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Estate Planning for the New Year

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As we move at what seems like the speed of light towards the new year, it is the perfect time to reflect on the past and set goals for the future. Beyond the usual resolutions, consider dedicating some time to comprehensive estate planning to prepare for the year ahead. This means taking proactive steps to organize your affairs and solidifying a sound financial and legal foundation for the upcoming year.

  1. Designate Beneficiaries
    One of the first steps to confirm your financial future (and your beneficiaries’ financial futures) while moving into the new year is to review and update your beneficiary designations, as necessary. This includes beneficiary designations for life insurance policies, retirement accounts, and annuities. You should ensure that the designated beneficiaries align with your current estate planning wishes, and that you have both primary beneficiaries and contingent (back-up) beneficiaries designated on those assets.
  2. Organize Documents
    Take the time to find and organize your important documents, such as your Will, Trust, Power of Attorney and Health Care Proxy. Create a comprehensive list of assets and liabilities along with bank, investment and retirement account information. It is also important to create and keep up-to-date a list of any and all accounts you have online together with the password and other access information. This can include email accounts, social media profiles, online banking, and any other platforms where you hold digital assets. Keeping your financial records in order makes it much easier for your loved ones to navigate your affairs in case of an emergency.
  3. Health Care Proxy and MOLST
    Health care decisions are crucial aspects of planning for the future. Share a copy of your health care proxy with your primary care physician and with your named health care agents and make sure they understand your medical preferences. Additionally, consider completing a Medical Order for Life-Sustaining Treatment (MOLST) form with your primary care physician if you have a terminal illness or you are in your mid- to late eighties or older.
  4. Consultation with “Support Team”
    Schedule meetings in the beginning of the year to consult with your “support team”, such as your estate planning attorney, accountant, and financial planner to review your overall financial and legal strategy in the event you become incapacitated or pass away. An attorney can help ensure your estate plan is comprehensive and appropriately reflects your current wishes, while an accountant can provide valuable insight into your tax planning for the upcoming year. A financial planner can assist in aligning your investments with your long-term goals, which becomes more and more crucial after you retire.
  5. Tell Someone!
    Having all those documents organized and in place is only helpful if one or more of your loved ones know they exist. Beyond sharing your health care proxy with your health care agent (and primary care physician), put a copy of it along with the MOLST in an easily accessible, visible location such as on the refrigerator or near your front door. It is absolutely critical that you tell a trusted individual where they can find a copy of your other estate planning documents and the contact information of your support team members so that person knows right away where to go and who to contact in the event of an emergency.

Taking the time to make sure you have a plan in place for the new year by doublechecking you have beneficiaries designated, organizing your documents, sharing your health care proxy, consulting with your support team, and telling a trusted family member or friend about all your efforts is a proactive and responsible approach. By addressing these aspects comprehensively, you will gain peace of mind and also make possible a smoother transition during unforeseen circumstances.

Attorney Abigail V. Poole is a senior associate attorney with the Dedham firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate settlement and elder law matters. She is an active member and President of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (NAELA). This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020.

December, 2023
© 2023 Samuel, Sayward & Baler LLC

Important Numbers for 2024 Estate Tax Planning

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Important Numbers for 2024 Estate Tax Planning 

Each year around this time, the IRS comes out with the inflation adjusted federal Estate and Gift Tax exemption amounts for the following calendar year.  Here are the numbers for 2024.

2024 Federal Estate Tax Exemption

The federal estate tax exemption is the amount that each person is permitted to pass on free of any federal estate tax.  For 2024, this amount is $13.61 million per person (up from $12.92 million in 2023) which translates into $27.22 million for a married couple.  

2024 Annual Gift Tax Exclusion

The Annual Gift Tax Exclusion amount is the amount that a person may gift to any number of other individuals during a calendar year without impacting the donor’s Lifetime Gift Tax exclusion. For 2024, this amount will be $18,000 per person.  For example, a grandparent may give each of his or her five grandchildren $18,000 for a total of $90,000 during 2024 without needing to file a gift tax return (form 709) reporting the gifts and without any impact on the donor’s Lifetime Gift Tax exclusion.

