By Attorney Suzanne R. Sayward (February 2012)

This time of year, people’s thoughts turn to income taxes, which can make even the most cheerful person cranky. However, there are some tax laws in effect right now that are quite favorable to taxpayers and that may not be around forever (or for very much longer). In the spirit of trying to bring a little cheer to tax time, here are five tax rules that could help keep a little more in taxpayers’ pockets.

1. Exemptions from Estate Tax. Many times clients come in to see me convinced that the government is going to take a big chunk from their estate at their deaths. For most people, this is simply not the case. Both federal and state tax codes include large exemptions from the estate tax. For people who die in 2012, the IRS will only collect tax on estates worth more than $5 million. Massachusetts is not quite as generous as the federal government, but even for Massachusetts estates, taxes are only payable on estates valued in excess of $1 million. Further, for both state and federal purposes, all assets that pass to a surviving spouse who is a U.S. citizen are free of estate tax.

2. Exclusion of Gain on the Sale of a Primary Residence. When it comes to taxes payable on the sale of your home, the current law is quite favorable to the taxpayer. A homeowner can exclude up to $250,000 of profit on the sale of his primary residence. For married couples, this means up to $500,000 of profit can be excluded. The exemption is available to those who have owned and used the property as a primary residence for at least two years. The law also provides exceptions to the rule for a residence that is sold after the death of a qualifying owner, or if an owner resides in a nursing home. This exclusion can save a lot of tax for people who bought their homes many years ago and have seen the property appreciate significantly.

3. Stepped-Up Basis for Inherited Assets. Another taxpayer-favored rule is the stepped-up basis for inherited assets. This section of the tax code provides that when someone dies owning an appreciated asset such as stock or real estate, the tax basis of the asset is “stepped-up” to its fair market value at the date of the owner’s death. For example, I had a client who bought stock in the 1970s for $5,000. When she died, the value of that stock was close to $70,000. If she had sold the stock during her lifetime, she would have had to pay capital gain tax on the difference between her basis of $5,000 and the sale price of $70,000. Because the stock was part of her estate at her death, her family inherited the stock with a tax basis of $70,000. When they sell the stock, gain or loss on the sale will be determined by subtracting $70,000 from the sale price of the stock.

4. Inherited Assets Not Taxable to Heirs (for the most part). In addition to receiving inherited assets with a stepped-up basis, the assets are not income taxable to the beneficiaries. For example, if my auntie dies and leaves me her house and $50,000 of life insurance, I do not need to report the receipt of those assets on my personal tax return; they come to me tax free. An exception to this rule is receipt of qualified retirement accounts such as IRAs and 401ks. When monies are withdrawn from qualified retirement accounts, the amount withdrawn is taxable income to the beneficiary. However, there are currently favorable rules in place for beneficiaries of these assets too.

5. Gift Taxes Exclusions. Many people are confused about gift taxes. Gift tax is payable on gifts made in excess of the lifetime gift tax exclusion. In 2012, the federal lifetime gift tax exclusion amount is more than $5 million ($5,120,000 to be exact). Further, although some states impose a gift tax, Massachusetts does not. In addition to the lifetime gift tax exclusion, the federal gift tax law allows each person to make annual exclusions gifts of up to $13,000 to as many people as you like. So if you have 10 grandchildren, you can give each of them $13,000 each year without using any of your $5 million lifetime exclusion. If you are married, your spouse can also make annual exclusion gifts. One caveat: under the current law the lifetime gift tax exclusion will be reduced to $1 million in 2013. Therefore, if you have a very large estate, consider whether it makes sense to undertake some gifting before the end of 2012.

One more tax tidbit to be glad about this year – the April 15th deadline is extended to April 17th because the 15th is a Sunday and the 16th is a holiday in Washington D.C. – cheers!

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.

Pursuant to IRS Circular 230, please be informed that any tax advice contained in this communication, including attachments, is not intended or written to be used for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or promoting, marketing or recommending this transaction or a tax-related matter to another party.

By Attorney Maria Baler (January 2012)

Vacation homes come in all shapes and sizes – the small bungalow on the lake, the cottage on Cape Cod, the rambling seaside home in Maine, the ski chalet or the cabin in the woods. For those lucky enough to own a second home, they know how much family members look forward to spending time there together and creating lasting memories. If you are the owner of such a property, it’s never too early to think about the future of your vacation home. Is this a property you wish to pass on to your children and grandchildren so the good times can continue long after you’re gone? In many cases, your heirs may not be able to purchase a vacation home on their own so it is especially important to make sure the property will be there for them to enjoy.

