By Attorney Maria Baler

As an elder law attorney, I often refer clients to geriatric care managers to assist them with the non-legal aspects of planning for current or future care needs.  When I discuss the role of a geriatric care manager (GCM) with my clients, many of them are unfamiliar with this profession.   GCMs are an important member of the team of advisers that elders and their family members should call upon when an elder begins to need care or assistance.

Here are five ways a geriatric care manager can help:

1. You or your spouse needs assistance finding resources to help you stay in your home and maintain independence.  Many elders prefer to remain in their home as they age.  There may come a time when staying at home requires outside assistance with certain tasks such as housekeeping, cooking, bathing, dressing, grocery shopping, and transportation.  A GCM can help elders and their families evaluate the type of help needed to allow an elder to remain in her home, and then help the elder and her family locate and implement that assistance.
2. You have decided that it is time to leave your home, but you are not sure what type of senior living community is right for you.  There are many different types of senior living options.  Elders move from their home for many different reasons – for a more social and collegial environment, to obtain needed care or assistance, or to be closer to family members.  GCMs are familiar with the different types of housing options available and can help you weigh the pros and cons and decide what’s right for you.
3. Your loved one is being discharged from a hospital or rehabilitation center and needs to move to a nursing home for a short- or long-term stay.  GCMs spend a lot of their time talking with nursing home staff and visiting facilities to check on their clients.  They are familiar with the facilities in their communities and the strengths and weaknesses of each.   One of the most valuable things a GCM can do is evaluate an elder’s needs and make recommendations for nursing homes tailored to those needs.  This is much more useful to a family than ratings on a website or the recommendation of a friend or neighbor, whose loved one may have had very different needs.
4. You are a child who lives far away from your parents.  GCMs fulfill a much needed role in assisting elders whose family members do not live nearby.  A GCM can check in on the elder periodically and report back to the family about the elder’s status.  A GCM can accompany the elder to routine doctor’s appointments or can be on call to accompany the elder to a hospital or emergency room if an unexpected crisis occurs.  Following such appointments, a GCM can help implement next steps (i.e. medication supervision, further testing, etc.), and communicate with family members and agencies to keep everyone on the same page.  A GCM can monitor caregivers that assist the elder at home or in a facility and make changes as needed.  In short, a GCM can be the eyes and ears of the family, providing monitoring, follow-up, and advocacy for an elder.
5. You or your family members need support and guidance.    When a family member needs care or assistance it is often a confusing and difficult time for the family.  The person who needs assistance may not agree that assistance is needed.  Family members may have limited time, resources, or expertise, or live too far away to provide regular assistance. The process of locating and maintaining caregivers or other assistance can be confusing and overwhelming to family members.  A GCM can provide professional guidance in these areas, recommending appropriate services or housing options and helping the family implement those recommendations.  GCMs can also provide emotional support to families and assist with complicated family dynamics and emotions around changing circumstances.

Geriatric care managers are a wonderful resource for professionals, their elderly clients, and family members of elders.  GCMs can smooth the way through difficult transitions, find solutions and resources, and become a trusted advisor, both in crisis and everyday situations.  To find a GCM near you, consult the Directory on the website of the New England Chapter of the National Association of Professional Geriatric Care Managers at www.gcmnewengland.org.

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.

Clients often tell me they want to put all their assets in a trust to protect them in case they need to go to a nursing home.  Given the high cost of long-term care, this is a valid concern and there are situations when an irrevocable trust for asset protection purposes makes sense.  However, using an irrevocable trust can be one of those situations where the “cure” is sometimes worse than the disease. Here are five reasons to tread carefully when considering transferring assets to an irrevocable trust for long-term care protection purposes.

