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In Estate Planning, Preparation Is Key

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It is everyone’s hope that they will die after they have managed to get everything in order so that their family will have an easy time of it and not be left picking up the pieces.  Here are some things to put on your Estate Planning To Do list, to make it easier on your family if you depart this world before tying up all the loose ends:

  1. Identify a place in your house where you keep important information and documents and let trusted family members (or personal representatives) know where that is. I suggest a well-organized filing cabinet with clearly labeled folders containing important information and copies of your legal documents such as wills, trusts, powers of attorney and health care proxies.
  2. Create a list of your assets that includes the institution where each account is located, the account number, your contact person at that institution (if any) and their contact information. Include on this list bank accounts, investment accounts, annuities, life insurance, retirement accounts, etc.    Keep this list updated, and in the place where you keep other important papers so that it can be found.
  3. If you have original stock certificates, savings bonds, cash or other valuables in your house, make a note of where those items are kept so that they are not overlooked or inadvertently thrown out.
  4. Don’t forget digital estate planning. Create a list of usernames and passwords for any important online accounts – financial, photo storage, email, social media, document storage accounts. Keep this list updated and in the place where you keep other important papers so that it can be found.
  5. If you have young children or a child with special needs, consider a letter of instruction that provides important information about your child – the name and contact information for their physician, allergies, other important medical information and other things you think someone should know if they had to care for your children unexpectedly.
  6. Review and update beneficiary designations on life insurance and retirement accounts in consultation with your estate planning attorney to ensure the designations do not disrupt the other provisions of your estate plan.
  7. Do your best to keep your income tax filings up-to-date so that your family will not have to try to piece together that information in order to file income tax returns after your death. This is a painful and expensive process that can lead to lingering liability for family members.
  8. If you have a safe deposit box, make sure at least one other trusted family member’s name is on the box so that they will have access after your death This is especially important if your original Will or other estate plan documents are in the box.
  9. And finally, make sure your estate plan documents are up-to-date, and that you have left instructions for your family regarding where to find them, and the contact information for your estate planning attorney.

Tackle one of these tasks every month, and within a year you will be leaving your family well-prepared if something unexpected occurs.

November, 2019

© 2019 Samuel, Sayward & Baler LLC

Estate Planning and Taxes – Five Things to Know About Taxes After Death

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After an individual’s death, his or her assets will be gathered, affairs settled, debts paid, tax returns filed and assets distributed as directed by the deceased’s Will and/or Trust or if those documents do not exist as provided by Massachusetts intestate law. Don’t neglect the importance of taxes and filing tax returns after death. The Personal Representative (formerly Executor) of the deceased’s estate may be responsible for filing a number of tax returns. Here are five things to keep in mind with respect to taxes after a death.

See the chart for more information on tax deadlines.

 

  1. A Personal Representative must file the deceased’s final income tax return for the year of death and prior year returns that have not been filed. The deceased’s final income tax return will reflect income earned or received by the deceased from January 1 of the year of death through the date of death.

What should you do if the deceased failed to file tax returns in the years before his or her death? It is not uncommon for a deceased person who was ill for the last years of his or her life to have failed to file his or her income tax returns. It is important for a Personal Representative to investigate whether required returns have been filed and be certain about a decedent’s income tax liabilities.  A Personal Representative who distributes estate assets and fails to pay income taxes owed by the deceased will be personally liable to pay those taxes.

