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5 Ways to Leave a Legacy (but not the Good Kind) 

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If you look up the definition of Legacy in the dictionary, it has two distinct meanings.  The first is  a gift by Will, especially of money or other personal property (e.g. “Her aunt left her a legacy of $50,000”).  The second is something transmitted by or received from an ancestor (e.g. “He left a legacy of love and caring”).  Both of these meanings are common in the estate planning arena.  Clients often plan to leave money, real estate, jewelry, artwork, etc. to family or friends, and most people want to leave their families with fond memories and treasured traditions or customs.  

However, legacies of the second type can also cut the other way.  That is, rather than good will and fond memories, loved ones are left with feelings of anger and resentment.  Often this type of legacy comes from poor estate planning or no estate planning.  

Read on for 5 ways to leave a legacy of pain that lasts long after you’re gone. 

1. Naming co-fiduciaries who cannot work together.  A vital aspect of every estate plan is designating fiduciaries to carry out your wishes.  In a Will, this is your Personal Representative, in a Trust it is the Trustee, and in a Power of Attorney it is your Attorney-in-fact.  These positions can be held by one person or by two or more people.  Sometimes clients feel that it is important to appoint all of their children to these roles because they don’t want to hurt anyone’s feelings by leaving them out.  If your children do not get along or if they cannot work well together, naming them as co-fiduciaries is not going to heal that relationship and will probably make it worse.
 

2. Naming fiduciaries who are not qualified to carry out the job.  For most people it is not necessary to appoint a professional such as an estate planning attorney or a bank as Personal Representative of their Will or Trustee of their Trust.  However, it is important to appoint someone who is conscientious, responsible and competent to carry out the tasks of settling the estate in a timely manner.  These tasks often include updating bank and other financial accounts, gathering and organizing financial statements, making numerous phone calls to insurance companies and IRA custodians, cleaning out the house and readying it for sale, and working with professionals like attorneys and accountants, to name a few.  If the person you are considering naming as a fiduciary does not do a good job managing her personal matters, chances are she is not going to do a good job performing these tasks for you or your estate.
 

3. Treating children differently.  If you have more than one child, consider carefully the possible consequences of treating them differently in your estate plan. By that I mean leaving one child a greater portion of your assets and estate than another child, or directing that one child’s inheritance be distributed outright to her while another child’s share remains in trust to be managed for him.  There are certainly compelling reasons to treat children differently in your estate, such as when you have a child who receives needs-based governmental benefits, a child who struggles with drug dependency, or a child with disabilities that impair her ability to manage assets.   However, if there is not a compelling reason for treating a child differently than his siblings, doing so is likely to leave the child who is singled out feeling angry and resentful, and that anger is often directed at his siblings since mom and dad are no longer around.  In my practice I have seen this result in a total breakdown of sibling relationships which extended into the next generation.
 

4. Not being clear about your wishes for your tangible personal property. If you’re a fan of the TV series Fargo, then you will recall how distribution of a parent’s tangible personal property in a manner that feels ‘unfair’ can create trouble (Season 3).  Tangible personal property consists of items such as a car, jewelry, artwork, tools, collections/collectibles, etc.  In Fargo, one brother received a valuable stamp collection and the other a Corvette.  Sadly, many people don’t need a television show to experience the impact of family discord over the distribution of tangible personal property because they have experienced it in their own families.  If you have valuable artwork, items that have sentimental value to your children, jewelry, or other possessions that could be a source of controversy, designating the recipients of those items rather than leaving it up to your children to ‘figure it out’ will go a long way in ensuring family harmony.
 