1. For married couples, there are better ways to protect assets.   When I represent a married couple for estate and long-term care planning, my goal is to make sure they are able to take care of themselves and each other.  In Massachusetts, if a member of a married couple requires nursing home care and needs to qualify for Medicaid benefits to pay for that care, there are protections in place that allow the spouse who is living in the community to keep all or most of the couple’s assets.  However, those protections can be forfeited if the couple transfers assets to an irrevocable trust (or to children) within the five-year period preceding the need for care.  That is because there is a five-year  ineligibility period for long-term Medicaid benefits following the transfer of assets to an irrevocable trust (or to any person other than a spouse).  For many married couples, it is far better not to transfer assets to an irrevocable trust so that if one spouse does need long-term nursing home care, the spouse at home can take full advantage of the laws that  offer financial protections to the community spouse.
2. There’s no guaranty the trust will accomplish your goals.  Federal and state laws,  state regulations, and agency policies govern Medicaid eligibility.  These rules change frequently, usually with no “grandfathering” for planning undertaken prior to the change.  When considering whether to transfer assets to an irrevocable trust to preserve those assets from having to be spent down on long-term care costs, it is important to remember that the law in effect today is unlikely to be the law in effect after the five-year ineligibility period has expired.  A person who is applying for Medicaid benefits must disclose the existence of an irrevocable trust on the application,  Currently, many Medicaid applications that report such trusts are being routinely denied by MassHealth, the agency that administers the Medicaid program in Massachusetts.
3. Despite what you hear on the radio, you  do give up control.   We have all heard the advertising on the radio claiming that a person can retain control over her assets while still protecting them from the high cost of a nursing home.  In order to effectively protect assets in Massachusetts, an irrevocable trust that  is intended to preserve assets from having to be spent down on long-term care costs must not allow for any distributions of principal from the trust to the person whose assets are funded into the trust, including distributions that might pay for home care or assisted living.  In addition, when the intent is to preserve the assets from having to be spent down on long-term care costs, it is prudent to name someone other than the person creating the trust as the trustee.  The trustee is the person who is in control of determining how to invest the trust assets, when to sell trust assets (including real estate held in the name of the trust), and is the only  one with access to the trust accounts.
4. Things change.   Although there are not too many things you can rely on in life, one thing you can be certain of is that things will change.  I can’t count the number of times clients have made statements like, “We’re never going to sell the house” or “I know I can count on my daughter Mary to be there for me,” only to call me a few years later to tell me they are selling their home or that Mary had a mid-life crisis and has moved to Australia to farm sheep!  The point is, no one knows what the future holds and positioning yourself to maximize your options is prudent.  Unfortunately, the provisions which estate planning and elder law attorneys have traditionally used to build flexibility into irrevocable trusts are the very provisions  that MassHealth is now using to claim that the trust assets are available to be used to pay for long-term care.
5. The best way to ensure you end up in a nursing home is to have no money.  One of my favorite sayings to clients is “money buys you options.”  If a person has savings, CDs, retirement accounts, investments, or real estate available to her, she can choose to remain at home and pay for help to allow her to remain there, she can choose to go to assisted living and pay for additional assistance if she needs it, she can choose to modify her home to accommodate her needs, etc.  A person who has no resources usually has only one option — go into a nursing home.  The reason for this is that Medicaid will pay for 24/7 care for a person with no assets who is a nursing home resident.  Medicaid does not pay for assisted living or round-the-clock care at home for (most) elders who need such care.  Most of my clients would rather be at home than in a nursing home, and for this reason transferring assets out of their ownership and control and into an irrevocable trust in order to “protect” them often results in the client ending up in a nursing home rather than at home where they would prefer to be.

While there certainly are situations where transferring assets to an irrevocable trust for long-term care planning purposes makes sense, it is never a good idea to rush into this type of planning without having a complete understanding of the consequences.  An experienced elder law attorney can advise you about the pros and cons of using an irrevocable trust for long-term care planning in your particular circumstances.

November 2013

Attorney Suzanne R. Sayward 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.  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. 

As an elder law attorney, I spend a lot of time talking with clients about paying for long-term care and how to “protect” their assets.  Many of these conversations are precipitated by ads clients hear on the radio or see in print, urging them to act quickly to protect their assets from the high cost of nursing home care, and making it seem easy as pie to do so while still enjoying full control.  In long-term care planning, as in life, it is not possible to have your cake and eat it too as these ads would have you believe.

In order to keep your options open to live where you want to live as you get older you need resources.   Much of the pre-planning that is done to “protect” assets involves removing assets from your control, with the result that the asset are not available to pay for care you may need down the road.  Putting resources beyond your reach may mean that you will need to apply for public benefits to pay for care.  Although the availability of public benefits to pay for care in settings other than a nursing home is improving, public benefits are still predominately available for nursing home care.  I have yet to meet a client who would rather be in a nursing home rather than at home or in another less restrictive setting such as an assisted living facility or a continuing care community.