Here are five ideas to consider when planning for your vacation property:

1. Do Your Children Share Your Hopes and Dreams?

You may intend to pass your vacation home to all of your children to use and enjoy for their lifetimes. When planning, it is important to consider whether these intentions are realistic. Take a hard look at how the property is used and by whom. Do all of your children enjoy the property and will they continue to do so in the future, taking into account their busy lives and where they live? If you intend for your children to contribute to the cost of maintaining the property after your death, consider whether all children can afford to do this or whether it makes sense to leave the property (and the financial burdens of its maintenance) to the child or children who can afford the expenses that go along with owning such a property.

2. How Will Decisions be Made and Bills be Paid?

No matter how smart your children are or how well they get along, it is always helpful to have a plan for how decisions are made relating to the property – such as who can use the property, how routine expenses will be paid, and what and when major improvements are made to the property. Without rules that clearly govern how these matters are handled or disputes are resolved, a dominant child (or child’s spouse) may overpower the others, fostering resentment and resulting in potential impasses that can delay decisions and contribute to the deterioration of the property.

Considering how to fund the payment of property expenses is also an important part of planning for your vacation property. You may anticipate that your children will contribute equally to the upkeep of the property in the future. But no matter how financially comfortable your children are now, jobs and fortunes can be lost, children relocate, and circumstances change. If children are unable to pay their share of expenses and/or if a child wants to sell his interest in the property, a structured plan will allow for such transitions, including the opportunity for siblings to buy out one another.

3. What Will the Future Bring?

The best laid plans can be derailed by unexpected issues that arise in every family – divorce, debt, disability, and long-term care expenses can all put a vacation home at risk. Planning can anticipate and address current and future owners’ issues and protect against or resolve them in a way that does not disrupt the overall plan for the property. In most cases, in order to plan appropriately for a vacation property and create a structure for decision making and the payment of expenses, the property will be owned by some type of entity, for example a trust or a limited liability company (LLC). The type of entity you use to own your vacation property will determine the extent to which the property is protected against issues affecting its current and future owners.

4. Would Some Extra Cash Be Useful?

Life insurance can be used in creative ways to protect your long-term plans for your vacation property. Life insurance on the current owner’s life can create a reserve fund from which expenses can be paid after the owner’s death, relieving the future owners from the obligation to contribute to those expenses on an ongoing basis and reducing the risk that those expenses will not be met. If the property is not going to be left to all of your children, life insurance can create additional assets that can be used to equalize the distribution of your estate among your children, if that is important. Finally, life insurance can provide a resource from which estate taxes can be paid, reducing the possibility that the property will need to be sold to satisfy a tax obligation.

5. Does Skipping a Generation Make Sense?

Consider the benefits of generation-skipping transfer tax planning that will allow the property to avoid estate taxes in your children’s generation. If this is a property you anticipate your heirs enjoying beyond your children’s generation, such planning can save a tremendous amount of estate taxes and also insulate the property from issues that may arise during your children’s lifetimes.

Thoughtful and timely planning for a vacation property can ensure the property will pass to future generations in a way that will minimize issues and maximize the chances the property will be enjoyed by your family for generations to come.

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 (December 2011)

In September, this column discussed a new law going into effect this year that will affect the way estates are administered in Massachusetts. This law, the Massachusetts Uniform Probate Code (MUPC), also changes how assets are distributed to family members and who will be in charge of settling an estate when someone dies without a Will.

Here are five ways the MUPC may affect how your estate is distributed at your death.

1. “Per capita” versus “right of representation.” Under prior law in Massachusetts, if someone died without a Will, his estate was distributed to his descendants by “right of representation.” For example, say that Harry had five children. Harry dies without a Will and with no surviving spouse. Two of his children, Sam and Diane, predecease Harry. Sam had one child and Diane had three children. When Harry’s estate is distributed by “right of representation,” Sam’s only child would receive Sam’s one-fifth share of Harry’s estate. Diane’s three children would share Diane’s one-fifth share of Harry’s estate, and Harry’s other three living children would each receive a one-fifth share.