  1. A Personal Representative may be required to file a Massachusetts estate tax return if the value of the estate assets exceeds $1 million. A deceased’s estate includes all assets that he or she owned and controlled, whether held in his or her individual name, jointly with others, or in a revocable trust, and includes life insurance proceeds and retirement assets. If the estate’s assets exceed $1 million, tax is computed on the entire value of the estate.  Tax is not payable on assets passing to a spouse or to charity.  Don’t forget the deadline for estate tax returns. The filing deadline for estate tax returns is 9 months after death.  A Personal Representative who distributes assets and fails to pay estate taxes owed will be personally liable to pay those taxes.
  2. A Personal Representative may have to file a federal estate tax return if the value of the estate assets exceeds the federal estate tax exemption ($11.4 million for 2019).  Even if the value of the estate does not exceed the federal estate tax exemption amount, a federal estate tax return should be filed if the decedent is survived by a spouse so that the deceased’s unused exemption can be used by a spouse at his or her death. The filing deadline for the federal estate tax return is 9 months after death.
  3. A Personal Representative and Trustee may have to file fiduciary income tax returns for an estate or a trust, respectively. An estate is a taxpayer and must obtain a tax identification number and file a fiduciary income tax return for the estate if income is earned on estate assets or received during the administration of the estate. A revocable trust becomes irrevocable after the death of the trust creator and must obtain a tax identification number at that time and file a fiduciary income tax return for all income earned by trust assets after the death of the creator. Filing deadlines for estate or trust fiduciary income tax returns depend on whether the estate or trust elects to file its tax return on a calendar year basis (ending in December) or a fiscal year basis (rolling 12 months from death). In both instances, the fiduciary income tax return is due 4.5 months after the end of the tax year elected.
  4. Income tax planning opportunities exist for estates and trusts and beneficiaries because they may not be in the same income tax brackets. The highest income tax brackets for estates and trusts apply at low levels of income, while the highest income tax brackets for individuals apply at high levels of income. For this reason, timing distributions from an estate or trust to its beneficiaries can save money. Beneficiaries pay income tax on any estate or trust income distributed to them in any tax year at personal rather than fiduciary income tax rates.  It is important to work with an estate planning attorney to maximize your planning efforts and understand the tax implications and responsibilities of a deceased trust and estate.

Natalene B. Ong, Esq. is an estate planning attorney at Samuel, Sayward & Baler LLC, a law firm in Dedham that focuses on advising clients in estate planning, special needs planning, estate and trust administration and elder law.  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.

November, 2019

© 2019 Samuel, Sayward & Baler LLC

Ask SSB

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Who Should I Name as Executor?

Q:        How do I choose who to name as my Executor, Power of Attorney, Health Care Agent and Trustee?  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 the executor of your Will (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 the responsibilities that each role entails. If you create a Trust as part of your estate plan, be aware that the duties and responsibilities of a Trustee are many and varied.  The roles of Personal Representative, Trustee, 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. Most importantly, these roles require someone who is absolutely trustworthy.

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 as 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.

Taking the Mystery Out of Gift Giving

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We are often asked about the tax rules around gift-giving, especially as the end of the year approaches.  These tax rules are governed by the federal gift and estate tax system, which is wholly separate from the income tax system.  There is no Massachusetts gift tax.

If you give a gift, the money you give is not income taxable to the recipient, nor is the gift tax-deductible by you (the person who makes the gift, who we’ll call the “donor”), unless it is made to a qualified charity.

Federal gift tax, if any, is paid by the donor, not by the recipient.  For federal gift and estate tax purposes, under current law every US citizen has a combined $11.4 million exemption (in 2019) from gift and estate tax. This means that each person can give up to $11.4 million to others, either during their lifetime or at death, without paying any federal gift or estate tax.  A gift tax is payable only after the donor has made combined lifetime and death time gifts of more than $11.4 million.

In addition, certain gifts are exempt from the gift tax.  Exempt gifts include:

  • so-called annual exclusion gifts which currently allow a person to gift $15,000 (in 2019) to any number of people in any calendar year,
  • unlimited gifts to a spouse (provided the spouse is a U.S. citizen),
  • unlimited gifts to qualified charities, and
  • unlimited payments of health care expenses or tuition for another as long as those gifts are paid directly to the educational institution or health care provider.

These exempt gifts do not require the donor to file a federal gift tax return. If a donor makes a non-exempt gift, a federal gift tax return must be filed, even if no gift tax is payable, to track how much of the donor’s gift and estate tax exemption has been used.

The gift tax is complicated, but for most people who want to make gifts to children or grandchildren, the gift tax will not be an issue. If you wish to make a non-exempt gift, it is best to consult with your estate planning attorney and accountant before making the gift so that issues such as timing, and estate, gift and capital gain tax implications can be thoughtfully considered prior to making the gift.

Medicare 101

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As part of our work at Samuel Financial LLC, we connect our clients and their families with experts in many fields, such as social security, taxes, and real estate to name a few.  This quarter, we are giving our firm’s financial column to Peter Stoner and Kathy Barniak, of Stoner & Company — experts on all matters related to Medicare.  The annual enrollment period for people who are new to Medicare or who want to make changes to their existing plans is from mid-October to early December.  Peter Stoner and Kathy Barniak have been a great resource to our firm and our clients.

