When someone schedules an estate planning or long-term care planning meeting with an attorney at our firm, they are asked to complete our Client Questionnaire and send it to us prior to that meeting.  This is the case for both clients who are new to us who don’t already have an estate plan and for returning clients who are coming in to update their estate plan.  There are often questions about why we need this information so I thought I would take the opportunity this month to explain why this is so important when it comes to estate planning.

Q. Why do you need detailed information about my assets? We ask for detailed information about your assets, including their value, how they are owned, how beneficiaries are designated, and the nature of the asset (i.e. whether an account is an IRA or other type of qualified retirement account or not) so that we can properly advise you about probate avoidance, long-term care planning, legacy planning, as well as estate planning and estate taxes.

Probate Avoidance.   One of the primary goals of estate planning is to pass assets to family at death without the need for probate.  Probate  is the court process of changing the title on an asset when the owner of the asset passes away.  Probate can take a long time, cost a lot of money, and cause surviving family members much aggravation.  As such, many folks want to avoid probate.  There are several ways to avoid probate depending upon an individual’s circumstances and the type of assets he or she owns.  In order for us to advise you about your options for probate avoidance our estate planning and probate attorneys need to know about your assets.

Estate Tax Planning.   Although the federal estate tax is not currently a concern for many people because our current tax code permits each person to pass on $11.4 million of assets free of any federal estate tax, this is not the case in Massachusetts where we have a $1 million exemption for estate taxes. As such it is important to consider estate tax planning. Whether your estate will owe federal or Massachusetts estate tax depends upon the value of your taxable estate when you pass away.   In order to determine whether your estate will be liable for estate taxes and to advise you about your options for reducing or eliminating that tax, we need to know the nature and value of your assets.

Long-term Care Planning.  Long-term care planning is typically planning to preserve assets from having to spent down on long-term care costs.  Such planning can be done in advance (the need for long-term care is not imminent) or in a crisis (nursing home care is imminent or likely within the next few months).  In either case, our long-term care attorneys, need to have detailed information about assets and income in order to advise you about your options for planning to preserve your assets.  When we are working with a married couple, information about both spouses’ assets is needed since eligibility for some long-term care benefits programs is contingent on both spouses meeting the criteria imposed by the benefits program.

Estate Planning.  Estate planning is done to make sure your assets pass to the people you intend at your death.  How an asset is owned and how beneficiaries (if any) are designated on an asset will determine how that asset will be distributed at your death.  In order to give you advice about whether or not changes to asset ownership or beneficiary designations are necessary based on your estate planning goals, we need to know how assets are owned and how beneficiaries are designated currently, so we can work with you to create the most accurate estate plan for you and your family.

Q. Why do I have to complete a Client Questionnaire if I am already a client? An important aspect to having an estate plan that actually accomplishes your goals is to keep your plan up to date.  Your life is not static – family situations change, health changes, income and assets change, etc.  These factors have an impact on the type of estate plan you should have and the provisions of your plan.  We actively encourage our clients to regularly review and update their estate plan to ensure the success of that plan.  Returning clients sometimes question the need to complete an updated Questionnaire saying that ‘nothing has changed.’  If it has been more than a few years since you filled out a Client Questionnaire, completing an updated Questionnaire will ensure that we are best able to advise you.   We would be happy to send you a copy of the most recent Client Questionnaire we have on file for you so that can you work off of that in updating your information  Just ask Jen to send that to you when you schedule your appointment.  Having an updated Questionnaire in your file will also help us help your family members in the event you become incapacitated, and at the time of your death, as we will be able to give them information about assets, help them locate a safe deposit box, etc.  This can save a lot of time and effort for family members.