The planning to protect assets that you hear about on the radio or see in print ads is often about protecting your assets for future generations rather than protecting those assets for you or your spouse.  If you have been thinking about long-term care and asset protection issues, seek the advice of an experienced elder law attorney.  If your attorney does not discuss the risks or downsides of a particular asset protection strategy, ask questions about the disadvantages of such planning and make sure you understand the consequences before proceeding.  An experienced elder law attorney can counsel you on the benefits and risks of various asset protection strategies and help you decide what is best for you and your family.

Click here for an excellent article written by my partner Suzanne Sayward in November 2013 about why you might not want to transfer your assets to an irrevocable trust.

Published December, 2013

Do you live in Massachusetts and own real estate in another state?  Perhaps it’s a ski condo in New Hampshire, a winter retreat in Florida, or a deeded timeshare in North Carolina?  If so, your out-of-state property requires special consideration as part of your estate plan.  Here are five things to consider when planning for out-of-state property:

1. Get the Advice of Local Counsel.  Many owners convey out-of-state real estate into a trust as part of the estate planning process.  Others may choose to convey the property to children or other relatives.  If a conveyance of out-of-state property is contemplated, be sure to the get advice of a real estate or estate planning attorney who practices in the state in which the property is located.  Real estate conveyance laws and practices vary greatly from state to state (and sometimes county to county).  A deed drafted using the format and language used in Massachusetts may not effectively convey property in another state, or may have unintended consequences.  An erroneous deed will create title issues that can have ramifications long after you have passed away, which can be costly and time consuming to correct. Finally, some states impose transfer taxes on certain conveyances that require additional filings. These are just examples why it is important to get the advice of a local attorney when doing any type of conveyance of your out-of-state property.
2. Two probate proceedings are NOT twice the fun. If you own out-of-state property in your individual name at your death, a probate proceeding will be required in the state where the property is located in order to transfer title to your heirs.  With probate comes the cost and delays associated with it. Above and beyond the additional cost is the difficulty of managing a legal proceeding in another state.  This can be avoided with careful planning.  Speak to your estate planning attorney about probate avoidance options available to meet your goals for the particular property.
3. Don’t Forget to Consider the Estate Tax.  Just as each state has its own laws governing real estate, different states have different state estate tax laws.  Some states (like Florida) do not impose an estate tax on residents who own real estate in their state.  Other states, like Massachusetts, require non-residents who own real estate in Massachusetts to file an estate tax return and pay estate tax to the Commonwealth based on the value of the real estate located in Massachusetts.  When planning, it is important to understand the estate tax implications of owning property in another state and to take that into account in the planning process.
4. Be Careful About Changing your Domicile – Many people who own property in another state consider changing their domicile to that state.  There can be estate and income tax benefits to changing your domicile, however it is not as simple as packing the moving truck and filling out a change of address card.  Your residence for tax purposes is determined both by where you are physically located and where you intend to reside.  Evidence includes such factors as voter and automobile registration, membership in clubs and religious groups, the address on your bank and credit card statements, in addition to where you spend your time.  A state like Massachusetts, which has both an estate and income tax, can be aggressive in its pursuit of taxpayers who claim to reside in another state but maintain ties to Massachusetts (such as ownership of real estate or a business interest).  If you are considering changing your residence, seek expert advice about the steps you need to take, and then follow that advice.
5. Be Realistic.  When estate planning involves out-of-state property, be realistic.  Will your children continue to use the property after your lifetime or will it be a costly burden for them?  Maintaining property in another state as well as finding the time to visit can be difficult.  If your out-of-state real estate is a special property you hope your family will use for generations, take the time to plan for it in a way that the property can be passed to your heirs in a way that minimizes taxes and provides a framework to manage the property going forward.  If it is a property you enjoy but your heirs will not or cannot, consider whether it may be appropriate to direct that the property be sold at your death, or sell it prior to death to minimize the additional cost and effort involved in dealing with such a property after your lifetime.

Along with the enjoyment a property in another state can provide comes the need to plan for that property.  Take the time to consider these unique planning issues as they relate to your particular situation and address them in a thoughtful way with the advice and assistance of an experienced estate planning attorney.

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.

