By Steven Joshua Samuel JD, MBA, AIF® (January 2013)

The American Taxpayer Relief Act of 2012 was passed by Congress on January 1, 2013. The act provides a mixed bag for taxpayers, extending or modifying many of the tax provisions that were set to expire on December 31, 20121, while letting others terminate. Where do we stand now? Let’s take a closer look at some of the changes that have occurred and how you may take advantage of them.

Individual income tax rates
For taxpayers with annual income less than $400,000 (individual) and $450,000 (married filing jointly), the act made permanent the current marginal income tax rates of 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, and 35 percent. For taxpayers with taxable income over these thresholds, the act restores the 39.6-percent tax bracket.

Planning tip: Business owners may wish to examine their current entity structure to determine whether or not it remains beneficial under this new legislation. S corporations and LLCs historically have been favored over C corporations due to the ability for the business owner to report business profits on his or her own personal return. Now, however, the C corporation’s highest tax bracket is lower than the highest personal tax bracket. The spread may provide opportunities to defer compensation.

Capital gains and qualified dividends
Taxpayers with income above the $400,000 (individual) and $450,000 (married filing jointly) thresholds will see an increase in the long-term capital gain and qualified dividend tax rate from 15 percent to 20 percent. The 15-percent rate will remain in place for taxpayers below these income thresholds. (For taxpayers in the 15-percent or lower tax bracket, the 0-percent capital gain rate will remain in place.)

Important note: The new Medicare surtax resulting from the 2010 Patient Protection and Affordable Care Act will also play an important role for higher-income taxpayers in 2013. Starting January 1, certain taxpayers will be subject to a 3.8-percent surtax on the lesser of net investment income or the excess of modified adjusted gross income (MAGI) over $200,000 (individual) and $250,000 (married filing jointly). This is on top of regular capital gain taxes. The following types of investment income will be affected: taxable interest, capital gains, dividends, nonqualified annuity distributions, royalties, and rental income. Exceptions include distributions from retirement accounts, pensions, 401(k), IRAs, and municipal bonds, although these distributions will impact the MAGI calculation.

As a result, the effective top rate for net long-term capital gains for many higher-income taxpayers is now 23.8 percent.

Federal estate, gift, and generation-skipping transfer (GST) tax
The act retains the annual inflation-adjusted $5 million estate tax exclusion but increases the maximum estate tax rate to 40 percent. The lifetime gift tax exemption remains unified with the $5 million exemption. Portability between spouses also becomes permanent, and the act extends the GST tax-related provisions, including the inflation-adjusted $5 million exemption.

Portability allows the surviving spouse to apply any unused exclusion of the deceased spouse to his or her own transfers during life and at death (if the proper elections are made). Portability should bring with it flexible planning strategies for high-net-worth estates.

Planning tip: The $5 million exemption amounts offer greater flexibility for high-net-worth individuals to transfer assets during life or at death—potentially gift and estate tax-free. With the “permanency” of these provisions, taxpayers are encouraged to take time to execute well-thought-out estate plans, instead of trying to implement changes at the last minute, before legislation expires.

Qualified charitable tax-free IRA distributions
Congress restored the Qualified Charitable Distribution (QCD) provision for 2012 and 2013. The QCD allows taxpayers age 70½ and older to transfer up to $100,000 from an IRA directly to a qualified charity to avoid recognition of the income and to partially or fully satisfy the required minimum distribution (RMD) requirement. For 2013, the QCD must be made prior to December 31, 2013.

Planning tip: A QCD may still be made for the 2012 tax year under the following conditions:

1.An individual may make a direct transfer from the IRA to charity prior to February 1, 2013, and characterize it as made on December 31, 2012.

2.If an individual took an RMD after November 1, 2012, and before January 1, 2013, the individual may treat the distribution as a QCD if the amount (up to $100,000) is transferred to charity prior to February 1, 2013. Please note: RMDs taken prior to November 1, 2012, are not eligible.

Education incentives
The American Opportunity Tax Credit is extended through 2017. This provides for a 100-percent tax credit of the first $2,000 of qualified tuition and related expenses and 25 percent of the next $2,000, for a maximum credit of $2,500 per eligible student. The credit applies to the first four years of a student’s post-secondary education.

