Attorney Maria Baler

Five Scary Estate Planning Traps

October 2, 2017 by Attorney Maria Baler

With Halloween fast approaching, it’s time to turn our attention to ghosts, goblins and other scary things! Estate planners are not easily frightened – no matter how many do-it-yourself Wills we see. However, there are things that come across our desks from time to time that give us a good scare. Here are a few of my personal favorites:

1. Forgotten beneficiary designations. Your Will and Trust are estate plan documents that contain your instructions about the distribution of your assets at your death. However, your Will only controls the distribution of assets you own in your individual name (with no joint owner or beneficiary designated) and your Trust only controls assets owned by or payable to the Trust at your death. Assets like life insurance and retirement accounts usually have a designated beneficiary who will receive those assets at the death of the account or policy owner. That beneficiary designation controls the distribution of those assets regardless of what your Will or Trust may say, and if you are like many of my clients with significant life insurance policies and/or significant retirement savings, those designations likely control the distribution of a large portion of your wealth.

It is common for clients to name their spouse as beneficiary on these types of assets, but that is like leaving your Halloween candy half-eaten, because your work is only half done. It is just as important to designate contingent beneficiaries properly. These are the beneficiaries who will receive the asset if the primary beneficiary is not living. Be thoughtful about this designation and get advice from your estate planning attorney about how to make proper designations. If you name your children equally as contingent beneficiaries, make sure you understand what happens if a child predeceases you. The beneficiary designation form may give you the option to pay a deceased beneficiary’s share to his children, but if those children are minors, this could haunt the family for years if a conservatorship is required. And the family will get a real fright if an ex-spouse receives life insurance proceeds because the designation was not changed after divorce.

2. “Winner takes all” Wills. If a married couple has no children, their estate plan will often leave all assets to each other. The more difficult question is who should receive the assets when the second member of the couple passes away? Let’s say Sally decides to leave all of her assets to her sister Jane if her husband Harry does not survive her. Harry decides to leave all of his assets to his brother Bob if Sally does not survive him. Sounds simple right? But this plan is a haunted house of horrors for Jane or Bob. If Harry dies first, all of his assets pass to Sally, and when Sally dies, all of the assets owned by Sally (including Harry’s assets) will pass entirely to Jane under Sally’s Will, and Bob would receive nothing. This is probably not what the parties intended. In situations like this, care should be taken to draft the estate plan carefully so that the intended beneficiaries of both spouses benefit as desired.

3. Unfunded Trusts. A Trust document is an impressive and imposing thing to behold. It carefully set outs the instructions for distribution of assets after death, and includes appropriate administrative provisions that ensure the Trustee can act to manage the Trust assets and pay taxes fairly and appropriately. When you sign your Trust you should feel a sense of accomplishment. But signing your Trust document is only the first step in the planning process. When you create a Trust, your estate planning attorney should give you detailed instructions about how to “fund” your Trust. Trust funding is the process of re-titling assets into the name of your Trust, or designating your Trust as the beneficiary of life insurance or other assets. Unfunded Trusts can have serious consequences, including the delay and expense of a probate proceeding, lost opportunities to shelter assets from estate tax, and assets passing outright to beneficiaries with special needs or who are otherwise in need of asset protection. Make sure you follow your attorney’s trust funding instructions and take the time to fund your Trust so that your estate plan will work as intended.

4. Improper estate tax apportionment. If you are a resident of Massachusetts, and the assets you own (bank accounts, real estate, life insurance, retirement accounts, etc.) are worth more than $1 million at the time of your death, your estate will need to file an estate tax return with the Commonwealth of Massachusetts, and pay any estate tax that is due. If you leave your estate (including any assets passing outside your estate) equally to your children or other heirs, and your Will directs your Personal Representative to pay the estate taxes from your estate before distributing the remaining assets to your heirs, all is well. The tax will be paid “off the top”, and your heirs will each receive an equal share of what remains in the estate and the assets passing outside the estate, with the tax burden being shared equally by the heirs. However, if you leave assets passing outside your estate differently than your estate assets (for example, if you leave your IRA to a favorite grandchild), you need to consider how the estate tax will be paid. Unfortunately, many standard estate tax provisions in Wills or Trusts fail to take into account how the assets are being distributed, particularly those assets (like retirement accounts or life insurance) that may pass by beneficiary designation in a different manner than your other assets. The hair-raising result may be that certain beneficiaries end up paying a disproportionate share of the tax. This is not only inequitable, but can result in some serious family disharmony.