Q. The Questionnaire is 14 pages long – do I really need to fill out the entire form? Yes, we do want you to complete the Questionnaire in its entirety. Some of the sections may not apply to you and you should indicate that on the form.  For example, we ask about ownership interests in a business – if you do not own an interest in a business, you will skip this section. If you do not have life insurance, you will skip that section.   The last page of the Questionnaire asks about your goals for your planning – is reducing taxes important to you?  Are you concerned about protecting the inheritance you leave your children from their creditors, such as a divorcing spouse or a lawsuit?  We want to know what is important to you so that we can help you create the right estate plan that is best for you and your family.

Q. Do you share that information with anyone outside of your firm? Of course not! We are lawyers, and confidentiality is of paramount importance to us. Our staff is also well-trained on keeping all client information, including the names of our clients, confidential.

We’re here to help you achieve your estate and long-term care planning goals.  Whether those goals are probate avoidance, estate tax reduction, preserving assets from the high cost of long-term care, or simply the peace of mind in knowing that you have put your affairs in order, successful legacy planning begins with our collection of the information requested on our Client Questionnaire.

August, 2019

© 2019 Samuel, Sayward & Baler LLC

At its heart of estate planning for beneficiaries with special needs is the special needs trusts (SNT).  SNTs allow you to provide your beneficiaries with an inheritance while allowing them to maintain eligibility for public benefits they need. Assets in SNTs do not count toward the asset limit imposed by government programs. You can choose a Trustee to manage the inheritance for your child and make distributions to supplement your child’s benefits. Below are five things to consider to provide peace of mind when you have a disabled beneficiary.

1. Create a Special Needs Trusts (SNT). Parents and grandparents can create trusts for their special needs children or grandchildren with the assistance of an estate planning attorney with expertise and experience in planning for beneficiaries with special needs.  This is preferable to leaving money directly to the beneficiary because SNTs provide long-term management of the inheritance you leave to disabled beneficiaries while allowing them to qualify for needs-based government benefits. Special needs trusts can pay for and supplement medical and travel expenses, entertainment, pet care and other expenses that can enhance a beneficiary’s quality of life especially when you are no longer around. You would name a Trustee to manage funds in the Trust. The person you name as Trustee could be a professional or a trusted family member.

2. Learn About the Types of SNTs. First-party trusts hold assets the beneficiary owns, for example, from inheritance or lawsuits. When the beneficiary dies, the funds remaining in the trust must be used to reimburse the government for services the beneficiary received. Parents with a disabled child often establish third-party trusts.  These trusts are created and funded by someone other than the beneficiary. The advantage is that any funds left when the beneficiary dies can be distributed to contingent beneficiaries such as other siblings. Special needs trust assets do not have to pay the government for services received.

3. How Much Money Do You Leave for a Beneficiary?  The amount a child needs depends on a family’s needs and lifestyle and a child’s abilities. Housing can be a large unknown. Group homes may require purchase of a condominium unit in a building with services for special needs, and monthly costs will apply for food, utilities and staff. Families may also want to budget eating out weekly, technology (for example, an iPad every couple of years) or gym memberships. When parents die, costs increase because a social worker must be paid to coordinate care and advocate for the beneficiary. Another consideration is legal fees.  Family members who serve as the sole Trustee of a special needs trust should consult attorneys to guard against actions that may jeopardize benefits.

4. Appoint a Guardian and/or Conservator. When special needs beneficiaries need to have a legal guardian and/or conservator, a probate court proceeding is required.  A guardian for a beneficiary with special needs is responsible for decisions about medical care and living arrangements. A conservator is responsible for your beneficiary’s property and finances.  Any person serving as a guardian or conservator should name successor guardians and conservators in their Will.  A court will need to appoint the guardian named in a Will to make decisions for your child. Responsibilities may include those below, so great care should be taken in deciding who to appoint to these important positions.