October 2013

There have been several stories in the news recently about famous people who were swindled by family members.  For example, both actor Mickey Rooney and famed socialite Brooke Astor fell victim to financial abuse by family members or trusted advisors.  These stories make some of my clients a bit nervous about signing a durable Power of Attorney.   It is true that a durable Power of Attorney is a powerful document that could be used to take advantage of someone.  Even still, for most individuals the decision to create a durable Power of Attorney as part of their estate plan is a better choice than not creating one.

A Power of Attorney is a legal document in which ‘the principal’ (the person who makes the Power of Attorney) appoints another person as his ‘Attorney-in-fact.’  The reason to create a Durable Power of Attorney is so that your Attorney-in-fact can pay your bills, sign your tax return, invest your money, file an insurance claim, etc. in the event you are not able to do so.  If you become incapacitated and you do not have a Durable Power of Attorney, then a guardian and/or conservator will need to be appointed by the court to take care of your affairs.  That process is usually time consuming, expensive and stressful, and there is no guaranty that the court will appoint the person you would have chosen.

While it can be worrisome to think about giving another person so much authority over your affairs, for most people, creating a Durable Power of Attorney naming a family member or trusted friend or advisor is a better option than a guardianship or conservatorship through the probate court.  An experienced estate planning attorney can answer your questions and help you make decisions that are right for you given your particular situation.

To learn more about Powers of Attorney read my article, Five Important Facts to Know About Powers of Attorney.

Published November, 2013

By Attorney Maria C. Baler

Do you live in Massachusetts and own real estate in another state?  Perhaps it’s a ski condo in New Hampshire, a winter retreat in Florida, or a deeded timeshare in North Carolina?  If so, your out-of-state property requires special consideration as part of your estate plan.  Here are five things to consider when planning for out-of-state property:

1. Get the Advice of Local Counsel.  Many owners convey out-of-state real estate into a trust as part of the estate planning process.  Others may choose to convey the property to children or other relatives.  If a conveyance of out-of-state property is contemplated, be sure to the get advice of a real estate or estate planning attorney who practices in the state in which the property is located.  Real estate conveyance laws and practices vary greatly from state to state (and sometimes county to county).  A deed drafted using the format and language used in Massachusetts may not effectively convey property in another state, or may have unintended consequences.  An erroneous deed will create title issues that can have ramifications long after you have passed away, which can be costly and time consuming to correct. Finally, some states impose transfer taxes on certain conveyances that require additional filings. These are just examples why it is important to get the advice of a local attorney when doing any type of conveyance of your out-of-state property.
2. Two probate proceedings are NOT twice the fun. If you own out-of-state property in your individual name at your death, a probate proceeding will be required in the state where the property is located in order to transfer title to your heirs.  With probate comes the cost and delays associated with it. Above and beyond the additional cost is the difficulty of managing a legal proceeding in another state.  This can be avoided with careful planning.  Speak to your estate planning attorney about probate avoidance options available to meet your goals for the particular property.
3. Don’t Forget to Consider the Estate Tax.  Just as each state has its own laws governing real estate, different states have different state estate tax laws.  Some states (like Florida) do not impose an estate tax on residents who own real estate in their state.  Other states, like Massachusetts, require non-residents who own real estate in Massachusetts to file an estate tax return and pay estate tax to the Commonwealth based on the value of the real estate located in Massachusetts.  When planning, it is important to understand the estate tax implications of owning property in another state and to take that into account in the planning process.
4. Be Careful About Changing your Domicile – Many people who own property in another state consider changing their domicile to that state.  There can be estate and income tax benefits to changing your domicile, however it is not as simple as packing the moving truck and filling out a change of address card.  Your residence for tax purposes is determined both by where you are physically located and where you intend to reside.  Evidence includes such factors as voter and automobile registration, membership in clubs and religious groups, the address on your bank and credit card statements, in addition to where you spend your time.  A state like Massachusetts, which has both an estate and income tax, can be aggressive in its pursuit of taxpayers who claim to reside in another state but maintain ties to Massachusetts (such as ownership of real estate or a business interest).  If you are considering changing your residence, seek expert advice about the steps you need to take, and then follow that advice.
5. Be Realistic.  When estate planning involves out-of-state property, be realistic.  Will your children continue to use the property after your lifetime or will it be a costly burden for them?  Maintaining property in another state as well as finding the time to visit can be difficult.  If your out-of-state real estate is a special property you hope your family will use for generations, take the time to plan for it in a way that the property can be passed to your heirs in a way that minimizes taxes and provides a framework to manage the property going forward.  If it is a property you enjoy but your heirs will not or cannot, consider whether it may be appropriate to direct that the property be sold at your death, or sell it prior to death to minimize the additional cost and effort involved in dealing with such a property after your lifetime.

