Blog

Ask SSB

by

Q:        My daughter told me that she can get a Will form off the internet that I can fill out and that way I will avoid an expensive legal fee.  If I have a pretty simple situation is there any reason why I shouldn’t do this?

A:        Yes!  There are many reasons why you should not use a Will form from off the internet, just like there are many reasons why you should not do your own dental work!  Here are just a few:

  • Most situations are not simple.   Many clients who come to see me tell me at the outset that their situation is simple, but as we talk, it often turns out that things are not quite so simple. Common circumstances which merit more than a simple Will include
    • a child or grandchild with special needs
    • a child who is in a shaky marriage or has money troubles
    • a desire to protect assets from long term care costs
    • a second marriage, especially where there are children
    • having a taxable estate
    • ownership of a family business, commercial real estate or a beloved vacation home
  • Language is important.  The wording in your Will determines how your estate will be distributed.  If your Will says, ‘I leave everything to my children in equal shares’ what happens if a child predeceases you?  Will his share go to his children or will it be distributed among your other children?  What do you want to have happen?  Engaging an estate planning attorney to prepare your Will means that your intentions will be carried out, and that there will be no ambiguity that could lead to family disputes or unnecessary court involvement after your death.
  • Most people need more than just a Will.  While having a Will is important, creating documents to address the possibility that you may experience a period of incapacity in your life is just as important.  These documents include a durable Power of Attorney, a Health Care Proxy, HIPAA Authorization and a Living Will.

In many ways your Will is your legacy to your family; it is the last thing you say to your loved ones.  A well-planned estate, including a Will prepared by an experienced estate planning attorney for your unique situation, tells your family that you care enough about them to ensure that your intentions are carried out effectively and in the most cost-effective manner possible.

Call us – we can help you ensure that your wishes are carried out.

Two Recent Cases in Massachusetts Highlight the Perils of Failing to Plan when it comes to Estate Planning. 

by

There’s a popular saying attributed to Benjamin Franklin that goes, “Failing to plan is planning to fail”.  The truth of this adage is well illustrated by two recent Massachusetts cases that highlight some of the unfortunate consequences of poor Estate Planning. In the first case, a man (Raymond) who married for the second time late in life failed to properly take the trust and estate planning steps to ensure that his wishes for the disposition of his property between his second wife (Susan) and his four children from a prior marriage were achieved.  The result of Raymond’s failure to plan was contentious (and no doubt expensive) ligation between Susan and the four children after his death.  The issue in the case of  Ciani v. McGrath arose out of a Massachusetts law that effectively prevents someone from disinheriting his or her spouse if that spouse does not want to be disinherited.  Because Raymond failed to properly plan, this law gave Susan the ability to force a sale of Raymond’s real estate when he passed away and to take one-third of the sale proceeds for herself.  It did not matter that Raymond had owned the property for many years before his marriage to Susan (he bought it with his first, late wife) or that Susan and Raymond had only been married for two years when Raymond passed away. This result could have been avoided if Raymond and Susan had entered into a prenuptial agreement before their marriage in which they had agreed upon the disposition of their assets at death.  Even without a prenuptial agreement, Raymond could have avoided this result by, for example, leaving assets in trust for Susan during her lifetime.  A properly planned Trust can avoid these type of issues. The Trust could have provided that upon Susan’s death, the Trust assets would be distributed to Raymond’s children.  Instead, Raymond’s intentions for the distribution of his estate were not carried out (if you assume his Will represented his wishes) and his family was left with an acrimonious lawsuit.  One-third of the property that Raymond intended pass to his children will instead be distributed to Susan, and to her beneficiaries at her death. The second situation is even sadder.  When Richlene married Noel Aimes she already had a daughter, Marcelle.  In 1980, Richlene and Noel bought a house together in Somerville for $23,000 where they lived with Marcelle and other of Richlene’s family members until Richlene, then Noel died. Noel never had children of his own.  When Richlene died, Noel became the sole owner of the home since they took title to the property as husband and wife, tenants by the entirety.  When Noel died two years later without a Will, the Somerville property, now worth $1 million, passed to his heirs-at-law as determined under the Massachusetts intestate statute which does not recognize step-children as heirs. As such, Marcelle, who has lived in the property for almost 30 years, has no legal right to ownership or occupancy. Instead title to the house passes to Noel’s nieces and nephews with whom he apparently had no relationship.  Had Noel made a Will or added Marcelle’s name to the title of the property, the property would have passed in accordance with what everyone believes would have been Noels’ wishes – to Marcelle. Here’s another pearl of wisdom from our pal Ben, “Well done is better than well said.”   Plan now to speak with an attorney for wills and trusts to make sure your family isn’t sorry later.