5. Real estate with no tenancy. Have you ever looked closely at the deed to your home? If you are married, you should see your name and your spouse’s name, followed by some words that have important implications for the ownership of your property and what happens when you pass away. These words specify the different forms of “tenancy” for real property in Massachusetts. Owning property as “tenants in common” allows each individual owner to pass on her share of the property free from any claim by the other owner. At an owner’s death, her interest in the property will be subject to probate and will be distributed to her heirs under the terms of her Will. The surviving owner will have no say in who inherits the other owner’s interest in the property, and will have no claim to that interest unless the other owner is the recipient of that interest under the deceased owner’s Will. Property owned as “joint tenants” or as “tenants by the entirety” (the form of joint ownership for married couples in Massachusetts) has a different result. Upon the death of a joint owner or tenant by the entirety, the deceased owner’s interest passes automatically (without probate or any other action required) to the surviving joint owner. Beware of real estate with no tenancy indicated after the names of the owners. If that is the case, the property is deemed to be held as “tenants in common” and the surviving owner may be spooked by the realization that he does not own the entire property when the co-owner dies. Even if the co-owner is the beneficiary of the deceased owner’s estate and becomes full owner of the property in that manner, it will not be without significant delay and expense that could have been avoided with proper planning.

Like the house that hands out the full-size candy bars on Halloween, an experienced estate planning attorney can be your best bet for making sure your estate plan operates as you intend so your beneficiaries have no unwelcome surprises. Happy Fall and an enjoyable Halloween to all!

Maria Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.

October 2017

Ask SSB

September 18, 2017 by Attorney Maria Baler

Q: How do I choose who to name as my executor, power of attorney, and health care agent? I don’t want to hurt any of my children’s feelings.

A: It can be hard to decide who to name to these roles, especially if you think a child will be upset if not chosen. While you don’t want to make a child feel slighted, the duties and obligations of your executor (now called a Personal Representative), Attorney-in-Fact under your durable Power of Attorney, and your Health Care Agent are substantial and you must appoint a person who can carry out these responsibilities. The role of Personal Representative and Attorney-in-Fact require a person who is well-organized, not a procrastinator, and willing and able to move a project forward to a conclusion. He or she should be able to work well with others, such as attorneys and accountants, and also get along well with family members and keep them informed.

Your Health Care Agent should be someone you are comfortable speaking with about your health care wishes and who you can trust to carry out your instructions. Your health care agent should be able to communicate with your health care providers, not be afraid to ask questions or request explanations, and be able to advocate for you if necessary.

In complex situations or where significant discord between family members is expected, a non-family member may be the best choice. In any event, you should discuss your concerns with an experienced estate planning attorney who will help you make the right choices.

September 2017

Planning for Your Digital Assets

September 14, 2017 by Attorney Maria Baler

Digital assets did not exist 25 years ago, but they are now part of our everyday existence. Things like the contents of our Facebook, Twitter and Instagram accounts, photographs stored online, digital music, YouTube videos, on-line gaming accounts, domain names, and email are all digital assets – a collection of our digital property and electronic communications. To the extent these accounts contain information that you would like someone to be able to access after your death or incapacity, it is necessary to plan to provide the appropriate authority and instructions for what you want done with these “assets.” For some types of these assets, planning is crucial to prevent financial loss (i.e. the loss of a domain name used for business purposes), to protect sensitive personal information (on-line dating websites), to avoid identity theft, and to allow access to valuable assets (think bitcoin, an author’s manuscript, or family photographs).

Most of us create digital assets without a thought as to what will happen to those “assets” if we are no longer around or able to access them. Even if you share your password for your on-line accounts with a trusted person, keep in mind that it is a violation of federal law for anyone other than you to access your accounts (because password sharing is prohibited under most terms of service agreements) unless the person with whom you share your password has the legal authority to access your account.

