Newly Posted Article -- "An Informal Glossary of Selected Guardianship, Entitlements and Estate Planning Terms"
[November 6, 2006]
Donald N. Freedman
Paula J. Morgan
Susan H. Levin
Ellen M. McVay
Hope C. Vassos
Kristin Wildman Shirahama

I. Guardianship

Guardian:

A guardian is a person who is given powers and duties by a probate court to take care of the person and manage the property and rights of another person, called the “ward.” The court may appoint a guardian for a person over age 18 if the person is incapable of taking care of himself or herself by rea¬son of mental illness or mental retardation, or if the person is unable to make informed decisions due to physical incapacity or illness. The “natural” guardianship of a parent over his or her minor child ceases when the child turns age 18, regardless of the child’s mental or physical capacity.

Guardianship appointments can be temporary or permanent. A temporary guardian is appointed for a limited period set by the court. Temporary guardianship is usually undertaken where guardianship is necessary for a short-term and non-recurring objective, such as an operation, or for emergency purposes, because it can be obtained much more quickly than permanent guardianship. A permanent guardianship is an open-ended appointment.

Guardianship appointments can be general, with broad powers, or limited to specified areas of inca¬pacity, such as making medical decisions. Courts may also appoint a special kind of limited guardian, called a monitor, with authority limited only to giving consent to the administration of anti-psychotic medications.

Special court permission is necessary for certain actions by a guardian, such as decisions relating to institutional placement, psycho-tropic medications, sterilization, transfer of the ward’s assets to a trust, sale of real estate, and approval of settlements in lawsuits.

If a guardian is given control over the ward’s income and/or assets, the guardian must prepare and file an annual account with the court, pertaining to his or her management and utilization of the ward’s income and assets.


Guardian Ad Litem:

A person appointed by the court to represent the interests of a mentally incapacitated individual, most often in the context of a guardianship petition, primarily by investigating the facts underlying the petition and reporting to the court, with a recommendation that the court approve or not approve the proposed action. The guardian ad litem may be an attorney, accountant, psychologist, social worker, or other professional, depending on the nature of the petition, but is always independent individual with no relation to the parties. The guardian ad litem ordinarily has no on-going responsibilities once the petition is allowed.


Conservator:

A person appointed by the court to manage an individual’s income and assets, and not his or her health care, residential, or other personal needs. A conservator must prepare and file an annual account with the court, pertaining to his or her management and utilization of the ward’s income and assets.


Ward:

A person on whose behalf a guardian or conservator has been appointed by a probate court.



II. Government Benefit and Related Insurance Programs

Supplemental Security Income:

A federally-administered income-benefits program for persons of any age who are disabled, aged, or blind, and who meet certain income and asset restrictions. If a person is eligible for SSI, he or she is also automatically eligible for Medicaid.


Social Security Disability Benefits:

A federal program providing monthly income benefits and Medicare (after two years of eligibility for income benefits) for persons over age 18 who (1) have worked in most kinds of employment, (2) have paid into the social security system (“FICA” taxes), and (3) are disabled. A person is considered disabled for purposes of this program if he or she is unable to engage in any substantial gainful activity by reason of a seri¬ous mental or physical handicap or combination of handicaps which is expected to last for a continuous period of at least twelve months or result in death. A person is eligible for Disability Benefits and Medicare regardless of his or her assets and unearned income from other sources.

A special program called Childhood Disability Benefits may provide both income benefits and Medicare to adult disabled individuals who have never worked substantially. To be eligible, the individual: (1) must be over age 22; (2) must have become disabled in childhood and have remained continuously disabled; and (3) must have or have had a parent who was covered by Social Security and who has become disabled, or who has retired or died.


MassHealth/Medicaid:

Medicaid, or MassHealth as the program is called in Massachusetts, is a medical assistance program for persons who are eligible for Supplemental Security Income (SSI) or who are disabled and whose assets and income fall within specified limits. While the focus of MassHealth is on medical, hospital and nursing home services, MassHealth also provides (1) a broad range of home and community based residential and non-residential programs; (2) work- and life-training services through the Day Habilitation program; (3) non-medical personal support through the Personal Care Attendant program; (4) psychiatric day hospital programs for persons with mental illness; (5) assisted living services through the Group Adult Foster Care program, (6) private in-patient psychiatric hospital services for persons under age 21 or over age 65, and other programs which may be very important for persons with severe disabilities.


