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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.

The estate planning firm of Samuel, Sayward & Baler LLC, in Dedham 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

© 2019 Samuel, Sayward & Baler LLC

Why we ask for your Financial Information in Advance of your Estate Planning Meeting

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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

Estate Planning When Your Beneficiary Has Special Needs: Five Things to Consider

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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.

Samuel, Sayward & Baler LLC, is 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

Ask SSB

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Q:        My neighbor put her house in a trust. Should I put my house in a trust?

A:        Whether or not your house should be held in a trust depends on your unique circumstances and goals. Owning your home in a living trust means that it will avoid probate at your death. Certain types of trusts can also be used preserve your home for your family in the event you need long-term care.  That type of trust is an irrevocable trust. Although an irrevocable trust can provide asset protection, it also means that you give up unfettered access and control over your home. For some people, the adverse consequences of putting their home into an irrevocable trust outweigh the benefits.

Whether transferring your home into a revocable or irrevocable trust is right for you can only be determined after you review the advantages and disadvantages of such a transfer with your attorney in light of your particular circumstances and goals.

Keep Your Eye on the SECURE Act

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The SECURE (Setting Every Community Up for Retirement Enhancement) Act is a bill currently making its way through Congress. If the Act is signed into law, it will change the rules that govern Required Minimum Distributions (RMDs) made from retirement accounts after the account owner’s death.

The House of Representatives recently passed the SECURE Act with a near-unanimous bipartisan vote. The Trump administration has not taken a position on the bill.  However, if the Act passes in the Senate, lobbyists who support it say they expect the president to sign it into law.  Passage of the Act is currently being blocked in the Senate by Senator Ted Cruz who wants to add a provision to the bill allowing 529 college savings accounts to be used toward expenses for homeschooling.

Currently, non-spouse beneficiaries of inherited retirement accounts can stretch RMDs over their lifetimes.  These distributions from inherited retirement accounts are taxable, so the longer that beneficiaries can postpone or defer them, the better.

If the SECURE Act is signed into law, non-spouse beneficiaries of retirement plans will have to withdraw the balance of the retirement account within 10 years of your death. The proportion of the retirement account distributed to the beneficiary each year within this period can vary.  Exceptions have been proposed for minor and disabled children. However, once a minor child who inherits a retirement account attains the age of majority, the child would have to withdraw the balance of the account within 10 years.  The Act would also impact trusts that are named as beneficiaries of retirement accounts after the owner’s death and affect distribution of retirement assets.  If enacted, these new rules will begin applying to inherited IRAs in 2020 and non-IRA retirement plans in 2022.

Some strategies to keep in mind and learn more about if the act is passed are conversions of traditional IRAs to Roth IRAs, using retirement plans for charitable giving by way of qualified charitable contributions made directly from retirement plans and charitable remainder trusts funded with retirement plans and replacing the lost value of tax deferral with life insurance.

Stay tuned for more information about the SECURE Act and its impact as well as planning strategies that may mitigate the impact of this legislation if and when the Act is passed.

Three Tax Advantaged Ways to Use Required Minimum Distributions (RMDs)

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For those taxpayers 70½ and older and retired, the IRS requires annual withdrawals from retirement accounts. Some fortunate taxpayers don’t need to use their entire required withdrawal amount for living expenses and wonder whether there are tax advantaged ways to put this “extra” money to use. Here are three tax advantaged ways some taxpayers can use RMD amounts.

Use RMDs to Pay Estimated Income Taxes

The IRS and most states consider income taxes due when income is received. For taxpayers who are employed, taxes are usually withheld from each paycheck and sent to the IRS. Other income, such as interest, dividends, capital gains, pensions and social security may be taxable and income tax withholding is not required. Taxes are still due, so, instead, taxpayers are required to make quarterly estimated tax payments.

Quarterly estimated tax payments are due in April, June, September and by January 15 (for the prior calendar year). Payment is considered made when payment is sent to the IRS. Making estimated payments on time can present challenges because of the extra calculations, paperwork, cash flow or just simply remembering to make payments on time. Late payments of estimated taxes may result in tax penalties.

For taxpayers who don’t need all of their RMD amount for living expenses, using some of the RMD to pay estimated taxes has a tax advantage. When RMD money is used to pay estimated taxes, the IRS has a special rule favorable to taxpayers. Instead of considering the payment made when the money is sent to the IRS, the payment may be made at the end of the year but is treated by the IRS as being paid evenly during the year at the required times. Why does the IRS allow this favorable tax treatment? Perhaps to encourage investors whose cash flow and spending doesn’t always perfectly match the quarterly payment dates.

Use RMDs for Gifts to Charities

RMDs are taxable income and the amount can shift a taxpayer into a higher tax bracket. For taxpayers subject to RMDs, the IRS permits any part of the RMD to be satisfied without increasing taxable income if the amount is sent directly from the IRA to an IRS recognized charity. The RMD cannot exceed $100,000 for this purpose and must come from an IRA not a 401(k) or other retirement account.

Use RMDs to Pay Long Term Care Costs

Paying for long term care costs creates enormous challenges. For families able to pay for care at home or in assisted living residences, one of the challenges is deciding which accounts to use first. Using RMDs can provide important tax advantages that make family money last longer. Long term care costs are income tax deductible for taxpayers who itemize, if the costs:

  1. cover care for a person who is chronically ill, meaning the person cannot perform at least two activities of daily life without help (i.e., eating, bathing, dressing, toileting, continence, and transferring from bed or chair to daily activities);
  2. are medically necessary for services from a diagnosis, rehabilitation, therapy, cure, treatment, maintenance or personal care, often evidenced by a treatment plan prescribed by a physician;
  3. include residence and meals at an assisted living facility if part of a medically necessary treatment plan;
  4. are more than 10% of the taxpayer’s adjusted gross income (Congress is considering reducing the current 10% threshold to 7.5% as it has been in the past); or,
  5. are for long term care insurance premium but with age based limits (for 2019, over age 71 is $5,270; 61-70 is $4,200 and 51-60 is $1,580 per year), with self-employed taxpayers being able to deduct more, without itemizing.

As always, consult trusted tax and financial professionals before making important tax and financial decisions.

Samuel Financial LLC is located at 858 Washington St. Dedham, MA 02026 and can be reached at (781) 461-6886.  Securities and advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment adviser. www.samuelfinancial.com.

Fixed insurance products and services offered through CES Insurance Agency or The Hanson Group.

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