• Applying for public benefits including those from Social Security
• Advocating for your child’s rights and best interests
• Safeguarding your child’s finances and consulting with physicians
• Making decisions regarding treatment and placement
• Releasing medical records for Social Security and health insurance

5. Write a Letter of Intent. Parents of children with disabilities should write letters of intent.  A letter of intent provides Trustees, guardians, advocates and caretakers guidance about your child’s abilities, routines and interests and your child’s likes and dislikes.  The letter should include at least the following:

• Education – regular and special education needs, services, programs and providers
• Final Arrangements – cremation or burial; family plots; religious services and clergy
• Residence – group home or community preferences, size and arrangements for a child
• Healthcare – doctors, therapists and hospitals; frequency and purpose of appointments, medications taken in the past and currently and whether they worked

Keep these things in mind when thinking about your family member with special needs and consult with estate planning attorney who has expertise in special needs planning to advise you about these important matters.

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.

August, 2019

© 2019 Samuel, Sayward & Baler LLC

As surprising as it may seem to some, it is not unusual for me to hear my clients who are very elderly or terminally ill tell me, in all seriousness, that they are ready to die.  For many people in this situation, having no control over their fate is very disheartening.

In the United States, a person’s ability to legally and voluntarily end his or her own life is a controversial topic.  However, the “death with dignity” movement is growing.  Also called “medical aid-in-dying” laws, these laws allow terminally ill, competent adults to request a physician to prescribe medication that will allow them to end their lives in a peaceful manner and at a time of their choosing.  As of April, 2019, nine states in the United States (Oregon, Washington, Vermont, California, Colorado, Hawaii, New Jersey, Montana and Maine) and the District of Columbia have physician-assisted dying laws in effect, or permit physician-assisted death by Court ruling.

This year in Massachusetts, the End of Life Options Act was filed in the Massachusetts legislature and sponsored by a total of 67 State Senators and Representatives.  Senate bill S.1208 was introduced in January 2019, along with companion bill H.1926.

This legislation would give adults who are terminally ill an additional option at the end of life – essentially to control the timing and manner of their death.

These bills would create a new law which would allow an adult who is mentally competent and who has been diagnosed as being terminally ill to request a physician to prescribe medication which the patient may choose to self-administer to bring about a peaceful death.  The End of Life Options Act contains various safeguards to ensure the request is voluntarily made by a patient who is informed, competent and is in fact terminally ill.  Two physicians must confirm:  1) that the patient is terminally ill; 2) that the patient is competent and acting voluntarily; and, 3) that the patient has made an informed decision.  The patient must also undergo counseling to ensure the patient is not suffering from a psychiatric or psychological disorder or depression that impairs the patient’s judgment.  Notification of the patient’s family is recommended but not required.

The law also spells out the effect of the patient’s actions on Wills, contracts, insurance policies, and other legal documents that may be affected by a person’s death.

The End of Life Options Act was referred to the Legislature’s Committee on Public Health, and heard in the Joint Public Health Committee on June 25, 2019, where patients with terminal illnesses and their loved ones, along with physicians, advocates, social workers and faith leaders testified about their experiences with death and dying.

It appears no further action has been taken on these bills since the June 25 hearing.  If you are interested in voicing your opinion on this legislation, a list of the sponsoring legislators for each bill can be found here: S.1208 and H.1926.

Although this is dealt with in the proposed law, if this legislation becomes law, it could potentially raise many estate planning issues around end of life decisions. Are people able to make sound decisions regarding inheritance and legacy planning during such a difficult time, will changes to these estates be contested? If you have questions regarding End of Life Planning or other concerns please contact a qualified Estate Planning Attorney.

July, 2019

© 2019 Samuel, Sayward & Baler LLC

Summer is finally here, and you may have plans to spend time at your vacation home with family and friends.  If you own a vacation home or are considering purchasing one, it is wise to create a plan for keeping the home in the family at your death or selling it if associated costs become unaffordable.  There are a number of options for keeping vacation homes in the family such as gifting a vacation home or putting a vacation home in a Trust or an entity.  Below is a short list with the upsides and downsides.

Wills. Individuals can distribute property they own in their individual names to the people whom they choose upon their deaths via their Wills. However, assets transferred under a Will must go through the public probate court process, which can be time-consuming and expensive.  Probate avoidance is a great gift you can give to your family.

