Attorney Suzanne Sayward discusses The Differences Between a Named and Appointed Personal Representative. Please watch and if you have any questions or want to learn more please call us at 781 461-1020.

 

As in most areas, myths, misconceptions, and misunderstandings abound in the estate planning arena.  Read on for five common estate planning myths. 

Myth No. 1 – If you have a Will your Estate will not need to go through Probate.   Many people think that if they create a Will, their estate will avoid probate.  This is not true. Probate is the court process of changing the title on assets when someone passes away.  Assets that are owned in a deceased person’s individual name and for which there is no named beneficiary are no longer accessible once the owner of the asset has died.  This is the case whether or not the owner of the asset had a Will.  A Will allows the maker of the Will to choose who will receive his or her probate assets.  However, a Will does not avoid probate.  

Myth No. 2 – A Couple that lives together for 7 years in Massachusetts will be deemed Married under Common Law. While common-law marriage does exist in some states, Massachusetts is not one of them. No matter how long a couple lives together, neither Massachusetts nor the federal government will recognize them as married.  This is important to understand because a non-spouse has no inheritance rights (unlike a spouse), nor is a non-spouse partner entitled to Social Security benefits or pension benefits that a spouse is entitled to receive.  Of course, partnered couples are not prohibited from leaving assets for the benefit of each other.  The key is they must take steps to make that happen; it will not happen under the intestate law in Massachusetts.  

Myth No. 3 – If a Trust is irrevocable, no distributions can be made from the Trust.    An Irrevocable Trust is an excellent planning tool for some circumstances such as tax planning and long-term care planning.  Many people think that if a Trust is irrevocable that means that no distributions may be made from the Trust.  This is not true.  For example, an Irrevocable Income Only Trust is an irrevocable Trust often used to preserve assets from needing to be spent down on long-term care costs.  The way that it works is that the maker of the Trust transfers assets to a Trust that strictly prohibits distributions of principal from the Trust to the Trust maker but permits distributions of income.  For example, if I had rental real estate and transferred it to an irrevocable Trust, I could continue to receive the rental income, but I could not receive a distribution of the property.

Myth No. 4 – The law authorizes a Parent to collect an Inheritance on behalf of their Minor Child.   Leaving money directly to a minor (under age 18) creates an administrative nightmare and should be avoided.  A minor is not legally able to own assets.  As such if a minor is the beneficiary of an estate or is named as a beneficiary of a retirement account or life insurance policy, a legal representative for the child will need to be appointed by the court in order to collect that inheritance.  While the parent of the child may be the best person to serve in that role, it is not automatic.  The parent must petition the court to be appointed as the child’s conservator.  The court will investigate whether the parent is a suitable person to receive the funds for the minor and if the Judge finds the parent a suitable custodian for the funds, the court will issue a decree appointing the parent as the child’s conservator.  At that point, the parent may collect the inheritance on behalf of the child.  But it doesn’t end there.  The parent, in her capacity as the conservator for the minor child, must file a report (called an accounting) with the court on an annual basis itemizing all of activity in the child’s account (i.e., earnings and disbursements) during the prior calendar year. The court may appoint a guardian ad litem to review the accounting submitted by the parent-conservator and that person may challenge the parent’s management of the funds.  All of this is time-consuming, expensive and aggravating.  To add insult to injury, once the minor turns 18, he or she is entitled to receive the assets outright and is free to do with them as he or she wishes (think fast cars, spring break, and lots of shopping).  Creating a Trust to receive assets passing to a minor, or even to a young adult beneficiary, is the best way to ensure that the court is not involved in the process, that the person you want to manage assets for the beneficiary is able to do so, and that the beneficiary may use the assets only for purposes you decide are important and/or at ages that you dictate.

Myth No. 5 – Just because you are an Heir does not mean you are Entitled to Anything.    For the most part, people in our country have the right to leave their estate to whomever they wish.  There are some exceptions to this general rule.  For example, in Massachusetts we have a statute that protects a surviving spouse from being disinherited.  In addition, there may be situations where someone is legally obligated to benefit someone via their estate (e.g., a divorce agreement to leave assets to a former spouse or for the benefit of children).  Assuming those situations do not exist, a person is free to leave their estate to whomever they wish; they are not obligated to leave their estate to their family members, not even to their adult children. While an heir may have the right to contest a Will or challenge a Trust, there are specific and limited reasons that someone will be successful in doing so.  

