Question: We attended a dinner hosted by a large estate planning firm. They got us excited about signing up for nursing home protection planning. To be safe, we sought your “second opinion.” You took a close look at our finances, saw our $1 million IRA and advised against putting our home in an Irrevocable Trust. Why did the big firm say we should sign up at the dinner?
Answer: There is no such thing as a free dinner. Sure, you didn’t have to pay out of pocket for the meal. But, you may have wasted thousands in legal fees for illogical services.
I decided early in my career to prioritize legal advice and planning, over our marketing and sales process. I live and work in my hometown of Billerica, Massachusetts. I bump into my clients at Market Basket each weekend. I never want them to say, “That’s the guy who sold us a bill of goods.”
The issue preventing your nursing home protection planning is common. You are stuck with your IRA. You can’t get rid of it without incurring huge taxes and possibly even penalties. I do not recommend paying actual taxes and penalties for a chance at potential nursing home protection.
Because of your large IRA, you will be “rich” when entering a nursing home someday. As such, you likely won’t ever qualify for MassHealth coverage. Thus, it makes no sense to “protect” your home from MassHealth recovery in an Irrevocable Trust.
My common sense approach, may not net me an immediate fee. But hopefully I earned your business for other estate planning matters. In this case, we discussed using a trust to minimize or avoid avoid Massachusetts estate taxes.
Attorney James Haroutunian is the founder of Priority Law.This article was originally published in the Lowell Sun and is for informational purposes only and not to be relied on as legal advice, in any manner.