This is an emerging area of estate planning. The Uniform Fiduciary Access to Digital Assets Act (UFADAA) is an attempt to create some clarity in this area. Massachusetts is one of only a handful of states that has not enacted this law, or even introduced it for consideration. Hopefully our state legislature will not delay much longer. The law allows fiduciaries to take action to marshall and protect the digital assets of the deceased or incapacitated person on whose behalf they are acting. As a rule, access is difficult to obtain because on-line providers all have different policies or terms of service agreements with their customers. The Uniform Act’s purpose is to bring some uniformity to these policies as they relate to fiduciaries, and to extend a fiduciary’s power over assets in a deceased or incapacitated person’s “estate” to include digital assets, giving a fiduciary the legal right to access online accounts.

The Massachusetts Supreme Judicial Court is in the process of deciding the case of Ajemian v. Yahoo!, Inc. In this case Mr. Ajemian died with a Yahoo email account, and Yahoo would not allow access to his account to his siblings who were the administrators of his estate. This case has been bouncing around the court system since 2007 on procedural grounds, including whether the case had to be decided by a California court (where Yahoo is located) or whether the case was properly decided in Massachusetts where Mr. Ajemian was a resident prior to his death. The Court now seems poised to decide the substantive issue of access to emails, after oral arguments in March of this year.

Here are some tips to manage your digital assets until Massachusetts law and a path to access becomes clearer:

If an online entity offers a way for you to give permission or access to your digital assets stored with that company, pay attention and follow the directions. For example, Facebook allows you to designate a Legacy Contact (Settings/General Account Settings/Manage Account) who can manage your account after your die, or you can choose to have your account deleted if you pass away. Google allows you to control what happens to your account through their Inactive Account Manager feature (My Account/Personal Info and Privacy/Control your Content). Here you can designate when your account will be considered inactive and what will happen to your Google account, and designate one or more people who will have access to whatever portions of your Google account you choose.
Update your estate plan documents, specifically your Power of Attorney, Will and Trust, to ensure those documents provide express permission for the fiduciaries named in those documents to access your digital assets, and express direction regarding what should be done with specific digital assets at death. In our office, we include express permission for access in these documents, and provide our clients with a Digital Assets Memorandum that can be used to record instructions about digital assets.

Keep in mind that if you have not used an online entity’s prescribed method of giving someone permission to access your account, and do not have express permission and direction in your estate plan documents, the company’s Terms of Service Agreement will govern. In such a case, you and your digital assets are at the mercy of the online provider, which may not allow access following your death or incapacity.

September 2017

Five Things a Well-structured Estate Plan Can Do For Your Children

July 31, 2017 by Attorney Maria Baler

As you spend time with your children and grandchildren during the lazy days of summer, it is a good time to think about your estate plan, and whether it is structured in a way that takes care of your family. Here are a few ways a good estate plan can protect and provide for your children:

Protect the inheritance you leave your children. If you pass away before your children are mature or experienced enough to responsibly manage the assets they inherit from you, those assets may very well be lost to your children’s creditors or poor judgment. Some risks to a child’s inheritance include substance abuse, persistent friends in need of money, failed marriages, bankruptcy, irresponsible spending and lawsuits. A Trust can hold your child’s inheritance and name a Trustee to manage and protect those funds for your child. The Trustee can use the Trust assets for your child’s benefit for reasons the Trustee determines are appropriate, or for reasons you specify in the Trust. These could include making sure your child can pay tuition, pay for a wedding, buy a home, or start a business. The Trustee can manage the assets for your child’s lifetime or for a specific period of time (for example, until age 35).

Protect a disabled child’s benefits. If you have a child that receives needs-based government benefits because of a disability, or may need those benefits in the future, your estate plan should include a trust for the benefit of your child. A supplemental needs trust that receives and manages the assets your child inherits will allow those assets to be used for the benefit of the child throughout the child’s lifetime, but will not disqualify the child from receiving any needs-based benefits the child may now or in the future be eligible to receive. A Trust can also be used to hold the child’s own assets in order to protect those assets and facilitate eligibility for benefits. If you have other family members who want to leave assets for the benefit of a disabled child, make sure they understand that proper planning is important to ensure that inherited assets will not affect the child’s eligibility for benefits.