Along with the enjoyment a property in another state can provide comes the need to plan for that property.  Take the time to consider these unique planning issues as they relate to your particular situation and address them in a thoughtful way with the advice and assistance of an experienced estate planning attorney.

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. 

 

By Attorney Suzanne Sayward

On June 26, 2013, the United States Supreme Court issued its ruling in the case of Windsor v. United States, finding the provision of the federal Defense of Marriage Act (DOMA) which defined marriage as between one man and one woman for all federal purposes to be unconstitutional. In states like Massachusetts, which recognize same-sex marriage, this means, for example, that the same-sex spouse of a federal employee will be entitled to the same spousal benefits that opposite sex couples have always enjoyed. There are over 1,000 federal rights and benefits to marriage. Here are five benefits that same-sex married couples will be entitled to following the repeal of DOMA.

1. Social Security. When the Social Security program was enacted, lawmakers recognized that death or disability can have a devastating impact on a spouse who relied on the earnings of the deceased or disabled spouse to maintain the household. A person may therefore apply for Social Security benefits based on his or her own earning history or on the earning history of the applicant’s spouse. In addition, a surviving spouse or a disabled spouse is entitled to benefits based on his or her spouse’s earnings. Until the repeal of DOMA, a disabled spouse or a surviving spouse in a same-sex marriage did not have that access to spousal Social Security benefits.

2. Spousal Rollover of IRA. Qualified retirement plans such as IRAs and 401ks allow a wage earner to contribute funds to a retirement account tax free. In addition, the funds contributed to such plans grow income tax free. Once the owner of the retirement account reaches age 70.5, he or she must start taking withdrawals from the plan and pay tax on the amount withdrawn. If a married person dies owning an IRA or other qualified retirement account, the surviving spouse as beneficiary of the account has the right to take that retirement account as her own and to defer withdrawals until she reaches age 70.5. This means the funds in the account continue to grow income tax free. This can be a tremendous tax benefit that was denied to same-sex spouses prior to this summer’s repeal of DOMA.

3. Filing a Joint Federal Income Tax Return. After the repeal of DOMA, same-sex married couples will be able to file joint federal income tax returns. Filing a joint return reduces federal income taxes when one spouse has a high income and the other has a low or no income. (Conversely, the federal income tax bite will be increased when both spouses have high income.) For example, in 2013, single taxpayers reach the 33 percent tax bracket at $184,000 of income, but married couples did not hit the highest bracket until their income reached $223,000. It may be possible for same-sex couples to amend some prior years’ tax returns and collect significant refunds.

4. Employment Benefits. Spouses of federal employees are entitled to many benefits including health insurance, dental and vision benefits, life insurance coverage, COBRA benefits and more. These benefits are described on the federal employees’ website, which now includes a statement that, following the Supreme Court’s repeal of section 3 of DOMA, the government “will now be able to extend certain benefits to federal employees and annuitants who have legally married a spouse of the same sex.” Learn more about these benefits at http://www.opm.gov/healthcare-insurance/healthcare/.

5. Estate and Gift Tax Benefits. The Windsor case is an estate tax case. Federal estate tax law allows for an unlimited deduction for assets that pass to a surviving spouse either by gift during life or at death. This means that a surviving spouse need never pay estate tax upon the death of the first spouse. However, when Edith Windsor’s spouse Thea Spyer passed away leaving her estate to Edith, the IRS denied the estate the marital deduction and assessed $363,000 of estate tax against Ms. Spyer’s estate. Ms. Windsor sued for a refund and the case made history. Same-sex married couples now have the same right to the unlimited estate and gift tax deduction as heterosexual couples.