Five Things to Know About Life Insurance When Considering Estate Planning

by

Life insurance companies are giving away free Apple Watches to people who share fitness data with them and meet their fitness goals.  New York state is allowing life insurance companies to scroll through your pictures on Instagram to determine your premiums.  The digital age has makes it possible to decrease premiums by installing fitness apps and posting pictures of yourself running. When thinking about life insurance as your family grows or your term life insurance expires, you will want to keep the following five things in mind as you consider the implications of life insurance on your estate plan.

1. What is life insurance? Life insurance provides a payout after your death (called a death benefit) to the people you designate as beneficiaries. It is an important safety net if anyone depends on you financially. Life insurance benefits can pay debts such as mortgages, replace your income and provide funds to pay college tuition. Life insurance can provide for dependents such as children or a younger spouse.  It can help a business owner buy out the interest of a deceased business partner.

2. Is group life insurance enough? Free life insurance at work is a great benefit. You sign up, and your employer pays.  More Americans are covered by work-based life insurance than by policies they purchase outside work. Most people rarely revisit their life insurance needs. Free coverage is typically one to two times your annual salary. However, you may want to replace more than two years of income upon your death.  Our firm does not advise clients as to the amount of insurance to obtain, but we work with financial advisors to make sure that ownership and beneficiary designations for insurance policies are in line with your estate plan.  If you have questions about your life insurance, speak with a financial advisor as to whether work coverage is sufficient depending on your goals to align with your estate planning needs.

3. Are your life insurance policies taxable? This is an important question to ask when preparing an estate plan. Beneficiaries do not have to pay income tax on death benefits they receive. However, proceeds of insurance policies are subject to estate tax upon your death if you control the policy – that is, if you can cancel, surrender, or assign the policy or change the policy’s beneficiary.  When life insurance proceeds are payable to your spouse, a marital deduction will apply.  However, if the proceeds are payable to children or others, an estate tax may be due.  As an example, if my sister designates me as beneficiary of a policy with a $50,000 death benefit, I will not pay income tax on the proceeds, but the $50,000 proceeds will be included in my sister’s estate for purposes of calculating the estate tax payable by her estate at her death. It is important to consider.

4. What can you do to avoid estate tax on life insurance? Life insurance proceeds can escape estate tax if you transfer the policy to an irrevocable life insurance trust.  Once the trust owns the policy, you cannot get it back or make changes to the provisions of the trust that will specify how the death benefit will be distributed at your death.  Also, you cannot be the Trustee of an Irrevocable Trust that owns a policy insuring your life. If you transfer an irrevocable policy to a trust but die within three years of the transfer, you lose the estate tax break, but if you create an irrevocable trust and the trust buys a new policy, the three-year rule does not apply.

5. What is the catch? The irrevocable trust as the policy owner must pay premiums. You cannot pay premiums directly but may make gifts to the trust.  The Trustee must give the beneficiaries notice of their right to withdraw amounts contributed to the trust so they qualify as present gifts.  These notices, called Crummey notices, are named after a court case that fleshed out these requirements and allow the contributions to qualify for the annual gift tax exclusion, relieving you of the need to file gift tax returns.

If you have purchased a life insurance policy or are contemplating purchasing a policy and would like to structure ownership to decrease the estate tax owed at your death, contact an estate planning attorney with experience in drafting and administering irrevocable life insurance trusts.