Ensure future vacations at the family vacation home. For children young and old, the family vacation home is a special place that parents often want to pass on to future generations. Careful planning can ensure that long-term care costs and estate taxes do not get in the way of your family being able to keep the vacation home and continue to enjoy it. Considerations about managing and paying for a vacation property are also important issues to address when planning for such a property. A Limited Liability Company, trust, or co-ownership agreement can create a structure for dealing with issues such as use of the property, shared expenses, maintenance and repairs, and rentals. A well-structured plan will also make provisions for the death or disability of an owner, and the buy-out of an owner’s share if they pass away, become disabled, or just want out.

Ensure that your minor children are properly cared for in the event of your death. If you’re lucky this summer, you may be able to get away for a weekend with your spouse and leave your young children at home with your parents or friends. Most parents prepare for a weekend away by leaving instructions behind about caring for the children while they’re away. Think of an estate plan as a set of instructions for how your children should be cared for if you are not there. Although it is difficult to contemplate the possibility that you may pass away leaving young children, planning for that possibility will ensure that your children are in a far better position than if you did no planning. Planning ahead means that you are the one who chooses the people that will take care of your children, not the Court. Creating an estate plan means you can make your house available for your children and their guardian to live in, so your kids can stay in the family home, continue to go to school with their friends, and graduate from high school in the town they grew up in.

Help your children with health care decisions. Children who are age 18 or older are adults in the eyes of the law. This means that they make their own health care decisions. If your college-age student is ill, her doctor cannot share medical information with you without your child’s permission. If your child’s condition means that she is not able to grant that permission, you may find yourself unable to obtain information or make decisions about your child. A health care proxy is a document by which your child can name you to make health care decisions for her if she is unable to make those decisions herself. Your child can sign a HIPAA Authorization to give permission for physicians and other medical professionals to speak with you and release information. These are simple documents that can make access to information and decision-making possible in the event of a child’s unexpected illness.

The peace of mind that comes with good planning will help you enjoy your summer vacation. If you haven’t gone through the estate planning process, the summer is a good time to consider how you would want your plan to provide for your family, and take the first step in putting that plan in place. Time flies and summer will be over before you know it, so don’t wait!

July 2017

Dementia Friendly Massachusetts

June 9, 2017 by Attorney Maria Baler

The Massachusetts Executive Office of Elder Affairs has a new initiative to raise awareness about the prevalence of dementia in our state, in an effort to make our communities and those who live in them more “friendly” to those who suffer from dementia. Did you know that one in eight older adults in Massachusetts has Alzheimer’s disease or a related disorder? Nearly 60 percent of those with dementia live in their own communities. One in seven of those with dementia lives alone.

Those who suffer with this disease, and their caregivers, need support, and Massachusetts is one of the states taking the lead in this “dementia friendly” initiative. Please watch this short 2.5-minute video to learn more about the Dementia Friendly Massachusetts Initiative. We were so pleased to see our wonderful clients Al and Jackie DeMeo in the video. Hopefully it will inspire you to work with others to make your community safer, more inclusive, and respectful for residents affected by Alzheimer’s disease and related dementias.

June 2017

Five Ways to Make Sure Health Care Wishes are Carried Out

April 1, 2017 by Attorney Maria Baler

Maria_144px Estate planning attorneys have the opportunity to speak to people at all stages of life. Some of the most profound conversations we have are with clients who have serious illnesses or are close to death. They often have great clarity about life and what is important. Many of them also have definite thoughts about how they wish to be cared for at the end of their lives, and care deeply that their wishes are heard and carried out.