The Qualified Tuition and Related Expenses “above the line” deduction (meaning you don’t need to itemize to claim it) is extended until December 31, 2013, and was retroactively extended for 2012.

The Student Loan Interest Deduction is a $2,500 “above the line” deduction. The act makes permanent the suspension of the 60-month time limit.

Coverdell Education Savings Accounts received a permanent maximum contribution limit of $2,000. Distributions must be used for qualified higher education expenses while attending elementary, secondary, or post-secondary educational institutions.

Planning tip: A taxpayer cannot claim the Qualified Tuition deduction in the same year as he or she claims the American Opportunity Tax Credit or the Lifetime Learning Credit. Nor can the tuition deduction be claimed for a student in the same tax year if anyone else claims the American Opportunity Tax Credit or Lifetime Learning Credit for the same student in the same year.

Alternative minimum tax (AMT)
The last AMT “patch” expired at the end of 2011. The 2012 act permanently extends AMT amounts to $50,600 for individuals and $78,750 for married filing jointly. These amounts are retroactive for the 2012 tax year. The exemption will be adjusted for inflation in 2013.

Planning tip: In previous years, the AMT patch was not released until the year after the previous tax year, making it difficult to plan without knowing the exemption amounts. Now that the AMT has been given a more permanent fix, planning should be easier.

Itemized deductions and personal exemptions
For tax years 2010–2012, itemized deductions and personal exemptions were not subject to phase-out. The new legislation revives phase-out rules for 2013 at these applicable thresholds:

•$300,000 for married filing jointly
•$275,000 for heads of household
•$250,000 for single filers
•$150,000 for married filing separately

The itemized deduction rules reduce the allowable itemized deductions by 3 percent of the amount by which the taxpayer’s adjusted gross income exceeds the applicable threshold. The itemized deduction cannot be reduced by more than 80 percent. Certain items, such as medical expenses, investment interest, casualty, wagering, and theft losses, are excluded.

The total amount of personal exemptions that may be claimed by a taxpayer is reduced by 2 percent for each $2,500 or portion thereof (2 percent for each $1,250 for married filing separately) by which the taxpayer’s adjusted gross income exceeds the applicable thresholds listed above.

Planning tip: For taxpayers with a higher income and larger deductions, the itemized deduction and personal exemption limitations may create a “stealth” tax on tax liability, effectively increasing the marginal rate. Taxpayers may wish to recognize income or deductions in certain tax years to help minimize the impact.

Payroll tax cut
The act did not extend the 2-percent payroll tax cut, which temporarily reduced the social security tax withholding rate from 6.2 percent to 4.2 percent for tax years 2011 and 2012. The tax withholding rate will return to 6.2 percent for wage bases under $113,700, which will have an immediate impact on take-home pay.

On the whole, although Congress did act to stop the sweeping tax increases that were set to take effect as a result of the fiscal cliff, taxes may go up for some taxpayers. We will continue to work with you—as well as with your legal and tax advisors—to help you pursue your financial and legacy goals in this new tax environment.

1Bush-era Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Act of 2003 (JGTRRA), both of which were extended under the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.

Commonwealth Financial Network® does not provide legal or tax advice.

IRS CIRCULAR 230 DISCLOSURE:

To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Steven J. Samuel is a financial consultant located at Samuel Financial LLC, 858 Washington Street, Suite 202, Dedham, MA 02026. He offers securities as a Registered Representative of Commonwealth Financial Network®, Member FINRA/SIPC. He can be reached at (781) 461-6886 or at steve@samuelfinancial.com.

© 2013 Commonwealth Financial Network®

By Attorney Suzanne R. Sayward (December 2012)

The current depressed real estate market, coupled with historically low interest rates and continued volatility in the stock market, make the idea of purchasing investment real estate attractive to many would-be investors. If you are considering purchasing real estate with someone other than your spouse, you should discuss expectations and work out the details well in advance of signing the Purchase & Sale Agreement. Here are five issues to consider before venturing into a real estate partnership.