Samuel, Sayward & Baler LLC, a law firm that is based in Dedham.  The firm focuses on advising clients in the areas of estate planning, administration of estates and trusts 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.

April 2019

© 2019 Samuel, Sayward & Baler LLC

Digital Estate Planning – It’s Time to Plan for your Digital Assets

by

In the year and a half since I last wrote about planning for digital assets not much has changed in Massachusetts.  Our state is still one of a handful of states that has not enacted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), although there is a bill pending in the Massachusetts legislature that would do so.  This bill would clarify the authority your appointed fiduciaries (such as your agent under your Power of Attorney, or the Personal Representative of your estate) would have to access your digital assets if you become incapacitated or pass away.

What has changed in the past year and a half is that we all continue to be more dependent upon technology, and our digital footprint increases with each passing day.  We continue to use social media, online photo and document storage, and email on a daily basis, increasing the digital “assets” we have stored in these accounts.  The importance of the assets stored online has also increased – perhaps this is the only place you now store vacation photos (rather than putting them in your photo album), or perhaps you only receive your bank or investment account statements online rather than in the mail. This online footprint will only continue to grow, as will the need for your estate plan to address your digital assets.

The more digital assets become mainstream, the more important it is to plan for access to these assets by others if you are not able to do so. To the extent these accounts contain information that you would like someone to be able to access after your death or incapacity, it is necessary to provide the appropriate authority for such access as well as instructions about what you want done with these “assets.”  For some types of these assets, digital estate planning strategies are is crucial to prevent financial loss (i.e. the loss of a domain name used for business purposes, bill payment, access to investment account information), to protect sensitive personal information (on-line dating websites), to avoid identity theft, and to allow access to valuable assets (think bitcoin or an author’s manuscript).

Here are some tips to manage your digital assets until Massachusetts law catches up with the rest of the country and we have a clear roadmap for access for Massachusetts fiduciaries:

  • Review the terms of service agreements for the online accounts you use. Understand what those agreements provide about access, and if and how others can be given permission to access your account. Have a qualified estate planning attorney review these on your behalf if you have questions.
  • If an online entity offers a way for you to give permission or access to your digital assets stored with that company, pay attention and follow the directions. For example, Facebook allows you to designate a Legacy Contact who can manage your account after you die, or you can choose to have your account deleted if you pass away. Google allows you to control what happens to your account through their Inactive Account Manager feature. Here you can designate when your account will be considered inactive, what should happen to your Google account in that event, and designate one or more people who will have access to whatever portions of your Google account you choose.
  • Update your estate plan documents, specifically your Power of Attorney, Will and Trust, to ensure those documents grant express permission for the fiduciaries named in those documents to access your digital assets, and express direction regarding what should be done with specific digital assets at death. In our office, we include express permission for access in these documents.
  • Keep a current list of your usernames and passwords in an online password manager or recorded in another way where a trusted person can access this information if needed, and let that person know where this information is located. As a start, we provide our clients with a Digital Assets Memorandum that can be used to record access information and instructions about digital assets.

Keep in mind that if you have not used an online entity’s prescribed method of giving someone permission to access your account, and do not have express permission and direction in your estate plan documents, the company’s Terms of Service Agreement will govern. In such a case, you and your digital assets are at the mercy of the online provider, which may not allow access following your death or incapacity. Don’t fail your loved ones with poor digital legacy planning.

March 2019

© 2019 Samuel, Sayward & Baler LLC

5 Considerations If You Plan to Move to A Continuing Care Retirement Community

by

You may be asking yourself “What is a Continuing Care Retirement Community?” A Continuing Care Retirement Community (CCRC) is a community that consists of graduated levels of residential and health care options to accommodate elders who are looking to downsize but remain independent and ensure that their health care needs are met as they “age in place” in a familiar setting. Generally, a couple or single person’s financial and health eligibility are rigorously reviewed by the CCRC and a signed agreement outlining the terms of residency, services, fees, transfers between types of residency units, and other matters (Agreement), along with a large Entrance Fee deposit (similar to a security deposit from renters), are required to join a CCRC. Here are five things to consider if you are contemplating moving to a CCRC.

