Events of Note Relating to Estate Planning

The New Hampshire Legislature passed several pieces of legislation in its session that ended this spring of note to folks interested in estate planning and senior issues, which should include everybody!  All clients need estate planning and many either are planning for their senior years, have reached them, or are assisting parents in that category.  Therefore, everybody should be interested in what the Legislature did!

In a relatively minor bill, Senate Bill 170, the Legislature amended the state form for medical advance directives. The durable power of attorney for health care and living will are typically part of an estate plans, and New Hampshire statues provide the basic form to be used in appointment of agents to make medical decisions for those not able to make their own and to express end-of-life wishes in a living will.

The bill eliminated a specific question in the previous documents concerning “artificial nutrition and hydration” and cleaned up other language.  Prior to the change, both the original durable power of attorney law passed in the early 1990s and a revised version passed a decade or so ago included a question about whether individuals wished to have artificial nutrition and hydration (mechanical feeding tubes and hydration tubes) notwithstanding their wish not to have other extraordinary means used to keep them alive if there was no hope of recovery.  In making the change, the Legislature seemed to recognize what others have come to understand, namely, that the artificial provision of nutrition and hydration is not particularly different from other mechanical means of preserving physical functions and very few people opt for having those services provided if they do not want mechanical means used to keep them alive otherwise.

The specific reference to nutrition and hydration can be included elsewhere in the document if people so desire. Another motivation for the change was confusion over the validity of out-of-state advance directives not referencing nutrition and hydration.

Another bill, Senate Bill 107, which was signed by Governor Maggie Hassan and became Chapter 67 of the Laws of 2013 (like Senate Bill 170, effective on January 1 of next year), relates to probate administration.  The law makes several changes.  First, it allows proving a will by the assent of heirs and the Director of Charitable Trusts under certain circumstances.  This is important in having wills probated when there is no notary or justice of the peace attestation to the signatures of the witnesses and the witnesses are unavailable.  The law already allows wills to be probated upon the testimony of one of the witnesses, but when none of them are available, it becomes problematic and if all of the heirs consent, it is helpful to have a will admitted to probate with their approval.  Second, the law expands those cases in which probate administration can be waived to situations where a parent or a revocable trust is the only heir.  This is added to those situations presently in the law that allows waiving the probate process where a decedent dies with a will and the surviving spouse is named as the sole beneficiary and is appointed as executor or appointed by the court as administrator, and where an only child is the sole beneficiary and serves as the fiduciary.  Often, a will leaves everything to a revocable trust and the same person is named as executor and trustee.  In that circumstance, waiver of probate administration now is allowed.  These provisions also apply to circumstances where a person dies intestate (without a will) but the same person or persons would end up with the property under the state’s intestacy statute and are appointed administrators of the estates.

The basic theory is that people should not be required to account to themselves for their administration of an estate of which they are the sole beneficiaries since all that does is add to the work of transferring assets to the intended recipient.

This makes the administration for many estates in New Hampshire easier and should be a welcome change to everyone (except probate attorneys and paralegals)!

Of course, in a circumstance where there is an issue presented by a creditor or by someone claiming against an estate either as an heir or otherwise, probate can be required and forced.

Finally, the new law re-enacts the provisions of RSA 541, I and II which relate to inventories of estates to make the requirements for filing inventories and appraising those assets the exception, rather than the rule.  Inventories still have to be filed, but no appraisers are required unless the judge, acting on motion of an interested party, deems the appointment of an appraiser necessary.

Finally, Senate Bill 138 (Chapter 167) will be of interest to those entering assisted living or nursing homes or having close relatives doing so.

This law, obviously passed at the request of institutions providing such care, allows an assisted living facility or nursing home facility in certain circumstances to pursue recovery of costs of care rendered to a client from entities or persons when an application for Medicaid is not made in a timely way or where a client is not able to receive Medicaid assistance due to the transfer of the client’s assets within the five year Medicaid lookback period.

Medicaid is the government welfare program that pays for nursing home or assisted living care for those who have run out of money.  The five-year lookback period is a provision in the law that says any assets transferred without consideration during five years prior to the application for Medicaid will be deemed brought back into the “estate” of the resident presuming that the property should not have been transferred and has to be spent on the person’s care prior to Medicaid being available.  Often, Medicaid applications are not made in a timely manner and there is a period of time between when a person runs out of assets and Medicaid qualification is reached when the nursing home or assisted living facility does not get reimbursed by Medicaid and has no other source to get funds.  Also, notwithstanding the five-year lookback period, sometimes the transferee of the assets has spent the money and it is impossible to get the funds back.  The facility then often has to provide free care without having planned to do so. This law makes a fiduciary of the individual liable[MP1]  for the gap funds and also makes the recipient of a gift or other transfer who has spent the money liable for payment for the care which otherwise would have been paid by Medicaid.

This law became effective July 2, 2013 as Chapter 167 of the Laws of 2013 and became law without the signature of the Governor Hassan.

What do these legal changes signify?  Along with the constantly changing federal tax on estates which, in its most recent iteration provides a $5,250,000 personal tax credit to each individual or $10,500,000 credit for a couple, it means that everyone should be sure to have estate planning done and stay abreast of changes in the law.  Those who have not revisited their plans recently should consult their attorneys to see if changes are indicated.

In the case of the statutes recounted in this article, estate administration has become easier and the change in the durable power of attorney for health care does not require people to change their documents since previously signed documents are still valid.

However, everyone should make sure their estate plan is current and be aware that it can help increase assets as they reach senior status as well as direct the transfer of assets upon death.