1. How to take title? Title refers to the legal ownership of the property and it can have significant consequences. For example, if you and your partner own property as ‘joint tenants,’ when one of you dies the other will be the 100 percent owner of the property. While this may be your intent if you and your spouse own the property, it may not be the same intent to a business partner. Choice of title can also have tax consequences, so consulting with an accountant in advance of your purchase is advisable.

2. What about liability? With property ownership comes risk. What if the third floor porch on your three-family building collapses while your tenants are having a party and people are hurt or worse, killed? What if there’s a fire? What about lead paint? As the owner of the property you may be liable for damages. Holding title to the property in a Limited Liability Company (LLC), Limited Partnership, or corporation can shield your personal assets from liability arising out of the investment property. Insurance options that will provide liability protection should also be explored.

3. Is your prospective partner in good financial standing? Anyone who has ever owned real property knows that there is always something that needs attention, and that usually means money. Does your business partner have the financial wherewithal to contribute his fair share of the cost to make repairs or improvements? If your property is without a paying tenant for some period of time, will your partner be able to pay for her share of the mortgage, taxes, insurance and other ongoing expenses? It is important to work out in advance how these situations will be addressed so that there are no surprises when they occur.

4. What if someone wants out? You should discuss an exit strategy before entering into the transaction. The importance of this has been made clear by the latest downturn in the real estate market. It is easy to address this in good times – one partner will buy the other out or the property will be sold. But what about in bad times when the remaining partner does not have the means to buy out the share of the retiring partner? What if the property is worth less than the outstanding mortgage? What if a partner dies or becomes incapacitated? There may be no ready solution to these issues, but the possibility that times may not always be rosy should be discussed between partners.

5. Who will be responsible for what? There are many tasks that need the time and attention of a landlord. Deciding in advance who will be responsible for which items will go a long way toward avoiding misunderstandings between partners. For example, who will be responsible for responding to tenant requests/complaints? Who will be responsible for collecting the rent and paying the bills? Who will be in charge of tax and insurance matters? Having a discussion about this with your prospective partner before purchasing property is a must.

There are many challenges to managing investment property and no one should embark on such a venture with the notion that it is an easy road to wealth. However, with patience, hard work, and a little luck, it can be a fruitful undertaking. Purchasing real estate with a partner can be an excellent arrangement as it allows each partner to contribute in the way he or she is best able. A discussion by prospective partners regarding each person’s expectations and responsibilities is vital to the success of the partnership. A written agreement memorializing that understanding is the best way to ensure those expectations and responsibilities are met.

Attorney Suzanne R. Sayward is certified as an Elder Law Attorney by the National Elder Law Foundation. She is a partner with the Dedham firm of Samuel, Sayward & Baler LLC. 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.

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.

One of the first questions I ask clients who want to discuss planning for long-term care is whether they have long-term care insurance. Those who do not have long-term care insurance express concern about the cost and the fact they may never use the benefits that long-term care insurance provides.

Men and women have an average life expectancy of 76.5 years. However, a person who lives to age 65 has an average remaining life expectancy of 17.7 years (to age 82.7). The longer you live the longer your life expectancy. Most people who live into their 80s and 90s will require some type of care before they die. Your health and family history may also impact your likelihood of needing care in the future. Most people you ask would prefer to be cared for in their home, rather than in a nursing home or other long-term care facility. Long-term care insurance is one resource that can be used to pay for the care you may need as you age, whether it’s at home, in an assisted living facility, or in a nursing home. Here are five facts about long-term care insurance.

1. Not all Long-Term Care Insurance Policies are Alike. Not all long-term care insurance policies are created equal. Long-term care policies generally provide a dollar amount that the policy will pay each day toward your care if you meet a certain threshold level of need for care or assistance. Policies vary greatly in the daily benefit amount provided, the length of time that benefit will be paid (i.e. for one year, three years, etc.), the types of care the policy benefit will pay for, and whether the policy has inflation protection. Each of these different aspects of the policy impacts the policy’s cost. A long-term care insurance agent can help you understand which features of the policy are most important for your particular situation, which are worth paying extra for, and which are not. For example, someone with a large pension may require a smaller daily benefit amount. It is also important to understand the financial strength of the company issuing the policy in order to help determine whether or not that company will be around to pay the benefits when you need them.