  1. How are CCRCs Regulated?

There are currently about 30 CCRCs throughout the Commonwealth of Massachusetts. Under Massachusetts’ consumer protection law (G.L.c. 93, §76), CCRCs are required to disclose specific information regarding the terms of residency and services prior to or at the time the Agreement is signed or a deposit is paid, and to provide the same to the Executive Office of Elder Affairs (EOEA), which had made several CCRCs’  Agreements and other information available here. If a CCRC knowingly and willfully fails to disclose this information, the resident may recover damages, costs and attorneys’ fees, and in certain cases, a refund of the Entrance Fee, sometimes less certain costs outlined in the Agreement. However, in Massachusetts there is no state agency that has authority to oversee and enforce the CCRCs’ adherence to the statute.

  1. I Meet the CCRC’s Financial Requirements – Does It Meet Mine?

Typically, a large Entrance Fee deposit is required to buy in to a CCRC, and each CCRC treats the manner by which the Entrance Fee may be utilized during your lifetime and the process by which it is refunded differently.  For instance, some Agreements state that the Entrance Fee may be used by the CCRC to pay your monthly expenses if your other methods of payment have been exhausted. Other Agreements state that you, or your family if you are deceased, will not receive a refund until a new resident buys in to the CCRC, unless you are willing to receive a greatly reduced refund. Yet other Agreements may link the Entrance Fee refund to your period of residency, which means the refund may be significantly less than the deposit you paid if you reside there for several years. Carefully consider the Entrance Fee refund provisions and decide if they are acceptable to you and your family when reviewing an Agreement.

Also pay attention to the financial strength of the company that supports the CCRC, especially if the Agreement makes it clear that your receipt of a refund is dependent upon the buy in of a future resident.  If the company declares bankruptcy, you may lose your entire refund.   The Commission on Accreditation of Rehabilitation Facilities (CARF) is a nonprofit accreditor of health and human services providers and provides a Guide to Understanding Financial Performance and Reporting in CCRCs on its website.

Another matter to consider is what happens if you no longer have adequate funds to pay your monthly expenses, especially if you are in the skilled nursing facility section of the CCRC. Carefully review the Agreement to determine if there are terms that explain the procedure by the CCRC to collaborate with you to pay your expenses, including applying for Medicaid benefits.  Most CCRCs do not accept Medicaid.

  1. What Are the Monthly (and Other) Fees I Will Pay?

The CCRC should provide you with a detailed written description of the services included with the monthly fee you will be paying them as well as a list of fees for additional services.  For example, is transportation to local grocery stores, laundry services or light cleaning of your unit included in the monthly fee or are these additional fees? It’s a good idea to calculate the fees for the additional services you anticipate utilizing along with the monthly fees you will be paying.  Be aware that these fees generally increase annually.

  1. What Happens If My Health Declines?

The major appeal of CCRCs is that you can remain within a familiar community that provides more residential and health care support if and when your health declines. Many Agreements include provisions that broadly describe the process, factors and decision-makers that influence when you may be temporarily or permanently transferred from an independent living unit to an assisted living unit or a skilled nursing facility unit or to another facility outside of the community if warranted. Some Agreements permit residents or their legal representatives to weigh in and appeal the decision to permanently transfer the resident to another unit while others do not. A move to assisted living or skilled nursing can significantly increase your monthly expenses.  Additionally, the decision to permanently move you to a potentially more expensive unit may be out of your hands.  Carefully consider the factors and individuals involved in deciding if you require transfer to another unit, and note whether the Agreement clearly explains the fees if your healthy spouse remains in your independent living unit.

  1. What Else Is Important to Me?

Arbitration: Another part of a CCRC Agreement to consider is the arbitration/dispute resolution provision. Some Agreements state that any disagreement you have with the CCRC may only be resolved with arbitration and/or dispute resolution and not via the court.  This will limit your ability to pursue an outcome that may be more beneficial to you. Consider carefully if it is important to you to have all legal options available to you in the event the CCRC violates its Agreement with you.