CommonHealth:

CommonHealth is a specific MassHealth program for certain disabled individuals whose income is too high for “regular” MassHealth (MassHealth Standard). Disabled persons age 18 – 65 who are working at least 40 hours per month are eligible, regardless of their income. Alternatively, non-working disabled persons may be eligible if out-of-pocket medical expenses are high enough in relation to their income to meet a one-time six-month deductible. In either case, eligible persons may have to pay a monthly premium, on a sliding scale.


Section 8 and other rental-housing subsidy programs:

The federal “Section 8” voucher program is the best known but really only one of a number of rental subsidy programs for low income elders and persons with disabilities. They are administered by local public housing authorities, and by regional non-profit agencies under contract with the state. (In Boston and 26 surrounding communities, the regional entity is the Metropolitan Boston Housing Partnership.) Programs similar to Section 8 include the tenant-based MRVP program, and the state Alternative Housing Voucher Program (AVHP) (only for non-elder persons with disabilities).

An individual with a voucher may live in any apartment owned by a landlord who has agreed to participate in the program. The tenant pays no more than 30% of his income as rent; and the housing authority pays the landlord the difference, up to an agree level. A person with a voucher may use it in any community in the Commonwealth. (In fact, a Section 8 voucher can be used anywhere in the United States.) There is a waiting list on the issuance of new vouchers, so early application should be considered.


Section 8 Home Ownership Program:

This is a new program administered by local public housing authorities. The program is optional with PHAs, and only some participate. It can be used to purchase single-family homes, condominiums and co-ops. Assistance is paid to the homeowner and the lender to the extent necessary to cap the homeowner’s major housing expenses (mortgage, mortgage insurance, utilities, maintenance repairs, etc) at a level not greater than 30% of the homeowner’s income.

Home Modification Loan Program:

The Home Modifcation Loan Program provides low- and no-interest loans (of up to $25,000) to modify the primary and permanent homes of elders, and of children and adults with disabilities, as necessary to accommodate the resident’s functional limitations. Typical modifications include installation of ramps and lifts, widening of doorways, and alteration of kitchens and bathrooms. The program is administered through regional provider agencies under contract with the Massachusetts Rehabilitation Commission. (In Boston and 26 surrounding communities, the agency is the Metropolitan Boston Housing Partnership.)

Medicare:

This is the federal health insurance program for people on Social Security Disability for at least two years, and for people receiving Social Security retirement benefits. Medicare covers basic hospital and medical services, subject to co-payments and deductibles. Perhaps the most significant gaps are in coverage for medication and for more than very limited nursing home services.

Medicare Prescription Drug Program:

Newly implemented starting January 2006, recipients of Medicare now have the option of enrolling with private insurance companies for prescription drug coverage. The program is also referred to as “Medicare Part D.” While each participating insurance company must meet certain federal standards, the details of coverage vary widely, as to premiums (the basic cost of coverage), deductibles (the amount that must be paid each year before benefits are paid), co-insurance requirements (the amount that must be paid for each prescription, and perhaps most importantly, formularies (the drugs covered by the particular plan).

Medi-gap Insurance:

This popular type of health insurance is intended to supplement or fill in at least some of the gaps in benefits provided under Medicare. The gap-filling, however, is generally limited to meeting obligations for co-payments and deductibles, and generally does not pay for services not covered by Medicare. Some companies offer extra-cost options for medication and enhanced home health services. Generally speaking, Medi-gap policies do not provide for long-term nursing care. The “Medex” policies, offered by Blue Cross-Blue Shield in Massachusetts, are examples or medi-gap health insurance, as are group policies offered by AARP.

III. Estate Planning Tools

Trusts:

A trust is a legal arrangement whereby one person (called the “Donor” or “Settlor”) transfers property to another person (called the “Trustee”) who manages the property on the basis of written directions (called the “Trust Instrument”) for the benefit of a specified person or persons (called the “Trust Beneficiaries).” There are many kinds of trusts, and literally infinite variations within general categories which makes trusts often appropriate for highly individualized planning for a person with disabilities. Trusts may be “testamentary” or “living.” A testamentary trust is described, is funded and goes into effect as a part of a Will. A living trust (also called an intervivos or living trust) is established to take effect during the lifetime of the person (usually called the “settlor”) who establishes it. Living trusts may be funded during lifetime, or initially unfunded, with the plan being to have them funded as a result of a “pour-over” from a Will or proceeds of life insurance. Living trusts may also be revocable or irrevocable. A revocable trust can ordinarily be amended at any time; and persons transferring assets to the trust can revoke, or literally call the property back, at will. An irrevocable trust ordinarily cannot be amended or revoked. The use of trusts is severely limited by law in the Medicaid context, but several are permitted and are often considered for use in special circumstances. These include income-only trusts, and special needs and pooled trusts for persons with disabilities.