We all have the right to make our wishes known about the type of end-of-life care we want. Making your wishes known while you are well is important as an accident or an unexpected illness may cause you to lose the ability to express your care preferences. This April marks the 10^th anniversary of National Healthcare Decisions Day. Here are five ways you can ensure your care preferences are clearly documented and honored:

Create a Health Care Proxy. If you are over the age of 18, make sure you have signed a Health Care Proxy that designates a person you choose (your Health Care Agent) to make health care decisions for you if you become unable to make or communicate your own health care decisions. Give your doctor and your Health Care Agent a copy of your Proxy. Then, have a conversation with your Health Care Agent about your feelings about health care and the type of care you would want in certain situations. See No. 5 below for some resources to get you started. If you are hospitalized, remember to bring your Health Care Proxy with you to the hospital. This will ensure you are not asked to sign another Proxy that will revoke the Proxy you currently have in place and that may not be as comprehensive.

Assemble a Care Committee. For those who have very definite ideas about where and how they wish to be cared for, consider assembling a Care Committee to ensure your care wishes will be carried out, particularly if you have a chronic illness. This group may consist of your Health Care Agent, a professional care manager, your attorney, your physician, the person you have named to make financial decisions for you if you are incapacitated, and perhaps your financial advisor. Choose the participants, have discussions with them about your care preferences, and develop a plan that is financially realistic. Have a discussion with your Care Committee periodically to modify the plan as your needs and wishes change. Think of your Care Committee as a team that can help your Health Care Agent carry out your wishes as necessary.

Sign a Living Will. There are many advance directives that can be used by clients to express care preferences. A Living Will typically expresses a general preference that no extraordinary measures be used at the end of life. In Massachusetts, Living Wills are not legally binding, and your physicians will not act based upon your Living Will (only at the direction of your Health Care Agent). However, a Living Will can serve as evidence of your wishes that will guide your Health Care Agent in making decisions about end-of-life care.

Advance Medical Directives. A Medical Directive can be used to express care preferences in specific medical situations. Do Not Resuscitate or Do Not Intubate orders are medical orders that a doctor will put in place at a patient or Health Care Agent’s direction in appropriate circumstances. In Massachusetts, a MOLST (Medical Orders for Life Sustaining Treatment) form is a useful document created by patient and doctor together that includes medical orders for care preferences, including resuscitation, ventilation, intubation, dialysis, artificial nutrition and hydration, and whether or not you should be transferred to a hospital. This initiative is known as POLST (Physician Orders for Life Sustaining Treatment) on a national level.

Use the Available Tools. There are many Massachusetts and national organizations working to increase awareness of the value of advance care planning and to encourage people to express their care preferences. The Massachusetts Coalition for Serious Illness Care and related organizations have designated April as Massachusetts Healthcare Decisions Month, and has tools and resources on its website. Honoring Choices is another Massachusetts organization bringing information about health care decision-making and outreach to many local communities, as well as helping people to create a Health Care Proxy and express their health care preferences. The Conversation Project is dedicated to making it easier for people to talk about their wishes for end-of-life care. Both Honoring Choices and The Conversation Project have starter kits on their websites that make it easy to get started.

As part of Healthcare Decisions Month, several Boston-area organizations will also be hosting Before I Die, a global public art project that invites people to share their personal aspirations in public, reflect on what’s most important to them in life and how they contemplate death. Use whatever tool or inspiration works for you, and find a way to express your wishes about end-of-life care to the people who will make those decisions for you.

April 2017

Five Reasons to Call an Estate Planning Attorney

February 1, 2017 by Attorney Maria Baler

Maria_144px Estate planning attorneys work with clients every day to ensure their wishes are carried out in the event of illness or death. While it’s not pleasant to think about, planning ahead will make it easier for your loved ones during difficult times. An estate planning attorney can help you create documents (such as a Will and/or Trust) that provide instructions about distribution of your assets at death, minimize probate expenses and estate taxes, name guardians for minor children, and manage inherited assets for your beneficiaries. An estate planning attorney can also help you plan for incapacity by creating powers of attorney and health care documents that allow individuals you choose to make financial and health care decisions on your behalf.

Some estate planning firms advise clients on elder law matters — how to plan for long-term care (both pre-planning and addressing a crisis situation when the need for care is imminent), how to pay for that care (including whether you are eligible for public benefits such as Medicaid benefits), and whether advance planning is appropriate.