The above are just five of the many misconceptions we hear from clients who are starting the estate planning process.  If you have been relying on your friends and neighbors to advise you about your estate plan, you may want to reach out to an experienced estate planning attorney to learn the real scoop.  Please call us or email us to schedule an appointment with one of our experienced estate planning attorneys who will debunk those myths and advise you about the best way to plan your estate.  

Attorney Suzanne R. Sayward is a partner with the Dedham law firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate and Trust settlement and elder law matters. She is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts.  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. For more information visit our website at www.ssbllc.com or call 781/461-1020.

February, 2025

© 2025 Samuel, Sayward & Baler LLC

The Corporate Transparency Act (CTA) is a federal law passed in 2021 with a start date of January 1, 2024.  The purpose of the law is to reduce money laundering and tax fraud.  The manner in which Congress seeks to achieve this goal via the CTA is to require every ‘entity’ (other than those that are exempt) to file a report with the Financial Crimes Enforcement Network (FinCEN) disclosing detailed information about the individuals who are associated with the entity as owners and as managers who exercise substantial control.   This is called a Beneficial Ownership Information report or BOI.  An ‘entity’ is defined as a company that was formed by filing with the Secretary of State’s office.  

This law primarily impacts small businesses formed as a corporation or an LLC.  Those who created an LLC to own their rental or investment real estate for liability protection purposes are also required to file a BOI.  The government estimates that the filing requirements will impact more than 32 million companies that were in existence before January 1, 2024 and an additional 5 million entities formed in 2024 and each year going forward.  The estimated cost to administer this law is $22 billion, plus an additional $2 billion each year for updated reports.

The law requires entities in existence as of January 1, 2024, to file their Beneficial Owner Information report no later than January 1, 2025.  Entities created during 2024, were required to file with FinCEN within 90 days.  The law carries very steep penalties for failure to timely file.  

Needless to say, many people are unhappy with this law and argue that is an unwarranted governmental intrusion.  Lawsuits have been brought against the federal government to prevent its enforcement.  

Here’s a brief overview of the major legal wrangling over enforcement of the CTA as of today (January 15, 2025):

• On December 3, 2024, a federal district court judge for the Eastern District of Texas issued a nationwide preliminary injunction prohibiting the government from enforcing the law. 
• The federal government appealed the injunction and on December 23, 2024, a 3-judge panel of the Fifth Circuit Court of Appeals lifted the injunction reinstating the filing requirement.  Following that ruling, the filing deadline was extended from January 1, 2025 to January 13, 2025. 
• On December 26, 2024, the Fifth Circuits merits panel issued a ruling reinstating the nationwide preliminary injunction against enforcement of the CTA.  This is where the law stands today.  FinCEN has updated its website with a statement to the effect that reporting companies are “not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.” 

The Fifth Circuit has put this matter on an expeditated tract.  Briefs from both sides are due by February 28, 2025 and a hearing on the matter is scheduled for March 25, 2025.

So small business entity, you are safe from the CTA reporting requirements for the time being but you may want to be ready to file on a moment’s notice if the matter is resolved in the government’s favor and a short deadline enacted. 

Attorney Suzanne R. Sayward is a partner with the Dedham firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate settlement and elder law matters. She is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts.  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. For more information visit www.ssbllc.com or call 781/461-1020.

January, 2025

© 2025 Samuel, Sayward & Baler LLC

Our office is closed on 11/28 and 11/29.

In my estate planning practice, I advise my clients about the different documents that make up an estate plan, including Wills and Trusts. Both Wills and Trusts are used to pass assets on to beneficiaries at death. However, there are distinct advantages to using a Trust over a Will. Here are five ways in which a Trust beats a Will.

1. A Trust can be used to Avoid Probate – a Will cannot. Probate is the process of changing the title on assets when someone passes away. Assets that are owned in a deceased person’s individual name and for which there is no named beneficiary are no longer accessible once the owner of the asset has died. In order for family members to gain access to accounts or other assets in the deceased’s individual name, they must file a petition with the probate court and wait for the court to approve the Will and appoint the Personal Representative. This can be a long and costly process during which bills cannot be paid and assets cannot be managed. A Trust is an excellent probate avoidance tool because assets that are owned in the name of a Trust are immediately accessible to the trust-maker’s designated successor.