2024 Lifetime Gift Tax Exclusion

In addition to the Annual Gift Tax Exclusion, each person has a Lifetime Gift Tax exclusion which is currently equal to the federal estate tax exemption – $13.61 million for 2024.  If gifts in excess of a person’s Lifetime Exclusion amount are made, tax on the excess gifts is payable by the donor (person making the gift) at the rate of 40%.  To the extent a person makes gifts over and above the Annual Gift Tax Exclusion amount, their Lifetime Gift Tax exclusion amount is reduced 

2024 Gifts to Spouses

Amounts passing to a U.S. citizen spouse either at the death of the first spouse or during lifetime in the form of gifts, pass free of federal and Massachusetts estate tax regardless of the amount.  

The same does not apply for non-U.S. citizen spouses.  When one spouse dies leaving assets to a surviving non-U.S. citizen spouse, there is no marital deduction permitted for those assets.  Since the deceased spouse may leave $13.61 million free of federal estate tax, the lack of a marital deduction does not matter for many people.

Lifetime gifts to a non-U.S. citizen spouse are limited to $185,000 (2024) per calendar year.  

What about Massachusetts? 

Massachusetts has its own estate tax system which until very recently had a $1 million threshold for taxable estates. As of October 4, 2023, we have a $2 million exemption and this is effective for estates of decedents dying on or after January 1, 2023.  This amount is not indexed for inflation so it will take another act of the Massachusetts legislature to increase it.  But still, we are grateful for the bump up to $2 million ($4 million for a married couple who undertake estate tax planning).

Keep in mind that Massachusetts does not have a gift tax.  As such, there is no limit on the amount you may give away under Massachusetts tax law. 

 If you are interested in discussing estate tax planning or creating a gifting plan, please contact our office to schedule a time to meet with one of our attorneys. 

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

November, 2023

© 2023 Samuel, Sayward & Baler LLC

Commonwealth Resources for Family Caregivers and New Parents

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Attorney Abigail Poole discusses Commonwealth Resources for Family Caregivers and New Parents, for our Smart Counsel for Lunch Series. Please watch and if you have any questions or want to learn more please call us at 781 461-1020.

https://www.mass.gov/family-caregiver-support-program
https://www.mass.gov/babysteps

Five Things Your Estate Plan Allows You to Be Thankful For 

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Estate planning is hard.  Discussing topics like incapacity, death and taxes are unpleasant.  It’s the reason why an estimated two-thirds of Americans do not have an estate plan.  But like many hard things, after it is done there is a sense of accomplishment and relief, and in many cases gratitude.  Estate planning may be something you have been putting off for years, if not decades.  Getting it done is a great feeling, and something that benefits not just you but your loved ones.  Estate planning is an essential aspect of financial well-being and ensuring that your assets and loved ones are protected.  Here are five things to be thankful for when your estate plan is done.

1. Peace of Mind

One of the most significant benefits of estate planning is the peace of mind it provides. Knowing that your affairs are in order and that your loved ones will be taken care of in the event of your passing can be a great source of comfort. For families with minor children, estate planning means you have put in place a plan for your children to be taken care of by someone you choose if you pass away while they are still young.  It also means that you have created a trust so inherited assets can be managed for young children until they are mature enough to take control of those assets themselves.  Estate planning minimizes the potential for family disputes over assets, designates decision-makers of your choice, and makes the difficult process of grieving much more manageable for your heirs.

2. Control Over Your Legacy

Estate planning allows you to have control over your legacy. You get to decide how your assets will be distributed, who will receive them, and under what conditions, and who will oversee that process.  Holding assets in trust for minor children or a beneficiary with special needs is important.  It may also be important for older children for whom asset protection is a concern due to an unstable marriage, a pattern of mismanagement of assets, profligate spending, creditor issues, gambling issues or substance abuse.  This control ensures that your assets are used in a way that aligns with your values and priorities. Whether you want to support your family, friends, favorite charities, or any other cause close to your heart, estate planning allows you to make that happen.

3. Tax Efficiency

Effective estate planning, especially in a state such as Massachusetts with a separate state estate tax, can reduce the tax burden on your estate, leaving more of your assets to your loved ones. By using strategies like trusts, gifts, and other tax-efficient mechanisms, you can maximize the wealth you pass on to the next generation.  If you have a large IRA or other tax-deferred retirement plan, the estate planning process will help you understand how the income tax on these assets will impact you and your heirs.  You will be thankful for the opportunity to minimize the impact of these taxes on your estate and your heirs to ensure that your beneficiaries inherit as much as possible.