Medicare 101

By Peter D. Stoner & Kathy Barniak

Medicare Open Enrollment (officially known as the Annual Election Period) begins October 15 and runs through December 7, for plan changes effective January 1.  Most baby boomers remember December 7 as a date that will live in infamy, which makes it easy to recall.  Medicare was introduced in the 1960’s and was part of Lyndon Johnson’s “Great Society”.  Back then, people over 65 had half the income of younger people, but had three times the medical expenses, so something had to be done.

There are two parts of Medicare, Part A, which covers hospital related expenses and Part B, which covers doctor related expenses.  Counterintuitively, one applies for Medicare through the Social Security Office.  You can reach them on-line at www.ssa.gov/retirement, or by calling 800-772-1213.  You can also go to your nearest Social Security Office.

Medicare Part A is used for hospital insurance and covers inpatient stays at medical facilities, as well as, home health care, rehab at nursing homes and hospice care.  Note that if you are spending the remainder of your life in a nursing home, Medicare will not cover custodial care. You will need long term care insurance for that.  Part A has a $1420 “per benefit period” deductible in 2020.  A new benefit period begins once a beneficiary is released from the hospital for 60 days or more, so this deductible can be incurred multiple times each year. Part A has a $0 premium for most people.

Medicare Part B provides medical insurance to help cover physician visits, physical therapy, durable medical equipment and other medical services, such as lab tests and screenings.  It has an annual deductible of $197 in 2020 and 20% coinsurance.  Part B has a premium which is “means tested”, so it is correlated to income.  That premium is projected to be around $145 per month in 2020, but can be as high as around $460 a month for “high wage earners”.

Once someone has Medicare Parts A & B, they have health insurance, but because of the deductibles and coinsurance most people also elect a Medicare Advantage or Medicare Supplement plan.  These are distinctly different types of plans that are confused for one another all the time.

Medicare Advantage (Part C) plans are provided through private carriers who have a contract with Medicare.  In Massachusetts these plans are primarily Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs), so they all have some form of a provider network.  Generally, referrals are required to see a specialist and most services incur a copayment.  They tend to have low premiums and they offer multiple options with varying premiums, copays and out of pocket maximums.  Usually, the higher the premium, the lower the copayments and the lower the premium, the higher the copayments.  They may also include added benefits like vision and dental, not covered by Medicare, in order to differentiate themselves from other plans.  Most Medicare Advantage plans incorporate prescription (Part D) drug coverage within their product.

Medicare Supplement (Medi-Gap) plans are also provided through private carriers.  They have state mandated benefits and fill in the gaps left by Medicare.  They cover any provider who has a contract with Medicare and specialists may be seen without getting a referral.  No Supplement plan includes prescription coverage, so a separate, or “stand alone” Part D plan must be elected to provide prescription drug coverage.

Part D Prescription Drug Coverage will be provided through 25 different plans in 2020.  Which plan is most suitable depends on your prescriptions.  Premiums and copays vary substantially.  If your prescriptions change during the course of the year, you can change your drug coverage during Medicare Open Enrollment (October 15 – December 7), but in most cases, must retain your existing plan until January 1 of the following year.   There can be an added income assessment to the Part D plan premium for “high wage earners.”.

This is but a brief outline to provide the basics of Medicare.  If you are turning 65 in 2020, or are over 65 and plan to retire, the paperwork for Medicare Parts A & B should be initiated 90 days before the month during which you plan to transition to Medicare.  When your 65th birthday approaches, you will be inundated with literature that is overwhelming and confusing.  You are welcome to call us personally, go to a SHINE counselor at your local Senior Center or use www.Medicare.gov for help.

What do you want your estate plan to say?

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A question I am often asked as an estate planning attorney is basic: what is estate planning? Estate planning is commonly thought of as protecting, preserving and enhancing families by accumulating, conserving, and distributing assets. From this perspective, tax, tools and techniques are important. Just as significant is the opportunity to pass values to loved ones.  Estate plans help individuals tangibly care for family and loved ones. Yet, for every plan, I ask this – if none of your beneficiaries survive, where do you want your wealth to go? Many clients name individuals or charities they care about.