Here are five reasons you should call an estate planning attorney.

You are a parent. If you are the parent of a minor child (defined as under the age of 18 in Massachusetts) you should have a Will that names a legal guardian for your child. Parents of minor children and young adults should also consider creating a Trust that will hold and manage assets for your child’s benefit, to ensure your child does not receive control of inherited assets at age 18, and to designate a trusted individual to manage those assets for your child until your child reaches an age that you deem is appropriate. If an adult child has substance abuse, gambling, or creditor problems, or is in a bad marriage, it may be appropriate to hold assets in trust to protect the assets and ensure they will be available for the child’s benefit in the future.

You (or your spouse) receive a serious medical diagnosis. If you have a serious illness, sitting down with your estate planning attorney may not be at the top of your list. However, it is important to plan while you are competent to make decisions about your future. If you or your spouse need long-term care or anticipate the need for care in the future because of physical or mental decline, an estate planning attorney with knowledge of elder law can advise you about estate plan documents you should have in place and about your options for care and payment. Make it a priority to become educated about your options and work with an attorney to make a plan for the future.

You are getting married or divorced. Marriage and divorce both impact your existing estate plan and necessitate changes to your documents. If you do not have an estate plan in place, these events provide a good reason to plan. An attorney can also help you review asset ownership and beneficiary designations to ensure a new (or ex-) spouse is provided for (or not) as appropriate. Prior to marriage, an estate planning attorney will help you determine whether a prenuptial agreement is appropriate. These agreements can protect assets owned prior to marriage (such as an interest in a family business or vacation home) or assets that are inherited during the marriage in the event of death or divorce. Prenuptial agreements are also important in second marriages to protect assets for children from a prior marriage.

You have a spouse, child, grandchild or other beneficiary who has a disability. If you wish to leave assets to a disabled individual you need to take special care with your estate plan documents. Leaving an inheritance to a disabled beneficiary may cause a loss of benefits, including medical benefits. Leaving an inheritance in a properly drafted Trust can preserve eligibility for benefits and protect assets for the benefit of the disabled beneficiary.

You have not reviewed your plan in a while. If you have a Will, Trust or other estate plan documents, it is important to keep your plan current. If it has been more than five years since you have met with an attorney to review your plan, take the time to do so. A few simple amendments to your documents may be all you need to bring your plan up to date. Even if more significant changes are needed, make those changes to ensure your plan will work as you intend, save time and expense, and minimize taxes — both for your benefit and for the beneficiaries of your estate.

You can find more information about these topics, including many articles on estate planning and elder law at www.ssbllc.com.

Attorney Maria Baler is an estate planning and elder law attorney and a partner with the Dedham law firm of Samuel, Sayward & Baler LLC. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.

February 2017

Happy Anniversary to the Massachusetts Estate Tax!

January 19, 2017 by Attorney Maria Baler

Maria_144px As a follow-up to my July 2016 blog commemorating the 100th anniversary of the federal estate tax, and as promised in that post (and better late than never), we are recognizing the less-significant-but-still-worth-commemorating 40th anniversary of the Massachusetts Estate Tax.

The Massachusetts estate tax, like the federal estate tax, is a transfer tax that taxes the value of a decedent’s estate before the estate assets are passed on to the heirs who receive assets from the estate.

Before the current version of the Massachusetts estate tax (enacted in 2003), the tax was a so-called “sponge” tax, calculated based on the credit provided by the federal estate tax for estate tax paid to a state. When the federal government began phasing out its estate tax in 2001, Massachusetts “decoupled” from the federal estate tax, and implemented its current system of computing a separate state estate tax equal to the federal credit for state death taxes as it existed on December 31, 2000.

So when does a Massachusetts estate tax return have to be filed? The estate of every resident of Massachusetts who dies with an estate valued at $1 million or more must file a Massachusetts Estate Tax return within nine months of the date of death. If you are not a Massachusetts resident but own real estate in Massachusetts, you must also pay an estate tax to the Commonwealth at your death, assuming the total value of your estate is over $1 million.