5. Conveying conflicting messages to family.   Whether or not to share the details of your estate plan or legacy planning with family members is a personal decision.  For some families, a family meeting to inform everyone of decisions regarding who will serve as Personal Representative of the Will and the distribution provisions of the estate plan is the norm.  For other families, no information is shared.  I see problems arise when a parent shares information, such as who is named as Personal Representative or to whom certain assets will pass, and later changes those decisions without telling family members about the changes.  In my experience, it is a good idea to inform the people you are naming as your fiduciaries (Personal Representative, Attorney-in-fact, Trustee, etc.) in case they are not willing or able to serve – better to find out sooner rather than later.   In addition, your named fiduciaries should be provided with some basic information that will enable them to help in the event you become incapacitated or when you pass away.   This should include contact information for your professional advisors (accountant, estate planning attorney, financial advisor) and the location of your important documents.  While you need not provide your family with information about the value of your estate, maintaining a comprehensive list of your bank and investment accounts, insurance policies, retirement accounts, annuities (including copies of the contract), etc. and informing your fiduciary of the location of that information will go a long way toward the smooth settlement of your affairs. 
 

If you want to leave a legacy of love and fond feelings, take care to consider how your estate planning, or lack of estate planning, may impact those you leave behind.  If we our estate planning attorneys can help you with that legacy planning, please contact us – we’ll help you leave a legacy that will live on in the hearts and minds of your loved ones in a good way. 

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 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.

December, 2020

© 2020 Samuel, Sayward & Baler LLC

Thirteen Estate Planning Terms You Need to Know

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We recently celebrated National Estate Planning Awareness Week during the week of October 19-25, 2020.  Although it is nice to have an entire week each year devoted to raising awareness of the importance of estate planning, I would argue that 2020 has been National Estate Planning Awareness Year, as the COVID-19 pandemic has brought the importance of estate planning to the forefront of everyone’s mind.  Here at SSB we have had a busy year making sure our clients’ plans are up-to-date, and helping new clients put a plan in place so that they, too, can have the peace of mind an estate plan brings in these uncertain times.

As Estate Planning Attorneys, we know Estate planning is incredibly important and not just for the wealthy.  Estate planning is something every adult should do. Estate planning can help you accomplish any number of goals, including appointing guardians for minor children, choosing a health care agent to make decisions for you should you become ill, appointing an agent to handle your financial and legal matters if you become incapacitated, minimizing taxes so you can pass more wealth on to your family members, and stating how and to whom you would like to receive your assets when you pass away. 

While it should be at the top of everyone’s to-do list, estate planning can often feel overwhelming, and estate plan documents can sometimes seem to be written in their own language.  Here are some important estate planning terms you should know as you think about your own estate plan. 

Assets

Generally, anything a person owns, including a home and other real estate, bank accounts, life insurance, investments, retirement accounts (IRAs, 401ks), annuities, furniture, jewelry, art, clothing, and collectibles.

Beneficiary

A person or entity (such as a charity) that is designated to receive assets from an estate, trust, account, or insurance policy. 

Distribution

A payment in cash or assets to a beneficiary who is entitled to receive it.

Estate

All assets and debts left by an individual at death.

Fiduciary

A person with a legal obligation (duty) to act primarily for another person’s benefit, e.g., a trustee or agent under a power of attorney. “Fiduciary” implies great confidence and trust, and a high degree of good faith. 

Funding

The process of transferring (re-titling) assets to a living trust (a trust created during the creator’s lifetime). A living trust will only avoid probate at the trust creator’s death with assets that are funded into the trust during the trust creator’s lifetime, or that will be automatically payable to the trust (i.e. by beneficiary designation) at the trust creator’s death.

Incapacitated/Incompetent

Unable to manage one’s own affairs, either temporarily or permanently; often involves a lack of mental capacity.

Inheritance

The assets received from someone who has died.

Guardianship / Conservatorship

The court-supervised process of appointing a guardian / conservator to make decisions on behalf of an incapacitated or incompetent person, including health care and financial decisions. 