4. Smooth Transition of Assets

The estate planning process starts with compiling information about the assets you own, how they are owned, and how beneficiaries are designated.  Creating such an inventory and keeping it up to date will go a long way toward helping the people who are implementing your estate plan carry out their duties efficiently.  Ensuring your assets are owned properly and beneficiaries are designated appropriately and consistent with your plan is an important part of estate planning and will ensure your plan works as intended.  In Massachusetts, where the probate process can take a year or more to complete, the use of Trusts in an estate plan can avoid the probate process and allow for immediate access to assets at death.  This means that your beneficiaries will receive their inheritance more quickly and with far less delay and frustration. The ability to provide a seamless transfer of wealth will give you peace of mind and will be a source of gratitude for your heirs after your death.

5. Your Team

It takes a village, as they say, and estate settlement and trust administration is no exception.  If planning is done properly, an important part of the legacy you leave will be a team of advisors – your estate planning attorney, your accountant and your financial advisor – who will guide and advise your family after your lifetime while ensuring your estate plan is carried out according to your instructions.  Introducing your family to these team members while you are alive can ensure an even more seamless transition.  You will be thankful for the guidance your team provides you during your lifetime and will have peace of mind knowing they will be there to guide your family after your death.

Estate planning offers peace of mind, control over your legacy, tax efficiency, a smooth transition of assets, and a team that will guide you and your loved ones through whatever the future brings.  If you have not already created your estate plan, start the process.  If you have an estate plan in place, make sure it is up to date.  And while you are planning, be thankful for the opportunity estate planning provides to secure your family’s future, provide for charitable causes, and make your passing more manageable for those you leave behind. Your heirs will certainly thank you after you’re gone.

Maria C. Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA), and the former President of the Board of Directors of the Massachusetts Forum of Estate Planning Attorneys. For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.

November 2023

© 2023 Samuel, Sayward & Baler LLC

 

Planning for a Special Needs Relative: Honoring Special Needs Law Month

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It’s fall again and October is the time of year when the Massachusetts Chapter of the National Academy of Elder Law Attorneys (“MassNAELA”) celebrates Special Needs Law Month by hosting valuable legal education programs for attorneys regarding new developments in special needs law. MassNAELA also distributes copies of its Special Needs Advocacy Toolkit, which is accessible to the public and provides tools to help people advocate for the rights and well-being of individuals with special needs. The Toolkit provides important information on financial management, as well as an understanding of Medicare and Medicaid, a student’s right to an independent educational plan, housing options, and other issues. You can find the Second Edition of the Toolkit here: https://massnaela.com/wp-content/uploads/2021/10/MassNAELA-Special-Needs-Toolkit-Second-Edition.pdf

Not only are many of our attorneys here at Samuel, Sayward & Baler active in MassNAELA, our senior associate attorney, Abigail Poole, is the current President! We are proud to be part of an organization of attorneys who are experienced and trained in working with the legal problems of individuals of all ages with disabilities. We would like to honor Special Needs Law Month by providing you with basic information on estate planning for a special needs child, grandchild, or other relative.

Financial and Healthcare Documents for an Individual with Special Needs

1. Durable Power of Attorney

A Durable Power of Attorney is a legal document in which the principal (the person creating the document) designates someone to make legal and financial decisions in the event of incapacity. This document is especially important for a special needs individual because it ensures that the individual’s financial affairs are properly managed in the event of incapacity. However, if the special needs individual is already incapacitated or is unable to understand the legal implications of the Power of Attorney, then another alternative will need to be explored, such as conservatorship. 

The person designated in the Power of Attorney is called an attorney-in-fact. The attorney-in-fact should not only be trustworthy and capable of making decisions in the best interest of the principal but should understand the implications of their decisions on the individual’s eligibility for needs-based government benefits. The attorney-in-fact should be informed about the rules and regulations governing such benefits to prevent any action that could jeopardize the individual’s eligibility. The Power of Attorney can be drafted to include specific instructions and guidelines for the attorney-in-fact in accordance with the individual’s circumstances.

2. Health Care Proxy and HIPAA Authorization

A Health Care Proxy is a legal document used to designate a Health Care Agent to make medical decisions on behalf of the principal (person creating the Proxy) if the principal is deemed by his or her medical provider to be unable to meaningfully participate in decision making. As with the Durable Power of Attorney, the special needs individual must have capacity and an understanding of the document in order to execute it. 

The Health Care Agent should be someone who the individual can discuss his or her healthcare wishes with and who will follow those wishes. The Health Care Agent’s role is to speak with the individual’s doctors and make healthcare decisions based on the individual’s wishes, including direction regarding life-sustaining procedures.