For many, this is understandably a difficult question to consider and answer. I am taking courses to become a Chartered Advisor in Philanthropy (CAP) and learning about how to help individuals thoughtfully consider this dilemma. I begin with a question – what is your personal vision for the world and for yourself? Every person has a unique answer, and this is much of what makes estate planning such a joy.  A list of questions to consider as you create your estate plan are listed below.

First, even 18-year-olds need estate plans to choose the people they want to manage their financial affairs and to make their health care decisions in the event of incapacity with the creation of Durable Powers of Attorney and health care documents. As they consider how they will live their lives and as you guide younger family members as they make decisions about the values that they will live by, a couple of important questions to reflect on are the kind of person you want to be and the kind of world you would like to be part of. For older adults, it is worth thinking about the kind of world you want for the younger generation.

In mid-life, a good question to reflect on starts with thinking about when you were younger. Did you have goals back then that you have not yet accomplished but you still want to pursue? If so, how can you work toward these goals now? Beyond yourself and your loved ones, would you like to have a positive impact on any people or things in this world?

Finally, for individuals toward the end of their lives, an interesting posture is to think about one’s estate plan as the final piece of teaching that you are able to impart as a legacy you leave to your loved ones.

What would you like your estate plan to say?

I would love to listen and hear your thoughts and work with you to create an estate plan to accomplish your goals and reflect your values.

Natalene B. Ong, Esq. is an estate planning attorney at Samuel, Sayward & Baler LLC, a law firm in Dedham that focuses on advising clients in estate planning, special needs planning, estate and trust administration and elder law.  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, 2019

© 2019 Samuel, Sayward & Baler LLC

5 Things to Consider Before Getting Hit by the Bus

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In my estate planning and elder law practice we discuss the hard topics of sickness and death with our clients and help them plan for their legacy and the possibility of incapacity and the eventuality of death.   A primary purpose of undertaking this legacy and inheritance planning is to lessen the burden of these events on loved ones.  We often use the euphemism ‘getting hit by the bus’ to begin the discussion and get our clients thinking about what the reality of that situation would look like if they were suddenly no longer available or experienced an early or unexpected demise.  Here are five things to consider before getting hit by the bus.

  1. Access to Money.  If you were hit by that bus, would your family be able to get access to funds to pay your bills, take care of you and your family, or pay for funeral expenses? Who would manage your funds in the event of an early death?  What if you don’t have any close family members?  Is there someone who will do this for you?  For many people their financial information is now available only via online access; they do not receive monthly statements in the mail.  This can be a real problem if you have not prepared a list of your accounts (and, at the risk of horrifying IT people everywhere, your passwords) and made this information available to at least one trusted person.  Consider how someone would figure out what you own and how to access it.
  2. Life Insurance and Other Benefits.   If you have one or more life insurance policies, does someone know about them? Do your beneficiaries know they are your beneficiaries? One NBC news story estimated that there is more than $1 billion of unclaimed life insurance sitting with insurance companies because the beneficiaries are unaware of the existence of the policies.  If your employer, or former employer, offers life insurance, disability insurance or other benefits, does anyone in your family know this?  If you receive a pension, does that pension continue for the benefit of your spouse?  In full? In part? How will your spouse know that she is receiving the full amount to which she is entitled if you meet an untimely death?  Have you checked your Social Security benefits lately so that you know the benefits to which your family would be entitled in the event of your death or disability?  You can do that on the Social Security Administration’s website.
  3. Health Care Proxy & End of Life Medical Decisions.  Does your family and your Health Care Agent understand your wishes for end of life care should you suffer a stroke or other debilitating event that leaves you incapacitated?  It is so important to have these conversations, both to ensure your wishes are carried out and for your family’s peace of mind.  I have clients who had to make end of life decisions for loved ones and who felt as though they did not have a clear understanding of the decision their family member would have made.  This left them feeling troubled for a long time.  The American Bar Association publishes a Tool Kit for health care decisions which includes a Health Care Proxy Quiz intended to help people start the conversation about end of life decisions. The Conversation Project is “dedicated to helping people talk about their wishes for end-of-life care” and is a great resource for these discussions which can be difficult.
  4. Final Arrangements.   Does your family know your wishes regarding burial or cremation?  Who should be notified of your passing? How will these folks be found?  Making this information available to the people who will make final arrangements for you is critical.  This is especially important for people who do not have family nearby, or who may be estranged from their family.
  5. Last Will and Testament.  Do you have a Will and if so, does your family know where to find it? A Will is an important part of your estate plan. Inquiries about the existence of a Will for a deceased person appear regularly on the Massachusetts Bar Association listserv, posted by attorneys for surviving family members who don’t know whether or not their loved one left a Last Will and Testament.  Don’t let this happen to you.  Inform your family and the person you’ve named as your Personal Representative of the name of your attorney and the location of your important estate planning documents including your Last Will and Testament.  If you haven’t yet made a Will, put that at the top of your to-do list.