2. Read the Fine Print to Ensure You are Covered for the Care You Want. Although most people would prefer to receive any care they may need in their home, not all long-term care insurance covers home care. Make sure you understand the type of care your policy covers and the level of care you must require before the policy will begin paying benefits. The policy may also specify who must deliver the care you need — some policies will pay a benefit even if a family member is delivering that care, some will not.

3. Don’t Wait Too Long To Decide if Long-Term Care Insurance is Right for You. In addition to the benefits provided by the policy, your age at the time the policy is purchased is the other important factor in determining the cost of a long-term care policy. If you decide that long-term care insurance makes sense for your situation, don’t delay. The best time to purchase such a policy is when you are in your 50s or 60s.

4. Make Sure Your Policy Qualifies for the Estate Recovery Exemption in Massachusetts. In Massachusetts, an individual can be eligible for Medicaid benefits to pay for long-term care even if he owns a home. However, the Commonwealth will place a lien against the home so that it can recover the cost of those benefits if the home is sold or upon the death of the Medicaid recipient. Massachusetts does, however, allow the home of an individual who has a long-term care insurance policy that meets the criteria established by the state to be exempt from post-death recovery of benefits paid. The logic behind this provision is to encourage people to purchase long-term care insurance, giving them another resource to pay for their care, thereby reducing the amount the Commonwealth must pay towards their long-term care costs.

5. Some Policies Provide an Answer to What Happens If You Never Need Long-Term Care. “Hybrid” long-term care policies provide long-term care benefits along with a death benefit (like a life insurance policy) if you never use, or use only a fraction of, the long-term care benefits the policy provides. These types of policies are more expensive than standard long-term care policies. However, they may be a solution for those who hesitate to purchase a standard long-term care policy because they are not certain they will ever need the benefits the policy provides. An experienced long-term care insurance agent can educate you about the various types of long-term care insurance policies and guide you to the policy that is most appropriate for you.

There is a lot of chatter out there about how to protect assets from having to be spent down on long-term care expenses and much of that revolves around positioning assets in order to become eligible to receive Medicaid benefits. Although Medicaid provides more benefits for community-based care than it has in the past, it is primarily a benefit used by those in nursing homes. As with all public benefits programs, Medicaid is likely to suffer cuts to the program and reductions in the services it is able to provide in the future. If you want to ensure you have sufficient resources to pay for your own care in a location of your choice, such as in your home or in an assisted living facility, long-term care insurance is an option worth exploring.

There are many places to educate yourself about long-term care insurance. The Commonwealth’s Office of Consumer Affairs and Business Regulation publishes an excellent guide to long-term care insurance for consumers. Find it online at http://www.mass.gov/ocabr/consumer/insurance/health-insurance/consumer-guides/ (click on Long Term Care Guide).

Attorney Maria C. Baler is an estate planning and elder law attorney and a partner with the Dedham law firm of Samuel, Sayward & Baler LLC. 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 2012)

By Steven Joshua Samuel JD, MBA, AIF® (April 2012)

Annuities are getting a great deal of attention in the media, especially with baby boomers who are retired or nearing retirement and seeking guaranteed investments. While annuities can be appropriate for some investors, some annuities involve complex limitations that can harm a retiree and should be examined with the assistance of a trusted financial professional before investing. Practical consumer information about these investments is scarce, as insurance industry materials are often and unfortunately too biased to offer a balanced view regarding whom and when annuities are a good choice. To make it more confusing, the materials that are available to the consumers consist mainly of warnings about high costs and misleading sales tactics.

Immediate annuities are the simpler of the two main types available. An investor makes a one-time payment to an insurance company in exchange for a monthly payment based on life expectancy, beginning immediately and guaranteed by the insurance company to continue until the investor’s death. Tax deferred annuities, the second kind of annuity, allow tax deferrals of the investment until money is withdrawn. Within the tax deferred annuity category, investors can choose either fixed annuities, which offer fixed interest rate investment accounts, or variable annuities, which offer a range of investment options. Variable annuities are long-term, tax deferred investment vehicles designed for retirement purposes.

Variable annuities allow a range of investment options and involve risk. The insurance industry has developed variable annuities that address risk with “living benefits,” which guarantee lifetime income and/or principal even if the investments lose money. Here are five facts you should know about annuities, focused mainly on “living benefit guarantees.”