2. A Trust can provide Creditor Protection for the Inheritance you Leave to Beneficiaries – a Will cannot. Many people worry that the inheritance they leave to their children will be lost to their children’s creditors such as a divorcing spouse, unpaid credit card bills, a bankruptcy, a business loss, or a lawsuit. Sadly, this is often the case when assets are distributed to beneficiaries via a Will. A Trust allows the maker to safeguard an inheritance from the easy reach of the beneficiaries’ creditors by keeping the assets out of the name of the beneficiary. Ownership of the assets remains in the Trust. The beneficiary will have access to the assets in accordance with the directions you leave in your Trust. You may name your beneficiary to serve as Trustee, allowing the beneficiary to manage her own inheritance. By leaving assets to your beneficiaries via a Trust rather than outright via your Will, you can ensure that the assets you worked so hard for will be available to your children and future generations and will not end up with the beneficiary’s ex-spouse.

3. A Trust can Protect Government Benefits for a Person with Disabilities – a Will cannot. If you have a child, grandchild or other beneficiary with disabilities, then a Trust is a must. If you leave assets to a person who receives needs-based government benefits via your Will, it will place your beneficiary in the difficult position of either losing those benefits, or transferring the inheritance into a Trust of which the state must be the beneficiary at the beneficiary’s death. Unless the inheritance you are leaving is so significant that the monetary and medical benefits available to the person through programs such as Social Security and Medicaid are no longer important, then making sure that those government benefits continue to be available is vital. Leaving assets to a person with disabilities via a Trust is the best way to ensure those government benefits are preserved and that the inheritance you leave will be available to pay for expenses that are not covered by those benefits, which while vital to many, are limited in their scope.

4. A Trust makes it Easier to Manage Assets for an Incapacitated Person – a Will cannot. If a person experiences a period of incapacity during their lifetimes, they will need someone to pay their bills, manage their investments, maybe sell their house, etc. The worst situation to be in should this occur is to have done no estate planning at all. For those with no estate planning in place, family members or another interested party will need to petition the court to be appointed as the Conservator for the incapacitated person in order to obtain authority to manage the assets. This is an expensive, time-consuming, and public process. A basic estate plan will include a durable Power of Attorney which is used to appoint a person to manage one’s affairs in the event of incapacity. A Power of Attorney is a very important estate planning document but it can be difficult for the appointed individual to utilize with banks and other financial institutions which often push back hard on someone attempting to access an account using a Power of Attorney. Banks and other financial institutions do not have the same hostility toward Trust accounts. The successor Trustee of a Trust can easily manage the Trust assets and use them for the benefit of the trust-maker in the event of the trust-maker’s incapacity

5. A Trust can Administer Assets for Minor Beneficiaries without Court Intervention – a Will cannot. Leaving money directly to a minor (under age 18) creates an administrative nightmare because under the law, a minor does not have the legal capacity to receive assets. The parent of the minor does not have the authority to act as the child’s legal representative until the court says so. As such, if you die with a Will that leaves money to minor beneficiaries, or if you name a minor as the beneficiary of your life insurance or IRA, the court will need to appoint a Conservator to receive that inheritance for the minor. The Conservator will be required to report annually to the court and the court will appoint an overseer (guardian ad litem) to make sure the Conservator is doing his or her job for your minor beneficiaries. This means huge costs and long delays in administering funds for minors. It also means that when the minor turns 18, he or she will be entitled to receive all of those assets and will be free to do with them as he or she wishes (think, fast cars, spring break, and lots of shopping). Creating a Trust to receive assets passing to a minor, or even to a young adult beneficiary, is the best way to ensure that the court is not involved in the process, that the person you want to manage assets for the beneficiary is able to do so, and that the beneficiary may use the assets only for purposes you decide are important and/or at ages that you dictate.

These are just five of the many ways in which a Trust is superior to a Will. If you want to learn more about whether a Trust is right for you, call us or email us to schedule an appointment with one of our experienced estate planning attorneys.

Attorney Suzanne R. Sayward is a partner with the Dedham law firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate and Trust settlement and elder law matters. She is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts. 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. For more information visit our website at www.ssbllc.com or call 781/461-1020.

 

September, 2024
© 2024 Samuel, Sayward & Baler LLC