Certain Laws Can Help When You Become a Senior Citizen
By ANN I. WEBER, Esq.
When you become a ‘senior,’ defined variously as 60 to 70 or older, you become eligible for legal benefits that are not available to your younger compatriots.
While many of these laws are needs-based, some are not — for example, Social Security, Medicare, and others which are available to all of us. The following is a non-exclusive list of some of these laws which might be of interest.
Timing Social Security Benefits
When you turn 62, you become eligible for early withdrawal of Social Security benefits, and this is a great benefit for people who for one reason or another cannot continue to be employed or who do not have a long life expectancy. However, for individuals born between 1943 and 1954, the monthly benefit at age 62 will be 75% of the full monthly benefit at age 66.
If you can wait for benefits until you are 70, there is an additional 8% increase every year for the four years between 66 and 70. So, before making a decision about when to start collecting these retirement benefits, consider the differences, taking into account your estimated life expectancy and your financial situation. For people who can afford to wait or who are worried about outliving their resources, waiting to file might be a good option to consider.
As you probably know, for beneficiaries who are 65 and older, Medicare pays not only for medical and hospital services, but also for some home services and medical equipment used in the home. Less well-known perhaps are the hospice services available to anyone with a prolonged, life-threatening diagnosis.
Although the diagnosis must state that death is likely within six months, hospice now allows not only palliative but curative care, with the result that many individuals end up renewing their eligibility for the program in six-month installments, sometimes multiple times, or graduating from the program entirely.
Hospice services include scheduled in-home care and emergency 24/7 care, which can often obviate the need for routine medical appointments and some emergency-room visits. In addition, Medicare hospice assigns a licensed, professional social worker to beneficiaries to help the patient and family deal with the social and emotional ramifications of an end-of-life illness. It is a comprehensive home-healthcare program, and it’s free.
Charitable Giving from Retirement Funds
As a general rule, any withdrawal from a traditional individual retirement account (IRA) results in income taxation of the full amount withdrawn. However, if you are 70 1/2, you can make charitable gifts from your IRA up to $100,000, receive a full charitable deduction, and have the amount contributed count toward your required minimum distribution.
If you are charitably inclined and meet the age requirement, this is a great way to partially fund your charitable gifts with money that would otherwise be going to Uncle Sam.
Declaration of Homestead
In Massachusetts, a homeowner receives automatic protection from unsecured creditors up to $125,000 so long as the owner or covered family member occupies or intends to occupy the property as his or her principal place of residence. With a declaration filed on the land records, this protection is increased to $500,000 in total for the property.
However, for individuals 62 or older, a homestead may be filed on each individual’s behalf, so, for example, for two homeowners 62 or older, the aggregate protection increases to $1 million.
A reverse mortgage is similar to a purchase mortgage in that it is a loan from a bank or mortgage company to an individual. However, instead of using the funds advanced by the bank for purchase of a residence, a senior homeowner (62 or older) can use a portion of his or her home equity as collateral and receive cash in return.
Reverse-mortgage payments are not taxable, nor are the payments considered countable income for purposes of MassHealth (Medicaid) eligibility. However, reverse mortgages have fees due upon origination and servicing fees annually which can be substantial, and the loan will have to be repaid with interest which has accumulated over the life of the loan when the homeowner dies or no longer lives in the home as his or her principal residence.
In the right situation, these loans can be life savers, but, because of the fees and technical provisions, it may be wise to consult with a knowledgeable attorney before committing.
Durable Powers of Attorney
Durable powers of attorney are used to allow one person, the agent, to act for another, the principal, in financial matters. These provisions can take place immediately or be triggered by incapacity. Though powers of attorney can be utilized by people of all ages, signing a durable power of attorney can be one of the most important steps you can take if you are getting older to make sure your financial affairs are handled by the person you want and in the manner you would choose.
Under the Massachusetts Uniform Probate Code enacted in 2012, power of attorney was given additional muscle. Specifically, in the event of an unreasonable refusal of a third party to honor the authority of a valid durable power of attorney, the agent can sue for damages. This can be really helpful if the failure to honor an agent’s directions — for example, in a sale or purchase of property — results in a loss to the principal.
There are many other laws and programs which are available to seniors on a needs-based basis which have not been covered here. Additional information can be found at local senior centers and various government agencies, or by contacting an elder-law attorney. n
Attorney Ann I Weber is a partner at Shatz, Schwartz and Fentin, P.C., and concentrates her practice in the areas of estate planning, estate administration, probate, and elder law. She is a fellow of the American College of Trust and Estate Counsel and past president of the Hampden County Estate Planning Council, and has been recognized by Super Lawyers, Top Fifty Women Attorneys in Massachusetts, and Best Lawyers in America; (413) 737-1131; [email protected]