Resident Rights: Beyond any rights described in the Agreement, residents may establish a residents’ association, submit comments to the CCRC regarding resident health and welfare, and request information about construction and the financial reserves of the CCRC under Massachusetts law. Think carefully about whether you will be comfortable with a limited ability to effect change within your community as a resident. Also keep in mind that you will be sharing common space with people that have different lifestyles from you; for instance, would you be bothered if your neighbor smokes cigarettes or has a noisy pet?

Activities: Review the activities, events and meal schedules of the CCRC and consider whether they appeal to you and fit your lifestyle.

For more information, an extensive consumer guide to questions and other topics for consideration regarding Massachusetts CCRCs can be found at the EOEA’s website.

If you are considering making a Massachusetts CCRC your future home and wish to better understand the terms and legal ramifications of the Agreement for you and your loved ones, contact an experienced elder law attorney to thoroughly review and discuss the Agreement with 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. 

February, 2019

© 2019 Samuel, Sayward & Baler LLC

Tax Time is Estate Planning Check-up Time

by

In February, you’ll get tax forms – use them as an estate planning checklist for reviewing beneficiary designations.

By February 15, financial institutions will have sent you all the forms needed for your tax returns.  This nifty pile can help you review your beneficiary designations to make sure they are up-to-date. Beneficiary designations determine how retirement plans and life insurance proceeds will be distributed at death. Brokerage and bank accounts may also have beneficiary designations. Out of date designations may mean that assets go to the wrong people, and that’s just bad estate planning. You designated beneficiaries when you enrolled in your retirement plan. You may have filled out POD (payable on death) or TOD (transfer on death) forms when you opened investment or bank accounts.  Things to keep in mind in reviewing beneficiary designations are:

Your Designations May Be Wrong.  Life brings change, so it is wise to review your beneficiary designations and change them as needed.  Rules for retirement plans and remarriage are complex, and when the companies managing your assets merge, beneficiary designations may not transfer.  Review your designations when your marital status changes and when the institutions in charge of your assets change. Name contingent beneficiaries to receive assets in case primary beneficiaries do not survive.  Otherwise, these assets will need to be probated.

When providing for children or grandchildren, be thoughtful about the type of assets to leave them and the manner in which the assets will be distributed.  Do not name a minor as beneficiary.  Also, be cautious about naming a young adult as a beneficiary. Instead, create a trust for their benefit and name the trust as beneficiary.  Then, you can control when the child or grandchild can access funds. Contact a lawyer for wills and trust to discuss the right strategy for your children.

If a loved one has become disabled, you will want to change your designations to assure that you do not jeopardize that person’s eligibility for Social Security Supplemental Security Income (SSI). SSI provides income and Medicaid insurance to disabled people with less than $2,000 ($3,000 for a couple) in “countable resources.”  Inherited assets will be “countable resources” and jeopardize eligibility for benefits.  Instead, create a Special Needs Trust for the benefit of your disabled loved one and designate the trust as the beneficiary.

Your Designations Can Save Taxes. Retirement assets paid to an estate must be paid out within 5 years of death rather than over a named beneficiary’s lifetime. Name beneficiaries to save taxes! Life Insurance owned by a Life Insurance Trust can remove that asset from your taxable estate.  Finally, you can rollover or distribute your required minimum distribution to a charity and save income tax during life.

Your Estate Plan Needs Annual Exams.  Even if life has not handed you major change, review your beneficiary designations and make sure your loved ones know where to find important estate planning documents. Keep copies of your 1099 tax forms and use the contact information on the forms to call your financial institutions and check your designations.  Remember where you put your important documents and create a list for your family.

February, 2019

© 2019 Samuel, Sayward & Baler LLC

When Love Stinks – Five Ways Divorce Impacts your Estate Plan

by

The approach of Valentine’s Day and the recent announcement by Jeff Bezos, founder of Amazon, that he and his wife are ending their marriage after 25 years, set me thinking about how divorce impacts a person’s estate plan (especially in high net worth couples).  Here are five ways that divorce can impact an estate plan and actions that should be taken to address that impact on your legacy planning.