What is an “estate”? In the estate tax world, your “estate” consists of any asset you own or control. So, for example, your home, your bank accounts, your investment accounts, your IRAs or 401k, your car, and your life insurance (if it is owned by you) are all assets that together constitute your “estate” and are countable when determining if your estate is worth more than $1 million at the time of your death.

If you have to file a return, will you have to pay tax? The answer is “it depends.” No matter how valuable your estate, if you leave your assets all to your spouse or all to charity, you will not have to pay any estate tax. Assets left to anyone else are subject to estate tax, which must be paid within nine months of the date of death. Unlike the federal estate tax, if the estate meets the $1 million filing threshold, the full value of the estate (less a $60,000 exemption) is subject to Massachusetts estate tax, not just the amount in excess of $1 million. The estate tax is computed on the value of the taxable estate (the value of your assets less deductions for funeral expenses, administrative expenses, debts, and assets passing to charity or a spouse), with rates ranging from 0.8% to 16% for estates in excess of $10 million.

If taxable gifts (gifts made in excess of the gift tax annual exclusion) are made during a deceased person’s lifetime, the total taxable gifts are added to the value of the estate on the date of death to determine whether or not the value of the estate is in excess of the $1 million filing threshold and an estate tax return must be filed. However, the estate tax is computed only on the value of the assets owned by the deceased on the date of death.

The Massachusetts Department of Revenue chose to celebrate the Massachusetts estate tax’s 40th anniversary by implementing the electronic filing of estate tax returns. An exciting development for those of us in the estate tax world, or at least it promises to be once the kinks are worked out!

If you have questions about the Massachusetts estate tax, whether your heirs may have to pay tax, how much they may have to pay, and what can be done to reduce the estate tax owed, call our office and schedule a time to meet with one of our estate planning attorneys. Estate tax planning is one of our favorite things to do!

January 2017

Five Ways to Be Proactive About Your Care Choices

December 1, 2016 by Attorney Maria Baler

Maria_144px Many of my clients have definite ideas about how they want to be cared for if they are ill later in life. I hear clients expressing very clear wishes about where they want to live and what type of care they wish to receive and do not wish to receive. With planning and communication, you will have greater certainty that your wishes will be carried out. Here are five ways to plan ahead for the type of care you envision for your future:

See your Attorney. Your estate planning attorney can help you create legal documents that can go a long way toward ensuring you will receive the type of care you want. The first is a Power of Attorney that will appoint a trusted person to handle your financial affairs if you are unable to do so. Your appointed agent will be able to use your assets to pay for whatever care you may need. The second is a Health Care Proxy that names a person to make health care decisions for you if you are unable to do so. The third is a HIPAA Authorization that will list individuals who have permission to receive information from your physicians and others about your medical care.

See your Doctor. A conversation with your physician is an important step in deciding what type of care you wish to receive and clearly expressing your wishes about your care preferences. There are many medical directive forms available that allow you to be very specific about the care you would like to receive in particular situations, including end of life care. It is wise to complete these forms and express preferences after you have had a conversation with your doctor in order to understand the options and the implications of each care choice. The care you choose may be very different from that of another person, based on your age, your health, your personal experiences, and your personal preferences. Making clear and educated choices about your health care now will allow your Health Care Agent to make health care decisions for you based on your known wishes, rather than having to guess about what your wishes may be.

Educate Yourself About Housing Options. Where do you want to live as you age? Many people are firm in their desire to remain at home for as long as possible, even if they require help to do so. There are more resources than ever to receive care at home. Individuals called Aging Life Care Managers (also sometimes called Geriatric Care Managers) can assist in evaluating the type of assistance needed and coordinating those who will provide care or assistance at home. There are also many options for those who do not wish to stay in their home as they get older. Learn about the housing options available in the area you wish to live and the cost. If you are a person who enjoys being socially active, a continuing care retirement community may be a good choice. There, you can have your own apartment, but join others for activities or for meals if you choose. If you want a quieter setting, a senior housing complex where everyone has their own apartment may be preferable. If you need assistance with things like cooking, bathing, dressing or transportation, an assisted living facility may be appropriate. If you need skilled care, nursing home care may be required.