It is always hard for family and friends when someone passes away.  In addition to grieving, there are the tasks and seemingly never-ending paperwork that need attention following a death, even more so if it is an early or untimely death.  For some people, a health diagnosis serves as a wake-up call to get their affairs in order.  When an unexpected event results in death or incapacity, there is no time for that.  Every day is a gift for all of us.  Take a minute to imagine what would happen if you ‘got hit by the bus’ and then plan to ensure that your family has access to the information they need.    We can help – if you don’t have an estate plan, or if it’s been more than five years since you’ve reviewed your Last Will and Testament, call us at 781/461-1020 or email us to schedule an appointment with an estate planning attorney to make sure you have a strong plan for your legacy.  In the meantime, watch out for that bus!

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. 

October, 2019

© 2019 Samuel, Sayward & Baler LLC

Planning Now For Long-Term Care After Incapacity

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A big concern of many of my estate planning clients is what happens if they need long-term health care in a nursing home but they cannot make important financial and health care decisions on their own anymore due to dementia, serious injury or prolonged illness. This is especially relevant if Medicaid (MassHealth), the federal/state program that provides benefits to pay for long-term nursing home care expenses, will be necessary. There are two essential estate planning documents that you can complete now to alleviate these concerns: a Power of Attorney and a Health Care Proxy.

A Power of Attorney appoints a person called an attorney-in-fact to make financial decisions on your behalf when you cannot do so yourself.  A Health Care Proxy appoints a person called a health care agent to make health care decisions for you if you are unable to do so yourself. Both documents should include specific language to give your appointed agent the authority to manage your long-term care in a nursing home.  Below are a few of the provisions that should be included in these documents.

Power of Attorney

Your Power of Attorney should be comprehensive in order to address anticipated and unanticipated long-term care circumstances.  For example, the Power of Attorney should include language that permits your attorney-in-fact to complete an application for Medicaid benefits on your behalf and appeal any denial of benefits for you.  Your attorney-in-fact should also have authority to sign nursing home agreements on your behalf. However, it is important your attorney-in-fact’s authority is limited so that he or she cannot sign an agreement that restricts your rights (or the rights of your estate) to pursue litigation in the event you suffer harm; many of these agreements mandate arbitration and/or mediation in the event of the nursing home’s illegal or harmful actions toward you. A new federal rule attempts to curtail mandated arbitration in agreements but does not ban it outright. Additionally, it may be appropriate for your Power of Attorney to give your attorney-in-fact the authority to make gifts of your assets, and designate beneficiaries of bank accounts, retirement accounts, annuities and life insurance policies. The Power of Attorney may also include provisions that allow your attorney-in-fact to change your estate plan. The purpose of these provisions is to permit your attorney-in-fact the flexibility to appropriately manage, transfer, or spend down your assets to qualify you for Medicaid benefits, if necessary.  Your Power of Attorney can be drafted so that only certain attorneys-in-fact have the authority to take specific actions, and only certain family members can receive gifts of your assets.  Although these powers may not be appropriate in every case, if you anticipate that you may wish to apply for Medicaid benefits in the future, your Power of Attorney should contemplate that these types of actions may be necessary.