Under the new MUPC, the distribution would be made on a “per capita” basis. That means the shares of Sam and Diane will be added together and the two-fifths share that they would have received will be divided equally among their four children.

2. Amount receivable by a surviving spouse changes. Under the prior law, if someone died without a Will leaving both a surviving spouse and surviving children, the surviving spouse would receive half of the estate and the surviving children would receive the other half. Under the new MUPC, if all of the children are the children of the decedent and the surviving spouse, the entire estate will pass to the surviving spouse. For example, if Harry and Wilma have two children together and Harry dies without a Will, Harry’s estate will pass entirely to Wilma. The two children will not be entitled to any share of Harry’s estate.

However, if either Harry or Wilma has children from a prior marriage or relationship, then under the new law, part of Harry’s estate will pass to Wilma and part of his estate will pass to his children.

3. The new law favors certain individuals as personal representatives. Under the MUPC, the person who administers the estate of a deceased person is called a “personal representative”. Under the previous law this person was called an executor (if a person died with a Will) or an administrator (if a person died without a Will). The new law introduces the concept of priority of appointment of the person who will administer the estate in the event a person dies without a Will. Under the new law, the spouse has the first priority. If there is no surviving spouse, then all of the surviving children have equal priority.

So, if Harry dies with no surviving spouse leaving seven children, all seven of those children are entitled to be appointed as the co-personal representatives of the estate. Any one or more of the seven children could decline to serve and agree that the remaining sibling or siblings could serve in their place. However, if any one of those seven children is not agreeable to the arrangement the estate will have to proceed with a formal administration.

4. The new law permits a personal representative to name a replacement. Continuing with the example of Harry and his seven children, the new law would allow any one of those seven children to decline to serve as personal representative and to name someone else to serve in his or her place. The replacement person could be a spouse, other relative or friend. The new law recognizes that this could create a very contentious situation and provides that all of the other children must agree to the substitute appointment. Again, if there is not 100 percent agreement, the family will need to proceed with a formal administration through the probate court.

5. Divorce affects all beneficiary designations. Under the prior law, a change in marital status revoked the provisions favoring the ex-spouse in a prior Will. However, divorce had no affect on beneficiary designations for life insurance or IRAs, for example. Under the new law, divorce will not only revoke the provisions in favor of an ex-spouse and any member of the ex-spouse’s family in a prior Will, it will also nullify all previous beneficiary designations that favor the ex-spouse and any of his or her family members.

This makes sense in many instances. It is not uncommon for divorcing couples to forget to change beneficiary designations on life insurance or other pay-on-death type assets even though they remember to change their Wills. The new law will do this automatically. However, this may not always be the intent, especially as it relates to family members of an ex-spouse.

For example, if Dan and Michelle name Michelle’s sister as the guardian of their minor children in Wills made prior to their divorce, their subsequent divorce would revoke that guardian provision in Dan’s Will. Even though Dan and Michelle are divorced from each other, both may still be in favor of naming Michelle’s sister as the guardian of their minor children.

The substantive changes made by the MUPC in many ways represent what most people would want to have happen. However, that is certainly not the case for everyone. As has always been the case under the old law and will continue to be the case under the new law, it is important to be proactive and create your own estate plan so that you are in control of how your estate will be distributed and who will be in charge — instead of allowing the Commonwealth of Massachusetts to dictate those terms.

Attorney Suzanne Sayward is a partner with the Dedham law firm Samuel, Sayward & Baler LLC and served as the 2009 president of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). She was recently named MassNAELA’s Chapter Member of the Year for 2011. For more information, visit www.ssbllc.com or call (781) 461-1020.

By Attorney Maria Baler (November 2011)

Like most people, you are probably doing what you can to save for your retirement. If you are an employee, your employer may have established a defined contribution plan such as a 401k or 403b plan to which you can contribute a portion of your income each year. As an alternative, or in addition to an employer-sponsored plan, you can contribute funds to an individual retirement account (IRA). If you are already retired you most likely have some funds in a 401k or IRA account accumulated over your working life. The income tax laws look favorably on retirement savings and allow you to defer paying tax on income you contribute to a retirement account and on the account’s earnings until the funds are withdrawn.