Marital deduction

A deduction that may be taken on the federal and Massachusetts estate tax returns, it lets the first spouse to die leave an unlimited amount of assets to the surviving spouse free of estate taxes. However, if no other tax planning is used and the surviving spouse’s estate is more than the amount of the federal and/or state estate tax exemption in effect at the time of the surviving spouse’s death, estate taxes will be due at that time.

Settle an estate

The process of winding down the affairs of a deceased person, and includes identifying and valuing of assets, paying debts and taxes, and distributing assets to beneficiaries.

Trust

A fiduciary relationship in which one party, known as the trust creator, settlor or grantor, gives another party, known as the trustee, the responsibility to hold property or assets for the benefit of another party, the beneficiary. The trust should be memorialized by a written trust agreement which specifies the trustee’s duties and powers, the trustee’s obligation to the beneficiary, and the beneficiary’s rights to income or principal from the trust.

Will

A written document with instructions for disposing of probate assets after death. A Will can only be enforced through a probate court. A Will may also include the nomination of guardian for minor children.

If you have any additional questions about estate planning, or would like to consult with an experienced estate planning attorney about your own estate plan, please contact our office. We will be happy to assist you in creating a comprehensive plan that is tailored to your unique needs and goals, so that next year when National Estate Planning Week rolls around, you will have something to celebrate!

November, 2020

© 2020 Samuel, Sayward & Baler LLC

Five Things to Know about Unclaimed Property, You and Your Estate

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“Visit findmassmoney.com and get your money today!” You have probably heard the announcement on the radio and thought it was a gimmick or too good to be true. In fact, the Commonwealth of Massachusetts does hold property, such as bank accounts, stock dividends, uncashed paychecks, and insurance refunds, that appear to have been abandoned because no action has been taken with the property for a period of time (3 years for most properties). This so-called “unclaimed property” can range from a few dollars to tens of thousands of dollars or more. An individual, the Personal Representative (Executor) of a deceased person’s estate, and sometimes the heir of a deceased family member can file a claim to receive the unclaimed property. Here are a few things to consider and know about unclaimed property in connection with you and your estate:

Regularly check to see if you have any unclaimed property

It’s easy to visit the unclaimed property website of the Commonwealth of Massachusetts. If you have lived in states other than Massachusetts, visit that state’s equivalent or this website which searches the databases of multiple states and directs you to the appropriate state link to file a claim.

Make it a good estate planning habit to check for unclaimed property annually, such as when you file your taxes each year.

Complete the claim online

The Massachusetts Unclaimed Property Division website requests your name (and your town of residence), then locates all unclaimed property that matches the information you provided (as does the multi-state database). You simply select the claim that applies to you, provide additional information and submit the claim electronically. The Unclaimed Property Division will then mail you documentation to complete and return, then mail a check representing the amount of unclaimed property owed to you. The representatives at the Massachusetts Unclaimed Property Division with whom I have interacted were extremely helpful in answering questions and addressing concerns, so do not hesitate to be in touch with them.

The Personal Representative of your estate will file a claim to receive your unclaimed property after your death

If you do not file a claim to receive any unclaimed property while you are alive, the Personal Representative of your estate will be responsible for doing so. The Personal Representative has a fiduciary obligation to consolidate all assets associated with your estate after your death, including unclaimed property. Typically, it is more complicated for the Personal Representative to receive the unclaimed property because he or she must provide additional documentation, including a death certificate and proof of his or her authority over your estate as Personal Representative via Letters of Authority issued by the Probate Court.

Something to keep in mind is that if significant unclaimed property is discovered several years later, obtaining it for the estate may be further complicated if the original Personal Representative is deceased, or one or more of the beneficiaries of the estate are deceased.

