they can flag it for review. You cannot use your credit card to pay for food and shelter, which SSI would cover. When administering your funds, your trustee must ensure that any expenditures are for your sole benefit if you have a first-party special needs trust. While using a credit card is appropriate, you should not use a debit card. Debit cards are considered cash income. Best Practices When using a credit card for a special needs trust fund, remember several best practices. Choose a card with low fees and interest rates. Set a clear budget and monitor transactions regularly. Keep thorough records and receipts of expenses. Consult with your special needs planning attorney. A special needs planning attorney can help you navigate the rules that apply to your trust and understand how to use a credit card to preserve your Medicaid/MassHealth and SSI eligibility. 

How an ILIT can help offset estate taxes

12 May, 2023
With the Federal estate tax exemption possibly about to be lowered, it may be time to think about steps you can take to keep your estate from being taxed. An irrevocable life insurance trust allows you to pass on money to your heirs while avoiding both the federal estate tax, as well as any applicable state estate tax which is currently $1 million in the Commonwealth of Massachusetts. Senate Democrats have proposed lowering the current estate tax exemption from $11.7 million for individuals and $23.4 million for couples to $3.5 million for individuals and $7 million for couples. While it is unclear if this proposal will pass, it is likely that some change to the estate tax is coming. Even if Congress does not take any action, the current rate will sunset in 2026 and essentially be cut in half, to about $6 million per individual. In the Commonwealth of Massachusetts, the current estate tax exemption is $1 million for individuals and is taxed at dollar $1.00. A proposal to raise it to $3 Million and the tax to start at $3 Million (not at $1.00) has been submitted in the legislature but has not yet been voted on or enacted. One way to make up for any estate tax your estate may have to pay is by setting up an irrevocable life insurance trust [ILIT]and funding it with a policy that has a death benefit that would pay your heirs some or all of the amount your estate will be taxed. If you purchased such a life insurance policy directly, it could end up being taxed as part of your estate. But if a trust owned the policy, it could pass outside your estate. While a life insurance trust can be highly beneficial, it is also complicated to set up and maintain properly. The following are some of the requirements: Trustee . If you are setting up the trust, you cannot also serve as a trustee. If you are the trustee, you have control of the trust, which could lead to the trust being included in your estate. You will need to name another trusted person or financial institution to act as trustee. Policy ownership . The trust must own the life insurance policy. If you transfer an existing policy to the trust and die within three years, the policy will still be considered a part of your estate. To avoid this risk, the trust can purchase a policy directly rather than receive an existing policy. Premiums . You need to transfer funds to the trust to pay the policy premiums, which creates an issue with gift taxes. A transfer to a trust is usually not subject to the $15,000 yearly gift tax exclusion. For a gift to qualify for the exclusion, the recipient must have a "present interest" in the money. Because a promise to give someone money later does not count as a present interest, most gifts to trusts aren't excluded from the gift tax. To avoid this, you can use something called a “Crummey” power which gives beneficiaries the right to withdraw the funds transferred to the trust for up to 30 days. As part of the process, the trustee needs to send them a letter, known as a Crummey letter, letting them know about the trust funding and their right to withdraw the funds. After the 30 days have passed, the trustee can use the funds to pay the annual insurance premium. You run the risk of the beneficiaries withdrawing the funds, but if they know that by allowing the money to stay in the trust they will receive more money later, it shouldn’t be a problem. Beneficiaries . The beneficiary of the life insurance policy is usually the trust. Once the funds are deposited in the trust, the trustee can distribute the assets to the beneficiaries in the way specified by the trust. For example, if your beneficiaries are minors, you can wait to have the trustee distribute the assets. Keeping the assets in the trust will also protect them from your beneficiaries’ creditors. The downside of an irrevocable life insurance trust is that you do not have the ability to change it once it is set up, although the policy would effectively be canceled if you stopped paying the premiums. If you are considering this type of trust, discuss it with your attorney.
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