Many people have significant assets accumulated in their retirement account. Like any other asset of value, it is important to pay close attention to your retirement account when doing estate planning, to be sure this valuable asset is left to your heirs in the most tax-efficient manner possible.

Here are five facts to know about estate planning for retirement benefits.

1. Double the Tax, Not Double the Fun

The value of your IRA, 401k or other retirement account is part of your taxable “estate.” This means the value of that asset will be added to the value of all other assets you own at the time of your death to determine if your estate must pay state and/or federal estate tax at your death.

In addition to estate tax, because income tax has not been paid on the funds in your retirement account, the beneficiary who receives the retirement account after your death will pay income tax on the funds in the account as they are withdrawn by the beneficiary. Amounts withdrawn from the retirement account will be taxed as ordinary income based on the beneficiary’s own personal income tax rate.

2. Beneficiary Designations Control All

When you establish a retirement account you can name a primary beneficiary of the account – the person or organization to receive the funds in the account at your death. If you are married, your spouse must be named as the primary beneficiary of your employer plan unless your spouse agrees that a different beneficiary may be named. In addition, you can name a secondary or contingent beneficiary to receive the funds in the account at your death if your primary beneficiary is not living. You may name one or more people as beneficiaries, in equal or varying percentages. Charities, educational institutions, or other organizations may also be named as beneficiaries of a retirement account. These beneficiary designations control to whom the funds in your retirement account are paid at the time of your death.

It is important to review your beneficiary designations periodically and make changes as necessary. Life events such as marriage, divorce, the birth of a child, or the death of a family member should all trigger a review of beneficiary designations.

3. Plan to Take Advantage of Income Tax Benefits for your Beneficiaries

Uncle Sam is generous and patient… to a point. Although tax laws allow you to defer the payment of income tax on the funds you contribute to a retirement account, those same laws don’t allow this tax deferral to continue indefinitely. The tax laws require you to begin taking withdrawals from a retirement account when you reach a certain age. Similarly, when the owner of a retirement account dies, the tax laws require the beneficiary of that account to start withdrawing and paying income tax on those funds. How quickly the funds have to be withdrawn, and how much tax must be paid on the funds as they are withdrawn, are key issues to consider when planning for the distribution of your retirement benefits after your death.

There are significant income tax benefits to naming your spouse as the primary beneficiary of your retirement account including the option for the surviving spouse to ‘rollover’ the deceased spouse’s retirement account into the surviving spouse’s own IRA, and therefore delay the withdrawal of funds from the IRA until the surviving spouse turns age 70.5.

There are also benefits to naming young beneficiaries like children, grandchildren, or nieces or nephews, as they may have the option to “stretch” the withdrawal of funds from the retirement account over their own life expectancy. This type of stretch pay-out is a powerful tax-savings strategy, as income tax is paid only on the funds as they are withdrawn, allowing years of tax-deferred growth.

For those who are charitably inclined, naming a qualified charity as the beneficiary of a retirement account will save the income taxes that would otherwise be paid on those funds, as a charitable organization does not pay income tax on the retirement funds it receives.

4. Don’t Forget About Planning for Estate Taxes

An important part of estate tax planning is to consider the liquidity of the estate and plan for how estate taxes will be paid without the need to liquidate assets. Planning for taxes on an estate with a large retirement account is important, as having to withdraw funds from the retirement account to pay estate taxes will generate income taxes on the funds that are withdrawn, creating an undesirable tax result.

Leaving retirement benefits to charity is one way to reduce your estate tax burden. Naming a qualified charity as the beneficiary of a retirement account will give your estate an estate tax charitable deduction, allowing those benefits to pass to the charity estate-tax free. If you are planning to leave money to charity at your death, consider the estate and income tax benefits of funding that gift with retirement plan assets.

If you have a large estate or wealthy children, consider naming your grandchildren as beneficiaries of your retirement account, rather than your children. Doing so will allow the retirement plan assets to avoid estate tax at your children’s death, and will provide the income tax advantages of an extra-long stretch payout to grandchildren. If you are considering this type of planning, be sure to consult with your attorney about the generation-skipping transfer tax implications of this type of arrangement.