1. Risk Tolerance

Some investors think annuity guarantees are a license to invest more aggressively and are entirely without risk. It’s important to understand that living benefit guarantees do not refer to or protect the value of the investment account. The guarantees refer only to calculations on a hypothetical account, called a “benefit base.”

The “benefit base” account is not real money. The guaranteed amounts refer to annual withdrawals calculated on the “benefit base” account. It takes a long time just to get your own money back, even at the 5 or 6 percent guaranteed annual withdrawal or growth rates now offered. For example, a 60 year old investing $100,000 today will likely be in her 80’s before she gets back the $100,000 she invested, at today’s guaranteed rates; and, guaranteed principal generally is a benefit only for her heirs after her lifetime.

The investment risk assumed by the investor remains very real. The only actual large lump sum of money an investor in a guaranteed annuity can freely withdraw is in the cash account, and that is subject to surrender charges. This may well be less than the original amount invested, depending on how the actual investments perform, notwithstanding the guarantees.

All guarantees are based on the claims paying ability of the issuer.

2. Complexity

The sales pitch for variable annuities with living guarantees is often oversimplified to: “You get to invest in the stock market with no risk because the insurance company guarantees your ability to withdraw a stable amount or have stable income growth every year no matter how your investments perform.” That’s true, but it’s not the whole truth, and it’s important to fully understand what this means.

Insurance companies accept some risk and offer some guarantees, but even with specific, written income guarantees as high as 5 or 6 percent per year, an investor still has to ask, “What can I realistically expect for income and are there any limitations or exceptions on the guarantees?”

All guarantees are based on the claims paying ability of the issuer.

Here’s why:

Annuities with living benefits can limit (hedge) the company’s risk by requiring 50 percent or more of the invested money to be in low or no-risk fixed income investments. Hedging can prevent stock market losses, but also limit gains when the stock is performing well. In addition, insurance company guarantees of income or principle protection are almost always subject to a bewildering array of conditions on the amount and timing of withdrawals, the performance of the actual investments and other considerations. Make sure you understand them with explanations from sources not selling the annuity.

3. Cost

With rare exception, the cost of the living benefit guarantees is charged against the above referenced hypothetical “benefit base.” This creates a predictable revenue stream for the insurance company, but it also creates a rising cost to the investor if the actual cash balance account declines. A charge of 1.25 percent per year on a $100,000 investment is $1,250 for the first year. If,10 years later the actual investment account value has dropped to $50,000, that same $1,250 fee represents 2.5 percent, double the rate. Guaranteed annuities also have the standard annuity fees for mortality, administrative and underlying fund management expenses; therefore, the total cost to an investor can be over 4 percent per year. Once withdrawals begin, the cost burdening these contracts can exceed 8 percent.

4. Liquidity

Once an investor begins withdrawals, there is a limit on the amount that can be taken each year without serious consequences. Taking a withdrawal in excess of the amount guaranteed may be permissible, but this “excess” withdrawal can sharply reduce future withdrawal amounts, even for those which appear to have been guaranteed. An investor opting for an annuity with living benefits must be sure to have other investments outside the annuity to supplement income and for emergencies. Also, investors should be mindful of surrender charges and consider the IRS 10 percent penalty for pre-age 59 1/2 distributions from any annuity in addition to any gain taxed as ordinary income.

5. Don’t Pay For Insurance You Will Never Use

Income guarantees are available to investors up to age 85. But are they worth buying? Even with a guaranteed withdrawal rate as high as 7 percent per year, an investor in her late 70’s or 80’s is very unlikely to spend down to zero during her lifetime. Remember, until you’ve withdrawn the entire amount you invested and recovered the fees for the guarantee, you have not received a nickel in investment gain from the insurance company. Make sure that if you are paying for any insurance that you’re transferring real risk. Buying a lifetime income guarantee if you are in your 70’s or 80’s and your name isn’t Yoda is like paying for insurance on a mountain top retreat to protect against a flood.