Health Care Proxy

Your Health Care Proxy should include the standard powers given to your health care agent under Massachusetts law.  The Proxy should also contain expanded powers to permit your health care agent to assist with long-term care matters, with the goal of eliminating the need to petition the court to appoint a guardian to make health care decisions on your behalf in certain situations.  For example, your Proxy should give your health care agent the ability to authorize the administration of medication, employ and terminate the employment of doctors and other medical providers, admit and discharge you from a medical facility, and sign a MOLST (Medical Order for Life-Sustaining Treatment) on your behalf.  In the event it is necessary to go to court, the Proxy’s expanded powers clearly express your wish to give your agent the authority to take certain actions and may simplify the appointment process.

If you already have these documents, I recommend that you contact an attorney experienced in elder law and estate planning to review them to ensure that the necessary long-term care planning provisions are included.  If you do not have a Power of Attorney or Health Care Proxy and wish to learn more about them from an estate planning attorney in a one-on-one meeting, an attorney at Samuel, Sayward & Baler LLC can meet and discuss these documents with you. Alternatively, you may join Attorneys Suzanne R. Sayward and Abigail V. Poole on Thursday, October 17th at 1:00 p.m. for a presentation on this topic at the Dedham Senior Center located at 735 Washington Street, Dedham, Massachusetts.  Please RSVP to Courtney Daly at (781)326-1650.

Attorney Abigail V. Poole is an associate attorney 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 an active member of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (NAELA).  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.

October, 2019

© 2019 Samuel, Sayward & Baler LLC

Five Reasons to Review Your Estate Plan

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I see clients every day who sheepishly tell me they have been meaning to update their Wills and Trusts for years, but just haven’t found the time to do so.  First things first – let the guilt go.  Procrastinating about estate planning is nothing new and is understandable in many ways.  Talking about illness, death and taxes is not most people’s idea of a good time (except for us estate planning attorneys).  That being said, there are times in life when it’s time to move updating your estate plan off the “to do” list and on to the “done” list.  Here are those times:

  1. You have Young Children

If you have young children, your estate plan needs to do two important things: address the care and custody of your minor children (under age 18 in Massachusetts) should you pass away, and address the management and distribution of the assets you will leave them.  Your Will is the document in which you name a guardian for your minor children.  The guardian is the person who will decide where your children live and attend school, what type of health care your children receive, and make other day-to-day decisions regarding your children’s care and upbringing.  If you do not have a Will naming a guardian, family members or others may petition the Court to appoint someone as your children’s guardian.  The Court will have the difficult job of choosing among those who ask to be appointed without the benefit of your input.  Don’t lose the opportunity to put your children in the right hands by neglecting to speak with a lawyer who has experience drafting Wills and Trusts for families with young children!

After you have made sure that the right people will be raising your children, you need to make sure that the inheritance you leave them is preserved and protected for them.   Creating a Trust that sets out when and for what purpose your children will receive the inheritance you leave them, and names a responsible person (a Trustee) to manage those assets is the best way to do this.  Estate planning and Trusts are not just for those with millions of dollars.  Think about the assets your children would receive if you passed away – consider your home, your life insurance, your retirement accounts, your savings and investments.  Then think about how you feel about your children receiving those assets at age 18.  If this makes you uncomfortable, a Trust should be a part of your estate plan.  An experienced estate planning attorney can help you set up a Trust for your minor children. While funds are held in trust for your children’s benefit, the Trustee may use them for a child’s education, living expenses, health care, or other purposes you specify.

  1. The Value of your Estate is more than $1 million

If you are a Massachusetts resident and the value of your “estate” (your home, retirement accounts, life insurance, bank and investment accounts) is more than $1 million, your estate will pay an estate tax to the Commonwealth of Massachusetts at your death unless your assets are left to your spouse or to charity.  The estate tax is a graduated tax.  With tax rates ranging from 6.4% (for estates just over $1 million) to 16% for estates in excess of $10 million, the tax bill can be significant. Estate taxes and estate planning are closely connected. Whether you are married or single, there are planning strategies that can be employed to reduce the estate tax payable at your death.  If you are married, this planning must be done while both spouses are alive.