Your surviving heirs may file a claim to receive your unclaimed property after your death instead

If there was no need to appoint a Personal Representative of your estate at the time of your death, and if the unclaimed property amount is less than $1,000, and if the beneficiaries of your estate are undisputed, it is possible to avoid the rigmarole of a probate court proceeding to obtain the unclaimed property. For example, if you have a surviving spouse or a sole surviving child, the so-called “Affidavit of Heirs” form may be completed by the beneficiary instead. The Affidavit of Heirs is unique to the Unclaimed Property Division and provided by the Division representative. It requires the heirs (beneficiaries) of the estate to be identified and to swear the information on the form is true and correct, and the heir is entitled to the unclaimed property.

Deposit your unclaimed property funds upon receipt; beware of taxes!

You should deposit the unclaimed property check upon receipt. If the Personal Representative of the estate receives the check, he or she should deposit it in the estate bank account along with any other estate assets. After the expenses of the estate are satisfied, the Personal Representative will divide and distribute the remaining funds among the estate’s beneficiaries. Keep in mind that income taxes may be payable for the year the unclaimed property is received depending on the type of property claimed. A knowledgeable accountant should be contacted to provide advice on this matter.

It’s good Estate Planning practice to remember to check for unclaimed property in your name annually, so you can save your heirs or the Personal Representative of your estate the trouble of claiming that property after your death. At Samuel, Sayward & Baler LLC, our estate planning attorneys and probate attorneys regularly guide and assist our clients who are serving as Personal Representatives of estates to receive and properly deposit unclaimed property. If you live in Massachusetts and find yourself needing assistance in claiming the unclaimed property of a deceased person, we would be happy to help you.

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. 

November, 2020

© 2020 Samuel, Sayward & Baler LLC

To Gift or to Loan?

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If you live in Massachusetts you know that the prospect of buying your first home is a daunting one given the high cost of real estate.  Parents often want to help their children with their first home purchase by making a gift or a loan to the child to use toward the down payment.  For parents (or grandparents) who are in a financial position to do this, it is important that everyone involved understand whether the funds are gift or a loan and the consequences of each. This is also an important Estate Planning question. Read on for factors to think through when providing funds to a child.

If it’s a gift,

  • A gift to a person (as opposed to a gift to a charity) is not tax deductible by the person who makes the gift.
  • A gift is not income and should not be reported on the recipient’s income tax return. 
  • For most people, there is no reason to be concerned about gift tax even if the amount of the gift exceeds the annual gift tax exclusion amount of $15,000 (2020) per person per year.  
  • Even though it is unlikely that there will be any gift tax payable (under current law you would need to gift more than $11.6 million over your lifetime before there would be any gift tax payable) you may be required to file a gift tax return (form 709) reporting the gift. 
  • You are not entitled to repayment (this may seem as though it goes without saying, but that is not always the case in my experience).  
  • Making a gift could help your child qualify for a mortgage and you may need to provide a gift letter. 
  • Making a gift may be advantageous to you from an estate tax perspective as the gifted assets will reduce the value of your estate for estate tax purposes.
  • If you have more than one child, consider whether you want to make any changes to your estate plan to ‘even up’ the distribution of your estate among your children to account for the gift to one child.

If it’s a loan, 

  • It is important to document the loan with a Promissory Note. 
  • Even if you do not choose to charge interest on the loan, the IRS may think differently and may ‘impute’ taxable interest income to you.  Consult with your accountant to make sure you understand the income tax consequences of the loan.
  • Interest charged on the loan and paid to you as the lender is taxable income to you in the year received.
  • Consider whether the loan should be secured by a mortgage.  Even if you are not concerned about repayment, doing so may protect your investment in the event your child gets divorced, is sued, files for bankruptcy, etc. 
  • Consider what you will do if the loan is not repaid as expected. 
  • The outstanding balance on the loan will be an asset of your estate and you may want to specify that the Promissory Note should be allocated to the debtor child’s share of your estate. 

Seeing a child settled in their first home is a good feeling for parents and helping a child get there is a goal for many parents.  However, before you hand over that big check, decide whether you’re making a gift or a loan and make sure your child knows as well.   

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 2020

© 2020 Samuel, Sayward & Baler LLC

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

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