Investors who feel they must have guarantees and are willing to pay for them should get help from their trusted financial advisor in order to understand their choices and focus on:

* annuities from the most reputable company that offers a decent cost and benefit value proposition

* mitigating costs by utilizing low-cost investment options within the annuities and learning the difference between A, B and other annuity share costs

* avoiding paying for insurance that isn’t likely to be used

* fully understanding how guarantees work and how they are limited

* making certain you leave money outside the annuity in case you need additional income

Variable annuities are sold by prospectus. You should consider the investment objectives, risk, charges and expenses carefully before investing. The prospectus, which contains this and other information about the variable annuity, can be obtained from the insurance company issuing the variable annuity, or from your financial professional. You should read the prospectus carefully before you invest.

Samuel Financial, Inc. 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

By Attorney Suzanne R. Sayward (September 2012)

In my elder law practice, I see many clients who worry about how growing older will impact their living situation. One truth is universal — that it is better to begin thinking about this while healthy and able, rather than waiting until there is a crisis. Advance planning means it is more likely that the elder will control his or her housing choice rather than have it decided by someone else. Here are five housing options to consider.

1. Remain in your current home. Staying put is often people’s first choice in housing and this is a viable option for many. I advise my clients who want to remain in their homes that they need to remain flexible and open to the possibility that some changes to their living space may be necessary. For example, staying at home may require physical modifications to the home such as moving the bedroom to the first floor, widening doorways to allow for a walker or wheelchair, replacing flooring to minimize the chance of falls, and renovating the bathroom. Planning to remain at home must also include a willingness to accept help from home health aides or others, as needed. Figuring out how to pay for needed modifications and for help at home is an important part of the equation. Some options include a reverse mortgage, community Medicaid, long-term care insurance or savings.

2. Live with family members. For some folks, moving in with family or having family members move in with them is a great solution. This can be mutually beneficial to everyone, especially when the older person is still fairly independent. Grandma can help with the grandchildren, even if that means simply sitting with them while they do homework. Living in the same home and interacting on a daily basis can foster a strong bond between grandparents and grandchildren. Of course, it is important to establish boundaries at the outset and set expectations to avoid misunderstandings and hurt feelings. Since everyone needs their own space, these arrangements often work best when a separate in-law apartment is added to the home.

3. Independent Living. Independent living is often the next step for seniors who want to be free of the expense and stress of maintaining a house. Independent living can refer to many types of living arrangements, from a rental apartment in a senior housing complex to the purchase of an independent living unit in communities such as Fox Hill Village in Westwood or NewBridge on the Charles in Dedham. Independent living is right for individuals who are able to live on their own but want the convenience of easily accessible transportation, the opportunity for socialization, and the comfort of knowing support is nearby if needed.

4. Assisted Living. Assisted living combines housing with personal service. Assisted living is for people who need support with day-to-day activities such as meals, bathing, and dressing. Some assisted living facilities require residents to purchase an interest in the facility, most of which is returned to the family upon the resident’s death. Some assisted living facilities charge rent for the apartment. All assisted living facilities charge a monthly fee for the services provided. Paying for assisted living can be a challenge for some. There are limited public benefit programs that will pay for assisted living, so this option is most readily available to those who have savings or long-term care insurance from which they can pay for this type of housing. Currently, veterans or surviving spouses of veterans may qualify for veteran’s benefits to help pay for assisted living.

5. Continuing Care Retirement Community (CCRC). A Continuing Care Retirement Community (CCRC) provides multiple levels of living options from independent living to nursing home care. The purpose of a CCRC is to allow residents to “age in place.” Many CCRCs offer amenities such as private clubhouses, restaurants, a fitness center, and entertainment. Medial staff and security are often on duty 24 hours a day. For those who need a higher level of care and attention, assisted living services such as assistance with housekeeping, laundry and shopping are available. Most CCRCs also have a skilled nursing facility for individuals who need 24/7 care. CCRCs can be especially appropriate where one member of a couple may require more care or assistance than the other.

Considering the possibility that there may come a time when you are not able to live alone in your home is not easy. Exploring options and planning in advance will make the transition easier – an elder law attorney can help.

Attorney Suzanne R. Sayward is certified as an Elder Law Attorney by the National Elder Law Foundation. She is a partner with the Dedham firm of Samuel, Sayward & Baler LLC. 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.