Understand how you will pay for care. If you need assistance or care at home, or in an assisted living facility or a nursing home, there will be a cost associated with that care. Care costs may be paid with your monthly income (Social Security, pension) or your assets (proceeds from a home sale, cash, investments, etc.). If you have long-term care insurance, those benefits can be used to pay or defray the costs of care. If you do not have assets or insurance to pay for care, you may be eligible to receive Medicaid benefits, which are the public benefits that pay for long-term care (at home or in a nursing home) for individuals who are unable to pay the cost of their own care. Eligibility for Medicaid benefits can be complicated. If you think you may need Medicaid benefits to pay for care in the future, take the time now to consult with an elder law attorney and understand the eligibility rules and how they apply to your particular situation.

Identify and Inform your Team. No matter how certain you are about the type of care you wish to receive, you can be sure your wishes will not be carried out if no one but you knows what they are. Plan in advance by identifying a team of individuals who will help you carry out your wishes – your attorney, your financial advisor, your Health Care Agent, your attorney-in-fact, and an Aging Life Care Manager are all important members of the team. Involve these individuals early on in your planning process. Express your wishes to them clearly and repeatedly. Share with these individuals the health care documents your attorney has prepared or those you have completed with the assistance of your physician so they can ask you questions and get a good sense of your wishes before a crisis occurs.

Take these steps while you are able to put appropriate legal documents in place, express your housing and care preferences, and communicate those preferences to the people who will help you carry them out. Your family will thank you for being proactive and giving them a roadmap for your future care.

Attorney Maria Baler is an estate planning and elder law attorney and a partner with the Dedham law firm of Samuel, Sayward & Baler LLC. She is also a director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.

December 2016

Consider Being Specific When Giving to Charity

October 15, 2016 by Attorney Maria Baler

Maria_144px It is safe to say that Robert Morin achieved more notoriety following his death last year at age 77 than he ever did during his lifetime. Mr. Morin was an alumni and employee of the University of New Hampshire for almost 50 years, working in the University’s Dimond Library until his retirement in 2014. Although Mr. Morin was known as a frugal man (he drove a 1992 Plymouth), when he died he left his entire $4 million estate to UNH, a sum that shocked those that knew and worked with him. Although his financial advisor had spoken to him about being more specific about how he wanted his gift to UNH to be used, Mr. Morin chose only to specify that $100,000 was to go to the Library, saying UNH would “figure out what to do” with the rest of the money.

Although such a generous gift is certainly newsworthy, the story became even more interesting when UNH decided to spend $1 million of Mr. Morin’s gift on a new scoreboard for UNH’s new $25 million football stadium. This decision has generated a lot of discussion in the UNH community, with many people, including UNH alumni and some of Mr. Morin’s fellow employees, believing that the money could be used in ways that would more appropriately honor Mr. Morin’s memory.

This is just one tale of many in which a charitable bequest has been used in ways that the donor may not have intended. Although charities welcome unrestricted gifts that allow the charity to use the funds for whatever the charity’s needs and priorities are at that moment, many who are charitably inclined want their gift used in a specific way. If you are among those people who intend to benefit charity through your estate plan, consider specifying how you intend your gift to be used. This may mean taking care to explain your intent to your estate planning attorney so he or she can express your wishes in the Will or Trust that bestows the bequest. An even better approach is to contact the charity in advance of your death to discuss your wishes and make sure that what you envision is possible and that the charity is willing and able to use the funds as you wish.

I recently contacted a local university on behalf of a client who is considering including a gift in her estate plan for the benefit of a specific organization within the university. The university suggested that the client work with them to create a Memorandum of Intent that would clearly set out the client’s wishes and serve to guide the university in its use of the money following my client’s death. If you don’t have a specific use in mind, but want to be sure your money is used for charitable works, rather than administrative expenses, visit guidestar.org for free information on a charity’s income, spending and mission, or charitynavigator.org or give.org, which evaluate and rate different charities.

October 2016