Wills:

A will is the legal declaration of a person’s wishes as to the disposition of his or her assets, to take effect on death. Wills may be simple or complex, but must to be valid meet certain formal requirements regarding signing and witnesses. The person making the will is called the testator, or testatrix if a woman. The person named to arrange approval of the will and to settle the testator’s affairs at death is called the executor (executrix). People with young children may also nominate a guardian for the children.


Health Care Proxy:

Under Massachusetts state law, any competent person at least 18 years of age can authorize another person to make medical treatment decisions on his or her behalf in the event of incapacity, including the authority to de¬cide about withholding or withdrawing life-sustaining treatment -- even artificially administered food and water. The instrument signed by the individual is called a health care proxy. The person who makes the ap¬pointment is called the principal. The person who is to have the authority to make the decisions in the event of incapacity is the health care agent. There are legal formalities that must be observed for the proxy to be valid and to be put into effect. The proxy can be quite general, but can also reflect specific limitations that the individual considers appropriate, for example, relating to the administration of anti-psychotic medications.


Living Will:

This is not a “will” at all, but a statement by an individual in¬tended to give guidance to relatives and physicians in the event that the individual becomes terminally ill or is otherwise severely incapacitated, and cannot make or communicate decisions regarding the prolonging of life, such as through mechanical life-supports or feeding tubes. In Massachusetts, Living Wills are not legally binding, but may serve as evidence of the individual’s wishes, and help family and medical providers to make deci¬sions in such circumstances. Some lawyers prefer the name Medical Directives. Health care proxies, completed properly, respond to the same concern, and are legally binding in Massachusetts.


Power of Attorney:

A written statement by a individual that another person is authorized to perform certain actions in his place. The person who is given the authority to act is called the attorney-in-fact or agent. The person who appoints the attorney-in-fact is called the principal.

Such authorizations are usually legal and financial in nature, but need not be limited in this way. Powers of attorney may be very broad or very limited, and should be individually drawn to reflect the individual’s particular circumstances, needs, wishes and relationship with the attorney-in-fact. For example, the power may or may not extend to the making of gifts to family members, the sale of real estate, or the creating or funding of trusts.

A person cannot execute a power of attorney if incompetent (that is, incapable of understanding the general nature of the power of attorney or his or her relationship to the attorney-in-fact). A power of attorney will have no legal effect if the person giving the power later becomes incompetent, unless the power is described in the instrument as “durable,” or contains a statement that it is intended to remain in effect despite the incompetence of the principal. A power may also be made conditional, that is, not to go into effect until some event occurs, such as serious illness or mental incapacity. This is called a springing power of attorney.


Representative Payee:

A representative payee is a person or agency named by the Social Security Administration (or certain other federal agencies) to receive and manage benefits (e.g, SSI, Disability, Old Age, Survivor’s) on behalf of a person who the agency determines to be incapable of handling the benefits himself or herself. The agency makes its decision on the basis of its own administrative procedure, and has no relation to the appointment of a guardian by a court. The authority of the representative payee extends only to the administration of benefits from the agency involved.


Homestead:

Homestead is a type of protection provided under Massachusetts law for a person’s principal residence. A homestead is created by filing a “Declaration of Homestead” in the Registry of Deeds in the county where the residence is located. of the appropriate form Under most circumstances it protects the residence from creditors, up to certain limits. It does not protect the residence from creditor claims after death, including MassHealth estate recovery claims. There are two types of homestead: the “regular” homestead, to the extent of $500,000, which is available to any homeowner/occupant; and an elderly-and-disabled-persons exemption, also to the extent of $500,000. Only one homestead may be placed on any property. According to the weight of authority, homestead protection is not applicable to real estate held in trust.


Annuities:

An annuity is a contract under which an individual (called the annuitant) pays an agreed sum and in return receives (or names someone else to receive) periodic fixed payments for a predetermined period. Commercial annuities are purchased from a life insurance company or other financial institutions. Private annuities are purchased from individuals, typically family members. Annuities can be immediate or deferred. An immediate annuity is one intended to go into effect right away, in contrast with a deferred annuity, which is used primarily for retirement planning. A deferred annuity is intended to accumulate for a period of years, and remain accessible to you, until a date set in advance for actual payment back to begin. An immediate annuity is used often in conjunction with planning for Medicaid eligibility. Annuities can be for life, or, more commonly, for a specified term of years, or for life but also with a guarantee period. Lastly, annuities may be fixed (paying the same amount every month) or variable (with payments going up or down depending market conditions.

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