For example, Jim and Sue have assets of approximately $1.5 million.  If all assets are owned jointly or left to the surviving spouse at the first spouse’s death, the surviving spouse will have $1.5 million of assets at her death and will pay Massachusetts estate tax of approximately $70,000.  If instead the first spouse to die leaves $700,000 of assets in trust for the benefit of the surviving spouse, the surviving spouse will have a taxable estate of only $800,000 ($1.5 million minus $700,000), and no estate tax will be payable at the surviving spouse’s death.  In this example, creating and funding the right type of trust will save Jim and Sue’s family $70,000 in Massachusetts estate tax, while at the same time ensuring all of the assets are available for Sue’s use during her lifetime.

  1. You Created your Estate Plan Documents before 2012

In 2012, after decades of probate and trust laws that estate planners had come to know and love, the Massachusetts legislature made big changes to the laws that govern Wills, probate and Trusts in our state.   These changes in the law were favorable in many respects.  Although these changes did not make Wills and Trusts created prior to 2012 obsolete, the law did change terminology (Executors are now called Personal Representatives) and also gave us the opportunity to streamline and customize in many respects the way Wills and Trusts are administered after death.  If you have estate plan documents that were created before 2012, it is a good idea to have those documents reviewed, and consider updating them to include some of the new administrative provisions that will make things easier for your fiduciaries and your heirs after your death.  While you are at it, you can also include digital estate planning provisions that give your fiduciaries necessary authority to deal with your digital assets (email accounts, photo storage accounts, social media, online banking, etc.) if you become incapacitated or pass away. This will protect your fiduciaries from running afoul of federal “hacking” laws that do not look kindly on unauthorized access to online accounts, even if the person has your username and password.

  1. You have Significant Wealth in Retirement Plans

An important estate planning concept to understand is that your Will and Trust do not necessarily control all of the assets you own at your death.  First, assets that have beneficiary designations – such as life insurance policies, annuities, and retirement accounts (IRA, 401k) – will be paid to the beneficiary you have designated at your death, regardless of the provisions of your Will or Trust.  For this reason, a crucial part of a comprehensive estate plan is to carefully review how beneficiaries are designated on these types of assets, and be thoughtful about making any necessary changes.  Second, retirement accounts are subject to their own, complicated set of rules regarding how and when distributions from those accounts will be made to the beneficiaries you have designated.  These rules are about to change when Congress passes the SECURE Act, which is expected to happen when Congress returns to session in September.  If you have significant assets in a retirement account, you should understand how these new rules will impact the distribution of these funds to your beneficiaries, and if necessary, make appropriate plans to manage those accounts for those who may not be capable of managing that wealth on their own, with an eye towards minimizing the income tax that will be payable on those distributions.  Finally, keep in mind that these assets are still considered part of your estate for estate tax purposes.  The estate tax provisions of your Will and Trust will need to specify whether the recipient(s) of those assets, if different (or in different proportions) from the beneficiaries of the assets controlled by your Will and Trust, will pay their share of the estate tax in proportion to what they receive.

  1. You are Concerned about the Cost of Long-Term Care

Estate and tax planning can be inconsistent with long-term care planning.  The estate plan you created 15 or 20 years ago when your family was young is most likely no longer adequate for the issues your estate plan should address as you age.  It is important to get educated about issues relating to long-term care while you are still healthy and able to take whatever long-term care planning steps may be necessary.  An experienced estate planning and elder law attorney can help you think through questions like – What is your plan if you or your spouse need care?  Do you intend to stay in your home?  If so, how should it be owned?  Do you intend to move to a different state to be near children, or to a CCRC?  Do you have or should you look into purchasing long-term care insurance?  Will you be or do you wish to be eligible for public benefits to pay for long-term care?  Are there planning steps you should take now to position yourself to be eligible in the future?  What will public benefits pay for and what won’t they pay for, and is eligibility for those benefits the best planning strategy?  Depending on your answers to these questions, your estate plan can be updated to plan appropriate for your future.  In addition to these issues, the importance of a good Power of Attorney (for financial decision-making) and updated health care documents (such as a Health Care Proxy) cannot be overstated.

Take the time to consider whether your estate plan is due for a review and update.  If you have never created an estate plan, now’s the time!  Put your mind at ease, cross this important item off the “to do” list, and contact an experienced estate planning attorney today to get the process started!  You will be glad you did.

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), and currently serves on the Board of Directors of the Massachusetts Forum of Estate Planning Attorneys. 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.

September, 2019

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Wills • Trusts • Elder Law • Long-Term Care Planning • Estates

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