By Attorney Maria Baler (August 2012)

Last month’s column addressed the importance of prenuptial agreements in protecting a couple’s personal and inherited wealth. This month’s column continues with that theme to provide some estate planning tips for newly married couples. After all the time and effort involved in planning a wedding, newlyweds often find themselves with some extra time on their hands. What better use of that free time than making sure your estate plan is keeping pace with your new status in life?

Here are five estate planning tips for newly married couples

1. Marriage Impacts the Interpretation of Existing Wills. Under the new Massachusetts Uniform Probate Code (MUPC), your marriage will not automatically revoke an existing Will. However, the marriage will impact how the Will is interpreted unless the Will was made in contemplation of marriage or states that it is to be effective despite a subsequent marriage. In general, if you create a Will and later marry, your surviving spouse will receive a portion of your probate estate (the assets controlled by your Will) equal to what he or she is entitled to receive under the intestate laws (which govern how assets are distributed if a person dies without a Will), regardless of what your Will says. For example, Joe wrote a Will back in 2005 before he took a business trip to China, leaving all of his assets to his brother John. In 2012, Joe marries Janice. Under current law, the effect of Joe’s marriage to Janice will be that all of Joe’s assets will now pass to Janice (assuming Joe had no surviving parents or children). The intestate laws are complex and distribution of assets can be impacted by whether or not either of the newly married spouses had children, from this marriage or prior relationships, or whether other non-probate assets are left to the spouse. If you have a Will that was created before you were married, sit down with an estate planning attorney to review how your marriage will impact the distribution of your assets under your current Will, and whether any changes should be made to ensure your spouse or other family members receive what you want them to receive.

2. Don’t forget to provide for the children – present or future. If either member of a newly married couple has minor children from this or a prior relationship, it is important to name guardians for those children in a Will. Creating a trust which will manage assets for young children in the event of your death is often an important part of planning for young children. In some cases, newly married couples who do not yet have children but are planning to do so will create Wills and trusts that name guardians for future children and provide for the management of assets for those children’s benefit. Given the many demands on your time when you become new parents, planning before children are born is often a good idea. After all, this may be the most clear-headed and least sleep-deprived period of your life for many years to come!

3. Don’t Forget to Change Your Beneficiary Designations. Your Will only controls assets that you own in your individual name. Wills do not control jointly owned assets, or assets for which a beneficiary is designated, such as life insurance policies or retirement accounts, unless your estate is named as the beneficiary. For many people, life insurance policies and retirement accounts are a significant portion of their assets. When reviewing your estate plan in light of a new marriage, remember to review the beneficiaries you have designated to receive these assets in the event of your death, and change them if necessary to properly reflect your wishes. Since federal law protects a spouse’s right to be named as beneficiary of certain retirement plans, your marriage may affect the designation of another person as beneficiary of that type of account, and your spouse may need to consent to another person (for example, a child from a prior marriage) being named as the beneficiary if that is your wish.

4. For Richer, For Poorer, In Sickness and In Health… Powers of Attorney and Health Care Proxies are important estate plan documents that appoint an individual to make financial or health care decisions in the event you are incapacitated or otherwise unable to make those decisions for yourself. If you are newly married, consider creating Powers of Attorney and Health Care Proxies to give your spouse this authority in the event of incapacity. These documents will in most cases avoid a protracted and expensive guardianship or conservatorship proceeding which is necessary when there are not legal documents in place. In addition to decision-making documents, a HIPAA Authorization gives your physician and other health care professionals permission to speak with your spouse, and is essential if you want your spouse to have access to information about your medical condition or prognosis in the event of an unexpected medical event. The importance of these documents in avoiding the added stress and delay associated with a court proceeding under what are often difficult circumstances for family members cannot be overstated.

5. It’s Not Too Late to Create a Post-Nuptial Agreement. Massachusetts recently recognized the validity of agreements between spouses, entered into after marriage that govern the division of their assets in the event of a divorce or death of one spouse. Post-nuptial agreements are particularly effective to ensure that if either spouse receives an inheritance from a parent, that inheritance will remain the property of the spouse who inherited those assets and will not be subject to division in the event of a divorce. Full disclosure of assets and separate attorneys for each party are among their requirements for a valid post-nuptial agreement. However, if protecting assets a party brought into the marriage or expects to inherit during the marriage is a priority, a post-nuptial agreement is an important planning option.