  1. Update your Beneficiary Designations. One of the first things people think about when they split up with their spouse is that they need to change their Will to remove their soon-to-be ex-spouse as a beneficiary of their Will.  What is sometimes overlooked is updating beneficiary designations on assets such as retirement accounts, life insurance policies and annuities.  While Massachusetts has a statute (MGL c 190B § 2-804) which provides that a divorce revokes a beneficial designation made in favor of a former spouse unless the designation was made pursuant to the divorce, the law also states that if a financial company is not properly notified of the divorce and it makes a distribution to the former spouse then the company cannot be held liable.  Keep in mind that changes to assets, including beneficiary designations, may not be permissible while a divorce is pending but should be addressed as soon as the divorce is final.
  2. Avoid Probate to Avoid Prying. Probate is a public proceeding.  One of the requirements of probate is that notice of the filing be published in a newspaper local to the town in which the decedent lived at the time of death.  The purpose of this notice is to alert anyone who wants to make a claim against the estate that they have a limited amount of time to do so.  It is also an invitation to the nosy to snoop or to the vindictive to cause trouble.  Sadly, when love goes bad vengeance can be a byproduct.  Wreaking havoc with a probate estate is not that hard.  Even if a claimant does not have a valid claim, the prospect of prolonged delay and costs can motivate the Personal Representative of the estate to offer something in settlement.  However, if there is no need to file for probate this can be avoided.  When no probate is needed there is no publication in the local newspaper and there is no matter pending in the probate court for someone to meddle with.
  3. Follow through on Deed Changes. When a married couple divorces the disposition of their jointly owned real estate is determined as part of the divorce.  Sometimes the property is sold, but often the property will be retained by one of the parties.  Although a divorce will sever a tenancy by entirety and a divorce agreement, or order of the court on file in the probate court will determine the title, it is still advisable to actually have a new deed signed conveying the property into the name of the spouse who is retaining it.  It is surprising to me how often divorced clients do not take this last step.  Good estate planning advice is that no matter how sick and tired you are of dealing with your soon to be ex-spouse, don’t walk away until the i’s are dotted and the t’s’ are crossed and that new deed putting the house in your name is signed and filed with the Registry of Deeds.
  4. Create a Trust for Minor Children. Even though your Ex is no longer your spouse, he or she is still the parent of your children.  In the event you die while you have a minor child, your former spouse is likely to have custody of the children.  In addition, your former spouse will have control over your minor child’s assets.  That means if you die without a Will, or if you have a Will leaving your estate to your children, it will be your ex-spouse who will have control and custody of your assets that pass to your children until they turn 18.  The same is true if you name minor children as the beneficiaries of your life insurance and retirement accounts – those assets will be in the control of your former spouse.   If this alarms you, speak with a Wills and Trusts lawyer, and create a Trust that leaves your assets to your children via your Trust in which you will designate someone other than your ex-spouse to manage the assets for your children.
  5. Update your Power of Attorney and Health Care Proxy. Powers of Attorney and Health Care Proxies are legal documents in which the maker of the document appoints another person to manage financial affairs and make health care decisions in the event the maker is incapacitated.  Most married couples appoint each other to these roles.  However, most people would not want an ex-spouse managing their finances or making nursing home or health care decisions for them.  Even though Massachusetts law automatically revokes those appointments upon divorce, it is prudent to retrieve all copies of those documents that your former spouse, your physician, or a financial institution may possess and to revoke the documents.  Create a new Power of Attorney and Health Care Proxy naming people who you want to assume these roles in the event it is necessary.

With apologies to the J. Geils Band, just because Love Stinks while you’re in the midst of a divorce, your estate plan doesn’t have to.  If you are recently divorced, contact an experienced estate planning attorney to create or update your estate plan so that the people you care about don’t have to suffer the effects of your divorce again should you fall ill or pass away.

Attorney Suzanne R. Sayward is a partner with the Dedham firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate settlement and elder law matters. She is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts.  This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020. 