The HIPAA Authorization allows the persons listed in the document to obtain personal medical information and speak with medical providers. The HIPAA Authorization and the Health Care Proxy are extremely important for special needs individuals over the age of 18.  That is because once a person is age 18, they are deemed legally competent to make decisions for themselves. At that point, parents or other caregivers no longer have the right to make healthcare decisions on the individual’s behalf or even to speak with physicians or other medical providers. without written consent.

Guardianship and Conservatorship

If an individual doesn’t have capacity or doesn’t understand the Power of Attorney or Health Care Proxy they are signing, then guardianship and/or conservatorship may be necessary. A guardian is someone who has legal responsibility for an individual’s physical well-being and the authority to make all decisions regarding his or her care, including healthcare decisions, residence, and education. This legal responsibility is created by the Probate and Family Court upon the court’s appointment of the guardian. 

Similarly, a conservator is someone appointed by the court to manage the financial assets of a special needs individual if the individual is unable to manage the assets themselves. A conservator may also apply for and manage government benefits on behalf of the individual.

Any person serving as a guardian or conservator should name successor guardians and conservators in their Will. A court will need to appoint the guardian/conservator named in a Will to make decisions for the special needs individual.

Supplemental Needs Trusts

Parents and grandparents can create trusts for their special needs children or grandchildren with the assistance of an estate planning attorney with expertise and experience in planning for beneficiaries with special needs.  This is preferable to leaving money directly to the beneficiary because Supplemental Needs Trusts (“SNT”) provide long-term management of the inheritance you leave to disabled beneficiaries while allowing them to qualify for needs-based government benefits. Special needs trusts can pay for and supplement medical and travel expenses, entertainment, pet care, and other expenses that can enhance a beneficiary’s quality of life especially when parents or grandparents are no longer around.  The Trust creator names a Trustee to manage funds in the Trust who could be a professional or a trusted family member.

It is important to us at Samuel, Sayward & Baler to develop a plan that ensures that your family member with special needs is cared and provided for in the event you are unable to. It is also important to know about these basic legal tools so that you can be an effective advocate for the special needs child or relative in your life. Keep these things in mind when thinking about your family member with special needs and consult with an estate planning attorney with expertise in special needs planning to advise you about these important matters.

Attorney Brittany Hinojosa Citron is an associate attorney with Samuel, Sayward & Baler LLC in Dedham, Massachusetts, which assists and advises clients who have family members with special needs and focuses on trust and estate planning and elder law matters. 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 ssbllc.com or call 781-461-1020. 

October, 2023

© 2023 Samuel, Sayward & Baler LLC

Five Ways to Protect your Estate

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When we meet with clients for their estate planning, I ask them about their goals. One of the most frequent answers I hear is that they want to ‘protect their estates.’ Of course, my next question is, from what? There are a variety of risks that estate planning can address when timely and properly undertaken. Read on for five ways to protect your estate from risks that can negatively impact the estate, and legacy, you intend to leave.

1. Protect your assets from long-term care costs.

One of the biggest concerns people have when they are planning their estates is that their assets will be consumed by their long-term care costs. Given the very high cost of such care, whether provided at home or in a long-term care facility, this is a valid concern. While many people think Medicare will cover long-term care costs, it does not. Advance planning to protect assets from spend down on long-term care costs often includes creating and funding an irrevocable trust. Depending on age, health and financial circumstances, purchasing a long-term care insurance policy which provides financial assistance for services like home care, assisted living, or nursing home care is another excellent way to protect a legacy from loss to long-term care costs.

2. Protect the inheritance you leave your beneficiaries

It is essential to thoughtfully decide how your assets will be distributed upon your passing. If you have minor children or beneficiaries with special needs, it is critical that assets not pass directly to these beneficiaries but instead pay into a Trust for them. A person with a disability who is receiving or may be entitled to receive public benefits may lose those benefits if they receive an inheritance.

Under the law, a minor is not legally able to receive assets. As such, if a minor is named as a beneficiary, a court appointed conservator will be required to collect the benefit on behalf of the minor. The conservator will need to manage the assets and report to the court on an annual basis – time consuming and expensive. Once a beneficiary turns age 18, the beneficiary is entitled to receive the asset – often another bad result.

Leaving an inheritance to beneficiaries in trust is often beneficial even if your beneficiaries are non-disabled adults. An inheritance that passes outright to beneficiaries is subject to the easy reach of their creditors such as a divorcing spouse, failed business, lawsuit, etc. Structuring your estate plan to leave the inheritance to your beneficiaries in trust will protect it from the easy reach of those creditors.