Although death, divorce or incapacity are issues that young couples do not spend a lot of time thinking about, taking the time to plan now can go a long way to ensuring that some of the foreseeable bumps in the road can be smoothed over for newly married couples.

Attorney Maria Baler is an estate planning and elder law attorney and a partner with the Dedham law firm of Samuel, Sayward & Baler LLC. She is also a director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). 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.

By Attorney Suzanne R. Sayward (July 2012)

Planning a wedding is an exciting time for couples, but it’s important to remember that a wedding is not just about flowers, cake and champagne. The wedding ceremony is the public declaration of the couple’s change in their legal status from single to married. Once that happens, the law confers certain property rights and financial obligations on spouses. If a marriage ends in divorce, the Court has broad discretion to determine how a couple’s assets will be divided between them. Couples who would prefer to decide for themselves how their assets will be divided in the event they terminate their marriage should enter into a prenuptial agreement.

Here are five facts to know about prenuptial agreements.

1. Prenuptial Agreements are enforceable in Massachusetts provided they meet certain requirements. In general, these requirements are:

a. Both parties must enter into the agreement voluntarily. This means that there must be no coercion or duress and one party may not take advantage of the other party’s known weaknesses.

b. There must not be any fraud or misrepresentation.

c. The agreement must be fair and reasonable both at the time it is executed and at the time enforcement is sought.

d. There must be full and fair disclosure of all assets and liabilities.

Under Massachusetts law it is hard to prove that these requirements were satisfied unless both parties have separate legal counsel advising them. That is why it is important that each person have his or her own attorney.

2. A prenuptial agreement will not protect your assets from your spouse’s long-term care costs. It is very common for people marrying for the second time to enter into a prenuptial agreement. These are folks who have acquired significant assets over the years and may have children from a prior marriage. In addition to preserving their personal estates for their respective children, they are also concerned about protecting assets in the event one of them needs long-term nursing home care. They are often surprised to learn that even though their prenuptial agreement states that neither will be responsible for the long-term care costs of the other, that provision will be disregarded if one spouse needs to apply for Medicaid benefits to pay for long-term nursing home care. As far as Medicaid is concerned, the assets of the healthy spouse will be considered countable and available to the nursing home spouse for Medicaid eligibility purposes.

3. You don’t need to be rich to need a prenuptial agreement. Even if the prospective bride and groom are just starting out and do not have much money, a prenuptial agreement may still be appropriate where the parents or grandparents of either of them have wealth that may someday be inherited by the younger generation or where there is a family business. This is especially important in Massachusetts where assets acquired during the marriage, even inherited assets, are considered marital assets subject to division in a divorce unless there is a valid prenuptial agreement in place that provides otherwise.

4. There are some things that cannot be decided in a prenuptial agreement. A couple cannot use a prenuptial agreement to determine rights and obligations with respect to their children, including child support, visitation and custody.

5. It may not be too late even if you’re already married. In general, a contract is enforceable only if there is consideration. That is, each party must “get something” for entering into the contract. For prenuptial agreements, the upcoming marriage is the consideration that makes the agreement enforceable. Post-marital agreements (agreements entered into by people who are already married) have often been viewed as unenforceable because of a lack of consideration. The parties are already married so what is the incentive to sign an agreement? In 2010, the Massachusetts Supreme Judicial Court ruled in a case of first impression that post-marital agreements are valid and enforceable in Massachusetts provided they meet the same requirements as prenuptial agreements.

Entering into a prenuptial agreement may not be the most fun and exciting part of getting married, but for many couples it is an important component to the legal formalities of marriage. For the statistically large proportion of couples whose marriage will end in divorce, a prenuptial agreement offers important protection to them and their families, and can often make the divorce process less difficult.

Attorney Suzanne R. Sayward is an estate planning and elder law attorney and a partner with the Dedham law firm of Samuel, Sayward & Baler LLC. 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 about estate tax planning, visit www.ssbllc.com or call (781) 461-1020.