January, 2019

© 2019 Samuel, Sayward & Baler LLC

Retirement Account Caution: Change in Firm or Provider Requires Confirmation of Beneficiaries

by

Here is something to be aware of if you have IRA, 401(k), 403(b) or other retirement account.  At Samuel, Sayward & Baler  we are careful to advise you about how to designate the beneficiaries of your retirement accounts consistent with your estate plan.  In some cases, customized beneficiary designations are required to ensure these accounts are distributed properly to achieve your planning goals.

There are two circumstances in which these beneficiary designations can be disrupted and over which you have no control:

  • If your financial advisor changes firms. Although your accounts may move with your advisor to the new firm (if you so choose), your beneficiary designations may not necessarily move along with your retirement accounts.  If your financial advisor has changed firms, be sure to confirm with your advisor that beneficiaries have been correctly designated on your new retirement accounts established at the advisor’s new firm.
  • If your employer or former employer changes its 401k or 403b provider. Beneficiary designations on employees’ or former employees’ accounts typically do not move over to the new provider, and beneficiaries must be re-designated. This is another circumstance where action is needed to ensure that beneficiary designations are correct.

If the owner of a retirement account passes away with no beneficiary designated on that account, the account is payable to the account owner’s estate. Although the funds in the account may still be distributed consistent with the owner’s estate plan (assuming the account did not have a beneficiary designation different from the rest of the owner’s estate plan), there will be no opportunity for continued tax deferral or a so-called “stretch” payout of the retirement account over the life expectancy of the beneficiary.  The account instead must be distributed in a lump sum to the owner’s estate, or at best over a 5-year period, and the income tax payable on the account must be paid all at once.  This is a very bad result from a tax planning perspective.

If one of these situations occurs, do not delay in ensuring that your beneficiary designations are in place and are consistent with our recommendations and your estate plan.  In all cases, we recommend that you request written confirmation of beneficiary designations so that you can confirm that beneficiaries are designated correctly.  If you would like us to review your designations we are happy to do so.

Ask SSB

by

Q:        It’s likely that my mom will need to go into a nursing home soon.  She does not have a lot of money but she still owns her home.  Will we need to sell her house to pay for her care?

A:        As with all long-term care matters, your question is more complicated than it seems.  The short answer is ‘no’, your mom will not be required to sell her home to pay for her nursing home care.  Medicaid, often called MassHealth in Massachusetts, is a state and federally funded program that will pay for the long-term care costs of people who are both medically and financially eligible for the program.  In order to be eligible for long-term Medicaid benefits, the applicant cannot have more than $2,000 of ‘countable assets.’   Bank accounts, investments, retirement assets such as IRAs, the cash value of life insurance, and deferred annuities are examples of countable assets.  A person’s primary residence is not a countable asset.  As such, someone who has less than $2,000 of countable assets and owns her home may be eligible for Medicaid to pay for her long-term care nursing home care.  However, that is not as good as it sounds.  For one thing, a nursing home resident who is receiving Medicaid benefits must pay all but a small portion of her monthly income to the nursing home.  As such, unless the home is rented out, or unless family members are willing and able to pay the real estate taxes, insurance, water and other utility bills, there is no money available to maintain the home.  Further, the state wants to recover the benefits paid on behalf of the Medicaid recipient and will place a lien on the property.  The house will likely need to be sold following the death of the MassHealth recipient in order to satisfy the lien.

There are many other factors that need to be considered in connection with the home and Medicaid eligibility including the marital status of the applicant, whether any gifts were made, and whether there are any exceptions to the prohibition on transfers in a family’s situation.   Because of the complexities involved in applying for Medicaid benefits to pay for long-term nursing home care, it is advisable to consult with an experienced elder law attorney as soon as you anticipate that nursing home care may be necessary. Please call us if you find yourself in this situation.

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

©2026 Samuel, Sayward & Baler LLP. All Rights Reserved. The information presented on this website should not be construed to provide legal advice, nor does it constitute the formation of an attorney/client relationship. Read the disclaimer.