Gifting.  Individuals can make gifts of vacation homes during their lifetimes.  The property would avoid probate and be removed from the individual’s taxable estate, thereby avoiding estate tax on the property. Many people consider gifting a house to avoid paying estate tax.  However, on the downside, the donor gives up control of the asset, and the asset is subject to the reach of the creditors of the donees who receive the property.  Also, the donee’s tax basis in the property would be “carryover basis”.  Tax basis is used to calculate the tax payable upon the sale of property.  Individuals who receive gifts of property have a basis in the property that equals the price the donor paid for the property.  If an individual inherits property at a person’s death, the basis in the property will “step up” to the value of the property at the time of death.

An important consequence of gifts made during life and after death is the basis of property.  If a parent purchases property for $500,000 and transfers it to children during life, then the children will have the same basis as the parent ($500,000).  If the children sell the property for $1 million, the children will pay tax on gain in the amount of $500,000 (the difference between the $1 million sale price and the $500,000 tax basis).

However, if the parent dies owning property worth $1 million and leaves the property to his or her children, the children will have a stepped-up basis in the property of $1 million.  If the children sell the property upon the parent’s death, no gain will result.  The children will not pay income tax upon selling the property.  However, the property will be includable in the parent’s estate and subject to the estate tax.  The Massachusetts estate tax rate ranges from 4.6% to 16%.  Combined federal and Massachusetts capital gains rate can be 20% to 25%.  Thus, opting until death to pass property to children may be favorable for tax reasons.

Trusts.  Assets titled in trusts during a person’s lifetime avoid probate. This is one of the reasons for placing property in a trust. A person who creates a revocable living trust is the grantor.  Upon transferring title of an asset to a revocable trust, the grantor retains control of the asset and usually serves as Trustee of the trust and is the sole beneficiary of the trust during his or her lifetime.  The grantor can name a Trustee to manage assets in the trust for the remainder beneficiaries (i.e. those who will be the beneficiaries at the grantor’s death).  Trusts can be structured to provide creditor protection for property held in trust against a beneficiary’s creditors such as a divorcing spouse, tax liens and bankruptcy.  Property in this type of trust will get a step-up in basis at the death of the grantor.

Entities.  A limited liability company (LLC) or a family limited partnership (FLP) can own a home and transfer the ownership of a home to future generations. An LLC or FLP can provide rules for a home’s use and operation, limit ownership of the underlying property to family members and provide buyout terms so that an individual family member cannot force a sale of the property.  Payment of repairs, insurance and taxes can be outlined with family members paying into an account for cleaning and maintenance annually or paying costs for the time that they use the vacation home.

A vacation home is a great gift, and passing it on to your loved ones is a wonderful way to continue family traditions and promote family bonding. It is important to consider all of your estate planning options in relation to a vacation home. Make sure you have a plan in place to ensure your vacation home continues to be a blessing and does not become a curse.

June, 2019

© 2019 Samuel, Sayward & Baler LLC

One of the most frequent concerns I hear from clients in my estate planning and elder law practice is the fear of losing their home to the nursing home if they need long-term care.  This is a valid concern when it comes to Medicaid and estate planning.  Long-term care can cost upwards of $14,000 per month.  If the long-term care recipient is not able to pay those costs, then Medicaid (sometimes called MassHealth in Massachusetts) will pay. However, there is a cost associated with having MassHealth pay long-term care costs.  First, in order to be eligible for Medicaid benefits to pay for that care the applicant must meet the strict financial criteria imposed by the program.  Second, to the extent a Medicaid recipient owns assets at his death, the state can seek reimbursement from those assets for the funds it expended on the Medicaid recipient.  So, what happens to the home when the owner needs long-term care?  Here are five things to know about Medicaid and the home.