5. Take Time to Learn About Your Retirement Plan

All retirement accounts are not created equal. Although the rules governing IRA accounts are mandated by federal law, the terms of your employer’s retirement plan are specific to that plan and very likely different from another employer’s plan. For example, your employer’s 401k plan may not permit a beneficiary to stretch payment over his or her life expectancy, or may require a beneficiary to withdraw the funds from the retirement account in a lump sum within five years of your death. Other plans may not allow a Trust or a charity to be named as the beneficiary of a retirement plan. Rolling over the retirement funds from the employer’s plan to an IRA, either following your retirement or after your death, may give you and your beneficiaries more options.

An important first step in planning for your retirement benefits is to review your plan’s documents with your advisor, determine your planning options, and if necessary determine whether it is possible to move the funds, now or in the future, to allow more flexibility in planning.

For many people, a retirement plan is their largest asset. Like any other valuable asset, there are significant estate tax implications of owning a large retirement plan. Unlike many valuable assets, there are also significant income tax implications. A good estate plan will include thoughtful and careful planning to ensure that the funds in a retirement plan will be paid to the intended recipients after your death in a way that minimizes both income and estate taxes, and if possible takes advantage of the favorable tax rules applicable to this type of asset.

Because employer retirement plans vary in their provisions, it is important to get individual advice about your retirement plan and your options. As with other planning issues, what works for your neighbor, barber, chiropractor or pet sitter will not necessarily work for you and your retirement account.

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 Steven Joshua Samuel (October 2011)

With the aging of the baby boomer generation, planning for long-term care illness has become of increasing concern. U.S. Department of Health and Human Services statistics show that 70 percent of people over 65 will require some long-term care services, primarily for one to five years of care. In 2010, the national average annual costs of long-term care were $ 40,428 for assisted living, $78,840 for private room nursing home and $1,135 per week for one eight-hour home care aid shift. Furthermore, long-term care costs in Massachusetts are higher than the national averages. Many questions arise when a family member needs long term care. Having a plan already in place may ease the emotional and financial stress on the rest of the family. We have provided answers to the most frequently asked questions when it comes to key planning issues. The good news is there are some new insurance alternatives that give families added flexibility in planning ahead.

What costs are covered by government programs?

Medicare covers medical care costs for illness or injury and provides very little for custodial care. Medicaid, the joint federal and state welfare program, pays for nursing home care but only after almost all of your own money has been spent. Although Medicaid pays for some home care services for people who have very little income or assets, finding and paying for caregivers with Medicaid funds is extremely difficult. Consequently, government programs do not effectively cover the really burdensome long-term care costs for middle class families, which have to be paid by either personal money or long-term care insurance.

What location for care do most people choose?

Most people prefer to remain in their own homes and most who start receiving care in their own homes are able to remain there. Coverage for long-term care in assisted living facilities, nursing homes, and in the insured person’s home are offered in most currently available long-term care insurance policies.

How much insurance coverage is enough?

For people who can afford insurance, the decision of how much of it is needed is usually made in consultation with an experienced professional. Key considerations include family and personal health history, as well as the local costs of care and affordability of annual premium. Seventy percent of recent buyers of long-term care coverage purchased between three and five years of benefits; 8.5 percent bought two years or less and 21.5 percent purchased six years or longer.

New choices in Long-Term Care insurance: Linked Life-Long Term Care Insurance Policies

Paying annual premiums to provide insurance for long-term care that may not be necessary is one reason some middle class consumers with considerable resources still have not acquired LTC insurance. New choices have become available to address this concern. One new choice is a policy that combines a death benefit and long-term care insurance, with all benefits income tax free; and, if long-term care is not needed, a refund of the premium is distributed. Here’s one example:

A retired woman, age 65, is married and in average (“standard” in insurance industry language) health and has not purchased long-term care insurance because of the annual premium. To address the possibility of long-term care needs, she has set aside $100,000 among her retirement investment holdings. In consultation with her financial advisor, she realizes that the amount set aside will cover little more than one year of care.

If instead she repositions the $100,000 into a “linked life-long term care policy,” offered by one of several financially solid insurance companies, she would have these benefits:

•$600,000 available to pay for long-term care costs (six times what she had without the policy);

•$200,000 death benefit if she does not have a long-term care need; and, $20,000 in death benefits even if she uses all the long-term care fund money described above;

•both the death benefit and long-term care moneys are income tax free;

•If she changes her mind about wanting the policy, the premium is refunded minus only loans she has taken and benefits which were paid to her.