It will take some time to sort out the changes that need to be made to federal laws and policies in order to reflect the ruling in the Windsor case. There have already been a number of lawsuits citing the Windsor case as a basis for granting same-sex married couples the same rights as opposite sex married couples in other areas of the law. In states that do not recognize same-sex marriage there may be additional hurdles. However, the Windsor decision is a significant step in providing same-sex spouses with the same security and benefits their counterparts in traditional marriages have enjoyed for decades.

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.

By Attorney Maria Baler (August 2013)

Beneficiary designations are an often overlooked aspect of estate planning. While most people understand that they can designate a beneficiary for their life insurance and retirement accounts, they do not necessarily understand that the beneficiary designation forms control those assets absolutely. This is true regardless of how long it has been since you designated the beneficiary, what your current intentions may be, or what your Will or Trust may say. Here are five reasons to review beneficiary designations from time to time:

1. You Change Jobs. I often receive calls from my clients when they change jobs because the HR department has given them lots of forms to fill out, including beneficiary designation forms for their group life insurance policy and their 401k. These forms are often filled out in haste during a hectic first week when the new employee has lots of other things on his mind. New forms are also required if you add additional life insurance or if your company changes 401k providers. In these situations, it’s easy to simply list your spouse as the primary beneficiary of your life insurance and retirement accounts, and your children as the equal contingent beneficiary, and move on to the next form. However, take the time to think about those designations to be sure that they are consistent with the rest of your estate plan. If you have set up a trust for the benefit of your young children or for estate tax planning purposes, should the trust be named as the beneficiary? You may not know the answer to that question, but your estate planning attorney will. Take the time to make a call or send an email to be sure those designations are made correctly.

2. Your Marital Status Changes. As a result of the recent enactment of the Uniform Probate Code in Massachusetts, beneficiary designations in favor of a former spouse are deemed void after a divorce. However, there is some question about whether the terms of an individual retirement plan or federal ERISA law could override this provision of state law. To be safe, if you are recently divorced you should update your beneficiary designations to reflect your current intentions. Conversely, if you are newly married, it is important to review and update your beneficiary designations as well.

3. Your Estate Plan Changes. A good estate plan will change as an individual’s circumstances change. A trust that was the beneficiary of your retirement account when your children were young may no longer be appropriate when they are having children of their own. A previously responsible child may develop a drug or alcohol addiction, or have a tendency to spend money inappropriately. It may become appropriate to leave your assets, including life insurance or retirement benefits, in unequal shares to your children for various reasons. Grandparents may wish to name grandchildren as beneficiaries if their children have sufficient wealth. For all of these reasons and many others, the manner in which you designate family members as beneficiaries of your life insurance or retirement accounts may need to change as time goes on. Don’t forget to revisit beneficiary designations when making changes to your estate plan so that they are consistent with each other.

4. It’s Time to Consider the Tax Implications. How retirement benefits are distributed at the death of the retirement plan participant can have significant income tax implications. This may not warrant a lot of thought if you have $20,000 in your retirement account. However, as time goes on, many people build up considerable wealth in their retirement plans. A beneficiary who receives a large lump-sum payment from a retirement plan will also receive a big income tax bill and lose a significant portion of the account to income taxes. It is possible to reduce these adverse income tax implications with thoughtful planning (see #5 below). Life insurance and retirement accounts are also subject to estate tax at the owner’s death. Planning can also reduce the impact of this tax, for example, through the use of irrevocable trusts or, for those with charitable intentions, by leaving these assets directly to charity.

5. Consider How — not just Who. All of that wealth in your life insurance policies and retirement accounts could have a significant impact on the beneficiary who receives it (or who has the option to receive it) in one lump sum. In addition to the income tax impact (see #4 above), receiving a large amount of money all at once may have an adverse impact on a beneficiary’s work ethic and lifestyle. If the timing is wrong, inherited assets can be lost to creditors, divorce, bankruptcy or other troubles. If a beneficiary is disabled and receiving public benefits, receipt of payments from life insurance or retirement benefits can result in disqualification from these very important benefits. In addition to reviewing who is named as beneficiary of your life insurance and retirement accounts, consider how they will receive the funds and whether controlling the manner in which that happens is in the best interest of your beneficiary.

Life insurance and retirement accounts often hold significant wealth but receive less attention than they deserve when it comes to planning. Review your beneficiary designations periodically to ensure they are consistent with your planning goals while being mindful of tax and other implications.

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.