1. You don’t have to sell it, but there will be a lien. Many people think that they must sell their home in order to be eligible for MassHealth benefits. Sometimes they believe this because they have been told so by the long-term care facility caring for their loved one.  This is not the case. The home is a so-called ‘non-countable’ asset (up to $878,000 of value in 2019) for purposes of determining Medicaid eligibility.  That means that a person can receive Medicaid benefits to pay for nursing home costs and still own his home.  However, the Commonwealth will file a lien against the property with the registry of deeds unless the owner’s spouse or a child or sibling who meets specific requirements is still living in the home.  The amount of the lien is the amount the state pays on behalf of the Medicaid recipient. As such, the house cannot be sold during the owner’s lifetime without re-paying the state.  In addition, the applicable MassHealth regulations require that the lien be satisfied within 9 months of the appointment of a Personal Representative following the death of the homeowner.

2. Keeping the home can be challenging. Although the regulations permit a Medicaid recipient to own her home, this can be challenging since all but a small amount of the recipient’s monthly income must be paid to the nursing home each month.  As such, there is no income available to pay the real estate taxes, insurance, utility bills and the cost of upkeep on the home.  In some cases, family members will pay these expenses and hope to be reimbursed when the home is eventually sold. In other cases, the home will be rented and the rental income used to pay the property expenses.  Both of these options present challenges and should be thoughtfully considered before embarking on either and require proper Medicaid planning with an attorney that specializes in long-term care matters.

3. Transferring ownership of the house to the spouse in the community is usually advisable. Many married couples own their home as tenants by the entirety which is a special form of joint ownership for married couples.  This form of ownership means that when one spouse dies, the house belongs entirely to the surviving spouse without the need for probate.  Although the house is a non-countable asset and the state is not permitted to file a lien against the property if there is a spouse residing in the home, it is usually prudent to transfer the home into the name of the community spouse when one spouse needs long-term nursing home care.  The reason for this is to protect the home from a lien (see #1 above) in the event the community spouse predeceases the nursing home spouse. There is no ineligibility period imposed for transfers of assets between spouses (see #4 below).

4. Special rules for certain transfers of the home and the look-back period.   The general rule for long-term Medicaid benefits eligibility is that if the applicant (or his or her spouse) gave away assets within the 5-year period preceding the application for benefits, he or she will not be eligible for benefits.  This is sometimes referred to as the Medicaid look-back period. This penalty applies to transfers of the home as well as other assets even though the home is a non-countable asset.  However, there are some exceptions to this transfer penalty rule.   The most commonly used exception is the exception for transfers between spouses.  The Medicaid regulations permit assets, including the home, to be transferred between spouses without the imposition of any penalty period.  Taking advantage of this exception is a good way for a married couple to protect the home from a Medicaid lien or claim when one spouse needs long-term care.  Other exceptions to the transfer penalty include transfers to a blind or disabled child, to a child who has provided care to the applicant (subject to a variety of requirements), and to certain types of trusts.

5. Long-term care insurance can help. Long-term care insurance is insurance that pays for care at home, in assisted living, or in a nursing home.  This type of insurance can be expensive, however, there is a lot of flexibility in the type of policies available and the amount of coverage that can be purchased.  Massachusetts has a law preventing the state from filing a lien or claim against the home if the Medicaid recipient has a long-term care insurance policy which meets certain minimum criteria.  In order to protect the home, the policy must:  1) have a minimum benefit of $125/day; 2) provide coverage for a period of at least 2 years; and, 3) still be in place at the time of admission to a long-term care facility. (Note that long-term care policies issued prior to March 15, 1999, need only provide for $50/day of coverage in order for the owner to be eligible for the lien exception.)

The prospect of losing one’s home to long-term care costs is scary.  However, there are steps that can be taken to reduce the risk that this will happen.  If you or a loved one are faced with the prospect of long-term care or entering a nursing home and want to protect your home or other assets from loss to future long-term care costs, seek advice from an experienced elder law attorney to learn about your options for doing so.

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. 

June, 2019

© 2019 Samuel, Sayward & Baler LLC