Other versions of linked life-long term care policies are available with slightly different features. They are worth investigating, as always, in consultation with a qualified financial advisor.

Helpful consumer resources used in this article:

Department of Health & Human Services, National Clearinghouse for Long-Term Care Information, September, 2008, www.longtermcare.gov.

Life Plans Long Term Care Market Summary: Cost of Care Update 2010, www.LincolnFinancial.com.

American Association of Long Term Care Insurance, 2010 LTCI Sourcebook.

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. Fixed Insurance products and services offered by Samuel Financial, Inc. is separate and unrelated to Commonwealth. www.samuelfinancial.com

By Attorney Suzanne R. Sayward (September 2011)

On January 1, 2012, a law which is likely to affect every resident of the Commonwealth at some point will go into effect. This law is the Uniform Probate Code (UPC) and it changes the way estates are administered in Massachusetts.

Here are five ways in which the settlement of estates will change under the UPC.

1. New Names for Probate Terms. Currently, the person appointed by the court to administer an estate is called the ‘Executor’ when there is a Will and the ‘Administrator’ when someone dies without a Will. Under the UPC, these terms are replaced with ‘Personal Representative.” Right now, the Court issues a ‘Certificate of Appointment’ to the Executor or Administrator as proof of their authority to act on behalf of the estate. Under the UPC, this proof of authority will be called, ‘Letters Testamentary’ or ‘Letters of Administration.’

2. Informal Probate Process Available for Many Estates. Under the current probate system in Massachusetts, it takes about 45 days from the date probate documents are filed with the Court to obtain the appointment of a permanent executor. Prior to receiving that appointment from the Court, bank accounts and other assets owned by a deceased person (or “decedent”) in his individual name are not accessible. This can be troubling to families who want to pay funeral expenses and other bills, or who need to manage property or continue operating a business. Under the UPC, if the estate is being administered under the new “informal” probate process, the appointment of the Personal Representative may occur as soon as seven days following a person’s death.

3. Heir Today, But Not After January 1, 2012 – Maybe. When a resident of the Commonwealth dies without a Will, her estate is distributed to her heirs as determined under the intestate laws. While that will still be the case under the UPC, the people who are your heirs will change. For example, right now, if someone dies without a Will leaving a surviving spouse and children, her estate will pass one-half to the surviving spouse and one-half to the children, in equal shares. Under the UPC, the deceased person’s estate will pass entirely to the surviving spouse provided that all of the decedent’s children are also the children of the surviving spouse. If this is not the case, the old rule applies.

4. Exempt Property and Family Allowance. There are two new protections for surviving family members under the UPC. The first is a $10,000 Exempt Property allowance in favor of the surviving spouse, or if there is no surviving spouse, the allowance is allotted to surviving children. The Exempt Property allowance is made up first of the decedent’s tangible personal property (furniture, cars, personal effects, etc.). If the value of the tangible personal property is less than $10,000 the shortfall is made up from other estate assets.

The second protection is the discretionary Family Allowance, which allows the Personal Representative to pay a monetary allowance from the estate for the benefit of the decedent’s spouse and dependent children of up to $18,000 while the estate is being settled. Both the Exempt Property allowance and the discretionary Family Allowance have priority over creditors of the estate.

5. Shorter Limitation for Probating Will. Currently, the Will of a deceased resident of Massachusetts may be administered up to 50 years after that person’s death. That means that if you find Great Uncle Henry’s Will in an old desk 49 years after his death, you can still probate it. Under the UPC, that statute of limitations will be three years. Failure to probate a Will within three years will result in the decedent being deemed to have died intestate, and any property that is discovered owned by the deceased after that three-year period will be distributed to his heirs in accordance with the intestate laws, and not under the terms of his Will.

The above is the briefest of summaries of a few of the changes under the new law that will occur when the UPC goes into effect in January. There are many welcome aspects to the UPC that should streamline the probate process for most families, making it faster, simpler and less expensive to settle an estate. However, there are also a number of provisions in the UPC that will control the settlement of an estate for people who do not leave a Will. These provisions may not represent your intentions. As has always been the case, it is much better to take control of your estate plan and create your own Will rather than letting the Commonwealth do it for you.
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.

Attorney Suzanne Sayward is a partner with the Dedham law firm Samuel, Sayward & Baler LLC and served as the 2009 president 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.