3. Protect your estate from avoidable costs and taxes

One key aim of estate planning is to minimize expenses and taxes that can diminish the value of your estate. Estate taxes can significantly reduce the assets you leave behind. Strategies like creating trusts, gifting assets during your lifetime, and making use of tax exemptions can help reduce the impact of estate taxes.

Furthermore, the way your assets are titled and structured can affect administrative costs. Proper titling of assets and careful planning can avoid probate and streamline the estate settlement process, saving both time and money for your beneficiaries.

4. Protect your unique assets

If you possess unique assets like a vacation home, valuable art, or collectibles, it’s crucial to incorporate them into your estate plan. These assets often hold sentimental value and can be a significant part of your legacy. The last thing most people want is to have their heirs fighting over their possessions following their deaths.

To protect and preserve these unique assets, your estate plan should clearly outline how they should be managed or distributed. You might consider creating a family trust to oversee the vacation home’s usage and maintenance, or specifying how your art collection should be appraised and distributed among your heirs.

By planning for these unique assets, you preserve your legacy by ensuring they continue to hold value and significance for your loved ones in the years to come.

5. Protect your privacy

Maintaining privacy is a fundamental aspect of estate planning. When you work with an estate planning attorney, you can establish measures to safeguard your personal and financial information.

One critical tool for privacy protection is the revocable living trust. Assets titled in a trust will avoid probate, a public court process that exposes your estate details to the public record. This means your assets can be distributed privately, without the need for public disclosure.

Additionally, working with professionals who understand the importance of confidentiality ensures that your affairs remain private during the estate settlement process. Protecting your privacy not only shields your financial matters from unnecessary public scrutiny but also preserves your family’s confidentiality during a potentially challenging time.

In conclusion, protecting your estate and preserving your legacy involves a comprehensive estate plan that considers various factors, from minimizing long-term care costs and taxes, safeguarding the inheritance you will leave, and planning for your unique assets. Working with an experienced estate planning attorney will help you tailor a plan that aligns with your specific goals and priorities, ensuring that your legacy is preserved and passed on as intended.

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

October, 2023

© 2023 Samuel, Sayward & Baler LLC

 

Leaving A Legacy of Love (& Money)

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A client recently asked me, “Is there anything that can be done now to protect my daughter and grandchildren’s inheritances?” Happily, I was able to explain that there are two tools available to safeguard the client’s legacy for her loved ones. These tools are prenuptial agreements and lifetime trust shares, which allow people to protect their wealth and ensure that their hard-earned assets are preserved for future generations.

If your adult child is not yet married, the best way to protect an inheritance is to execute a prenuptial agreement. A prenuptial agreement is a legally binding contract that is completed prior to marriage. It outlines the assets and rights of each person in the event of divorce or death which will supersede state law so long as the prenuptial agreement is determined to be valid. The prenuptial agreement can “carve out” assets, such as potential inheritances and gifts from parents, which will remain with your child in the event of a divorce instead of being divided between your child and the divorcing spouse. Your child and fiancé must each be represented by separate attorneys to provide advice and negotiate the prenuptial agreement. The prenuptial agreement should be started at least six to nine months prior to the date of the marriage ceremony.

In addition to your child executing a prenuptial agreement, you can take action by creating an estate plan that includes a lifetime trust share for your child. You can prepare a Trust now that upon your passing will hold and manage assets for your child for that child’s lifetime, or even for the lifetime of a child’s descendants (your grandchildren). Although your child (and grandchildren) can benefit from the funds held in the trust share during their lifetime according to the terms that you put in place, the assets are not as vulnerable to division between your child and a divorcing spouse because your child does not have total ownership and control of the assets.

To best preserve family wealth for multiple generations, your child should execute a prenuptial agreement and you should create an estate plan containing a lifetime trust share for your child. At Samuel, Sayward & Baler LLC, we strive to provide you with the peace of mind that you are taking all the steps necessary to afford your family financial security and stability, and protect your legacy for generations to come.

Attorney Abigail V. Poole is a senior associate attorney with the Dedham firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of trust and estate planning, estate settlement and elder law matters. She is an active member and current President of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (NAELA). This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit ssbllc.com or call 781/461-1020.

September, 2023

© 2023 Samuel, Sayward & Baler LLC

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

©2024 Samuel, Sayward & Baler LLP. All Rights Reserved. The information presented on this website should not be construed to provide legal advice, nor does it constitute the formation of an attorney/client relationship. Read the disclaimer.